Home  »  Company  »  KCP Ltd.  »  Quotes  »  Directors Report
Enter the first few characters of Company and click 'Go'

Directors Report of KCP Ltd.

Mar 31, 2014

Dear Shareholders,

The Directors have pleasure in presenting their 73rd Annual Report of the company together with the Audited Accounts for the fi nancial year ended 31st March, 2014.

Financial Results

Brief summary of the Company''s fi nancial performance (Stand Alone and Consolidated) is as under:

(Rs in Lacs)

For the year ended For the year ended Particulars 31-03-2014 31-03-2013 31-03-2014 31-03-2013 Stand Alone Consolidated (GROUP)

Revenue from Operations 72,257 81,701 1,04,310 1,25,493

Profi t for the year (PBDIT) 8,003 11,349 14,765 18,316

Less: a) Interest and Finance charges 4,473 3,812 4,631 3,971

b) Depreciation 3,410 3,198 4,712 4,442

Profi t before Tax 120 4,339 5,422 9,903

c) Provision for current tax 27 871 449 1,177

d) Deferred Tax 5 866 93 667

e)Tax provision for earlier years - 8 - 8

f) Minority share of profit 1544 1980 Add:

a) Refund of Income Tax 12 8 12 9

b) MAT Entitlement tax 27 444 90 444

c) Excess Provision of income tax of earlier years credited back 11

Profit for the Year 127 3,046 3,449 6,524

Add: Surplus brought forward from earlier year 5,374 5,234 18,418 20,167

Amount available for appropriations 5,501 8,280 21,867 26,691

Less: Transfer to Preference Capital Redemption Reserve 800 700 800 700

Transfer to General Reserve - 450 - 2,191

Proposed Dividend

-Preference Shares 30 55 30 55

Proposed Final Dividend – Equity Shares 129 645 129 645

Interim Dividends Paid –Equity Shares - 645 1,779 4,271

Interim Dividends Paid –Preference Shares 124 166 124 166

Tax on Distributed Profits – Equity shares 22 209 22 209

Tax on Distributed Profits – Preference shares 31 36 31 36

Surplus at the end of the Year 4,365 5,374 18,952 18,418

Year in retrospect: Cement

- The cement despatches and the average price realization were lower than the previous year, but economy in power cost and in the cost of logistics and transportation and market distribution resulted in the company''s operations for the year under review being considerably better than in the corresponding year.

- Production also was signifi cantly lower than the previous year.

- The various incentives also contributed to the improvement in the operations though the realization of the same have not yet materialized.

- Wide disparity witnessed in the price of cement across the geographical segments of India resulted in highly skewed profi tability.

- Export of cement to nearby countries commenced in a modest way.

Engineering:

- The slowdown of the global economy and the sluggishness of the Indian economy resulted in the signifi cant impact in the year under review. The company had to resort to taking up low contributory sales for better utilization of the capacity.Power:

Power:

- All the present captive power units reported gratifying results thanks to a good monsoon and a reasonable wind pattern last year.

- The company erected and commissioned a Solar Power Plant of 1.15MW at Muktyala for its captive use.

Dividend from subsidiary

During the year under review the company received a dividend of Rs 1504 lacs (Rs 4390 lacs in the previous year) from its subsidiary, KCP Vietnam Industries Ltd, Vietnam.

Dividend on Preference Share Capital

Your Directors recommend a dividend of 12% on the Rs 800 lacs Preference Share Capital of the company for the year 2013-14. On 8/12/2013 the company has redeemed Rs. 700 lacs preference share capital, along with the corresponding interim dividend for the Rs 1500 lacs preference share capital till the date of the redemption amounting to Rs. 124.27 lacs and further an amount of Rs.29.72 lacs being the preference dividend for the balance period on the reduced capital has been provided.

Redemption of Preference Shares and capital redemption reserve account

Pursuant to the Share subscription agreement dated 23rd November, 2009, entered with M/s Tata Capital Financial Services Limited (earlier Tata Capital Limited), Rs.800 Lacs preference share capital is due for redemption in December 2014. In terms of section 80(1) (d) of the Companies Act, 1956, a sum of Rs.800 Lacs has been transferred to capital redemption reserve account.

Dividend on Equity Shares

The Board of Directors has recommended, for approval of the members, a fi nal dividend of Rs. 0.10 per share (i.e 10 per cent). The fi nal dividend, if approved, will be paid to members within the period stipulated by the Companies Act, 2013 and the Companies (Declaration and Payment of Dividend) Rules, 2014.

Transfer to Reserves

Your Directors recommend the following appropriations from the profi ts available for appropriation:

To Preference Capital Redemption Reserve Rs. 800 lacs (under the provisions of the Companies Act, 1956)

To General Reserve NIL

This will leave Rs.4365 lacs in the Surplus Account to be carried forward to the next year.

The total amount in General Reserve as on 31st March 2014 would stand at Rs. 27450 lacs.

Management Discussion & Analysis report:

All matters pertaining to Industry structure and developments, opportunities and threats, segment/product wise performance, outlook, risks and concerns, internal control and systems, etc are discussed in Management Discussion & Analysis report forms part of this report.

Projects under implementation:

- The Captive Power Plant with a capacity of 18MW was originally envisaged with a total outlay of Rs 11300 lacs. The revised project has gone up marginally to Rs 11900 lacs. Implementation of the same is nearing completion and commissioning is expected in this quarter.

- The Hotel, on the other hand suffered overruns both in terms of commissioning time and the cost due to various factors some outside the control of the company. The project which was envisaged at Rs 6500 lacs is now estimated to cost around Rs 8500 lacs.

Exit from Biotech Division

Further to the approval of the shareholders on 31/01/2013 by way of Postal ballot, the company is in the process of selling of its Fixed Assets in the Biotech business.

Fixed Deposits:

The total amount of Fixed Deposits outstanding as on 31st March, 2014 was Rs.76,39,35,000/- as compared to the fi gure of Rs. 66,50,98,000/- as on 31/03/2013. As on 31st March, 2014, Fixed Deposits matured and remained unclaimed were Rs.2,05,03,000/- from 224 depositors. As on the date of this report, Fixed Deposits relating to None have been renewed and Fixed Deposits of Rs. 24,73,000/- of 47 depositors repaid.

Depositors have been intimated regarding the maturity of deposits with a request to either renew or claim their deposits. As per the provisions of Section 205C of the Companies Act, 1956, deposits remaining unclaimed for a period of seven years from the date they became due for payment have to be transferred to the Investor Education and Protection Fund (IEPF) established by the Central Government. Accordingly, during the year, an amount of Rs. 2.11 lacs has been transferred to the IEPF.

Credit Rating

CRISIL which had initially rated the debt facilities as A- Stable has now revised the rating to BBB (Negative). This was done taking into consideration both the operations of the year under review and also based on CRISIL perceptions on the scenario in the segments in which the company operates.

Corporate Social Responsibility (CSR)

India is a country of myriad contradictions. On the one hand, it has grown to be one of the largest economies in the world, and an increasingly important player in the emerging global order, on the other hand, it is still home to the largest number of people living in absolute poverty (even if the proportion of poor people has decreased) and the largest number of undernourished children.

The Ministry of Corporate Affairs has notifi ed the Section 135 of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 20 I4 effective from 1st April, 2014.

Even before this enactment, the company has in its own way been contributing to the benefi t of the society by taking steps in developing the infrastructure of the vicinity of the units. , providing potable drinking water to the town, and plantation of trees to improve the environment.

A Committee of Board consisting of Sri.P.S.Kumar, Sri Vijay Sankar apart from Smt V L Indira Dutt Joint Managing Director and Smt Kavitha D Chitturi Executive Director has been formed to monitor the CSR activities and suggest further improvement to make it more productive.

A more detailed report on activities under Corporate Social Responsibility is furnished separately in this Annual Report.

