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Directors Report of Kalyanpur Cement Ltd.

Mar 31, 2015

Dear Members,

The Directors submit herewith their report together with the Audited Accounts for the year ended 31st March, 2015. The following are the financial highlights in respect of the said Financial Year.

1.0 FINANCIAL RESULTS

Rs. in lacs

Year ended Year ended 31.3.2015 31.3.2014

Total Turnover including

other Income * 19885.83 25665.92

1. Loss before interest, depreciation, tax and Other appropriations 1787.88 542.02

2. Less:

i) Financial Costs 1195.77 1808.92

ii) Depreciation 487.19 768.34

3. Net Loss 3470.84 3119.28

4. Loss carried to Balance Sheet 3470.84 3119.28

2.0 OVER VIEW & PRODUCTION

Due to various economic factors, the Indian Economy witnessed sluggish growth in last 3-4 years when the GDP growth was in the region of 4.5% to 5.5%. The financial year under report however took off well as the Cement Production grew at a reasonable pace during April-November 2014 although the growth could not be sustained and the subsequent months witnessed marginal increase or decline in cement demand resulting from reduction in Government expenditure on infrastructure to contain fiscal deficit. The over all cement production, however, is estimated to have grown by about 6% in the Financial Year 2014-15. This is likely to improve during 2015-16 due to the Government's plan for providing a boost to cement demand in real estate and infrastructure sectors and cement sector is expected to grow @ 9% during 2015-16 with production of about 290 million tons of cement. The growth trend will also continue in the next financial year i.e. 2016-17 when cement industry is likely to grow by 8% backed by sustained healthy growth in demand. Your company, however, could not get the ' advantage of the uptrend, even shortlived, in cement industry due to the limestone problem arising from non-renewal of its major mining lease w.e.f. December, 2013. As a result of limestone problem, the company's production came down by about 25% during the financial year under report when the company produced 4.8 lac tons of cement against 6.39 lac tons during 2013-14 and 7.38 lacs tons during 2012-13.

3.0 FINANCIALS

3.1 Consequent upon 25% drop in production of .cement due to limestone constraint as mentioned above, the sales turnover registered corresponding decrease as compared to the previous financial year and the company during the financial year 2014-15 had a total income of Rs.198.86 Crores as against the total income of Rs. 256.66 crores during 2013-14. Even though cement production improved at macro level by registering an increase of about 6% in 2014-15, the prices improved only marginally which was offset by escalation in cost of inputs like Coal and Power. Your Company continued to suffer for want of working capital having no access to Bank finance in view of its weak financial position and sickness. During the year under consideration, the company had a negative EBIDTA of Rs.17.88 crores and after considering the financial costs and depreciation, the company incurred a net loss of Rs. 34.71 crores.

3.2 The last few years were not conducive for rapid growth in Indian economy due to subdued global economic sentiments and the general slow down in the economy of the country and consequent impact on Cement industry, caused by reduced spending on infrastructure projects in Government, Private and Public Private Partnership (PPP) sectors, consistently high interest rate maintained by the Central Bank primarily to curb inflation in the economy, substantial increase in cost of power and fuel and surplus cement manufacturing capacity created in the country not absorbed due to persistently low demand. This also led to cement prices remaining flat over three years with pressure on industry margins. As a result, whereas many cement companies had depressed margins, some incurred loss.

4.0 REVIVAL OF THE COMPANY

Your company is confronted with various problems for last few years and is, at present, in the process of revival under the aegis of the Board for Industrial and Financial Reconstruction (BIFR) pursuant to the provisions of Sick Industrial Companies (Special Provisions) Act, 1985 on the basis of a Revival Scheme Sanctioned by BIFR in October, 2011. Due to unfavourable environment created by the economic slow down in the last 3 /4 years coupled with Limestone problem, the company could not achieve the parameters envisaged in the Revival Scheme sanctioned by BIFR and your company therefore has approached BIFR again with a modified revival scheme for approval of certain additional reliefs and concessions including reschedulement of payment of dues. BIFR is yet to take a view on the modified scheme comprising therein the proposed changes seeking reliefs / reschedulement of dues.

5.0 MANAGEMENT DISCUSSION AND ANALYSIS

Management discussion and analysis has been appended to the report as Annexure-1.

6.0 DETAILS PURSUANT TO THE PROVISION OF THE COMPANIES ACT, 2013

As stipulated under section 134(3) of the Companies Act, 2013 the following details are provided hereunder:

a) The extract of the Annual Return

The extract of the Annual Return in the Form

MGT-9 has been placed at Annexure -2

b) No. of meetings of the Board

The details of the number of meetings of the Board of Directors have been provided in Annexure -3 dealing with Corporate Governance.

c) Director's responsibility Statement

The Directors' responsibility Statement has been provided at para-7.0 hereinafter.

d) Declaration by independent Directors

The Independent Directors have given the requisite declaration to the Company under section 149 (7) of the Companies Act, 2013 affirming that they meet the criteria of independence as provided in sub-section(6) of section 149 of the Act.

e) Company's Policy on Directors' appointment and Remuneration, etc.

i) The Nomination and Remuneration Committee has framed a Policy on "Criteria for determining qualifications, positive attributes and independence" as well as a Policy on "Board diversity". The same have been provided in Paragraphs 9.2 and 9.3 hereinafter.

ii) The Nomination and Remuneration Committee has already framed a Remuneration Policy and the same has been approved by the Board of Directors of the Company. The Remuneration Policy has been provided in paragraph 10.0 hereinafter.

f) Explanations in respect of the comments in the Auditors Report as well as the Secretarial Audit Report

The explanations in respect of the comments in the Audit Report and the Secretarial Audit Report have been provided in Annexure - 4

g) Particulars of loans, guarantees or investments

The company has not provided any loans, guarantees or made investments in any other company.

h) Particulars of contracts or arrangements with related parties.

