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Shree Cement Ltd.

BSE: 500387 Sector: Industrials
BSE 00:00 | 24 Apr Shree Cement Ltd
NSE 05:30 | 01 Jan Shree Cement Ltd
OPEN 18852.85
52-Week high 25341.20
52-Week low 15500.00
P/E 51.49
Mkt Cap.(Rs cr) 67,091
Buy Price 18300.00
Buy Qty 1.00
Sell Price 18900.00
Sell Qty 1.00
OPEN 18852.85
CLOSE 18710.10
52-Week high 25341.20
52-Week low 15500.00
P/E 51.49
Mkt Cap.(Rs cr) 67,091
Buy Price 18300.00
Buy Qty 1.00
Sell Price 18900.00
Sell Qty 1.00

Shree Cement Ltd. (SHREECEM) - Director Report

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Company director report


Dear Members

The Directors take pleasure in presenting the 38th Annual Report togetherwith the Audited Financial Statements for the year ended 31st March 2017. TheManagement Discussion and Analysis has also been incorporated into this report.


A brief of financial performance for the year gone by and its comparison with previousyear is given below: -

(Rs. in Crore)




2016-17 2015-16 (9 months) 2016-17 2015-16 (9 months)
Revenue from Operations 9496.52 6189.96 9496.52 6189.96
Profit Before Interest Depreciation and Taxes 2874.94 2079.59 2874.91 2079.56
Finance Costs 129.42 75.77 129.42 75.77
Depreciation and amortization expenses 1214.71 827.57 1214.71 827.57
Profit Before Tax 1530.81 1176.25 1530.78 1176.22
Tax Expense 191.70 33.12 191.70 33.12
Profit After Tax 1339.11 1143.13 1339.08 1143.10


• During the year 2016-17 Company has paid following dividends as InterimDividend : -

• First Interim Dividend of Rs. 16/- per share

• One-Time Special Dividend of Rs. 100/- per share

• Apart from above a Final Dividend of Rs. 24/- per share for 2016-17 has beenrecommended by the Board which will be paid after approval of Members in ensuing AnnualGeneral Meeting (AGM).

• The total dividend payment thus works out to Rs. 140/- per share for year2016-17 (12 months) as against Rs. 24/- per share for the year 2015-16 (9 months).

• The total dividend relating to the year 2016-17 amounts to Rs. 587.01 croreincluding dividend distribution tax of Rs. 99.29 crore as against Rs. 100.63 croreincluding dividend distribution tax of Rs. 17.02 crore for the year 2015-16.

During the year Rs. 1000.00 crore was transferred to General Reserve. Opening Balanceof Rs. 500.00 crore in Special Reserve was also transferred to General Reserve.

The Board of Directors of the Company in line with the SEBI (Listing Obligations &Disclosure Requirements) Regulations 2015 had approved the Dividend Distribution Policyon 12th August 2016.

The Policy is uploaded on the Company's website and can be accessed at the link


I. Indian Economy - Developments and Outlook

As per Advance Estimates of National Income released by Government of India the GDPgrowth for the year 2016-17 is estimated at 7.1% as compared to 7.9% for 2015-16. Themoderation in GDP growth this year is mainly attributable to demonetization announcementof Government. The growth in economy is largely because of healthy growth in agrarian andrural economy which benefitted from a good monsoon after two successive rain-deficientyears. The industrial sector continued to show a dismal picture as reflected in Index ofIndustrial Production (IIP) which is estimated to have grown at around 0.4% during April16 - Feb 17 on the back of 2.6% recorded in 2015-16. The inflation continued to stay lowas reflected in wholesale price index of 3.7% and Consumer Price Index of 4.5% during2016-17. As a result the interest rate saw good moderation during the year. A positivefactor of 2016-17 was improved tax collections of the Government as visible in the growthof around 18% in the Gross Tax Collections which will enhance government's ability tospend on infrastructure and other development projects. Going forward the interest ratescontinue to stay benign. There are predictions of a normal monsoon. The capital investmentboth from private and public sector is showing revival. Government has renewed its thruston infrastructure development. The passage of GST legislations by the Union and StateGovernments indicates that the GST regime is likely to be a reality over next few months.Overall there are expectations for growth in consumption across sectors includingconstruction and building materials.

The Niti Aayog has also released "A Three Year Vision Document for2017/2020". It has forecasted a vigorous expansion of the Economy. This is predicatedon the assumptions of a fiscal turn around. This would revive public investment ininfrastructure which in turn will revive private investment. It has also given a positiveperspective for the agricultural and manufacturing sectors. The outlook for 2017-18 thuslooks bright.

II. Cement Industry - Development and Outlook

All India cement production during 2016-17 is estimated to have clocked a figure ofaround 280 million tonnes which indicates a de-growth of around 1% over previous year. Thedemand conditions were badly affected due to demonetization during later part of the year.Overall the demand conditions were also affected due to relatively low infra spendingsubdued conditions in the urban housing space and overall slackness in other sectors ofthe economy because of demonetization. A good monsoon however helped push demand from therural and semi urban housing segment.

With the situation coming back to normal after demonetization construction activitieswere seen to be picking up from February 2017 onwards. A buoyant mood is visible ineconomic activities across sectors in the economy. Government has pushed infra spendingspecially in Road and

Railway sectors. The other Government schemes such as Smart City AMRUT etc. are likelyto attract significant investment. There is expectation of pick up in housing activitieson the back of lower interest rates and incentives provided for affordable housing. Thesedevelopments indicate a bright outlook for cement sector during 2017-18.

