Shree Cement Ltd Management Discussions.

Dear Members,

The Directors take pleasure in presenting the 40th Annual Report together with the Audited Financial Statements for the year ended 31st March, 2019. The Management Discussion and Analysis has also been incorporated into this report.


A brief of financial performance for the year gone by and its comparison with previous year is given below: -,




2018-19 2017-18 2018-19 2017-18
Revenue from Operations 11,722.00 10,159.53 12,554.65 10,159.53
Less :- Excise Duty - 326.43 - 326.43
Net Revenue from Operations 11,722.00 9,833.10 12,554.65 9,833.10
Other Income 245.40 389.05 249.76 389.05
Total Income 11,967.40 10,222.15 12,804.41 10,222.15
Profit Before Interest, Depreciation and Taxes 2,898.22 2,861.83 3,043.44 2,861.80
Finance Costs 246.98 135.27 247.86 135.27
Depreciation and amortization expenses 1,391.68 899.40 1,471.81 899.40
Exceptional items 178.13 - 178.13 -
Profit Before Tax 1,081.43 1,827.16 1,145.64 1,827.13
Tax Expense 130.38 442.98 130.59 442.98
Profit After Tax 951.05 1,384.18 1,015.05 1,384.15


• During the year 2018-19, Company has paid Interim Dividend of Rs 25/- per share.

• Apart from above, a Final Dividend of र 35/- per share for 2018-19 has been recommended by the Board, which will be paid after approval of Members in ensuing Annual General Meeting (AGM).

• Total dividend payment thus works out to र 60/- per share for year 2018-19 as against र 50/- per share for the year 2017-18.

• Total dividend relating to the year 2018-19 amounts to र 251.98 crore (including dividend distribution tax of र 42.96 crore) as against र 209.84 crore (including dividend distribution tax of र 35.66 crore) for the year 2017-18.

• During the year an amount of र 200 crores was transferred to General Reserves.

The Board of Directors of the Company in line with SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 had approved Dividend Distribution Policy on 12th August, 2016. The Policy is uploaded on Companys website and can be accessed at the link policy.pdf.


I. Indian Economy-Developments and Outlook

The Indian economy is likely to record growth rate of 7% during 2018-19 as per advance estimates of the Central Statistics Office (CSO). This is the lowest during last 5 years. The drop in GDP growth is mainly due to sharp decline from 5% to around 2.7% in the agriculture sector (especially during second half of 2018-19). The Agricultural and Rural sectors are going through a difficult period. While service sector is also expected to show mild moderation from 8.1% to 7.4% levels, industry and manufacturing sector is likely to show good improvement in growth to 7.7% from 5.9% in last year.

CPI headline inflation at around 3.5% during the year has also remained stagnant at the similar levels observed last year. Importantly it stayed within the 4% target set by RBI. The benign inflation has given room to RBI which cut its policy rates twice recently to give much needed impetus to the economy. As a result of easing rates and overall pick up in industrial, retail and commercial segments, credit off-take from the banking system is growing at a buoyant pace. This has helped push industrial growth which, as measured by Index of Industrial Production (IIP) is expected to clock around 4.5% level continuing on 4.4% growth witnessed in the previous year.

India continues to be one of the fast growing economies of the world. In recent years, growth has largely been consumption driven as investment has fallen on the back of high leverage in the corporate sector and high non-performing assets (NPA) in the banking sector. It appears however that, declining investment has bottomed out with fixed investment in 2018-19 increasing in proportion to GDP. Considering slackening global economic growth and consequently FDI/FPI inflows in India are expected to be better. As such, easy monetary policy is expected to continue. Accordingly, Indian economy is expected to witness rebound in growth in its industrial and service sectors. Agriculture sector economy is also expected to perform better on account of expectation of normal monsoon with well- distributed rainfall as well as र 6,000/- p.a. income support for marginal farmers announced by Government of India. It is widely expected that there shall be a surge of reforms after the new Government come into place in June which shall boost the economy. The outlook for Indian economy for 2019-20, therefore, looks positive.

In 2018-19, Indian rupee suffered because of crude price shock, and conditions exacerbated as recovery in some advanced economies caused faster investment outflows. Crude oil price has again started showing rising trend. This may also lead to fast depreciation in Indian rupee. These are the major risks to Indias current account and overall economic growth.

II. Cement Industry - Development and Outlook

Indian cement industry witnessed a remarkable growth of approx. 13% during 2018-19 on the back of 6.3% recorded in 2017-18. The demand growth has taken Cement production during 201819 to around 337 million tons. The strong cement demand is driven by higher infrastructure spend, affordable housing and pick-up in rural demand. The construction of houses under governments flagship scheme, Pradhan Mantri Awaas Yojana (Housing for all) showed impressive progress resulting in good demand for cement. The Infrastructure activities especially in roads and metro projects have also been a big cement demand driver. In fact, with Governments infrastructure push and launch of several mega infrastructure projects, cement demand is seeing a gradual shift from housing towards infra. This is leading to increase in shares of cement demand from infra sector in overall demand. Upward trend observed in urban residential and commercial realty led by accelerated urbanization, rapid migration and the rise in population of aspiring youth in major cities of the country is also helping growth in cement demand.

Government schemes such as PM-KISAN and overall high minimum support prices for major crops coupled with prospects of normal monsoon are expected to drive demand in rural areas. Governments continued thrust on affordable housing and infrastructure developments projects are likely to aid cement demand growth. Outlook for cement sector thus looks positive.

