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Directors Report of JK Lakshmi Cement Ltd.

Mar 31, 2016

Dear Members,

The Directors have pleasure in presenting the 76th Annual Report together with the Audited financial statements of the Company for the financial year ended 31st March 2016.

FINANCIAL RESULTS

Rs. in Crore

2015-16 2014-15

Sales & Other Income 2999.63 2596.69

Profit before Interest & 330.41 377.66 Depreciation

Profit before Depreciation 138.11 286.92

Profit after Tax 6.28 95.60

Transfer from Debenture 1.91 7.19 Redemption Reserve (Net)

Surplus brought forward 179.81 130.46

Amount available for 188.00 233.25 appropriation

Appropriations

- Dividend 3.54 28.32 (incl. tax on Dividend)

- General Reserve - 25.12

Surplus carried to Balance 184.46 179.81 Sheet

188.00 233.25

DIVIDEND

Your Directors are pleased to recommend a dividend of Rs. 0.25 per Equity Share of Rs. 5 each (5%) for the year ended 31st March 2016. The Dividend outgo would amount to Rs. 3.54 crores (inclusive of Dividend Distribution Tax of Rs. 0.60 crores). The Dividend subject to approval at the AGM on 7th September 2016 will be paid to those Shareholders whose names are borne on the Register of Members of the Company as on the date of book closure for the AGM.

PERFORMANCE

The Company''s performance during the Financial Year 2015-16 has been satisfactory in terms of better capacity utilization at 82% as against the Industry average of 66%.

The Company has been able to increase its Production and Sales by 26% and 23% respectively. The Company continues to be one of the least cost producers and has laid great emphasis on cost optimization at all levels. Its fuel consumption was at 76 Kg/Tonne in FY 2015-16 as against 81 Kg/Tonne in the previous FY 2014-15.

The Durg Plant has performed satisfactorily in the very first full year of its operations and achieved 104% capacity utilization in the last quarter of FY 2015-16. Company has become a third largest player in Chhattisgarh market in a short span of time.

During the year, the Company witnessed a sharp fall in the cement prices in most of its markets. Consequently, its sales realisation too registered a steep decline. As a result, despite a good volume growth of 23%, turnover of the Company rose by only 16% from Rs. 2596.69 Crore to Rs. 2999.63 Crore. The Company''s Operating Profit was lower at Rs. 330.41 Crore as against Rs. 377.66 Crore in the previous year. Besides substantially lower prices, the Company''s profitability got impacted due to the additional burden of interest and depreciation relating to commissioning of the first phase of the integrated Greenfield Cement plant at Durg. After recognizing Deferred Tax Assets, the Company''s Net Profit stood at Rs. 6.28 Crore as against Rs. 95.60 Crore achieved in FY 2014-15.

PROGRESS OF THE PROJECTS & EXPANSIONS

Durg plant, commissioned last year, has been fully operational. Work of split grinding unit at Surat got completed in March 2016 and trials are going on. This will add 1.35 million tonnes to the total capacity of your Company. Work at Orissa Grinding Unit is also progressing gradually. Project related to setting up clinkerization facility at the Company''s Subsidiary, Udaipur Cement Works Ltd. (UCWL) is expected to be completed by Q4 of FY 2016-17. Company''s total capacity which stood at 8.6 million tonnes as at end of March 2016 is expected to grow to about 11 million tonnes besides 1.6 million tonnes of UCWL by March 2017.

INDUSTRY SCENARIO

The Cement Industry, currently having a capacity of more than 400 million tonnes per annum is gradually moving towards consolidation. The leading 4 players on all India basis as well as on regional basis account for about 50% of the total capacity as also the market share. Cement business being capital intensive with longer gestation period and investment cycles, consolidation helps the industry to meet Nation''s emerging needs in orderly fashion and in time.

We expect that the new capacity additions shall be considerably lower, may be, less than 5% per annum, over the next few years thereby narrowing the existing large supply-demand imbalance.

OPPORTUNITIES

In the year 2015, India for the first time in its recent history, surpassed China to emerge as top FDI destination in the world. It attracted more than 40 Billion US $ of investment during April to December 2015. With the Indian economy growing at current pace and with other favorable micro indicators such as inflation, budget & trade deficit, exchange & interest rates, growth of non-food credit etc., there are huge expectations of significant turn-around in the industry fortunes in FY 2016-17.

The Prime Minister in the recent past has laid considerable emphasis on the schemes and policies such as ''Smart Cities'', ''Swacch Bharat'', ''AMRUT'' and most ambitiously ''Housing for All by 2022''. These schemes when fully implemented are expected to revive the cement consumption all over the country. Further, increase of 46% in the budget allocations for infrastructure segment in the Union Budget for FY 17 and the emphasis being laid by the present Government on the Highway Projects and Concrete Roads Construction augurs well for cement consumption in all 4 key segments viz. Housing, Infrastructure, Commercial Real Estate and Industry, on a sustainable basis.

These initiatives will help to absorb the excess capacity to the extent of 40 to 50% in certain regions and above 25% for the country on the whole.

The last quarter of FY 2015-16 has seen some upsurge in cement demand in certain pockets of the country with corresponding improvement in prices and margins. With the expectations of overall GDP growth of above 7.5%, the Industry is hopeful of seeing at least 8% growth in cement demand in the FY 2016- 17 with a possible 2% upside on account of the policies and schemes announced by the Government.

THREATS & CHALLENGES

The continued imbalance in the cement demand and supply has led to considerably lower sales realization. Fresh increase in the cost by way of mandatory contribution of 30% of royalty on limestone to District Mineral Foundation (DMF) and the rising cost of power, has resulted in substantial shrinking of EBITDA margins. The capital cost of the new capacities additions, is also expected to go up due to higher cost of acquisition of new mining leases and land. With current capital cost of approx. Rs. 750 Crores required to create a fresh 1 million tonne per annum cement capacity, the industry needs considerably higher EBITDA margins for a sustained growth of the industry.