III. Power Sector - Development and Outlook

Power Sector continues to witness over capacity conditions. The continual capacityaddition both in conventional power segment and renewable energy segment is making thesituation worse. The sector is also witnessing high regulatory interventions making openmarket condition for power sector a distant reality. Poor financial health of DistributionCompanies continues to adversely affect their power purchase decisions. The demand inshort term market is therefore low and erratic leading to poor realizations forgenerators. The power generators are hardly able to recover their fixed costs. There ishowever hope that the government's initiatives of UDAY (Ujwal DISCOM Assurance Yojana) andinclination shown by new Government in the State of Uttar Pradesh to supply 24 hourssupply may help lift demand to some extent. Overall outlook for power sector remains grimfor 2017-18.


Pursuant to the Companies (Indian Accounting Standards) Rules 2015 notified by theMinistry of Corporate Affairs Company has adopted Indian Accounting Standards (Ind AS)with effect from 1st April 2016. Accordingly the financial results for theprevious year ended 31st March 2016 have also been prepared in accordance withInd AS. The adoption of Ind AS has resulted in change in accounting and disclosures ofcertain income & expenditures and assets & liabilities. Reconciliation to thiseffects on the transition from Indian GAAP to Ind AS on the equity as at 1stJuly 2015 and 31st March 2016 and on the net profit for the year ended 31stMarch 2016 is disclosed in Note no. 55 in the accompanying standalone financialstatements.

Brief summary of the Company's performance is as under:

Particulars Unit 2016-17 2015-16 +/-%
(9 months) (Annualized)
Cement Production Lac Tons 202.87 140.99 7.9%
Cement & Clinker Sale Lac Tons 205.86 142.43 8.4%
Power Generation (Net) Million Units 2895 2611 -16.8%
Power Sale Million Units 1658 1739 -28.5%
Revenues - Cement Rs. Crore 8924.11 5604.49 19.4%
- Power Rs. Crore 572.41 585.47 -26.7%
- Total Rs. Crore 9496.52 6189.96 15.1%
Operating profit - Cement Rs. Crore 2210.73 1207.33 37.3%
- Power Rs. Crore 156.50 199.58 -41.2%
- Other Income Rs. Crore 507.71 672.68 -43.4%
- Total Rs. Crore 2874.94 2079.59 3.7%
EBIDTA Margin to Revenue % 30.27% 33.60%
Net Profit Rs. Crore 1339.11 1143.13 -12.1%

Cement Business

• Company crossed 20 million ton mark during 2016-17 in its Cement productionwhich registered a growth of 7.9% over previous year to 202.87 lac tons.

• Cement and Clinker Sale volume were up at 205.86 lac tons recording a growth of8.4% over previous year. This was mainly because of significant strides made by theCompany in Eastern India cement market.

• Cement Sales revenue grew 19.4% to Rs. 8924.11 Crore on account of increasedsale volumes as well as improved price realization.

• Company continued to maintain its cost leadership during the year. It containedthe raw material costs around the same level as was recorded last year through optimalsourcing and continual efficient usage. It rationalized its power and fuel cost by around3% during the year through improvement in energy consumption levels as well as better fuelprocurement. Logistics cost was however up by 14% mainly because of higher diesel pricesand relatively lower ex-factory dispatches.

• As a result of combined effect on account of growth in cement volumes costrationalization and improved price realization the EBITDA of cement business was up by37.3% to Rs. 2210.73 Crore.

Power Business

As Company operates in short term power market its power sales depend on theprevailing fuel prices as it directly affects its cost of generation and consequently saleprice. During the first half of 2016-17 fuel prices were soft the same however increasedsharply during the second half. This coupled with challenging market conditions impactedoverall power sale volumes which dropped to 1658 Million Units in 2016-17 from 1739Million Units in 2015-16 (9 months). Consequently revenue from Power Sale (includingincome from power trading) was also recorded lower at Rs. 572.41 Crore in 2016-17 asagainst Rs. 585.47 Crore in 2015-16 (9 months). EBITDA of Power Business stood at Rs.156.50 Crore in 2016-17 as against Rs. 199.58 Crore in 2015-16 (9 months).

New/Expansion Projects

During the year the expansion project of grinding unit at Aurangabad in Bihar wascompleted which increased its capacity to 3.6 Million Tons Per Annum (MTPA) from 2.0 MTPA.In addition the capacity of existing units of the Company has also increased as a resultof de-bottlenecking process-flow improvement installation of balancing equipment andother productivity improvement measures. Accordingly the cement capacity of the Companyhas increased to 29.30 MTPA from 25.60 MTPA last year.

The work on Clinker capacity Expansion project of 2.6 MTPA at Baloda Bazar in RaipurDistrict of Chhattisgarh is expected to be completed by Quarter ending March 2018. Work onIntegrated cement project of 3.0 MTPA at Kodla in Gulbarga District of Karnataka is alsoprogressing as per schedule and is expected to be completed by Quarter ending December2018.

The official perspective of revival as spelled out by Niti Aayog in its "A ThreeYear Vision Document for 2017/2020" is a welcome initiative and is consistent withCompany's actions on capacity expansion. The Company looks forward to the Governments atthe Centre and the States implementing the Vision document.

The policies on reform of Agricultural Markets housing and transport and powerinfrastructure in particular will help the Company's capacity addition plans to besuccessfully implemented.

Coal Linkage

Price Behaviour of imported coal and pet coke observed over the years indicate thatthey are subject to high fluctuations. Thus in order to contain the impact of suchvolatility Company has started exploring possibility of coal linkages. From 2016-17Government has started granting coal linkages to cement sector through auction route.Company participated in these auctions and won three Coal linkages at competitive pricesfor supply from New Kusumunda and Dipka OC coal mines of South Eastern Coalfields Ltd.(Subsidiary of Coal India Ltd.). The coal will be used for company's plant at Raipur inChhattisgarh. The quality of coal to be supplied under the above coal linkages is"G-Garde" and aggregate quantity allotted is 2.10 lac MTPA. The supply willcontinue for 3 years from the date of signing of Fuel Supply Agreement(s).

