Home  »  Company  »  Kajaria Ceramics  »  Quotes  »  Directors Report
Enter the first few characters of Company and click 'Go'

Directors Report of Kajaria Ceramics Ltd.

Mar 31, 2015

Dear Members,

The Directors are pleased to present the 29th Annual Report together with the audited financial statements of your Company for the financial year ended 31st March, 2015.

FINANCIAL RESULTS

The Company's financial performance for the year ended on 31st March, 2015 is summarised below :

(Rs. Crore)

Particulars Standalone

Year ended Year ended 31st March 31st March 2015 2014

Revenue (Net Sales) 2224 1875

EBIDTA (Operating Profit) 286 237

Profit before Tax 243 177

Tax Expense 75 60

Profit After Tax (before Minority interest) 168 117

Minority Interest - -

Profit After Tax (after Minority interest) 168 117

Balance of Profit & Loss brought forward from previous 263 207 year

Profit available for appropriation 431 324

APPROPRIATIONS

Proposed Dividend 32 26

Dividend Distribution Tax 6 4

Transferred to General Reserve 40 30

Surplus Credited to Balance Sheet 353 263



Particulars Consolidated

Year ended Year ended 31st March 31st March 2015 2014

Revenue (Net Sales) 2175 1829

EBIDTA (Operating Profit) 354 285

Profit before Tax 270 199

Tax Expense 85 68

Profit After Tax (before Minority interest) 185 131

Minority Interest 9 7

Profit After Tax (after Minority interest) 176 124

Balance of Profit & Loss brought forward from previous 274 211 year

Profit available for appropriation 450 335

APPROPRIATIONS

Proposed Dividend 32 26

Dividend Distribution Tax 6 4

Transferred to General Reserve 40 30

Surplus Credited to Balance Sheet 372 274

Financial Highlights and State of Affairs of the Company

(The financial discussion in this section is based on Standalone Financial Statements)

Your Company reported an industry-beating performance in an otherwise sluggish housing sector. The Company's net sales grew by 19% from Rs.1875 crore in 2013-14 to Rs. 2224 crore in 2014-15.

The team's efforts in raising shop-floor efficiencies and marketing effectiveness facilitated in improving business profitability despite inflationary headwinds. EBIDTA grew by 20% from Rs. 237 crore in 2013-14 to Rs. 286 crore in 2014-15 and the EBIDTA margin stood at 12.86% in 2014-15 against 12.66% in 2013-14.

Profit after tax grew by 44% from Rs. 117 crore in 2013-14 to Rs. 168 crore in 2014-15. The earnings per share (basic) increased from Rs. 15.70 in 2013-14 to Rs. 21.80 in 2014-15; the book value per share grew from Rs. 68.46 in 2013-14 to Rs. 90.89 in 2014-15.

No material change have incurred after close of the year till the date of this report, which have effect the financial position of the Company. The Company has an adequate internal financial control commensurate with the size, scale and complexity of operations. State of Affairs of the Company is disclosed in the management discussion analysis section which forms part of this report.

Outlook

The Indian tile Industry is expected to witness better days over the medium-term. This optimism is based on important realities.

Increasing urbanisation: Over the last two decades, India's urban population increased from 217 million to 377 million and this is expected to reach 600 million, or 40% of the population by 2031. By then, India is expected to have 68 cities with population of more than one million - driving housing demand.

Interest rate reduction: The recent reduction in interest rates augurs well for the housing sector. Beside, declining commodity prices are expected to reduce inflationary pressure on the Indian economy, creating a foundation for further interest rate reduction. This should improve housing demand.

Cost reduction: Reduction in international crude prices should optimise the energy bill strengthening business profitability.

Policy-driven growth: The Government's decision to develop, Housing for all by 2022, Swachh Bharat campaign (Sanitisation for all by 2019), Smart City Mission is expected to create an interesting growth opportunity for the Indian ceramic tile industry.

Growth Drivers

Capacity augmentation: The Company is increasing its operational capacity in a phased manner facilitating seamless absorption of the additional volumes:

Our joint venture partner Taurus commissioned its 5 MSM facility in June 2015. Our brownfield expansion of 3 MSM of ceramic floor tiles is scheduled to commence operations in September/ October 2015. We raised the capacity of our greenfield facility at Rajasthan from the initially budgeted 5 MSM to 6.5 MSM - this unit will kickstart operations in Q4 of this fiscal. We also forged a joint venture alliance with Floera Tiles Private limited, which will add 5.7 MSM vitrified tile capacity in Andhra Pradesh - this unit is expected to come on stream in 2016-17.

Shelf-space increase: We are increasing shelf space with existing dealing and progressively adding new dealers and sub-dealers, largely in Tier-II and Tier-III locations for wider reach and deeper penetration into demand pockets pan-India.

Consolidated Financial Statements

The Consolidated Financial Statements of the Company prepared in accordance with relevant Accounting Standards (AS) viz. AS-21, AS-23 and AS-27 issued by the Institute of Chartered Accountants of India form part of this Annual Report.

Holding, Subsidiaries, Associate Companies and their Performance

During the year under review, following companies have become the subsidiaries of the Company:

1. Taurus Tiles Private Limited

2. Kajaria Ceramics Kazakhstan, LLP

3. Kajaria Bathware Private Limited

During the year under review Kajaria Sanitaryware Private Limited ceases to be the subsidiary of the Company and become the step down subsidiary of the Company i.e (subsidiary of Kajaria Bathware Private Limited).

A report on performance and financial position (form AOC-1) of each of the subsidiaries as per the Companies Act, 2013 is provided as "Annexure-I".

Dividend

Your Directors have recommended a dividend of Rs. 4 (i.e 200%) on equity shares (previous year Rs. 3.50 per equity share) of face value of Rs.2 each for the financial year ended on 31st March 2015. The total pay-out will be '38.15 Crore (including dividend distribution tax of Rs. 6.36 Crore).

