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BSE: 530005 | NSE: INDIACEM | ISIN: INE383A01012
Market Cap: [Rs.Cr.] 2,644.81 | Face Value: [Rs.] 10
Industry: Cement - South India
Your Directors have pleasure in presenting their Sixty eighth Annual Reporttogether with audited accounts for the year ended 31st March 2014.
|Rs. in Crore|
|For the year ended 31st March|
|Profit / (Loss) before Interest, Depreciation & Exceptional Items||594.20||841.95|
|Less : Finance costs||353.65||307.75|
|Less : Depreciation / Amortization||276.39||281.84|
|Less : Exceptional items||126.56|||
|Profit / (Loss) Before Tax||(162.40)||252.36|
|Profit / (Loss) after Tax||(162.40)||163.55|
|Add : Surplus brought forward from last year||1192.57||1088.47|
|Less : Proposed dividend on Equity Capital (including Dividend Distribution Tax)||0.00||71.87|
|Less : Transfer to General Reserve||0.00||40.00|
|Less : Transfer to / (from) Debenture Redemption Reserve||0.00||(52.42)|
|Surplus carried forward||1030.17||1192.57|
In view of the net loss for the year ending 31st March, 2014, the Board ofDirectors has not declared any dividend for the year.
EMPLOYEES STOCK OPTION SCHEME
No fresh options have been granted under India Cements Employees Stock Option Scheme,2006 during the financial year.
No options at all have been granted under India Cements Employees Stock Option Scheme,2007.
DIRECTORS RESPONSIBILITY STATEMENT
Your Directors make the following statement in terms of Section 217(2AA) of theCompanies Act, 1956.
1. That in the preparation of the accounts for the year ended 31st March,2014, the applicable accounting standards have been followed.
2. That such Accounting Policies have been selected and applied consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company as at 31st March, 2014 and of the lossof the Company for the year ended on that date.
3. That proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act, 1956 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities.
4. That the annual accounts for the year ended 31st March, 2014 have beenprepared on a going concern basis."
MANAGEMENT DISCUSSION AND ANALYSIS
Pursuant to Clause 49 of the Listing Agreement, a Management Discussion and AnalysisReport is given as addition to this report.
Pursuant to Clause 49 of the listing agreement with Stock Exchanges, a report onCorporate Governance along with Auditors' Certificate of its compliance is included aspart of the Annual Report and is given in Annexure 'C' and Annexure 'D' respectively.Further, a declaration on Code of Conduct signed by the Vice Chairman & ManagingDirector in his capacity as Chief Executive Officer of the Company is given as Annexure'E'.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
A Corporate Social Responsibility (CSR) Committee was constituted by the Board ofDirectors at the meeting held on 10th February, 2014. The CSR Committee hassince approved the Company's CSR Policy and the CSR Budget for 2014-15.
A report on CSR activities of the Company during 2013-14 is given in Annexure 'F'.
LICENCES & RECOGNITIONS
The Company's Dalavoi cement factory was granted Licence For The EnvironmentalManagement Systems Certification in accordance with IS / ISO 14001:2004 by the Bureau ofIndian Standards, Chennai.
The Company's Sankari cement factory was granted Licence For The EnvironmentalManagement Systems Certification in accordance with IS / ISO 14001:2004 and TheOccupational Health & Safety Management Systems Certification in accordance with IS18001:2007 by the Bureau of Indian Standards, Chennai.
The Company's Malkapur cement factory has been recommended for granting Licence For theQuality Management Systems Certification in accordance with IS / ISO 9001:2008 by theBureau of Indian Standards, Chennai.
The Company's in-house magazine "Compass" was awarded a Certificate of Meritin an In-house House Magazine Contest in 2014.
Chennai Super Kings, the cricket team of the Chennai cricket franchise owned by yourCompany has won the Trophy at the recently concluded Champions League T20 Tournament 2014.
The Companys performance has been discussed in detail in the "ManagementDiscussion and Analysis" section.
