Dear Members,
We have pleasure in presenting this 41st Annual Report of the Company
together with the Audited Statements of Accounts, Management Discussion and Analysis for
the year ended 31st March, 2023.
Financial Results:
Rs in Crs
| Particulars |
2022-23 |
2021-22 |
| Revenue from operations (Rs in Crs) |
237.08 |
218.30 |
| Profit before tax |
-8.02 |
9.11 |
| Current Tax |
0 |
2.25 |
| Comprehensive Income |
0.40 |
0.05 |
| Total Comprehensive Income |
-8.24 |
8.47 |
Even though, the turnover and net price realisation was increased, the net profit has
been adversely effected due to hike in the price of coal.
Elevated prices of pet coke and imported coal as a result of geo-political events
adversely impacted the entire cement industry. As a result, the power and fuel cost shot
up significantly during 2022-23 compared to the previous year.
Cement Industry Structure, Developments and future outlook
Sri Chakra Cement Limited, is among Indias growing leading cement companies, renowned
for its hassle-free, homebuilding solutions. Unique products tailor-made for Indian
climatic conditions, sustainable operations and initiatives that advance the Companys
philosophy of contributing to the larger good of the society, have made it the trusted
cement brand in India.
By integrating sustainability into operational and growth planning, we have continued
to reduce its carbon footprint by reducing thermal and electrical energy intensity,
implementing Solar Power Systems at the plants, and increasing the use and capacity of
generating renewable energy. We continue to play a pivotal role in building a greener and
more sustainable future.
The world economy faced multiple headwinds such as escalating geopolitical tensions,
constrained supply chains and high inflation. India proved to be an outlier, demonstrating
resilience and growing by 7.2% GDP during FY 2023, aided by strong private consumption,
growth-supportive policies, and continued government spending on infrastructure and
logistics, among others. However, inflation stayed high, prompting a series of rate hikes
by the Reserve Bank of India which, in turn, impacted demand.
The Indian governments strong infrastructure push under the Prime Ministers Gati
Shakti (National Master Plan for Multimodal Connectivity) initiative is likely to
contribute significantly towards raising industrial competitiveness. Further, the
Production Linked Incentive (PLI) scheme announced by the government is not only
bolstering the countrys manufacturing sector but also creating enormous employment
opportunities. Till December 2022, more than 650 applications were approved across 13
sectors under the scheme. The scheme facilitated private sector capex to the tune of Rs.
3.5 lakh crore over the next 3-4 years. Further, with global businesses looking at
diversifying their supply chains from Chinas dependence, India is in the sweet spot to
become a manufacturing hub for the world.
India is also witnessing a massive digital transformation. The mass-scale digital
infrastructure is second to none, which is further validated by the creation of the India
stack. Digitalisation is accelerating e-commerce growth, changing the retail consumer
market landscape and attracting leading multinationals in technology and e-commerce to the
Indian market.
While global economic growth is expected to moderate further in 2023 before marginally
increasing in 2024, India is likely to grow 6.0%-6.5% in FY 2024, the fastest among major
economies in the world. Higher public sector capex, coupled with fresh capital investments
by the private sector, will help drive medium-term growth, while digitalisation and
efficiency-enhancing reforms will enhance productivity. Further, Indias transition to
clean energy and mobility through green hydrogen and electric vehicles provides
significant investment opportunities. Semiconductors and IT product manufacturing are
expected to position India attractively in global trade.
The long-term growth drivers of the economy remain intact, coupled with a large and
fast-growing middle-class driving consumer spending. The rapidly growing domestic consumer
market as well as the large industrial sector have made India an important investment
destination for a wide range of multinationals across manufacturing, infrastructure, and
services. Further, India is fast becoming the startup capital of the world, attractive
sizeable foreign investments, driven by its young population including a large GenX
segment, and technology edge.
However, a complex interplay of geopolitical events including the neighbouring
countries, high inflation and consequently elevated interest rates could pose risks to
future economic growth.