Limestone Block

Having sizable limestone deposits at one location allows one to have larger and rapidcapacity set up at one single location apart from cost efficiencies. With this objectiveCompany decided to participate in an e- auction conducted by Govt. of Chhattisgarh for alimestone deposit at Village Karhi Chandi District- Baloda Bazar- Bhatapara Raipur. Thedeposit is adjacent to Company's Cement Plant in Raipur. Company won the deposit in highcompetition with other bidders. The deposit was the first ever limestone deposit allottedby Government through the e-auction route. This deposit will augment Company's limestonereserve availability thereby allowing it to scale up its capacity.


Business Risk Evaluation and Management is an ongoing process within the Organization.The Company has a robust risk management framework to identify Rs. monitor mitigate andminimize risks and treats the same as a measure to identify business opportunities aswell. The framework helps timely identification and assessment of risks as well as ensurestimely implementation of appropriate mitigation measures.

The framework also allows regular review of the identified risks and their mitigationmeasures so as to ensure their relevance.

The Audit and Risk Management Committee monitors the risk management plan of theCompany for ensuring its effectiveness and reviews the risks inventory from time to time.The key risks identified by the Company and their mitigation measures are as under:

a) Demand Slackening and Supply Overhang in the Industry - The slowdown in demandgrowth and supply overhang due to continual capacity addition pose risk ofunder-utilization of cement capacities. Company has proactively adopted measures likemulti-brand strategy faster delivery to consumers and consistent quality to contain thisrisk. It also keeps adding capacity in markets where demand-supply conditions areconsidered to be relatively favourable. Company's foray into Eastern India market with itsplants in Bihar and Chhattisgarh helped it quickly gain extra market share. Company isfurther strengthening its market position in these markets. Company is now venturing intoSouthern India market by setting up an integrated cement plant in the State of Karnatakawhich will help it gain further market share and make it an all India player. All thesestrategic moves are helping Company in increasing its market share and better capacityutilization rates.

b) Availability of Water and Other Resources -

Because of constant increase in demand and depletion of traditional resources of wateravailability of ground water has been shrinking over the years. Company's plants inRajasthan are located in water deficient areas and as such conserving water becomes moreimportant. Realizing this Company installed Air Cooled Condensers (ACC) in all its powerplants which though involve additional capital expenditure have helped Company reducewater consumption significantly. This is quite significant as hardly any other power plantin the State has installed ACC in its plant. Also the Company has aggressively installedWaste Heat Recovery systems in its cement plants which use waste hot gases as their inputthereby eliminating the need for cooling of such gases and thus saving water. There isCompany-wide awareness at all levels to conserve water.

Secondly conservation of limestone which is a key input for cement production is quiteimportant. While Company has adequate limestone deposits at its existing operationalsites it has been making all efforts to optimize its usage thereby conserving thedeposits and enhancing their life. Additionally Company continuously undertakesexploratory activities at its existing deposits areas to find more reserves. To conservethe high grade limestone Company is mixing the same with low grade limestone and minesrejects and using it for clinker production.

c) Fuel Cost - Company sources fuel from open market and hence is exposed to volatilityof market prices of the fuel. Company has deployed multifuel usage strategy as well asbest technology which allows it to use different fuels and use the most economical fuelamong a basket of different fuels as per prevailing trends in the market. To furthermitigate the risk of price volatility Company during the year participated in e-auctionof coal linkages and secured linkages for 2.10 Lac ton per annum for its RaipurChhattisgarh plant. Additionally to reduce reliance on conventional fuel company hasaggressively invested in Waste Heat Recovery Power Plants thereby cushioned itself fromfuel price volatility to that extent.

d) Power Prices - Company sells its surplus power under short term contracts. This isbecause it does not have any long term arrangement for coal. This exposes it to pricevolatility in this segment. The Company is managing this risk by increasing its captiveconsumption and ensuring advance sale contracts for part of the capacity and keeping thebalance for running the same with market volatility.


In order to ensure orderly and efficient conduct of business Company's management hasput in place necessary internal control systems commensurate with its businessrequirements scale of operations geographical spread and applicable statutes. TheCompany has an in-house Internal Audit department manned by qualified professionals and anexternal firm acting as independent internal auditors that reviews internal controls andoperating systems and procedures. Company's internal control systems include policies andprocedures IT systems delegation of authority segregation of duties internal audit andreview framework etc. Company has also put in place a digital legal compliance managementsystem. Company has designed the necessary internal financial controls and systems withregard to adherence to company's policies safeguarding of its assets prevention anddetection of frauds and errors accuracy and completeness of the accounting records andtimely preparation of reliable financial information. Company has documented StandardOperating Procedures (SOPs) for procurement human resources sales and marketinglogistics finance and treasury financial reporting compliances and other areas of itsoperations.

The compliance to these controls and systems including SOPs is periodically reviewed bythe Internal Audit function and exceptions are reported. All material audit observationsand follow up actions thereon are reported to the Audit and Risk Management Committee. TheCommittee holds regular discussions with the auditors to ensure adequacy and effectivenessof the internal control systems and monitors implementation of audit recommendations.


A company may have the best technology best strategy and the best plant and machineryin its business but if it doesn't have the hearts and minds of the people who work withit none of it comes to life. At Shree everyone considers himself as a part of family andidentifies himself as part of a one whole. They treat themselves as an entrepreneur andcontribute in the working of the Company with a mindset as if every gain or loss caused tothe Company is his own. That's a value system that flows from the top management and is aguiding principle for all our people practices. During the year Company has continued itsfocus on people related programs aimed at attracting developing and retaining talentwithin organization.

a) Employee Engagement and Talent Management - Eighty percent of our success comes fromour people and twenty per cent from our product. Care for our people and ensuring theirholistic happiness and getting the best out of them is the focus of HR function at Shree.This is carried through the four pillars of HR-Recruitment Establishment Learning &Organisation Development & Employee Engagement. Recruitment gets people who arecompetent and culture fit. While the hiring process ensures that those who join theorganization are aligned to the organization culture our on-boarding process ensures thatnew joiners are thoroughly assimilated into the organization and are able to gel withCompany's culture and ways of working. Learning & Organisation Development focuses onbuilding capabilities for the future and driving change as per the needs of the business.