STRATEGIC IMPERATIVES & OUTLOOK

With the industry experiencing a certain structural changes in terms of consolidation, cost economics, demand patterns and increasing barriers for new capacity additions, etc., the strategy can no longer be singularly focused on investing to create more capacities for growth. It is imperative for the Company to adopt a short term, a medium term and a long term vision to remain relevant and competitive in the industry.

The Company having already made substantial investments in building capacities, the immediate short term focus now shall be on meaningful absorption of such capacities and further improving all round operational efficiencies. With the expected improvement in the cement prices, it is hoped that the Company will achieve better operating margins and profitability on a sustainable basis over the next few years.

In the medium term, the Company shall strive to consolidate on market share and to further raise brand positioning through introduction of premium and differentiated value added products, among others.

Our premium Cement Brand Pro , which was introduced in October 2014 in existing market, has been well accepted and achieved stable and sustainable volumes. Another premium Cement brand, namely, "Platinum" was launched in the East last year which has also evoked satisfactory response.

Keeping in mind changing construction practices, efforts are being made to create more value added products and services which can increase the pace of construction and improve the quality of construction.

Your directors are fairly optimistic about the future of the industry in general and the Company in particular. The cement demand is highly dependent on private consumption. The success of ''Make in India'', ''Skill India'', ''Stand up India'' is likely to be largely driven by private investments and entrepreneurship. India due to its vast pool of young population is in unique position to harvest much talked about demographic dividend. On the whole, with the silver linings already on the horizon, the hopes of a brighter future are far stronger than the gloom at the dawn.

HUMAN RESOURCES

Our sustained focus and best-of-the class HR practices have strengthened a culture, where commitment towards results are very high. The contributions of our human capital during the year were amply demonstrated through numerous efficiency parameters and effective outcomes besides continued accomplishments in soft metrics such as motivation, satisfaction and engagement scores. Notable achievements were made in capacity utilization and cost optimization. Stabilisation of the Company''s Greenfield cement plant at Durg in a record time as compared to industry standards is a manifestation of our people''s high level of ownership and personal motivation at work.

In the area of marketing excellence, against an industry average growth of 2% in our existing market, the Company grew by 5% in cement sales for the year under report. Our in-house R&D has helped to achieve edge in market through initiation, development and production of premium cement and value added products. Our empowered human capital has played a significant role in all above achievements. Utilizing the in-house talents, nurturing and developing expertise over the years through sustained processes and systems with emphasis on learning, development, competency assessments, improvement projects, cross- functional teams, coaching and other HR interventions have proven to be real differentiators.

NEW MARKETS

It is a matter of great pleasure that the planned strategy of your Company to enter into Eastern Market at a premium positioning has worked well and within a year, it has reached to top 3 positions in terms of volumes in the home market. A very strong dealer network has been developed and the same is expanding. It is heartening that the Company in its very first year of operations has bagged the "Most Trusted Brand Award" from Hon''ble Chief Minister of Chattishgarh.

INTERNAL CONTROL SYSTEM

The Company has in place a robust Internal Control System under which its Independent Internal Audit Department carries out extensive audit covering all significant areas of Company''s operations throughout the year. The Company has also appointed External Auditors to carry out Internal Audit for its key locations and marketing offices. The Internal Auditors regularly review the adequacy and effectiveness of Company''s Internal Control Systems. Reports of the Internal Auditors are placed before the Audit Committee on Quarterly basis for review. The Audit Committee also monitors the implementation of the recommendations of the Auditors on Systems improvement as well as Process improvement.

The Company also has a robust Budgetary Control System & MIS System under which actual operational performance are mapped against the Budget and the variance are analyzed to take corrective actions. Further, an enterprise wide Legal Compliance Monitoring Software Tool has been implemented to monitor and ensure timely compliances of all applicable statutory requirements.

INTERNAL FINANCIAL CONTROLS

The Company has established adequate Internal Financial Controls commensurate with its size, scale and complexity of its operations. These are designed to ensure adherence to the Company''s policies, safeguarding of its assets and prevention & detection of frauds & errors, accuracy & completeness of financial records and timely preparation of reliable financial information.

The Controls & Systems of the Company have over the years have been further strengthened with the Implementation of ERP (SAP) which connects all the plants as well as offices & Marketing offices to ensure seamless data and information flow. The Company has also implemented Standard Operating Procedures (SOPs) for its various areas of operations.

With a view to ensure that such Controls & Systems are reinforced on an on-going basis, compliances thereto including SOPs are regularly monitored and also periodically reviewed by the Internal Auditors and exceptions reported.

EXTRACT OF ANNUAL RETURN

An extract of the Annual Return as on 31st March 2016 in the prescribed form MGT -9 is attached as Annexure ''A'' to this Report and forms part of it.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENT

The particulars of loans, guarantees or securities and investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the financial statements.

RELATED PARTY TRANSACTIONS

During the financial year ended 31st March 2016, all the contracts or arrangements or transactions entered into by the Company with the Related Parties were in the ordinary course of business and on arms'' length basis and were in compliance with the applicable provisions of the Companies Act, 2013 and the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.

Further, the Company has not entered into any contract or arrangement or transaction with the Related Parties which could be considered material in accordance with the Policy of the Company on materiality of Related Party Transactions. In view of the above, disclosure in form AOC-2 is not applicable.

The Related Party Transaction Policy approved by the Board is available on the website of the Company.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Dr. Raghupati Singhania retires by rotation and being eligible offers himself for re-appointment at the ensuing AGM.

The Board of Directors of the Company has re-appointed

Shri Bharat Hari Singhania and Smt. Vinita Singhania as Managing Directors, for a term of 5 years each w.e.f. 1st October 2016 and 1st August 2016, respectively. The Board has also re-appointed Dr. Shailendra Chouksey and Shri Sushil Kumar Wali as Whole-time Directors of the Company, for a term of 3 years each w.e.f. 1st August 2016. These are subject to requisite approval of members of the Company at the ensuing AGM. The Board recommends their re-appointments.

