Panyam Cements & Mineral Industries Ltd Directors Report

HIGHLIGHTS:

The Total Income for the year ended March 31, 2024 was Rs. 13,453.32 Lakhs as compared to Rs. 3,910.29 Lakhs during the previous year. Loss before tax was Rs. 5,501.63 Lakhs as compared to Loss before Tax of Rs. 5,985.35 Lakhs during the previous year. Loss after tax was Rs. 5,501.63 Lakhs as compared to Loss after Tax of Rs. 5,985.35 Lakhs.

TRANSFER TO RESERVES

No transfer to any reserve was proposed or made during the year under review.

DIVIDEND:

In light of the accumulated losses, the Board has decided not to recommend any dividend on Equity Shares for the year..

MAJOR EVENTS OCCURRED DURING THE YEAR:

State of Company Affairs:

The Company has one production plant at Cement Nagar, Nandyal District with a production capacity of 0.66 Million Tonnes Per Annum of Clinker and 0.85 Million Tonnes Per Annum of Cement. The said plant has been revamped and restarted in the first month of Financial Year 2023-24.

The company faced initial setbacks due to financial constraints, which led to a temporary halt in production. However, by repurposing clinker production and securing a loan facility from Canara Bank, the company managed to resume full-scale operations. Despite minor disruptions for repairs and cleaning in between, it achieved its highest monthly sales quantity during the year under review. While production was briefly interrupted due to equipment damage in the third quarter, prompt action was taken to address the issue, ensuring smooth operations thereafter. Overall, the company effectively navigated challenges and maintained its production and sales activities throughout the year.

Change in the nature of business:

The Company was operating in single segment of cement production operations and there was no change in nature of business of the Company during the year under review.

Material changes and commitments, if any, affecting the financial position of the company, having occurred since the end of the Year and till the date of the Report:

There was no such change or commitment affecting financial position of the Company after end of year 2023-24 and before the date of report.

OVERVIEW OF THE INDUSTRY:

The information has been provided in the Management Discussion Analysis Report.

CAPITAL STRUCTURE:

Authorised Share Capital:

During the year under review, the members in their 67^th Annual General Meeting held on 29^th September, 2023 approved the alteration of authorised share capital of the Company through reclassification.

As on 31^st March, 2024, the authorised share capital of the company was Rs.21,50,00,000/-(Rupees Twenty One Crores and Fifty Lakhs only) comprising of 2,15,00,000 (Two Crores and Fifteen Lakhs) Equity Shares of Rs. 10/- (Rupees Ten only) each.

Paid-up Share Capital:

There was no change in paid-up share capital during the year under review.

As on 31^st March, 2024, the paid share capital of the Company was Rs.8,02,14,010/-(Rupees Eight Crores Two Lakhs Fourteen Thousand and Ten only) divided into 80,21,401

(Eighty Lakhs Twenty One Thousand Four Hundred and One) equity shares of Rs.10/-(Rupees Ten only).

Utilization of funds raised through issue of Equity Shares:

The company did not raise any funds by issue of equity shares during the year under review.

CREDIT RATING:

During the year under review, the Company has obtained Rating on 10^th October, 2023 from Infomerics Valuation and Ratings Pvt Ltd. over long term and short term loan credit facility availed from Canara Bank.

The details are as follows:

The Company had no debt/credit facility during the financial year ended 31^st March, 2023 and accordingly, there was no credit rating obtained then.

INVESTOR EDUCATION AND PROTECTION FUND (IEPF):

During the year under review, there were no requirement for transfers by the Company to the IEPF.

DIRECTORS AND KEY MANAGERIAL PERSONNEL:

Mr. Narayanasamy Elamran (DIN: 01744259), Director of the Company, liable to retire by rotation was re-appointed to the office of Director of the Company by the members in their 67^th AGM held on 29^th September, 2023.

The board at their meeting held on 03^rd July, 2023 appointed Mr. Amaranath Sachu as Chief Financial Officer (CFO) of the Company with immediate effect.

Other than the above mentioned, there was no appointment, resignation, retirement or removal of Directors or KMP during the year under review.

However, after end of year and before presentation of this report, Mr. G. Sai Prashanth has submitted his resignation from the position of Company Secretary and Compliance Officer of the Company and same was accepted by the board in their meeting held on 13^th August, 2024. Mr. Asuri Ramesh Rangan Sholinghur (DIN-07586413) has submitted his resignation from the position of Independent Directors and same was accepted by the board in their meeting held on 13^th August, 2024 with immediate effect.

Reappointment of Retiring Director:

In accordance with provisions of Companies Act, 2013, Mr. Narayanasamy Elamran (DIN: 01744259), Director of the Company is retiring by rotation and being eligible, offers himself for reappointment. Nomination and Remuneration Committee and the Board in their meeting held on 13^th August, 2024 have recommended his re-appointment.