Employee Engagement works towards making everyone involved with the purpose and objectof the Company. This is achieved through creation of a conducive work-place and positiveenvironment where every member feels committed and strives to contribute meaningfully forthe goals set for himself for his function and ultimately for the Company.

Focus is given on maintaining work-life balance and increasing social engagement of theemployee. Unique 'Shree Family' culture which is hallmark of Company's human resourcepractices has made pivotal contribution in more engaged and happy employees of theCompany. On-going initiatives like 'Kutumb Utsav' endeavours to make families part of worklife of employees where family of an employee is invited for a day at his/her workplaceand have glimpses of his/her work life.

In order to measure the effectiveness of our people policies and practices andbenchmark them against the industry an annual employee engagement survey is conductedthrough a third party. The Engagement survey scores have seen a consistent upward trendover the years and this year the scores are at par with India's Top 50 best places to workfor.

During the year company has received following recognitions as a result of pro-peoplepolicies:- • Golden Peacock Award for HR Excellence 2016 instituted by the Instituteof Directors (IOD). The award is bestowed upon organizations that have achieved overall Jexcellence in their HR and people management practices.

• Company is ranked among top 5 companies for Employee Health & Wellness inIndia by Society of Human Resource Management India.

• Company is Great Place to Work-Certified™ by Great Place to WorkInstitute (GPW). The certification has been accorded after a rigorous and objective reviewof feedback on credibility respect fairness pride and camaraderie in workplace providedby employees during a Trust Index Employee Survey and Culture Audit of varietyoriginality all Inclusiveness human touch and integration conducted by GPW.Certifications by GPW are considered as gold standard for defining work culture and ethosacross organizations.

b) Occupational Health and Safety - Occupational health and safety is considered a highpriority in the Company. It is imbibed in our key corporate values. All plants follow astrict regimen of safety management protocols. Company continuously undertakes variousinitiatives aimed at providing a healthy and safe workplace to its people (full-timeemployees as well as contract workers). To strengthen its people's commitment towardssafety Company organises a 'Safety Meeting' on first day of each month at all its plantsites. This occasion brings all employees and workers of a unit at a common platform andprovides them a great opportunity for sharing of safety related aspects and encouragingall to adopt safe work practices in their respective areas of operations.

To ensure that the 'safety first' culture continues to grow; Company has developed apractice of periodically organising various safety related events viz. Road Safety WeekNational Safety Day Workshops by experienced Safety Professionals etc. Such regularevents give an opportunity for the Company's Safety Team to create excitement amongstpeople and thereby boost their awareness and keenness to adopt safe practices in theireveryday life. To ensure a safe work environment Company engages its entire workforce(including contract workers) to highlight any observed unsafe working conditions in theplant so that the same can be suitably and timely corrected. For the same Company hasdeveloped a 'Safety Observation Portal' in which any person can report any observed unsafecondition which then gets shared with the concerned to ensure immediate and appropriateredressal.

Company continues to adopt practices like 'Toolbox Talks' (wherein prior tocommencement of any maintenance activity engineers hold an informal talk with the groupof workers to discuss and highlight the safety hazards in the job to be undertaken)Safety Audits (undertaken by internal and external experts so as to identify and eliminatepotential safety risks) Mock drills (to build on emergency preparedness to meet anycontingency). All these initiatives have resulted in strengthening of safety systems andimproving people welfare.

During the year Company organized various workshops for middle and junior levelexecutives to explain the management's role in developing safety culture strategies forsafety culture improvement and various statutory safety provisions. Company voluntarilyinvited a team of nominated auditors from 'National Safety Council- Mumbai' (an autonomousbody set up by Ministry of Labour and Employment-Government of India) to conduct an'Occupational health and safety audit' of its cement and power plants at its Beawar andRas sites. While appreciating Company's existing practices the team of Auditorsappreciated the implementation of Hazard Identification & Risk Assessment (HIRA)system across all plant location of company for prevention of injuries.

Company is a member of Cement Sustainability Initiative (CSI) of World Business Councilfor Sustainable Development (WBCSD). Delegation of Member Companies of CementSustainability Initiative (CSI) visited company's Beawar Plant as a part of a Peer Visitprogram. The objective of the program was to review the implementation of recommended goodpractices and sharing of safety initiatives for improvement in safety culture. Visitingdelegates appreciated the efforts for sustainable improvement in safety culture.

c) Industrial Relations - Employee Relations remained cordial during the year. This hasenabled Company to build healthy relationship and resolve issues through dialogue anddiscussions.

Total number of employees as on 31st March 2017 were 5411.


Company's commitment to sustainable development goes beyond its operating boundariesas it continuously aims to add value to stakeholders by advancing knowledge and improvinglives. Sustainability is an intrinsic part of the Company's business model and is vital toits long term growth strategy. Company works with key stakeholders and focuses its effortstowards sustainable development through various initiatives for energy managementenvironment and social institution building. Company's sustainability initiatives arefocused on low carbon emission use of alternate fuels water & resource conservationand environment management. Sustainability matters are regularly discussed at Board level.

During 2016 Company attained a unique distinction of being the first cement Company inthe World accorded with the highest "5-Star" rating by Whitehopleman UK aninternational benchmarking firm that reviews cement plants across the globe and assignsthem star ratings based on various parameters like safety manpower productivity energyefficiency product quality equipment productivity equipment reliability andenvironmental impact. It is worth mentioning that no other cement company has everattained the perfect 5-Star rating during last 18 years of benchmarking done byWhitehopelman. The rating was assigned to the Company for its cement plants at Ras inRajasthan India. Prior to the above upgrade the Company has been getting 4 Star ratingfor last 15 years.