There has been no change in the Key Managerial Personnel of the Company, during the year under review.

All the Independent Directors of the Company have given requisite declarations that they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and also Regulation 16 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.

CONSERVATION OF ENERGY ETC.

The details as required under Section 134(3)(m) read with the Companies (Accounts) Rules, 2014 is annexed to this Report as Annexure ''B'' and forms part of it.

CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements have been prepared by the Company in accordance with the applicable Accounting Standards. The Audited consolidated financial statements together with Auditors'' Report form part of the Annual Report.

A report on the performance and financial position of each of the subsidiaries and associates included in the consolidated financial statements is presented in a separate section in this Annual Report. Please refer AOC-1 annexed to the financial statements in the Annual Report.

Pursuant to the provisions of Section 136 of the Act, the financial statements, consolidated financial statements alongwith relevant documents and separate audited accounts in respect of subsidiaries are available on the website of the Company.

During the financial year under review, no company has become or ceased to be your Company''s subsidiary or joint venture or associate.

DEPOSITS

Pursuant to the approval of members by means of a Special Resolution at the Annual General Meeting held on 4th September 2014, the Company has continued to accept deposits from the public, in accordance with the provisions of the Companies Act, 2013 (Act) and the Rules made thereunder.

The Particulars in respect of the deposits covered under Chapter V of the said Act, for the financial year ended 31st March 2016 are- (a) Accepted during the year- Rs. 4.59 crores; (b) Remained unclaimed as at the end of the year- Rs. 0.18 crores; (c) Default in repayment of deposits or payment of interest thereon at the beginning of the year and at the end of the year- NIL and (d) Details of deposits which are not in compliance with the requirements of Chapter V of the said Act- NIL.

AUDITORS

(a) Statutory Auditors and their Report

M/s Lodha & Co., Chartered Accountants, have been appointed as Auditors of the Company to hold the office from the conclusion of the 74th Annual General Meeting held on 4th September 2014 until the conclusion of the 77th Annual General Meeting to be held in the Year 2017, subject to ratification of their appointment by the members at the respective AGMs to be held in the years 2015 and 2016. Accordingly, being eligible, matter relating to the appointment of the Auditors will be placed for ratification by members at the forthcoming Annual General Meeting. The observations of the Auditors in their report on Accounts and the financial statements, read with the relevant notes are self explanatory.

(b) Secretarial Auditor and Secretarial Audit Report

Pursuant to the provisions of Section 204 of the Companies Act, 2013, the Board of Directors appointed Shri Namo Narain Agarwal, Company Secretary in Practice as Secretarial Auditor to carry out Secretarial Audit of the Company for the financial year 2015-16. The Report given by him for the said financial year in the prescribed format is annexed to this Report as Annexure ''C''. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

(c) Cost Auditor and Cost Audit Report

The Cost Audit for the financial year ended 31st March 2015 was conducted by M/s R.J. Goel & Co., Cost Accountants, Delhi and as required Cost Audit Report was duly filed with Ministry of Corporate Affairs, Government of India. The Audit of the cost accounts of the Company for the financial year ended 31st March 2016, is being conducted by the said Firm and their Report will also be filed.

CORPORATE SOCIAL RESPONSIBILITY

Your Company strongly believes in the process of giving back to the society. Since inception the Company has taken this as a moral responsibility to build a better society by focusing on areas such as Health, Sanitation, Education, Skill Development, Livelihood Interventions, to name a few.

The Company has undertaken lots of activities for empowering women especially tribal women in the areas of Adult Literacy, Formation of Self Help Groups for income generation through providing them trainings on various trades. During the Financial Year, the Company has also focused on activities related to Swachh Bharat Mission by constructing IHHLs in the villages, providing Sanitary Napkins especially to adolescent girls by installing Napkin making machines near our Plant locations.

The Company has requisite Corporate Social Responsibility (CSR) Policy in accordance with the provisions of the Companies Act 2013 and rules made thereunder. The contents of the CSR Policy are disclosed on the website of the Company.

The annual report on the CSR activities undertaken by the Company during the financial year under review, in the prescribed format is annexed to this Report as Annexure ''D''.

PARTICULARS OF REMUNERATION

Disclosure of the ratio of the remuneration of each director to the median employee''s remuneration and other requisite details pursuant to Section 197(12) of the Companies Act, 2013 (Act) read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, is annexed to this Report as Annexure ''E''. Further, Particulars of Employees pursuant to Rule 5(2) & (3) of the above Rules, form part of this Report. However, in terms of provisions of Section 136 of the said Act, the Report and Accounts are being sent to all the members of the Company and others entitled thereto, excluding the said particulars of employees. Any member interested in obtaining such particulars may write to the Company Secretary. The said information is available for inspection at the Registered Office of the Company during working hours.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

During the financial year under review, there were no significant and material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations.

CORPORATE GOVERNANCE - including details pertaining to Board Meetings, Nomination and Remuneration Policy, Performance Evaluation, Risk Management, Audit Committee and Vigil Mechanism.

Your Company reaffirms its commitment to the highest standards of corporate governance practices. Pursuant to Regulation 34 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, a Management Discussion and Analysis, Corporate Governance Report and Auditors Certificate regarding compliance of conditions of Corporate Governance are made a part of this Report. The Corporate Governance Report also covers the following:

(a) Particulars of the four Board Meetings held during the financial year under review.

(b) Policy on Nomination and Remuneration of Directors, Key Managerial Personnel and Senior Management including, inter alia, the criteria for performance evaluation of Directors.

(c) The manner in which formal annual evaluation has been made by the Board of its own performance and that of its Committees and individual Directors.

(d) The details with respect to composition of Audit Committee and establishment of Vigil Mechanism.

(e) Details regarding Risk Management.