With a poor GDP growth of sub 5% on an all India basis and with industrial activitytaking a beating, the performance of the core industries was severely affected during theperiod under review with cement being no exception.
According to the information published by Department of Industrial Policy and Promotion(DIPP), the industry had registered practically flat growth during the year under reviewagainst an estimated growth of 5% in the previous year. Given such a back drop, theperformance of the Company can be considered to be satisfactory as it could maintain theoverall sales at 100.37 lakh tons including clinker as compared to 100.55 lakh tons in theprevious year. The total sales and other income for the year was at Rs.4529.84 crores ascompared to Rs.4615.67 crores in the previous year. With huge supply overhang particularlyin the South, the selling price of cement went down substantially from the second quarterresulting in a top line erosion which reflected on the bottom line. The cost of productionwas impacted with increase in the price of Gypsum, Fuel, depreciation of rupee, highertransport charges resulting in a lower EBIDTA of Rs.594.20 crores as compared to Rs.841.95crores in the previous year. Finance cost including forex loss was higher at Rs.353.65crores (Rs.307.75 crores) while depreciation charges were lower at Rs.276.39 crores ascompared to Rs.281.84 crores in the previous year. There were also exceptional itemsrelating to provision for Fuel Surchage Adjustment claims of Andhra Pradesh DISCOMS andright of recompense to lenders together amounting for Rs.126.56 crores and resultant losswas at Rs.162.40 crores for the year as compared to a profit before tax of Rs.252.36crores in the previous year. The year also witnessed the annual bout of cost increases inwages due to settlement and cost of living index, monthly dosage of increase in the pricesof petroleum products, impact of power tariff increase by electricity boards of Tamil Naduand Andhra Pradesh during the year and huge depreciation of rupee against dollar. However,the impact was mitigated to certain extent with the fuller availability of power frompower plant in Tamil Nadu and the commissioning of the power plant in Andhra Pradesh.
During the year the performance of the division can be considered to be satisfactorywith deployment of the three vessels which had done 54 voyages in total in the coastaltrade and tramping. The total earnings of the division for the year was at Rs.67.72 croresas compared to Rs.58.57 crores in the previous year. In March 2014, the vessel "MVChennai Perrumai" was sold for a consideration of approximately $ 2.486 Million forscraping since it had served its economic life.
MERGER OF 2 SUBSIDIARIES WITH THE COMPANY
Application has been filed in the High Court of Judicature at Madras under Sections 391to 394 of the Companies Act, 1956 for completing the procedural requirements for theproposed Scheme of Amalgamation and Arrangement between Trinetra Cement Limited andTrishul Concrete Products Limited with this Company.
CHENNAI SUPER KINGS CRICKET LIMITED
The Board of Directors of the Company at the meeting held on 26th September,2014 approved the proposal to demerge Chennai Super Kings (CSK) - BCCI-IPL Franchise 20/20Cricket Tournament Team of your Company into a wholly-owned subsidiary of the Company, bytransferring its net assets at cost. The effective date of transfer will be 1stJanuary, 2015. Accordingly, a new wholly-owned subsidiary, by name Chennai Super KingsCricket Limited, is in the process of getting incorporated.
Pursuant to General Circular No.2/2011 No.51/12/2007-CL-III dated 08.02.2011 issued bythe Ministry of Corporate Affairs, Government of India, the Board of Directors has passeda resolution for sending the Balance Sheet of the Company without attaching a copy of theBalance Sheet, Statement of Profit and Loss, Report of the Board of Directors and theReport of the Auditors of the Subsidiary Companies namely Industrial Chemicals &Monomers Limited, ICL Financial Services Limited, ICL Securities Limited, ICLInternational Limited, Trishul Concrete Products Limited, Trinetra Cement Limited,Coromandel Electric Company Limited, India Cements Infrastructures Limited, PT. CoromandelMinerals Resources, Indonesia and Coromandel Minerals Pte. Limited, Singapore. However,pursuant to Accounting Standard 21 issued by the Institute of Chartered Accountants ofIndia, Consolidated Financial Statements presented by the Company include the financialsof the subsidiaries. The Company will make available these documents / details uponrequest by any member of the Company and its subsidiaries interested in obtaining thesame. The annual accounts of the Subsidiary Companies will also be kept for inspection byany member at the Registered / Corporate Offices of the Company and its SubsidiaryCompanies.