India is the worlds second-largest cement producer, accounting for over 7% of the
global cement installed capacity. Cement production in India grew at 7.6% for FY 2023 (368
million tonnes) driven by strong demand from housing and infrastructure sectors. The
housing sector accounts for the majority of Indias cement consumption, followed by the
infrastructure sector, and commercial and industrial building constructions.
The outlook for cement sectors is favourable on the back of higher growth opportunities
in the housing and infrastructure segment. Government in the Union Budget 2023-24 has
allocated Rs. 11.4 billion for the creation of safe housing (rural and urban), sanitation
and increasing road connectivity.
With a busy construction season ahead with the preelection spending kicking in. The
Industry is expected to see a volume growth of 6-8% going forward and is likely to reach
390-400 million tonnes.
Opportunity and Threats:
Our cement plant being strategically located with high quality limestone mines very
near to the plant can cater to the neighbouring States of Tamil Nadu, Karnataka, Goa and
Kerala where the realizations are better. The management is putting its best efforts to
revive the industry to normal levels.
State Of Companys Affairs:
During the year under review, the Companys profitability is impacted due to heavy
competition created by the major players in the industry by way of addition of huge
capacities in and around the plant area. However, in order to meet such competition, your
company has initiated efforts to reduce the cost of production on account of power and
fuel as a part of which the Company has already setup captive solar power generation unit
at Srikalahasti with a total installed capacity of 5 MW for with an investment of about Rs
30 Crores
Management Outlook of Macro Economy And Industry:
The International Monetary Fund (IMF) has projected Indias GDP growth to be 5.9% in
FY2024, and 6.3% in FY2025, driven by strong private sector investment and supported by
improvement in transport infrastructure and logistics. The Union Budget 2023-24 has
allocated a record amount of Rs.10 Lakh Crores for capital expenditure, which will boost
infrastructure development, create jobs, and stimulate demand in the economy.
Indias economic growth rate is outpacing many advanced and emerging economies thanks
to a strong emphasis on domestic consumption. The Governments strong infrastructure push
under National Master Plan for Multimodal Connectivity, logistics development, and
industrial corridor development will help drive market competitiveness and fuel future
growth. The improvement of labour market conditions and consumer confidence will increase
private consumption. Additionally, contact intensive services have already on a rebound,
nearing pre COVID levels.
Despite this, potential risks still exist for Indias growing economy. OPEC production
levels could push up oil prices, possible issues with financial sectors of advanced
countries could increase risk aversion across financial markets and impede capital flows,
and an the El Nino event may weaken Indian monsoon rains, thus affecting food security
Cement Industry – Development and Outlook:
Cement industry continued with its growth momentum this year as well and cement demand
estimated to have reached 393-398 Mn Tons level showing a healthy growth of ~11-12% in FY
2022-23. The solid growth is attributed mainly to the tailwinds observed in demand from
infrastructure and rural housing segments.
Demand from infrastructure segment maintained its strong undertone as a result of
higher government spending across different infra segments. Within infrastructure, demand
from roads segment was the highest contributor followed by railways, irrigation and urban
infrastructure. In fact, over the years, there has been a steady rise in share of
infrastructure in total cement demand. Its share, which was around 11-13% in FY 13 has
risen to 26-28% in FY23.
Rural housing segment witnessed improved demand owing to higher rural incomes resulting
from better yields and rise in crop prices. Also, there was strong demand observed from
"Pradhan Mantri Awas Yojana – Gramin" as well as "Pradhan Mantri Awas
Yojana – Urban" which are part of GOIs "Housing for All by 2022"
mission. In FY 2022-23, housing construction from PMAY-G witnessed construction of around
40 lakh dwelling units while that in PMAY-U witnessed the same at around 16 lakh units.
On the supply side, industry is estimated to have added ~30 MTPA of new cement capacity
during FY 2022-23. The overall capacity utilization levels are estimated to be around
68-69% for year 2022-23. As regards, industry margins, the same saw contraction on account
of elevated power & fuel costs.
Going forward, in FY 2023-24 the cement demand is expected to maintain its healthy
momentum. The demand growth is expected to be majorly led by Governments thrust on Infra
spending and its flagship housing schemes under Pradhan Mantri Awas Yojana. Demand is also
likely to witness enhanced government spending before the Lok Sabha election in 2024.