III. Power Sector - Development and Outlook Country has large power generation capacity which is far excess of the capacity required to meet the demand. Though Government of Indias focus on attaining Power for all has helped increase in demand for power in the country, excess capacity is leading to many power plants running on low capacity utilization levels. This has caused stress in the sector and debt repayment issues. While new capacity addition in conventional power space has slowed now, the renewable energy space, because of drop in capital costs and governments push, is witnessing good traction.

During 2018-19, because of surplus capacity in the country, prices for power continued to remain depressed although in some months prices did witness upward trend mainly because of coal availability issues, poor rains, elections etc. The market for electricity trading in India is dependent on health of State distribution Companies. As most of these Companies have poor financials, they dont go for power procurement if prices are high. The Sector is therefore, expected to continue to reel with uncertainty in terms of both power procurement and prices.


Brief summary of the Companys standalone performance is as under:

Particulars Unit 2018-19 2017-18 +/-%
Cement Production Million Tons 25.06 22.20 12.88%
Cement & Clinker Sale Million Tons 25.86 22.53 14.78%
Power Generation (Net) Million Units 3,253.62 2,562.16 26.99%
Power Sale Million Units 1,678.20 1,196.53 40.26%
Cement (Net of Excise/GST) र Crore 10,920.12 9,400.09 16.17%
Power र Crore 801.88 433.01 85.19%
Total Revenue र Crore 11,722.00 9,833.10 19.21%
Operating - Cement र Crore 2,471.26 2,458.35 0.53%
Profit - Power र Crore 181.56 14.43 1,158.21%
(EBIDTA) - Other Income र Crore 245.40 389.05 (36.92)%
- Total र Crore 2,898.22 2,861.83 1.27%
EBIDTA Margin % 24.72% 29.10% -
Finance Costs र Crore 246.98 135.27 82.58%
Depreciation and amortization expenses र Crore 1,391.68 899.40 54.73%
Exceptional items र Crore 178.13 - -
Profit Before Tax र Crore 1,081.43 1,827.16 (40.81)%
Tax Expense र Crore 130.38 442.98 (70.57)%
Net Profit र Crore 951.05 1,384.18 (31.29)%

I. Cement Business

• Cement and Clinker Sale volume were up at 25.86 Million Tons recording a growth of 14.78% over previous year. This was mainly because of significant strides made by the Company in Eastern India market and new capacity addition in southern market.

• Net cement price realizations marginally improved during the year. The increase in cost however, outpaced the increased realizations this year as well.

• Net Cement revenue jumped 16.17% to र 10,920.12 Crore on the back of increased sale volumes as well as better price realizations.

• Increase in prices of Petcoke and Imported Coal resulted in increase in power & fuel cost. Led by its consistent efforts towards route optimization and other improvement measures, Logistics cost was contained marginally despite increase in diesel and other input costs.

II. Power Business

Performance of Power business improved during the year as a result of improved sales volumes as well as better price realization. Overall power sale volumes increased to 1,678.20 Million Units in 2018-19 as against 1,196.53 Million Units in 201718. This together with better price realization, resulted in revenue from Power Sale (including income from power trading) going up to र 801.88 Crore in 2018-19 as against Rs 433.01 Crore in 2017-18. EBITDA of Power Business jumped to र 181.56 Crore in 2018-19 as against र 14.43 Crore in 2017-18.

III. Net Profit

During the year, net profit was impacted due to (a) fair value loss of Rs 178.13 crore booked in respect of investment in preference shares of IL&FS group upon same being downgraded by rating agencies to junk status and (b) Mark-to-Market loss of र 134.23 crore on External Commercial Borrowing (ECB) taken by the Company.

IV. Key Financial Ratios

Key financial ratios of the Company showing financial performance are as under:

Particulars 2018-19 2017-18 % Change Remarks
Operating Profit Margin (%) 24.72% 29.10% (15.05)% No significant change
Net Profit Margin (%) 8.11% 14.08% (42.40)% Higher depreciation due to new projects completed during the year
Return on Net Worth (%) 9.61% 16.47% (41.65)%
Interest Coverage Ratio 11.73 21.16 (44.57)% Due to increase in Finance Cost in view of interest expenses on External Commercial Borrowings
Debtors Turnover (Days) 22.81 17.05 33.78% Higher due to increase in debtors related to power sales
Inventory Turnover (Days) 49.48 58.24 (15.04)% No significant change
Current Ratio (Times) 2.01 1.92 4.69% No significant change
Debt-Equity Ratio (Times) 0.26 0.26 - No change

V. New / Expansion Projects

Company completed following projects during the year 2018-19:-

• Integrated Cement Plant having capacity of 3.0 MTPA at Kodla in Kalaburagi (erstwhile Gulbarga) District of Karnataka.

• Commissioned balance 6.3 MW (3 Wind Towers) out of 21 MW Wind Power Plant at Village Kustagi, District Koppal in Karnataka.

Further, Company has following on-going projects:-

• Clinker grinding unit of 2.5 MTPA at Seraikela- Kharsawan District in Jharkhand which is expected to be operationalized by June, 2019.

• Clinker grinding unit of 3.0 MTPA at Athagarh Tehsil in Cuttack District of Odisha which is planned to be completed in first half of FY 19-20.

• Setting up of 3.0 MTPA Clinker Grinding Unit in Patas District of Maharashtra which is expected to be completed in first half of FY 2021.