The company has not entered into a contract with any related party during the year under report. There have been no related party transactions made by the company with the Promoters, Directors and the Key Managerial Personnel which could be in conflict with the interest of the company. The details of related party transactions which pertained to the managerial remuneration are set out in Note 19 to the Balance Sheet.

i) The State of the Company's Affairs

This has been provided at Paragraph Nos.

1.0 to 4.0 above.

j) The amounts proposed to be transferred to reserves.

Since the Company has incurred loss, it does not propose to carry any amount to its reserves.

k) Dividend.

The company, in view of the losses, does not, propose to pay any dividend.

l) Material changes and commitments affecting the financial position of the company

No significant event has occurred leading to any material change in the State of Affairs of the company and no commitments affecting the financial position of the company have been made during the period i.e. between end of financial year (31.3.2015) and the date of this report (22.5.2015)

m) The Energy conservation technology absorption, etc.

The statement in respect of conservation of energy, technology absorption and foreign exchange earnings and outgo is placed at Annexure - 5.

n) Risk Management Policy

The company has evolved and implemented a risk management policy. The responsibility * of the Risk Management has been entrusted to the Audit Committee by re-designating the same as Audit and Risk Committee. The Risk Management Policy framed by the company includes Identification of Risk and their mitigation through the Groups/ Committees appointed for this purpose.

o) Corporate Social Responsibility

The Companies Act, 2013 requires a company to spend at least 2% of the average net profit earned during previous three financial years on various areas specified in schedule -VII to the Act. Since the company did not have profit in any of the three financial years, it is not obliged to spend in respect of the areas of Corporate social responsibility as mandated by the Act. Nevertheless the company has, for long, been pursuing certain corporate social responsibilities out of its own philanthropic initiatives which are as under:

i) Running a High School providing free co- education to about 650 students including the wards of local people (not connected with the company's employees).

ii) Running a Women Degree College providing subsidized education to the Girls of nearby areas.

iii) Providing emergency medical treatment to the people in the hospital owned and maintained by the company.

iv) Organizing free camps for medical checkup and treatment from time to time.

v) Providing free water to local farmers for irrigation purpose.

p) Annual evaluation of performance of the Board

The Nomination and Remuneration Committee has framed the policy for evaluation of the performance of the Board, its committees and the Directors. The said Policy has also been approved by the Board of Directors of the company. The policy provides detailed guidelines for evaluation and the parameters on the basis whereof the evaluation is to be carried out in respect of the (i) Independent Directors (ii) Non- independent Directors (iii) Chairperson of the Board (iv) Entire Board and its Committees. This has been provided in paragraph 9.1 hereinafter. The evaluation has been made by the Directors of their performance on the said parameters as laid down in the Policy.

q) Matters prescribed under the Companies (Accounts) Rules 2014.

i) The Financial summary or highlights

This has been provided at paragraphs 1.0 to 4.0

ii) The change in the nature of business, if any

There is no change in the nature of the business conducted by the company

iii) Change in the directors or key managerial personnel during the year

a) Shri Shailendra P. Sinha was reappointed as Managing Director by the Board of Directors and Shareholders for a period of 3 years w.e.f. 23rd February, 2013. His reappointment and remuneration were approved by the Central Government also. In order to comply with the provisions of section 203(2) of the Companies Act, 2013 he was appointed as a Key Managerial Personnel

b) Shri P.K. Chaubey who has been working with the company in the capacity of President (Finance) & Company Secretary for last several years was reappointed as Chief Financial Officer and Company Secretary in the capacity of a Key Managerial Personnel.

c) Shri D.N. Bhandari ceased to be director of the company w.e.f. 23rd May, 2014 consequent upon his resignation from the Board.

d) Shri Satyadeva Prakash Sinha, the Executive Chairman unfortunately expired on 11 th April, 2014.

e) The Board has appointed Smt. Lata Ajay Srivastava as an Independent Director w.e.f. 26.03.2015.

iv) Changes in the subsidiaries, joint ventures or associate companies during the year.

The Company does not have any subsidy, joint venture or associate companies.

v) Deposits

The company has not invited or accepted any deposit.

vi) Significant Orders impacting the going concern status and company's operations in future.

No such order which will have the bearing on the going concern status of the company or its operations in future has been passed by any regulator, court or the tribunal.

vii) Adequacy of internal financial controls

The Internal Control System of the company is an adequately structured system which is considered adequate to safeguard the business interests of the company as well as help and facilitate compliance with legal and statutory requirements. Since the objective of the internal control system is to ensure efficient use and protection of the company's resources / properties, correct reporting of the state of affairs of the company through the financial statements, the internal control system is periodically reviewed by the management which is subjected to extensive scrutiny by the Internal Auditors through its quarterly reviews and audits.

7.0 DIRECTORS'S RESPONSIBILITY STATEMENT

(a) The Directors confirm that in preparation of the annual accounts for the financial year ended 31st March, 2015, the applicable accounting standards have been followed;

(b) The directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(c) The directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) The directors have prepared the annual accounts on a going concern basis;

(e) The directors have laid down internal financial controls which are adequate and are operating effectively;

(f) The directors have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.

8.0 Corporate Governance

The Corporate Governance Code has been . implemented by the Company and a separate section thereon is included in the Directors' Report as Annexure-3.