DIRECTORS'' RESPONSIBILITY STATEMENT

As required under Section 134(3)(c) of the Companies Act, 2013, your Directors state that:-

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) the accounting policies have been selected and applied consistently and judgments and estimates made 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 profit and loss of the Company for that period;

(c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the said Act 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) the internal financial controls to be followed by the Company have been laid down and that such internal financial controls are adequate and were operating effectively; and

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

ACKNOWLEDGEMENTS

Your Directors wish to thank and acknowledge the Financial Institutions, Banks, Government authorities, Shareholders, suppliers, dealers, business associates and the Company''s esteemed customers for their continued trust and support.

Your Directors also wish to place on record their appreciation of the contribution made by the Company''s employees at all levels but for whose hard work, solidarity and support the Company''s consistent growth would not have been possible.

On behalf of the Board of Directors

New Delhi Bharat Hari Singhania

Date: 11th July 2016 Chairman & Managing Director


Mar 31, 2013

Dear Members,

The Directors have pleasure in presenting the 73rd Annual Report together with the Audited Accounts of the Company for the year ended 31st March 2013.

FINANCIAL RESULTS

Rs. in Crore

2012-13 2011-12

Sales & Other Income 2355.70 1985.03

Profit before Interest & 484.16 399.13 Depreciation

Profit before Depreciation 400.62 311.71

Profit after Tax 175.74 108.78

Surplus brought forward 102.00 95.71

Amount available for 277.74 204.49 appropriation

Appropriations

- Dividend- (incl. tax 34.28 27.49 on Dividend)

- General Reserve 120.00 75.00

- Capital Redemption 2.34 - Reserve

- Debenture Redemption 10.30 - Reserve

- Surplus carried to 110.82 102.00 Balance Sheet

277.74 204.49

Financial year 2012-13 has been a year of satisfactory performance, amidst lack lustre growth of cement industry during last three years in succession. Company registered a volume growth of 8% over the previous year as against industry''s growth of about 5.5%. Company''s capacity utilization at 94% on its enhanced capacity of 53 lac MT compares favourably with that of industry''s 74%.

The Company continues to make steady progress in its efficiency parameters. This has enabled the Company to be one of the least cost producers amongst its peers in the Indian Cement Industry.

Company''s sales realization aided by improvement in the cement prices in some of our markets as also due to Company''s efforts towards the market optimization, both segmentwise and geographywise, has shown satisfactory improvement. Company''s ex-factory realization would have been better but for the brunt of considerable increase in the freight costs consequent to increase in the diesel prices.

BUY BACK

The Buy-Back Offer announced by the Company on 7th February 2012 was closed on 6th February 2013. Pursuant to the said Buy-Back, the Company bought back and extinguished 46.89 Lac Equity Shares of Rs. 5 each at an average price of Rs. 64.99 per Equity Share aggregating to Rs. 30.47 crore. Consequent to the Buy-Back, the paid-up Equity Share Capital of the Company has reduced from Rs. 61.18 crore as on 31st March, 2012 to Rs. 58.84 crore as on 31st March 2013.

DIVIDEND

The Directors are pleased to recommend a dividend of Rs. 2.50 per Equity Share of Rs. 5 each (50%) for the year ended 31st March 2013. The Dividend outgo would amount to Rs. 34.28 crore (inclusive of Dividend Distribution Tax of Rs. 5 crore). The Dividend subject to approval at the AGM on 2nd August 2013, will be paid to those members whose names appear on the Register of Members as on the date of book closure for the AGM.

DIRECTORS

Your Directors express their profound grief and sorrow on the sad demise of Shri Hari Shankarji Singhania on 22nd February 2013. Shri Singhania joined the Board of Directors of the Company in the year 1951. He became Chairman of the Board in the year 1975 and continued ever since. Shri Hari Shankar ji who joined J.K. Organisation at the young age of 18 years learned the ropes of business under his illustrious father late Lala Lakshmipatji. Shri Singhania held several positions before assuming the Chairmanship of various JK Group of Companies. Shri Singhania contributed immensely not only in the growth of your Company but also in the growth of industrialization and economic development of India. In recognition, he received numerous prestigious National & International awards. Your Directors pay their respectful homage and tribute to this extraordinary human being, a great leader, an iconic industrialist and a leading statesman.

The Board of Directors at their meeting held on 29th May 2013, appointed Shri Bharat Hari Singhania as the Chairman & Managing Director and Smt Vinita Singhania as Vice Chairman & Managing Director of the Board of Directors of the Company.

Shri N.G. Khaitan, Shri S.K. Wali and Shri B.V. Bhargava, retire by rotation at the ensuing Annual General Meeting of the Company and being eligible, have offered themselves for re-appointment. The Board commend their reappointment.

INDUSTRY SCENARIO

The quick estimates released by the Central Statistics Office under the Ministry of Statistics & Programme Implementation show cumulative growth in industrial production of a meager 1% in FY 13 over FY 12. Within the indices for industrial production, while the mining showed a negative growth of 2.5%, the growth in manufacturing & electricity was 1.2% and 4% respectively. A deeper analysis of data reveals that most of the growth in manufacturing has come from consumer non- durables like apparels, textiles, footwear etc. Other sectors in manufacturing like consumer non- durables and capital goods have either recorded a marginal growth or negative growth during FY 13 over FY 12.

Similarly, lower growth has plagued the Indian Cement industry for the successive third year, with a growth of only 5.5% during FY 12-13. Against a demand growth of 13 million tonnes, capacity additions were in the order of 17 million tonnes. Drop in cement demand was caused by general economic slowdown, under performance of Infrastructure and industrial projects, high inflation and high interest rates. The shortage of construction materials like bricks, sand etc., also impacted the cement demand growth in certain pockets of North India.

EXPANSIONS

The Company continues to believe in the inherent strength of the Indian economy, notwithstanding the recent drop in cement demand. The cement industry''s future would remain bright. Your Company, therefore, has been pursuing its growth plans through its various expansion projects.

During the year, the Company has completed the augmentation of Kiln Capacities resulting in increase in its clinker manufacturing capacity from 39.60 lac tonnes to 42.90 lac tonnes p.a. at its mother plant at Jaykaypuram.