VI. Acquisitions and Mergers

(i) Union Cement Company

As reported last year, Company has completed acquisition of Union Cement Company (UCC), Ras-Al-Khaimah, United Arab Emirates on 11th July, 2018 for an Enterprise Value of USD 305.24 Million. Company now holds a majority stake of 97.61%. The acquisition was made through Wholly Owned Step-down Subsidiary Company viz. Shree International Holding Ltd., incorporated in U.A.E. Salient features of UCCs consolidated financial performance since the date of acquisition by the Company till 31st March 2019 is as under: -

Particulars Amount in AED Million Amount in र Crore
Net Turnover 420.93 813.80
EBIDTA 72.76 140.56
Net Profit* 35.95 69.50
Net Worth (As at 31.3.2019)* 980.86 1,847.46

* Excluding non-controlling interest

UCC has undertaken several process improvement measures to increase the productivity of its Kiln, Cement Mills, Waste Heat Recovery Power Plant and other equipment as well as improve its power and fuel consumption levels. UCC has also undertaken steps to enhance the capacity of existing Waste Heat Recovery Plant. All these measures will help in enhancing revenues and rationalizing costs thereby contributing to increased profitability.

(ii) Raipur Handling and Infrastructure Private Limited

Company also acquired Raipur Handling and Infrastructure Private Limited (RHIPL) for an aggregate consideration of र 59 crore. RHIPL is engaged in operating a Railway Siding as a Private Freight Terminal near Companys cement plant at Baloda Bazar in Chhattisgarh. This terminal will provide dedicated railway connectivity to the Company for transporting its cement, clinker and input materials through railways. RHIPL operates the terminal for other customers also.


At SCL, risk management is considered as a strategic activity as our plans and measures to manage risks generates opportunities as well. Identification and management of risk is systematically achieved using an Enterprise Risk Management (ERM) system under which the Board is responsible for overseeing the overall risk management framework of the Company. The Audit and Risk Management Committee of Board, keeps an eye on execution of the risk management plan of the Company and advises the management on strengthening mitigating measures wherever required. The actual identification, assessment and mitigation of risks are however done by key executives of the Company in a systematic manner through regular meetings and dialogue and engagement / consultation with relevant stakeholders. The key risks identified by the Company and their mitigation measures are as under:

a) Over-Capacity in the Industry - Continued over capacity in the industry pose risk of underutilization of production capacities and prices falling to levels which are non-remunerative levels causing losses. For this purpose, Company has invested in building customer loyalty through consistent high quality of its products, faster delivery to consumers and continued customer engagement through its dedicated marketing teams. It also keeps adding capacity in markets where demand-supply conditions are considered to be relatively favourable.

b) Availability of Limestone and other resources- Limestone is the key raw material for cement production and its availability for existing and future plant requirements is essential. With limited reserves at existing mines and acquisition of new limestone mines being uncertain due to regulatory and competition issues, conservation of limestone is quite important. Company has been making all efforts to optimize its usage, thereby, conserving the deposits and enhancing their life. To conserve the high grade limestone, Company is mixing the same with marginal grade limestone and using it for clinker production. Companys emphasis on enhanced production of blended cement has also helped conserve limestone significantly. Additionally, Company continuously undertakes exploratory activities at its existing deposits areas to find more reserves.

Companys plants in Rajasthan are located in water deficient areas and as such conserving water becomes very important. Realizing this, Company installed Air Cooled Condensers (ACC) in all its power plants which though involve additional capital expenditure, have helped Company reduce water consumption significantly. Company has installed Waste Heat Recovery Systems in its cement plants thereby, eliminating the need for cooling of waste hot gases and thus, saving water. Water harvesting reservoirs have also been constructed within plant and mines area.

c) Fuel Cost - Company sources fuel from open market and hence, is exposed to volatility of market prices of the fuel. Company has deployed multi-fuel usage strategy as well as state of the art technology, which allows it to use different fuels and use the most economical fuel among a basket of different fuels as per prevailing trends in the market. Company participated in e-auction and secured coal linkage for partly meeting the fuel requirements of its Raipur, Chhattisgarh plant. Additionally, to reduce reliance on conventional fuel for its captive thermal power plant, Company has extensively invested in Waste Heat Recovery Power Plants thereby, cushioned itself from fuel price volatility to that extent. Additionally, to reduce reliability on conventional fuel, company has commissioned 21 MW Captive Wind Power Plant in Karnataka.

d) Power Prices - Company sells its surplus power under short term contracts. This is because; it does not have any long term arrangement for coal. This exposes it to price volatility in this segment. The Company is managing this risk by ensuring advance sale contracts for part of the capacity and keeping the balance for running the same with market volatility.

e) Cyber Security and Disaster Recovery -

Considering the increasing importance of digitisation to business, majority of businesses activities of the Company have been seeing digital transformations, whether related to logistics, marketing or manufacturing. Significant advantages of digitisation reflect in faster customer servicing, enhanced process efficiency, better controls and speedy decision making. Digitisation is however fraught with risk of cyber security and disaster recovery. This could be misuse of hardware and software, interference, loss, unauthorised access, modification and disclosure. Company has taken necessary measures for better monitoring & control and more effective regulatory compliance to mitigate any risks arising due to digitisation.

f) Climate Change - Global warming and consequent impact in the form of erratic and frequent climate changes has emerged as a major risk across globe. This impacts our operations also as cement manufacturing releases CO2 due to calcination process and combustion of fuels. Efforts to address climate change by reducing emissions of greenhouse gases (GHG) through national, state and regional laws and regulations as well as international agreements will bring about various regulatory requirements affecting our operations and creates uncertainties for our business. New legislative or regulatory controls may pose risks which could include costs to purchase allowances or credits to meet GHG emission caps, costs required to procure advanced equipment to reduce emissions to comply with GHG limits or required technological standards or higher production costs. In addition, physical risks arising from extreme weather or high temperatures may impact any manufacturing sector in terms of property damage and disruption to operations. We have integrated sustainability as core to our operations and are thus prepared to meet new regulatory and legislative requirements resulting from climate change risks.