TRINETRA CEMENT LIMITED
During its third year of operation, the unit has achieved a clinker production of 8.82lakh tons (8.92 lakh tons) while the grinding was up by 7% at 12.19 lakh tons as comparedto 11.38 lakh tons. The sale of cement was also accordingly higher at 12.12 lakh tons(11.28 lakh tons). Significant improvements were achieved in the operating parameters witha reduction in power consumption and heat consumption due to stabilized operation of theplant during the year under review.
TRISHUL CONCRETE PRODUCTS LIMITED
During the year, the Company achieved a volume of 3.38 Lakh cu.m. of Readymix Concreteas compared to 3.48 Lakh cu.m. in the previous year. While the turnover of the Company wasmaintained at Rs.120 crores against Rs.121 crores in the previous year, there was amarginal improvement in profit before tax which was at Rs.84 lakhs as compared to Rs.25lakhs in the previous year.
COROMANDEL ELECTRIC COMPANY LIMITED
With improvement in the availability of natural gas, the plant was able to generate netunits of 204 Million KWH as against 193 Million KWH in the previous year. The company hadwheeled 49 Million KWH of power to the cement plants of India Cements Limited in TamilNadu and the balance power of 155 Million units was sold to other group captive and thirdparty consumers through the "Intra State Open Access". The total revenue earnedby the Company stood at Rs.120.26 crores (Rs.93.01 crores) and the net profit after taxwas at Rs.13.72 crores (Rs.17.80 crores) in the previous year. As per the policy, thedividend pattern was maintained at 9% for equity shares and at the respective coupon ratesof dividend for the participating / non-participating preference share capital. During theyear under review, the company had redeemed the Third / Fourth instalments of redeemablecumulative participating/non-participating preference shares on their respective duedates.
INDIA CEMENTS INFRASTRUCTURES LIMITED
The company during the year under review commenced operations by acquiring land fordevelopment. During the current year the company is expected to develop this project andwill also take up other projects.
PT. COROMANDEL MINERALS RESOURCES, INDONESIA AND COROMANDEL MINERALS PTE LIMITED,SINGAPORE
The company has already arranged for the first shipment of coal from the mines that isunder development through its subsidiary abroad. However, with the significant drop in theinternational price of coal, it was felt prudent to conserve the reserves of our mine. Allsteps are being taken to secure the mines fully and the benefits of this acquisition willaccrue to the company when the international price of coal starts increasing.
CONSOLIDATED FINANCIAL STATEMENTS
As prescribed by Accounting Standard 21 issued by the Institute of CharteredAccountants of India, the audited consolidated financial statements of India Cements Groupare annexed.
COROMANDEL SUGARS LIMITED
Coromandel Sugars Limited achieved a cane crushing of 7.02 lakh tonnes during the yearunder review, which was substantially less than the crushing of 7.94 lakh tonnes achievedin the previous year. However the sugar recovery had improved to 9.73% as against 9.44%achieved last year. The crushing during the previous year was higher on account of carryover cane from the earlier season available for crushing during the year.
The company has produced 68,240 tonnes of sugar (74948 in the previous year) and sold61170 tonnes (67188 tonnes in the previous year).
Though the crushing was lower by nearly 12% during the year, the power export wasmarginally higher at 258.55 lakh KWHs as against 253.80 lakh KWHs in the previous year,because of the improved functioning of the boilers.
The sales and other income was lower at Rs.198.85 crores as against Rs.234.35 crores inthe previous year because of reduced sales volume and drop of 8% in the selling price ofsugar. This has resulted in the Profit Before Interest and Depreciation being lower atRs.22.55 crores as against Rs.42.98 crores in the previous year. Profit Before Tax wasRs.0.79 crores as against Rs.22.78 crores in the previous year. During the current year,the company is expected to improve the crushing in view of the improved rainfall. Furtherthe power plant which is in an advanced stage of completion is expected to commencecommercial operations before the end of this year.