9.0 Evaluation of Directors, determining qualifications, positive attributes and Independence of Directors

9.1 The Nomination and Remuneration Committee has formulated the criteria for evaluation of Directors, the Board and its Committees and the same has been approved by the Board of Directors also. The same are provided below:

a) The criteria for evaluation of performance of independent directors

i) Attendance in the meetings of the Board

as well as the Committees thereof.

ii) Effective participation in the meetings and providing timely inputs on the matters brought before the Board or the Committees.

iii) Adherence to and affirmation with ethical standards and the Code of Conduct of the company and timely disclosure of interest, if any, acquired subsequently and affirmation to the Board about the continued "independent status" as provided in section 149(6) of the Act.

iv) Raising of valid concerns to the Board and the Committees and constructive contribution to the resolution of issues at the meetings.

v) Inter-personal relation with other directors and management

vi) Unbiased and objective evaluation of the Board performance.

vii) Understanding of the Company and the external environment in which it operates.

viii) Protecting the interest of whistle blower under vigil mechanism and safeguarding the confidential information of the company.

b) The Criteria for evaluation of performance of the non Independent Directors / Executive Directors.

The parameters / criteria for evaluation of the performance of non independent and executive directors take into consideration the size of the company, nature of its business and state of uncertainty in which the company operates and accordingly the following parameters will be applicable for evaluation of non independent and executive directors.

i) Attendance in the meetings of the Board as well as the Committees thereof.

ii) Effective participation in the meetings

and providing timely inputs on the matters brought before the Board or the Committees.

iii) Adherence to and affirmation with ethical standards and Code of Conduct of the company and timely disclosure of interest, if any, acquired subsequently.

iv) Efforts for improvement in operations of the company for its long term revival.

v) Efforts made for obtaining the government's approval / support in respect of various issues either under BIFR Scheme or otherwise.

vi) Team work attributes and supervising and training of staff members.

vii) Compliance with various laws, Capital Market Regulations, Corporate Governance practices, listing conditions and reporting of frauds etc. in time.

viii) Protecting the interest of whistle blower under vigil mechanism and safeguarding the confidential information of the company.

The chairperson of the Board will be evaluated on the basis of the above ' criteria depending on whether he is an independent or a non-independent director.

c) Criteria for evaluation of performance of the entire Board of Directors and its Committees

i) Adequacy of composition of the Board of Directors and the Committees in terms of (a) Board diversity (b) technical knowledge and skills (c) mix of independent & non independent directors and legal requirements.

ii) Holding statutorily required number of meetings of the Board and the committees thereof and ensuring that the meetings are held properly in adequate length of time providing sufficient time to the directors for deliberations in the meetings.

iii) Level of transparency in providing information to the Board and the Committees enabling proper understanding of the issues confronted by the company and ensuring the quality, adequacy and timeliness of flow of information between the Company Management and the Board as well as the Committees. .

iv) Adequate opportunity and encouragement to the directors for open communication, meaningful participation and timely resolution of the issues.

v) Ensure that the Independent Directors meet the requirement of independence prescribed under section 149(6) of the Act.

vi) Establishing an environment which facilitates effective disclosure, fiscal accountability and high ethical standard.

vii) Ensuring that the company's internal control mechanism in respect of the operations and financial matters is effective and capable to avoid irregularities and frauds and that the financial statements of the company are credible to provide true and fare view of the state of affairs of the company.

viii) Providing regular financial updates to the board.

ix) Ensuring compliance with the provisions of Corporate Governance, insider trading, the conditions of the listing agreement and other Capital Market regulations as applicable to the company.

The evaluation has been made in respect of the performance of various directors on four scales.

9.2 Determining qualifications, positive attributes and independence

1.0 The Nomination and Remuneration Committee is required to formulate the criteria for determining the qualifications, positive attributes and independence of a director and recommend to the board a policy relating to the remuneration for the directors, key managerial personnel and other employees. The Nomination & Remuneration Committee formulated a Remuneration policy and approved the same in their 11 th meeting held on 23.05.2014 and recommended the Policy to the Board of Directors for approval and the Board of Directors in their meeting held on 23.05.2014 approved the said remuneration policy. The Nomination and Remuneration Committee however, has now formulated the criteria for determining qualification, positive attributes and independence of a director for appointment on the board of the directors of the company as under and the same has been approved by the Board and implemented.

1.1 Criteria for Qualification -

a) The directors to be appointed on the Company's Board will have the minimum academic qualification of Graduation.

b) The Wholetime Directors shall be professionally qualified in the related fields.

1.2 Positive attributes -

a) Academic and professional excellence in their respective fields.

b) Communication skill

c) Stature in the Corporate or other relevant areas.

1.3 Independence

The status of independence will be governed by the provisions of Section 149(6) of the Act.

9.3 The Policy on Board diversity

1.0 The Listing Agreement provides for devising a policy on Board diversity by the Nomination and Remuneration Committee. The Board diversity is required to have on the Board of Directors of the company, the people from diverse background who could bring with them, the varied experience in different fields which enable the Board to provide effective guidance from different perspectives adding value to the Company's operations, shareholders' worth and effective compliance as a good Corporate Citizen. Accordingly, the Nomination and Remuneration Committee has framed the following policy on Board diversity.

i) The Board should comprise the independent and non independent directors as stipulated under the provisions of the Act and the listing Agreement.

ii) The Board should comprise the adequate combination of Executive and Non Executive Directors.

iii) The directors should be experts in different fields like technology, economics, finance, accounting , legal and social work.

iv) The Board members shall possess academic and technical skills in varied fields which will provide to the company the opportunity of receiving guidance from the experts in diverse areas which ultimately would accrue financial and other benefits to the company.