Infrastructure segment, as a result of ~24% enhanced outlay in budgeted spending of
central government on key infra sectors, shall be main demand driver. New projects and
capacity expansion plans announced by players in capital intensive sectors such as steel
and start of work in PLI led projects & Data Centers, are likely to spur demand from
the industrial and commercial segments. Expectation of normal monsoon and muted impact of
El Nino along with continuation of healthy prices for farm produce suggests that overall
demand in general and rural cement demand in particular should be healthy. Industry
margins are also expected to improve because of softening of international coal prices and
declining crude oil prices. All in all, FY 2023-24 is expected to witness continuation of
healthy cement demand
Board of directors, Key managerial personnel and changes during the year:
The Board is duly constituted and balanced as required under the Companies Act, 2013
and the Listing Regulations/Agreement read with the policy of the Board of Directors
appointment and remuneration in terms of the provisions of Section 134(3)(e), read with
sub-section (3) of Section 178 of the Companies Act, 2013.
Sri V V S R Anjaneyulu (DIN: 00698980) has resigned as the Director of the Company
w.e.f 22nd April, 2022.
Sri N. Krishna Mohan (DIN: 00698772) has resigned as the Chairman and Managing Director
of the Company w.e.f 30th April, 2022.
Sri K Sriram (DIN: 05103429) was designated as the Wholetime Director of the Company
w.e.f 1st June, 2022
Sri Vijayulu Reddy Kaliki (DIN: 03154329) was regularised as Director (Independent
Category) at the previous Annual general Meeting.
DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to section 134(3) (c) of the Companies Act, 2013, the Directors confirm that:
• In the preparation of Annual Accounts, the applicable accounting
standards had been followed and there are no material departures from the same.
• The Directors have selected such accounting policies and applied
them consistently and made judgements and estimates that are reasonable and prudent so as
to give true and Fairview of the state of affairs of the company at the end of the
financial year and the profit and loss of the company for that period.
• Proper and sufficient care for the maintenance of adequate
accounting records in accordance with the provisions of this Act for safeguarding the
assets of the company and for preventing and detecting fraud and other irregularities.
• Annual accounts were prepared on a going concern basis., and
• Directors had laid down internal financial controls to be followed
by the company and that such internal financial controls are adequate and were operating
effectively.
• The proper system was devised to ensure compliance with the
provisions of all applicable laws and that such systems were adequate and operating
effectively.
DECLARATION BY INDEPENDENT DIRECTORS:
The company has received necessary declaration from all independent Directors under
section 149(7) of the Companies Act, 2013 that they meet the criteria of Independence laid
down in section 149(6) of the Companies Act, 2013.
BOARD MEETINGS:
The Board met four times during the year under review and the particulars of meeting
held and attended by each Director are detailed in the Corporate Governance Report.
POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION
The companys policy lays down the criteria for determining qualifications, positive
attributes, Independence of a director and other matter as provided under sub-section (s)
of section 178 of the Companies Act, 2013.
The current policy is to have an appropriate mix of executive and independent directors
to maintain the independence of the Board in terms of the provisions of section 178. The
Board consists of four executive directors and one non executive director and five
independent Directors. We affirm that the remuneration paid to the directors is as per the
terms laid out in the nomination and remuneration policy of the company.
AUDIT COMMITTEE:
Pursuant to the provisions of section 177 of the Companies Act, 2013 the company board
constituted the audit committee with the following directors.
• Sri P Ramamoorthy, Non-Executive Independent Director as Chairman.
• Sri N Gopal, Non-Executive Independent Director
• Smt. K. V. Naga Lalitha, Non-Executive Director.
AUDITORS:
• Statutory Auditors: At the 37th Annual General Meeting held on 23nd
day of September 2019; M/s Satyanarayana & Co., Chartered Accountants, Secunderabad,
were appointed as Statutory Auditors of the Company to hold office till the conclusion of
41st Annual General Meeting of the Company. In this regard, the Company has received a
certificate from the auditors to the effect that if they are reappointed, it would be in
accordance with the provisions of section 141 of the Companies Act, 2013.