In order to ensure orderly and efficient conduct of business, Companys management has put in place necessary internal control systems commensurate with its business requirements, scale of operations, geographical spread and applicable statutes. The Company has an in-house Internal Audit department manned by qualified professionals and an external firm acting as independent internal auditors that reviews internal controls and operating systems and procedures on a regular basis. Companys internal control systems include policies and procedures, IT systems, delegation of authority, segregation of duties, internal audit and review framework etc. Company has designed the necessary internal financial controls and systems with regard to adherence to companys policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial information. Company keeps documented Standard Operating Procedures (SOPs) for all its major operations. Company has been expanding into different geographies which needed to be appropriately covered in the SOPs to capture their specific features and, therefore, a complete overhaul of the SOPs was carried out during FY 2018-19. The compliance to these controls and systems including SOPs are periodically reviewed by the Internal Audit function and exceptions are reported. All material audit observations and follow up actions thereon are reported to the Audit and Risk Management Committee. The Committee holds regular discussions with the auditors to ensure adequacy and effectiveness of the internal control systems and monitors implementation of audit recommendations.


a) Employee Engagement and Talent Management - Building a motivated and performance oriented team or institution starts with a founder. A founder also acts as a culture- creator of his team. But being a founder doesnt mean starting a new company or enterprise. He could be one who is joining a company that has existed for decades. At Shree, we nurture young talent through empowerment and trust in their capabilities to undertake challenging roles and tasks. This in turn builds a team of young entrepreneurs or founders who can take leadership position within the Company. As Company has been expanding fast, they take the position of being a founder for the new unit or new plant or new geography to undertake the task of building a committed and motivated team. The unique Shree culture and style of working is put on ground from day one. It is no surprise that because of this unique measure, Company has been able to deliver almost all its project before their targeted timelines.

Building on the practices of all these years, this year was focused on Communication, Inclusion and Leadership development. Research says that true assimilation of an employee happens within the first 90 days of joining and, therefore, focus of HR team is to create a delightful joining and on- boarding experience. For this purpose, Company initiated a feedback for New Joiners which is done within their first 90 days. In this, new joiners get an opportunity to interact with the senior leadership team and share their experiences and areas which they find the Company needs to work on. This has also led to building a communication channel that reinforces our culture of transparency and approachable management.

Companys focus is to make sure that every employee has access to great opportunities, and that they feel that they are making a meaningful impact and are contributing to the good of all stakeholders. This requires regular training and development opportunities for all the employees to upgrade their skills and capabilities. Skill Development is therefore, a constant endeavour across the Company and has been a focus area for the Human Resource team too. Through the years we have also realised that home grown leaders have been more successful, therefore we have been working internally and with external partners to develop a leadership pipeline for the Company. Unique Shree family culture acts as a bond amongst employees where they feel homely while working within the organization. Provision of required recreation and other facilities at all our sites and regular get-togethers with family members together with sports and cultural events ensures work life balance for the employees. Shree also believes in giving equal opportunities to all. As part of this ethos, Womens Day celebration that was initiated last year on March 8th was institutionalised this year as a practice. The highlight of Womens Day celebration is the opportunity to interact with the companys leadership team.

b) Occupational Health and Safety - Health and safety is at the top of Companys priority areas. Company has built a robust safety management system based on the globally recognised and practiced OHSAS 18001 standard. We have established a structured hazard identification and risk assessment process based on the globally practiced Plan, Do, Check and Act cycle. The process helps us identify potential risks which could have resulted in production disruptions, litigation and liabilities.

In order to provide our employees with access to quality and essential healthcare services, we have established Wellness Management Centers (WMC) at all the locations. WMCs are equipped with qualified doctors and modern facilities.

Employee health check-ups are conducted annually with various health care services provided to the employees and their families. All contract workmen are also covered under WMC services where they are provided health care services customized to their nature of work.

We also organized blood donation camps across our locations. Health talks and lectures by experts and specialists were also organized to propagate awareness on chronic and lifestyle diseases for the benefit of employees and their families.

Safety committees have been formed at all manufacturing units with equal representation from both management and non-management categories. These committees play a pivotal role in achieving the objective of "safety first" by undertaking assessment of safety issues on an ongoing basis and implementing suitable initiatives and programs for the same. Since most of the workers deployed are from the communities around the factory, it was quintessential for the committee to devise an approach which could transform the way workers looked at safety. The committee periodically organized trainings, mentoring and coaching with the help of local supervisors who brought about a positive change to the workers safety performance. Through such interactions, it became easier for the committees to identify hazards and minimize the recurrence of the same.

All our safety initiatives and employee engagement programs have been designed to reach this goal no fatalities. Through a regular internal audit protocol, we assess the overall safety performance and examine the existing procedures, systems and control measures for fire & safety hazards. Observations and recommendations were implemented by concerned departments within set timelines. As part of the process, monthly safety performance of all grinding units were reviewed and discussed with all safety professionals for implementation of common safety system and practices.