10.0 "REMUNERATION POLICY

1.0 The Nomination and Remuneration Committee has formulated a Remuneration Policy for the Directors, Key Managerial Personnel and other employees of the Company which has also been approved by the Board of Directors. The Remuneration Policy, as approved is given below:

2.0 Section 178 (3) and Section 178 (4) of the Companies Act, 2013 provide as under:

"(3) The Nomination and Remuneration Committee shall formulate the criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board a policy, relating to the remuneration for the directors, key managerial personnel and other employees. (4) The Nomination and Remuneration Committee shall, while formulating the policy under sub-section (3) ensure that -

(a) the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the company successfully;

(b) relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and

(c) remuneration to directors; key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals:

Provided that such policy shall be disclosed in the Board's report. "

In terms of the provisions of Section 178 (3) and Section 178 (4) of the Companies Act, 2013, the Nomination and Remuneration Committee has to recommend to the Board a policy relating to the remuneration payable to the directors, Key Managerial Personnel and other employees.

Accordingly, the Nomination and Remuneration Committee has formulated the following Remuneration Policy for the directors, Key Managerial Personnel and other employees of the company.

3.0 Remuneration payable to Non Executive Directors

3.1 Section 198 read with Section 309 of the Companies Act, 1956 and the corresponding section 197 of the Companies Act, 2013 provide for payment of commission to Non Executive Directors limited to 1 % of the Net Profit where the company has a Managing Director or a Wholetime Director and 3% where the company has no such Managing or Wholetime Director.

Since KCL does not have profit, no commission is paid to the Non Executive Directors and they are paid only the sitting fee under the provisions of the Companies Act, 1956 / the Companies Act,

2013 read with the Articles of Association of the Company.

3.2 Remuneration Policy in respect of Executive Directors and Key Managerial Personnel

The following factors / criteria would determine the remuneration payable to Executive Directors and the Key Managerial Personnel.

(i) Educational, professional and technical qualification

(ii) Experience of managing various fields in industry like administration, marketing, commercial, technical, finance etc.

(iii) Salary structure presently in the industrial units of similar size.

(iv) Complexity involved in managing the business of the company in view of various challenges like (i) financial constraints, (ii) dealing with government agencies for seeking various approvals, (iii) serious legal issues etc.

(v) The provisions under the Companies Act, 2013 read with the relevant schedules provided therein.

(vi) Apart from payment of basic salary and House Rent Allowance in keeping with the industry trend, providing the statutory benefits like Provident Fund, Gratuity and Leave Encashment and other benefits like Medical, Annual Leave Scheme.

(vii) Consideration of the current financial position of the company while deciding the remuneration payable to the executive Directors and Key Managerial Personnel.

4.0 Remuneration Policy applicable to the Senior Management and other officers of the company

The company presently has three grades of officers namely (i) Jr. Officers, (ii) Jr. Managers and (iii) Sr. Managers.

The following factors / criteria would determine the remuneration payable to the senior Management and other officers of the company.

4.1 Educational and Professional Qualifications of the officers.

4.2 Experience in terms of length of service and quality of such experience based on association with the organizations in the past.

4.3 Payment of basic salary and House Rent Allowance in keeping with the trend in industry particularly similar size companies.

4.4 Payment of remuneration by breaking the same into fixed and variable parts and variable salary to be linked with the production and profitability Of the company.

4.5 To link the remuneration payable to senior management category employees on the basis of the cadre he belongs to and the responsibilities entrusted to him.

4.6 To provide statutory benefits like Provident Fund, Gratuity, Leave Encashment and other benefits like Medical as well as Annual Leave Scheme.

4.7 The annual increment to be provided in keeping with the performance of the company and in the event of unsatisfactory performance of the company, to provide the annual increment close to inflation.

5.0 Remuneration Policy in respect of other Employees

5.1 Employees are appointed as per the hiring policy of the company in different grades of workmen and staff.

5.2 The unionized workers to be paid wages as per the Wage Agreements with them. Payment of Variable Dearness Allowance (VDA) linked with the Consumer Price Index (CPI) on quarterly basis circulated by Cement Manufacturers Association (CMA) based on the data published by the Ministry of Labour, Govt, of India.

5.3 Payment of remuneration to non-unionized staff at the Corporate Division and Marketing Division at Patna on the basis of compensation package applicable to such employees irtPatna. To provide Variable Dearness Allowance (VDA) to such staff members also."

11. Disclosure pursuant to section 197 (12) read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

i) the ratio of the remuneration of each director to the median remuneration of the employees.

Managing Director 29.5:1

Jt. Managing Director 27.5:1

The median remuneration of the employees does not take into consideration the value of housing accommodation provided to the workers, staff and officers in the factory

ii) the percentage increase in remuneration of directors and KMPs

Managing Director 5.26%

Jt. Managing Director 5.66%

CFO & Co. Secretary (KMP) 6.05%

iii) the percentage increase in the median remuneration of employees; 7.52%

iv) the number of permanent employees on the rolls of company; 925

v) the explanation on the relationship between average increase in remuneration and company performance.

The company is registered with the Board for Industrial and Financial Reconstruction (BIFR) and is in the process of revival through the aegis of BIFR. The increase in remuneration provided by the company is very modest and rather lower than the Industry average. The increase is barely enough to neutralize the effect of inflation and is essential to retain the employees in the company as the company, at this stage, needs more close and effective leadership as well as other employees.

vi) comparison of the remuneration of the Key Managerial Personnel against the performance of the company;

The increase in the remuneration of KMP is 6.05% which is considered as reasonable in view of the explanations given above in reply to SI. No. (v).

vii) variations in the market capitalization, price earnings ratio and market price vis-a-vis issue price of shares

As mentioned above, the company at present is in the process of revival. Its networth is negative and although the company's shares are listed at Bombay Stock Exchange, the trading is very rare. The shares of the company were last traded at the rate of Rs. 10.82 per share on 20th January, 2015. The company has not made any public offer for issue of shares in the financial year 2014-15.

viii) Increase in the salaries of managerial personnel and other employees

The increase in the salaries of employees in the financial year 2014-15 was 7.52% against the average increase of 5.45 % in the salary of managerial personnel.

ix) Comparison of the each remuneration of the Key Managerial Personnel against the performance of the company;

This has been explained in reply to para (vi) above.

x) the key parameters for any variable component of remuneration availed by the directors; Presently not applicable.

xi) the ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year;

Not applicable

xii) affirmation that the remuneration is as per the remuneration policy of the company

It is affirmed that the remuneration being paid by the company is in conformity with the remuneration policy of the company.

