Mar 31, 2023
The Board presents its One Hundred and Fourth Annual Report together with the Audited Statement of Accounts for the year ended 31st March, 2023.
FINANCIAL RESULTS (STANDALONE)
H/ Crores |
||
Particulars |
31st March, 2023 |
31st March, 2022 |
Total Income |
3,603.93 |
3,577.71 |
Profit before Interest, Depreciation, Tax and other Amortizations ("EBIDTA") |
371.22 |
586.80 |
Less: Depreciation and Amortization Expenses |
81.57 |
90.73 |
Finance Costs |
422.78 |
481.70 |
Profit/ (Loss) before Exceptional Items and Tax |
(133.13) |
14.37 |
Exceptional Items |
(173.07) |
(154.25) |
Profit/ (Loss) before Tax |
(306.20) |
(139.88) |
Tax Expenses |
190.53 |
9.87 |
Total Profit/ (Loss) for the year |
(115.67) |
(130.01) |
Other Comprehensive Income (net of tax expense) |
||
Re-measurement of Post-employment Benefit Obligations |
(1.43) |
4.55 |
Fair valuation of Equity Investments |
6.22 |
(3.58) |
Total Comprehensive Income/ (Loss) for the year |
(110.48) |
(129.04) |
GENERAL REVIEW OF COMPANY''S OPERATIONAL AND FINANCIAL PERFORMANCE
The year saw a steep rise in input costs for the Industry that resulted in lower EBIDTA as compared to the previous year.
During the second half of the financial year, costs moderated and EBIDTA per quarter crossed H 100 crore plus mark. Finance Cost continued to be elevated, Net worth improved with substantial portion of the Optionally Convertible Reedemeble Preference Shares ("OCRPS") getting converted into equity. Improved performance and moderating costs are likely to pave the way for expeditious refinancing of the current debt which in turn will reduce finance cost going forward.
⢠Standalone Income, comprising Revenue from Operations and Other Income, for the year was H 3,603.93 crore, 0.73 % higher compared to H 3,577.71 crore in 2022.
⢠Standalone Loss before Tax for the year was H 306.20 crore, 118.90 % higher compared to H 139.88 crore in 2022.
⢠Standalone Loss after Tax for the year was H 115.67 crore, 11.02 % lower compared to H 130.01 crore in 2022.
⢠Cement production reduced by 5.26% from 7.42 million tonnes in 2022 to 7.03 million tonnes in 2023.
⢠Cement Sales Volume reduced by 5.39% from 7.42 million tonnes in 2022 to 7.02 million tonnes in 2023.
⢠No material changes or commitments have occurred between the end of the financial year and the date of this Report, which affect the Financial Statements of the Company with respect to the reporting year.
DIVIDEND
No dividend is proposed in view of the loss during the year and the non-availability of any carry forward surplus.
The web-link for accessing the Company''s Dividend Distribution Policy is: https://www.kesocorp.com/DOCS/pdf/mgc/ dividend-distribution-policy-final.pdf
TRANSFER TO RESERVE
In view of the loss during the year, no amount is being transferred to General Reserve.
INCREASE IN SHARE CAPITAL
During the year, the Company converted 5,19,626 partly paid Equity Shares into fully paid Equity Shares pursuant to receipt of call money of the Rights Issue made during the year 2021.
Moreover, further 6,61,19,874 Equity Shares were issued and allotted during the year @ H 65 per share, inclusive of a premium @ H 55 per share. These were issued on preferential basis to identified entities, consisting primarily of scheduled
banks upon conversion of 4,29,77,918 numbers Optionally Convertible Redeemable Preference Shares of face value H 100 each originally issued as part of the debt resolution plan in March 2021.
Both issues were listed on the Stock Exchanges and are eligible for trading.
In addition, 90,00,000 unlisted 5% Non-Convertible Cumulative Redeemable Preference Shares were issued and allotted to a promoter entity on private placement basis. The required general body approval was duly obtained for such an issue. Accordingly, the Company''s paid- up Equity Share Capital as on 31st March, 2023 stood enhanced to H 310.66 crores and Preference Share Capital stood at H 109.19 crores.
STATUS OF NON-CONVERTIBLE DEBENTURES
During the year Secured Non-Convertible Debentures aggregating to H 10 crore (Principal) were prepaid.
The face value of total Secured Listed Non-Convertible Debentures outstanding as on 31st March, 2023 is H 1538.50 crores. PUBLIC/ FIXED DEPOSITS
The Company accepted public fixed deposits (both from public and members of the Company) during the year within the parameters set out in Chapter V of the Companies Act, 2013. Deposits accepted are for a fixed term of three years only. No deposit matured for re-payment during the year. The requisite details relating to deposits, covered under Chapter V of the Act are as under:
a) Accepted during the year: H 119.97 crores
b) Remained unpaid or unclaimed as at the end of the year: NIL
c) Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved: NIL
d) Premature requests received and paid: H 24.56 crores
The Company has not accepted any deposits which are not in compliance with the requirements of Chapter V of the Act. POSSIBLE DISPOSAL/ TRANSFER OF THE HINDUSTHAN HEAVY CHEMICALS LAND
Shareholders had assented to an enabling Resolution proposed under Section 180 of the Companies Act, 2013 ("the Act") for disposal/ transfer of its Hindusthan Heavy Chemicals land in the State of West Bengal. A final Resolution to this effect is being proposed at the forthcoming Annual General Meeting for Shareholder approval.
Efforts for disposal transfer within the extant legal framework are under examination.
MANAGEMENT DISCUSSION & ANALYSIS, BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT AND CORPORATE GOVERNANCE
The Management Discussion & Analysis, Business Responsibility & Sustainability Report and the Report on Corporate Governance are attached as Annexures I, II & III respectively to this Report.
CREDIT RATING
Credit Rating related details are disclosed in the Report on Corporate Governance Section.
RISK MANAGEMENT FRAMEWORK
The Company has in place a well-defined risk management framework ("the framework") together with a defined structure to manage and report risks.
The framework established across the Company and its wholly-owned Subsidiary is so designed as to identify, assess and respond to risks and threats that affect the realisation of business objectives.
The Risk Management Committee of the Board meets periodically to oversee the functioning of the framework.
The approach of Risk Management is defined across the Company at various levels with a periodical review to maintain its contemporariness so as to effectively address the emerging challenges in a dynamic business environment.
SIGNIFICANT AND MATERIAL ORDERS
No significant or material orders were passed by Regulators or Courts or Tribunals which impact or influence the Company''s going concern status and/ or its future operations.
INTERNAL FINANCIAL CONTROLS AND ITS ADEQUACY
The Company''s Internal Financial Control Systems are commensurate with its size, nature and complexity of business operations.
Internal Audit, a key feature of the Company''s internal control system, is conducted by a dedicated team of professionals. The Audit Committee of the Board monitors feedback by Internal Audit periodically to ensure its smooth functioning and appropriate oversight of the control systems instituted by the Company.
CORPORATE GOVERNANCE Number of Meetings of the Board
During the year, ten (10) Board Meetings were held. Meeting particulars are disclosed in the Report on Corporate Governance section.
Policy on Director Appointment and Remuneration
The present Company Policy on Director Appointment and Remuneration, including criteria for determining qualifications, positive attributes, independence and other related matters as contemplated in Section 178(1) of the Companies Act, 2013 ("the Act"), is available on the web-link https://www.kesocorp.com/DOCS/pdf/mgc/nomination-and-remuneration-policy.pdf
It is affirmed that the remuneration paid to the Company Directors during the year has been as per the terms set out in the Company''s Nomination & Remuneration Policy.
Declaration by Independent Directors
The Company has received the requisite declarations from each Independent Director under Section 149(7) of the Act, affirming that each of them duly met the criteria of independence as prescribed in Section 149(6) of the Act and Regulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("LODR").
Board Evaluation
This year too the Board went through an elaborate process of evaluating its own effectiveness, that of its Committees as also of individual Board Members. The process included an appraisal of the functioning of the Chairman and the Whole-time Director separately by Independent Directors at the annual Independent Directors Meeting.
Familiarisation programme for Independent Directors
There were no Directorial appointments during the year. The procedure followed for familiarising Independent Directors with corporate operations appears in the Report on Corporate Governance.
DIRECTORATE
Manjushree Khaitan (DIN: 00055898), Non-Executive Non Independent Director and Chairman of the Board, retires by rotation at the forthcoming Annual General Meeting and, being eligible, offers herself for re-appointment. Her brief particulars are annexed to the Notice of Annual General Meeting.
KEY MANAGERIAL PERSONNEL
The following persons functioned as Key Managerial Personnel ("KMP") during the year:
P. Radhakrishnan Whole time Director & Chief Executive Officer
Suresh Sharma Chief Financial Officer (till 11th April,2022)
Rohit Shah Chief Financial Officer (effective 12th April, 2022)
Raghuram Nath Company Secretary (till 15th May, 2022)
Gautam Ganguli Company Secretary (effective 13th May, 2022)
COMMITTEES OF THE BOARD
As on 31st March, 2023, the Board had five Statutory Committees being the Audit Committee, the Nomination and Remuneration Committee, the Stakeholder Relationship Committee, the Risk Management Committee and the Corporate Social Responsibility Committee.
During the year, all recommendations made by designated Committees were noted and approved by the Board. There were no instances of any disagreement between any of the Committees and the Board.
A detailed note on the composition of the Board and its Committees appears in the Report on Corporate Governance.
CORPORATE SOCIAL RESPONSIBILITY ("CSR")
No mandatory expenditure during the year on Corporate Social Responsibility was envisaged as per Section 135 of the Act.
Nonetheless, the Company has never been found wanting in making dedicated spends that seek to desirably benefit those living in the vicinity of its two cement plants. No exceptions were made this year either.
The Board''s CSR Committee consisted of Manjushree Khaitan, Jikyeong Kang and P. Radhakrishnan.
The Company''s CSR Policy is available on the web link www.kesocorp.com/DOCS/pdf/mgc/corporate-social-responsibility-policy.pdf.
A Report on CSR activities during the year is annexed to this Report and marked Annexure IV.
CONTRACTS/ ARRANGEMENTS MADE WITH RELATED PARTIES
The Board affirms that all related party transactions/ arrangements/ contracts entered into by the Company during the year were approved by the Audit Committee and were at arm''s length basis and in the ordinary course of business.
No contract/ arrangement with any related party that could be considered material in accordance with the Company Policy on "Materiality of Related Party Transactions" or which required reporting in Form No. AOC-2 as per Section 134(3) (h) read with Section 188(1) of the Act was entered into during the year.