DECLARATION ON INDEPENDENCE OF DIRECTORS:-

The company has received necessary declarations from all the Independent Directors of the Company in accordance with Section 149 (7) of the Companies Act 2013, that they meet the criteria of independence as laid out in Section 149(6) of the said Act and Regulation 16 (1) (b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations").

The Independent Directors have also confirmed that they have complied with Schedule IV of the Companies Act, 2013.

The Board of Directors is of the opinion that all the Independent Directors possess requisite qualifications, experience and expertise in industry knowledge and corporate governance and they hold highest standards of integrity.

BOARD MEETINGS AND COMMITTEE MEETINGS

During the year 2023-24, six meetings of the board were held and the details of these meetings of the Board as well as its Committees meetings have been given in the Corporate Governance Report, which forms part of the Annual Report.

COMPANYS POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION:

The companys policy on directors appointment and remuneration and other matters provided in Section 178 (3) of the Companies Act, 2013 have been disclosed in the corporate governance report.

Under Section 178 (3) of the Companies Act, 2013, the Nomination and Remuneration Committee of the board has adopted a policy for nomination, remuneration and other related matters for directors and senior management personnel. And the policy was disclosed on company website https://www.panyamcements.in/panyam%20files/ Nomination%20and%20Remuneration%20Policy.pdf.

BOARD EVALUATION:

The Board of directors have carried out an evaluation of its own performance as well as its individual directors, on the basis of criteria such as composition of the board / committee structure, effectiveness, its process, information flow, functioning etc.

REMUNERATION OF DIRECTORS AND EMPLOYEES:

The Company did not pay any remuneration to its Executive and Non-Executive Directors other than sitting fees for attending the board and committee meetings during the year under review. Therefore, the ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year under review is Nil.

The percentage increase in remuneration of the following:

Directors- Nil;

Chief Financial Officer- Appointed for the first time during the year under review after CIRP.

Company Secretary- 5%

Percentage increase in median remuneration of employees in the financial year- 14%

The total number of permanent employees as at the end of the financial year 2023-24 on rolls of the Company is 141.

The average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year is around 14%.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to Section 134(5) of Companies Act, 2013, your board of directors, to the best of their knowledge and ability, confirm that: -

i. In the preparation of the annual Accounts, the applicable accounting standards had been followed along with proper explanation and that there were no materials departures.

ii. The Directors had selected such accounting policies and applied them consistently and made judgment and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year, and of the loss of the Company for the year.

iii. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 for safeguarding the assets of the company, and for preventing and detecting fraud and other irregularities.

iv. The annual financial statement has been prepared on a going concern basis.

v. Proper internal financial controls were in place and that the financial controls were adequate and operating effectively.

vi. Proper systems were devised to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

INTERNAL FINANCIAL CONTROLS:

The Company has adequate internal financial controls in place to ensure proper reflection of books of accounts in financial statement of the Company.

FRAUDS REPORTED BY THE AUDITOR:

No frauds were reported by the Auditors under Sub- Section 12 of Section 143 of the Companies Act, 2013 read with the Rules made there under.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES:

The Company has no subsidiaries, Joint Ventures or Associate Companies during the year under review.

DEPOSITS FROM PUBLIC:

The Company has not accepted any Deposit from public during the year and there are no public deposits unpaid or unclaimed as on 31^st March, 2024.

LOANS, GUARANTEES OR INVESTMENTS

During the year under review, the Company has not advanced any loan, provided any guarantee or made any investment as per section 186 of Companies Act, 2013.

CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES:

All contracts/ arrangements/ transactions entered by the Company during the financial year with related parties were in the ordinary course of business at arms length basis.

There are no materially significant related party transactions that may have potential conflict with interest of the Company at large. Please refer to Form No. AOC-2 in Annexure-I for the details of related party contracts or arrangements.

CORPORATE SOCIAL RESPONSIBILITY:

As the Companys net worth is less than Rupees Five Hundred Crores, Turnover less than Rupees One Thousand Crores and Net-profit calculated as per section 198 of Companies Act, 2013 is less than Rupees Five Crores, the provisions of section 135 of Companies Act, 2013 were not applicable to the Company during the year under review.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING/OUTGO:

Particulars of Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo required under section 134 (3) (m) of the Companies Act, 2013 read with the Companies (Accounts)Rules,2014 are set out in the Annexure II and forms part of the report.

RISK MANAGEMENT:

Pursuant to section 134 (3) (n) of the Companies Act, 2013, a risk management policy has been devised to ensure sustainable business growth with stability and to promote a pro-active approach in reporting, evaluating and resolving risks associated with the Companys business.

