heidelbergcement india ltd share price Directors report

To the Members,

The Directors are pleased to present the 64 Annual Report together with the audited financial statements of HeidelbergCement India Ltd. (the Company) for the financial year ended 31 March 2023 (FY23).

THE YEAR IN RETROSPECT

The year started when global uncertainties were rife. Barely had the pandemic receded, and the war between Russia and Ukraine broke out in February 2022 leading to a worldwide surge in inflation. Consequently, the central banks across economies led by the US Federal Reserve responded with synchronized interest rate hikes to curb inflation. The rate hike by the US Fed drove capital into the US markets causing the US Dollar to appreciate against most of the currencies. This led to the widening of the Current Account Deficits and increased inflationary pressures in net importing economies. Prices of food products, fuels and fertilizers rose sharply. Many developing countries are under severe economic stress on account of combination of multiple factors such as weaker currencies, higher import prices, rising cost of living and a stronger dollar making debt service obligations more expensive.

For India, 2022 marked the 75 year of Indias Independence. Despite facing formidable challenges, India stands tall and steadfast, emerging as a beacon of resilience in the global economy. The Indian economy after its encounter with the pandemic not only staged a full recovery but also marched ahead and became the worlds fifth-largest economy. Indias GDP grew by 7% in FY23 compared to revised estimate of 9.1% for the previous financial year. Indias economic growth in FY23 was led by private consumption and capital formation which has led to employment generation as can be witnessed from declining urban unemployment rate and faster net registrations with Employees Provident Fund Organization. Foreign exchange reserve levels are comfortable and external debt is low. Yet in FY23, India also faced the challenge of reining in inflation. Measures taken by the Central Government and RBI, along with declining trend in global commodity prices, have finally brought the retail inflation within RBIs tolerance limit. Further support to economic growth will come from the expansion of public digital platforms and path-breaking measures such as PM GatiShakti, the National Logistics Policy, and the Production-Linked Incentive schemes to boost manufacturing output. The fundamentals of the Indian economy are sound as it enters its Amrit Kaal, the 25-year journey towards its centenary as a modern, independent nation.

FINANCIAL HIGHLIGHTS / REVIEW OF OPERATIONS

During FY23, the Company produced 4.32 million tonnes of cement compared to 4.75 million tonnes during the financial year ended 31 March 2022 (FY22), a decrease of 9.0%. Cement sales during the year were 4.39 million tonnes compared to 4.78 million tonnes in FY22, a decrease of 8.1%.

A snapshot of the Companys financial performance for FY23 vis-a-vis FY22 is as under:

(INR in Millions)

Particulars	FY23	FY22
Revenue from Operations	22,381.0	22,969.6
Other Income	452.9	490.7
Total Revenue	22,833.9	23,460.3
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)-	2,941.4	4,836.2
Including other income
Depreciation and Amortization	1,123.1	1,120.5
Finance Cost	460.6	364.4
Profit before Tax	1,357.7	3,351.3
Total Tax expense	366.0	828.7
Net Profit for the year	991.7	2,522.6

After brief slowdown in economy there has been unprecedented revival of growth across all sectors. Demand and consumption have gone up increasing the inflation that has impacted raw materials, fuels and packaging costs. In line with the global indexes and owing to demand and production mismatch, domestic prices of various commodities have also shot up. For cement industry, Coal is a major fuel. The supply constraints in coal led to its significantly reduced availability, decline in quality and sudden surge in prices. Your Company has mitigated quality risk by constantly changing its fuel mix and the supply risks by entering into long term contracts with local companies exploring new mines, continuous participation in e-auctions etc. Despite intermittent stoppages of power plants due to lack of demand, your Company was able to source adequate quantity of flyash to ensure continuity of operations.

Following the increasing trend in commodity prices, crude oil was no exception. Consequently, diesel prices soared to new heights which had cascading effect on logistics and packaging costs. Outbound and Inbound movement of cement and raw materials also posed a challenge on account of shortage of trucks. Your Company managed the situation by inducting new transporters and managing its Rail-road mix.