INDIA CEMENTS CAPITAL LIMITED (ICCL)
The main focus of the Company continues to be on Full Fledged Money Changing [FFMC]business, besides Travel & Tours and Forex Advisory Services. The Company's FFMCdivision continues to enjoy the status of Authorised Dealers, Category II. The whollyowned subsidiary viz. India Cements Investment Services Limited (ICISL) is in StockBroking. The FFMC division operates out of 17 branches and Travels division operates atChennai as an IATA accredited branch. The subsidiary ICISL runs its operations through 17centres. The Gross income from operations of ICCL was Rs.422.17 lakhs and that of ICISLwas Rs.134.65 lakhs for the year ended 31st March, 2014.
With the demand for cement being subdued, there was practically negligible growth inthe Southern market during the first half of the current fiscal resulting in loweringcapacity utilization further. The clinker production was lower at 36.10 lakh tons (39.29lakh tons) while the cement dispatch was at 46.09 lakh tons (50.84 lakh tons). Inaddition, the company achieved a sale and export of 3 lakh tons of clinker for the currentperiod under review. However, the cement prices have started improving from the month ofJuly 2014.
EXPANSION / MODERNISATION
The operation of the power plant at Vishnupuram which was commissioned during the yeargot stabilized quickly after its initial teething troubles and has been producing to itscapacity.
The company is also planning to install a new energy efficient Cement Mill Grindingfacility at Sankarnagar replacing the old cement mills for which necessary approvals havebeen sought.
Your Company has stopped accepting deposits from public and shareholders from 16thSeptember 2013. The total amount of fixed deposits including cumulative deposits, whichhad not become due but outstanding as at 31st March, 2014 stood at Rs.550.88Lakhs. Deposits totaling Rs.34.94 Lakhs that matured for repayment were neither claimed bythe Depositors nor instructions for renewal were received by the Company. Reminders wereissued to the depositholders and since the close of the financial year ended 31stMarch, 2014, deposits aggregating to Rs.16.50 Lakhs out of the above have either beenclaimed and paid or transferred to Investor Education and Protection Fund.
CONSERVATION OF ENERGY ETC.
The prescribed details as required under Section 217(1)(e) of the Companies Act, 1956are set out in the Annexure 'A'.
RESEARCH & DEVELOPMENT
During the year, your Company spent Rs.100.27 Lakhs towards revenue expenditure of theR&D department besides contributing a sum of Rs.73.30 Lakhs to National Council forCement and Building Materials (NCCBM), which carries out research on behalf of theindustry as a whole.
Industrial relations continued to remain cordial during the year.
In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with theCompanies (Particulars of Employees) Rules, 1975, as amended, the names and otherparticulars of the employees are to be annexed to the Directors' Report. However, as perthe provisions of Section 219 (1)(b)(iv) of the said Act, the Annual Report excluding theaforesaid information is being sent to all members of the Company and others entitledthereto. Any member interested in obtaining such particulars may write to the CompanySecretary.
IDBI Bank Limited, vide its letter No.CBG-SSCB.53/206/Nom.8 dated 08.10.2013, nominatedMr.G.M.Yadwadkar on the Board of the Company with effect from 23.10.2013 in the place ofMr.K.P.Nair. The nomination of Mr.G.M.Yadwadkar was withdrawn by IDBI Bank Limited, videits letter No.CBG-SSCB.53/122/Nom.8 dated 26.08.2014 and Mr.Nagaraj Garla was appointed onthe Board of the Company with effect from 25.09.2014 in the casual vacancy caused by thewithdrawal of nomination of Mr.G.M.Yadwadkar. The Board expresses its appreciation of thevaluable contribution made by Mr.K.P.Nair and Mr.G.M.Yadwadkar during their tenure asdirectors.