There were no materially significant related party transactions entered into by the Company that could have potential conflict with the interest of the Company at large.
The Company''s Related Party Transaction Policy appears on the web- link www.kesocorp.com/DOCS/pdf/mgc/related-party-transactions-policy.pdf.
Related party transactions during the year as per the provisions of Indian Accounting Standard ("Ind AS") 24 have been disclosed in the Notes to the Financial Statements.
SUBSIDIARY, ASSOCIATE AND JOINT VENTURE COMPANY
Cygnet Industries Limited ("Cygnet") and Gondkhari Coal Mining Limited ("Gondkhari"), continued as a Wholly Owned Subsidiary ("WOS") and Joint Venture Company respectively.
The Financial Statements of Cygnet as at 31st March, 2023 have been consolidated with the Financial Statements of the Company. The Consolidated Financial Statements forms part of this Annual Report.
The turnover of Cygnet for the year stood at H 244.30 Crore as against H 71.85 crore during the previous year. The turnover improved considerably as the year 2021-22 was affected both by lockdowns and a prolonged suspension of work.
Several measures to restructure operations of Cygnet are being actioned upon. Transparent paper operations will be further upgraded going forward. The marketing activity too will come under more co-ordinated streamlining. Sourced from wood pulp, transparent paper is bio-degradable and can therefore be a substitute for polythene film.
Gondkhari, the Special Purpose Vehicle ("SPV"), was incorporated in 2009 as a Joint Venture between the Company and two other corporate entities for developing and working a coal block in the State of Maharashtra. Gondkhari forfeited its substructure once the Supreme Court de-allocated the coal block that was originally allocated to it in 2014. As a result, the SPV became defunct leading to full provision by the Company against its portion of investment in Gondkhari.
A Statement containing salient features of the financial statements of Cygnet and Gondkhari in the statutory Form AOC-1 appears in Annexure V of this Annual Report.
The financial statements of Cygnet, a Material Subsidiary, is available on the website of the Company www.kesorcorp.com. The Policy on material subsidiaries is also available on the Company''s website www.kesocorp.com.
The Board has proposed a "Spin off" of the business activities being undertaken by converting Cygnet from a WOS into a Standalone listed Company. The Scheme of Arrangement to effecuate such "Spin off", contemplated under section 230 -232 of the Act, is pending with the Stock Exchange from their No Objections.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Inter corporate financial exposures as at the end of the year appears under Note No. 8 to the Financial Statements.
The Company has not given any loan and guarantee or made any investment within the meaning of Section 186 of the Act during the year.
The Company has in place a Vigil Mechanism/ Whistle Blower Policy as detailed in the Report on Corporate Governance. The Policy is available on the web-link (www.kesocorp.comlDOCSIpdflmgclwhistle-blower.pdf.)
No fraud has been reported by the Auditors under Section 143(12) of the Act. Therefore, no further disclosures are required under Section 134(3)(ca) of the Act.
Shareholders at the Company''s 103rd Annual General Meeting held on 17th June, 2022 appointed Walker Chandiok & Co LLP, Chartered Accountants, Auditors of the Company for a period of five consecutive years from the conclusion of that Annual General Meeting.
The Auditor''s Report forming part of this Annual Report is free from any qualifications, reservations or disclaimers.
Mani & Co., Cost Accountants, has been appointed by the Board to conduct the audit of the Company''s cost accounting records for the year at a remuneration of H 5.47 lakh, excluding tax and reimbursement of out of pockets.
A Resolution to this effect is being proposed at the forthcoming Annual General Meeting for ratification of their remuneration. SECRETARIAL AUDITORS & SECRETARIAL STANDARDS
Ritu Bajaj, Practising Company Secretary was appointed as Secretarial Auditor to conduct audit of the Company''s secretarial records for the year. Her Report is annexed to this Report and marked Annexure VI. The Report does not contain any qualification, reservation or adverse remark.
The Secretarial Audit Report of the WOS is also annexed in Annexure VI. The Company has complied with all applicable Secretarial Standards.
Disclosures pertaining to remuneration and other particulars as prescribed under the provisions of Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are set out in Annexure VII of this Report. No employee listed in the Annexure is related to any Director.
However in line with the provisions of the second proviso to Section 136(1) of the Act and as per extant Ministry of Corporate Affairs Circulars, this Annual Report is being sent to Members excluding the above information. Any Member interested in obtaining this information, is welcome to request the Company through email at [email protected] for the statement.
The Company has a laid down Policy on prevention, prohibition and redressal of sexual harassment of women at the workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Policy is available on the weblink www.kesocorp.comIDOCSIpdfImgcIpolicy-on-prevention-of-sexual-harassment-at-workplace.pdf.
The requisite Internal Committee(s) in accordance with Company Policy are in place.
No complaint on any issue covered by the above law was received during the year.
Pursuant to Section 134(5) the Act and, based upon representations from the Management, the Directors, to the best of its knowledge and belief, states that:
(a) in the preparation of the Annual Accounts, applicable accounting standards has been followed along with proper explanation relating to material departures;
(b) such accounting policies have been selected and applied consistently and such judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March, 2023 and of the profit/ (loss) of the Company for that period;
(c) proper and sufficient care was taken 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 Annual Accounts have been prepared on a going concern basis;
(e) internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and operating effectively; and
(f) proper systems have been devised to ensure compliance by the Company with the provisions of applicable laws and that such systems were adequate and working effectively.
CODE OF CONDUCT
The Company has a laid down Code of Business Conduct and Ethics for Directors and Employees based on the principles of ethics, integrity and transparency.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO
Particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act read with the relevant Rules appears in Annexure VIII to this Report.
MATERIAL CHANGES BETWEEN THE END OF THE FINANCIAL YEAR AND DATE OF REPORT
There has been no material change that have occurred between the end of the Financial Year and the date of this Report. OPENING OF SUSPENSE ESCROW DEMAT ACCOUNT
In accordance with recent SEBI directions circular, a separate Suspense Escrow Demat Account has been opened with a Depository Participant for crediting unclaimed shares in dematerialised form lying in the Company''s Demat Suspense Account at present.
ANNUAL RETURN
The Company''s Annual Return in Form MGT-7 can be viewed on the Company website(www.kesocorp.com).
CHANGE IN THE NATURE OF BUSINESS
There has been no change in the nature of business of the Company during the year.
PROCEEDINGS UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016 There are no pending proceedings under the Insolvency and Bankruptcy Code, 2016.
ONE-TIME SETTLEMENT WITH THE BANKS OR FINANCIAL INSTITUTIONS
No one-time settlement with Banks or Financial Institutions were entered into during the year.
ANNEXURES FORMING PART OF THIS REPORT
Annexure |
Particulars |
I |
Management Discussion & Analysis |
II |
Business Responsibility and Sustainability Report |
III |
Report on Corporate Governance |
IV |
Report on Corporate Social Responsibility (CSR) activities |
V |
AOC - 1 |
VI |
Secretarial Audit Report |
VII |
Disclosures pertaining to remuneration and other particulars as prescribed under the provisions of Section 197 of the Companies Act, 2013 |
VIII |
Conservation of energy, technology absorption, foreign exchange earnings and outgo |
APPRECIATION
The Board takes this opportunity to express its deep sense of gratitude to investors, lenders, Central and State Governments, the local authorities and all other stakeholders for their consistent co-operation and support during the year.
It would further like to place on record its sincere appreciation of the commitment, dedication and high engagement level of each of its employees. The year was indeed a challenging one but employees were never found wanting to take these challenges head on.
Mar 31, 2022
The Board presents the Company''s One Hundred and Third Annual Report together with the Audited Statement of Accounts of the Company for the year ended 31st March, 2022.
FINANCIAL RESULTS (STANDALONE)
H/ Crores |
||
Particulars |
31st March, 2022 |
31st March, 2021 |
Total Income |
3,577.71 |
2,517.43 |
Profit before Interest, Depreciation, Tax and other Amortizations ("EBIDTA") |
586.80 |
496.74 |
Less: Depreciation and Amortization Expenses |
90.73 |
96.21 |
Finance Costs |
481.70 |
245.81 |
Profit before Exceptional Items and Tax |
14.37 |
154.72 |
Exceptional Items |
(154.25) |
(294.83) |
(Loss) before Tax |
(139.88) |
(140.11) |
Tax Expenses Credit - Net |
9.87 |
307.05 |
Total Profit / (Loss) for the year |
(130.01) |
166.94 |
Other Comprehensive Income (net of tax expense) |
||
Re-measurement of Post-employment Benefit Obligations |
4.55 |
0.52 |
Fair valuation of Equity Investments |
(3.58) |
7.90 |
Total Comprehensive Income / (Loss) for the year |
(129.04) |
175.36 |
GENERAL REVIEW OF COMPANY''S OPERATIONAL AND FINACIAL PERFORMANCE
⢠Standalone Income, comprising Revenue from Operations and other income, for the year was R3,577.71 Crores, 42.12 % higher compared to R2,517.43 Crores in 2021.
⢠Standalone Loss before Tax for the year was R139.88 Crores, 0.16 % lower compared to R140.11 Crores in 2021.
⢠Standalone Profit/ (Loss) after Tax for the year was (R130.01) Crores, 177.88 % lower compared to R166.94 Crores in 2021.
⢠Cement production increased by 38.92% from 5.37 Million Tonnes in 2021 to 7.46 Million tonnes in 2022.
⢠Cement Sales Volume increased by 36.40% from 5.44 Million Tonnes in 2021 to 7.42 Million tonnes in 2022.
⢠No material changes or commitments have occurred between the end of the financial year and the date of this Report, which affect the Financial Statements of the Company with respect to the reporting year.
⢠The thrust on public spending and implementation of big ticket investments in infrastructure projects augur well for improving the cement demand in current financial year.
DIVIDEND
No dividend is proposed in view of the loss during the year and non-availability of any carry forward surplus. In terms of the provisions of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended (''the Listing Regulations''), the Company has formulated a Dividend Distribution Policy and it is available on Company''s website link www.kesocorp.com/DOCS/pdf/mgc/dividend-distribution-policy-final.pdf.
TRANSFER TO RESERVE
No profit has been transferred to General Reserve.
SHARE CAPITAL
During the year under review, the Company has issued and allotted 7,99,97,755 partly paid-up Equity Shares of R 5/- each of the Company on rights basis, in the ratio of 133:274 Equity Shares held, to eligible equity shareholders of the Company at an issue price of R 50/- per Rights Equity Share (including a premium of R 40/- per Rights Equity Share) pursuant to the Letter of Offer dated 13th September, 2021.