Your Company has put in place a robust Suppliers Code of Conduct that is being strictly adhered to while scouting and registering new suppliers. We have in place strong annual supplier evaluation and feedback process for major suppliers to ensure continuous improvement. The Company continues to focus on improving its operating efficiencies and minimising costs to improve overall operational and financial performance.

Your Company relentlessly strives to transit from grey to green by reducing the carbon footprint. As a proponent of sustainability, we ensured uninterrupted supply of Flyash, Red mud and various other by-products of other industries to reduce usage of natural resources. A state-of-the-art Alternate Fuels project, which was commissioned in the last quarter of FY22, stabilised during the year and made its contribution towards sustainable operations. The Company has also commissioned 5.5 MW Solar Power Plant in its mining area at Damoh, Madhya Pradesh during FY23.

DIVIDEND

The Board has recommended dividend of INR 7 per share (70%) for FY23, subject to the approval of the shareholders in the ensuing AGM (Dividend paid during FY22 was INR 9 per share). The proposed dividend for FY23 will absorb INR 1586.3 million. Therefore, in accordance with the provisions of Companies (Declaration and Payment of Dividend) Rules, 2014, the Board has proposed to withdraw an amount of INR 594.6 million from the accumulated profits of the past financial years.

In accordance with the provisions of the Income Tax Act, 1961 the aforesaid dividend will be taxable in the hands of shareholders but liable for Tax Deduction at Source (TDS) by the Company at the applicable rates.

Dividend Distribution Policy

Regulation 43A of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, requires top 1000 listed companies based on market capitalization to formulate a Dividend Distribution Policy. In compliance with the said requirement, the Board of Directors had formulated a Dividend Distribution Policy and the same is posted on the Companys website. The web-link to access the said policy is as follows:

https://www.mycemco.com/sites/default/files/PDF/Policies/HCIL_Dividend_Distribution_Policy.pdf

Unclaimed Dividends

The respective due dates on which unclaimed amounts of dividends pertaining to the prior years will be transferred to Investor Education and Protection Fund (IEPF), constituted by the Ministry of Corporate Affairs, are given below:

Sr. No.	Financial Year	Dividend Per Share (INR)	Date of declaration	Date of transfer to IEPF
1	FY2016-17	2.00	22 September 2017	28 October 2024
2	FY2017-18	2.50	21 September 2018	27 October 2025
3	FY2018-19	1.00 (Interim)	25 October 2018	30 November 2025
4	FY2018-19	3.00 (Final)	19 September 2019	24 October 2026
5	FY2019-20	1.50 (Interim)	23 November 2019	28 December 2026
6	FY 2019-20	6.00 (Final)	18 September 2020	21 October 2027
7	FY 2020-21	8.00	27 September 2021	01 November 2028
8	FY2021-22	9.00	08 September 2022	12 October 2029

ENVIRONMENTAL SUSTAINABILITY

Natural resources have been the foundation of every modern-day progress and are critical for our manufacturing processes as well. We are conscious that containing the environmental impact of manufacturing processes needs significant and systemic measures. We, therefore, follow a three-pronged approach to fulfil our commitment towards sustainability: Prevention, Mitigation and Compensation. Committed to deliver on our Sustainability Goals 2030, we strive to excel in environment protection by reducing our footprints on water, air and land, and simultaneously drive a circular economy by reducing waste, recycling and reusing the materials. We remain committed to engage and deliver in the following key domain areas:

Driving Economic Strength & Innovation

Achieving excellence in Occupational Health and Safety

Reducing our Environment Footprint

Enabling Circular Economy

Being a Good Neighbour

Ensuring Compliance and Transparency

All plants of the Company are ISO 14001 (Environment Management System) certified. The Company consumed ~34.95% of fly ash in producing PPC cement and ~53.33% of slag in producing PSC cement thus reducing limestone consumption, preserving limestone reserves for posterity. During FY23 the Company generated 59064 Mega Watt (MW) of power from Waste Heat Recovery Power Plant at Narsingarh. During FY23, the Company commissioned 5.5 MW Solar Power Plant in its mining area at Damoh, Madhya Pradesh and generated 9419 Mega Watt (MW) of power. We have also invested in alternative fuels feeding system, another green initiative which has increased the usage of alternative fuels in kiln.