Directors

The Board of Directors deeply regrets the sad demise of Dr.A. Ramakrishna an Independent Director of the company on 20th August, 2013. The Board of Directors would like to place on record its sincere gratitude to Dr. A. Ramakrishna and appreciates the contribution made by him during his association with the Company.

Pursuant to the provisions of the Companies Act, 2013 and rules made there under Sri. O Swaminatha Reddy, Sri.V.H.Ramakrishnan and Sri. Vijay Sankar Directors retiring by rotation and are eligible to be appointed as Independent Directors of the company and their appointments are recommended for the approval shareholders of the company.

Sri.P.S.Kumar, who was appointed in the casual vacancy caused by the death of Sri. A. Ramakrishna and Sri. M. Narasimhappa appointed as additional director of the company hold offi ce up to the date of this Annual General Meeting of the Company and are eligible to be appointed as Independent Directors of the company and their appointments are recommended for the approval of shareholders of the company.

Sri. V. Gandhi, Technical Director of the company, retires by rotation and being eligible has offered himself for re-appointment.

Brief resume of the Directors proposed to be reappointed and other details as stipulated under Clause 49 of the Listing Agreement are provided with the Notice convening the Annual General Meeting

Auditors

M/s Brahmayya & CO, Chartered Accountants, Vijayawada, Statutory Auditors of the company retires at the conclusion of the ensuing Annual General Meeting.

Pursuant to Section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, we have to rotate the Auditors within a period of three years.

M/s Brahmayya & CO have furnished their written consent and a certifi cate stating that that the appointment, if made, shall be in accordance with the conditions as may be prescribed in sub section (I) of Section 139 of the Companies Act, 2013

The Board recommends the appointment of M/s Brahmayya & CO Vijayawada, as Auditors of the company for a period of three years to hold offi ce till the conclusion of the 76th Annual General Meeting of the company subject to ratifi cation by shareholders in every Annual General Meeting.

The Notes on Financial Statements referred to in the Auditors'' Report are self-explanatory and do not call for any further comments.

Cost Auditors

The Central Government has approved the appointment of M/s Narsimhamurthy & Co, Cost Accountants, Hyderabad and M/s Mahadevan & Co, Chennai as the Cost Auditors for the Cement and Engineering units for the year 2013-14.

Pursuant to the Companies (Cost Accounting Records) Rules, 2011 M/s Narsimhamurthy & Co Hyderabad has been appointed to conduct the Cost audit for the Cement unit and M/s Mahadevan and Co, Chennai has been appointed to conduct the Cost audit for the Engineering unit of the company.

The Cost Audit Reports/Cost compliance audit reports for the year 2012-13 were fi led by the Cost Auditors within the due date.

Particulars of Employees

The Information required under Section 217(2A) of the Companies Act, and the Rules made there under, in respect of employees of the Company, is provided is in Annexure-1 forms part of this report.

Subsidiary company and consolidated fi nancial statements

The Company has a subsidiary in Vietnam, KCP Vietnam Industries Limited. There has been no material change in the nature of the business of the subsidiary.

Pursuant to the provision of section 212(8) of the Companies Act, 1956, the Ministry of Corporate Affairs vide its circular dated February 8, 2011 has granted general exemption from attaching the balance sheet, statement of profi t and loss and other documents of the subsidiary companies with the balance sheet of the Company.

A statement containing brief fi nancial details of the Company''s subsidiary for the fi nancial year ended March 31, 2014 is included in the annual report. The annual accounts of the subsidiary and the related information will be made available to any member of the Company and are available for inspection by any member of the Company at the registered offi ce of the company during business hours.

Consolidated Financial Statements

Pursuant to the requirements of Accounting Standard – 21 and the Listing Agreement with the Stock Exchanges, unaudited fi nancial statements consolidating those of its subsidiary KCP Vietnam Industries Ltd and its Joint Venture company, Fives Cail KCP Ltd, considering the minority interest in them and duly audited have been attached to this Directors'' Report.

Conservation of Energy, Technology absorption, Foreign Exchange Earning and Outgo:

The particulars as prescribed under section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are set out in Annexure "2" to this report.

Transfer of amounts to Investor Education and Protection Fund (IEPF)

Pursuant to sections 205A and 205C and other applicable provisions, if any, of the Companies Act, 1956, all Unclaimed dividend, and interest on deposits as well as the principal amount of deposits, as applicable, remaining unclaimed for a period of seven years from the date they became due for payment, have been transferred to the IEPF established by the Central Government.

Corporate Governance and Management Discussion and Analysis:

As per clause 49 of the Listing Agreements entered into with the Stock Exchanges, Corporate Governance Report with auditors'' certifi cate thereon and Management Discussion and Analysis are attached and form part of this report.

As per clause 55 of the Listing Agreements entered into with the Stock Exchanges, a Business Responsibility and Sustainability Report is attached and forms part of the annual report.

Human Resource Development

Human Resource Development (HRD) is the framework for helping employees develop their personal and organizational skills, knowledge, and abilities. It encompasses providing such opportunities as employee training, employee career development, performance management and development, coaching, mentoring, succession planning, key employee identifi cation, tuition assistance, and organization development. Development of human resources is essential for any organization that would like to be dynamic and growth-oriented. Unlike other resources, human resources have rather unlimited potential capabilities. The potential can be used only by creating a climate that can continuously identify, bring to surface, nurture and use the capabilities of people.

The company realizes the importance HRD and has put in place several measures such as :

- In house training under a class room atmosphere

- Sponsoring for various seminars that would help the employees in continuously updating their skills.

- Visit to other units to enable the employees see for themselves the technology developments happening around them.

- Initiating and persuading the employees to go in for higher education to make them more versatile.

- Arranging for the live demo of other profi table activities for the spouse to make them possess skills that can be used to generate income.

Director''s Responsibility Statement

Pursuant to the requirement of section 217(2AA) of the Companies Act, 1956, and based on the representations received from the operating management, the directors hereby confi rm that:

(a) in the preparation of the annual accounts for the fi nancial year 2013-14, the applicable accounting standards have been followed and there are no material departures;

(b) they 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 fi nancial year and of the profi t of the Company for the fi nancial year;

(c) they have taken proper and suffi cient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956. They confi rm that there are adequate systems and controls for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) they have prepared the annual accounts on a going concern basis.

Acknowledgements

The Board wishes to place on record their gratitude to the Central Government, State Governments, Company''s Bankers, Customers, dealers and other business associates for the assistance, co- operation and encouragement they extended to the Company. Your Directors wish to whole heartedly thank the employees for their sincere and devoted contribution to the company''s continued performance. Your Directors are thankful to the shareholders and deposit holders for their continued patronage.

For and on behalf of the Board of Directors

Place: Chennai (V.L. DUTT)

Date: 22nd May, 2014 Chairman and Managing Director


Mar 31, 2013

Dear Shareholders,

The Directors have pleasure in presenting their 72nd Annual Report on the Business and Operations of the company together with the Audited Accounts for the fi nancial year ended 31st March, 2013.