On 20th November, 2021, the Board approved the making of the first and final call of R 25/- (including premium of R 20/-) per partly paid-up equity shares of R 5 each, issued by the Company on rights basis.
Pursuant to the first and final call, the Fund Raising Committee ("FRC"), duly authorized by the Board, on 14th January, 2022,
21st February, 2022 and 6th April, 2022 approved the conversion of 7,69,35,064, 22,77,758 and 4,22,638 partly paid-up Equity Shares of R 5 each to fully paid-up equity shares of R 10 each respectively. The process of calling final call money of rest 3,62,295 partly paid-up shares and its conversion into fully paid-up share is under process. The converted shares rank pari passu with the existing fully paid-up Equity Shares of the Company.
The paid-up Equity Share Capital as on 31st March, 2022 stood at R 2,44,41,66,295/- consisted of 24,40,24,163 paid-up Equity Shares of R 10 each and 7,84,933 paid-up Equity Shares of R 5 each. The Preference Share Capital as on 31st March, 2022 stood at R 4,48,97,19,500/-.
STATUS OF EXISTING DEBENTURES
Total Secured Listed Non-Convertible Debentures and Secured Optionally Convertible Debentures of the Company at amortised cost as on 31st March, 2022 are R 1,463.53 Crores and R 138.49 Crores respectively.
The Company has repaid face value of R 55 Crores worth of Secured Non-Convertible Debentures and R 309.33 Crores worth of Secured Optionally Convertible Debentures during the financial year ended 31st March, 2022.
FINANCIAL LIQUIDITY
Standalone cash and cash equivalent as on 31st March, 2022 stood at R 118.97 Crores vis-a-vis R 90.95 Crores in the previous year.
DEPOSITS
During the year under review, the Company did not accept any Deposit within the meaning of Section 73 of the Companies Act, 2013 ("the Act"). The Compliances as required under Chapter V of the Act is not applicable.
MANAGEMENT DISCUSSION & ANALYSIS, BUSINESS RESPONSIBILITY REPORT AND CORPORATE GOVERNANCE
Management Discussion & Analysis, Business Responsibility Report and the Report on Corporate Governance for the year under review, as stipulated under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") are attached as Annexures I, II & III respectively to this Annual Report.
CREDIT RATING
The details of credit ratings obtained by the Company and any revision thereto are disclosed in the Corporate Governance Report, which forms part of the Annual Report.
RISK MANAGEMENT FRAMEWORK
The Company has a structured Risk Management framework designed to identify, assess and mitigate risks appropriately.
The Risk Management Committee has been entrusted with the responsibility to oversee and approve the Company''s risk management framework and to suggest all possible measures to achieve prudent balance between risk and reward in ongoing business activities.
The approach of Risk Management is defined across the Company at various levels with a periodical review to maintain its contemporariness so as to effectively address the emerging challenges in a dynamic business environment.
GOING CONCERN STATUS
No significant or material orders have been passed by the Regulators or Courts or Tribunals which impact or influence the Company''s going concern status and / or its future operations.
INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY
The Company''s Internal Financial Control Systems commensurate with the nature of its business, the size and complexity of its operations and such internal financial controls with reference to the financial statements are adequate.
The Internal Audit is performed by an external independent firm which reports its findings to the Audit Committee periodically. Internal Audit provides assurance to the Board on effectiveness of internal financial control functioning and quality through continuous monitoring and operational testing by the internal audit function.
EVALUATION OF BOARD PERFORMANCE
The Board evaluated the effectiveness of its functioning, of the Committees and of individual Directors, pursuant to the provisions of the Act and the SEBI Listing Regulations.
The Independent Directors carried out annual performance evaluation of the Chairperson, the Non-Independent Directors and the Board as a whole in the separate meeting of the Independent Directors taking into account the views of the Executive Directors and other Non-Executive Directors.
The performance of the Board, its Committees and each Board Member individually was evaluated by the Board based on the policy on performance evaluation specified by the Nomination and Remuneration Committee.
During the year, five Board Meetings were convened and held. The particulars of the meetings held and attended by each Director are detailed in the Report on Corporate Governance.
The Audit Committee comprises Kashi Prasad Khandelwal (Chairman), Sudip Banerjee, Lee Seow Chuan and Jikyeong Kang. Padmalochanan Radhakrishnan, Whole-time Director & CEO, Suresh Sharma, CFO and Observers representating Debenture Holders are permanent invitees to the Meetings. The Company Secretary acts as Secretary to the Committee.
During the year, all the recommendations of the Audit Committee were accepted by the Board.
NOMINATION AND REMUNERATION COMMITTEE
The Nomination and Remuneration Committee comprises Kashi Prasad Khandelwal (Chairman), Lee Seow Chuan and Jikyeong Kang.
The Company''s Nomination and Remuneration Policy prepared in conformity with the requirements of Section 178(3) of the Act is available on company''s website link www.kesocorp.comlDOCSIpdflmgclnomination-and-remuneration-policy.pdf. All recommendations of the Nomination and Remuneration Committee made during the year were accepted by the Board and there were no instances of any disagreement between the Committee and the Board.
CORPORATE SOCIAL RESPONSIBILITY
The Company continued to ensure and focus on several social responsibility programs during the year even though the expenditure is not mandated during the year under review.
The Company continues its endeavor to improve the lives of the people by taking initiatives in the areas of education, health, hygiene, empowerment and community development. The Company organised Pulse Polio Camps, plantation of trees, facilitating vaccination centres during the year.
The Company''s CSR Policy is available on link www.kesocorp.comIDOCSIpdfImgcIkesoram-CSR-Policy-27042015.pdf. The CSR Committee of the Board consists of Manjushree Khaitan (Chairman), Kashi Prasad Khandelwal and Padmalochanan Radhakrishnan as Members.
The Annual Report on CSR activities is annexed herewith and given in Annexure IV to this Report.
All related party transactions/arrangements/contracts entered into by the Company during the financial year were approved by the Audit Committee and were at arm''s length basis and in the ordinary course of business in compliance with the applicable provisions of the Act and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
During the year under review, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions or which are required to be reported in Form No. AOC-2 in terms of Section 134(3) (h) read with Section 188 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014.
There were no materially significant related party transactions entered into by the Company which could have potential conflict with the interest of the Company at large.
The Company''s Related Party Transactions Policy appears on its website link www.kesocorp.com/DOCS/pdf/mgc/related-party-transactions-policy.pdf.
Details of related party transactions entered into by the Company, in terms of Ind AS-24 have been disclosed in the notes to the standalone / consolidated financial statements forming part of this Annual Report.
SUBSIDIARY, ASSOCIATE AND JOINT VENTURE COMPANY
The Company had a wholly-owned subsidiary, Cygnet Industries Limited ("Cygnet") and a Joint Venture Company, Gondkhari Coal Mining Limited ("Gondkhari") as on 31st March, 2022.
The Financial Statements of Cygnet as at 31st March, 2022 have been consolidated with the Financial Statements of the Company. The Consolidated Financial Statements of the Company in respect of the year is a part of this Annual Report.
Cygnet achieved Revenue from Operations of R 71.85 Crores during the financial year 2021-22 as compared to R 237.56 Crores in the previous financial year 2020-21.
Cygnet posted negative Earnings before Interest, Depreciation, Taxation and Amortisations (EBITDA) (before exceptional
items) of R 28.92 Crores during the financial year compared to negative EBITDA of R 16.36 Crores in previous financial year. During the year under review, the factory of Cygnet was under temporary suspension from 22nd June, 2021 till 22nd December, 2021 amid 2nd wave of Covid-19.
The subsidiary also implemented a ''Workers Separation Scheme'' during the year under review where permanent workers were converted into casual workers. Total 439 employees have availed the scheme during the year amounting to R 22.35 Crores which has been charged under Exceptional Items in its Statement of Profit and Loss.
Under the agreement with Futamura Chemical Co. Ltd., Cygnet is acting as an agent for the coated films and is looking for good avenues and growth for the transparent paper market in the years to come.
The Board has proposed to demerge rayon, transparent paper and chemicals business (''the Business'') carried out by the Company directly and through its wholly owned subsidiary Cygnet into Cygnet. All assets and liabilities, which include, Hindusthan Heavy Chemicals unit of the Company, the Kesoram Rayon brand, investments and receivables pertaining to the Business shall stand transferred to Cygnet on a going concern basis.
Gondkhari, the Special Purpose Vehicle ("SPV"), was incorporated in 2009 as a Joint Venture between the Company and two other corporate entities for developing and working a coal block in the State of Maharashtra lost its sub-structure once the Supreme Court de-allocated the coal block that was originally allocated in 2014. As a result, the SPV has become defunct leading to full provision by the Company against its portion of the investment in Gondkhari.
A Statement containing the salient features of the financial statements of the wholly-owned subsidiary and the Joint Venture Company as per section 129(3) of the Act, in Form AOC-1 appears in Annexure V of this Annual Report.
The financial statement of Cygnet, as required, is available on the website of the Company www.kesorcorp.com.
The Policy on material subsidiaries is also available on the Company''s website www.kesocorp.com.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Inter corporate financial exposures as at the year end appears under Note Nos. 5,6, 7 and 8 to the Financial Statements. The Company has not given any loan and guarantee or made any investment during the year under review except as disclosed in the Financial Statements.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY
Fraud and corruption free culture has always been at the Company''s core. In view of the potential risk of fraud, corruption and unethical behavior that could adversely impact the Company''s operation, performance and reputation, the Company has established a robust Whistle Blower Policy in accordance with the provisions of the Act and the Listing Regulations. The policy is available on the website of the Company at www.kesocorp.com/DOCS/pdf/mgc/whistle-blower.pdf.
There was no fraud reported by the Auditors of the Company under Section 143(12) of the Companies Act, 2013, to the Audit Committee or the Board of Directors during the year under review. Therefore, no detail is required to be disclosed under Section 134(3)(ca) of the Act.
STATUTORY AUDITOR AND THEIR REPORT
Shareholders at the Company''s Ninety Eighth Annual General Meeting appointed Messrs. Deloitte Haskins & Sells, Chartered Accountants, Auditors of the Company for a period of five years from the conclusion of that Annual General Meeting.
The Report of the Statutory Auditors for the year ended 31st March, 2022 forms part of this Annual Report. The said report does not contain any qualification, reservation, adverse remark or disclaimer. The observations of the Auditors are selfexplanatory.