We have embraced a culture of conservation, and integrated environmental parameters into our growth aspirations by adopting state-of-the-art technological interventions, innovative production techniques, resource optimization measures and sustainable mining practices. Through a series of well-calibrated pre and post mining measures, the Company strives to reverse the operational impact and at the same time add value to the economy and community. In our mining operations we lay special emphasis on soil management, pollution control, biodiversity conservation, maintaining water balance, and promoting safe mining practices. Post mining, the land is reclaimed through back-filling and afforestation by planting trees like Rain Tree, Baniyan, Arjun, Golden Bamboo, Pilkhan (timber), Neem, Indian Rosewood etc. Some of the mined areas have been developed into large water reservoirs that have become a boon for the villagers since the harvested rainwater not only recharges the ground water leading to significant improvement in water table of the area but also serves their irrigation needs. As a result of these actions, Patharia limestone mines is consistently getting five Star Rating from Indian Bureau of Mines (IBM) ever since the concept of five Star Rating was introduced by IBM.

ENRICHING BIODIVERSITY

Development of green belt in the plants and mines provides several benefits to the environment and the society at large in terms of release of oxygen, absorption of carbon dioxide and prevention of soil erosion. The green cover extends to over 38% of the factory area. Water bodies too have been developed to support plantation. These water bodies and trees are home to a variety of flora and fauna. The enriched biodiversity provides shelter to numerous species of animals and birds indirectly helping in improving the happiness quotient of our employees. To increase the green cover, we are continuously motivating our business associates to plant trees in their region under our “friends of Earth” programme. It is a step towards our commitment to make the world a better place to live for our generations to come.

MAKING A DIFFERENCE THROUGH CSR

The Company continued to contribute to the economic and social development of the local communities, in the regions where it has presence by focusing on education, rural infrastructure development and healthcare facilities. By promoting local participation, the company strengthens its bond with local communities. During FY23 the Company has spent INR 78.50 million on various CSR activities / projects exceeding the obligations pursuant to Section 135 of the Companies Act, 2013.

The transformation of rural schools in Damoh, Jhansi and Ammasandra in association with the Education Department has always been a top priority. Through this initiative, the basic infrastructure of 10 government schools was upgraded, benefiting over 3,000 students and 95 teachers. Extensive repair and renovation work was carried out in some schools while in few others existing classrooms were upgraded into digital classrooms. Scholarships were given to meritorious students to facilitate their higher education. Educational kits and uniforms were also distributed to students. We are working in close coordination with the District Women and Child Development Departments of Damoh and Ammasandra to transform Anganwadi centers into model Anganwadi centers. We believe in entrepreneurial ability of rural youth and endeavor to make them self-reliant by developing their skills. Quality training that covers various areas of trade is tremendously beneficial. To guarantee this, we have partnered with the "Centre for Entrepreneurship Development (CEDMAP)," supported by the Madhya Pradesh Government. These courses build skills in many trades, like beautician, sewing and stitching, computer operations, motor driving etc. These courses are run on a regular basis, and participants are enrolled for three-months course. A certificate of completion is also provided to all the students. These courses are being conducted at our skill development centers known as "Sakshamta Vikas Kendras" in Jhansi and Damoh. During FY23, training was imparted to 240 rural youth.

We organize health check-up camps at regular intervals to meet communities general and specific needs. Under our healthcare program, our mobile medical van team has regularly organized rural healthcare camps. To promote cattle farming as an additional source of rural livelihood, the Company has engaged BAIF Institute to provide facilities such as cattle rearing, vaccination, artificial insemination etc., to the villagers in Damoh. The Company has also taken steps for upgradation of rural veterinary hospitals.

The Company continued to extend its support towards development of infrastructure in the vicinity of its plants and mines viz., construction of concrete roads, drainage facilities, availability of potable water, solar lights, cremation grounds, public toilets, bus stand shelters etc.

The Report on CSR activities in the format prescribed by the Ministry of Corporate Affairs is annexed herewith as Annexure - A.

OCCUPATIONAL HEALTH & SAFETY

Occupational health and safety is a core value for our Company and safety is at the center of everything that we do. We strive to create a healthy and safe working environment for our employees, contractors and other stakeholders.