Financial Results

Brief summary of the Company''s fi nancial performance (Standalone and Consolidated) is as under:

(Rs. In Lacs)

For the year ended For the year ended

Particulars 31-03-2013 31-03-2012 31-03-2013 31-03-2012 Standalone Consolidated (Group)

Revenue from operations 81,701 68,725 125493 110557

Profit for the year (PBDIT) 11,349 15,208 18316 23625

Less: a) Interest and Finance charges 3812 3795 3971 4154

b) Depreciation 3198 2935 4442 4104

Profit before Tax 4339 8478 9903 15367

c) Current tax 871 1675 1177 1983

d) Deferred Tax 866 1701 667 1685

e) Tax provision for earlier years 8 28 8 28

f) Minority share of profit 1980 2146

Add: a) Refund of Income Tax 8 10 9 11

b) MAT Entitlement 444 1070 444 1070

Profi t for the year 3046 6153 6524 10605

Add: Surplus brought forward from earlier year 5234 4108 15580 13228

Amount available for appropriations 8280 10201 22104 23833

Less: Transfer to Preference Capital Redemption Reserve 700 500 700 500

Transfer to General Reserve 450 2000 2191 2119

Proposed Dividend - Preference Shares 55 240 55 240

Proposed Final Dividend - Equity Shares 645 322 645 322

Proposed Special Dividend - Equity Shares 645 645

Interim Dividends Paid - Equity Shares 645 967 4271 4074

Interim Dividends Paid - Preference Shares 166 166

Tax on Distributed Profits - Equity shares 209 314 209 314

Tax on Distributed Profits - Preference shares 36 39 36 39

Surplus at the end of the year 5374 5234 13831 15580

Year in retrospect: Cement

Notwithstanding the higher volume of Cement sold, operations were deeply impacted by the following:

* High incidence of power cost on account of purchase of power under Open Access resulting from monthly 12 days Power Holiday in the State of Andhra Pradesh for most part of the year.

* Higher consumption of outside power due to inadequate generation of power from the Captive Hydel plant.

* Higher logistic costs due to the spread of the cement despatches across various States .

Engineering:

* Continuance of the recessionary trends which has affected the operations of the Engineering Division.

* Customers have either not taken delivery of the materials ordered or in some cases deferring / cancelling the order

Outlook:

Cement:

Given the slight moderation in credit growth in the housing and commercial real estate sector, growth of demand may be expected to be between 5%- 8% in year 2013. With the expected stabilization in demand, capacity utilizations may have bottomed out. But South Zone based companies especially those from Andhra Pradesh may continue to experience pressure on capacity utilization. This is due to the demand-supply gap in the region.

Engineering:

Government''s focus on infrastructure development is expected to keep demand for the engineering sector high. Continued growth of manufacturing sector and favorable regulatory policies would further propel the sector''s growth in the long run. The slowdown it appears may just be over and the fortune of the Indian engineering industry is likely to look up.

Dividend from subsidiary

During the year under review the company received a dividend of Rs 4390 lacs from its subsidiary, KCP Vietnam Industries Ltd, Vietnam.

Dividend on Preference Share Capital

Your Directors recommend a dividend of 12% on the Rs 1500 lacs Preference Share Capital of the company for the year 2012-13. On 08/12/2012 the company has redeemed Rs. 500 lacs preference share capital, along with the corresponding interim dividend for the entire preference share capital of Rs 2000 lacs till the date of the redemption amounting to Rs 165.69 lacs and further an amount of Rs 55.72 lacs being the preference dividend for the balance period on the reduced capital has been provided.

Redemption of Preference Shares

Pursuant to the Share subscription agreement dated 23rd November, 2009, entered with M/s Tata Capital Financial Services Limited (earlier Tata Capital Limited), Rs.700 Lacs preference share capital is due for redemption in December 2013. In compliance with the provisions of the Companies Act, 1956, the same amount has been transferred to the Capital Redemption Reserve created for the purpose.

Dividend on Equity Shares

During the year two interim dividends of Re.0.25 per share (i.e. Re.0.50 per share) was declared and paid. The Board of Directors has recommended a fi nal dividend of Rs. 0.50 per share (i.e 50 per cent) to the members for their approval. The fi nal dividend, if approved, will be paid to members within the period stipulated by the Companies Act, 1956.

Transfer to Reserves

Your Directors recommend the following appropriations from the profi ts available for appropriation:

To Preference Capital Redemption Reserve Rs. 700 lacs (under the provisions of the Companies Act, 1956)

To General Reserve Rs. 4500 lacs

This will leave Rs 5374 lacs in the Surplus Account to be carried forward to the next year.

The total amount in General Reserve as on 31st March 2013, after the proposed appropriation, would stand at Rs.27450 lacs.

Management Discussion and Analysis Report

All matters pertaining to Industry structure and developments, opportunities and threats, segment/

product wise performance, outlook, risks and concerns, internal control and systems, etc are discussed in Management Discussion and Analysis report forms part of this report.

Fixed Deposits:

The total amount of Fixed Deposits outstanding as on 31st March, 2013 was Rs.6650.98 lacs (Rs.6824.18, lacs on 31-3-2012) and Fixed Deposits matured and remained unclaimed were Rs.133.97 lacs from 268 depositors. As on the date of this report, Fixed Deposits relating to 58 depositors amounting to Rs. 3.93 lacs/- have been renewed and Fixed Deposits of Rs. 20.75 Lacs of 13 depositors repaid.

Depositors have been intimated regarding the maturity of deposits with a request to either renew or claim their deposits.

As per the provisions of Section 205C of the Companies Act, 1956, deposits remaining unclaimed for a period of seven years from the date they became due for payment have to be transferred to the Investor Education and Protection Fund (IEPF) established by the Central Government. Accordingly, during the year, an amount of Rs. 2.18 lacs has been transferred to the IEPF.

Corporate Social Responsibility (CSR)

CSR has been defi ned as the "continuing commit- ment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large"

Such a practice cannot have a Sustainable Development without taking along the rural populace in the path of development.

CSR is not a new concept to the company, the CSR activities are long being guided by the vision of the Founder Chairman Sri V.Ramakrishna. The long cherished aim of the company has also been to main- tain integrity with which a company governs itself, fulfi lls its mission, lives by its values, engages with its stakeholders, measures its impact and reports on its activities in a transparent manner.

A Committee of Board consisting of Dr. A. Ramakrishna, Sri Vijay Sankar apart from Smt V L Indira Dutt Joint Managing Director and Smt Kavitha D Chitturi Executive Director has been formed to monitor the

CSR activities and suggest further improvement to make it more productive.

A more detailed report on activities under Corporate Social Responsibility is furnished separately in this Annual Report.

Directors

The Board of Directors deeply regrets the sad demise of Sri.P.Kotewararao an Independent Director of the company on 27th September, 2012. The Board of Directors would like to place on record its sincere gratitude to Sri.P.Kotewararao and appreciates the contribution made by him during his long association with the Company.

Sri. O Swaminatha Reddy and Sri. Vijay Sankar Directors, retire by rotation at the forthcoming Annual General Meeting and being eligible; offer themselves for reappointment.

Brief resume of the Directors proposed to be re- appointed and other details as stipulated under Clause 49 of the Listing Agreement are provided with the Notice convening the Annual General Meeting

Auditors

M/s Brahmayya & CO, Chartered Accountants, Vijayawada, Statutory Auditors of the company retire at the conclusion of the ensuing Annual General Meeting. They are, however eligible for reappoint- ment. They have furnished a certifi cate to the effect that their appointment if made, will be in accordance with the limits specifi ed in sub section (IB)of Section 224 of the Companies Act .1956

The Board recommends the reappointment of M/s Brahmayya & CO Vijayawada, as Auditors of the company to hold offi ce till the conclusion of the next Annual General Meeting.

The Notes on Financial Statements referred to in the Auditors'' Report are self-explanatory and do not call for any further comments.

Cost Auditors

The Central Government has approved the appointment of M/s Narsimhamurthy and Co, Cost Accountants,

Hyderabad and M/s Mahadevan & Co, Chennai as the Cost Auditors for the Cement units for the year 2012-13.

Pursuant to the Companies (Cost Accounting Records) Rules, 2011 M/s Narsimhamurthy and Co Hyderabad has been appointed to conduct the Cost audit for the Cement and Biotech units and M/s Mahadevan and Co, Chennai has been appointed to conduct the Cost audit for the Engineering unit of the company.

The Cost Audit Reports/Cost compliance audit reports for the year 2011-12 were fi led by the Cost Auditors within the due date.

Particulars of Employees

Information as per Section 217(2A) of the Companies Act,1956 read with the Companies(Particulars of Employees) Amendment Rules, 2011 is provided in Annexure-1 which forms part of this report.