During the year Auditors from National Safety Council, Mumbai conducted detailed audit of the Safety Management System at Companys Thermal Power Plants at Beawar and Ras and expressed its satisfaction on the same. Additionally, Surveillance Audit of Social Accountability Management System (SA 8000: 2014) of certified units was conducted by a team of auditors from M/s. BSI, New Delhi.

c) Industrial Relations - Employee Relations remained cordial during the year. This has enabled Company to build healthy relationship and resolve issues through dialogue and discussions.

Total number of employees as on 31st March, 2019 were 6,299.


Company perceives sustainability and growth as symphonic musical sounds which should always be in harmony with each other for the benefit of present as well as future generations. Thus, all our operations and project activities are carried out keeping a balance between unbounded economic growth and sustainability. Our operational strategy is built on a long term commitment to experiment and implement new ideas for improving efficiencies and minimizing the use of input resources. Our continued endeavours towards improving productivity and efficiency of all processes, equipment and systems as well optimization measures have made the Company as one of the most efficient player in terms of energy consumption and resource utilization. As a result of sustained efforts towards greening our operations, our direct CO emission intensity is one of the lowest in the cement industry. During the year, the initiatives on sustainability continued with improved performance on several parameters of operations. Some of the initiatives taken on the environment front during the year were as under:-

a) Power Generation from Renewable Resources -

Company continues to be the leading cement Company in India in terms of capacity of Waste Heat Recovery Power Plants (WHRPP) in the country. Its WHRPP capacity is the largest in World Cement Industry excluding China. In the month of April 2019, Company has further installed WHRPP at its Karnataka plant. Also, in terms of operational efficiency of WHRPP, Company is regarded as one of the best in the industry. This has helped Company in conserving fossil fuels and water, mitigating GHG emissions and controlling fugitive emission. With a view to further curtail its carbon footprint, Company has commissioned 21 MW Wind Power Plant in Karnataka. The power generated from the said plant is utilized for meeting power requirement of Companys Cement plant in Karnataka.

b) Alternative Fuels and Raw Materials - In line with our goal to increase usage of alternative raw materials and fuels, we have stepped-up reuse of low grade limestone and quarry rejects in a cost effective manner. We have also been consciously undertaking co-processing activities so as to close the loop by reusing waste of other industries as raw materials for our cement production. This has helped us significantly reduce our environmental impacts and economic costs without compromising on our products quality and output.

c) Energy Conservation - Energy conservation and environment management is a focus area for the Company and is driven at every level of operations. As part of Perform, Achieve & Trade (PAT) Scheme of the Govt. of India, Company has overachieved its target (set under PAT Cycle I, 2012-15) of reducing its energy consumption and as a result Ministry has issued 86,117 (Nos) Energy saving certificates for Beawar and 72,140 (Nos) of Energy saving certificates (ESCerts) for Ras site. Company was also awarded the Best Performer award for energy saving under PAT Cycle I by Bureau of Energy Efficiency (BEE) for the Beawar and Ras units. Currently assessment of our performance under PAT Cycle II (2016-19) that covers our Beawar plant, Ras plant and 300 MW Shree Mega Power is going on and results are yet to be finalised. Shree Raipur Plant also covered under PAT Cycle III (2017-2020) for which assessment will be done in next year.

d) Conservation of Water - Water being a scarce and precious resource, finds utmost priority in the Companys sustainability initiatives. Companys investment in Air Cooled Condensers in all its Power Plants, though relatively most expensive, has been a major contributor towards conserving water. Its large capacity of Waste Heat Recovery power plants also helps it save water required in cooling hot gases in gas conditioning towers. It has been constructing rain water harvesting structures to reduce its water dependence. Adding to its continuous drive towards water conservation, during the year, it created rain water harvesting system at Karnataka plant with few more under development. This apart, Sewage Treatment Plants (STP) were installed for treatment of domestic waste water at different plant sites of the Company.

e) CDP disclosure - Shree Cement has been participating consistently in the Carbon Disclosure Project. It has been ranked B in CDP Climate Change Disclosure 2018. This is higher than Global Cement average of Ranks B(-), and higher than the Asia regional average Rank C.

f) Sustainability Reporting - During the year, Company released its 14th annual corporate sustainability report titled "Embedding Harmonious Growth" focusing on balancing economic development with sustainability and exhibiting organizational performance on economic, environmental and social parameters - for the reporting period 2017-18. Report was prepared in accordance with the GRI Standards -

Comprehensive Option.

During the year Company was awarded and recognised for its various initiatives towards sustainable development, a few which are as under:-

• Golden Peacock Award for Sustainability - 2018:- The Award instituted by the Institute of Directors, New Delhi was delivered in recognition of Companys efforts towards Environment Management, Natural Resource conservation, emission control, energy conservation etc.

• Corporate Governance & Sustainability Vision Award, 2019:- The Award was instituted by the Indian Chamber of Commerce and given in recognition of its overall governance, environmental, economic & social performance.

• 5 Star rating for Limestone Mines of the Company:- Limestone Mines of the Company at Ras (Nimbeti Limestone Mines) and Beawar (Sheopura - Kesarpura Limestone Mines) awarded with 5 Star Rating under Star Rating System for Sustainable Development formulated by Indian Bureau of Mines, Ministry of Mines, Govt. of India. These ratings were started three years back and Company has been awarded with Five Star Rating for both the mines consecutively for second year.

• Recognized as Second Fastest Growing Cement Company - Large Category under 3rd Indian Cement Review Awards 2018: -

Company has been declared as the "Second Fastest Growing Cement Company - Large Category" under 3rd Indian Cement Review Awards 2018 in recognition of its significant initiatives for enhancing its capacity, governance level, stakeholder engagement, environment improvement, alternative fuels & raw material utilization and sustainability practices.

