Andhra Cements Ltd Directors Report.

To,

The Members

The Directors of your Company are pleased to present the Eighty First Annual Report together with the Audited Accounts of the Company for the Year ended 31st March, 2021.

FINANCIAL HIGHLIGHTS

Summary of the financial results of the Company for the year under report are as under: (Rs. in lakhs)

Current Year Previous Year
2020-21 2019-20
Net Sales 10.27 14292
Other Income 145.18 71
PBIDT (2779) (702)
Finance Cost 12972 12174
Depreciation 4753 4783
Profit/(Loss) before (20504) (17660)
exceptional Items
Exceptional Item - -
Profit/(Loss) before Tax (20504) (17660)
Deferred Tax 0 (828)
Net Profit / (Loss) (20504) (16832)
Other Comprehensive (28) (10)
Income
Total Comprehensive (20532) (16841)
Income

SHARE CAPITAL

The paid up equity share capital as at 31st March, 2021 is Rs. 293.52 lacs. During the period under review, your Company has not issued any shares with differential rights, sweat equity shares and equity shares under employees stock option scheme. Your Company has also not bought back its own shares during the period under review.

Dividend

No Dividend is recommended in view of the loss during the year and non-availability of any carry forward surplus.

OPERATIONS

During the year under review, Companys plants viz, Durga Cement Works (DCW) and Visaka Cement Works (VCW) were not operated due to some operational, technical reasons and also in view of the massive outbreak of the COVID-19 pandemic. Further, the plant operations of the Company are at halt due to shortage of working capital and consequential attachment of stocks and bank accounts of the Company by the GST authorities and Power disconnection by the concerned Electricity Board.

IMPACT OF COVID-19

Due to Covid-19 virus the Indian Economy is expected to witness a growth rate of around 7% for the year 2020-21 as compared to 4% in the year 2019-20. This is largely because of increase showing by manufacturing, construction and mining sectors. Lockdown imposed in the Country as a result of Covid-19 virus has had an unprecedented impact on the entire economy of the Country. There is uncertainty as to how long the impact of lockdown is expected to continue and when one can witness normalcy returning to the economy. In view of the above reasons our Companys performance also effected largely and stopped the entire plant operations since lockdown imposed by the Government of India due to viability and operational reasons.

KEY FINANCIAL RATIOS

Pursuant to Reg. 34(3) and 53(1) and Schedule V (B) of SEBI (LODR) Regulations, 2015, the Key Financial Ratios for the year 2020-21 are given below:

Sl. Particulars 31.03.2021 31.03.2020 Formula adopted
1 Debtors Turnover Ratio (Days) 49197.22 50.23 365 Days/(Net Revenue/ Average Trade Receivables)
2 Inventory Turnover Ratio (Days) 54064.22 39.04 365 Days/ Net Reveue/Average Inventories)
3 Interest Coverage Ratio (0.58) (0.45) (Profit before Tax +Interest)/(Interest + Interest Capitalised)
4 Current Ratio 0.05 0.08 Current Assets/(Total Current Liabilities-Security Deposits payable on demand-Current maturities of Long Term Debt)
5 Debt-equity Ratio (*) (*) Total Debt Total Equity
6 Operating Profit Margin Ratio (270.61) (0.17) EBITDA/Niet Revenue
7 Net Profit Margin Ratio (1996.74) (1.18) Net Profit/Net Revenue
8 Return on Networth (#) (#) Total Comprehensive Income/Average Networth

(*) Since equity is negative, ratio cannot be calculated. (#) Since Netwoth is negative, ratio cannot be calculated a. EBITDA denotes Profit before Interest+Tax+Depreciation.

b. Increase in Debtor Turnover Ratio is on account of reduction in Sales.

c. Reduction in Interest Coverage Ratio is due to reduction in Sales and Profit.

d. Current Ratio is reduced as current liability has increased due to reduction in Sales and Profit.

FINANCIAL STATEMENTS

As per the provisions of the Companies Act, 2013 and Regulation 34 of LODR, Companies are required to prepare financial statements to be laid before the Annual General Meeting of the Company. Accordingly, the financial statements along with the Auditors Report thereon, form part of this Annual Report.

As per section 136(1) of the Companies Act, 2013 the Financial Statements are available at the Companys website i.e www.andhracements.com.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the year under report the following changes took place in the Board of the Company:

1. Shri Pankaj Gaur and Shri Ram Bahadur Singh, Directors would retire by rotation at the ensuing Annual General Meeting and, being eligible, they offer themselves for re-appointment. Shri V.K. Jain passed away during the year and he ceased to be a Director of the Company w.e.f. 17th September, 2020. Shri S.D.M. Nagpal, Shri R.K. Pandey and R.K. Singh, independent Directors of the Company were retired on 29th September, 2020 as their 2nd term of appointment was completed. Shri K.V. Rajendran and Shri Suresh Chand Rathi were appointed as Additional Directors in the capacity of non-executive Independent Directors by the Board w.e.f 12th November, 2020.