The dividend pay-out for the year under review has been formulated in accordance with the Company's Policy to pay sustainable dividend linked to long term growth objectives of the Company to be met by internal cash accruals.

Share Capital

The Authorised Share Capital of the Company is Rs. 35 Crore comprising of 12.50 crore of equity shares of Rs. 2 each and 10 lakh preference shares of Rs. 100 each. The paid up capital of the Company as on 31st March 2014 was Rs. 15.12 Crore divided into 75583580 equity shares of Rs. 2 each. As per the resolution passed by the shareholders in general meeting held on 6th November 2013 authorising the Board to issue the shares after conversion of warrants on preferential basis, during the year under review, on exercising the option, the Company has issued 3885420 equity shares to M/s WestBridge Crossover Fund, LLC. These shares would be pari passu with the existing equity shares of the Company. The Equity Share capital of the Company as on 31st March 2015 was Rs. 15.89 Crore divided into 79469000 equity shares of Rs. 2 each.

During the year under review, the Company has neither issued shares with differential voting rights nor granted stock options/ sweat equity. As on 31st March 2015, none of the Directors of the Company hold instruments convertible into equity shares of the Company.

Transfer to Reserves

A sum of Rs. 40 Crore has been transferred to the Company's General Reserve account and the balance has been carried to surplus in statement of profit and loss which now has a balance of '352.81 Crore.

Directors' Responsibility Statement

In terms of the provisions of the Companies Act, 2013, the Directors confirm that:

i) In the preparation of the annual accounts for the year ended on March 31, 2015, the applicable accounting standards had been followed and that no material departures have been made from the same.

ii) Appropriate 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 as on 31st March 2015 and the profit and loss and cash flow of the Company for the period 31st March 2015.

iii) 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.

iv) The annual accounts have been prepared on a going concern basis.

v) The Company is following up the proper internal financial controls laid down by the Directors of the Company and such internal financial controls are adequate and are operating effectively and

vi) the Company has devised proper system to ensure the compliance with the provisions of all the applicable laws and that such systems are adequate and operating effectively.

Corporate Governance

The Company has complied with the Corporate Governance requirements as stipulated under the Listing Agreement with the Stock Exchanges. A separate section on corporate governance, along with a certificate from the Practicing Company Secretary confirming the compliance, is annexed and forms part of the Annual Report.

Management Discussion and Analysis Report

Management discussion and analysis on matters related to the business performance as stipulated in clause 49 of the Listing Agreement with the Stock Exchanges is given as a separate section in the Annual Report.

Related Party Transactions

All related party transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors and Key Managerial Personnel which may have a potential conflict with the interest of the Company at large.

For all related party transactions prior omnibus approval of the Audit Committee is obtained on a yearly basis for the transactions which are of a foreseen and repetitive nature and such approval is in the interest of the Company. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval. All transactions entered with related parties during the year under review were on arm's length basis and in ordinary course of business. All related parties transactions are disclosed in Note number 42 to the financial statements. Material related party transactions which are at arm's length are disclosed in form AOC-2 annexed as "Annexure-2".

The Company has developed a related party transactions policy for purpose of identification and monitoring of such related party transactions, which may be accessed on the Company's website at weblink i.e. http://www.kajariaceramics.com/pdf/ RelatedPartyTransactionPolicy.pdf

Corporate Social Responsibility Initiatives

In terms of provisions of Section 135 of the Companies Act, 2013 and Companies (Corporate Social Responsibility Policy) Rules, 2014, the Corporate Social Responsibility Committee has formulated and recommended to the Board a CSR policy indicating the activities to be undertaken by the Company, which has been approved by the Board. The constitution of CSR Committee is disclosed in Corporate Governance Report

The CSR policy may be accessed on the Company's website i.e http://www.kajariaceramics.com/pdf/CSR_Policy.pdf

As a part of initiative of CSR drive, the Company has undertaken the project of building / renovation of sanitation facilities in the schools near the manufacturing facilities. The Company has also taken steps for preventive health care by organising the camps through various agencies / trusts, contributing to the education and social economic development of under privileged children and for slum area / rural area development.

These projects are in accordance with Schedule VII of the Companies Act, 2013.

The Annual Report on CSR activities as required under the Company's (Corporate Social Responsibility Policy) Rules 2014 is set out as annexure-3 forming part of this Report. Being the initial year, the Company has incurred CSR expenditure of Rs. 109.66 lacs (as against Rs. 297.14 lacs) during the current financial year. The Company is in process of identifying the projects/activities for the benefit of the Public in general and neighbourhood of the manufacturing facilities in the best possible manner into various projects in future.

Risk Management

In terms of provisions of Section 134(3)(n) of the Companies Act, 2013, the Company, during the year under review, have framed and put in place a Risk Management policy to mitigate the risks, both internal and external, which the Company is exposed to.

Business Risk Assessment procedures have been set in place for self-assessment of business risks, operating controls and compliance with the Corporate Policies. The Company manages, monitors and reports on the principal risks and uncertainties that can impact the ability to achieve the objectives. This is an ongoing process to track the evaluation of risks and delivery of mitigating action plans. The risk management policy of the Company is uploaded on the website of the Company i.e www.kajariaceramics.com.

There is no identification of risks which in the opinion of the Board may threaten the existence of the Company

Internal Control and their adequacy

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit (IA) function is defined in the Internal Audit Program. To maintain its objectivity and independence, the internal auditors report to the Chairman of the Audit Committee of the Board.

The Internal auditors monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company and its subsidiaries. Based on the report of internal audit, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board. The Committee reviews the adequacy and effectiveness of the Company's internal control environment.