Subsidiary company

The Company has fulfi lled all the conditions pre- scribed under Section 212(8) of the Companies Act 1956 read with General Circular No. 2/2011 dated 8th February,2011 to avail exemption from publishing the Balance Sheet and other statements of its subsidiary company, M/s KCP Vietnam Industries Ltd. Vietnam for the fi nancial year 2012-13. However, a statement giving certain information as required in the said cir- cular is placed along with the Consolidated Accounts.

The company will provide to any shareholder, on request and without any cost, the Balance Sheet and other particulars and statements of accounts of the subsidiary company, M/s KCP Vietnam Industries Ltd. Vietnam.The Annual Accounts of the subsidiary will also be available for inspection at the Registered Offi ce of the Company.

Consolidated Financial Statements

Pursuant to the requirements of Accounting Standard – 21 and the Listing Agreement with National Stock Exchange, unaudited fi nancial statements consolidating those of its subsidiary KCP Vietnam Industries Ltd and its Joint Venture company, Fives Cail K C P Ltd, considering the minority interest in them have been attached to this Directors'' Report.

Conservation of Energy, Technology absorption, Foreign Exchange Earning and Outgo:

The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 are attached as Annexure "2" to this report.

Transfer of amounts to Investor Education and Protection Fund

Pursuant to the provisions of Section 205A (5) of the Companies Act, 1956, relevant amounts (Dividend and Deposits) which remained unclaimed for a period of 7 years have been transferred by the Company to the Investor Education and Protection Fund.

Corporate Governance:

Pursuant to clause 49 of the listing agreement exe- cuted with the Stock Exchanges, A Management Discussion and Analysis, Corporate Governance Report, Managing Director''s and Auditor''s Certifi cate regarding compliance of conditions of Corporate Governance are made part of the Annual Report.

Human Resource Development

It is rightly said that "machines are important in the production process but the man behind the machines is more important". He transforms the lifeless factors of production into useful products.

Human Resources Development (HRD) as a theory is a framework for the expansion of human capital within an organization through the development of both the organization and the individual to achieve performance improvement. Human Resource Development is the integrated use of training, orga- nizing , and providing career development efforts to improve individual, group and organizational effec- tiveness. HRD develops the key competencies that enable individuals in organizations to perform current and future jobs through planned learning activities

The company and its workforce go together. Since its inception, each and everyone associated with it has been a driving force to catapult its growth to where it is today. The company is proud of its people and are focussed towards enriching their careers in terms of professional and personal development. It strives to bring the best and leaves no stone unturned to ensure that their growth is in line with that of the organisation.

It is also equally important to retain the human force available and to this end the company has been devis- ing attractive remuneration package within the legal framework to ensure that the workforce is happy and contented. It recognises the fact Productivity is best brought out when the workforce is taken care of properly.

The total number of employees as an Date is 1566.

Director''s Responsibility Statement

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

1. In the preparation of the annual accounts, the applicable Accounting Standards have been followed and that no material departures have been made from the same.

2. The Selected Accounting Policies were applied consistently and the Directors 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 fi nancial year ended 31st March, 2013 and of the profi t of the Company for the year ended as on date.

3. They have taken proper and suffi cient care for 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, and

4. They have prepared the annual accounts on a going concern basis.

Acknowledgements

The Board wishes to place on record their gratitude to the Central Government, State Governments, Company''s Bankers, Customers, Dealers and other Business Associates for the assistance, co- operation and encouragement they extended to the Company.

Your Directors wish to whole heartedly thank the employees for their sincere and devoted contribution to the company''s continued performance and are thankful to the Shareholders and Deposit holders for their continued patronage.

For and on behalf of the Board of Directors

Place: Chennai V.L. DUTT

Date: 17th May, 2013 Chairman and Managing Director


Mar 31, 2012

The Directors have pleasure in presenting their 71st Annual Report together with the Audited Accounts for the financial year ended 31st March, 2012.

Financial Results

Brief summary of the Company's financial performance (Stand Alone and Consolidated) is as under:

(Rs. In Lacs)

Particulars For the year ended For the year ended 31-03-2012 31-03-2011 31-03-2012 31-03-2011 Stand Alone Consolidated (GROUP)

Revenue from operations 68,725 36,182 1,10,557 70,467

Profit for the year (PBDIT) 15,208 8,224 23,625 15,288

Less: a) Interest and Finance charges 3,795 1,394 4,154 1,565

b) Depreciation 2,935 1,233 4,104 2,233

Profit before Tax 8,478 5,597 15,367 11,490

c) Current tax 1,675 1,118 1,983 1,529

d) Deferred Tax 1,701 1,361 1,685 1,380

e)Tax provision for earlier years 28 - 28 -

f) Minority share of profit - - 2146 1,725 Add:

a) Refund of Income Tax 10 18 11 18

b) MAT Entitlement 1,070 751 1,070 751

c) Excess Provision of income tax of earlier years credited back - 248 - 248

Profit for the year 6,153 4,135 10,605 7,874

Add: Surplus brought forward from earlier year 4,108 2,755 13,228 8,597

Amount available for appropriations 10,261 6,890 23,833 16,471 Less:

Transfer to Preference Capital Redemption Reserve 500 - 500 -

Transfer to General Reserve 2,000 1,000 2,119 1,033

Proposed Dividend - Preference Shares 240 240 240 240

Proposed Final Dividend - Equity Shares 322 322 322 322

Proposed Special Dividend - Equity Shares 645 - 645 -

Interim Dividends Paid - Equity Shares 967 967 4,074 1,396

Tax on Distributed Profits - Equity Shares 314 214 314 214

Tax on Distributed Profits - Preference Shares 39 39 39 39

Surplus at the end of the year 5,234 4,108 15,580 13,227

Segment wise Sales performance

Particulars 2011-12 2010-11 Sales Value % to Total Sales Sales Value % to Total Sales (Rs. In lacs) (Rs. In lacs)

Engineering 14,091 20.50% 13,067 36.12%

Cement 54,232 78.92% 22,375 61.84%

Power 56 0.08% 52 0.14%

Others 346 0.50% 688 1.90%

Total 68,725 100.00% 36,182 100.00%

Year in Retrospect Financial results

There has been a quantum increase in turnover of the company of about 90% consequent to the commissioning of the 1.52 MTPA green field cement plant at Muktyala during the year under review. The Plant commenced production with both Cement mills in operation in August 2011 and during this period of stabilization, achieved an average capacity utilization of around 49%. The quantity of cement produced from this Plant was 5,48,991 MTs accounting for about Rs 26,300 lacs of the total turnover.

During the current year, the new plant has further increased its capacity utilization and is expected to achieve a figure of about 70% by the close of the year.

The Engineering Division maintained the turnover of the last year with a marginal increase of about Rs. 1,024 lacs (8%). Dispatches' continued to be sluggish in view of the continuing slow recovery of the global economy. With the weight of the European financial crisis looming large, world industrial production has been slack with the capital goods industry, as is natural, bearing the brunt as enterprises cancel or delay expansions, additions and new ventures. Domestic demand remained stable but active and contributed to a good portion of the Order Book.

Overall Financial position

The Profit before Depreciation, Interest and Tax also increased by Rs. 6984 Lacs, that is about 85% over the previous year. The Net Profit of Rs. 6153 Lacs against Rs. 4135 lacs accounts for an increase of 49% largely due better cement realization and dividend from Subsidiary. The continued healthy liquidity

position is a matter of considerable satisfaction even while the company had to defray substantial amounts towards the New Cement Plant, the upcoming Hotel Project etc. The income from investment in the subsidiary, namely KCP Vietnam Industries Ltd in the form of dividend substantially contributed to this position in addition to the increased cash generation from operations.

The utilization of working capital limits with Banks was, however higher on account of the necessity to maintain significant stock of coal for both the cement units in the face of the uncertainty in its availability.

