Cera Sanitaryware Ltd Directors Report.
The Directors have pleasure in submitting the Annual Report together with the Statement of Accounts of your Company for the year ended 31st March, 2019.
The summary of your Companys financial performance is given below:
|(Rs. in Lakhs)|
|Year ended March 31, 2019||Year ended March 31, 2018|
|Profit before Depreciation and|
|Taxes & Exceptional item||20301.36||17679.44|
|Deducting there from Depreciation of||2284.83||2235.76|
|Profit before Tax||18016.53||15443.68|
|Deducting there from taxes of:|
|- Current Year||6015.29||5009.99|
|- Deferred Tax||495.91||408.54|
|Profit for the year||11505.33||10025.15|
|Add/Less: Other comprehensive|
|Income (Net of tax)||(103.68)||(90.21)|
|Income for the year.||11401.65||9934.94|
Transfer to Reserves
The Company has transferred a sum of Rs. 5857.61 Lakhs to General Reserve in the current year (previous year Rs. 6359.68 Lakhs).
Highlights / Performance of the Company
Turnover (Net of GST / Excise) of the Company for the year increased by 13.70% to Rs. 133943.49 Lakhs as compared to Rs. 117808.72 Lakhs previous year.
Profit before Depreciation and Taxes & Exceptional Items for the year increased by 14.83% to Rs. 20301.36 Lakhs as compared to Rs. 17679.44 Lakhs previous year.
Profit after Tax for the year increased by 14.76% to Rs. 11505.33 Lakhs as compared to Rs. 10025.15 Lakhs previous year.
During the year, the Company continued with its dominant position in the Indian market place. The Companys plant continued to operate at an optimum mix of high capacity utilization and production of technologically complex products. The Company continues to capitalize on evolving consumer tastes by introduction of differentiated products and maximise the use of Company owned experience center which serve as a large format consumer touch point.
Your Company has been constantly upgrading its technology, increasing automation, upgrading consumer visible manufacturing processes via robotic glazing machines which help in evenness of glaze and also save glaze, your Company is now going in for further mechanization of casting. The Company developed 3D printing machines allow designs to be prototypes in a manner of weeks, facilitating quicker time to market of new designs.
The business has attained critical mass, the product offerings span most consumer tastes in price and design. In Faucetware manufacturing, continuous technology upgradation programs have enabled higher productivity and minimum human intervention in the manufacturing process. Commissioning of the Zamac plant, has substituted imported zamac handles. Your Company has now embarked on further mechnisation and automation of production process.
Launch of new prototypes many of which are launched as products with the help of 4 axis 3D printing and robotic grinding and polishing, your Company has been able to differentiate products based on design, finish and consumer preferences.
Yoour Company continued its aggressive launches. This year the Company launched water heaters, which have been well accepted in the market.
Senator by CERA
Your Company premium offering, Senator by CERA aimed at discerning customers has been received overwhelmingly in the market. Senator consists of Sanitaryware, faucets, mirrors and wellness.
JEET, your Companys sanitaryware range aimed at affordable segment, has been readied for relaunch.
The Italian luxury designer sanitaryware, ISVEA, launched by your Company, exclusively in India, has established with over 50 showrooms.
Your Company entered modular kitchens market, with the launch of Senator Cucine, in CERA Style Studio in Kochi, in the presence of over 400 trade associates, developers and architects. Senator cucine is made to measure in Italy.
Your company had a megs launch of new range of tiles, which was witnessed by over 500 dealers and 200 architects from all over India. The event established CERAs supremacy in range and quality of tiles.
Apart from the existing JV with Anjani Tiles Limited in Andhra Pradesh, your Company also entered into a JV with Milo Tiles LLP in Morbi, thus helping it in reaching out to West, North and East markets.
During the year company has entered into a Joint Venture with Milo Tiles LLP (Earlier Crown Ceramics an established production facility since 2015) at Morbi, Gujarat with 26% Equity amounting to Rs. 806 Lakhs for producing high end Glazed Vitrified Floor Tiles of 7000 Sq. Mtr. per day.
The Joint Venture unit for manufacture of corrugated boxes has now achieved stabilised production. The products are now available on a just in time basis, built to the exacting specifications for the Company. The capacity utilization has increased considerably during the year. CERA holds an equity of 51%.
Your Company has entered into Joint venture for Polymer Products unit for manufacture of seat covers and cisterns with 51% Equity amounting to Rs. 370 Lakhs.