2. During the year under report, the Board Meet 4 times, the details whereof are given in Report on Corporate Governance. The meetings of Board of Directors were held on 29.06.2020, 15.09.2020, 12.11.2020 and 13.02.2021.

3. All Independent Directors have given declaration that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) and 25(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

4. Pursuant to the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the Committees constituted by it. The manner in which the formal annual evaluation has been carried out has been explained in the Report on

Corporate Governance.

5. The Board has on the recommendation of the Nomination & Remuneration Committee adopted a policy for selection and appointment of Directors, Senior Management and their remuneration. Brief features of the said Policy are:

a) Nomination and Remuneration Committee shall formulatethecriteriafordeterminingqualifications, positive attributes and independence of Director;

b) Nomination and Remuneration Committee shall identify persons who are qualified to become Director and persons who may be appointed in Key Managerial and Senior Management Position;

c) While selecting Independent Directors, the Nomination and Remuneration Committee shall identify persons of integrity who possess relevant expertise and experience required for the position;

d) Non-executive/Independent Director may receive remuneration by way of sitting fees for attending meetings of Board or Committee thereof, as amount as may be approved by the Board of Directors within the limits prescribed under the Companies Act, 2013 and the rules made thereunder, provided that the amount of such fees shall not exceed Rs. One lakh per meeting of the Board or Committee or such amount as may be prescribed by the Central Government from time to time. The sitting fee for Independent Directors and Women Directors shall not be less than the sitting fee payable to other Directors;

e) An Independent Director shall not be entitled to any stock option of the Company;

f) Other employees of the Company shall be paid remuneration as per the Companys HR policies. The breakup of the pay scale and quantum of perquisites including employers contribution to PF, pension scheme, medical expenses, etc. shall be as per the Companys HR Policy.

The Company shall reimburse actual expenditure incurred by the Directors in the performance of their duties as per the rules and policies of the Company.

Remuneration of other employees shall be reviewed/decided on an annual basis or earlier if deemed necessary, based on performance appraisal of individual employees taking into account several factors such as job profile, qualifications, seniority, experience, commitment including time commitment, performance and their roles and duties in the organization.

g) The age, term of appointment and retirement of Managing Director/Whole-time Director shall be determined in accordance with the provisions of Companies Act, 2013 read with Rules made thereunder;

h) Managing Director/Whole-time Director and Key Managerial Personnel shall be paid the remuneration within the overall limit prescribed under the Companies Act, 2013 and the Rules made thereunder as recommended by the Nomination and Remuneration Committee subject to the approval of the Board;

i) The Company shall provide suitable training to Independent Directors to familiarize them with the Company, their roles, rights, responsibilities in the Company, nature of the Industry in which the company operates, business model of the Company etc;

The Company has received necessary declarations from all the Independent Directors under Section 149(7) of the Companies Act, 2013 that they meet the criteria of independence as provided in Section 149 (6) of the Companies Act, 2013. Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV of the Companies Act, 2013. As required under Regulation 25(7) of LODR, the Company has programmes for familiarization for the Independent Directors.

Board Evaluation: Pursuant to Section 134(3)(p) of the Companies Act, 2013 and Regulation 25(4) of LODR, Independent Directors have evaluated the quality, quantity and timeliness of the flow of information between the management and the board, performance of the Board as a whole and its Members and other required matters. Pursuant to Regulation 17(10) of LODR Board of Directors have evaluated the performance of Independent Directors and observed the same to be satisfactory and their deliberations beneficial in Board/Committee Meetings.

The Company had formulated a code of conduct for the Directors and Senior Management personnel and the same has been complied.

All Related Party Transactions that were entered into during the financial year were on an arms length basis and were in the ordinary course of business. During the year, the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transaction.

The policy on materiality of Related Party Transactions and dealing with Related Party Transactions as approved by the Board may be accessed on the Companys website at www. andhracemens.com.

The details of Related Party Transactions as required under IND AS-24 are provided in the accompanying financial statements forming part of this Annual Report. Form AOC- 2 pursuant to Section 134 (3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is set out as "Annexure-A" to this Report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant and material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

AUDITORS

1. Statutory Auditors

As the members are aware in accordance with the provisions of Section 139 of the Companies Act, 2013 and the Rules made there under, M/s. M/s Dass Gupta & Associates, Chartered Accountants (Firm Registration No. 000112N), were appointed as Statutory Auditors of the Company in the 80th Annual General Meeting (AGM) for a period of Five consecutive years till the conclusion of 85th AGM of the Company to be held in the year 2024. The Company has obtained a written consent and a certificate from the Statutory Auditors to the effect that their appointment, if ratified, would be in accordance with the conditions as prescribed and they fulfill the criteria laid down in Section 141 of the Companies Act, 2013.