Your Directors are confident that the current position will be sufficient to meet the company's obligations in completing the on-going Projects, service capital and debt and also take care of unexpected exigencies.

Power units

The various captive power generating units performed satisfactorily during the year. Shareholders' attention is drawn to the detailed Management Discussions and Analysis.

Captive Power Plant at Muktyala

Your Directors are of the opinion that a Captive Power Plant is essential to protect the large investment in the new cement plant by ensuring uninterrupted supply of quality power.

However, with the coal situation undergoing considerable changes since the last report, it has been decided to limit the capacity of the Plant to 18 MW only with provision for subsequent addition of another 18 MW at an appropriate time. Power generated over and above the captive requirement will be sold to third parties at reasonably profitable market rates.

The Project Cost and the loan component thereof have been suitably revised.

Upcoming Hotel Project

The Hotel Project at Somajiguda in Hyderabad is progressing well and is expected to be commissioned before the first half of the next financial year that is by June 2013. The Hotel will be a four star business category which has good business potential, under Management Agreements with a leading international chain.

Replacement of cement Mills at Macherla

With the continuing improvement in production technologies as a result of innovation on a global scale, to meet competition, eliminate pollution and increase margins, the company has taken steps to replace the existing four old grinding mills with a single mill with latest technology at an estimated cost of Rs. 3400 lacs with a loan component of Rs. 2100 lacs. The process of replacement is expected to be completed during the current fiscal.

Outlook for the future

A detailed analysis on the various segments in which the company operates has been furnished in the Management Discussions and Analysis.

Dividend from subsidiary

During the year under review the company received a dividend of Rs 2800 lakhs from its subsidiary, KCP Vietnam Industries Ltd, Vietnam on its investment of Rs. 2371 lacs.

Investment in BGE Global Inc

As a strategic investment which would provide the Engineering Unit an opportunity for growth and also establish an export base, the company, during the year under review, has invested an amount of USD 9,00,000 equivalent to Rs. 462 Lacs as on 31.3.2012 in a US based company BGE Global Inc. U S A mainly engaged in providing Engineering and other related services and also offer key cement machinery and equipment through its affiliates, The investment comprises USD 150,000 in Common Non Voting Stock of a face value of USD 0.01 per share and USD 750,000 in Preferred Non Voting Stock of face value of USD 0.01 bearing a fixed dividend of about 2.5% per annum.

Your Directors are of the opinion that the strategic investment will be beneficial in furthering the interests of its business prospects in the coming years to meet global competition.

Dividend on Preference Share Capital

Your Directors recommend a dividend of 12% on the Preference Share Capital of the company. The amount of such dividend is Rs 240 lacs for the year.

Redemption of Preference Shares

Pursuant to the Share subscription agreement dated 23rd November, 2009, entered with M/s Tata Capital Limited, 25% of the total subscription amounting to Rs.500 lacs is due for redemption in December 2012. As required under the Companies Act, 1956, a Preference Capital Redemption Reserve of an equivalent amount has been allocated out of the profits and created during the year under review.

Dividend on Equity Shares

Based on the continued good financial performance and working results of the company during the last three quarters of the financial year 2011-12 and other relevant parameters, the Board had declared and paid three interim dividends of 25% each during the financial year amounting to 75 % (Rs 0.75 per share) as of date.

Your Directors are now pleased to recommend a final dividend of 25% (Rs 0.25 per share) making a total equity dividend of 100% (Rs 1/-per share) for the year. The total amount of dividend paid on equity capital excluding Dividend Distribution Tax thereon will be Rs 1,289 lacs, which is the same as in the previous year.

Special dividend on completion of 70th Year

Shareholders will be happy to know that the company has completed 70 years of its existence having been incorporated in 1941. During this period, it has made consistent progress and taken great strides in expansions, diversifications etc. to reach a record group turnover in excess of Rs. 1000 crores. In appreciation of the continued support of the shareholders and to commemorate the 70th year, your Directors have considered it appropriate and fit to declare a Special Dividend of Rs.0.50 per Share that is 50% on the paid up Equity Capital.

The dividend will be paid to members whose names appear in the Register of Members as on 13th August,2012 and in respect of shares held in dematerialised form, it will be paid to members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited, as beneficial owners as on that date.

Transfer to Reserves

Your Directors recommend the following appropriations from the profits available for appropriation:

To Preference Capital Redemption Reserve

(under the provisions of

the Companies Act, 1956) - Rs. 500 lacs

To General Reserve - Rs.2000 lacs

This will leave Rs 5234 lacs in the Surplus Account to be carried forward to the next year.

The total amount in General Reserve as on 31st March, 2012, after the proposed appropriation, would stand at Rs.27000 lacs.

Fixed Deposits

The total amount of Fixed Deposits outstanding as on 31st March, 2012 was Rs.6824.18 Lacs as compared to the figure of Rs.7624.61 Lacs as on 31-3-2011. As on 31st March, 2012, Fixed Deposits matured and remained unclaimed were Rs.141.14 Lacs from 243 depositors. As on the date of this report, Fixed Deposits relating to 57 depositors amounting to Rs.28.62 Lacs have been renewed and Fixed Deposits of Rs.20.51 Lacs of 25 depositors repaid.

Corporate Social Responsibility (CSR)

For a business to take responsibility for its actions, that business must be fully accountable. Social accounting, a concept describing the communication of social and environmental effects of a company's economic actions to particular interest groups within society and to society at large, is thus an important element of CSR.

The rise in popularity of ethical consumerism over the last two decades can be linked to the rise of CSR.

As global population increases, so does the pressure on limited natural resources required to meet rising consumer demand (Grace and Cohen 2005, 147). Industrialization, in many developing countries,

is booming as a result of both technology and globalization. Consumers are becoming more aware of the environmental and social implications of their day-to-day consumer decisions and are therefore beginning to make purchasing decisions related to their environmental and ethical concerns.

The company in its own way has been taking a number of initiatives in supporting on-going long term projects while undertaking new ones.

With Corporate Social Responsibility in India having acquired a new dimension and being discussed at Government levels as a formal necessity for business in the recent years, your company has always laid considerable stress on voluntary compliance in this regard. It will be a repetition to state that long before CSR acquired its current nomenclature, KCP has been actively engaged in setting up projects and services to take care of surrounding community in its factory zones and has made their life more meaningful. Education, Health care, Community welfare measures are major areas in which it has laid its foundations in the early years of its existence and carefully added to them in succeeding years.

A more detailed report on activities under Corporate Social Responsibility is furnished separately in this Annual Report.

Directors

Sri. A. Ramakrishna and Sri V.H.Ramakrishnan, Directors of the Company, retire by rotation and being eligible offer themselves for reappointment at the ensuing Annual General Meeting in accordance with the provisions of the Companies Act, 1956 and Company's Articles of Association.

Sri. Vijay Sankar had been appointed an Additional Director of the Company effective from 7th November, 2011 and will hold office till the conclusion of the ensuing Annual General Meeting. The Company has presently received a notice in writing from a member, with the requisite fee proposing the candidature of Sri Vijay Sankar as a Director of the company subject to retirement by rotation, in terms of Section 257 of the Companies Act, 1956 to be considered at the ensuing Annual General Meeting.

A resume of the Directors seeking re-appointment/ appointment is furnished along with the notice for the Annual General Meeting for the information of shareholders.

Director's Responsibility Statement

The Directors confirm that:

1. In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed and that no material departures have been made from the same.

2. The selected accounting policies were applied consistently and the Directors 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 ended 31st March, 2012 and of the profit of the Company for the year ended as on date.

3. They have taken proper and sufficient care for 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, and

4. They have prepared the Annual Accounts on a going concern basis.

Auditors

M/s Brahmayya and Co, Chartered Accountants, Vijayawada, Auditors of the company retires at the conclusion of the ensuing Annual General Meeting. They are, however eligible for reappointment. They have furnished a certificate to the effect that their appointment will be in accordance with the limits specified in sub section (IB) of Section 224 of the Companies Act, 1956.