12.0 Share Capital

The Company did not issue any share capital during the financial year 2014-15. The company however had planned to issue 1.062 crore shares on rights basis but the issue was finally not proceeded with.

13.0 Auditors

M/s. M. Mukerjee & Company, Chartered Accountants, Kolkata are the statutory auditors of the company. Under the provisions of the Companies Act, 2013, they are eligible for re- appointment.

14.0 Committees of the Board of Directors

The Board of Directors have appointed three committees namely (i) "Audit and Risk Committee" (Re-designated as Audit and Risk Committee in place of the earlier name as Audit Committee) (ii) Nomination and Remuneration committee and (iii) Stakeholders Relationship Committee. The requisite details in respect of these committees have been provided in Annexure - 3 dealing with "Corporate Governance". The Board has accepted the recommendations of the Audit Committee and there is no such recommendation of the Audit Committee which has not been accepted by the Board of Directors of the Company.

15.0 Vigil Mechanism

The Company has introduced a vigil mechanism, for its Directors and Employees to report their genuine concerns or grievances. Since the company has an Audit Committee (Now re- designated as Audit and Risk Committee) the responsibility to oversee vigil mechanism has been entrusted to the Audit Committee. The Chairman Audit Committee has been authorized to ensure effective implementation of the vigil mechanism established by the company. The details of vigil mechanism are as under:

i) The Employees and Directors of the company may bring to the notice of the Chairman of the Audit and Risk Committee, any irregularity, wrong doing, unethical practice or any activity against the principles and standards laid down for conduct of the business of the company.

ii) The whistle blower will only report the irregularity and not act as an Investigator. He may be asked to make oral submission by the Chairman Audit Committee.

iii) The identity of the whistle blower will be kept confidential as far as possible. Such whistle blower will also not be discriminated or meted out any unfair treatment in employment matters.

iv) After receipt of the complaint, the Chairman Audit and Risk Committee will investigate the matter in an independent, fair and unbiased manner.

v) The identity of the person against whom the investigation is conducted will be kept confidential within the ambit of law and such person will also be informed of the allegations to enable him placing his view points before the Chairman Audit and Risk Committee

vi) The findings of the investigation will be communicated to such person and he will be provided with an opportunity to respond to the material findings, if any. Finally, the outcome of investigation will be informed to such person.

vii) The disciplinary action will be taken as per the rules of the company, in force from time to time.

16.0 Particulars relating to Employees.

As required under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the details of employees who were in receipt of remuneration in excess over the prescribed amount have been provided in Annexure-6.

17.0 Secretarial Audit Report

M/s. A. Kumar & Associates were appointed as Secretarial Auditors of the company and the Report submitted by them is placed at Annexure-7.

18.0 Corporate Governance Certificate

This Certificate has been provided by the Auditors of the company and placed at Annexure -8.

19.0 PROTECTION FROM SEXUAL HARASSMENT

The company has formed an Internal Compliance Committee to address the complaints of Sexual Harassment at work place. The employees can approach the Committee, if required. However, no complaint has been received by the said committee.

20.0 APPRECIATIONS

The Directors wish to put on record their appreciation for the support and contribution

made by the employees of the company towards the operation. The directors also wish to place on record their thanks and appreciation for the help and support given by State Govt, and Central Govt, in carrying out its operations.

ON BEHALF OF THE BOARD (Shailendra Prakash Sinha) Managing Director



Place: Patna (B.C. Srivastava) Date: 22.5.2015 Director




Mar 31, 2014

Dear Members,

With heavy heart, we inform you that our beloved Chairman Shri Satyadeva Prakash Sinha left for his heavenly abode on 11.4.2014. He was 72. This has created a void which is difficult to get filled. Our homage to the departed soul.

The Directors submit herewith their Report together with the audited accounts for the year ended 31st March ''2014

1.0 FINANCIAL RESULTS

(Rupees in Lacs) Year ended Year ended 31.03.2014 31.03.2013

Total Turnover including other income 25665.92 27511.19

1. Profit before depreciation, interest, tax and other appropriations (542.02) (957.15)

2. Less :

(i) Finance Costs 1808.92 1582.59

(ii) Depreciation 768.34 993.43

3. Net Loss (3119.28) (3533.17)

4. Loss carried to Balance Sheet (3119.28) (3533.17)

2.0 PRODUCTION

It was once again a bad year for the economy, the fourth in succession, pushing the Cement industry deeper into distress. In the face of high input cost, stagnant cement prices and oversupplied market, the Company experienced severe financial constraints. While this on one hand impeded smooth input supplies, on the other affected plant maintenance resulting in lower plant availability as well as efficiencies. While Capacity utilization in Clinker fell to 80% from 92% achieved last year, capacity utilization in cement was lower at 64% from 74% last year.