The day at the plants begins with safety gate meetings wherein important safety aspects are discussed along with safety prayer and pledge. To improve the Happiness

Quotient among the workmen, people are encouraged to share jokes during their daily gate meeting and enter plant after having taken the safety pledge. We believe that its the “Smiles that will take us Miles”.

Safety conversations and safety zones are effectively used for employee engagement and nurturing safety culture in all aspects of operations. Safety zones have been created at all plants with cross functional teams.

The Heidelberg Materials Groups cardinal norms, guidelines, standards, and legal requirements along with stipulations under ISO 45001 - Occupational Health and Safety Management System are being strictly adhered to at all the plants. Employees were imparted safety induction trainings, refresher courses and job specific trainings like scaffolding safety, working at height and in confined space etc.

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National Safety week was celebrated from 4 -11 March 2023 in a grand manner across all plants to improve the safety awareness. A schedule of twenty-four most critical safety hazards relevant to the cement industry has been compiled. Each month, a safety theme is taken up and its key aspects are deliberated so as to firmly ingrain the importance of the activity and build a conscious driven safety culture in the organization. Truck Drivers were also imparted training on defensive driving techniques. Monitoring of the workplace for noise, particulate matter, free silica and illumination level is being done as per the regulatory norms. All plants are ISO 45001 certified.

AWARDS AND ACCOLADES

The Company continues to pursue excellence in all areas of its operations as evident from the recognition in the form of awards and honours.

Jhansi Plant received “Safe Workplace Gold Award 2022" from Apex India Foundation.

Jhansi Plant received Energy Efficient Unit award by Confederation of Indian Industry.

Diamond Patharia Limestone Mines received “Amrit Kalash Puraskar” from Indian Bureau of Mines, Jabalpur.

Diamond Patharia Limestone Mines received 1 prize in

Safety Management Plan and 2 prize in Awareness of Swachhata and Supervision from Directorate General Of Mines Safety, Jabalpur.

CORPORATE GOVERNANCE

The essence of Corporate Governance lies in promoting and maintaining integrity, transparency, and accountability. The Company believes in creating and nurturing relationships based on trust and transparency with all its stakeholders. The governance framework enjoins the highest standards of ethical and responsible conduct. All Directors and employees consider governance as their personal responsibility and conduct themselves in accordance with the Code of Conduct set out by the organization.

The Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 have reinforced the governance regime in India. The Company is compliant with the corporate governance requirements as prescribed under the said Regulations. The Company has also ensured compliance with applicable Secretarial Standards issued by the Institute of Company Secretaries of India pursuant to Section 118(10) of the Companies Act, 2013. In terms of Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Corporate Governance Report pertaining to FY23 forms part of this Annual Report. Pursuant to the provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a certificate from M/s. Nityanand Singh & Co., a firm of Company Secretaries in Practice, confirming compliance with the conditions of Corporate Governance is also annexed to the Corporate Governance Report. A certificate furnished by Mr. Joydeep Mukherjee, Managing Director and Mr. Anil Kumar Sharma, Chief Financial Officer in respect of the financial statements and the cash flow statement for the financial year ended 31 March 2023 is annexed asAnnexure-B to this Report.

Management Discussion and Analysis Report is also given as an addition to this Report.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

The maiden Business Responsibility and Sustainability Report (BRSR), as stipulated under Regulation 34(2)(f) of SEBI Listing Regulations, describing the initiatives taken by the Company from Environment, Social and Governance (ESG) perspective forms part of this Annual Report.

DIRECTORS

Change of Whole-time Director

Mr. Sushil Kumar Tiwari retired from the position of Whole-time Director of the Company with effect from close of business hours on 09 June 2022. The Board places on record its appreciation for the valuable services rendered by Mr. Tiwari during his tenure as Whole-time Director of the Company.

Based on the recommendation of Nomination and Remuneration Committee, the Board of the Directors had approved the appointment of Mr. Vimal Kumar Jain (DIN: 09561918) as Whole-time Director of the Company for a term of three years from 10 June 2022 to 09 June 2025 in place of Mr. Sushil Kumar Tiwari. The shareholders of the Company at the last AGM held on 08 September 2022 had also approved the appointment Mr. Vimal Kumar Jain as Whole-time Director of the Company.