Directors and Key Managerial Personnel

i. Mr. Chetan Kajaria (DIN: 00273928) and Mr. Rishi Kajaria (DIN: 00228455) - Joint Managing Directors of the Company were re-appointed as Joint Managing Directors of the Company by the Board of Directors in its meeting held on 30th March 2015 on the recommendation of Nomination and Remuneration Committee and subject to the approval of the members.

ii. Mr. Dev Datt Rishi (DIN: 00312882) was appointed as an additional director of the Company by the Board of Directors in its meeting held on 14th January 2015 on the recommendation of Nomination and Remuneration Committee, upto the conclusion of the ensuing Annual General Meeting of the Company. He has been appointed as Director -Technical of the Company by the Board of Directors and subject to the approval of the members.

iii. Mrs. Sushmita Shekhar (DIN: 02284266) was appointed as an additional Independent Director by the Board of Directors in its meeting held on 30th March 2015 on the recommendation of Nomination and Remuneration Committee, upto the conclusion of the ensuing Annual General Meeting of the Company. The appointment of Mrs. Sushmita Shekhar, as an Independent Director of the Company, is subject to the approval of the members.

iv. Mr. H. Rathnakar Hegde (DIN: 05158270), and Mr. Ram Ratan Bagri (DIN: 00275313) Directors of the Company, will be appointed as the Independent Directors of the Company w.e.f 1st April 2014 subject to the approval of the members.

All the Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

The Board recommends for their appointment / re-appointment in the forthcoming Annual General Meeting.

No director has resigned during the year under review.

At the Board Meeting held on 1st August 2014, Mr. Ram Chandra Rawat - Executive V.P. (A&T) & Company Secretary has been given the additional charge of CFO of the Company and he later on resigned from the post of CFO and Mr. Sanjeev Agarwal was appointed as CFO of the Company in accordance with the resolution passed by the Board in its meeting held on 29th April 2015.

Board Evaluation

The Board has carried out an annual performance evaluation of its own performance, the Directors, including Chairman individually as well as the evaluation of the working of its Committees.

The manner in which the evaluation has been carried out and the details of familiarisation programme has been explained in the Corporate Governance Report.

Remuneration Policy

On the recommendation of the Nomination & Remuneration Committee, the Board has framed a policy for selection and appointment of Directors, senior management and their remuneration. Nomination and Remuneration Policy including criteria for determining qualification, positive attributes & independence is also placed on the website of the Company i.e http://www.kajariaceramics.com/pdf/Nomination_ Remuneration_Policy.pdf and is also stated in the "Annexure-4" to this report.

Details of remuneration under Section 197 of the Companies Act, 2013 and details required under Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are stated in "Annexure-4" which forms part of this report.

Statutory Audit

M/s O P Bagla & Co. (Firm Regn. No. 000018N), Chartered Accountants, the auditors of the Company would retire at the ensuing Annual General Meeting. They have confirmed their eligibility under section 139 & 141 of the Companies Act, 2013 and willingness for re-appointment as statutory auditors of the Company. The Board of Directors recommends the re-appointment of M/s O.P.Bagla & Co. (Firm Regn. No. 000018N), as Statutory Auditors from the conclusion of ensuing Annual General Meeting till the conclusion of next Annual General Meeting.

The report given by the auditors on the financial statements of the Company is a part of the Annual Report. There has been no qualification, reservation, adverse remark or disclaimer given by the Auditors in their report. There were no frauds reported by the auditors under subsection 12 of section 143 of the Companies Act, 2013.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s Chandrasekaran Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as "Annexure 5".

There is no qualification , reservation, adverse remark or disclaimer given by Secretarial Auditor in their report.

Disclosures:

Audit Committee:

The Composition of Audit Committee is disclosed in the Corporate Governance report. All the recommendations made by the Audit Committee were accepted by the Board.

Vigil Mechanism

The Company has established a Vigil Mechanism for Directors and employees by adopting the Whistle Blower Policy to report genuine concerns or grievances. The Whistle Blower Policy may be accessed on the website of the Company i.e http://www.kajariaceramics. com/pdf/whistel_blowing_policy.pdf

Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013

The Company has in place a policy for prevention of sexual harassment at workplace in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act 2013. This policy may be accessed on the Company's website i.e. http://www.kajariaceramics.com/pdf/prevention_of_sexual_harassment.pdf.

Internal Complaints Committee has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. We have not received any sexual harassment complaints during the year 2014-15.

Meetings of the Board

The details of the number of Meetings of the Board held during the financial year 2014-2015 forms part of the Corporate Governance report.

Particulars of Loans, Guarantee and Investments

Particulars of Loans, Guarantees and Investments, covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes 13, 14, 27 & 42 to the Financial Statements.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars relating to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo as required to be disclosed under the Act are provided in "Annexure-6" to this report.

Extract of Annual Return

The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as "Annexure-7".

Particulars of employees

The information required pursuant to Section 197 read with Rule, 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is attached as "Annexure-8" to the Directors Report.

Fixed Deposits

The Company did not invite/ accept any fixed deposit within the meaning of Section 73 of the Companies Act, 2013, and the rules made there under.

Significant and Material Orders passed by the Regulators or Courts

Regional Director -North has approved the transfer of registered office of the Company from the state of Uttar Pradesh to the state of Haryana vide its order dated 9 th June 2015. Besides this, there are no material and significant orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

Cautionary Statement

Statements in this Director's Report & Management Discussion and Analysis describing the Company's Objectives, projections, estimates, expectations or predictions may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make difference to the Company's operations including raw material/ fuel availability and its prices, cyclical demand and pricing in the Company's principle markets, changes in the government regulations, tax regimes, economic developments within India and the Countries in which the Company conducts business and other ancillary factors.