During the year company was awarded and recognised for its various initiatives towardssustainable development a few which are as under:-

• Sustainability disclosure Leadership Award 2016 under the umbrella of IndiaSustainability Leadership Summit & Award for transparency in disclosures towardsClimate Change.

• Environment Excellence Award 2016 instituted by "Mission Energyfoundation" under the category "Excellence in Implementation of NewEnvironmental Norms-Existing TPPs Category" Company was awarded this recognition forits innovative approach for installation of FGD unit and Synthetic Gypsum unit to cut downSOx emissions.

• Indian Bureau of Mines Ministry of Mines Govt. of India has awarded LimestoneMines of the

Company at Bangur City Ras and Bangur Nagar Beawar with 5 Star Rating under Star RatingSystem for Sustainable Development. A 'Star Rating' is awarded to the mining lease holdersfor their efforts and initiatives toward implementation of the Sustainable DevelopmentFramework. The best performing leases are given 5 Stars.

• Golden Peacock Environment Management Award 2016 by Institute of Directors NewDelhi in recognition of Company's efforts made in Environment Management Natural Resourceconservation Utilization of alternative fuel & resources emission control energyconservation etc.

• Company has won Green-Co Best Practices Award 2016 for its best practices inRenewable Energy and GHG Emission Reduction. The award was instituted by Confederation ofIndian Industries (CII).

Sustainability Initiatives - During the year the initiatives on sustainabilitycontinued with improved performance on several parameters of operations. Some of theinitiatives taken on the environment front during the year are as under:-

a) Power Generation from Waste Heat Recovery Plants - Company considers waste heatrecovery power plants as a potent source of renewable energy due to the various benefitsof these plants which include conservation of fossil fuels and water elimination of GHGemissions controlling fugitive emission etc. Company has invested in this renewableenergy source as a long term environment management plan. Company continues to maintainits distinction of having the largest Waste Heat Recovery capacity in World CementIndustry excluding China. These plants help in reducing Company's dependence on fossilfuel for power generation and consequently cut down the carbon emissions.

b) Solar Power - Company has identified Solar energy is one of the focus areas toimprove upon its carbon footprint. During the year Company has made a small beginning bysetting up a 62 KW Solar PV Power plant near its cement plant facility in Beawar. Theplant has employed three different type of variants including tracking system and helpunderstand the functioning of Solar power generation. Company is evaluating options"of setting up MW scale solar power plants near its cement plants in different states.

c) Alternative Fuels and Raw Materials

Our dedicated team continued its experiments during the year for working out solutionsto use alternative fuels and raw materials in the operations to reduce the consumption andusage of natural resources. Usage of other alternative fuels like paint sludge andindustrial wastes was increased during the year. Company's synthetic gypsum plant and FGDplant further continue to reduce its dependence on natural mineral gypsum.

d) Energy Conservation

Energy conservation and environment management is a focus area for the Company and isdriven at every level of operations. Company's dedicated "Energy Cell" continuedto find out innovative solutions of energy saving and improvement. Several measures likeinstallation energy efficient equipments optimization of processes modifying/improvising design & engineering of the equipments etc. were carried out to i mprovethe energy efficiency in the operations. The results of all these initiatives are visiblein continually reducing power and fuel consumption levels of the Company which are one ofthe lowest in the cement industry.

e) Environment Management

On environment management front measures were undertaken to control/reduce theemissions. In our plants Continuous Emission Monitoring System have been installed formonitoring and reporting of emission levels on a real time basis on websites of regulatoryauthorities.

f) Conservation of Water - Water being a scarce and precious resource finds utmostpriority in the Company's sustainability initiatives. During the year Company has createdrain water harvesting systems at Raipur plant with few more under development. This apartSewage Treatment Plants (STP) were installed for treatment of domestic waste water. Inaddition newly installed Waste Heat Recovery plant at Raipur plant is further adding tothe Company's continuous drive towards water consumption. At Ras plant also rain waterharvesting systems within and outside plant premises have been created for rain waterharvesting.

g) Sustainability Reporting

During the year Company released its 12th Corporate Sustainability Reportfor year 2015-16 detailing its efforts towards sustainability following GRI G4 guidelinesand an independent third party verifying agency has certified the report as"In-accordance" with comprehensive options under GRI G4 Guidelines. Company isalso releasing Business Responsibility Report (BRR) as part of its Annual Report coveringits compliances towards the Business Responsibility Principles enunciated by the Ministryof Corporate Affairs/ Securities and Exchange Board of India.

h) Carbon Disclosure

Project (CDP)-CDP is an international not-for-profit organization providing the globalsystem for companies to measure disclose manage and share vital environmentalinformation. Company is ranked 2nd best cement company in carbon relatedmetrics.


Company has always considered the community as its key stakeholder. It believes thatthe community around its operations should also grow and prosper in the same manner asdoes its own business. Accordingly Corporate Social Responsibility is an integral part ofthe Company's business. During the year company has been awarded "Excellence inCommunity Impact" Award instituted by Society of Human Resource Management India(SHRM) SHRM is the world's largest not-for-profit Human Resource association.

In order to oversee all its CSR initiatives and activities the Company has constituteda Board level Committee - "Corporate Social and Business ResponsibilityCommittee" (CSBR Committee). The major thrust areas of the Company includehealthcare education women empowerment infrastructure support integrated ruraldevelopment and conservation of natural resources.

The Annual Report on CSR activities of FY 2016-17 with requisite details in thespecified format as required under Companies (Corporate Social Responsibility Policy)Rules 2014 is attached at Annexure - 1 and forms part of this report.