Mr.Nagaraj Garla, IDBI Nominee Director, will hold his office upto the date of theensuing Annual General Meeting and resolution for his election as director of the Companyis included in the Notice dated 12th November, 2014 convening the 68thAnnual General Meeting of the Company.
Under Article 109 of the Articles of Association of the Company, Mrs.Chitra Srinivasanretires by rotation at the ensuing Annual General Meeting of the Company and she iseligible for re-appointment.
Under Section 149(6) of the Companies Act, 2013, the Company proposes to appointMr.Arun Datta, Mr.R.K.Das, Mr.N.R.Krishnan, Mr.V.Manickam and Mr.N.Srinivasan (F&R),as independent directors of the Company to hold office for a term of two consecutive yearswith effect from 26th December, 2014 or upto the date of Annual General Meetingin 2016, whichever is earlier and resolutions for their election as independent directorsof the Company are included in the Notice dated 12th November, 2014 conveningthe 68th Annual General Meeting of the Company.
Brief particulars of Directors eligible for reappointment in terms of Clause 49 ofListing Agreement are annexed to the Notice dated 12th November, 2014 conveningthe 68th Annual General Meeting.
Messrs. Brahmayya & Co., and P.S.Subramania Iyer & Co., Chennai, the Auditorsof the Company, retire at the ensuing Annual General meeting and are proposed to beappointed to hold office from the conclusion of the 68th Annual General Meetinguntil the conclusion of the 71st Annual General Meeting.
Mr.S.A.Murali Prasad, Cost Accountant, Chennai has been appointed as Cost Auditor forthe year 2014-15 at a remuneration of Rs.10 lakhs and this has been approved by theGovernment of India. The remuneration is subject to approval of members and hence isincluded in the Notice dated 12th November, 2014 convening the 68thAnnual General Meeting of the Company.
Messrs. Capri, Gopalaiyer and Subramanian, Kalyanasundaram & Associates and Bala& Co., Chennai have been appointed as Internal Auditors for the year 2014-15.
The Directors are thankful to the Financial Institutions and the Bankers for theircontinued support. The Directors also thank the Central Government and the various StateGovernments for their support. The stockists continued their excellent performance duringthe year and the Directors are appreciative of this. The continued dedication and sense ofcommitment shown by the employees at all levels during the year deserve special mention.
|On behalf of the Board|
|Vice Chairman & Managing Director||Wholetime Director||Director|
|Place : Chennai|
|Date : 12th November, 2014|
ANNEXURE 'A' TO DIRECTORS REPORT FOR THE YEAR ENDED 31ST MARCH, 2014
Information pursuant to Section 217(1)(e) of the Companies Act, 1956 read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.
A. Conservation of Energy:
(a) Energy conservation measures undertaken:
i. Cooler mid air tapping for increasing the hot air temperature to dry the highermoisture in raw material and to ensure higher output from VRM.
ii. Installation of 48 MW power plant at Vishnupuram in Andhra Pradesh for energysecurity and on cost economics.
iii. Hydraulic drive of VRM Separator replaced with Variable Frequency Drive for energyimprovement.
iv. Installation of variable speed drive for cooler mill and cooler fans at some of theplants.
v. Optimization of raw mill output by installing cyclone separator at one of theplants.
vi. Modification of Kiln inlet venturi to allow more gas flow resulting in improvedcombustion efficiency and improved operations of the kiln avoiding inlet coating.
vii. Modification of the cooler first grate plate with conventional one undertakenresulting in saving in electricity energy consumption.
viii. Modification of the GCT outlet duct to improve air flow resulting in reduced loadon the pre-heater fan.
ix. Plant lighting modification done with the LED lighting.
x. Top cyclone roof modification done to reduce heat loss due to radiation and toreduce false air.
xi. Modification of dynamic separator to improve coal mill production and also toenable usage of Petcoke.
xii. Modification of VRM damper to reduce load on main motor.