• Cost Auditors: M/s Naval & Associates, Cost Accountants,
Hyderabad, are the Cost Auditors appointed by the company Board for auditing the cost
accounts of the Company for the year ended 2022-2023.
• Secretarial Auditors: M/s. Puttaparthi Jagannatham & Co.,
Company Secretaries, Hyderabad are the Secretarial Auditors appointed by the board of
directors of the Company for the FY 2022-23.
• Internal Auditors: M/s C Ramachandram & Co, Chartered
Accountants, Hyderabad, were appointed to conduct the internal Audit and review of
internal financial controls on financial statements and other matters for better
performance of the Company which is being implemented by your Company from time to time.
Disclosure of particulars of employees and related matters:
The information required pursuant to Section 197 of the Companies Act, 2013 read with
Rule 5(1) of the Companies (Appointment and Remuneration of Managing Personnel) Rules,
2014 and Companies (Particulars of Employees) Rules, 1975, in respect of employees of the
Company and Director is given in a separate annexure to this Report. Particulars of
employees as per the Rule-5(2) of The Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014, are not applicable to the company.
Statutory auditors comment in the independent auditors report and reply:
With regard to the observations of the Statutory Auditors regarding the confirmations
from some of the parties, it is hereby clarified that the company has obtained
confirmations from major accounts and some minor accounts, the Board felt that it was
required as there is no impact on the accounts.
Other Disclosures
Board Committees:
The details of composition, terms of Reference, meetings and attendance particulars of
various committees of Board such as Audit Committee, Nomination and Remuneration
Committee, Corporate Social Responsibility Committee, Stakeholders Relationship Committee,
Share Transfer Committee are provided in the Corporate Governance Report vide annexure to
this Directors report. The intervening gap between the meetings of the Committees are
within the prescribed period under the Companies Act, 2013 and the listing regulations.
The Committees are constituted with optimum balance of independent,
executive/non-executive directors in line with the Companies Act, 2013 and the Listing
Regulations, 2015.
Loans, Guarantees or Investments:
Details of Loans, Guarantees and investments covered under the provisions of section
186 of the Companies Act, 2013 are given in the notes to the Financial Statements.
Contracts Or Arrangements With Related Parties:
All related party transactions that were entered into during the financial year 2022-23
were on an arms-length basis and in the ordinary course of business and were in compliance
with the applicable provisions of the Companies Act, 2013 and the Listing Regulations.
There were no material related party contracts or arrangements or transactions made by the
company. The Company has adopted a related party transactions policy duly approved by the
Board, Details of the related party disclosures (transactions) are provided in the
accompanying financial statements. The disclosure in form AOC-2 is not applicable.
Vigil Mechanism/ Whistle Blower Policy:
The Company has adopted a whistle blower policy ad has established a clear vigil
mechanism and directors to report concerns unethical behaviour. The policy provides for
adequate safeguards against victimisation of employees who avail of the mechanism and also
provides for direct access to the chairman of the audit committee. The whistle blower
policy may be accessed on the website of the company.
Prevention of Sexual Harassment at Workplace:
The Company has adopted a policy on prevention, prohibition and redressal of sexual
harassment at the work place in line with the provisions of the "The Sexual
Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 and
Rules made thereunder, your Company has constituted Internal Complaints Committee (ICC).
The Committee has four members and is chaired by a senior women member of the
organisation. It is stated that there are no such complaints received by the
committee/company during the year under review.
Material Changes after close of the financial year:
There have been no material changes and commitments which have occurred after the close
of the year till date of this report, effecting the financial position of the company.
Segment-wise or product-wise performance:
The Company is mainly engaged in the business of manufacturer of OPC 53/ 43 and PPC
grade cement and captive solar power generation. During the year under review, the company
has Single Reportable Segment i.e., Cement.
Risk and concerns:
The risks and concerns which are applicable to all industries and specially to cement
industry can be said to be prevalent in the case of your company as well. Few of the major
risks are given below. Periodical increases in the cost of inputs leading to impact on
margins
• Uncertainty in coal supplies and increases in the prices.