• Supply Chain and Logistic Excellence (SCALE) Award 2018 by CII:- Company has been conferred on "Supply Chain & Logistics Excellence Award-2018" for logistic excellence among all cement companies. The award was instituted by Confederation of Indian Industry (CII), Chennai.


Your Directors reaffirm their continued commitment to good corporate governance practices. During the year under review, Company was in compliance with the provisions relating to corporate governance as provided under the Listing Regulations. The compliance report is provided in the Corporate Governance section of this Annual Report. The Auditors Certificate on Corporate Governance is enclosed at Annexure - 1.


Company is also releasing Business Responsibility Report (BRR) as part of this Annual Report covering its compliances towards the Business Responsibility Principles enunciated by the Securities and Exchange Board of India as required under Regulation 34(2) (f) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.


As part of its triple bottom-line approach to its business, Company has always considered the community as its key stakeholder. It believes that the community around its operations should also grow and prosper in the same manner as does its own business. Accordingly, Corporate Social Responsibility is an integral part of the Companys business. In order to oversee all its CSR initiatives and activities, the Company has constituted a Board level Committee - "Corporate Social and Business Responsibility Committee" (CSBR Committee). The major thrust areas of the Company include healthcare, education, women empowerment, infrastructure support, integrated rural development and conservation of natural resources. The Annual Report on CSR activities of FY 2018-19 with requisite details in the specified format as required under Companies (Corporate Social Responsibility Policy) Rules, 2014 is enclosed at Annexure - 2 and forms part of this report. The CSR Policy of the Company may be accessed on website of the Company at link -final.pdf.


Company has following direct subsidiaries: -

Sl. No. Direct Subsidiaries Equity Stake
1. Shree Global FZE, Jebel Ali Free Zone, Emirate of Dubai, United Arab Emirates 100% Wholly Owned Subsidiary (w.e.f. 7th May, 2018)
2. Raipur Handling and Infrastructure Private Limited, Baloda Bazar, Chhattisgarh 100% Wholly Owned Subsidiary (w.e.f. 14th May, 2018)
3. Shree Global Pte. Ltd., Singapore 100% Wholly Owned Subsidiary (Liquidated w.e.f. 11th March, 2019)

Apart from above, during the year, following companies have become step-down subsidiaries of your company:-

• Shree Enterprises Management Ltd, Dubai International Financial Centre, Emirate of Dubai, United Arab Emirates

• Shree International Holding Ltd, Dubai International Financial Centre, Emirate of Dubai, United Arab Emirates

• Union Cement Company, PrJSC, Emirates of Ras- Al-Khaimah, United Arab Emirates

• Union Cement Norcem Co. Ltd. LLC, Emirates of Ras-Al-Khaimah, United Arab Emirates

The shareholders, who wish to receive a copy of Annual Accounts of the Subsidiary Companies, may request the Company Secretary for the same. As required under Section 129(3) of the Companies Act, 2013, Statement showing the salient features of the financial statements of the Subsidiary Companies in Form AOC-1, forms part of the Consolidated Financial Statements of Company. The policy for determining material subsidiaries as approved by the Board can be accessed on the website of the Company at link subsidiary-policy.pdf.


The Consolidated Financial Statements of the Company are prepared as required in terms of provisions of Companies Act, 2013 and Listing Regulations by following the applicable Accounting Standards notified by the Ministry of Corporate Affairs and forms part of the Annual Report.


Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and belief and according to the information and explanations obtained by them, state that:

a) In the preparation of the annual accounts for the year ended 31st March, 2019 the applicable accounting standards have been followed and there are no material departures from the same;

b) Such accounting policies as are mentioned in the

Notes to the Accounts have been selected 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 31st March, 2019 and of the profit of the company for the year ended on that date;

c) 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) The annual accounts have been prepared on a going concern basis;

e) Necessary internal financial controls have been laid down by the Company and the same are commensurate with its size of operations and that they are adequate and were operating effectively; and

f) Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.


In terms of requirements of Listing Regulations and provisions of Companies Act, 2013, Nomination cum Remuneration Committee of the Board of Directors of the Company specified the manner for effective evaluation of performance of Board, its Committees and Individual Directors. Based on the same, the Board carried out annual evaluation of its own performance, performance of its Committees, Individual Directors including Independent Directors during the year. Company had adopted the evaluation parameters as suggested by ICSI and SEBI with suitable changes from Companys perspective. The performance of the Board was evaluated by the Board on the basis of criteria such as Board composition and structure, effectiveness of Board processes, information flow to Board, functioning of the Board etc. The performance of Committees was evaluated by the Board on the basis of criteria such as composition of Committees, effectiveness of Committee working, independence etc. The Board evaluated the performance of individual Director on the basis of criteria such as attendance and contribution of Director at Board/Committee Meetings, adherence to ethical standards and code of conduct of the Company, interpersonal relations with other Directors, meaningful and constructive contribution and inputs in the Board/Committee meetings etc.

For the above evaluation, the Board members completed questionnaires providing feedback on different parameters as already stated above including on performance of Board / Committees / Directors, engagement levels, independence of judgment and other criteria. This is followed with review and discussions at the level of Board.

In a Separate meeting of the Independent Directors, performance evaluation of Non-Independent Directors, the Board as a whole and performance evaluation of Chairman was carried out, taking into account the views of Executive and Non-Executive Directors. The quality, quantity and timeliness of flow of information between the Company Management and the Board which is necessary for the Board to effectively and reasonably perform their duties was also evaluated in the said meeting.