The Company is also pursuing to set up a Split Location Grinding Unit at Surat.

Your Directors in their last report had informed the Members that the Company''s 27 Lac Tonnes Greenfield Project at Durg, has been making satisfactory progress and is likely to become operational by the end of the year 2013. However, progress of work was affected due to the unfortunate incident of arson by a section of villagers from nearby the project site pressing certain unjustified demands. The fire has inter alia damaged certain section of equipments, plant and machinery. Fortunately, there has been no casualty of human life during this untoward incident. Project completion therefore would be somewhat delayed. The extent of delay would, however, depend on the delivery of the replaced equipments. The plant being fully insured, the insurance agencies are presently in the process of evaluating the losses. After a period of temporary suspension of about 3-4 weeks, construction work at the plant has since restarted and is progressing well.

The erection work at Company''s Aerated Autoclaved Concrete (AAC) Blocks Project at Jharli, Haryana with a capacity of 400M3 per day, has been completed in the month of March 2013. The Project is expected to render stabilized production by end of June 2013. The Project due to its technological and locational advantages, would enable the Company to have a larger customer base in the NCR region.

The Company has stepped up revival of Udaipur Cement Works Ltd. (UCWL). The Cement Grinding section of UCWL is likely to be commissioned in the current financial year.

EYE ON THE MARKET

The Company was able to sustain its growth momentum amidst a difficult marketing scenario by focusing strongly on a strategy of intensive rural marketing penetration coupled with an integrated programme of micro marketing across its key markets. This enabled the Company to achieve a sales growth of 8% in the face of lower industry growth of all India level and a growth of below 4% in our marketing zone.

Focused campaigns for deep rural penetration in key markets like Rajasthan and Haryana were carried out during the year with excellent results. The Company''s new grinding unit at Jhajjar in Haryana was launched successfully in April''12 and is almost operating now at full capacity. The Company which was earlier operating only in select pockets of Haryana is now operating almost right across the State and the sales in the State has increased considerably. The kind of quantum growth achieved in a short time in a new market like Haryana post the launch of the grinding unit, gives us tremendous confidence to move into new markets.

The Company''s reliance on its network of highly loyal and exclusive dealers has also enabled it to operate effectively in an increasingly competitive environment created by the entry of new brands. The Company''s dealer network grew by over 15% during the year of which an overwhelming majority of dealers have been more than two decades with the Company. The Company also focuses strongly on developing an exclusive network and this strategy has greatly helped during the periods of intense competition.

The Company placed high degree of importance to various CRM activities and loyalty programmes for its channel partners. Various interactive events were held with the channel partners and their families on a calendarized basis right through the year where the top management participated and interacted with the various business partners on a sustained basis. Such interactions not only help to further strengthen the bonds between the Company and its business partners but also enable the senior management to directly listen to the Voice of the Customer.

The Company maintained its high brand visibility during the year through a well planned strategy of being present in high impact programmes. Apart from these topline measures, there has also been great deal of emphasis on carrying out micro marketing activities at ground level in every district.

INCREASING THE PRODUCT BASKET

The Company is continuously increasing its basket of offerings to its customers of value added products, the latest being AAC Blocks with the brand name "JK SMART BLOX".

The AAC blocks, though relatively new in the country, are being extensively used in the developed countries and are a preferred alternative to the traditional red clay bricks (made by using top layer of precious agriculture land). These AAC blocks are light in weight and offer high thermal insulation. With these inherent characteristics, this product will offer recurring life long savings in the power consumption besides savings in construction time and labour cost.

The Company also expanded its RMC presence in its home market of Rajasthan by adding 2 more plants in Rajasthan. These plants incidentally are the first such units set up by the organized sector in the two tier cities. The Company''s ability to offer a range of value added products (besides Cement) further consolidates its brand presence in various markets.

INTERNAL CONTROL SYSTEM

The Company has an independent Internal Audit Department to carry out extensive audits throughout the year covering all areas of Company''s significant operations. Besides such in-house strength, Company has also appointed external auditors for auditing its various outstation operations. The Audit Committee regularly reviews adequacy and effectiveness of the Company''s internal control environment and monitors implementation of audit recommendations.

The Company has further strengthened the internal controls through SAP ERP systems connecting all plants, sales offices and head office enabling seamless data and information flow. The Company also has robust Budgetary Control System and Management Information System (MIS).

HUMAN RESOURCES

In line with Company''s philosophy of "Where Caring Partners the Growth", management of Human Resources has always been on the top priority in order to meet key objectives. Besides several HR practices for developing leadership and talent pipeline, executive coaching, training and development, employee engagement initiatives in place already, some new programmes like We - Care (Cementing Aspirations For Receptive Exchange), MET (My Exclusive Time), etc. were undertaken successfully. This year''s focus on Next HR Practices is firmly embedded in the HR Architecture which is aligned more towards ''holistic'' approach. During the year under report, the Company showcased its Best HR Practices in several forums and were highly appreciated.

Over the past several years the Company''s unrelenting focus on human resources has been demonstrated through consistent and significant improvement in several HR domains including employee retention level, employee satisfaction/engagement level, individual and team performance and maturing of various HR processes and system which has also contributed in unique ways towards better business performance. The result of consistent commitment to human capital was aptly demonstrated in the Employee Engagement Survey (2013) with external agency M/s TNS India Pvt. Ltd. which was conducted with 94% of MCS participation and TRI*M Index of 91 (85 in 2011).

In the context of external recognition, the Company was bestowed upon with several reputed awards for its achievement including "India''s Best Companies To Work For 2012" (amongst Top 50 Companies in India, 2nd Position in Leadership Development and 5th position in Manufacturing and Production Industry) from Great Place to Work Institute India and The Economic Times, "NIPM National Award For Best HR Practices 2012" from National Institute of Personnel Management, Strong Commitment towards HR Excellence 2012 from Confederation of Indian Industry, etc. The successful HR Practices and outcomes during the year were result of the Company''s long standing value for human beings, their growth, development and well being in the long run with care, compassion and a stimulating environment to continue to grow and excel. This journey of striving for excellence continues with focus on continual growth of the Company through active engagement of its human capital.