Dubai & Sharjah operations
As business conditions in the Gulf Countries have changed, so has the companys strategy. The focus of the company will be township projects sourced by the companys dealers, and the need to use the company owned Cera Sanitaryware Ltd FZC- Sharjah, UAE will no more be required.The Board of Directors at their meeting held on 14th May, 2019 have approved to discontinue the business operations of Cera Sanitaryware Ltd FZC- Sharjah, UAE.
Green Energy Unit
As a part of national policy and Green initiative, which was initiated in 1995, Company has stabilized power cost by generation of electricity through non-conventional sources for captive use through wind and solar.
The installed capacity of Non-Conventional Energy unit of the company was 13.825 M.W, out of which a portion of 3.5 M.W Wind Power unit at Vill.Patelka and Vill.Lamba Dist.Porbandar, Gujarat were sold due to completion of their useful life. The current installed capacity of Non-Conventional Energy unit of the Company stands to 10.325 M.W.
The non-conventional Wind and Solar Power has produced 188.27 lakhs KWH for captive use.
Conservation of energy, technology absorption and foreign exchange earnings and outgo:
Conservation of energy v
The Company has two sources of its main energy, viz. Natural Gas - GAIL and Sabarmati Gas Ltd., for operating its sanitaryware plant. The pricing of both sources differ, as GAIL sources gas from isolated wells in and around Ceras manufacturing facility, and is able to contract gas at a lower price over prevailing market pricing. Medium term contracts with these suppliers are renewed on a periodic basis. For energy conservation, the company has installed fuel efficient burners to control gas consumption and in addition to this, every effort is done to adapt any technological developments in energy conservation by the Company.
The second energy, viz. electricity, required for running the machineries, is supplied by the local Discom. To compensate within the energy consumption by way of electricity, your Company has an installed capacity of Wind Turbines of 8.325 MW and 2.00 MW Solar Plant which generates about 90% of the requirements and gets offset against monthly consumption of the energy bill.
Technology absorption and foreign exchange earnings and outgo
The information on 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) Rules, 2014, is annexed herewith as a separate Annexure- III.
The Company has one Subsidiary Company namely Anjani Tiles Limited which became subsidiary of the Company w.e.f. 23rd November, 2015. It has started commercial production from 1st April, 2016. The Company has also two subsidiary LLP viz. Packcart Packaging LLP and Race Polymer Arts LLP. During the year Race Polymer Arts LLP was incorporated with 51% capital contribution by the Company for manufacturing of polymer products like seat cover, cistern, fittings and other products made from polypropylene (PP).
There are no associate companies within the meaning of Section 2(6) of the Companies Act, 2013 ("Act"). Further there has been no material change in the nature of business of the subsidiary.
The Company does not have any material subsidiary. The Policy on Material Subsidiary framed by the Board of Directors of the Company is available on Companys website at the link https:// www.cera-india.com/corporate/policy-for-determining-material-subsidiary/.
Those Shareholders who are interested in obtaining a copy of the audited annual accounts of the subsidiary may write to the Company.
In terms of provisions of sub section (3) of Section 129 of the Act, the salient features of the financial statement of the subsidiaries is set out in the prescribed form AOC-1 attached herewith as a separate Annexure - IV to this Annual Report.
Particulars of contracts or arrangements with related parties
All transactions entered with Related parties as defined under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 during the financial year were in the ordinary course of business and on an arms length basis, the details of which are included in the notes forming part of the financial statements.
There were no material related party transactions entered during the year. Accordingly, information in form AOC - 2 is not annexed. Further no materially significant related Party transactions were made by the Company with Directors, Key Managerial Personnel or other designated Persons, which may have a Potential Conflict with the interest of the Company at large. All related party transactions were placed before the Audit Committee and also the Board for approval. The Policy on related Party transactions as approved by the Board is uploaded on the Companys website i.e. www.cera-india.com.
Corporate Social Responsibility
Your Company has always laid emphasis on progress with social commitment. We believe strongly in our core values of empowerment and betterment of not only the employees but also our communities. Following this principle the Company had laid the foundation of a comprehensive approach towards promoting and facilitating various aspects of our surrounding communities.