Change of Managing Director

The Board of Directors of the Company at its meeting held on 13 February 2023 deliberated on the request of Mr. Jamshed Naval Cooper (DIN-01527371) with respect to his retirement from the position of Managing Director and relieving him prior to the end of his third term. The Board after considering the request of Mr. Cooper, accepted his resignation and decided to relieve him from the position of Managing Director with effect from close of business hours on 31 March 2023. The Board has placed on record its appreciation for the valuable services and support provided by Mr. Cooper as Managing Director of the Company.

Based on the recommendation of Nomination and Remuneration Committee, the Board of Directors had approved the appointment of Mr. Joydeep Mukherjee (DIN-06648469) as new Managing Director for a term of three years from 01 April 2023 to 31 March 2026 in place of Mr. Jamshed Naval Cooper.

The Board also recommended the resolutions to be passed by the shareholders for appointment of Mr. Joydeep Mukherjee as Managing Director of the Company, which were duly passed by the shareholders through postal ballot on 27 April 2023.

Retirement by rotation

Ms. Soek Peng Sim, Director retires by rotation at the ensuing AGM and being eligible has offered herself for reappointment. Her brief profile is given in the Notice of AGM. The Board hereby recommends her reappointment.

Declaration of Independent Directors

Mr. Ramakrishnan Ramamurthy and Ms. Jyoti Narang, Independent Directors on the Board have submitted declarations to the Company that they fulfill the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The Board of Directors, based on the declarations received from the Independent Directors after duly verifying the veracity of such declarations, hereby confirms that the Independent Directors fulfill the conditions of independence specified in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and are independent of the management of the Company.

DISCLOSURES UNDER COMPANIES ACT, 2013

Number of Board Meetings: During FY23, four Board Meetings were held. The details of the same are given in the Corporate Governance Report.

Composition of Audit Committee: The Audit Committee of the Company as on 31 March 2023 comprised three members namely, Ms. Jyoti Narang (Chairperson of the Committee), Mr. Ramakrishnan Ramamurthy and Ms. Soek Peng Sim.

Board Evaluation: In accordance with the provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an annual evaluation of its own performance, that of the directors individually and that of all the Committees constituted by it, namely, the Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, Stakeholders Relationship Committee and Risk Management Committee. The manner in which the performance evaluation has been carried out has been explained in the Corporate Governance Report.

Policy for appointment and remuneration of directors: The Board has on the recommendation of the Nomination and Remuneration Committee, formulated a Nomination and Remuneration Policy. The policy inter alia lays down the criteria for determining qualifications, attributes and independence of potential candidates for appointment as directors and determining their remuneration. The salient features of the Policy have been provided in Corporate Governance Report. The said Policy has been posted on website of the Company and the weblink to access the said policy is as follows:

https://www.mycemco.com/sites/default/files/PDF/Policies/Nomination_and_Remuneration_Policy.pdf

The Board has also adopted a ‘Board Diversity Policy‘ which requires the Board to ensure appropriate balance of skills, experience and diversity of perspectives in its own composition.

Annual Return: The Annual Return of the Company for FY22 already filed with the Ministry of Corporate Affairs (MCA) and the draft Annual Return for FY23 are available on the website of the Company and the weblink to access the same is as follows:

https://www.mycemco.com/financial-results

After the filing of Annual Return for FY23 with MCA, the aforesaid draft version of the Return will be replaced with the final version.

Key Managerial Personnel: Details of Key Managerial Personnel of the Company are given below:

Mr. Joydeep Mukherjee, Managing Director (with effect from 01 April 2023);

Mr. Jamshed Naval Cooper, Managing Director (up to 31 March 2023);

Mr. Vimal Kumar Jain, Whole-time Director (with effect from 10 June 2022);

Mr. Sushil Kumar Tiwari, Whole-time Director (up to 09 June 2022);

Mr. Anil Kumar Sharma, Chief Financial Officer; and

Mr. Rajesh Relan, Sr. Vice President- Corporate Affairs & Company Secretary.