Based on the recommendations of the Audit Committee, the Board has recommended the ratification of appointment of M/s. Dass Gupta & Associates, Chartered Accountants as Statutory Auditors of the Company for the Financial Year 2021-22 and to hold office till the conclusion of the 85th Annual General Meeting to be held in the year 2024, subject to ratification of their appointment in every AGM.

2. Cost Auditors

For the Financial Year 2021-22, the Board of Directors of the Company have on the recommendation of Audit Committee, appointed M/s. J.K. Kabra & Associates, Cost Accountants (Firm Regn No. 00009) Cost Auditors of the Company for auditing the Cost Records relating to the product ‘Cement. In this regard, they have submitted a certificate certifying their independence and their arms length relationship with the Company. The Resolution for ratification of their remuneration has been included in the Notice for ensuing Annual General Meeting.

3. Secretarial Auditor

Secretarial Audit Report for the financial year ended on 31st March, 2021, issued by M/s. Savita Jyoti Associates, Company Secretaries, in form MR-3 forms part of this report and marked as "Annexure-B".

The said report does not contain any qualification or observation requiring explanation or comments from Board under section 134(3)(f)(ii) of the Companies Act, 2013.

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, on recommendations of the Audit Committee, the Board has appointed M/s. Savita Jyoti Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company for the financial year ended 31st March, 2022.

AUDITORS REPORT

The Directors of the Company wish to state that the Statutory Auditors of the Company has given modified opinion on the Financial Statements of the Company for the year ended 31st March, 2021. The qualification in the Financial Statement and management response to the aforesaid qualification is given under:

Auditors Qualification Managements Reply
We refer to Note 35 to the financial statements in respect of preparation of financial statements of the Company on going concern basis for the reasons stated therein. The management has approached the financial institutions/banks for restructuring of the debts which is under consideration by major lenders. Further, Expression of Interest Notice was also issued through consortium of lenders for sale of plants situated in Andhra Pradesh. The company hopes to meet obligations/liabilities and is of the view that the company will continue as a going concern.
During the financial year ended March 31, 2021, the Company has incurred losses of Rs.20,532 lakhs, resulting into accumulated losses of Rs. 1,07,530 lakhs and erosion of net worth as at March 31, 2021 The Company has obligation towards fund based borrowings aggregating to Rs.1,20,035 lakhs as on March 31, 2021 including working capital loans and interest accrued thereon. The Companys current liabilities have exceeded current assets as on March 31, 2021. These matters require the Company to generate additional cash flow to fund the operations as well as payments to lenders, creditors, statutory dues and other obligations. These conditions indicate the existence of a material uncertainty that may cast significant doubt on the companys ability to continue as going concern and therefore the company may be unable to realize its assets and discharge its liabilities in the normal course of business. Accordingly, we are unable to comment on the consequential impact, if any on the accompanying financial statements.

Note: The Auditors have also drawn attention to some items under Emphasis of matter in their report. However, they have not modified their opinion in respect of the said matters.

EXTRACT OF ANNUAL RETURN

In accordance with Section 92(3) of the Companies Act, 2013 extract of the Annual Return in Form MGT-9 for the year ended 31st March, 2021 is attached as "Annexure-C" which forms part of this Report.

In accordance with Clause 22 of Secretarial Standard on Report of the Board of Directors (SS4), a copy of Annual Return for the year ended 31st March, 2021 has been placed on the website of the Company.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

During the year under review, there were no Loans, Guarantees and Investments made/given as per the provisions of Section 186 of the Companies Act, 2013.

RISK MANAGEMENT

The Company has formulated a Risk Management Policy. The Risk Management Policy, which inter-alia:

a) define framework for identification, assessment, monitoring, mitigation and reporting of risks.

b) ensures that all the current and future material risk exposures of the Company are identified, assessed, quantified, appropriately mitigated, minimized and managed i.e to ensure adequate systems for risk management.

The Risk Management policy of the Company is available at the Companys website.

CORPORATE SOCIAL RESPONSIBILITY

In view of absence of required profit/net worth/turnover, the provisions of the Companies Act, 2013 relating to Corporate Social Responsibility are not applicable to the Company.

MATERIAL CHANGES AND COMMITMENTS

In terms of Section 134(3) (i) of the Companies Act, 2013, except as disclosed elsewhere in this report, no material changes and commitments which could affect the Companys financial position have occurred between the end of the year and date of this report.

CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A Report on Corporate Governance as stipulated by Regulation 34(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, forms part of this Annual Report along with the required Certificate from the Practicing Company Secretary confirming compliance with conditions of Corporate Governance.

As required under Regulation 34(2)(c) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Management Discussion & Analysis Report on operations and financial position of the Company has been provided in a separate section which forms part of this Annual Report.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Companies Act, 2013, the Directors, based on the representation received from the operating management, certification by CEO and CFO to the Board of Directors and after due enquiry, confirm that in respect of the Audited Annual Accounts for the year ended 31st March, 2021 that:

a) in the preparation of the annual accounts, the applicable accounting standards had been followed and that there were no material departures;

b) the Directors had, in consultation with the Statutory Auditors, selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company for the year ended 31st March, 2021 and the loss of the Company for that period;

c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the Directors had prepared the annual accounts on a going concern basis;

e) the Directors had laid proper internal financial controls to be followed and that such internal financial controls were adequate and were operating effectively; and

f) Directors had devised proper systems to ensure compliance with the provisions of all applicable laws that such systems were adequate and operating effectively.

WHISTLE BLOWER POLICY AND VIGIL MECHANISM

The Company has in terms of the provisions of Section 177(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meeting of Board and its Powers) Rules, 2014 and Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, formulated Whistle Blower Policy and Vigil Mechanism for Directors and employees under which protected disclosures can be made by a whistle blower. (www.andhracements.com)

INTERNAL FINANCIAL CONTROL

The Internal Financial Controls with reference to financial statements as designed and implemented by the Company are adequate. During the year under review, no material or serious observation has been received from the Internal Auditors of the Company for insufficiency or inadequacy of such controls.

The information about internal financial controls is set out in the Management Discussion & Analysis Report which forms part of this Report.

DEPOSITS

The Company has not accepted or renewed any amount falling within the purview of provisions of Section 73 of the Companies Act 2013 ("the Act") read with the Companies (Acceptance of Deposit) Rules, 2014 during the year under review. Hence, the details relating to deposits as also requirement for furnishing of details of deposits which are not in compliance with Chapter V of the Act is not applicable.

However, In accordance with the Modified Rehabilitation Scheme (MS-08), the Company is settling the claims lodged by fixed deposit holders. As per the provisions of Section 125 of the Companies Act, 2013 the company is in the process to transfer the Unclaimed Amount to the ‘Investor Education and Protection Fund.

REDEMPTION OF PREFERENCE SHARES

The payments against these shares are being made as and when claimed by the holders. It has not been possible to locate the addresses of the shareholders, despite notices being published in daily newspapers. No claims were received during the year. There is no liability for dividend on these shares.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said Rules forms part of this Annual Report and is provided as "Annexure- D" in this report.

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided as

" Annexure- D" to this Report.

PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Second Amendment Rules, 2015 (as per the notification dated 4th September, 2015), is annexed herewith as "Annexure-E".

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMAN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has in place an Anti Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Woman at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year under review, no complaints were received by the Company.

FUTURE OUTLOOK

GDP growth for the year 2020-21 was around 7% which is lower than other previous years before Covid-19 pandemic and expected to increase in the year 2021-22. However, there are several uncertainties which can have an impact in the projected GDP. The outlook of oil prices continue to be hazy both on upside and downside. It is expected that the demand for cement would decline and will growth plugging to a lower for the financial year 2021-22. Our plants are fully equipped and supported with grinding units at strategic locations. Our company will be able to make suitable measures to take advantage of the present economic momentum in the coming years.

THREATS

The Sanctions imposed on countries from where India is imposing maximum crude would adversely affect the fuel price, which would have negative impact on our manufacturing and transportation cost. The Mines and Minerals (Development & Regulation) Amendment Act, 2015, (MMDR) has made the Limestone as a notified mineral. Pursuant to the amendment act, grant of mining lease for all notified minerals shall be through public auction process by the respective State Governments. Since, several State Governments do not have the required geological data of availability of the reserves and they are not able to proceed with the auction. This is delaying the process of getting fresh mining leases allotted.

OPPORTUNITIES

The Companys products have always been perceived to possess superior quality standards in the market and the company has been enjoying a high level customer satisfaction index. Hence, products will be sold at higher profitability and revenue. The Company is planning to introduce products catering to specific customers to meet their customized applications and requirements.

ACKNOWLEDGEMENT

The Board places on record its sincere appreciation and gratitude to various Departments and Undertakings of the Central Government, and State Governments, Financial Institutions, Banks and other authorities for their continued co-operation and support to the Company. The Board sincerely acknowledges the faith and confidence reposed by the Shareholders in the Company.

For and on behalf of the Board
K.V. RAJENDRAN
Place : New Delhi Chairman
Date : 26th June, 2021 [DIN: 02468551]