Company appointed an External Facilitator for the purpose of carrying out the performance evaluation in a fair and transparent manner.


During the year, the Board of Directors of the Company at their meeting held on 30th July, 2018 appointed Shri Prakash Narayan Chhangani (DIN: 08189579) as Whole Time Director of the Company w.e.f. 30th July, 2018 for a period of 5 (Five) years. Approval of Members was obtained by passing of Special Resolution through postal ballot on 8th March, 2019. Shri Prakash Narayan Chhangani is a Chemical Graduate having over 34 years of rich experience in cement and related industries.

Shri Ramakant Sharma (DIN: 01556371), NonExecutive Non-Independent Director ceased to be Director of the Company w.e.f. 4th August, 2018.

In accordance with the provisions of the Companies Act, 2013 and Article 112 of the Articles of Association of the Company, Shri Hari Mohan Bangur (DIN: 00244329), Director of the Company will retire by rotation in the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The Board recommends the re-appointment of Shri Hari Mohan Bangur. Item seeking approval of members is included in the Notice convening the 40th Annual General Meeting (AGM).

In terms of the Regulation 17(1A) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as Listing Regulations) as amended vide SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, with effect from 1st April, 2019, no listed Company shall appoint or continue the Directorship of a Non-Executive Director who has attained the age of 75 years, unless a Special Resolution is passed to that effect. As per Companys records, Shri Benu Gopal Bangur (DIN: 00244196), Non-Executive - Non-Independent Director (Designated as Chairman), Shri Ratanlal Gaggar (DIN: 00066068), Shri Om Prakash Setia (DIN: 00244443), Dr. Yoginder Kumar Alagh (DIN: 00244686) and Shri Nitin Dayalji Desai (DIN: 02895410) all Independent Directors were the ones who had attained the age of 75 years before 1st April 2019. In view of the above, approval of members by way of special resolutions was obtained through postal ballot on 8th March, 2019 for the continuation of their directorship beyond 1st April, 2019.

Further, your Board of Directors recommends that pursuant to the provisions of Sections 149, 152 and Schedule IV of the Companies Act, 2013 read with applicable Rules made thereunder, Regulations 17 & 17(1A) of the Listing Regulations, Independent Directors Shri Ratanlal Gaggar (DIN: 00066068), Shri Om Prakash Setia (DIN: 00244443), Dr. Yoginder Kumar Alagh (DIN: 00244686), Shri Nitin Dayalji Desai (DIN: 02895410), Shri Shreekant Somany (DIN: 00021423) be re-appointed as an Independent Director of the Company, not liable to retire by rotation, for second term of five consecutive years commencing from 1st September, 2019, as well as to continue to hold the position of Non-Executive Independent Director beyond 75 years of age. Items seeking approval of members are included in the Notice convening the 40th Annual General Meeting.

In accordance with Section 149(7) of the Companies Act, 2013 and Regulation 25(8) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, each Independent Director has given a declaration to the Company confirming that he meets the criteria of independence as specified under Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Profile and other information of the aforesaid Directors, as required under Regulation 36 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Secretarial Standard - 2 forms part of the Notice convening the 40th Annual General Meeting.


In order to acquaint the new directors with the Company, a detailed presentation is given to them at the time of their appointment which covers their role, duties and responsibilities, Companys strategy, business model, operations, markets, organisation structure, products, etc. A detailed presentation along similar lines is sent to existing Independent Directors also every year to keep them apprised of the above details.

As part of Board discussions, presentation on performance of the Company is made to the Board during its meeting(s). Plant visits are also arranged for Independent Directors from time-to-time for better understanding of the Companys operations. The details of such familiarization programmes for Independent Directors are posted on the website of the Company and can be accessed at link programme-for-independent-directors.pdf.


The particulars relating to conservation of energy, technology absorption, foreign exchange earnings / outgo, as required to be disclosed under the Companies Act, 2013 is set out at Annexure - 3 which forms part of this report.


Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided at Annexure- 4.

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names of employees and other particulars of the top ten employees and employees drawing remuneration in excess of the limits as provided in the said rules are set out in the Boards Report as an addendum thereto. However, in terms of provisions of the first proviso to Section 136(1) of the Companies Act, 2013, the Annual Report is being sent to the members of the Company excluding the aforesaid information. The said information is available for inspection at the Registered Office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request.


I. Statutory Auditors

M/s. Gupta & Dua, Chartered Accountants (Firm Registration No. 003849N) were appointed as Statutory Auditor of the Company, in the Annual General Meeting held on 31st July, 2017, for a consecutive term of five years from the conclusion of 38th Annual General Meeting till the Conclusion of 43rd Annual General Meeting. They have given their report on the Annual Financial Statements for Financial Year 2018-19. The Audit Report does not contain any qualification, reservation or adverse remark.

II. Secretarial Auditors

The Board had appointed M/s. P. Pincha & Associates, Company Secretaries, Jaipur as Secretarial Auditor of the Company to conduct Secretarial Audit for the Financial Year 2018-19. They have submitted their report in prescribed format and the same is enclosed at Annexure - 5. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

III. Cost Auditors

In terms of the provisions of Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the Board of Directors of the Company appointed M/s. K. G. Goyal & Associates, Cost Accountants, Jaipur (Firm Registration No. 00024) to conduct the cost audit for the financial year ending 31st March, 2020, at a remuneration as mentioned in the Notice convening the 40th Annual General Meeting.