LOANS, GUARANTEES, SECURITY, AND INVESTMENTS

During FY23, the Company has not given any loan, guarantee or security pursuant to the provisions of section 186 of the Companies Act, 2013.

The Loan of INR 1500 million which was given to Zuari Cement Limited (a fellow subsidiary) in FY21 was fully repaid by Zuari Cement Limited on the respective due dates in FY23. As on 31 March 2023, there is no outstanding loan appearing in the Financial Statements of the Company.

During FY23, the Company has not made any investment or issued any guarantee or provided any security.

General: The Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions with respect to these items during FY23:

Details relating to deposits covered under Chapter V of the Companies Act, 2013.

Issue of equity shares with differential rights as to dividend, voting or otherwise.

Issue of stock options or sweat equity shares.

No significant or material orders were passed by the Regulators or Courts or Tribunals impacting the going concern status and the Companys operations in future.

INTERNAL FINANCIAL CONTROLS

The Company has in place relevant internal controls, policies, and procedures to ensure orderly and efficient conduct of its business. Standard Operating Procedures (SOPs) and Risk Control Matrix (RCM) have been designed for critical processes across all operations. The internal financial controls are tested for operating effectiveness through managements ongoing monitoring and review processes, and independently by the internal auditors. In our view the internal financial controls are adequate and are operating effectively.

DIRECTORS RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them and based on the assessment of the management, the Board of Directors makes the following statements in terms of Section 134 of the Companies Act, 2013: a) that in the preparation of the annual accounts for the financial year ended 31 March 2023 the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; b) that such accounting policies have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 March 2023 and of the profit of the Company for the financial year ended on that date; c) 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; d) that the financial statements for the financial year ended 31 March 2023 have been prepared on agoing concern basis; e) that proper internal financial controls were in place and that such internal financial controls were adequate and were operating effectively; and f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

RELATED PARTY TRANSACTIONS

All transactions entered between the Company and its related parties during the financial year ended 31 March 2023 were in the ordinary course of business and on an arms length basis. The particulars of such transactions have been disclosed in notes to the financial statements for FY23. During the year under review, the Company has not entered in any related party transaction exceeding the threshold limit provided under the Companies Act, 2013 / Rules made thereunder and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Omnibus approvals are obtained for the transactions which are foreseeable and are repetitive in nature. A statement of all the related party transactions is placed before the Audit Committee on a quarterly basis, specifying the nature and value of the transactions. The Company has in place a Policy on Related Party Transactions and a framework for the purpose of assessing the basis of determining the arms length price of relevant transactions. The said policy and the framework are reviewed by the Audit Committee and the Board of Directors from time to time. The same have been posted on the Companys website. The web-link to access the said policy and framework is as follows:

https://www.mycemco.com/sites/default/files/PDF/Policies/Related_Party_Transaction_Policy.pdf

RISK MANAGEMENT

The Board of Directors of the Company has constituted a Risk Management Committee for reviewing and monitoring the risk management plan of the Company and ensuring its effectiveness. The business risks have been classified under the broad heads - strategic, operational, financial, and legal & compliance risks. The Companys Risk Management Policy lays down a bottom-up process comprising risk identification, analysis and evaluation, treatment and controlling. The Chief Risk Officer and the Risk owners identify and analyse risks in their area of operations. The risks faced by the Company, their impact and the mitigation measures are categorised as high, medium and low risks which are then reviewed by the Senior Management and the critical ones are placed before the Risk Management Committee / Board of Directors for review.

The Board provides oversight and reviews the Risk Management Policy. The Board along with Risk Management Committee is responsible for framing, implementing and monitoring the risk management plan of the Company. During the year under review, Internal auditors, had also tested the Risk & Control Matrices for various processes as a part of Internal financial control framework.

The details of the functioning of the Risk Management Committee and frequency of its meetings are provided in Report on Corporate Governance forming part of this Annual Report.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has established a vigil mechanism / whistle blower policy to deal with the instances of unethical behaviour, fraud, conflict of interest, mismanagement, and violation of the Code of Conduct. During FY23 no complaint was received under the Vigil Mechanism. The details of the vigil mechanism are given in the Corporate Governance Report and a copy of the same has been posted on the Companys website. The weblink to access the same is as follows:

https://www.mycemco.com/sites/default/files/PDF/Policies/W.e.f.19.10.2021_HCIL_Whistle_Blower_Policy_English.pdf

PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE

The Company is compliant with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, which aims to protect women at workplace against any form of sexual harassment and prompt redressal of any complaint. During FY23, no complaint was received by the Company in this regard.