COST AUDITOR
In terms of the provisions of Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the Board of Directors of the Company, as per the recommendation of Audit Committee, approved the appointment of Mani & Co., Cost Accountants, to audit the cost accounting records maintained by the Company for the financial year ended 31st March, 2022 and 31st March, 2023 at a total remuneration of R 4.11 lakhs and R 4.97 lakhs respectively, excluding tax and reimbursement of out of pocket expenses. A resolution to this effect has to be ratified by the Members of the Company and accordingly forms part of the Notice convening the AGM.
SECRETARIAL AUDITOR AND SECRETARIAL STANDARDS
In terms of Section 204 of the Companies Act, 2013, and the rules made thereunder, the Board had appointed Ritu Bajaj, Practising Company Secretary as Secretarial Auditor of the Company to conduct Secretarial Audit for the Financial Year 202122 and their report is annexed to this report as an Annexure VI. The Secretarial Audit Report does not carry any qualification, reservation or adverse remark. The Secretarial Audit Report of Wholly Owned Subsidiary is available on the Company''s website www.kesocorp.com.
The Company has complied with the applicable Secretarial Standards formulated by the Institute of Company Secretaries of India and notified by the Central Government for implementation.
PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other particulars as prescribed under the provisions of Section 197 of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are set out in Annexure VII and forms part of this Report. None of the employees listed in the said Annexure is related to any Director of the Company.
As per the provisions of the second proviso to Section 136(1) of the Act and as per MCA circulars, the Annual Report are being sent to the Members excluding the aforesaid information. Any Member interested in obtaining such information, may request to the Company by e-mail at [email protected].
DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
The Company has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder. The policy is available at www.kesocorp.com/DOCS/pdf/mgc/policy-on-prevention-of-sexual-harassment-at-workplace.pdf.
The Company has in place requisite Internal Committee(s) to redress and resolve any complaints arising under the said Act. No complaints on the issues covered by the above Act were received during the year.
DIRECTORS'' RESPONSIBILITY STATEMENT:
Pursuant to Section 134(5) the Act and, based upon representations from the Management, the Directors, to the best of its knowledge and belief, states that:
(a) in the preparation of the Annual Accounts, applicable accounting standards has been followed along with proper explanation relating to material departures;
(b) such accounting policies have been selected and applied consistently and such judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March, 2022 and of the profit of the Company for that period;
(c) proper and sufficient care was taken 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 Annual Accounts have been prepared on a going concern basis;
(e) internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and operating effectively; and
(f) proper systems have been devised to ensure compliance by the Company with the provisions of applicable laws and that such systems were adequate and working effectively.
CODE OF CONDUCT
The Company has laid down a robust Code of Business Conduct and ethics, which is based on the principles of ethics, integrity and transparency.
DIRECTORS
In accordance with the provisions of the Act and the Articles of Association of the Company, Manjushree Khaitan (DIN: 00055898), Director, retires by rotation at the ensuing Annual General Meeting and, being eligible, offers herself for re-appointment.
The Board of Directors, based on the performance evaluation and as per the recommendation of the Nomination and Remuneration Committee ("NRC"), has commended the appointment of Satish Narain Jajoo (DIN: 07524333) as a NonExecutive Independent Director for a period of 5 years from the date of ensuing 103rd Annual General Meeting and a resolution seeking shareholders'' approval for his appointment forms part of the 103rd AGM Notice.
Mangala Radhakrishna Prabhu (DIN: 06450659) was appointed as a Non-Executive Independent Director on the Board of Company effective from 14th May, 2021 for a term of 5 years and subsequently regularized at the Annual General Meeting held on 23rd July, 2021.
Jikyeong Kang (DIN: 08045661) was appointed as Independent Director on 10th January, 2018. However, she has been re-designated as a Non-Executive Director (Non-Independent) of the Company w.e.f. 11th April, 2022 and a resolution seeking
shareholders'' approval for her appointment forms part of the 103rd AGM Notice.
Padmalochanan Radhakrishnan (DIN: 08284551) is currently serving as a Whole-time Director and Chief Executive Officer of the Company upto 7th August, 2022. The Nomination and Remuneration Committee and the Board of Directors recommends his re-appointment for a further period of 3 years w.e.f. 8th August, 2022 and a resolution seeking shareholders'' approval for the same forms part of the 103rd AGM Notice.
The Company has received declarations from all Independent Directors confirming that they meet the relevant independence criteria as laid down in Section 149(6) of the Act as well as the Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and that they have registered themselves in the Independent Directors'' Databank and requirement of online self-proficiency test is complied with.
Brief profiles of Directors being appointed / re-appointed at the forthcoming One Hundred and Third Annual General Meeting have been given in the Corporate Governance Report annexed to this.
KEY MANAGERIAL PERSONNEL
The following persons functioned as Key Managerial Personnel during the year:
P. Radhakrishnan Whole time Director & Chief Executive Officer
Suresh Sharma Chief Financial Officer (till 11th April, 2022)
Rohit Shah Chief Financial Officer (w.e.f. 12th April, 2022)
Akash Ghuwalewala Company Secretary (till 14th June, 2021)
Raghuram Nath Company Secretary (w.e.f. 15th June, 2021)
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO
The particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014, are provided in Annexure VIII to this Report.
MATERIAL CHANGES BETWEEN THE END OF THE FINANCIAL YEAR AND DATE OF REPORT
There has been no material change between the end of the Financial Year and the date of this Report.
ANNUAL RETURN
The Annual Return as required under Section 92 and Section 134 of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is available on the Company''s website www.kesocorp.com.
CHANGE IN THE NATURE OF BUSINESS
There has been no change in the nature of business of the Company during the year under review.
PROCEEDING PENDING UNDER INSOLVENCY AND BANKRUPTCY CODE, 2016
There is no proceeding pending under the Insolvency and Bankruptcy Code, 2016 during the year under review.
ONE-TIME SETTLEMENT WITH THE BANKS OR FINANCIAL INSTITUTIONS
There was no instance of onetime settlement with any Bank or Financial Institution during the year under review. ANNEXURES FORMING PART OF THIS REPORT
Annexure |
Particulars |
I |
Management Discussion & Analysis |
II |
Business Responsibility Report |
III |
Report on Corporate Governance |
IV |
Report on Corporate Social Responsibility (CSR) activities |
V |
AOC - 1 |
VI |
Secretarial Audit Report |
VII |
Disclosures pertaining to remuneration and other particulars as prescribed under the provisions of Section 197 of the Companies Act, 2013 |
VIII |
Conservation of energy, technology absorption, foreign exchange earning and outgo |
APPRECIATION
The Board takes this opportunity to express their deep sense of gratitude to its debenture investors and places on record the valuable inputs given in the meetings by the Observers, representing the Debenture Holders. Additionally, the Board appreciates and thanks the Central and State Governments and the local authorities for their continued co-operation and support. We, on behalf of the Board, would also like to place on record their sincere appreciation for the commitment, hard work and high engagement level of every employee and worker of the Company. We thank the various stakeholders of the Company including customers, dealers, suppliers, transporters, advisors, local community, etc. for their continued committed engagement with the Company. The overwhelming response to the Rights issue reflects the trust and confidence reposed on the Board by you, the Members of the Company. We value the same.
For and on behalf of the Board
Manjushree Khaitan
Chairman
Place: Kolkata P. Radhakrishnan
Date: 11th April, 2022 Whole-time Director & CEO
Mar 31, 2019
The Board presents the Companyâs One Hundredth Annual Report together with the Audited Statement of Accounts of the Company for the year ended 31st March, 2019.
FINANCIAL RESULTS Rs./crores
Particulars |
31st March, 2019 |
31st March, 2018 |
||
Total Revenue |
3,988.31 |
3,933.03 |
||
Profit/(Loss) before Interest, Depreciation, Tax and other Amortizations (âEBIDTAâ) |
305.33 |
159.19 |
||
Add : Exceptional (Expense)/Income |
- |
(75.23) |
||
Less : Depreciation and Amortization Expenses (Net of transfer from Revaluation Reserve) |
133.08 |
128.23 |
||
Finance Costs |
438.45 |
421.24 |
||
Tax Expenses - Net |
(11.95) |
(2.00) |
||
559.58 |
547.47 |
|||
Profit/(Loss) for the year from continuing operations |
(254.25) |
(463.51) |
||
Other Comprehensive Income (net of tax expense) |
||||
Remeasurement of post-employment benefit obligations |
0.11 |
(7.67) |
||
Fair valuation of equity investments |
1.44 |
7.93 |
||
Income tax relating to these items that will not be reclassified subsequently to the statement of profit and loss |
- |
(2.00) |
||
1.55 |
(1.74) |
|||
Total comprehensive income/(loss) for the year |
(252.70) |
(465.25) |
DIVIDEND
No dividend is recommended in view of the loss during the year and non-availability of any carry forward surplus.
SHARE CAPITAL
The Paid-up Equity Share Capital as on 31st March, 2019 amounted to 1142.59 crores and was comprised as follows
Rs. /crores
Equity Share Capital as on 1st April, 2018 |
137.34 |
Add: Equity Shares allotted on conversion of Convertible Warrants during the year |
5.25 |
Closing Equity Share Capital |
142.59 |
52,50,000 Convertible Warrants of 110 each issued on 28th March, 2018, on a preferential basis to the Promoter Group, at a premium of 1165 per Warrant amounting to 191.875 crores were fully converted into Equity Shares on 6th April, 2018.
DEPOSITS
The Company did not, during the year under report, accept any deposit within the meaning of Section 73 of the Companies Act, 2013 (âthe Actâ). Deposits amounting 14.46 lakhs from two depositors continued to remain unclaimed as at the end of the year. There were no deposits not in compliance with the requirements of Chapter V of the Companies Act, 2013.
GENERAL REVIEW
The year under report proved to be yet another demanding period for the Company. Even so, it was able to close the year with an Earnings before Interest, Depreciation, Taxation and other Amortizations (âEBIDTAâ) much higher than that of the previous year. It is fitting that the Company, in its Centenary Year, was able to ride the effects of an adverse environment and work dedicatedly towards further fortifying its operational capabities- an unequivocal endorsement of its innate potential.
The Cement Business performed commendably despite the odds it faced. By the year-end, the Businessâs Sale Volumes, Revenue from Operations and EBIDTA registered significant increase as compared to the previous year further fostering the Companyâs confidence in the Business.