The CSR Policy of the Company is attached at Annexure - 2 to the Directors' Report andforms part of the Annual Report. The same may also be accessed on the website of theCompany at link


The Company has a 100% subsidiary i.e. Shree Global Pte. Ltd. Singapore. There havebeen no operations in the subsidiary during the year. The Company is not having anyAssociate Company or Joint Venture. The shareholders who wish to receive a copy of AnnualAccounts of the Subsidiary Company may request the Company Secretary for the same. Asrequired by Section 129(3) of the Companies Act 2013 statement showing the salientfeatures of the financial statements of the Subsidiary Company in Form AOC-1 forms partof the Consolidated Financial Statements of Company.

The policy for determining material subsidiaries as approved by the Board can beaccessed on the website of the Company at link subsidiary-policy.pdf.


The Consolidated Financial Statements of the Company are prepared as required in termsof provisions of Companies Act 2013 and Listing Regulations by following the applicableAccounting Standards notified by the Ministry of Corporate Affairs and form part of theAnnual Report.


Pursuant to Section 134(5) of the Companies Act 2013 the Board of Directors to thebest of their knowledge and belief and according to the information and explanationsobtained by them state that:

a) In the preparation of the annual accounts for the year ended 31st March2017 the applicable accounting standards have been followed and there are no materialdepartures from the same;

b) Such accounting policies as are mentioned in the Notes to the Accounts have beenselected applied consistently and judgments and estimates have been made that arereasonable and prudent so as to give a true and fair view of the state of affairs of thecompany as at 31st March 2017 and of the profit of the company for the yearended on that date;

c) Proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;

d) The annual accounts have been prepared on a going concern basis;

e) Necessary internal financial controls have been laid down by the Company and thesame are commensurate with its size of operations and that they are adequate and wereoperating effectively; and

f) Proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.


• Board of Directors of the Company in their meeting held on 30thJanuary 2017 have foreclosed the existing term of Shri Prashant Bangur w.e.f. Close ofthe Business hour of 31st March 2017 and re-appointed him as Joint ManagingDirector of the Company for a period of 5 years w.e.f. 1st April 2017 subjectto approval of the Members in the ensuing Annual General Meeting.

• In accordance with the provisions of the Companies Act 2013 and Article 112 ofthe Articles of Association of the Company Shri Ramakant Sharma Director will retire byrotation in the ensuing Annual General Meeting and being eligible offers himself forre-appointment.

The Board recommends the re-appointment of Shri Prashant Bangur and Shri RamakantSharma. Items seeking approval of members are included in the Notice convening the AnnualGeneral Meeting (AGM).

The Independent Directors hold office for a fixed term of 5 years and are not liable toretire by rotation. In accordance with Section 149(7) of the Companies Act 2013 eachIndependent Director has given a declaration to the Company confirming that he/she meetsthe criteria of independence as specified under Section 149(6) of the Companies Act 2013and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.


In terms of requirements of Listing Regulations and provisions of Companies Act 2013the Board carried out annual evaluation of its own performance performance of itsCommittees Individual Directors including the evaluation of Independent Directors duringthe year.

The Institute of Company Secretaries of India (ICSI) had issued Guidance Note namely"A Guide to Board Evaluation" and suggested various performance evaluationparameters with evaluation forms for carrying out performance evaluation of all theDirectors Chairman Board as a Whole and Committees of the Board. The Securities andExchange Board of India has also issued Guidance Note on the Performance Evaluation on 5thJanuary 2017. Company had adopted the evaluation parameters as suggested by ICSI andSEBI.

The performance of the Board was evaluated by the Board on the basis of criteria suchas Board composition and structure effectiveness of Board processes information flow toBoard functioning of the Board etc. The performance of Committees was evaluated by theBoard on the basis of criteria such as composition of Committees effectiveness ofCommittee working independence etc.

The Board and Nomination cum Remuneration Committee evaluated the performance ofindividual Director on the basis of criteria such as attendance and contribution ofDirector at Board/Committee Meetings adherence to ethical standards and code of conductof the Company inter-personal relations with other Directors meaningful and constructivecontribution and inputs in the Board/Committee meetings etc.

For the above evaluation the Board members completed questionnaires providing feedbackon different parameters as already sated above including on performance ofBoard/Committees/Directors engagement levels independence of judgment and othercriteria. This is followed with review and discussions at the level of Nomination cumRemuneration Committee and Board.

In a Separate meeting of the Independent Directors performance evaluation of Non-Independent Directors the Board as a whole and performance evaluation of Chairman wascarried out taking into account the views of Executive and Non-Executive

Directors. The quality quantity and timeliness of flow of information between theCompany Management and the Board which is necessary for the Board to effectively andreasonably perform their duties was also evaluated in the said meeting.

Company appointed an External Facilitator for the purpose of carrying out theperformance evaluation in a fair and transparent manner.


In order to acquaint the new directors with the Company a detailed presentation isgiven to them at the time of their appointment which covers their role duties andresponsibilities Company's strategy business model operations markets organizationstructure products etc. A detailed presentation along similar lines is sent to existingIndependent Directors also every year to keep them apprised of the above details.

As part of Board discussions presentation on performance of the Company is made to theBoard during its meeting(s). Plant visits are also arranged for Independent Directors fromtime-to-time for better understanding of the Company's operations.

The details of such familiarization programmes for Independent Directors are posted onthe website of the Company and can be accessed at link familiarization-programme-for-independent-directors.pdf.


The particulars relating to conservation of energy technology absorption foreignexchange earnings/outgo as required to be disclosed under the Companies Act 2013 is setout at Annexure-3 which forms part of this report.


Disclosures pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are provided at Annexure-4.