AUDITORS

In accordance with the provisions of Section 139(1) of the Companies Act, 2013 the members at the 63 Annual General Meeting (AGM) of the Company held on 08 September 2022 had reappointed M/s. S.N. Dhawan & Co. LLP., Chartered Accountants, as statutory auditors of the Company for second term to hold office up to the conclusion of the 68 AGM i.e., for conducting statutory audits commencing from FY 2022-23 until FY 2026-27. The observations of the Auditors in their report on Financial Statements read with the relevant notes are self-explanatory. The Independent Auditors Report does not contain any qualification, reservation or adverse remarks.

COST AUDIT

The Company is maintaining cost records in accordance with the provisions of Section 148 of the Companies Act, 2013 and the Rules made thereunder. The Cost Audit for FY22 was conducted by M/s. R.J. Goel & Co., Cost Accountants, Delhi. The Cost Audit Report was duly filed with the Ministry of Corporate Affairs, Government of India. The Audit of the cost accounts of the Company for FY23 is also being conducted by the said firm and the Report will be filed within the stipulated time.

In accordance with Section 148 of the Companies Act, 2013 and the Companies (Cost Records and Audit) Rules, 2014, the Board of Directors has on the recommendation of the Audit Committee, appointed M/s. R.J. Goel & Co., Cost Accountants as Cost Auditor of the Company for FY24 on a remuneration of INR 2,75,000. Pursuant to Section 148(3) of the Companies Act, 2013, a resolution seeking members ratification for the remuneration payable to M/s. R.J. Goel & Co., Cost Accountants for FY24 is included in the Notice convening the AGM. The Board recommends the aforesaid resolution for approval of the members.

SECRETARIAL AUDIT

The Board had appointed M/s. Nityanand Singh & Co., a firm of Company Secretaries in Practice as Secretarial Auditor for carrying out secretarial audit of the Company for the financial year ended 31 March 2023 in accordance with the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The Report of the

Secretarial Auditor is annexed herewith as Annexure-C. The Secretarial Audit Report does not contain any qualification, reservation, or adverse remarks.

Secretarial Compliance Report: Under Regulation 24A of SEBI Listing Regulations it is mandatory for listed companies to annually submit a Secretarial Compliance Report to Stock Exchanges. M/s. Nityanand Singh & Co. has furnished Secretarial Compliance Report for FY23. The said Report does not contain any qualification, reservation, or adverse remarks. The said Report has been filed with Stock Exchanges and has also been placed on website of the Company. The web link to access the same is as under:

https://www.mycemco.com/sites/default/files/PDF/Secretarial_Compliance_Report/Financial_Year_2022-2023.pdf

PARTICULARS OF EMPLOYEES

The particulars of employees required pursuant to Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 form part of this Report and are annexed as Annexure-D. In accordance with the provisions of Section 136 of the Act, the Boards Report and the financial statements for the financial year ended 31 March 2023 are being sent to the members and others entitled thereto, excluding the details to be furnished under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. However, the information required under aforesaid rule 5(2) is available for inspection by the members at the Registered Office of the Company during business hours on all working days up to the date of the ensuing Annual General Meeting. If any member desires to have a copy of the same, he may write to the Company Secretary in this regard.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules 2014, form part of this Report and are annexed asAnnexure-E.

ACKNOWLEDGEMENTS

Your Directors are thankful to all stakeholders including Customers, Bankers, Suppliers, Dealers, and Contractors for their continued assistance, co-operation, and support. The Directors wish to place on record their sincere appreciation to all employees for their commitment and continued contribution to the Company. The Directors are grateful for the confidence, faith and trust reposed by the shareholders in the Company. We are thankful to various agencies of the Central and State Government(s) for their continued support and co-operation.

	For and on behalf of the Board
Place: Bengaluru	Ramakrishnan Ramamurthy
Date: 29 May 2023	Chairman