The Tyre Business performed better than the previous year. Total Income during the year was marginally lower than the previous year but the Business did well to economise on expenses despite the rise in the cost of critical inputs.
PROPOSED DEMERGER OF THE TYRE BUSINESS
The Board, with a view to reorganising the Companyâs operating Businesses, has proposed a âspin offâ of the Tyre Business through the demerger route into a new Company, Birla Tyres Limited (âBTLâ) effective commencement of business, 1st January, 2019.
The demerger will be subject to such regulatory sanctions / approvals, including that of the National Company Law Tribunal (âNCLTâ). Upon final approval by the NCLT, each shareholder of the Company, as on a determined Record Date, will be allotted one Equity Share in BTL on a 1:1 basis. BTL will also be a listed company.
In-principle approvals to the demerger having already been accorded by the Stock Exchanges, the processes of getting the other sanctions / approvals are progressing.
MANAGEMENT DISCUSSION & ANALYSIS AND CORPORATE GOVERNANCE
A Management Discussion & Analysis and the Report on Corporate Governance are attached as Annexures I and II respectively of this Report.
RISK MANAGEMENT
The Company has a Risk Management Policy to deal with perceived risks in its businesses by identifying and evaluating business risks and opportunities.
The approach of risk management is defined across the Company at various levels, including documentation and reporting, interspersed with diverse risk models to help identify risk trends, exposure and potential impact analysis at the corporate level.
GOING CONCERN STATUS
There were no significant or material orders passed by regulators/ courts / tribunals impacting or influencing the Companyâs going concern status and/or its future operations.
INTERNAL FINANCIAL CONTROLS
The Companyâs Internal Financial Control framework is in line with current best practices and effectively addresses emerging challenges of its businesses.
The Board reviews from time to time the adequacy and effectiveness of the Companyâs Internal Financial Controls ensuring that process and business level controls are in place. The reviews conducted during the year did not indicate any material deficiency in the Internal Financial Control structure.
EVALUATION OF BOARD PERFORMANCE
The performance of the Board, its Committees and each Board Member individually were subjected to evaluation during the year by the Board in line with the provisions of Section 178(2) of the Act. A brief statement on the methodology adopted appears in the Corporate Governance Report.
As mandated under the provisions of the Act, a Meeting of all Independent Directors was convened and held during the year.
NUMBER OF BOARD MEETINGS
A tentative calendar of Board Meetings to take place in each financial year is prepared and circulated amongst Board Members and Key Management Personnel before the beginning of that financial year. During the year, seven Board Meetings were convened and held. These details appear in the Report on Corporate Governance.
NOMINATION AND REMUNERATION POLICY
The Companyâs Nomination and Remuneration Policy prepared in conformity with the requirements of Section 178(3) of the Act is available on www.fcesocorp.com/DOCS/management_corner.php#slide_5 and, as a result, does not form part of this Report.
All recommendations of the Nomination and Remuneration Committee made during the year were accepted by the Board and there were no instances of any disagreement between the Committee and the Board.
AUDIT COMMITTEE
The Audit Committee is chaired by Amitabha Ghosh, an eminent Chartered Accountant with additional professional qualifications in banking. K P Khandelwal, Sudip Banerjee, Lee Seow Chuan, Jikyeong Kang and Siddhartha Mohanty are the other Members. P. Radhakrishnan, Chief Financial Officer is a permanent invitee to the Meetings. The Company Secretary acts as Secretary to the Committee.
There were no instances of any disagreement between the Committee and the Board and all recommendations of the Audit Committee made during the year were accepted by the Board.
CORPORATE SOCIAL RESPONSIBILITY
The Company continued to ensure that it was alive towards its societal responsibilities even though under law there were no requirements whatsoever to make any spends on this account.
Consistent with the above, existing initiatives by the Company in the areas of education, health, hygiene, empowerment and community development continued without break.
The Kesoram Football Academy, the soccer nursery promoted by the Company, remains a pivotal Corporate Social Responsibility (âCSRâ) project. The Company continued in its endeavours to nurture the football nursery that it has been assiduously developing into an institution of repute.
The Academy is now entirely residential with trainees being housed under one roof and being provided boarding as well as lodging by the Company. The espirit-de-corps that had been inculcated amongst the trainees is thus being physically sustained with all of them staying, playing and even studying together. On the field, the trainees are giving a superb account of themselves having won all tournaments that they have participated in.
The Companyâs CSR Policy is available on www.kesocorp.com. The CSR Committee of the Board consists of Manjushree Khaitan Chairperson, Amitabha Ghosh and Chander Kumar Jain as Members.
A Report on CSR activities as mandated under the Companies (Corporate Social Responsibility Policy) Rules, 2014 is given in Annexure III to this Report.
RELATED PARTY TRANSACTIONS
As required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, related party transactions are placed before the Audit Committee for approval. Wherever required, prior approval of the Audit Committee is obtained on an omnibus basis for continuous transactions and the corresponding actual transactions become a subject of review at subsequent Audit Committee Meetings.
All related party transactions/arrangements entered into by the Company during the year were on an armâs length basis and in the ordinary course of business.
There were no materially significant related party transactions entered into by the Company with the Promoters, Directors, Key Management Personnel or other designated persons which could conflict with the interest of the Company as a whole and, as such, disclosure in Form AOC-2 pursuant to Rule 8(2) of the Companies (Accounts) Rules, 2014 has not been made.
The Companyâs Related Party Transactions Policy appears on its website with weblink www.kesocorp.com/ DOCS/management_corner.php#slide_5.
SUBSIDIARY AND JOINT VENTURE COMPANY
As at 31st March, 2019, the Company had a wholly owned subsidiary, Cygnet Industries Limited (âCygnetâ) and a Joint Venture Company, Gondkhari Coal Mining Limited (âGondkhariâ)
The Financial Statements of Cygnet as at 31st March, 2019 have been consolidated with the Financial Statements of the Company. The Consolidated Financial Statements of the Company in respect of the year appears on pages 126 to pages 188 of this Annual Report.
Cygnet registered a positive EBIDTA during the year as compared to a negative EBIDTA in the previous year. The Companyâs plant operations have shown higher reliability and are expected to improve further.
Gondkhari, the Special Purpose Vehicle (âSPVâ) incorporated in 2009 as a Joint Venture between the Company and two other corporate entities for developing and working a coal block in the State of Maharashtra lost its sub-structure once the Supreme Court de-allocated the coal block that was originally allocated to it in 2014. As a result, the SPV is defunct leading to full provision by the Company against its portion of investment in Gondkhari as well as loan(s) given to it. Although the Auditors have chosen to comment on the Companyâs exposure to the SPV in the Companies (Auditorâs Report) Order, 2016 (âCARO Reportâ), the fact remains that the future of the SPV is not in the hands of the Company but with the Central Government/Delhi High Court who will need to finally decide the matter.
A Statement containing the salient features of the financial statements of Cygnet, the wholly owned subsidiary and Gondkhari, Joint Venture Company, in Form AOC-1 appears in Annexure IV of this Report.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Inter corporate financial exposures and guarantees extended during the year appears separately under Note nos. 7 and 33 to the Financial Statements respectively.
The Company has not made any investment in shares of any body corporate during the year.
The Company has taken no other financial exposure during the year within the meaning of Section 186 of the Act to any other company.
VIGIL MECHANISM
The Whistle Blower Policy of the Company is available on its website www.kesocorp.com.
STATUTORY AUDIT
Shareholders at the Companyâs Ninety Eighth Annual General Meeting appointed Messrs. Deloitte Haskins & Sells, Chartered Accountants, Auditors of the Company for a period of five years from the conclusion of that Annual General Meeting.
The Report of the Auditors for the year ended 31st March, 2019 forming part of this Annual Report does not contain any qualification, reservation, observation, adverse remark or disclaimer.
COST AUDIT
As per recommendation of Audit Committee, Mani & Co., Cost Accountants, were appointed to audit the cost accounting records maintained by the Company for the financial year ended 31st March, 2019 at a total remuneration of 16.05 lakhs, excluding taxes and reimbursement of out of pockets. An appropriate Resolution has been incorporated in the Notice convening the One Hundredth Annual General Meeting for confirmation and ratification of the remuneration.
SECRETARIAL AUDIT AND SECRETARIAL STANDARDS
Report by Salil Banerjee, Practising Company Secretary, appointed by the Board to conduct the audit of the Companyâs secretarial records in respect of the Financial Year 2018-19 appears under Annexure V. There are no qualifications in the said Report.
The Company has complied with Secretarial Standards formulated by the Institute of Company Secretaries of India and notified by the Central Government for implementation.
PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other particulars as prescribed under the provisions of Section 197 of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are set out in Annexure VI and forms part of this Report. None of the employees listed in the said Annexure is related to any Director of the Company.
As per the provisions of Section 136 of the Act, this Annual Report and Accounts is being sent to each Member and others entitled thereto, excluding the information on employee particulars as per Rule 5(2) and Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. This information is readily available for inspection by Members at the Companyâs Registered Office between 3 P.M. and 5 P.M. on all working days (excluding Saturdays) up to the date of the forthcoming Annual General Meeting. Should any Member be interested in obtaining a copy (including through e-mail), s/he should write to the Company Secretary at the Companyâs Registered Office or send an e-mail on gg@ kesoram.net.
DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
The Company has in place the requisite Internal Committees as envisaged under the Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013.
No complaints on the issues covered by the above Act were received during the year.
DIRECTORSâ RESPONSIBILITY STATEMENT:
Pursuant to Section 134(5) the Act and, based upon representations from the Management, the Board, to the best of its knowledge and belief, states that:
(a) in the preparation of the Annual Accounts, applicable accounting standards have been followed along with proper explanation relating to material departures;
(b) such accounting policies have been selected and applied consistently and such judgments and estimates made 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, 2019 and of the loss for the year;
(c) proper and sufficient care was taken for 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 Annual Accounts have been prepared on a going concern basis;
(e) proper internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and operating effectively; and
(f) proper systems have been devised to ensure compliance by the Company with the provisions of applicable laws and that such systems are adequate and working effectively.
DIRECTORS
Manjushree Khaitanâs (DIN: 00055898) term as a Whole-time Director will end owing to efflux of time from close of business 4th February, 2020. It is proposed to renew her term for another period of three years without any increase in remuneration and an appropriate Special Resolution, to this effect is being proposed at the forthcoming Annual General Meeting (âAGMâ). Her brief profile is set out in the Report on Corporate Governance.