As required under the Act, the remuneration payable to cost auditors has to be placed before the Members at a general meeting for ratification. Hence, a resolution seeking ratification of remuneration by the Members, payable to the Cost Auditors forms part of the Notice of the 40th Annual General Meeting.


a) Composition of Audit and Risk Management Committee: The Committee comprises of Shri O. P. Setia as Chairman, Shri Prashant Bangur, Shri R. L. Gaggar, Dr. Y. K. Alagh, Shri Nitin Desai, Shri Shreekant Somany and Shri Sanjiv Krishnaji Shelgikar as other Members. All the recommendations made by the Audit and Risk Management Committee were accepted by the Board.

b) Details of Meetings of Board and its Committees: The Board of Directors of your Company met 4 times during the year to deliberate on various matters. The meetings were held on 28th April, 2018, 30th July, 2018, 12th November, 2018 and 22nd January, 2019. Further, details are provided in the Corporate Governance Report forming part of this Annual Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 and the Listing Regulations.

c) Extract of the Annual Return: Extract of Annual Return of the Company is enclosed at Annexure - 6 which forms part of this report.

d) Particulars of Loan, Guarantees or Investments: During the year 2018-19, there were no loans or guarantees given by the Company which attract the provisions of Section 186 of the Companies Act, 2013. The details of investments made by the Company in terms of Section 186 of the Companies Act, 2013 are given in the Notes forming part of Standalone Financial Statements.

e) Particulars of Contracts or Arrangements with Related Parties: All Related Party Transactions during the financial year 2018-19 were on arms length basis and were in compliance with the applicable provisions of the Companies Act, 2013 and the Listing Regulations. All such transactions are placed before the Audit and Risk Management Committee for review/approval. The necessary omnibus approval has been obtained from Audit and Risk Management Committee wherever required. There were no material Related Party Contract/Arrangement/ Transactions made by the Company during the year that would have required Shareholders approval under provisions of Section 188 of the Companies Act, 2013 or of the Listing Regulations. The Company has adopted a Related Party Transactions Policy duly approved by the Board, which is uploaded on the Companys website & may be accessed at link -amended.pdf.

Further, in terms of SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018 dated 9th May, 2018, the transaction with person / entity belonging to the promoter/promoter group holding 10% or more shareholding in the Company are as under:

Name of the Entity % Holding in the Company Amount ( Cr.) Nature of Transaction
Shree Capital Services Ltd. 25.79% 0.24 Payment of Office Rent
8.03 Reimbursement towards purchase of equity shares of Subsidiary
0.02 Reimbursement of Expenses
Digvijay Finlease Ltd 12.16% 14.43 Reimbursement towards purchase of equity shares of Subsidiary
0.04 Reimbursement of Expenses

f) Deposits from Public: The Company has not accepted any deposits from public covered under Chapter V of the Companies Act, 2013 during the year and as such, no amount on account of principal or interest on deposits from public was outstanding.

g) Vigil Mechanism/ Whistle Blower Policy: The

Company has adopted a whistle blower policy and has established the necessary vigil mechanism for employees and Directors to report concerns about unethical behaviour. The policy provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit and Risk Management Committee. The whistle blower policy may be accessed on the website of the Company at link whistleblower-policy.pdf.

h) Remuneration Policy: Company firmly believes that it needs to structure remuneration of its people in a manner that is both competitive and satisfies the needs of its people who are its real assets. Its remuneration policy is, therefore, designed to achieve this vision. The policy has be en a pproved by th e Boa rd on th e recommen d ati on of N omi n ati on cu m Remuneration Committee. The policy is applicable to Directors, Key Managerial Personnel and other employees. The policy provides that while nominating appointment of a Director, the Nomination cum Remuneration Committee shall consider the level and composition of remuneration which is reasonable and sufficient to attract, retain and motivate the Directors for delivering high performance. The Remuneration Policy is enclosed at Annexure-7 and can be accessed on the website of the Company at link n-policy-new.pdf.

i) Policy on Prevention, Prohibition and Redressal of Sexual Harassment at Workplace: The Company has complied with the provisions of the constitution of the Internal Committee under the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013 and has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace, in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder. Company has formed an Internal Complaints Committee for prevention and redressal of sexual harassment at workplace. The Committee has four members and is chaired by a senior woman member of the organization. The Company has not received any complaint of sexual harassment during the financial year 2018-19.

j) Material Changes after the Close of Financial Year: There have been no material changes and commitments which have occurred after the close of the year till the date of this Report, affecting the financial position of the Company.

k) Significant and Material Orders passed by the Regulators or Courts: No significant material orders have been passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations.

l) Maintenance of Cost Records: Company is required to maintain cost records as specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013, accordingly such accounts and records are made and maintained by the Company.

m) Compliance with Secretarial Standards:

Company has complied with the Secretarial Standards issued by Institute of Companies Secretaries of India (ICSI) on Board Meetings (SS- 1) and General Meetings (SS-2).


The Directors take this opportunity to express their deep sense of gratitude to its lenders, Central and State Governments and the local authorities for their continued co-operation and support. They also would like to place on record their sincere appreciation for the commitment, hard work and high engagement level of every member of the Shree family without which the exemplary performance of the Company year after year, would not have been possible. The Directors would also like to thank its various stakeholders of the Company customers, dealers, supplies, transporters, advisors, local community, etc. for their continued committed engagement with the Company. Lastly, the Directors would also like to thank you, the Members of the Company for the confidence and trust reposed in them.

For and on behalf of the Board
B. G. Bangur
Place: Kolkata Chairman
Date: 18th May, 2019 DIN:00244196