All the Senior Executives under the guidance of the Board of Directors has the responsibility for over viewing managements processes and results in identifying, assessing and monitoring risk associated with Organizations business operations and the implementation and maintenance of policies and control procedures to give adequate protection against key risk.

The Company manages, monitors and reports on the principal risks and uncertainties that can impact its ability to achieve its strategic objectives. The Companys management systems, organizational structures, processes, standards, code of conduct and behaviors together form the Management and business of the Company.

The company has a suitable risk management policy to identify and mitigate risks. This Policy, inter-alia, includes identification of various elements of risk, including those which, in the opinion of the Board, may threaten the existence of the Company.

Details relating to future outlook, risk management system and internal control and its adequacy have been given in-detail in the Management and Discussion Analysis Report, which is part of the Directors Report.

VIGIL MECHANISM:

The Vigil Mechanism of the Company, which also incorporates a whistle blower policy in terms of SEBI Regulations, includes Vigilance or Ethics Office, who may be a senior executive of the Company and the protected disclosures may be made by a whistle blower through an e-mail or a letter to the Vigilance or Ethics Officer or to the Chairman of the Audit Committee. The Policy on Vigil Mechanism and whistle blower policy may be accessed on the companys web site at the link http://www.panyamcements.in/ panyam%20files/Risk%20Management%20Policy.pdf.

SIGNIFICANT MATERIAL ORDERS PASSED BY REGULATORS/ COURTS/ TRIBUNALS

The Company was acquired by the new management through NCLT Order dated 25.06.2021 read with corrigendum order dated 10.07.2021 [NCLT Order] under Insolvency and Bankruptcy Code (IBC), where all the old creditors were repaid as per NCLT Order.

Few employees & creditors felt aggrieved by the said order and went for an appeal at NCLAT and few at High Courts to obtain stay order over NCLT Order and repayment of their old dues in full.

We would like to highlight here that the main reason behind rolling-out of IBC is to revive sick companies and as per Section 31 of IBC, the NCLT approved resolution plan shall be legally binding on the Company and its employees, members, creditors, [including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed].

The same has been declared by the Supreme Court in its various judgements including the one in the case of Ghanashyam Mishra and Sons Pvt Ltd v/s Edelweiss Asset Reconstruction Co. Ltd (2021).

Further, pursuant to Section 238 of IBC, the IBC shall have overriding effect over other laws.

Therefore, it can be concluded that the company is well protected within the umbrella of IBC and Supreme Court judgements from most of the company litigation cases.

Following are the material orders passed with the Company name as per the notices received by the Company during the year under review.

Other than those mentioned above, there was no significant material order passed by any regulator or court or Tribunal during the year under review, which can impact the companys going concern status and operations in future.

AUDITORS:

M/s. K.S. Rao & Co., Chartered Accountants, Hyderabad (Firm Registration No: 003109S) were initially appointed by the members at their 61^st Annual General Meeting (AGM) held on 26^th September, 2017 to hold the office of Statutory Auditors of the Company till conclusion of 66^th Annual General Meeting. Further, the members of the Company at their 66^th AGM approved the re-appointment of Statutory Auditors of the Company to hold office till conclusion of 71^st Annual General Meeting which is going to be held in 2026-27 on such remuneration as may be decided by the Board of Directors in consultation with the auditors. The Board places on record its sincere appreciation of the services rendered by the Statutory Auditors.

AUDITORS REPORT:

M/s. K.S.Rao & Co., Chartered Accountants, Hyderabad, Statutory Auditors of the Company have provided an unmodified report on financials of the Company for the year ended 31^st March, 2024.

SECRETARIAL AUDIT:

Pursuant to the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors in their meeting held on 13^th November, 2023 appointed M/s. B S S & Associates, Hyderabad, Company Secretaries in Practice, Hyderabad to conduct Secretarial Audit of records of the Company for the financial year ended 31^st March, 2024. The Secretarial Audit Report for the financial year ended 31^st March 2024, is annexed to this Report as Annexure III. The qualification/remarks and the board replies are mentioned below under explanation.

EXPLANATION IN RESPONSE TO AUDITORS QUALIFICATIONS:

The statutory auditor in his report on financials of the Company for the year ended 31^st March, 2024 has mentioned a comment as follows:

The board hereby inform that that a new Enterprise Resource Planning (ERP) system that aligns with our operational requirements, including features for maintaining an audit trail (edit log) has been procured, and the implementation of this ERP system is currently in progress, and the Company is committed to ensuring full compliance with regulatory requirements upon completion.

The secretarial auditor in their report on records of the Company contain the following observations:

The board hereby explain that the new Board was constituted in the month of January, 2023 and we had queries with respect to depreciation on fixed assets mentioned in the financial result of the Company for the year ended 31^st March, 2023 and post resolving the said queries, the discussion on financial result for the period ended 30^th June, 2023 was resolved.