FINANCIAL MANAGEMENT

Good revenue growth and strong financials, enhanced profit and strong balance sheet are the highlights of the Company''s performance during 2012-13.

The consistent excellent operational performance has enabled the Company to show good Financial Results year after year. This has resulted in the Company having a very strong Balance Sheet with adequate cushions to withstand any challenges which the Industry may face. Efficient management of the financial resources has resulted in the Company achieving low gearing and strong key financial fundamentals. The liquidity position of the Company continues to be strong, enabling it to retain the highest possible Short Term Rating of A1 (A One Plus) for its Commercial Paper Programme. Its inherent strength in the Balance Sheet together with its other strong operating parameters has enabled the Company to maintain its Long Term Rating of AA- (Double A Minus). With these strong Ratings, the Company continues to borrow Short Term Funds at the most competitive rates.

The Company continues to judicially deploy its surplus resources in the market in tax-efficient instruments of various Mutual Funds and PSUs. As a result, the Company is able to generate high post-tax returns on its surplus funds.

The Assets Turnover Ratio of the Company has consistently been going up with capacity additions through marginal low cost investments in its Clinker & Grinding Capacities as is depicted herein below:

Liquidity & Gearing

For funding the Company''s growth plans of doubling the Capacity from 5 million tonnes to 10 million tonnes over the next two years, the Company is deploying a blend of Rupee/ ECB funding alongwith internal accruals without diluting the equity with an eye on the overall Debt Equity Ratio of the Company. This shall enable the Company to enhance the overall returns to the Stakeholders in the long run.

OUTLOOK & STRATEGIC IMPERATIVES

Housing, commercial real estate and infrastructure sectors account for about 95% of the cement consumed in the country. Various studies suggest that approx. 250 million people in the country are homeless and about 80% of rural population does not have a permanent shelter. In case of infrastructure sector, which includes roads, irrigation, water supply, power etc., the gap between the requirements and availability is a well known fact. Your Directors are confident of the long term sustainability of the demand for cement.

Last 3 years'' trend in demand growth of the industry has been lower than expectations and below the GDP growth at national level. However, at micro level, there have been huge variations in growth rates between the states. The silver lining is that the States which have been lagging in the past are now working hard to successfully catch up with the rest of the country. A deeper analysis of each year reveals different reasons of lower than expected growth, with slackened pace of infrastructure development being a common factor in these years. Real estate construction to some extent has been impacted due to high rate of inflation leading to credit squeeze & higher interest rates and non availability of labour in many parts of the country.

There are indicators which suggest the possibility of demand bouncing back in the financial year 2013-14. Growing realization among the policy makers to remove the policy bottlenecks in land acquisition could be the most important factor. Providing adequate support for the growth of infrastructure and other construction related sectors including adequate resource allocation to key infrastructure development projects like Dedicated Freight Corridor (DFC), expediting the tendering process in highway projects, extending JNURM (Jawahar Lal Nehru Urban Renewal Mission) scope to more cities, incentives for construction of affordable housing, lowering of interest rates, etc. would go a long way. In addition, there is positive forecast for a normal monsoon, in terms of expectation of amount of rain, the onset time and uniformity of the spread through the country. A good monsoon should bring down the food inflation and increase in rural incomes resulting in enhanced construction activity and higher cement demand. Many government funded projects generally take off during the election year resulting in boosting construction activity and cement demand. This year, some major states in north and central India are likely to go for elections towards the end of the year followed by general elections in 2014. Therefore it is hoped that the cement demand may bounce back and be on strong growth trajectory.

On supply side, the pace of capacity additions have slowed down during the last year due to delays in implementation of new projects and brownfield expansions. Though, at approx. 360 million tonnes p.a. capacity, the industry still has about 25 - 30% surplus capacity, it is expected that either the surplus to remain at same level or the gap between demand and supply gradually reduce to desired levels in the next 3 - 4 years time. Improvement in utilization rates will help the industry to manage fixed cost better and have better gross margins.

To sum up, it is hoped that the Company shall achieve higher volumes during the year. There are chances of cement demand bouncing back, thereby correction in the prices, which had gone down considerably in the last quarter of FY 13. Further, with the expectation of costs remaining under control on account of efficient operations, we are hopeful of good financials.

SUBSIDIARY COMPANY

The Annual Accounts of the wholly-owned Subsidiary, Hansdeep Industries & Trading Company Limited, have been consolidated and the Statement pursuant to Section 212 of the Companies Act, 1956 read with General Circular No. 51/12/2007-CL-III dated 8th February 2011 of the Ministry of Corporate Affairs, containing the details of the Company''s Subsidiary is attached.

In terms of the said Circular dated 8th February 2011, copies of the Balance Sheet, Statement of Profit and Loss, Reports of the Board and the Auditors of the aforesaid Subsidiary, have not been attached to the Balance Sheet of the Company. However, the annual accounts of the subsidiary company and the related detailed information shall be made available to the Shareholders of the Company and that of the Subsidiary, seeking such information at any point of time.

The annual accounts of the subsidiary company are also available for inspection by any Shareholder at the Head Office of the Company and that of its Subsidiary.

AUDITORS

M/s. Lodha & Co., Chartered Accountants, Auditors of the Company, retire and are eligible for re-appointment. The observations of the Auditors in their Report on Accounts read with the relevant notes are self-explanatory.

COST AUDIT

The Cost Audit for the financial year ended 31st March 2012 was conducted by M/s. R.J. Goel & Co., Cost Accountants, Delhi and as required, Cost Audit Report was duly filed with Ministry of Corporate Affairs, Government of India.

The Audit of the Cost Accounts of the Company for the financial year ended 31st March 2013 Is being conducted by the said firm and the Report will also be filed.