• Failure or deficiency in the monsoon which may lead to reduction/
loss of revenue due to reduction in demand for cement
• Changes in Government policy impact the costs, demand and supply.
• The drying up of Government contracts through irrigation,
infrastructure and housing programs was major reason for hitting the Industry
• In addition to high cost of power and coal, high freight costs,
inadequate infrastructure, non-availability of wagons and poor quality of coal and heavy
taxes/royalty levies are the other concerns.
Internal control systems and their adequacy:
The Companys internal control system in place has a process designed to take care of
various controls and audit requirements. It ensures effectiveness in the operations and
protection of the companys assets from any possible loss and unauthorised use. It also
ensures proper and correct data being recorded. The design of the transactions is such
that there is an adequate, appropriate and need based control on the activities/ business
processes of the company. The Internal control system is augmented by an established
internal audit system which is carried out by outside chartered accountants of the repute
and experience. Regular reviews of internal audit are carried out to ensure robustness of
the systems and control environment. The internal auditors submit their reports to the
audit committee of the Board of Directors for their review. It is also ensured that the
internal audit scope is adequate and their reviews are well directed to achieve the
desired objectives. The committee also reviews the adequacy and effectiveness of the
internal control systems and suggests improvements from time to time. The Compliance to
the legal and statutory requirements is given utmost importance as also to ensure
efficiency in operations/ reporting and controls. All parameters in operations/ activities
are monitored regularly to ensure desired results.
Human resources development and industrial relations:
The main focus of the company is to attract, develop and retain talented employees in
order to achieve the business objectives. The company has made efforts in the field of
training and development, congenial work environment, providing challenging work
opportunities etc. The Company has framed HR practices in order to strengthen and building
people talent for achieving the business objectives. Initiatives to develop leadership
lines as well as enhance technical and functional capability with special focus on
nurturing young talent are taken. Young managers are groomed by providing higher
responsibilities, Focus remains on gaining cross functional knowledge to enable meaningful
participation of employees all across of the company in innovation and process
improvement. With the company entering in next phase of growth, the nurtured talent pool
will enable smooth transition to new growth trajectory. During the year employee relations
remained cordial. This has enabled company to build healthy relationship and resolve
issues through dialogue and discussions.
Annexures to the Directors Report
Corporate Social Responsibility: The Company has constituted a Board level Committee
"Corporate Social Responsibility Committee" in terms of section 135 and Schedule
VII of the Companies Act, 2013 read with the provisions of the listing agreement/
regulations. CSR activities as detailed in a separate annexure to this annual report as
required under Companies (Corporate Social Responsibility Policy) Rules, 2014 vide
Annexure 1 and the same may also be accessed on the companys website.
Conservation of energy, technology absorption, foreign exchange earnings and outgo: The
information relating to the conservation of energy, technology absorption, foreign
exchange earnings/outgo, as required under the Companies Act, 2013 and the rules made
there under is set out in Annexure 2 which forms part of this Annual Report.
Secretarial Audit Report: The Secretarial Audit Report issued by M/s. Puttaparthi
Jagannatham & Co., Company Secretaries, Hyderabad for the year 2022-23 is attached to
this Directors Report vide
Annexure-3. Annual Return:
The Annual Return of the company has been placed at the website of the company and can
be accessed at http://srichakracement.com
Corporate Governance Report:
Your Company has taken adequate steps to adhere to all the stipulations laid down in 27
of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015. A report
on the Corporate Governance is included as a part of this report. Certificate from the
Secretarial Auditors of the company M/s. Puttaparthi Jagannatham & co, Company
Secretaries, confirming the compliance with the conditions of Corporate Governance as
stipulated under above regulations is included as a part of this report vide ANNEXURE-4.
Risk Management Policy:
The Company has been addressing various risks impacting the company and the policy of
the company on risk management is set out in the Management Discussion and Analysis which
forms part of this report.