The Board has approved a policy for Corporate Social Responsibility and same has been uploaded on the website i.e. www.cera-india.com
As required under Section 135 of the Companies Act, 2013 and to demonstrate the responsibilities towards Social upliftment in structured way, the Company has formed a Policy to conduct the task under CSR, during the year.
The report on Corporate Social Responsibility (CSR) Activities along with Annexure as per Rule 8 of Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed as a separate Annexure - V.
Directors Responsibility Statement
In compliance of Section 134 (5) of the Companies Act, 2013, the Directors of your Company confirm:
that in the preparation of annual accounts, the applicable accounting standards have been followed and there are no material departures; Rs.that such accounting policies have been selected and applied 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 as on 31st March, 2019 and of the Profit of the Company for the year ended on that date.
that proper and sufficient care has been taken 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;
that the annual accounts have been prepared on a going concern basis.
that internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and were operating effectively.
that proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Managerial Remuneration and Employees
Details required pursuant to Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are enclosed as a separate Annexure - VI.
Details of employees required pursuant to Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexed as a separate Annexure, however it is not being sent along with this annual report to the members of the company in line with the provisions of Section 136 of the Companies Act, 2013 and rules made there under. Members who are interested in obtaining these particulars may write to the Company Secretary at the Registered Office of the Company. The aforesaid Annexure is also available for inspection by members at the Registered Office of the Company, 21 days before and up to the date of the ensuing Annual General Meeting during the business hours on working days.
Company has not offered its shares to its employees under ESOS during the year under review.
Company has not sanctioned loan to any of its employees for purchase of Companys shares under any scheme.
Corporate Governance and Management Discussion and Analysis
Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, report on Corporate Governance along with Practicing Company Secretarys Certificate on its compliance and Management discussion and Analysis have been included in this Annual Report as per separate Annexure - VIII and Annexure - I respectively.
Business Responsibility Reporting
As required under Regulation 34(2)(F) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, Business Responsibility Report forms part of the Directors Report and is enclosed as separate Annexure - IX.
Number of Meetings of the Board
The Board of Directors, during the financial year 2018 - 19 duly met 5 times on 18-04-2018, 03-05-2018, 09-08-2018, 01-11-2018 and 29-01-2019 in respect of which meetings, proper notices were given, and the proceedings were properly recorded and signed in the Minutes Book maintained for the purpose.
Extract of Annual Return
The details forming part of the extract of the annual return in Form No. MGT-9 is annexed herewith as a separate Annexure - VII, as per provisions of Section 92 of the Companies Act, 2013 read with Rules made thereunder.
Particulars of Loans, guarantees or investments u/s 186.
The loans if any, made by the Company are within the limits prescribed u/s 186 of the Companies Act, 2013 and no guarantee or security is provided by the Company.
Details of Investments covered u/s 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.
Risk Management Policy
The Board has approved and implemented risk management Policy of the Company including identification and element of risks.
The Risk Management is overseen by the Audit Committee / Board of Directors of the Company on a continuous basis. The Committee oversees Companys process and policies for determining risk tolerance and review managements measurement and comparison of overall risk tolerance to established levels. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuous basis. For details please refer to the Management Discussion and Analysis enclosed as separate Annexure - I to this report.
Pursuant to amendments in SEBI(LODR) Regulations, 2015, the Board of Directors of the Company has constituted the Risk Management Committee on 29th January, 2019.
The Company has constituted Audit Committee. For details please refer Corporate Governance Report attached as a separate Annexure - VIII.
Internal Control System and its adequacy
The Company has internal control system commensurate with the size, scale and complexity of its business operations. The scope and functions of Internal Auditor are defined and reviewed by the Audit committee. The Internal Auditor reports to the Chairman of the Audit Committee. The Internal Auditor assesses opportunities for improvement of business processes, systems and controls, to provide recommendations, which can add value to the organization.
Your Directors recommended a dividend of Rs. 13/- per share (260%) (Previous year Rs. 12/- per share (240%)) on 1,30,05,874 equity shares of Rs. 5/- each fully paid for the year ended 31.03.2019, to be paid subject to the approval of the members at the ensuing Annual General Meeting.
During the year, the unclaimed dividend pertaining to the financial year ending 2010-11 were transferred to the Investor Education and Protection Fund.
The paid-up Equity Share Capital as on 31st March, 2019 was Rs. 650.29 Lakhs. During the year under review the Company has not issued any shares.
No shares with differential voting rights, stock or sweat equity shares were issued by the Company during the year under review.