CORPORATE GOVERNANCE

The Company believes in maintaining the highest standards of Corporate Governance. Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, Corporate Governance Report and Auditors'' Certificate regarding due compliance of the conditions of Corporate Governance are made a part of this Annual Report.

CONSERVATION OF ENERGY ETC.

Pursuant to Section 217(1)(e) of the Companies Act 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988, particulars of energy conservation, technology absorption, foreign exchange earnings and outgo are annexed and forms part of the Annual Report.

PARTICULARS OF EMPLOYEES

Information in accordance with the provisions of Section 217(2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules, 1975 regarding employees is given in Annexure B to the Directors'' Report. However, as per the provisions of Section 219(1)(b)(iv) of the Companies Act 1956, the Annual Report is being sent to all the members of the Company excluding the aforesaid information. Any member interested in obtaining such particulars may write to the Secretary at the Company''s New Delhi Office.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 217(2AA) of the Companies Act, 1956, the Directors state that:

- in the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

- the accounting policies have been selected and applied consistently and judgements and estimates made 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 Profit or Loss of the Company for that period;

- proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the said Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

- the annual accounts have been prepared on a going concern basis.

ACKNOWLEDGEMENT

Your Directors wish to place on record their appreciation for the continued support and co-operation received from the financial institutions, banks, various Central and State government agencies, shareholders, suppliers, dealers and in particular the valued customers.

Your Directors also record their appreciation for the dedication and passion of "Team-JK Lakshmi" which has enabled the Company to remain at the forefront of the Industry.

On behalf of the Board of Directors

New Delhi (Bharat Hari Singhania)

Date: 29th May, 2013 Chairman & Managing Director


Mar 31, 2012

The Directors have pleasure in presenting the 72nd Annual Report together with the Audited Accounts of the Company for the year ended 31st March 2012.

FINANCIAL RESULTS

Rs in Crore

2011-12 2010-11

Sales & Other Income 1985.03 1524.31

Profit before Interest & 391.37 223.88 Depreciation

Profit before Depreciation 311.71 163.40

Profit after Tax 108.78 59.13

Surplus brought forward 95.71 104.35

Amount available for 204.49 163.48 appropriation

Appropriations

- Dividend - (incl. tax on 27.49 17.77 Dividend)

- General Reserve 75.00 50.00

- Surplus carried to Balance 102.00 95.71 Sheet

204.49 163.48

DIVIDEND

Your Directors are pleased to recommend a dividend of Rs 2/- per Equity Share of Rs 5 each (40%) for the year ended 31st March 2012. The Dividend outgo would amount to Rs 27.49 crore (inclusive of Dividend Distribution Tax of Rs 3.84 crore). The Dividend subject to approval at the AGM on 4th August 2012, will be paid to those Shareholders whose names appear in the Register of Members as on the date of book closure for the AGM.

OPERATIONS

Your Company has registered an all-round improvement in its performance over the previous year 2010-11. Gross sales turnover at Rs 1922 crore was higher by 29% compared to Rs 1491 crore in the previous year. PBIDT at Rs 392 crore, is 76% higher than Rs 223 crore in the previous year, which demonstrates Company's robust performance. The growth in Company's volume by 14% is much better than the industry's growth of about 7%. We are happy that the Company achieved 100% capacity utilisation vis-a-vis industry's average of 75%.

During the year, the Company further improved its operating efficiencies. There was reduction in consumption of both power and fuel per unit of production. In addition, the Company improved usage of alternate fuel of bio-mass from 2% to 6%. These improvements have enabled the Company to also reduce the carbon footprint.

EXPANSIONS

Company's various initiatives towards increasing its overall cement production capacity and undertaking value added products, as under, are making satisfactory progress:

- The 0.55 Million Tonnes grinding unit in Haryana with an investment of over Rs 100 crore has commenced commercial production in April 2012. This has raised the Company's production capacity from 4.7 Million Tonnes p.a. to 5.3 Million Tonnes p.a.

- Augmenting the existing capacity of the Company's clinkerisation at Jaykaypuram by additional 0.33 Million Tonnes p.a. from the existing 3.96 Million Tonnes p.a. to 4.29 Million Tonnes p.a. at a much lower capital cost. The additional clinker would enable the Company to further enhance cement production capacity by about 0.5 Million Tonnes p.a.

- The 2.7 Million Tonnes Greenfield Project at Durg, in Chattisgarh with a capital outlay of Rs 1250 crore is making satisfactory progress. It is likely to go in operation by the end of the year 2013. Besides clinkerisation facility at Durg, the Project will have two additional split location grinding units in different states of Eastern India. This will enable the Company to substantially cover Eastern Indian markets.

- On commencement of the above Projects Company's cement capacity will increase to about 8.5 Million Tonnes.

As reported earlier, the Company as a part of its growth plans, has also undertaken revival of Udaipur Cement Works Ltd. having an installed capacity of 1.2 Million Tonnes p.a. in Udaipur, Rajasthan. This will further increase Company's overall presence in the Cement Industry.

As a part of Company's overall strategy to increase its footprint into value added products, the Company is setting up an Aerated Autoclaved Concrete (AAC) Blocks Project at Haryana, which is likely to be commissioned by March, 2013. This product would help the Building Industry to save on labour cost, reduce time as well as bring down the overall cost.

The Company continues to consolidate its presence in RMC segment and has added two more RMC Plants during the year. Plans are afoot to further expand RMC capacity in the coming financial year, thus, taking the total number of RMC Plants to about fourteen with capacity of 7 lac Cu.Mtr/annum.

OUTLOOK

The fiscal 2011-12 saw an improvement in the growth of cement consumption to 6.9% as against 5% growth witnessed in the year 2010-11. The second half of FY 11-12 was particularly better when the demand grew by 9%.

Indian Cement Industry continues to face the challenge of excess capacity build up which has resulted in low capacity utilization of about 75%. Consequently, the prices are generally under pressure. The bigger challenge, however, remains from the continuous rise in the costs, particularly those of fuel and freight costs which are largely dependent on the petroleum prices being continuously on the rise.