In terms of the provisions of Section 197(12) of the Companies Act 2013 read withRules 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 a statement showing the names of employees and other particularsof the top ten employees and employees drawing remuneration in excess of the limits asprovided in the said rules are set out in the Board's Report as an addendum thereto.However in terms of provisions of the first proviso to Section 136(1) of the CompaniesAct 2013 the Annual Report is being sent to the members of the Company excluding theaforesaid information. The said information is available for inspection at the RegisteredOffice of the Company during working hours and any member interested in obtaining suchinformation may write to the Company Secretary and the same will be furnished on request.


Statutory Auditors

M/s. B R Maheswari & Co LLP Chartered Accountants who are the Statutory Auditorsof the Company hold office till the conclusion of the ensuing Annual General Meeting.They have given their report on the Annual Financial Statements for Financial Year2016-17. The Audit Report does not contain any qualification reservation or adverseremark.

As per the provisions of Section 139 of the Companies Act 2013 the term of office ofM/s. B R Maheswari & Co LLP as Statutory Auditors of the company will conclude fromthe close of the ensuing Annual General Meeting of the Company.

The Board of Directors places on record its appreciation for the services rendered byM/s. B R Maheswari & Co LLP as the Statutory Auditors of the Company.

Subject to the approval of the Members the Board of Directors of the Company hasrecommended the appointment of M/s. Gupta & Dua Chartered Accountants (ICAI FirmRegistration Number 003849N) as the Statutory Auditors of the Company pursuant to Section139 of the Companies Act 2013 for a period of 5 years commencing from the conclusion ofensuing 38th Annual General Meeting till the conclusion of 43rdAnnual General Meeting. Members' attention is drawn to a Resolution proposing theappointment of M/s. Gupta & Dua Chartered Accountants as Statutory Auditors of theCompany which is included at Item No. 5 of the Notice convening the Annual GeneralMeeting.

Secretarial Auditors

The Board had appointed M/s. P. Pincha & Associates Company Secretaries Jaipur asSecretarial Auditor of the Company to conduct Secretarial Audit for the Financial Year2016-17. They have submitted their report in prescribed format and the same is attached atAnnexure - 5. The Secretarial Audit Report does not contain any qualification reservationor adverse remark.

Cost Auditors

The Board has appointed M/s. K. G. Goyal & Associates Cost Accountants Jaipur(Firm Registration No. 00024) as Cost Auditors of the Company to conduct Cost Audit forthe Financial Year 2016 -17.


i. Composition of Audit and Risk Management Committee: The Committee comprises of ShriO. P. Setia as Chairman Shri Prashant Bangur Shri R. L. Gaggar Dr. Y. K. Alagh ShriNitin Desai Shri Shreekant Somany and Shri Sanjiv Krishnaji Shelgikar as other Members.All the recommendations made by the Audit and Risk Management Committee were accepted bythe Board.

ii. Details of Meetings of Board and its Committee: Details of the composition of theBoard and its Committees Meetings held and attendance of the Directors at such Meetingsare provided in the Corporate Governance Report. The intervening gap between the meetingswas within the period prescribed under the Companies Act 2013 and the ListingRegulations.

iii. Extract of the Annual Return: Extract of Annual Return of the Company is annexedat Annexure - 6 which forms part of this report.

iv. Particulars of Loan Guarantees or Investments: During the year 2016-17 there wereno loans or guarantees given by the Company which attracted the provisions of Section 186of the Companies Act 2013. The details of investments made covered under provisions ofSection 186 of the Companies Act 2013 are given in the Notes to the financial statements.

v. Particulars of Contracts or Arrangements with Related Parties: All Related PartyTransactions that were entered into during the financial year were on an arm's lengthbasis and in the ordinary course of business and were in compliance with the applicableprovisions of the Rs. Companies Act 2013 and the Listing Regulations.

All such transactions are placed before the Audit Committee for approval. Fortransactions that are foreseen or are repetitive in nature prior omnibus approval isobtained from Audit Committee.

There were no material Related Party Contract/ Arrangement/ Transactions made by theCompany during the year that would have required Shareholders' approval under provisionsof Section 188 of the Companies Act 2013 or of the Listing Regulations.

The Company has adopted a Related Party Transactions Policy duly approved by the Boardwhich is uploaded on the Company's website and may be accessed on the link party-transction-policy.pdf.

Details of Related Parties disclosures (transactions) are provided in the Notes toAccounts of the accompanying financial statements.

vi. Deposits from Public: The Company has not accepted any deposits from public coveredunder Chapter V of the Companies Act 2013 and as such no amount on account of principalor interest on deposits from public was outstanding as on the date of the balance sheet.

vii. Vigil Mechanism/Whistle Blower Policy: The

Company has adopted a whistle blower policy and has established the necessary vigilmechanism for employees and Directors to report concerns about unethical behaviour. Thepolicy provides for adequate safeguards against victimization of employees who avail ofthe mechanism and also provides for direct access to the Chairman of the Audit and RiskManagement Committee.

The whistle blower policy may be accessed on the website of the Company at link blower-policy.pdf.

viii. Remuneration Policy: Company firmly believes that it needs to structureremuneration of its people in a manner that is both competitive and satisfies the needs ofits people who are its real assets. Its remuneration policy is therefore designed toachieve this vision. The policy has been approved by the Board on the recommendation ofNomination cum Remuneration Committee. The

policy is applicable to Directors Key Managerial Personnel and other employees. Thepolicy provides that while nominating appointment of a Director the Nomination cumRemuneration Committee shall consider the level and composition of remuneration which isreasonable and sufficient to attract retain and motivate the Directors for deliveringhigh performance.

ix. Policy on Prevention Prohibition and Redressal of Sexual Harassment at Workplace:The Company has adopted a Policy on Prevention Prohibition and Redressal of SexualHarassment at the Workplace in line with the provisions of the Sexual Harassment of Womenat Workplace (Prevention Prohibition and Redressal) Act 2013 and the Rules made thereunder. Company has formed an 'Internal Complaints Committee' for prevention and redressalof sexual harassment at workplace. The Committee has four members and is chaired by asenior women member of the organization. The Company has not received any complaint ofsexual harassment during the financial year 2016-17.

x. Material Changes after the Close of Financial Year: There have been no materialchanges and commitments which have occurred after the close of the year till the date ofthis Report affecting the financial position of the Company.

xi. Significant and Material Orders passed by the Regulators or Courts: No significantmaterial orders have been passed by the Regulators or Courts or Tribunals which wouldimpact the going concern status of the Company and its future operations.