The Board recommends the reappointment of M/s Brahmayya & Co Vijayawada, as Auditors of the company to hold office till the conclusion of the next Annual General Meeting.

The Notes on Financial Statements referred to in the Auditors' Report are self-explanatory and do not call for any further comments.

Cost Auditors

The Central Government has approved the appointment of M/s Narsimhamurthy and Co, Cost Accountants, Hyderabad the Cost Auditor for the Cement units for the year 2011-12. The Cost Audit Report for the year 2010-11 was filed by the Cost Auditor within the due date.

Pursuant to the Companies (Cost Accounting Records) Rules, 2011 M/s Narsimhamurthy and

Co Hyderabad has been appointed to conduct the Compliance audit for the Biotech unit and M/s Mahadevan and Co, Chennai has been appointed to conduct the Compliance audit for the Engineering unit of the company.

Revised Schedule VI

It has been notified that in the preparation of the Balance Sheet and Profit and Loss Account for financial year commencing on or after 1st April 2011, the Revised Schedule VI as prescribed shall be followed. The accounts for the year have therefore been drawn in the new format. The most significant requirement of the Revised Schedule VI is the form of segregation of Assets and Liabilities to more effectively reflect their Current and Non Current nature and would be one step toward the achievement of IFRS.

Human Resources

Realising that human resources are the main assets of an enterprise, the company follows a policy suited to train and retain talent, recognise performance, provide motivation and opportunity for growth. Ensuring that the right person is assigned to the job best suited to his background and experience, the potential to grow and contribute towards organisational excellence has been encouraged and nurtured for mutual benefit. Stability of the workforce and meeting their aspirations is the foremost objective of the company and to this end the company has being taking a series of measures which includes training and development at different levels, merit-based promotions and other incentives. The families of employees are also brought into the overall fold in the form of periodical cultural meets, friendly get-togethers and other welfare measures. The Company has developed a unique "KCPeers culture" which binds employees together and keeps them happy resulting a high engagement level in the company.

The total number of employees as on date was 1233. Particulars of Employees

Information as per Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Amendment Rules, 2011 is provided in Annexure - 1 forms part of this report.

Subsidiary company

The Company has fulfilled all the conditions prescribed under Sec 212 (8) of the Companies Act 1956 read with General Circular 2/2011 dated 8th February, 2011 to avail exemption from publishing the Balance Sheet and other statements of its subsidiary company, M/s KCP Vietnam Industries Ltd. Vietnam for the financial year 2011-12. However, a statement giving certain information as required in the said circular is included in the Annual Report.

The company will provide to any shareholder, on request and without any cost, the Balance Sheet and other particulars and statements of accounts of the subsidiary company, M/s KCP Vietnam Industries Ltd. Vietnam. The said Annual Accounts of the subsidiary Company will also be available for inspection at the Registered/Corporate Office of the Company.

Consolidated Financial Statements

Pursuant to the requirements of Accounting Standard - 21 and the Listing Agreement with National Stock Exchange Ltd, financial statements consolidating those of its subsidiary KCP Vietnam Industries Ltd and its Joint Venture company, Fives Cail K C P Ltd, considering the minority interest in them and duly audited have been attached to this Directors' Report.

Conservation of Energy, Technology absorption, Foreign Exchange Earning and Outgo

The particulars as prescribed under Section 217(1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 are attached as Annexure "2" to this report.

Occupational Health and Safety

We have well defined health and safety policies which are widely circulated internally to ensure appropriate attention to health and safety hazards and to build a safe working environment. All the manufacturing plants have medical facilities with qualified doctors. Annual medical check-up is mandatory for all employees of the Company. Training related to safety aspects is provided to all employees prior to engaging them in respective jobs.

The company insists their lab our contractors to adopt similar Occupational Health and Safety practices while engaging them for Company work.

There is a system of periodical review of the activities done in the area of health, hygiene and safety and to address challenges in these areas.

Regular personal development sessions like "Art of living" etc. are also conducted with a view to maintain work life balance.

Transfer of amounts to Investor Education and Protection Fund (IEPF)

Pursuant to the provisions of Section 205A (5) of the Companies Act, 1956, relevant amounts which remained unpaid or unclaimed for a period of 7 years have been transferred by the Company to the Investor Education and Protection Fund.

Corporate Governance

Corporate governance is a term that refers broadly to the rules, processes, or laws by which businesses are operated, regulated, and controlled. The term can refer to internal factors defined by the officers, stockholders or constitution of a corporation, as well as to external forces such as consumer groups, clients and government regulations. India's SEBI Committee on Corporate Governance defines corporate governance as the "acceptance by management of the inalienable rights of shareholders as the true owners of the corporation and of their own role as trustees on behalf of the shareholders. It is about commitment to values, about ethical business conduct and about making a distinction between personal and corporate funds in the management of a company."

Corporate Governance has always been at the core of the company's management philosophy aimed at bringing about a managerial style of functioning which reflects transparency coupled with efficiency so as to benefit the larger interests of all stakeholders. The theme of management is to provide for sufficient internal checks and balances to ensure professional decision-making in the day-to-day affairs of the company with minimum exposure to risks. All Directors and employees are bound by Code of Conduct that

sets out the financial standards to be followed in all actions carried out on behalf of the company.

A Detailed Report on matters relating to Corporate Governance as statutorily required is annexed as part of this Annual Report together with the report of the Auditors on its compliance.

Acknowledgements

Your Directors wish to thank the Central and State Governments, Financial Institutions, Banks,

Government authorities, customers, vendors and shareholders for their continued co-operation and support extended. Your Directors wish to whole heartedly thank our employees for their sincere and devoted contribution to the company's continued good performance.

Ladies and gentlemen, your involvement as shareholders is deeply valued. Your Directors look forward to your continued support in all Endeavour's for stability, growth and prosperity for the company.

Place: Chennai For and on behalf of the Board of Directors

Date: 28th May, 2012 VL DUTT

Chairman and Managing Director


Mar 31, 2010

1. The Directors have pleasure in submitting their Annual Report together with the Audited Accounts of your company for the financial year ended 31 st March, 2010.

2. Financial Results

(Rs. In Lakhs)

For the year ended For the year ended Particulars 31-03-2010 31-03-2009 31-03-2010 31-03-2009 Stand Alone Consolidated (GROUP)

Gross Turnover 41,175 40,046 68,362 58,501

Profit for the year (PBDIT) 11,053 11,369 17,298 15,427

Less a) Interest and finance charges 949 671 1,336 1,279

b) Depreciation 1,057 914 2,167 2,014

Profit before Tax 9,047 9,784 13,795 12,134

c) Provision for current tax 3,000 3,200 3,166 3,285

d) Fringe Benefit Tax - 30 - -

e) Deferred Tax 45 17 79 22

f) Minority share of profit - - 1,485 793 Add Refund of Income Tax - 54 - 54 Net Profit 6,002 6,591 9,065 8,088 Add excess provision/Deferred tax credit - - 11 30 Add Surplus brought forward from earlier year 2,347 2,264 5,167 3,557 Less Amount available for appropriations 8,349 8,855 14,243 11,675 Transfer to General Reserve 4,000 5,000 4,000 5,000 Dividend-Preference Shares 74 - 74 -

Interim Dividend- Equity Shares 967 967 967 967

Dividend proposed -Equity Shares 322 322 322 322

Tax on distributed Profits - Equity 219 219 219 219

Tax on Distributed Profits - Preference 12 - 12 -

Surplus carried to next year 2,755 2,347 8,649 5,167

Segment wise Sales performance:

(Rs. In Lakhs)

2009-2010 2008-2009 Particulars % to Total Sales Value Sales Sales Value % to Total Sales

Engineering 16,594.33 40.30% 14,626.08 36.52%

Cement 24,058.00 58.43% 24,962.81 62.33%

Power 47.56 0.12% 35.60 0.09%

Others 475.26 1.15% 421.82 1.06%

Total 41,175.15 100.00% 40,046.31 100.00%

Authorised Share Capital:

In pursuance of the approval of the shareholders at the Annual General Meeting on 27th July, 2009, the Authorised Share Capital of the company was restructured as under:

The total number of 5,50,00,000 shares of Rs. 10/each was divided into 1,28,97,748 (One crore twenty-eight lakhs ninety seven thousand seven hundred and forty eight) Equity shares of Rs. 10/ each and 4,21,02,252 (Four crores twenty one lakhs two thousand two hundred and fifty two) Unclassified Shares of Rs. 10/ each with power to the Board to divide the shares in the capital for the time being into several classes and attach thereto such preferential, deferred, qualified or special rights, privileges or conditions as may be determined and to classify and re-classify them from time to time.