Chander Kumar Jainâs (DIN: 08125968) term as a Whole-time Director ended owing to efflux of time from close of business on 3rd May, 2019. It is proposed to renew his term for another one year effective 4th May, 2019 without any increase in remuneration and an appropriate Special Resolution, to this effect is being proposed at the forthcoming AGM. His brief profile is given in the Report on Corporate Governance.
Upon a favourable recommendation from the Boardâs Nomination and Remuneration Committee and accepted by it, the Board re-appointed Amitabha Ghosh (DIN: 00055962), Kashi Prasad Khandelwal (DIN: 00748523) and Sudip Banerjee (DIN: 05245757) as Independent Directors of the Company for a second term of five years from the conclusion of Companyâs One Hundredth Annual General Meeting to the conclusion of Companyâs One Hundred and Fifth Annual General Meeting. Appropriate Special Resolutions, to this effect, are also being proposed at the forthcoming AGM.
All Independent Directors have furnished to the Company the requisite declarations that they meet the relevant independence criteria as laid down in Section 149(6) of the Act as well as the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Siddhartha Mohanty (DIN: 08058830), Director, nominated by Life Insurance Corporation of India, retires by rotation and, being eligible, offers himself for re-appointment.
Tridib Kumar Das (DIN: 01063824), Whole-time Director and Chief Financial Officer, resigned from the services of the Company effective close of business on 30th August, 2018. The Board wishes to gratefully acknowledge Mr. Dasâs committed and dedicated services during his tenure with the Company.
Brief profiles of Directors being appointed / re-appointed at the forthcoming One Hundredth AGM have been given in the Report on Corporate Governance.
KEY MANAGERIAL PERSONNEL
The following persons functioned as Key Managerial Personnel during the year:
Manjushree Khaitan Executive Vice Chairperson (DIN: 00055898)
Chander Kumar Jain Whole time Director (DIN: 08125968) (effective 4th May, 2018)
Tridib Kumar Das Whole time Director and Chief Financial Officer (DIN: 01063824) (upto 30th August, 2018)
P. Radhakrishnan Chief Financial Officer (effective 31st August, 2018)
Gautam Ganguli Company Secretary
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO
Information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act are set out in Annexure VII to this Report.
MATERIAL CHANGES BETWEEN THE END OF THE FINANCIAL YEAR AND DATE OF REPORT
There has been no material change between the end of the Financial Year and the date of this Report. The process of demerger of the Companyâs Tyre business into Birla Tyres Limited has already been dealt with elsewhere in this Report.
EXTRACTS FROM ANNUAL RETURN
Extracts from the Companyâs Annual Return in Form MGT-9 are available on www.kesocorp.com/DOCS/our_financials. php#slide_2 These therefore do not form part of this Report
ANNEXURES FORMING PART OF THIS REPORT
Annexure |
Particulars |
I |
Management Discussion & Analysis |
II |
Report on Corporate Governance |
III |
Report on Corporate Social Responsibility (CSR) activities |
IV |
AOC - 1 |
V |
Secretarial Audit Report |
VI |
Remuneration related disclosures per Section 197 |
VII |
Energy Conservation Particulars |
APPRECIATION
The Board wishes to gratefully acknowledge the understanding and support received by the Company from its employees. It wishes also to thank the banking system, the Central Government, the various State Governments and the local authorities for the unstinted support received during the year.
This Report will be incomplete without a specific appreciation for the Members of the Company who have shown immense confidence and understanding in the Companyâs well being.
Basant Kumar Birla
Chairman
Chander Kumar Jain Manjushree Khaitan
Whole-time Director Executive Vice- Chairperson
P Radhakrishnan Amitabha Ghosh
Place: Kolkata Chief Financial Officer Lee Seow Chuan
Date : 15th May, 2019 Jikyeong Kang Directors
Gautam Ganguli Siddhartha Mohanty
Company Secretary Kashi Prasad Khandelwal
Sudip Banerjee
Mar 31, 2018
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 31st MARCH, 2018
The Board presents its Ninety-ninth Annual Report together and the Audited Statement of Accounts of the Company for the year ended 31st March, 2018.
FINANCIAL RESULTS Rs, in crores
Particulars |
31st March, 2018 |
31st March, 2017 |
||
Total Revenue |
3,933.03 |
4,243.44 |
||
Profit/(Loss) before Interest, Depreciation, Tax and other Amortizations ("EBIDTA") |
159.19 |
129.69 |
||
Add : Exceptional (Expense)/Income |
(75.23) |
121.35 |
||
Less : Depreciation and Amortization Expenses |
128.23 |
123.05 |
||
Finance Costs |
421.24 |
282.10 |
||
Tax Expenses - Net |
(2.00) |
0.76 |
||
547.47 |
405.91 |
|||
Profit/(Loss) for the year |
(463.51) |
(154.87) |
||
Other Comprehensive Income (net of tax expense): (Items that will not be reclassified subsequently to the statement of profit and loss) |
||||
Remeasurement of post-employment benefit obligations |
(7.67) |
(0.04) |
||
Fair valuation of equity investments |
7.93 |
7.88 |
||
Income tax relating to these items |
(2.00) |
(1.57) |
||
(1.74) |
6.27 |
|||
Total comprehensive income/(loss) for the year |
(465.25) |
(148.60) |
DIVIDEND
No dividend is recommended in view of the loss during the year and non-availability of any carry forward surplus.
SHARE CAPITAL
The Paid-up Equity Share Capital as on 31st March, 2018 amounted to Rs,137.34 crores and was comprised as follows:
Rs, in crores
Equity Share Capital as on 1st April, 2017 |
117.27 |
Add: Equity Shares allotted on conversion of |
|
a) Optionally Convertible Redeemable Preference Shares |
7.50 |
b) Issued during the year to the Promoter Group on preferential basis |
12.57 |
Closing Equity Share Capital |
137.34 |
In addition, the Company issued, on preferential basis to the Promoter Group, 52,50,000 Convertible Warrants of Rs,10/- each at a premium of Rs,165/- per warrant amounting to Rs,91.87 crores on which 90% consideration was received up to 31st March, 2018. These Warrants were fully converted into Equity Shares on 6th April, 2018.
Rs,207.43 crores being premium received against preferential allotment of Equity Shares has been credited to the Securities Premium Account.
ADOPTION OF INDIAN ACCOUNTING STANDARDS
The Company adopted the Indian Accounting Standards ("IndAS") notified under the Companies (Indian Accounting Standards) Rules, 2015 during the year for preparation and presentation of these Financial Statements. Consequently, the Financial Statements of the previous year have had to be restated to conform to the provisions of IndAS. The corresponding reconciliation and description of the effects of this transition from the provisions of the Companies (Accounting Standards) Rules, 2005 has been provided under Note 43 to the Financial Statements.
DEPOSITS
No deposit within the meaning of Section 73 of the Companies Act, 2013 ("the Act") was accepted during the year. Deposits amounting Rs,4.46 lakhs from two depositors continue to remain unclaimed as at the end of the year. These depositors have yet again been approached for instructions. There were no deposits not in compliance with the requirements of Chapter V of the Companies Act, 2013.
GENERAL REVIEW
Total Revenue of the Company for the year on a stand-alone basis amounted to Rs,3933.03 crores as against Rs,4243.44 crores in the previous year. Despite the lower turnover, the Company''s Earnings Before Interest, Depreciation, Taxation and other Amortizations ("EBIDTA") during the year rose to Rs,159.19 crores as against Rs,129.69 crores in the previous year, an increase of nearly 23%.
Sale volumes of the Cement Business during the year were subdued largely owing to a slowdown in construction activity in the markets that it services. This was compounded by uncertainty in consumer behavior in the months leading up to the implementation of the Goods and Service Tax ("GST") in the country and immediately thereafter. This affected cement off take and, in turn, impacted net price realizations. Nonetheless, the Business did well to improve EBIDTA as compared to the previous year.
The Tyre Business had an indifferent first half with both volume and net sale realizations on a downward cycle. The impact of GST was even more pronounced in the Tyre Business. In the run up to the D-day of 1st July, 2017 and subsequently, the market tended to postpone tyre buying decisions till "GST settled down". Markets in the North began recovering their equilibrium post Diwali. The Tyre Business took full cognizance of the altered dynamics and concentrated on growing sale volumes and augmenting margins. The strategy yielded dividends and the fourth quarter showed a positive EBIDTA. Commendable progress in the second half of the year was made not only in the Business''s conventional segments but also in such segments as two and three wheelers and off the road tyres.
With a view to enhancing the Company''s manufacturing presence in the State of West Bengal, the undertakings of Spun Pipes & Foundries as well as Heavy Chemicals, disposed of effective close of business on 31st March, 2016, were reacquired during the year. These Undertakings continue to be under suspension of work.
MANAGEMENT DISCUSSION & ANALYSIS AND CORPORATE GOVERNANCE
A Management Discussion & Analysis and the Report on Corporate Governance are attached as Annexure I and II respectively of this Annual Report.
RISK MANAGEMENT
The Company''s Risk Management Policy continues to be contemporary, dealing as it does with perceived risks in its Businesses. It endeavors to minimize, as far as possible, their adverse impact and fine tunes each Business''s competitive advantages.
GOING CONCERN STATUS
There were no significant or material orders passed by regulators/ courts / tribunals impacting or influencing the Company''s going concern status and/or its future operations.
INTERNAL FINANCIAL CONTROLS
The Company has a defined framework for internal financial controls through a combination of business level controls, process level controls and IT level controls. Continuous internal monitoring mechanisms ensure that these controls are reinforced from time to time on an ongoing basis.
EVALUATION OF BOARD PERFORMANCE
As in previous years, the performance of the Board, each individual Board Member, including Independent Board Members, as well as the performance of each Board Committee were evaluated during the year. A brief statement on the methodology adopted in the evaluation process appears in the Corporate Governance Report.
As mandated under the provisions of the Act, a Meeting of all Independent Directors was convened and held during the year. NUMBER OF BOARD MEETINGS
A tentative calendar of Board Meetings to take place in each financial year is prepared and circulated amongst Board Members and Key Management Personnel before the beginning of that financial year. During the year, seven Board Meetings were convened and held. These details appear in the Report on Corporate Governance.
NOMINATION AND REMUNERATION POLICY
The Company''s Nomination and Remuneration Policy prepared in conformity with the requirements of Section 178(3) of the Act is attached in Annexure III of this Report.