(b). Additional investments and proposals, if any, being implemented for reduction ofconsumption of energy:
i. Dynamic Separator in Coal Mill section is being implemented in one more plant toreduce power consumption and to enable usage of Petcoke.
ii. VFD for raw mill, coal mill and cooler drives for the plants in Andhra Pradesh tooptimize power consumption.
iii. Modification of preheater top stage cyclones for improving efficiency and for lowpressure drop.
iv. Installation of new energy efficient cement grinding system at one of the plantsreplacing all the old conventional ball mills.
v. Introduction of coal stacker reclaimer at two of the plants to ensure optimumblending efficiency aiming at reduction in heat consumption.
vi. Bag house in replacement of ESP for kiln for better efficiency and improvement inoutput.
(c) Impact of measures at (a) and (b) above for reduction of energy consumption andconsequent impact on cost of production of goods: The measures that are proposed to betaken/under implementation are expected to reduce the power consumption by nearly 2 to 3units/Tn of cement and overall heat consumption by around 10-15 kcals per kg of clinker.However, during the year, the power consumption was higher than that of previous year by 1unit while the fuel consumption marginally came down.
(d) Total energy consumption and energy consumption per unit of production: Given inForm 'A' annexed.
B. Technology Absorption:
Efforts made in technology absorption: Particulars given in Form 'B' annexed.
C. Foreign exchange earnings and outgo:
(a) Activities relating to exports, initiatives taken to increase exports, developmentof new export market for products and services and export plans: There was no significantexport sales during the year under review.
|Current Year||Previous Year|
|Used Rs. lakhs||3930.22||3497.96|
|Earned Rs. lakhs||9166.38||824.53|
FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY
|Current Year||Previous Year|
|A. POWER & FUEL CONSUMPTION|
|Units - KWH - Lakhs||5526.36||7185.18|
|Total amount - Rs. Lakhs||32221.65||38530.99|
|Rate per unit - Rs.||5.83||5.36|
|(b) Own Generation|
|(1) Through Diesel/Furnace Oil Genset *|
|Units - KWH - Lakhs||524.64||637.96|
|Unit per Litre of Diesel/Furnace Oil-KWH||3.95||3.10|
|Cost per unit - Rs.||0.95||2.64|
|(2) Through Steam Turbine/Genset|
|Units - KWH - Lakhs||3394.24||1469.71|
|Cost per unit - Rs.||4.31||3.76|
|2. Coal for Kilns (various grades incl. Lignite)|
|3. HSD/Furnace Oil for Kilns|
|B. CONSUMPTION PER UNIT OF PRODUCTION|
|Standards (if any)|
|Electricity (KWH/Tn of Cement)||110||93.55||92.33|
|Coal Consumption Per Tn of Clinker||20-25||15.70||16.42|
|(Depending on Quality of Coal)|
|Diesel Oil/Furnace Oil per Tn of Cement (Litres)||0.07||0.07|
|* Including Power from Waste Heat Recovery Plant.|
FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO ABSORPTION
|Research and Development (R & D):||The Company has started an in-house R&D department during December 1999 with a specified objective of carrying of R&D Projects in development of expert systems for the mills and kilns optimisation, Benchmark studies of our Cement Plants, optimisation of process systems and parameters ensuring product improvement and cost reduction.|
|1. Specific areas in which R&D carried out by the Company|
|2. Benefits derived as a result of above R & D|
|3. Future plan of action|
|4. Expenditure on R & D:|
|(b) Recurring||A sum of Rs.100.27 lakhs has been spent during the year for the functioning of R & D department. Besides this, a sum of Rs.73.30 lakhs is the contribution to National Council for Cement and Building Materials (NCCBM) which carries out Research on behalf of the Industry.|
India Infoline Research
Futures & Options Quote
Expiry Date :
99.80 0.45 (0.45%)
Expiry Date : Option Type : Strike Price :
N Srinivasan , Vice Chairman & M.D.
Rupa Gurunath , Whole-time Director
Arun Datta , Director
R K Das , Director
Company Head Office / Quarters:
Integrated Enterprises (I) Ltd