Issue of Preference Shares:

Shareholders at the Annual General Meeting held on 27th July 2009 had authorized the Board of Directors to offer and issue 2,00,00,000 (Two crores) Redeemable, cumulative, Non-convertible, Preference Shares of Rs. 10/ each at a coupon rate to be fixed by the Board in one or more tranches for cash at par or premium on private placement basis to promoters and their group , associates and /or to any other financial institution/banks/companies subject to certain conditions. In pursuance of the same, 2,00,00,000 shares out of the Unclassified and Unissued shares of Rs 10 each were classified by the Board at their meeting held on 29th October 2009, as Redeemable, Cumulative, Non convertible Preference shares of Rs 10/- each. Accordingly, during the year under review, the Board issued to M/s Tata Capital Ltd, on the basis of a Subscription Agreement, 2,00,00,000 12% Non Convertible Redeemable, Cumulative Preference Shares of Rs 10/- each on private placement basis and the allotment was completed on 9th December 2009.

Proposal for sub-division of the Equity and Unclassified Shares:

Considering the need for ensuring improved marketability of the companys equity shares which are listed for the benefit of the retail investor and convenience of bettertrading of the same, the Directors are of the view that the Equity and unclassified shares in the authorised, issued share capital of the company which are of the face value of Rs.10/- each should be subdivided into Equity and unclassified shares both of Rs.1/- each. Accordingly, suitable resolutions to amend the relevant clauses of the Memorandum and Articles of Association of the company are being proposed at this Annual General Meeting and are recommended for approval by the shareholders. The Company will obtain necessary approvals from the appropriate authorities where necessary and notify Stock Exchanges etc. in this regard.

Dividend on Preference Share Capital:

Your Directors recommend a maiden dividend of 12% on the Preference Share Capital of the company on a proportionate basis from the date of allotment. The amount of such dividend is Rs 74.30 lacs for the year.

Dividend on Equity Shares:

The Board, based on the performance of the company, had declared and paid three interim dividends of 25% each during the financial year making a total of 75% (Rs.7.50 per share). Your Directors are now pleased to recommend a final dividend of 25% (Rs.2.50 per share) making a total equity dividend of 100% (Rs.10/- per share) for the year. The total payment excluding Dividend Distribution Tax thereon will be Rs. 1,289 Lacs which is the same as in the previous year.

Reserves:

Your company proposes to transfer from out of the profits for appropriation an amount of Rs 4,000 lacs to General Reserve leaving a sum of Rs 2,755 lacs in Surplus Account to be carried forward to the next year.

After the above appropriations, the total reserves of the Company as on 31st March 2010, stand at Rs. 27,189 lacs.

Credit Rating:

The Credit Rating assigned by CRISIL to the company at A- Stable for Term loans and Cash Credit facilities and P2+for Non Fund Based limits remains unchanged.

Fixed Deposits:

The Companys Scheme of Fixed Deposits both under the Fixed and the Cumulative deposit category met with overwhelming response from the shareholders and public alike. The Company thanks the deposit holders for the confidence reposed by them. As at the end of the year on 31st March 2010, the total Fixed Deposits stood at Rs. 62,24,91,000/- compared to Rs. 13,91,50,000/ as on 31st March 2009. As on 31st March 2010, Fixed Deposits matured and unclaimed were Rs.52,07,000/- from 183 depositors. Since then, Fixed Deposits of Rs. 16,75,000/- relating to 53 depositors have been renewed and Fixed Deposits of Rs. 4,11,000/- of 13 depositors repaid.

Projects on hand:

Greenfield Expansion: Muktyala Cement Project

The 1.52 million tons capacity plant being set up at an estimated cost of Rs 352 crores at Muktyala, Krishna District, A.P has progressed well and is expected to be commissioned by September 2010. The Plant is one of the most modern plants of its kind in India with state-of-the-art technology enabling consider- able reduction in labour, power and other production costs. Among other statutory approvals, the unit has received the requisite clearance from the Ministry of Forests and Environment Protection and the final approval from the State Pollution Control Board is in the final stages and expected shortly.

Modernization/Expansion: Engineering Unit:

The first phase of the project, namely debottlenecking of the operations has been completed as per sched- ule. The second phase consisting of the expansion of the Foundry will be taken up on receipt of approv- als for civil works for the building from the concerned authorities. Orders for the equipment for this Phase, which are subject to short delivery periods, will be placed thereafter and the expansion completed by the end of the current financial year.

Diversification: Hotel Project at Hyderabad:

As had been reported earlier, the company had proposed to enter the Hospitality sector by putting to use the valuable land available at Hyderabad. A busi- ness class Hotel in the three/four Star category has been planned to be set up at the said land. The Hotel is expected to cost Rs. 63.02 crores without taking into account any cost for the land. Financial Closure for the project has been completed with Indian Overseas Bank, Chennai sanctioning a Term loan of Rs 45 crores. The balance of Rs. 18.02 crores is to sourced from internal generations of the company.

Final building plans have been submitted to the Greater Hyderabad Municipal Corporation and approval for the demolition of the existing structure at the site has been obtained and has been completed. The building permit for commencement of civil works is expected shortly. In the meanwhile, Consultants for Project Management, MEP services, Structural engineer- ing, Kitchen and F&B areas etc have been appointed and are at work to finalise the various aspects of the proposed Hotel. The contract for Civil work has been awarded and the Project is scheduled to be complete in all respects and the Hotel commissioned within a period of 24 months. Discussions are also being car- ried on with the reputed Hotel Chains for franchise options and assistance in technical management and marketing of the hotel.

Proposal for a Captive Power Plant:

As part of economising the operations at the New Cement Plant at Muktyala and to ensure continuous supply of adequate quantity of quality power for the unit, a proposal to set up a Captive Power Plant, as a natural backward integration, with a capacity of 2x 18 MW is under active consideration of the company. While initial estimates indicate that the Capital Cost would be around Rs. 160 crores, a Detailed Project Report to study the technical and economic feasibility has been commissioned with a leading Consultancy organization and the same is expected to be submitted shortly. A decision in this regard will be taken after studying the said Report.

Proposal for Cement Packing Units:

With a view to take cement nearer to the consumer and take advantage of logistics in movement of the product, a few packaging units with cement silos are being planned nearer to the consumer bases at Vijayawada and other markets. The cost of establish- ing such units are marginal and substantial saving in marketing costs are expected to flow with quicker movement of the product to benefit the ultimate consumer.

Corporate Social Responsibility:

The Ministry of Corporate Affairs has brought out a set of voluntary Guidelines, 2009 for responsible business which will add value to the operations and contribute towards the long term sustainability of their business. These guidelines are expected to enable business to focus as well as contribute towards the interests of the stakeholders and the Society. As part of the same, companies are encouraged to introduce in their Corporate Social Responsibility programme, the following matters:

Care for all Stakeholders

Ethical Functioning

Respect for Workers Right and Welfare

Respect for Human rights

Respect for Environment

Activities for social and Inclusive Development.