3.0 FINANCIAL PERFORMANCE

Economy appeared on threshold of a major crisis. A persistently high inflation, high interest rates , falling consumer spending, piling up of inventories and a general decline in corporate sales and profitability were all symptoms of an economy in distress. As per the advance estimates released by the Central Statistics Organisation, GDP growth for 2013-14 was expected to be below 5% for the second year in succession, at 4.9%. Manufacturing sector, which had grown at a CAGR of over 10% between 2005 till 2011 put up its worst performance in 20 years in 2013-14, contracting by 0.20% following an equally dismal growth of 1.1% in 2012-13. Construction sector grew by 1.1 % against 1.7% last year and Services sector by 11.2%. But for a healthy growth of 4.6% in Agricultural sector against 1.6% last year, GDP growth would have been still more dismal.

4.0 FINANCES

The position of the cement Industry has gradually worsened over the last 3 years to the extent that now the existence of atleast the smaller units, constantly squeezed by high cost, uneconomic scale of operation and unremunerative prices, is under threat. On the one hand, while the increase in Diesel and coal rates, as a part of Govt, strategy to cut back subsidies, unleashed an inflationary spiral, substantial!/ pushing up cost of power, fuel and transportation, on the other, unabated capacity additions without significant consumption growth, resulted in continued supply overhang and erosion of pricing power. In view of the extraordinary situation resulting in severe working capital constraints, it was very difficult to maintain viable operations resulting in substantial losses. The liabilities exposure of the Company, including those of statutory nature, went up substantially. All these factors cumulatively resulted in lower production at 6.39 lac tons during 2013-14, a significant 13% fall compared to the immediately preceding financial year. This resulted in negative EBIDTA Margin and net loss as reported above.

5.0 DIVIDENDS

The Directors regret their inability to recommend any dividend in view of the present position of the Company.

6.0 LISTING AGREEMENTS WITH STOCK EXCHANGES

The Company''s Equity Shares are listed on the Calcutta Stock Exchange and BSE Ltd. There are no arrears of Annual Listing Fees pending with the Company.

7.0 AUDITORS'' REPORT

The adverse remarks / qualifications contained in the Auditors'' Report have been appropriately explained in a statement "Auditor''s Remarks and Management''s Replies" placed at ANNEXURE- 1 hereto.

8.0 DIRECTORS'' RESPONSIBILITY STATEMENT

In terms of Section 217 ( 2AA ) of the Companies Act, 1956 , your Directors have -

i. followed the applicable accounting standards in preparation of the Annual Accounts for the year ended 31.03.14.

ii. selected the accounting policies and applied them consistently and made judgements and estimates which are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the loss of the Company for that period.

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

iv. prepared the Accounts on a going concern basis.

9.0 CORPORATE GOVERNANCE

In terms of Clause 49 of the listing Agreement, the Company is required to comply with the Corporate Governance Code. The Corporate Governance code has already been implemented by the Company and a separate section thereon is included in the Directors'' Report as ANNEXURE- 2

10.0 DIRECTORS

Under Articles 108 & 109 of the Articles of Association of the Company, Mr. Mahendra Lodha retires by rotation in this Annual General Meeting and being eligible offers himself for reappointment.

11.0 AUDITORS

The Auditors M/s M. Mukerjee & Co., Chartered Accountants retire in terms of their appointment and being eligible offer themselves for re-appointment .

12.0 ENERGY, TECHNOLOGY & FOREIGN EXCHANGE

Statement giving the particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo as required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed as ANNEXURE-3 .

13.0 PARTICULARS REGARDING EMPLOYEES

The particulars regarding an employee of the Company who was in receipt of remuneration stipulated under Section 217 (2A) of the Companies Act, 1956 read with the companies (Particulars of Employees) Rules, 1975 have been provided in para 7 (v)(f) of Annexure-2 of the Directors'' Report.

14.0 MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis has been appended to the Report, in terms of the Listing Agreement, as ANNEXURE-4.

15.0 APPRECIATION

The Directors wish to put on record their appreciation for the support and contribution made by the Employees of the Company towards the operation.

The Directors also wish to place on record their thanks and appreciation for the help and support given by State Govt, and Central Govt, in carrying out its operations.

On behalf of the Board

(Shailendra Prakash Sinha) Managing Director

(Dr. K.C. Varshney) Director

(B.C. Srivastava) Director. Patna Dated: 23rd May, 2014


Mar 31, 2012

The Directors submit herewith their Report together with the audited accounts for the year ended 31st March 2012

1. FINANCIAL RESULTS (Rupees in Lacs) Year ended 31.03.2012 Year ended 31.03.2011

Total Turnover including other income 21464.70 23756.91

1. Profit before depreciation, interest, tax and other appropriations (2117.98) (54.06)

2. Less :

Interest and Finance Charges 1123.91 299.79

3. Depreciation / amortization 1467.11 1380.64

4. Fringe Benefit Tax 0.05

5 Net Profit (Loss ) (4709.05) (1734.49)

6. Extraordinary Items (1388.46) 8754.71

7. Profit/(Loss) after Extraordinary Items (6097.51) 7020.22

2.0 PRODUCTION

Clinker and Cement production were lower during the year on account of maintenance of the Kiln during December, 2011 and January 2012. On account of the above, capacity utilization in Clinker and Cement production during the year was 77 % and 63 % respectively as against 88 % and 76 % achieved last year .

3.0 FINANCIAL PERFORMANCE

The growth of 8.6% witnessed during 2010-11 could not be sustained during 2011-12 due to inflationary pressures which had surfaced in 2010-11 and continued in 2011-12 , and remained a major concern for the Govt. The RBI pursued a tight money policy to contain inflation resulting in increased borrowing costs which impeded investment and consumption growth . Impacted by steep decline in manufacturing growth to an estimated 3.9 % compared to 8 % last year and lower agricultural growth at 2.5 %, GDP growth fell to an estimated level of 6.9 % after two successive years of over 8 % growth . Excess capacity in Cement, coupled with the economic slowdown affected the performance of the Industry ,as both production and consumption of Cement on All India basis grew marginally by 6% as against 5 % last year, which was already a decadal low. Lower plant availability coupled with reduced selling prices and high operating costs resulted in steep fall in turnover and substantially increased losses from operation during the year.