Appreciation and Acknowledgement

Your Directors place on record their deep appreciation to the employees at all levels for their hard work, dedication and commitment. The enthusiasm and unstinting efforts of the employees have enabled the Company to remain as industry leaders.

Your Directors would also like to record their appreciation for the support and cooperation your Company has been receiving from its suppliers, dealers, business partners and other associated with the Company.

Your Directors express their deep sense of gratitude to the banks, Central and State governments and their departments and the local authorities for their continued support.

And to you, our Shareholders, we are deeply grateful for the confidence and faith that you have always reposed in us.

For and on behalf of the Board

Ashok Kajaria Chairman & Managing Director DIN: 00273877

Place: New Delhi Date: 29th July 2015


Mar 31, 2014

The Directors are pleased to present the 28th Annual Report together with the audited accounts of your Company for the financial year ended 31st March 2014.

(Rs. million)

Standalone Consolidated Particulars year ended Year ended year ended year ended 31st March 31st March 31st March 31st March 2014 2013 2014 2013

Revenue (Net Sales) 18779 15882 18400 15833

Profit Before Depreciation, Interest and taxes 2396 2249 2870 2477

Profit Before Tax 1768 1480 1992 1577

Tax Expense 601 475 678 499

Profit After Tax 1167 1005 1314 1078

Minority Interest - - 71 33

Profit After Tax and Minority Interest 1167 1005 1243 1045

Balance of Profit & Loss brought forward from 2068 1619 2109 1620 previous year

Profit available for appropriation 3235 2624 3352 2666

APPROPRIATIONS

Proposed Dividend 265 221 265 221

Dividend Distribution Tax 45 36 45 36

Transferred to General Reserve 300 300 300 300

Surplus Credited to Balance Sheet 2626 2068 2742 2109

Financial review

(The financial discussion in this section is based on the Standalone Financial Statements).

Your Company''s strong business model stood the test of challenges for another year. Despite the economic slowdown, policy paralysis and rising fuel prices which dampened industry prospects, your Company sustained its growth momentum.

Your Company''s ability in fueling and consistently delivering on customer''s aspiration resulted in a 18% growth in net sales from Rs.15882 million to Rs.18779 million. Its painstaking efforts in streamlining costs facilitated in a 6.51 % increase in EBIDTA from Rs.2249 million in 2012-13 to Rs.2396 million in 2013-14.

Profit after tax increased from Rs.1005 million to Rs.1167 million, a 16.11 % growth over the previous year. The earnings per share (basic) increased from Rs.13.66 to Rs.15.70 per share during the same period. The book value per share strengthened from Rs.48.49 as on 31st March 2013 to Rs.68.48 as on 31st March 2014.

Dividend

With significant expansion plans on the anvil, the Board needed to strike a prudent balance between dividend payout and reinvestment of business surplus for organisational growth. But considering robust business growth and improved profitability, the Board of Directors recommended 175% dividend on equity shares (Rs.3.50 per equity share, face value of Rs.2). The total payout will be Rs.309.50 million (including dividend distribution tax of Rs.44.96 million).

Corporate highlights

Inorganic growth: Jaxx Vitrified, a subsidiary of your Company acquired a unit proximate to its existing facility having 2.60 MSM capacity for manufacturing polished vitrified tile at an investment of Rs.350 million. The unit strengthened your Company presence in West and South India markets.

Value addition: Your Company also commissioned a 3.40 MSM glazed vitrified tile unit in the area vacated by the closure of the polished vitrified tile unit at our Sikandrabad facility. Your Company''s growing presence in the glazed vitrified tile segment will enhance realisation and strengthen business margins going ahead.

Visibility expansion: Your Company expanded its Kajaria Galaxy network by opening 25 state-of- the-showrooms in the last 24 months. These 4000 sq ft outlets exclusively feature the Kajaria product range comprising ceramic, polished vitrified and glazed vitrified tiles - providing the discerning customer with a multitude of décor solutions under one roof. This initiative will facilitate in achieving our business targets.

Investment: WestBridge Crossover Fund, LLc. agreed to invest Rs.1.50 billion in your Company. Kajaria issued 20 lac equity shares at a price of Rs.250/- aggregating to Rs.500 million and Rs.38.85 lac warrants convertible into equity shares of the Company at a price Rs.257.372433 per share aggregating to Rs.1 billion. These warrants are convertible by November 2014. The Company has received Rs.250 million as advance towards warrants.

Consolidated Financial Statements

In accordance with the Accounting Standards (AS-21) Consolidated Financial Statement are attached and form part of the Annual Report and Accounts.

Accounts of subsidiaries

Pursuant to the general circular no. 1/2011 issued by Ministry of Corporate Affairs, Government of India the Individual accounts of the five subsidiaries of the Company (M/s Soriso Ceramic Private Limited, M/s Jaxx Vitrified Private Limited, M/s Vennar Ceramics Limited, M/s Cosa Ceramics Private Limited, Kajaria Sanitary ware Private Limited) for the year ended on 31st March 2014 have not been attached to the Annual Report. However a statement giving information as required by the aforesaid circular is attached to the Annual Report. The Annual Accounts of the subsidiary companies will be available at the registered office of the Company and also at the venue during the Annual General Meeting. The Company shall provide free of cost the copy of Annual Accounts of its subsidiary companies to the shareholders upon their request.

Fixed deposits

The Company did not invite/accept any fixed deposit within the meaning of Section 58A of the Companies Act, 1956, and the rules made there under.

Outlook

The ''new urban'' consumption from Tier II and Tier III locations has significantly expanded the opportunity pie for the Indian tile sector. As India stands steadfast in its resolve to accelerate economic progress, demand for tiles will continue to increase over the foreseeable future.