Government's increased impetus on urban as well as rural infrastructure development, housing and an enhanced capital allocation towards infrastructure in the 12th - Five Year Plan, will be the major growth drivers. Higher allocation by the Govt. of India for infrastructure projects by over 25% in the Budget Proposal of FY 13, gives a confidence that the cement demand would get back to higher growth rates in the coming years. Further, part rationalisaton of the duty structure in the Budget would also help the Cement Industry to partly mitigate the high tax burden on this core industry.

BUY-BACK OF SHARES

The Board of Directors at their meeting held on 7th February 2012, approved Buy-Back of its fully paid up Equity Shares of Rs 5 each ("Buy-Back"), with a view to enhance overall Shareholders' value. The Buy-Back offer has been made for acquisition of Shares upto Rs 97.50 crore i.e., 9.96% of the aggregate of the total paid-up equity capital and free reserves of the Company as on March 31, 2011, at a price not exceeding Rs 70 per share. The Buy-back is being made out of the Free Reserves and/or the Securities Premium Account of the Company, from the open market through Stock Exchange(s) in India. The Buy- Back opened w.e.f. 26th March 2012 and the Company has bought back 40,78,019 Equity Shares as on 16th May 2012. Consequently, the Paid-up Equity Capital of the Company stands reduced from Rs 61.18 crore to Rs 59.14 crore (11,82,80,905 Equity Shares of Rs 5 each), as on the date of this Report.

DIRECTORS

Dr. Ajay Dua ceased to be a Director on the Board of Directors of the Company w.e.f. 30th September 2011. The Board of Directors places on record its sincere appreciation of the valuable contributions made by Dr. Ajay Dua during his tenure of office.

The Board has appointed Shri Ravi Jhunjhunwala as Additional Director of the Company, w.e.f. 26th March 2012. He is an independent Director and shall hold office upto the date of the ensuing Annual General Meeting (AGM). The Company has received requisite Notice from a Member under Section 257 of the Companies Act 1956 proposing the name of Shri Ravi Jhunjhunwala for appointment as Director liable to retire by rotation at the AGM. The Board of Directors commends his appointment as aforesaid.

Dr. Raghupati Singhania, Shri Kashi Nath Memani and Shri Pradeep Dinodia retire by rotation at the forthcoming Annual General Meeting of the Company and being eligible, offer themselves for re-appointment.

SUBSIDIARY COMPANY

The Annual Accounts of the wholly-owned Subsidiary, Hansdeep Industries & Trading Company Limited, have been consolidated and the Statement pursuant to Section 212 of the Companies Act 1956 read with General Circular No. 51/12/2007-CL-III dated 8th February 2011 of the Ministry of Corporate Affairs, containing the details of the Company's Subsidiary is attached.

In terms of the said Circular dated 8th February 2011, copies of the Balance Sheet, Profit & Loss Account, Reports of the Board and the Auditors of the aforesaid Subsidiary, have not been attached to the Balance Sheet of the Company. However, the annual accounts of the Subsidiary Company and the related detailed information shall be made available to the Shareholders of the Company and that of the Subsidiary seeking such information at any point of time. The annual accounts of the Subsidiary Company are also available for inspection by any Shareholder at the Head Office of the Company and that of its Subsidiary.

AUDITORS

M/s. Lodha & Co., Chartered Accountants, Auditors of the Company, retire and are eligible for re-appointment. The observations of the Auditors in their Report on Accounts read with the relevant notes are self-explanatory.

COST AUDIT

M/s. R. J. Goel & Co., Cost Accountants, New Delhi have been appointed as Cost Auditors of the Company for the Financial Year 2012-13 commencing 1st April 2012, subject to approval of the Central Government. Audit of the Cost Accounts of the Company relating to 'Cement' for the year ended 31st March 2012, will be conducted by the Cost Auditors and Cost Audit Report will be submitted to the Ministry of Corporate Affairs, Government of India within the prescribed time.

The Cost Audit Report for the financial year ended 31st March 2011 was filed by the Cost Auditors with the Ministry of Corporate Affairs, Government of India on 12th September 2011 (Due date 30th Sept 2011).

CORPORATE GOVERNANCE

The Company believes in maintaining the highest standards of Corporate Governance. Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, Management Discussion and Analysis, Corporate Governance Report and Auditors' Certificate regarding due compliance of the conditions of Corporate Governance are made a part of this Annual Report.

CONSERVATION OF ENERGY ETC.

Pursuant to Section 217(1)(e) of the Companies Act 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988, particulars of energy conservation, technology absorption, foreign exchange earnings and outgo are annexed and forms part of the Annual Report.

PARTICULARS OF EMPLOYEES

Information in accordance with the provisions of Section 217(2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules, 1975 regarding employees is given in Annexure B to the Directors' Report. However, as per the provisions of Section 219(1 )(b)(iv) of the Companies Act 1956, the Annual Report is being sent to all shareholders of the Company excluding the aforesaid information. Any shareholder interested in obtaining such particulars may write to the Secretary at the Company's New Delhi Office.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 217(2AA) of the Companies Act, 1956, the Directors state that:

- in the preparation of Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

- the accounting policies have been selected and applied consistently and judgements and estimates made 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 Profit or Loss of the Company for that period;

- proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the said Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

- the annual accounts have been prepared on a going concern basis.

ACKNOWLEDGEMENTS

Your Directors thank all the Shareholders, Customers, Dealers, Suppliers and Business Associates for their continued support and faith in the Company and the Financial Institutions, Banks and Government Authorities for the assistance and co-operation extended by them.

Your Directors also wish to place on record their appreciation of the contribution made by the Company's employees at all levels but for whose hard work, solidarity and support the Company's consistent growth would not have been possible.

On behalf of the Board of Directors

HARI SHANKAR SINGHANIA

Chairman

New Delhi

Date : 16th May 2012

 
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