AUDIT COMMITTEE
The Audit Committee is chaired by Amitabha Ghosh, an eminent Chartered Accountant with additional qualifications in banking. K P Khandelwal, Sudip Banerjee, Lee Seow Chuan, Jikyeong Kang and Siddhartha Mohanty are the other Members. Tridib Kumar Das, Whole-time Director and Chief Financial Officer is a permanent invitee to the Meetings. The Company Secretary acts as Secretary to the Committee.
All recommendations of the Audit Committee made during the year were accepted by the Board and there were no instances of any disagreement between the Committee and the Board.
CORPORATE SOCIAL RESPONSIBILITY
In the absence of profit, there were no compulsions whatsoever on the Company to incur any spends on Corporate Social Responsibility ("CSR"). The Company nonetheless recognizes its commitment towards fulfilling its societal responsibilities. Several programmes initiated in previous years keeping in mind the Company''s obligations to the society at large were continued during the year so that the uptrend in the number of beneficiaries of these schemes was preserved.
The Company''s singular initiative aimed at transforming the lives of youth through excellence in sport in the form of the CCFC-Kesoram Football Academy ("the Academy") gained further ground during the year. The Academy today has a nucleus of some fifty talented young men meticulously spotted from over six hundred hopefuls who had participated in the series of trials. They are being put through the grind by a select group of qualified coaches for skill up gradation and developing the "big match" temperament. The team consisting of the senior trainees did well to top the Kolkata Second Division League in 2017-18 and has been promoted to participate in the Kolkata First Division League during the ensuing football season. This development has been a source of inspiration for the young men at the Academy and their trainers.
The Academy has major plans to further hone in on the ingrained talent in these young men. It is contemplating conversion of the present coaching pattern into a residential gurukul setting where both trainees and coaches will be housed in one location and trained in a dedicated complex equipped with the requisite facilities.
The football project is therefore so designed as to constitute a critical impetus to the game of football in the country. At the same time, the Academy endeavours to make a difference to the lives of these young men drawn as they have been from the weaker sections of society. The Academy hopes to see several of these young men being recruited by the country''s premier football clubs as well as the teams competing in the Indian Soccer League .
The Company''s CSR Policy is available on www.kesocorp.com. The CSR Committee of the Board consists of Manjushree Khaitan Chairperson, Amitabha Ghosh and Tridib Kumar Das.
A Report on CSR activities as mandated under the Companies (Corporate Social Responsibility Policy) Rules, 2014 is given in Annexure IV to this Report.
RELATED PARTY TRANSACTIONS
As required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, related party transactions are placed before the Audit Committee for approval. Wherever required, prior approval of the Audit Committee is obtained on an omnibus basis for continual transactions. The corresponding actual transactions then become a subject of review by the Committee at subsequent Meetings.
All related party transactions/arrangements entered into by the Company during the year were on an arm''s length basis and in the ordinary course of business.
There were no materially significant related party transactions entered into by the Company with the Promoters, Directors, Key Management Personnel or other designated persons which could conflict with the interest of the Company as a whole. Consequently, disclosures in Form AOC-2 pursuant to Rule 8(2) of the Companies (Accounts) Rules, 2014 are not required. The Company''s Related Party Transactions Policy appears on its website with weblink www.kesocorp.com/DOCS/management corner.php#slide5.
SUBSIDIARY AND JOINT VENTURE COMPANY
As at 31st March, 2018, the Company had a wholly owned subsidiary, Cygnet Industries Limited ("Cygnet") and a Joint Venture Company, Gondkhari Coal Mining Limited (''Gondkhari")
The Financial Statements of Cygnet as at 31st March, 2018 has been consolidated with the Financial Statements of the Company. The Consolidated Financial Statements of the Company in respect of the year appears on pages 132 to pages 200 of this Annual Report.
As reported in the previous Annual Report, Gondkhari, the Special Purpose Vehicle ("SPV") incorporated in 2009 as a Joint Venture between the Company and two other corporate entities for developing and working a coal block in the State of Maharashtra lost its sub-structure once the coal block was de-allocated in 2014 by the Supreme Court. The SPV is therefore non functional and the Company has made full provision against its portion of the investment in Gondkhari.
A Statement containing the salient features of the financial statements of Cygnet, the wholly owned subsidiary and Gondkhari, in Form AOC-1 appears in Annexure V to this Annual Report.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Inter corporate financial exposures during the year appears separately under Note No. 7 to the Financial Statements. The Company had, during the year, issued a Corporate Guarantee on behalf of Cygnet Industries Limited ("Cygnet"), its wholly owned subsidiary, against a Term Loan of Rs,500 crores availed by Cygnet from a Scheduled Bank. Cygnet has since repaid Rs,226 crores out of this Term Loan after the end of the year. Subject to converting Rs,400 crores out of its existing loan to Cygnet into Equity as disclosed under Note No. 5 to the Financial Statements, the Company has not made any investment during the year.
The Company has taken no other financial exposure during the year within the meaning of Section 186 of the Act to any other Company.
VIGIL MECHANISM
The Whistle Blower Policy of the Company is available on its website www.kesocorp.com.
STATUTORY AUDIT AND REPORT
Shareholders at the Company''s Ninety eighth Annual General Meeting appointed Messrs. Deloitte Haskins & Sells, Chartered Accountants, Auditors of the Company for a period of five years from the conclusion of that Annual General Meeting.
The Report of the Auditors for the year ended 31st March, 2018 forming part of this Annual Report does not contain any qualification, reservation, observation, adverse remark or disclaimer.
COST AUDIT
Upon a recommendation from the Audit Committee, Mani & Co., Cost Accountants, were appointed to audit the cost accounting records maintained by the Company for the financial year ended 31st March, 2018 at a total remuneration of ''5.50 lakhs, excluding taxation and reimbursement of out of pockets. The remuneration requires ratification by shareholders and an appropriate Resolution has been incorporated in the Notice convening the Ninety-ninth Annual General Meeting. SECRETARIAL AUDIT AND SECRETARIAL STANDARDS
Salil Banerjee, Practising Company Secretary, was appointed by the Board to conduct audit of the Company''s Secretarial records in respect of the Financial Year 2017-18.
His Report appears under Annexure VI to this Report. There are no qualifications in the Report.
The Company, during the year, has complied with Secretarial Standards 1 & 2 issued by The Institute of Company Secretaries of India.
PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other particulars as prescribed under the provisions of Section 197 of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are set out in Annexure VII and forms part of this Report. None of the employees listed in the said Annexure is related to any Director of the Company.
As per the provisions of Section 136 of the Act, this Annual Report and Accounts is being sent to each Member and others entitled thereto, excluding the information on employee particulars as per Rule 5(2) and Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended. This information is readily available for inspection by Members at the Company''s Registered Office between 3 P.M. and 5 P.M. on all working days (excluding Saturdays) up to the date of the forthcoming Annual General Meeting. Should any Member be interested in obtaining a copy (including through e-mail [email protected]), s/he should write to the Company Secretary at the Company''s Registered Office.
DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
The Company has in place the requisite Internal Committees as envisaged in the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
No complaints on the issues covered by the above Act were received during the year.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Act and, based upon representations from the Management, the Board, to the best of its knowledge and belief, states that:
(a) in the preparation of the Annual Accounts, applicable accounting standards has been followed along with proper explanation relating to material departures;
(b) such accounting policies have been selected and applied consistently and such judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March, 2018 and of the loss for that period;
(c) proper and sufficient care was taken 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 Annual Accounts have been prepared on a going concern basis;
(e) internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and operating effectively; and
(f) proper systems have been devised to ensure compliance by the Company with the provisions of applicable laws and that such systems were adequate and working effectively.
DIRECTORS
Upon a favorable recommendation from the Board''s Nomination and Remuneration Committee, the Board appointed Jikyeong Kang (DIN 08045661) as an Additional Independent Director effective 10th January, 2018. Ms. Kang vacates office at the forthcoming Annual General Meeting and is eligible to be appointed an Independent Director for a term of five years.
An appropriate Ordinary Resolution is therefore being included in the Notice convening the Ninety-ninth Annual General Meeting. A respected academic, Ms. Kang is at present the President and Dean of the Asian Institute of Management, Manila, Philippines.
Similarly, based upon a recommendation of the Nomination and Remuneration Committee, Chander Kumar Jain (DIN 08125968) Head Manufacturing, Cement Business has been appointed a Whole-time Director for one year effective 4th May, 2018. An appropriate Resolution, to this effect is also being proposed at the forthcoming AGM.
The Life Insurance Corporation of India, during the year, replaced its nominee Vinay Sah (DIN 02425847) with Siddhartha Mohanty (DIN 08058830). Mr. Mohanty is the Corporation''s Executive Director, Legal. The Board wishes to place on record its sincere appreciation for Mr. Sah''s wise advice and guidance during his tenure on the Board.
Basant Kumar Birla (DIN 00055856), Chairman of the Board, retires by rotation and, being eligible, offers himself for re appointment.
All Independent Directors have furnished to the Company the requisite declarations that they meet the relevant independence criteria as laid down in Section 149(6) of the Act as well as the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Brief profiles of Directors being appointed / re-appointed at the forthcoming Ninety-ninth Annual General Meeting have been given in the Report on Corporate Governance.
KEY MANAGERIAL PERSONNEL
The following persons functioned as Key Managerial Personnel during the year:
Manjushree Khaitan Executive Vice Chairperson (DIN 00055898)
Tridib Kumar Das Whole - time Director and Chief Financial Officer (DIN 01063824)
Gautam Ganguli Company Secretary
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO
Information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014, set out in Annexure VIII to this Report.
MATERIAL CHANGES BETWEEN THE END OF THE FINANCIAL YEAR AND DATE OF REPORT
There has been no material change between the end of the Financial Year and the date of this Report. The conversion of Warrants issued to the Promoter Group, into Equity Shares of the Company features elsewhere in this Report.
EXTRACTS FROM ANNUAL RETURN
Details forming extracts from the Company''s Annual Return in Form MGT-9 appears in Annexure IX to this Report. ANNEXURES FORMING PART OF THIS REPORT
Annexure |
Particulars |
I |
Management Discussion & Analysis |
II |
Report on Corporate Governance |
III |
Nomination & Remuneration Policy |
IV |
Report on Corporate Social Responsibility (CSR) activities |
V |
AOC - 1 |
VI |
Secretarial Audit Report |
VII |
Remuneration related disclosures per Section 197 |
VIII |
Energy Conservation Particulars |
IX |
Annual Return Extracts |
APPRECIATION
The Board gratefully acknowledges the understanding and support received by the Company from its employees. It also places on record its deep gratitude for the unstinted support the Company has received from the Banks, the Central Government, the various State Governments and the local authorities during the year.