4.0 FINANCES

2011-12 was the second successive year of extremely low growth in demand with virtually stagnant cement realization, despite 100 % hike in pit head cost of Coal and over 25 % increase in power cost, the two major cost components in Cement manufacture. The Company was called upon to pay FCPPA retrospectively which together with some other elements of cost had extraordinary impact on the financial position of the company. The company during the year under report had a negative operating margin of Rs. 21.18 Crs. and a cash loss of Rs. 32.41 Crs. The net loss for the year amounted to Rs. 47.09 Crs. which was caused mainly due to unprecedented rise in cost of fuel and power besides the cost of transportation and shortfall in production due to plant shutdown for major repairs. The company also provided for some of the accrued liabilities amounting to Rs. 13.88 Crs. towards energy cost and interest on mining royalty, the total loss for the year being Rs. 60.98 Crs.

Load restrictions imposed by the transport dept, of the Govt, of Bihar resulted in significant increase in transportation cost and considering all the elements of cost escalation, overall variable cost per ton of cement increased by 30% over the previous year while cement realization remained flat.

Burdened with continued hike in input costs which could not be passed on due to sluggish demand, the Company experienced severe financial distress. On account of financial constraints , the Company was not in a position to fully service its liabilities including statutory dues and there was thus substantial increase in liabilities.

The Board for Industrial and Financial Reconstruction (BIFR) sanctioned the rehabilitation scheme in February, 2012. The reimbursement of Value Added Tax amounting to Rs. 41 Crs. by the Govt, of Bihar pursuant to the Rehabilitation Scheme sanctioned by BIFR did help mitigate the situation to some extent by clearing the sales tax, electricity and some part of mining royalty dues. ,

The coming period might see further increase in operating costs following recent hike of 20% in Railway freight effective from March 2012. Diesel prices also may go up which will escalate freight cost. Excise duty was also increased during the period.

The overhaul of the Kiln has resulted in significant improvement in its operational efficiency in terms of output and lower energy consumption since February 2012, which will result in cost savings for the Company

5.0 DIVIDENDS

The Directors regret their inability to recommend any dividend in view of the present position of the Company.

6.0 LISTING AGREEMENTS WITH STOCK EXCHANGES

The Company s Equity Shares are listed on the Calcutta Stock Exchange and Bombay Stock Exchange. The Company s shares were earlier listed on Magadh Stock Exchange also which has since been derecognised by the Securities and Exchange Board of India. There are no arrears of Annual Listing Fees pending with the Company.

7.0 AUDITORS REPORT

The remarks contained in the Auditors Report have been appropriately explained in ANNEXURE - 1 to the Directors Report. .

8.0 DIRECTORS RESPONSIBILITY STATEMENT

In terms of Section 217 ( 2AA ) of the Companies Act, 1956 , your Directors hffve -

i. followed the applicable accounting standards in preparation of the Annual Accounts for the year ended 31.03.2012.

ii. selected the accounting policies and applied them consistently and made judgements and estimates which are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the loss of the Company for that period.

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

iv. prepared the Accounts on a going concern basis.

9.0 CORPORATE GOVERNANCE

In terms of Clause 49 of the listing Agreement, the Company is required to comply with the Corporate Governance Code . The Corporate Governance code has already been implemented by the Company and a separate section thereon is included in the Directors Report as ANNEXURE- 2

10.0 DIRECTORS

Under Articles 108 & 109 of the Articles of Association of the Company, Dr. K.C. Varshney and Mr. Dhananjay Lodha Directors retire by rotation in this Annual General Meeting and being eligible offer themselves for reappointment.

11.0 AUDITORS

The Auditors M/s M. Mukerjee & Co., Chartered Accountants retire in terms of their appointment and being eligible offer themselves for re-appointment .

12.0 ENERGY, TECHNOLOGY & FOREIGN EXCHANGE

Statement giving the particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo as required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1S 88 is annexed as ANNEXURE-3 .

13.0 PARTICULARS REGARDING EMPLOYEES

None of the employees of the Company was in receipt of remuneration stipulated under Section 217 (2A) of the Companies Act, 1956 read with the companies (Particulars of Employees) Rules, 1975.

14.0 MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis has been appended to the Report, in terms of the Listing Agreement, as ANNEXURE -4 .

15.0 APPRECIATION

The Directors wish to put on record their appreciation for the support and contribution made by the Employees of the Company towards the operation.

The Directors also wish to place on record their thanks and appreciation for the help and support given by Asset Reconstruction Company ( India ) Ltd. , Financial Institutions / Banks, State Govt, and Central Govt, in carrying out its operations.

On behalf of the Board

Patna Satyadeva Prakash Sinha

Dated : 25th May, 2012 Executive Chairman


Mar 31, 2010

The Directors submit herewith their Report together with the audited accounts for the year ended 31st March 2010

1. FINANCIAL RESULTS

(Rupees in Lacs) Year ended Year ended 31.03.2010 31.03.2009

Total Turnover including other income 23244.06 18,050.68

1. Profit before depreciation, interest, tax and other appropriations 2128.13 425.61

2. Less :

Loss on Assets discarded - 1.21

Interest and Finance Charges & Misc. Provisions 248.33 187.83

Excise Duty of Previous Year - 316.05

Depreciation/deferred revenue expenditure written off 1383.41 1,475.75

Fringe Benefit Tax 5.77 9.27

3. Net Profit/( Loss) 490.62 (1564.50)

4. Write back of Sales Tax and Loan 1207.11 2787.59

5. Sales Tax Reversed (8754.71) -

6. Loss carried to Balance Sheet (25469.06) (18,412.08)

2.0 PRODUCTION

As a result of plant improvement completed by Dec.09, Clinker and Cement capacity utilization during the year went up to 83% and 68% respectively as against 74% and 60% achieved last year. This was mainly helped by capacity utilization of over 100% in clinker and 85% in Cement during the last quarter of the year.