During the year the Company has transferred 45,501 Equity Shares to Investor Education and Protection Fund, pursuant to the provisions of sections 124 & 125 of the Companies Act, 2013 and Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016.
The Company has contributed Rs. 17918 Lakhs to the exchequer by way of GST, excise duty, customs duty, service tax, income tax, VAT, sales tax and other fiscal levies.
The Company has discontinued its Fixed Deposit Scheme from the Financial Year 2012-13. The Company has not accepted fixed deposit from the public falling within the ambit of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014. There have been no defaults in repayments of deposits or payment of interest thereon during the year.
During the year under review, the Company does not have any long term loans/debts from Financial Institutions and Banks.
Directors and KMP
Members at the Annual General Meeting held on 30-08-2018 have re-appointed Shri Sajan Kumar Pasari and Shri Lalit Kumar Bohania as Independent Directors of the Company to hold office for further period of five consecutive years for a term up to 31st March, 2024. Similarly, Shri J. K. Taparia was appointed as Independent Director at Annual General Meeting held on 27.07.2017 to hold office for five consecutive years up to 31.03.2022 (they will not retire by rotation). Shri Ayush Bagla and Shri Surendra Singh Baid were appointed as Independent Directors at the Annual General meeting held on 30.08.2018 to hold office for period of Five consecutive years upto 31.03.2023.
Ms. Akriti Jain (DIN: 08259413) was appointed as Additional Woman Director (Independent) on the Board of the Company w.e.f. 1st November, 2018 to hold office up to the ensuing Annual General Meeting. Ms. Akriti Jain is proposed to be appointed as Independent Director for five consecutive years at the ensuing Annual General Meeting of the Company.
All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015 and there has been no change in the circumstances which may affect their status as Independent director during the year under review and have also confirmed that they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact his ability to discharge his duties with an objective independent judgment and without any external influence. The Company keeps informed independent directors about changes in the Companies Act, 2013 and rules and other related laws from time to time and their role, duties and responsibilities.
The Board of Directors has appointed Shri Ayush Bagla as Executive Director for a period of 3 years w.e.f. 14.05.2019, subject to approval of the members at the ensuing Annual General meeting. Upon appointment as Executive Director, Shri Ayush Bagla ceased to be Independent Director of the Company.
Shri Govindbhai P. Patel has resigned as Director of the Company w.e.f. 18th April, 2018. Shri S.C. Kothari has retired w.e.f. 1st April, 2019 as CEO of the Company. Your directors wish to place on record their appreciation for the contributions made by them to the Company.
Shri Atul Sanghvi has been appointed as Chief Executive officer of the Company and designated as Executive Director and Chief Executive Officer (ED & CEO) of the Company and considered as Key Managerial Personnel of the Company pursuant to section 203 of the Companies, Act, 2013. Shri Atul Sanghvi (DIN:00045903) is due to retire at the end of the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.
Brief resumes of the directors who are proposed to be appointed/ reappointed at the ensuring Annual General meeting, as required as per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is provided in the notice convening this Annual General Meeting of the Company.
Pursuant to the provisions of the Companies Act, 2013 and Rules made thereunder, Schedule - IV of the Act and SEBI (LODR) Regulations, 2015, the Board has carried the evaluation of its own performance, individual directors, its committees and Key Managerial Personnel, on the basis of attendance, contribution and various criteria as recommended by the Nomination and Remuneration Committee of the Company.
The performance of each of the Independent Director and Non-Independent Director (including the chairperson) was also evaluated by the Independent Directors at the separate meeting of Independent Directors of the Company.
Policy on Directors appointment and remuneration
Criteria determining the qualifications, positive attributes and independence of Directors.
Qualifications of Independent Director
An Independent director shall possess appropriate skills, qualifications, experience and knowledge in one or more fields of finance, law, management, marketing, administration, corporate governance, operations or other disciplines related to the Companys business.
Positive attributes of Independent Directors
An independent director shall be a person of integrity, who possesses knowledge, qualifications, experience, expertise in any specific area of business, integrity, level of independence from the Board and the Company etc. Independent Directors are appointed on the basis of requirement of the Company, qualifications & experience, expertise in any area of business, association with the Company etc. He should also devote sufficient time to his professional obligations for informed and balanced decision making; and assist the Company in implementing the best corporate governance practices.