The Companys Corporate Social Responsibility (CSR) philosophy focuses on growing the business while ensuring that the concerns encompassing natu- ral environment as well as the communities that live within its areas of operation are suitably addressed. An overview of the activities of the company in the area of CSR is given separately.

Management Discussions and Analysis:

Details of Management discussions and analysis for each segment of the companys business are presented separately for ease of access and study.

Insurance and Risk Policy:

All the Insurable interests of your Company includ- ing inventories, buildings, plant & machinery etc. are adequately covered to take care of all the normal risks. The company presently has in place a detailed Risk policy covering the various aspects and action is taken accordingly.

Details of Retiring Directors:

Sri V H Ramakrishnan and Sri A Ramakrishna, Directors, retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

Brief profiles of the retiring Directors, Sri V H Ramakrishnan and Sri A Ramakrishna are furnished below:

a) Sri VH Ramakrishnan is a Chartered Accountant and a Cost Accountant by qualification. He is a retired General Manager of Bank of India with more than 36 years of experience in industrial finance, international banking and other related areas in India and abroad. He is on the panel for Nominee Directors of IDBI and other Financial Institutions.

b) Sri A Ramakrishna is a Structural Engineer by profession and has over 41 years experience in field of management and technology. He retired as President and Deputy Managing Director of Larsen and Toubro Ltd.

Directors Responsibility Statement:

The Directors confirm that:

1. In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed and that no material departures have been made from the same.

2. The selected accounting policies were applied consistently and the Directors 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 ended 31st March, 2010 and of the profit of the company for the year ended as on date .

3. They have taken proper and sufficient care for 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 and

4. They have prepared the Annual Accounts on a going concern basis.

Auditors:

M/s Brahmayya and Co, Chartered Accountants, Vijayawada, Auditors of the company retire at the con- clusion of the ensuing Annual General Meeting. They are, however eligible for reappointment. They have furnished a certificate to the effect that their appoint- ment will be in accordance with the limits specified in sub section (IB) of Section 224 of the Companies Act 1956.

The Board recommends their reappointment as Auditors of the company to hold office till the conclu- sion of the next Annual General Meeting.

Cost Auditors:

Pursuant to the directives from the Central Government and provisions of Section 233B of the Companies Act 1956, M/s Narasimhamurthy & Co. Cost Accountants, Hyderabad have been appointed, as Cost Auditors of the company subject to the approval of the Central Government for the ensuring year to conduct the cost audit of the cement units of the company.

International Financial Reporting Standards (IFRS):

The application of international Financing Reporting Standards (IFRS) in the preparation of annual accounts of companies to ensure common report- ing formats globally has been engaging the atten- tion of the Government of India. A detailed time table has been drawn up in consultation with the various interests, for the companies to make their Financial Statements IFRS-compliant.

Under the above timeframe, your company will come under Phase-Ill, namely, "Listed companies which have a net worth of Rs. 500 crores or less will convert their opening Balance Sheet as at 1st April, 2014, if the financial year commences on or after 1st April, 2014, whichever is later, in compliance with the noti- fied accounting standards which are convergent with IFRS".

The company is taking earnest steps to comply with the time table and has plans to take on hand, preliminary steps in time to be ready for the conver- gence without any difficulty.

Human Resources:

Industrial Relations in the company, across all its units, have remained cordial throughout the year. The employees have always been a pillar of strength to the company. Your Directors appreciate the signifi- cant contribution made by the employees to the oper- ations of your company during the year.

The information required on particulars of employees as per Sec. 217 (2A) of the Companies Act 1956, read with Companies, (Particulars of Employees) Rules, 1975 forms part of this report.

Subsidiary company:

The Company has received exemption from the Government of India vide letter of the Ministry of Corporate Affairs vide letter No. 47/209/2010-CL- III under Section 212 (8) of the Companies Act, 1956 from publishing the Balance Sheet and other statements as per Section 212 of the said Act of its subsidiary company, M/s KCP Vietnam Industries Ltd. Vietnam for the financial year 2009-10. However, a statement giving certain information as required in the said exemption letter is placed along with the Consolidated Accounts.

The company will provide to any shareholder, on request and without any cost, the Balance Sheet and other particulars and statements of accounts of the subsidiary company, M/s KCP Vietnam Industries Ltd. Vietnam as per Section 212 of the Companies Act, 1956.

Consolidated Financial Statements:

As required by Accounting Standard - 21 and Listing Agreement with exchanges, the audited consolidated financial statements of the Company and its subsid- iary are attached which also includes the companys share in the Joint Venture Fives-cail KCP Ltd.

Conservation of Energy, Technology absorption, Foreign Exchange Earning and Outgo:

The Particulars as prescribed under Section 217(1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 are attached as Annexure "1" to this report.

Cautionary Statement:

Statements in the "Management Discussion and Analysis" describing the Companys objectives, expectations or predictions are as perceived cur- rently. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Companys operations include domestic supply and demand conditions affecting selling prices of finished goods, input prices, changes in government regulations, tax laws, economic devel- opments within the country and other factors such as litigation and industrial relations.

Safety and Pollution Control:

The various units of the company are fully compliant with pollution control measures as directed by the statutory authorities and had the necessary approv- als from them. In particular, the new Cement Plant coming up at Mukthyala has also obtained approval relating to Pollution Control.

Adequacy of Internal control systems:

Your Directors place considerable emphasis on the internal control systems prevalent in the company and its working which is constantly reviewed and management information statements and information generated for analysis and action.

These systems are supplemented and supported with the appointment of external professional firms of Chartered Accountants, namely M/s R G N Price & Co, Chennai and M/s M Bhaskara Rao & Co, Hyderabad. They undertake regular and periodical audits of the financial aspects besides the perfor- mance and adherence to internal controls, prescribed manuals and regulatory orders relating to tracking of transactions, selective audit of authorization and sanctions of expenditure such as purchases within the units, stocking of materials, maintenance of stock records etc. They regularly visit the factories and audit the self-regulatory norms prescribed and follow up of recorded suggestions to enhance compliance etc. Detailed reports are presented by both the firms to the Audit Committee at regular intervals, interact with its members on their audit and the reports and analyse risks and their management.

Risk Management System:

Your company which is operating in various business segments and in different cities and countries is aware of the necessity to take steps to recognize, analyse and mitigate risks, potential and apparent. A compre- hensive Risk Policy is in place and every Unit includ- ing the Corporate Office has a Risk Management Committee to constantly study the prevalence of risks and suggest steps to mitigate the same. Mitigation includes timely recognition of the risks and action taken to eliminate, minimize their effect or provide for compensatory mechanisms to supplement any finan- cial losses likely to be caused thereby.

Corporate Governance:

The Company has fully complied with the manda- tory provisions of Corporate Governance as pre- scribed under the Listing Agreement with the Stock Exchanges. It keeps track of changes in this regard and is constantly taking steps to fall in line to comply with such new provisions as and when they are pro- mulgated or announced by the authorities from time to time.

A separate detailed Report on matters governing Corporate Governance is annexed as part of this Annual Report together with the report of the Auditors on its compliance.

Particulars of Employees:

The information required under Section 217(2A) of the Act and the Rules made thereunder, is provided in an Annexure forming part of this Report. In terms of Section 219(1 )(b)(iv) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any Shareholder interested in obtaining a copy of the same may write to the Company Secretary.

Acknowledgements:

Your Directors wish to thank the Central and State Governments, Financial Institutions, Banks, Government authorities, customers, vendors and shareholders for their continued co-operation and support extended. We wish to whole heartedly thank our employees for their sincere and devoted contribu- tion to the companys continued good performance.

Ladies and gentlemen, your involvement as share- holders is deeply valued. Your Directors look forward to your continuing support in all their endeavours.

For and on behalf the Board

Place: Chennai Date: 28th, May, 2010

(V. L. DUTT)

Chairman and Managing Director



 
Subscribe now to get personal finance updates in your inbox!