Depository System
Your Company has connectivity with both the Depositories i.e. National Securities
Depository Limited (NSDL) and Central Depository Service (India) Limited (CDSL). As per
the SEBI (Listing Obligations & Disclosure Requirements) (Fourth Amendment)
Regulations, 2018, vide Gazette notification dated 8th June, 2018 & 30th
November, 2018 mandated that Share transfer shall be mandatorily carried out in
dematerialized form only w.e.f. from 1st April, 2019. In view of the numerous
advantages offered by the Depository System, members are requested to avail the facility
of Dematerialization of the Companys shares on either of the Depositories mentioned as
aforesaid.
Board Evaluation:
The evaluation of all the directors and the Board as a whole was conducted based on the
criteria and framework adopted by the Board. The evaluation process has been explained in
the Corporate Governance report section in this Annual Report. The Board approved the
evaluation results as collated by the Nomination and Remuneration Committee. None of the
Independent Directors are due for reappointment.
Details Of Difference Between Amount Of The Valuation Done At The Time Of One-Time
Settlement And The Valuation Done While Taking Loan From The Banks Or Financial
Institutions Along With The Reasons Thereof:
The aforementioned clause is not applicable to the Company during the financial year
ended as on 31st March, 2023 as the Company has not taken any loan from the banks or
financial institutions under the above mentioned scheme and accordingly there is no
instance of one time settlement. Your Directors state that no disclosure or reporting is
required in respect of the following items as they are not apprised there were no
transactions on these items during the year under review.
• Details relating to deposits covered under chapter 5 of the Act.
• No significant or material orders were passed by the Regulators or
courts or tribunal which impact two going concern status and the companys operations in
future.
• There are no such instances of frauds reported by Auditors under
Section 143(12) and hence the reporting clause is not applicable to the Company.
• No cases were filed pursuant to the sexual harassment of women at
workplace (prevention, prohibition and Redressal) Act, 2013 as per the internal complaints
committee (ICC). No Dividend was recommended by the Board.
• Your Directors do not propose to carry any amount to General
Reserve Account.
• No Issue of equity shares with differential rights as to Dividend,
voting or otherwise.
• No Issue of shares to employees of the company under any revenue.
• Corporate social responsibility policy not applicable for the year
under report.
• The Company has complied with all the applicable Secretarial
Standards issued by The Institute of Company Secretaries of India and notified by the
Central Government
• The Company has maintained cost records under Section 148(1) of the
Companies Act, 2013
• The Business Responsibility Reporting as required by Regulation
34(2) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015,
is not applicable to your Company for the financial year ending March 31, 2023
• There is no change in the nature of the business of the company
during the year under report.
• There were no such companies which have come or ceased to be the
companys subsidiaries, joint ventures or associate companies during the year.
• There were no significant material events occurred between the
closure of the books of accounts for the year 2022-23 and the date of this report.
• The company has adequate internal financial controls system over
financial reporting and such internal financial controls over financial reporting were
operating effectively as at 31st March 2023 based on the internal controls over
financial reporting.
• During the period under review, there was no application made or
any proceeding pending under the Insolvency and Bankruptcy Code, 2016
Disclosure of Remuneration:
A Statement as required under section 197 of Companies Act, 2013 and Rule 5(1) of
Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is enclosed
as Annexure 5.
Cautionary Statement:
Statements made in this report describing the Companys projections, estimates,
expectations or predictions may be ‘forward looking predictions within the meaning of
applicable securities laws and regulations. Actual results may differ from such estimates,
projections, etc. whether expressed or implied. Factors which would make a significant
difference to the Companys operations include availability of quality raw materials,
market prices in the domestic and overseas markets, changes in Govt. Regulations and tax
laws, economic conditions affecting demand/ supplies and other environmental factors over
which the Company does not have any control.
Acknowledgement:
Your directors take this opportunity to express their sincere appreciation for the
support and cooperation received from the various departments of the Government, Bankers,
Suppliers, Customers and Shareholders. The Directors also wish to place on record their
appreciation for the committed services of the companys Employees.
|
|
For and behalf of the Board |
|
|
For Sri Chakra Cement Limited |
|
Sd/- |
Sd/- |
| Place: Hyderabad |
K Vijay Kumar |
K Sriram |
| Date: 26.05.2023 |
Managing Director |
Whole-time Director |
|
DIN: 00769568 |
DIN: 05103429 |
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