Independence of Independent Directors
An Independent director should meet the requirements of Section 149(6) of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015 and give declaration every year to the Board of Directors for the same.
Other Directors and Senior Management
The Nomination and Remuneration Committee shall identify and ascertain the qualifications, expertise and experience of the person for appointment as Director or at Senior Management level and recommend to the Board his / her appointment.
The Company shall not appoint or continue the employment of any person as Whole-time Director or Senior Management Personnel if the evaluation of his performance is not satisfactory.
Other details are disclosed in the Corporate Governance Report under the head Nomination and Remuneration Committee and details of Remuneration (Managing Director / Whole Time Director(s) and non-executive directors) are attached as a separate Annexure - VIII to this Report.
Remuneration / commission from Holding or Subsidiary Company
Managing Director or Whole Time Director is not receiving any remuneration / commission from any Holding Company or Subsidiary Company.
It is separately disclosed in the Corporate Governance Report attached as a separate Annexure - VIII to this Report.
Auditors and their Observations
N.M. Nagri & Co., Chartered Accountants are the statutory auditors of the Company. They are appointed for a period of five years, from the conclusion of 19th AGM till the conclusion of the 24th AGM (AGM of financial year 2021-22).
Pursuant to amendment to section 139 of the Companies Act, 2013 effective from May 7, 2018, ratification of Statutory Auditors appointment is not required at every Annual General Meeting. Accordingly, resolution for ratification of Statutory Auditors is not proposed.
The Auditors Report and Secretarial Audit Report to the members for the financial year under review does not contain any qualification, reservation or adverse remarks or disclaimer.
The Statutory Auditors have not reported any fraud during the year under review.
Cost Records and Cost Auditors
The Company is required to maintain cost records under Companies (Cost Records and Audit) Rules, 2014. Accordingly, cost records have been maintained by the Company.
The Company has appointed K.G. Goyal & Co., as Cost Auditors for conducting cost audit for the year 2019-20.
Pursuant to provisions of Section 204 of Companies Act, 2013 and rules made there under, the Company has appointed Umesh Parikh and Associates, Practicing Company Secretaries to undertake the Secretarial Audit of the Company for the year 2019-20.
The Secretarial Audit Report for the year 2018-19 given by Umesh Parikh and Associates, Company Secretaries in practice is annexed with this report.
The Company is complying with the applicable Secretarial Standards.
Your Company has adequately insured all its properties including Plant and Machinery, Building and Stocks.
The Company has successfully signed a Long-Term Settlement (LTS) under section 12(3) of Industrial Disputes Act,1947, for 4 years with workers Union on 4th August, 2017 which was due on 01st September, 2017. The LTS was signed in harmonious environment and without any labour unrest and loss of production. The next LTS will fall due on 01st September, 2021. The industrial relations in the Companys plant had been cordial and peaceful throughout the year.
The Company has adequate skilled & trained workforce for its various areas of operations and the skills upgradation of which is being done on continuous basis for improving the plant operations and quality process.
The Company has taken sufficient measures to maintain Industrial Health and Safety at its workplace foremployees as laid in the Gujarat State Factories Rules, 1963. The Company is also complying and maintaining all applicable Industrial and Labour laws / rules.
The Company has in place a Policy against Sexual Harassment at workplace in line with the requirement of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committees have been set up to redress complaints received regarding sexual harassment. The Company has received two complaints during the year under the Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013 and the same were resolved. The Company has organized 2 workshops under the said Act during the year.
Material changes affecting financial position of the Company
No material changes or commitments, affecting the financial position of the Company have occurred between the end of the financial year of the Company to which the financial statements relate, i.e. 31st March, 2019 and the date of the Boards Report.
Change in nature of business
No changes have been made in nature of business carried out by the Company during the financial year 2018-19.
Orders passed by Regulatory Bodies or Courts
No regulatory body or court or tribunal has passed any significant and material orders impacting the going concern status and operations of the Company.
The Company has implemented Vigil Mechanism. For details please refer Corporate Governance Report attached as a separate Annexure - VIII.
Your Directors thank the Financial Institutions and Bankers for extending timely assistance in meeting the financial requirements of the Company. They would also like to place on record their gratitude for the co-operation and assistance given by State Bank of India, Yes Bank Ltd. and various departments of both State and Central Governments.
|For and on behalf of the Board of Directors,|
|For Cera Sanitaryware Limited|
|14th May, 2019||Chairman and Managing Director|