The Directors take this opportunity to express their deep sense of gratitude to itslenders Central and State Governments and the local authorities for their continuedco-operation and support. They also would like to place on record their sincereappreciation for the commitment hard work and high engagement level of every member ofthe Shree family without which the exemplary performance of the Company year after yearwould not have been possible. The Directors would also like to thank its variousstakeholders of the Company customers dealers supplies transporters advisors localcommunity etc. for their continued committed engagement with the Company. Lastly theDirectors would also like to thank you the Members of the Company for the confidence andtrust reposed in them.

For and on behalf of the Board
B.G. Bangur
Place: Kolkata Chairman
Date: 16th May 2017 DIN:00244196


[Pursuant to Section 134 (3) (m) of The Companies Act 2013 read with Rule 8 (3) of TheCompanies (Accounts) Rules 2014]

(A) Conservation of Energy

(a) Steps taken or impact on conversation of Energy

- Installed additional axial cooling fan start and stop with PLC as per the temperatureof equipment at Cement Mills

- Installed SPRS in Raw Mill Fan

- Changed conventional aeration blower with tri lobe blower

- Optimization of pressure setting of compressors

- Installed Star-Delta Starter in Gypsum Crusher

- PLC Interlocking for Plant Lighting at Cement Mill & Packing Plant

- Installation of VFDs in various applications

- Modified existing complete assembly of clinker hopper venting bag filter

- Modification in distribution transformer to control the external cooling fan runningby WTI Alarm temperature

- Installation of Solar lights at various locations

- Load centre P&V system operation interlocked with temperature by providing RTDand controller

- Grid Rotor Resistance (GRR) cooling blower interlocking done with fan speed at 100%load

- Installation of new limestone conveying belt instead of pneumatic conveying

- Installation of high capacity and energy efficient motor in limestone crushing mills

- Carried out boiler soot blower line inclination work to increase effectiveness ofsoot blower

- Waste heat recovery boiler refractory dry out process by klin heat instead of burners

- Reduction of Boilers false air ingress

- Installation of vibrating screens for un-burnt carbon recovery of boilers

- Overhauling of Boiler Feed Pump (BFP)

- Modifications in FGD for better productivity and reduced power consumption

(b) Steps taken by the company for utilizing alternate sources of energy

- Installation of 62 KW Solar PV power plant at Bangur Nagar Beawar

- Established waste heat recovery based power plants for generation of power throughWaste Heat Recovery of Cement Kilns

- Use of Industrial waste

(c) Capital investment on energy conservation equipments : Rs. 53.63 Crore

(B) Technology Absorption

(i) The efforts made towards technology absorption

The Company has leading Research & Development Centres at Beawar and Ras both ofwhich are recognized by Department of Science & Industrial Research (DSIR) Governmentof India. The Company considers R&D as an essential tool to achieve sustainablegrowth. The R&D Center has expertise in interdisciplinary approach which combineschemistry geology environment mechanical instrumentation energy management andbuilding material mechanics. The activities of the R&D Center is focused onidentifying alternate fuels utilizing waste material adopting newer technologiesimproving product quality with improved process and optimizing available resources. Itmakes continuous efforts towards adoption and implementation of new technologies whichassist in reducing the Company's carbon footprint. The Company is a member of Cementsustainability Initiative (CSI) which works under the aegis of World Business Council forSustainable Development (WBCSD). The Company's Ras cement plants have been awarded 5 Starrating by U.K. based Whitehopleman benchmarking agency.

Training is imparted to R&D personnel in advanced computational methods. Company'sR&D officials participate in various national and international seminars on technologyup-gradation adaptations and innovation and share knowledge at various global forums atnational and international platforms.

(ii) The benefits derived like product improvement cost reduction product developmentor import substitution

1. Energy Conservation

2. Conservation of natural resources

3. Utilization of waste and environment conservation

4. Improvement in equipment efficiency and productivity

5. Cost reduction

(iii) Information regarding imported technology (imported during last three years)

Details of technology imported Technology import from Year of Import Status implementation/absorption
- - - -

(iv) Expenditure incurred on Research and Development

2016-17 Rs. in Crore
Particulars Beawar RAS KKG SGU RGU JGU BGU PGU SRCP UPGU Kodla* Total
Capital Expenditure 0.03 6.53 0.46 0.15 0.15 0.13 - 0.14 - 0.09 0.17 7.85
Recurring Expenditure 5.91 5.13 0.31 0.35 0.46 0.43 0.45 0.14 0.79 0.73 - 14.70
Total Expenditure 5.94 11.66 0.77 0.50 0.61 0.56 0.45 0.28 0.79 0.82 0.17 22.55
Total R&D Expendituire as a % of Tu'nover 0.24%

*Project under execution

2015-16 (9 Months)

Capital Expenditure 0.01 0.08 0.23 - - 0.10 - 0.05 1.13 1.81 3.41
Recurring Expenditure 5.73 3.53 0.50 0.21 0.50 0.61 0.38 0.29 0.69 0.57 13.01
Total Expenditure 5.74 3.61 0.73 0.21 0.50 0.71 0.38 0.34 1.82 2.38 16.42
Total R & D Expenditure as a % of Turnover 0.27%

(C) Total Foreign Exchange Earning and Outgo

Rs. in Crore
Particulars 2016-17 2015-16
(9 Months)
Earned Nil Nil
Outgo 1388.57 572.26