The company was required to increase public shareholding from 5% to 10% within 12 months of such fall, pertaining to which the company has paid the statutory fine and actively pursuing discussions and working towards the increase of public shareholding over statutory requirement.

The board took note of the same and assured to strict compliance in coming days.

MAINTENANCE OF COST RECORDS:

Pursuant to Section 148 of Companies Act, 2013 read with Rule 3 of the Companies (Cost Records and Audit) Rules, 2014, the company has maintained cost accounts and records made and maintained in the books of account during the year under review.

COST AUDIT:

Cost Audit was not applicable for the financial year 2023-24, since the turnover of the company during the financial year under review is below the statutory threshold prescribed under section 148 of the Companies Act, 2013 read with relevant rules in force.

The company has triggered the threshold for the current financial year 2024-25 and the board in their meeting held on 12^th February, 2024, appointed M/s. Ganti+ Associates, Cost and Management Accountants, Hyderabad as Cost Auditors of the Company for the financial year 2024-25 and their remuneration is subject to ratification of members in their 68^th Annual General Meeting of the Company.

ANNUAL RETURN:

Pursuant to the amendments to Section 134(3)(a) and Section 92(3) of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return (Form MGT-7) for the financial year ended March 31, 2024 is available on the Companys website and can be accessed at https://www.panyamcements.in/ panyam%20files/Annual%20Return%202023-24.pdf.

CORPORATE GOVERNANCE:

Your Directors reaffirm their continued commitment to good corporate governance practices. A separate report on Corporate Governance is incorporated as Annexure IV as a part of the Directors Report. Further as a part of the report, "Management Discussion and Analysis" has also been furnished as Annexure V.

SUSPENSION OF TRADING REVOCATION:

The trading of Company shares was suspended by Bombay Stock Exchange (BSE) before CIRP due to non-payment of Annual Listing Fees and non-compliance under erstwhile management, and last trading day before beginning of financial year under review was 22^nd October, 2019.

During the year under review, the Company made application for revocation of imposed suspension and obtained BSE in-principle approval on 07^th July, 2023. Thereafter, the company has submitted the documents and information as required by BSE along with payment of requisite fees, and after thorough follow-ups, the BSE gave public notice on its website on 25^th September, 2023 that the suspension in trading of company shares has been revoked with effect from 03^rd October, 2023 and the trading of company shares was resumed on BSE from 04^th October, 2023.

SEXUAL HARRASSMENT:

Regarding the Sexual Harassment of Women at the work place (Prevention, Prohibition & Redressal) Act, 2013, your company has an Internal Complaints Committee. No complaints were received or disposed off during the year under the above Act and no complaints were pending either at the beginning or at the end of the year. Your Company has complied with the provisions relating to the constitution of Internal Complaints Committee (ICC). ICC is responsible for redressal of complaints related to sexual harassment and follows the guidelines provided in the policy.

INSURANCE:

All the properties of the Company have been adequately insured.

HUMAN RESOURCE DEVELOPMENT AND INDUSTRIAL RELATIONS:

Your Company continues to enjoy cordial relationship with all its personnel at its production plant, corporate office and on the field. Your company is organized training programmes wherever required for the employees concerned to improve their skill.

Your company continues to focus on attracting and retaining competent personnel and providing a holistic environment where they get opportunities to grow and realize their full potential. Your company is committed to providing all its employees with a healthy and safe work environment.

LISTING AGREEMENT:

The Securities and Exchange Board of India (SEBI), on September 2, 2015, issued SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, with the aim to consolidate and streamline the provisions of the Listing Agreement for different segments of capital markets to ensure better enforce ability. The said regulations were effective December 01, 2015. Accordingly, all listed entities were required to enter into the Listing Agreement within 6 months from the effective date.

The Equity shares of the Company are listed on the BSE Limited only.

CAUTIONARY STATEMENT:

Statements in the Management Discussion and Analysis Report describing the Companys objectives, expectations or predictions may be "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to your Companys operations include demand supply conditions, finished goods prices, cyclical demand and pricing in your Companys principal markets, change in Government regulations, tax regimes, economic developments within India or any other country in which your company conducts business and other factors such as litigation and labour negotiations. Your company is not obliged to publicly amend, modify or revise any forward-looking statements, on the basis of any subsequent development, information or events or otherwise.

ACKNOWLEDGMENTS:

The Management of the Company would like to express their sincere appreciation for the cooperation and assistance received from shareholders, bankers, financial institutions, regulatory bodies and other business constituents during the year under review. The Management of the Company also wish to place on record their deep sense of appreciation for the commitment displayed by all executives, officers and staff of the Company during the financial year.