Further, growing urbanisation, gravitation to the aesthetic, increasing aspiration towards brands and deeper penetration of distribution networks of organised players is expected to increase the off take of branded products.

Growth drivers for the current year

Your Company''s growth will be driven by a prudent volume-value play that will strengthen business profitability and facilitate in providing superior shareholder value.

Recent addition: The 5.60 MSM capacity addition in 2013-14 will be operational for the entire 2014-15 making a meaningful contribution to the Company''s growth target.

Capacity augmentation: Your Company is adding 4.50 MSM at Jaxx and 3 MSM capacity at Cosa units. Your Company is also analyzing the prospects of and studying the opportunities for adding capacity in the tile segment which would materialise in 2014-15.

Directors

Pursuant to the provisions of section 161 (1) of the Companies Act 2013 and articles of association of the Company, Mr. Sandeep Singhal - was appointed as an additional director, designated as independent director, by the Board of directors in its meeting held on 8th October 2013, up to the conclusion of the ensuing Annual General Meeting of the Company. The appointment of Mr. Sandeep Singhal, as an Independent Director of the Company, is subject to the approval of the members. The Company has received requisite notice in writing from a member proposing Mr. Sandeep Singhal for appointment as an Independent Director.

Mr. R. K. Bhargava and Mr. D. P. Bagchi, Directors of the Company, will retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for reappointment.

The Board recommends for their re-appointment.

The Company has received declarations from all independent directors of the Company confirming that they meet the criteria of independence as prescribed under section 149(6) of the Companies Act 2013 and under clause 49 of the Listing Agreement.

Auditors and their observations

M/s O P Bagla & Co., Chartered Accountants, the auditors of the Company would retire at the ensuing Annual General Meeting. The Company has received a letter from them that their re- appointment, if made, would be within the prescribed limits under section 141(3) (g) of the Companies Act 2013 and they are not disqualified for re-appointment.

The Board of Directors recommends the re- appointment of M/s O.P.Bagla & Company as Statutory Auditors from the Conclusion of ensuing Annual General Meeting till the Conclusion of next Annual General Meeting.

The notes on financial statements referred to in the Auditor''s report are self-explanatory and do not call for any further comments.

Cost Auditors and their observations

The Board of Directors on the recommendation of the Audit Committee appointed M/s. G T & Co. Cost Accountants, as the Cost Auditors of the Company for the Financial Year 2014-15. M/s. G T & Co. have confirmed that their appointment is within the limits of the Section 141(3) (g) of the Companies Act, 2013 and have also certified that they are free from any disqualifications.

The Audit Committee has also received a certificate from the Cost Auditor certifying their independence and arm''s length relationship with the Company. Pursuant to Cost Audit (Report) Rules 2001, the Compliance certificate for the financial year 2012-13 was filed on 04.09.2013 vide SRN S22118764 on the Ministry of Corporate Affairs website.

Particulars of Employees

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are set out in the annexure to the Directors'' Report. Having regard to the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and other entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

Directors'' responsibility statement

Pursuant to Section 217 (2AA) of the Companies Act 1956 as amended, Directors confirm that:

i) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures

ii) Appropriate 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 as on 31st March 2014 and the profit and cash flow of the Company for the period 31st March 2014.

iii) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv) The annual accounts have been prepared on a going concern basis.

Corporate Governance Report

The Company has complied with the Corporate Governance requirements as stipulated under the listing agreement with the stock exchanges. A separate section on corporate governance, along with a certificate from the auditors confirming the compliance, is annexed and forms part of the Annual Report.

Management discussion and analysis report

Management discussion and analysis on matters related to the business performance, as stipulated in Clause 49 of the Listing Agreement with stock exchanges, is given as a separate section in the Annual Report.

Conservation of energy, technology absorption and foreign exchange earnings/ outgo

Information required under Section 217(1) (e) of the Companies Act, 1956, read with the Companies (disclosure on particulars in the Report on the Board of Directors) Rules, 1988 is given in Annexure-I and forms part of this Report.

Acknowledgment

Your Directors take this opportunity to express their deep sense of gratitude to the banks, Central and State governments and their departments and the local authorities for their continued guidance and support. We would also like to place on record our sincere appreciation for the commitment, dedication and hard work put in by every member of the Kajaria family. To them goes the credit for the Company''s achievements. And to you, our Shareholders, we are deeply grateful for the confidence and faith that you have always reposed in us.

For and on behalf of the Board

Place: New Delhi Ashok Kajaria

Date: 7th May 2014 Chairman and Managing Director


Mar 31, 2013

Dear Shareholder''s

The Directors are pleased to present the 27th Annual Report together with the audited accounts of your Company for the financial year ended 31st March 2013.

(Rs. million)

Standalone

Particulars Year ended Year ended 31st March 2013 31st March 2012

Revenue (Net Sales) 15871 13114

Profit Before Depreciation, Interest 2249 2016 and taxes

Profit before Tax 1480 1175

Tax Expense 475 368

Profit After Tax 1005 807

Minority Interest 0 0

Profit after Tax & Minority Interest 1005 807

Balance of Profit & Loss brought 1619 1276 forward from previous year

Profit available for appropriation 2625 2083

APPROPRIATIONS

Proposed Dividend 221 184

Dividend Distribution Tax 36 30

Transferred to General Reserve 300 250

Surplus Credited to Balance Sheet 2068 1619

Consolidated

Particulars Year ended Year ended 31st March 2013 31st March 2012

Revenue (Net Sales) 16109 13115

Profit Before Depreciation, Interest and taxes 2477 2077

Profit before Tax 1577 1199

Tax Expense 499 381

Profit After Tax 1078 819

Minority Interest 33 10

Profit after Tax & Minority Interest 1045 809

Balance of Profit & Loss brought forward from previous year 1620 1275

Profit available for appropriation 2666 2084

APPROPRIATIONS

Proposed Dividend 221 184

Dividend Distribution Tax 36 30

Transferred to General Reserve 300 250

Surplus Credited to Balance Sheet 2109 1620

Financial review

(The financial discussion in this section is based on Standalone Financial Statements)

Your Company''s continuous endeavour towards meeting soaring customer aspirations with unique and value-added products enabled it to tide over a difficult year. Net sales grew 21% from Rs.13114 million to Rs.15871 million, a combination of volume growth and value addition. The EBIDTA increased from Rs.2016 million in 2011-12 to Rs.2249 in 2012-13.