3.0 FINANCIAL PERFORMANCE

The year 2009 was amongst the most challenging for the Indian economy which saw it successfully emerge out from severe global slowdown coupled with poor agricultural output in the country. Significant improvement in the industrial production during later part of the year helped recovery. Driven by strong growth in Industrial and services sector, GDP growth for 2008-09 is expected to cross 7.2% against 6.7% last year and is projected to register an even higher growth in the current year.

Fresh cement production capacities continued to be added with 25 million tonnes of additional capacity coming on stream during 2008-09, pushing Cement production by 12%. Fiscal stimulus rolled out by the Govt. to combat slowdown, led to consumption growth of 13% during the year. The Companys total income improved to Rs. 232 crores registering an increase of 28% over the previous year.

Improved production coupled with 10% increase in prices and better operating efficiencies, helped the Company to make a turnaround with a net profit of Rs. 4.91 crores against the net loss of Rs. 15.65 crores during 2008-09. However, the reversal of sales tax credit taken earlier based on the Interim Order of the Honble Supreme Court in the Profit and Loss Account, consequent upon the final verdict of the Apex Court in Sales

Tax exemption case had the net effect of increasing the cumulative loss by Rs. 75.48 crores over the cumulative loss of Rs. 182.12 crores as on 31.3.2009

The Companys reference under Sick Industrial Companies (Special Provisions) Act 1985 is under consideration of the Board for Industrial and Financial Reconstruction (BIFR) and BIFR has since circulated the Draft Rehabilitation Scheme (DRS) for consideration of various Stakeholders. The DRS circulated by BIFR envisages various measures required for reviving the Company.

4.0 FINANCES

The Company continued its efforts to optimize production levels and operating efficiency by carrying out necessary replacements in critical areas of operation. The major installations carried out during the year were Belt Bucket elevator system in the Clinker Roller Press, a new dense phase system for feeding fly ash and ground clinker and a steel silo for storage and feeding fly ash. The Company is in the process of adding a new packer and replacing the old Roller Press in Clinker Grinding Section. Further improvement in production and operating efficiencies are expected to result from the proposed changes. .

5.0 DIVIDENDS

The Directors regret their inability to recommend any dividend in view of the present position of the Company.

6.0 LISTING AGREEMENTS WITH STOCK EXCHANGES

The Companys Equity Shares are listed on the Calcutta Stock Exchange, Bombay Stock Exchange and Magadh Stock Exchange. There are no arrears of Annual Listing Fees pending with the Company. The Bombay Stock Exchange has since permitted trading in the shares of the company.

7.0 AUDITORS REPORT

Although the remarks contained in the Auditors Report have been appropriately explained in the Notes on Account in Schedule-16, replies to the qualifications / adverse comments made by the Auditors are separately enclosed as ANNEXURE-1.

8.0 DIRECTORS RESPONSIBILITY STATEMENT

in terms of Section 217 ( 2AA ) of the Companies Act,1956, your Directors have -

i. followed the applicable accounting standards in preparation of the Annual Accounts for the year ended 31.03.2010.

ii. selected the accounting policies and applied them consistently and made judgements and estimates which 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 of the Company for the Year.

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

iv. prepared the Accounts on a going concern basis. 9.0 CORPORATE GOVERNANCE

In terms of Clause 49 of the listing Agreement , the Company is required to comply with the Corporate Governance Code. The Corporate Governance code has been implemented by the Company and a separate section thereon is included in the Directors Report as ANNEXURE-2

10.0 DIRECTORS

The Board of Directors appointed Shri. K. Balasubramanian and Shri Dhananjay Lodha as Additional Directors w.e.f. 30.10.2009 and 30.01.2010 respectively. The Shareholders of the company in their meeting held on 8th March, 2010 confirmed their appointment as Directors.

Under Articles 108 & 109 of the Articles of Association of the Company, Shri Mahesh Prasad, Shri Arun Sharma and Dr. K. C. Varshney, directors retire by rotation in this Annual General Meeting and being eligible offer themselves for re-appointment.

11.0 AUDITORS

The Auditors M/s M. Mukerjee & Co., Chartered Accountants retire in terms of their appointment and being eligible offer themselves for re-appointment.

12.0 ENERGY, TECHNOLOGY & FOREIGN EXCHANGE

Statement giving the particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo as required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed as ANNEXURE-3.

13.0 PARTICULARS REGARDING EMPLOYEES

A statement setting out the particulars regarding employees of the Company as required under Section 217 (2A ) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 is enclosed hereto as ANNEXURE-4

14.0 MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis has been appended to the Report, in terms of the Listing Agreement, as ANNEXURE-5

15.0 APPRECIATION

The Directors wish to put on record their appreciation for the support and contribution made by the Employees of the Company towards the operation.

The Directors also wish to place on record their thanks and appreciation for the help and support given by Asset Reconstruction Company ( India ) Ltd., Financial Institutions / Banks, State Govt. and Central Govt. in carrying out its operations.

On behalf of the Board

Satyadeva Prakash Sinha Executive Chairman

Patna Dated : 29th May, 2010

 
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