The net profit after tax increased from Rs.807 million to Rs.1005 million, registering a 25% growth over the previous year. The earnings per share increased from Rs.10.97 to Rs.13.66 per share during the same period. The book value per share strengthened from Rs.38.31 as on 31st March 2012 to Rs.48.49 as on 31st March 2013. More importantly, every rupee invested in business delivered superior returns - reflected by the improved return on employed capital.

Dividend

Considering business growth and improved profitability, the Board of Directors recommended 150% dividend on equity shares (Rs.3 per equity share, face value of Rs.2). The Total Payout will be Rs.256.56 Million (including dividend distribution tax of Rs.35.81 million).

Corporate highlights

Inorganic growth: Your Company acquired a 51% stake in Vennar Ceramics Ltd., Andhra Pradesh having a 2.30 MSM ceramic wall tiles manufacturing facility. The unit commenced production on July 1, 2012 which facilitated your Company strengthen its foothold in the South Indian markets.

Further, your Company acquired a 51% stake in Cosa Ceramics, Gujarat, with an annual capacity of 2.70 MSM double charge vitrified tile - a premium segment. This allows your Company to cater to the well-heeled Western Indian markets with speed and increased product diversity. In addition, our subsidiary Jaxx Vitrified acquired a 2.60 MSM polished vitrified tile plant proximate to its existing facility in April 2013.

Your Company also converted the 3.00 MSM soluble salt (low-end PVT segment) manufacturing line to a glazed vitrified line which will produce polished GVT with nano- finish - a better value added product.

We expect these initiatives will strengthen our capability to provide better shareholder value, going ahead.

Consolidated Financial Statements

In accordance with the Accounting Standards (AS-21) Consolidated Financial Statement are attached and form part of the Annual Report and Accounts.

Accounts of subsidiaries

Pursuant to the general circular no. 1/2011 issued by Ministry of Corporate Affairs, Government of India the Individual accounts of the five subsidiaries of the Company (M/s Soriso Ceramic Private Limited, M/s Jaxx Vitrified Private Limited, M/s Vennar Ceramics Limited, M/s Cosa Ceramics Private Limited and M/s Kajaria Ceramics Addis plc, Ethiopia) for the year ended on 31st March 2013 have not been attached to the Annual Report. However a statement giving information as required by the aforesaid circular is attached to the Annual Report. The Annual Accounts of the subsidiary companies will be available at the registered office of the Company and also at the venue during the Annual General Meeting. The Company shall provide free of cost the copy of Annual Accounts of its subsidiary companies to the shareholders upon their request.

Fixed deposits

The Company did not invite/accept any fixed deposit within the meaning of Section 58A of the Companies Act, 1956, and the rules made there under.

Outlook

The spread of roads, telephones and electricity is driving productivity growth away from the big urban centres to Tier II and Tier III locations - India''s ''new urban areas''. Further, as wage growth at the lower end remains robust, goods in the "new urban" consumption basket (which includes tiles) should see robust demand.

About 80%-85% of tile demand is driven by new housing or first-time users, while the balance is derived from replacement. Interestingly, new housing demand is expected to emerge from non-metro locations (smaller urban centres, Tier-II and III towns) while replacement demand is expected to be largely a metro phenomenon.

This new phenomena will significantly expand the opportunity pie for the Indian tiles sector over the coming years.

Growth drivers for the current year

Your Company''s growth will be driven by a prudent volume- value play that will strengthen business profitability and facilitate in providing superior shareholder value.

Volume-led: Business volumes will expand with the acquisition of the new plant at Morbi, Gujarat by our subsidiary Jaxx Vitrified. Other volume addition would come from the full year operations of Vennar and Cosa units which operated for only a part of the year in 2012-13.

Value driven: We will continue to move up the tile value pyramid through the following initiatives which we expect will sustain our profitability in 2013-14.

- Sale of double-charge polished vitrified tiles (high value product) from Cosa Ceramics

- Replacement of 3.00 MSM soluble salt PVT capacity by GVT at our Sikandrabad unit - a margin-accretive initiative

- Increasing the proportion of digitally printed tiles by investing in additional digital printing machines

Directors

Mr. R. R. Bagri and Mr. B. K. Sinha, Directors of the Company, will retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for reappointment.

In accordance with Article 122 to 124 of the Articles of Association of the Company, Mr. B. K. Sinha, Director -

Technical was appointed for a period of 3 years and his tenure will expire on 30th April 2013. In view of the contribution made by, Mr. B. K. Sinha, Director - Technical, it is proposed to re-appoint for another period of three years w.e.f. 1st April 2013 on revised terms and conditions. His re-appointment is subject to the approval of the members.

The Board recommends their re-appointment.

Brief resumes of the directors being appointed/re-appointed together with other relevant details form part of the Notice of the ensuing Annual General Meeting.

Auditors and their observations

M/s O P Bagla & Co., Chartered Accountants, the auditors of the Company would retire at the ensuing Annual General Meeting. They have confirmed their eligibility under section 224 of the Companies Act 1956 and willingness for re- appointment as statutory auditors of the Company.

The Board of Directors recommends the re-appointment of M/s O P Bagla & Co. as Statutory Auditors from the Conclusion of ensuing Annual General Meeting till the Conclusion of next Annual General Meeting.

The observations of the auditors are suitably explained in the notes on accounts.

Particulars of Employees

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are set out in the annexure to the Directors'' Report. Having regard to the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and other entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

Directors'' responsibility statement

Pursuant to Section 217 (2AA) of the Companies Act 1956 as amended, Directors confirm that:

i) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures

ii) Appropriate 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 as on 31st March 2013 and the profit and cash flow of the Company for the period 31st March 2013.

iii) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv) The annual accounts have been prepared on a going concern basis.

Corporate Governance Report

The Company has complied with the Corporate Governance requirements as stipulated under the listing agreement with the stock exchanges. A separate section on corporate governance, along with a certificate from the auditors confirming the compliance, is annexed and forms part of the Annual Report.

Management discussion and analysis report

Management discussion and analysis on matters related to the business performance, as stipulated in Clause 49 of the Listing Agreement with stock exchanges, is given as a separate section in the Annual Report.

Conservation of energy, technology absorption and foreign exchange earnings/ outgo

Information required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (disclosure on particulars in the Report on the Board of Directors) Rules, 1988 is given in Annexure ''I'' and forms part of this Report.

Acknowledgement

Your Directors would like to express their appreciation for the assistance and co-operation received from the banks, Government authorities, dealers, end consumers, suppliers and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the executives, staff and workers of the Company.

For and on behalf of the Board

Place: New Delhi Ashok Kajaria

Date: 30th April 2013 Chairman and Managing Director


Mar 31, 2012

The Directors are pleased to present the 26th Annual Report together with the audited accounts of your Company for the financial year ended 31st March 2012.

(Rs million)

Particulars Standalone Consolidated Year ended Year ended Year ended Year ended 31st March 2012 31st March 2011 31st March 2012 31st March 2011

Gross Sales 14,003 10,046 14,072 10,051

Profit before interest, depreciation and tax 2,016 1,486 2,077 1,490

Financial charges 470 299 485 301

Depreciation 371 295 393 297

Profit before taxation 1,175 892 1199 892

Tax expenses 368 285 380 285

Minority interest - - 10 1

Profit after tax 807 607 809 607

Balance brought forward from the previous year 1,276 994 1,275 994

Profit available for appropriation 2,083 1,601 2,084 1,601

Transferred from debenture redemption reserve - (46) - (46)

Proposed dividend on equity shares 184 147 184 147

Corporate dividend tax 30 24 30 24

Transfer to General Reserve 250 200 250 200

Balance carried forward 1,619 1,276 1,620 1,276

2,083 1,601 2,084 1,601

Financial review

In 2011-12, your Company successfully implemented various strategic initiatives, improving business volumes and profitability, despite a challenging external environment plagued with stubborn inflation and rising interest rates.

Gross sales grew 39% from Rs 10,046 million to Rs 14003 million, facilitated by a robust growth in sales volume and an increased average realisation per sq mtr. The EBIDTA increased from Rs 1,486 million in 2010-11 to 2016 in 2011-12.

The net profit after tax increased from Rs 607 million to Rs 807 million, registering a 33% growth over the previous year. The earnings per share increased from Rs 8.24 to Rs 10.97 per share duringthe same period. The bookvalue per share strengthened from Rs 30.25 as on 31st March 2011 to Rs 38.31 as on 31st March 2012. More importantly, every rupee invested in business delivered superior returns - reflected by the improved return on employed capital.

Dividend

Considering business growth and improved profitability, the Board of Directors recommended a 125% dividend on equity shares (Rs 2.50 per equity share, face value of Rs 2.00). The total payout will be Rs 213.80 million (including dividend distribution tax of Rs 29-84 million).

Corporate highlights

Capacity addition: The Company embarked on a brownfield capacity expansion project (from 2.30 MSM to 4.60 MSM) at its Soriso unit at total investment of Rs 30 million, which is significantly lesser than the initial investment. The Company's 6 MSM high-end polished and glazed vitrified tile unit at the Gailpur unit (a brownfield expansion) commenced operations in March, 2011 and significantly contributed to the Company's growth.

Inorganic growth: The Company acquired 51% stake in Jaxx Vitrified Pvt. Ltd, Gujarat, with an annual capacity of 3.10 MSM of polished vitrified tiles at an investment of Rs 62.65 million. The unit commenced operations in March, 2012. The Company also acquired 51% stake in Vennar Ceramics (2.30 MSM high- end digitally printed ceramic tile capacity) on 9th April, 2012 which is expected to commence production in June, 2012 at an investment of Rs 136.50 million. The plant will cater to the South Indian markets.

Recognition: Awarded the 'Superbrand' status for the sixth consecutive time, emerging as the only Indian tile company to create this record.

Accounts of subsidiaries

Pursuant to the general circular no. 1/2011 dated 8th February, 2011, issued by Ministry of Corporate Affairs, Government of India the Individual accounts of the three subsidiaries of the Company (M/s Soriso Ceramic Private Limited, M/s Jaxx Vitrified Private Limited and M/s Kajaria Ceramics Addis PLC, Ethiopia) for the year ended on 31st March 2012 have not been attached to the Annual Report. However, a statement giving the information as required by the aforesaid Circular is attached to the Annual Report. The Annual Accounts of the subsidiary companies will be available at the registered office of the Company and also at the venue during the Annual General Meeting. The Company shall provide, free of cost, the copy Annual Accounts of its subsidiary companies to the shareholders upon their request.

Fined deposits

The Company did not invite/accept any fixed deposit within the meaning of Section 58A of the Companies Act, 1956, and the rules made thereunder.

Outlook

The outlook for the tile industry appears to be positive over the medium term given the rising aspirations and availability of high- end tiles with a wide range of finishes and designs. This optimism stems from certain credible estimates which highlight the likelihood of robust demand over the medium term.

Real estate growth: The real estate demand in Tier-11 and III cities in India is estimated to be 354 msf of residential space in the next three years. Also, the demand for premium housing and housing for investment purposes is also expected to witness a significant growth with the networth of HNIs expected to grow from Rs 45 trillion in 2010-11 to Rs 235 trillion in 2015-16. As per investment trends, a report by Kotak suggests that HNIs invest nearly 8% of wealth in the real estate segment.

Commercial segment demand: The demand for malls and retail space in the top seven cities in India is expected to reach 112.57 msf in 2015 from 57 msf in 2011. During the same period, office space supply is expected to reach 243.5 msf. This is expected to drive demand for large-format, value-added tiles for flooring solutions.

Social infrastructure creation: The healthcare sector in India is estimated to invest US$86 billion upto 2025 to add 1.8 million beds and 700,000 doctors. India, being a low-cost destination with an improving healthcare scenario is emerging as an attractive destination for medical treatment. The medical tourism in the country, pegged at US$2.5 billion, is growing at 25% annually. This necessitates growing alliances between hospitals and hoteliers to create better infrastructure to cater to the growth in the sector.

Growth drivers for the current year

Your Company expects to leverage this opportunity through a volume-value play in the current year to enhance revenues and margins and focus on strengthening shareholder value.

Volumes expansion: The product volumes are expected to expand substantially following the commissioning of a 2.30 MSM ceramic tiles capacity expansion at Soriso unit, commencement of 3.10 MSM vitrified tile capacity from Jaxx and 2.30 MSM ceramic tiles capacity from Vennar complemented with continued outsourcing from Europe/China and Gujarat.

Value enhancement: Your Company commissioned 6 MSM of value-added vitrified tile capacity in March, 2011, stabilising operations during the second half of the year. Its full impact will be felt in 2012-13. Vitrified tiles capacity of 2.30 MSM from Jaxx Vitrified is expected to generate a premium.

Duringthe year, your Company increased the proportion of digital printed tiles and also manufactured matching digital floor tiles. It introduced large format floor tiles (150x90cm,120x60cm, 80x80cm, 90x30cm,60x60 cm) and high definition digital vitrified tiles with various designs and finishes, offering better aesthetic appeal to customers.

Visibility: Expanded Kajaria World distribution network to seven-owned and 11 franchisees to market high-end tiles apart from widening its dealer network.

Directors

Appointment: Mr. H. Rathnakara Hegde was appointed as an Additional Director of the Company by the Board in its meeting held on 17th January 2012. It is proposed to appoint him as a Director of the Company, liable to retire by rotation, at the ensuing Annual General Meeting.

Retirement by rotation: In accordance with Article 100 of the Articles of Association of the Company, Mr. R. K. Bhargava and Mr. D. P. Bagchi, Directors of the Company, will retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for reappointment.

Cessation: Mr. R. P. Goyal passed away during the year 2011-12. He was an eminent member of the Company's Board of Directors. The Board extends its condolences to his family at this hour of bereavement.

Brief resumes of the directors being appointed/re- appointed together with other relevant details form part of the Notice of the ensuing Annual General Meeting. The Board recommends their appointment/ reappointment.

Auditors and their observations

M/s 0 P Bagla & Co., Chartered Accountants, the auditors of the Company retire at the ensuing Annual General Meeting and being eligible offer themselves for reappointment. The Company has received a certificate from the auditors to the effect of their reappointment. The observations of the auditors are suitably explained in the notes on accounts.

Personnel

Talent development remained a key focus during the year. Well structured HR systems were used for talent identification, development and retention. The organisation continues to develop home-grown leaders to support its growth and maintain its competitiveness and leadership in the industry. Systematic identification of successors to key positions enabled a proper succession plan with their respective development plans in place. The Company maintained cordial relations during the year under review. The information required to be furnished in terms of Section 217(2A) of the Companies (Particulars of Employees) Rules, 1975, as amended, is set out in the statement annexed hereto as Annexure-I, forming part of the Report.

Directors' responsibility statement

Pursuant to Section 217 (2AA) of the Companies Act 1956 as amended. Directors confirm that:

i) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures

ii) Appropriate 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 as on 31st March 2012 and the profit and cash flow of the Company for the period ended on 31st March 2012.

iii) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv) The annual accounts have been prepared on a going concern basis.

Corporate Governance Report

The Company complied with the Corporate Governance requirements as stipulated under the Listing Agreement with the stock exchanges. A separate section on corporate governance, along with a certificate from the auditors confirming the compliance, is annexed and forms part of the Annual Report.

Management discussion and analysis report

Management discussion and analysis on matters related to the business performance, as stipulated in Clause 49 of the Listing Agreement with stock exchanges, is given as a separate section in the Annual Report.

Conservation of energy, technology absorption and foreign exchange earnings/outgo

Information required under Section 217(l)(e) of the Companies Act, 1956, read with the Companies (disclosure on particulars in the Report on the Board of Directors) Rules, 1988 is given in Annexure-II and forms part of this Report.

Acknowledgements

We would also like to place on record our sincere appreciation for the commitment, dedication and hard work put in by every member of the Kajaria Group. To them goes the credit for the Company's achievements.

Your Directors take this opportunity to express their deep sense of gratitude to the banks/ financial institutions. Central and state governments, customers, vendors and the society at large for their continued support.

And to you, our shareholders, we are deeply grateful for the confidence and faith that you have always reposed in us.



For and on behalf of the Board

Place: New Delhi Ashok Kajaria

Date: 27th April 2012 Chairman and Managing Director

 
Subscribe now to get personal finance updates in your inbox!