Specific acknowledgment is also made for the confidence and understanding shown by the Members in the Company.
Basant Kumar Birla
Chairman
Manjushree Khaitan Tridib Kumar Das Executive Vice Chairperson
Whole-time Director &
Chief Financial Officer
Amitabha Ghosh Lee Seow Chuan
Chander Kumar Jain Kashi Prasad Khandelwal Directors
Whole-time Director Sudip Banerjee
Place: Kolkata Gautam Ganguli
Date: 11th May, 2018 Company Secretary
Mar 31, 2017
FOR THE YEAR ENDED 31st MARCH, 2017
The Board presents its Ninety-eighth Annual Report together with the Audited Financial Statements of the Company for the year ended 31st March, 2017.
FINANCIAL RESULTS
Rs. in crores
Particulars |
31st March 2017 |
31st March, 2016 |
Total Revenue from: |
|
|
Continuing operations |
3891.96 |
4217.57 |
Discontinuing operations |
- |
288.77 |
Total Revenue |
3891.96 |
4506.34 |
Profit/(Loss) before interest, depreciation, tax and other amortizations ("EBIDTA") |
134.80 |
(165.30) |
Add : Exceptional Income |
121.35 |
755.35 |
Less : Depreciation and Amortization Expenses (Net of transfer from Revaluation Reserve) |
108.97 |
122.31 |
Finance Costs |
268.98 |
677.53 |
Tax Expenses - Net |
2.33 |
- |
|
380.28 |
799.84 |
Profit/(Loss) for the year from continuing operations |
(124.13) |
(209.79) |
Profit/(Loss) for the year from discontinuing operations |
- |
(34.50) |
Profit on disposal of Assets and Liabilities of discontinuing operations |
- |
381.41 |
Profit/(Loss) for the year |
(124.13) |
137.12 |
Balance of Profit/(Loss) at the beginning of the year |
(451.23) |
(588.35) |
(Loss) Carried Forward |
(575.36) |
(451.23) |
DIVIDEND
No dividend is proposed in view of the loss during the year.
SHARE CAPITAL
The Paid-up Equity Share Capital as on 31st March, 2017 remained at Rs. 117.27 crores. The Company has not, during the year, issued any shares with or without differential voting rights, granted stock options or issued sweat equity shares.
SECURED REDEEMABLE NON-CONVERTIBLE DEBENTURES
10.50% Secured Redeemable Non Convertible Debentures amounting to Rs.200 crores issued during the previous year were redeemed in full on 13th April, 2016.
DEPOSITS
The Company has not, during the year, accepted any deposit within the meaning of Section 73 of the Companies Act, 2013 ("the Act"). Deposits amounting to Rs.4.46 lakhs from two persons remained unclaimed as at the end of the year. There were no deposits not in compliance with the requirements of Chapter V of the Act.
GENERAL REVIEW
Despite encountering significant challenges during the year, the Company earned a positive Earnings Before Interest, Depreciation, Taxation and other Amortizations ("EBIDTA") of Rs.134.80 crores as against a negative EBIDTA of Rs.165.30 crores in the previous year.
Total Revenue for the year on a standalone basis was Rs.3891.96 crores as compared to Rs.4217.57 crores in the previous year.
Sale volumes and net sales realizations of the Cement Business came under stress during the year owing to subdued demand in the areas which it services. This position was further exacerbated by capacity additions in this area resulting in further pressure on price realizations. To make matters worse, input cost increases during the year also impacted margins even though the Business made measured advances in value engineering of cement inputs. The Business''s brand recall gained in strength in the wake of several initiatives carefully conceived to underline the quality superiority of the Birla Shakti brand in the market.
The task before the Tyre Business during the year was to realign manufacturing capabilities upon the transfer and ultimate disposal of the Business''s Uttarakhand manufacturing facility. Despite unavailability of production from the Uttarakhand facility during the year, the Business maintained its presence in the market. This would not have been possible without a renewed quality emphasis together with the development of market oriented products. Thus, a complete range of tubeless tyres for two and three wheelers, a premium range of bias tyres for the commercial vehicle segment, christened Platina, and an entirely new range of radial tyres also for the commercial vehicle segment were put into the market. Investments, during the year, in increasing the Birla Tyres brand awareness and recall was yet another high point. Sponsorship of the Kolkata based Atletico de Kolkata football team that won the Indian Super League 2016 ("ISL 2016"), for instance, was a success. Birla Tyres had also been a major sponsor of the ISL 2016. Its "Tireless" advertisement campaign was also well accepted. Steep increases in prices of major inputs during the second half of the year, however, ranked as a major dampener to its efforts at business consolidation in the revised scenario. Nonetheless, the Business endeavoured to counteract this situation with better sourcing as well as product re-engineering.
MANAGEMENT DISCUSSION & ANALYSIS AND CORPORATE GOVERNANCE
A Management Discussion & Analysis and the Report on Corporate Governance are attached as Annexure I and II respectively of this Annual Report.
RISK MANAGEMENT
The Company has a Risk Management Policy tailored to appropriately appraise the state of the Company''s business risks. The Policy is so structured as to evaluate risks at several operational levels so that processes to monitor business risks are effectively identified and mitigation procedures implemented.
GOING CONCERN STATUS
There were no significant or material orders passed by regulators or courts or tribunals'' impacting the Company''s going concern status and/or its future operations.
INTERNAL FINANCIAL CONTROLS
The Board reviews from time to time the adequacy and effectiveness of the Company''s internal financial controls. This year was no exception. The reviews conducted during the year did not reveal any material deficiencies in the internal financial control structure.
EVALUATION OF BOARD PERFORMANCE
The performance of the Board, each Board Member individually, including each of the Independent Directors, as well as the working of Board Committees was subjected to evaluation during the year. The Board did not deviate from the assessment mechanism adopted in the previous year. A brief statement on the methodology adopted appears in the Report on Corporate Governance.
As required under the provisions of the Act, a Meeting of all Independent Directors was convened and held during the year. NUMBER OF BOARD MEETINGS
A tentative calendar of Board Meetings to take place in each year is prepared and circulated to Board Members before the beginning of each Financial Year. During the year, six Board Meetings were convened and held. These details are provided in the Report on Corporate Governance.
NOMINATION AND REMUNERATION POLICY
The Company''s Nomination and Remuneration Policy prepared in conformity with the requirements of the provisions of Section 178(3) of the Act is attached in Annexure III to this Report.
AUDIT COMMITTEE
The Audit Committee is chaired by Amitabha Ghosh, an eminent Chartered Accountant with additional qualification in Banking. Vinay Sah, Kashi Prasad Khandelwal, Sudip Banerjee and Lee Seow Chuan are Members of the Committee. Tridib Kumar Das, Whole-time Director & Chief Financial Officer is a permanent invitee to the Meetings. The Company Secretary acts as Secretary to the Committee.
All recommendations of the Audit Committee were duly accepted by the Board and there were no instances of any disagreement between the Committee and the Board.
CORPORATE SOCIAL RESPONSIBILITY
In the absence of profit, there were no compulsions whatsoever on the Company to incur any spends on Corporate Social Responsibility ("CSR") during the year. A no compulsion situation acted as an added impetus for the Company to keep up all its programmes initiated earlier so as to positively contribute in its small way to societal well-being keeping in mind the provisions of Section 135 of the Act.
The CCFC-Kesoram Football Academy, the soccer nursery promoted by the Company, remains a pivotal CSR project. A nucleus of trainees selected during the year from hundreds of hopefuls is being rigorously coached by a team of senior trainers in the finer points of the game. The project aims not only to foster the game of football in the country but also emerge as a source of livelihood for the trainees who are drawn from the weaker sections of society. For the Company, that achievement will rank as an ornate diadem in its humble quest to serve society at large.
The CSR Policy is available on www.kesocorp.com. As at 31st March, 2017, the Board Committee on CSR consisted of Manjushree Khaitan as Chairperson, Amitabha Ghosh and Tridib Kumar Das.
The Report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 is given in Annexure IV to this Report.
RELATED PARTY TRANSACTIONS
As required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI LODR Regulations, 2015"), related party transactions are placed before the Audit Committee for approval. Wherever required, prior approval of the Audit Committee is obtained on an omnibus basis for continuous transactions and the corresponding actual transactions become a subject of review at subsequent Audit Committee Meetings.
All related party transactions/arrangements entered during the year were on an arm''s length basis and in the ordinary course of business.
There were no materially significant related party transactions entered into by the Company with the Promoters, Directors, Key Managerial Personnel or other designated persons, which could conflict with the interest of the Company as a whole and, as such, disclosure in Form AOC-2 pursuant to Rule 8(2) of the Companies (Accounts) Rules, 2014 is not required.
The Company''s Related Party Transaction Policy appears on its website with web link www.kesocorp.com/DOCS/management_ corner.php#slide_5.
SUBSIDIARY AND JOINT VENTURE COMPANY
As at 31st March, 2017, the Company had a wholly-owned subsidiary, Cygnet Industries Limited ("Cygnet") and a Joint Venture Company Gondkhari Coal Mining Limited ("Gondkhari").
The Company''s shareholding interest in Cavendish Industries Limited, a material unlisted subsidiary, was disposed of on 13th April, 2016.
Effective close of business 31st March, 2016, the Company''s rayon and transparent paper undertaking was transferred, upon obtaining the required approvals, to Cygnet. As at close of business on 31st March, 2017, Cygnet was a wholly-owned subsidiary. This position continues as on date. Consequently, the Consolidated Financial Statements of the Company in respect of the year appear on Pages 125 to 160.
Gondkhari Coal Mining Limited ("Gondkhari"), a Special Purpose Vehicle ("SPV"), was incorporated in 2009 as a Joint Venture between the Company (45.46% shareholding), Maharashtra Seamless Limited (30.30% shareholding) and Dhariwal Power & Alloys Private Limited (formerly known as Dhariwal Infrastructure Limited) (24.24% shareholding). The joint venture was set up as per Central Government directives to develop and work the Gondkhari Coal Block in the State of Maharashtra that the Central Government had allocated. The Supreme Court, vide judgment dated 25th August, 2014, read with Order dated 24th September, 2014, cancelled the allocation of all coal blocks (including Gondkhari) by the Central Government. The deallocation of the coal block has made the SPV virtually defunct.
In view of the provisions of Paragraphs 11, 28 of Accounting Standards ("AS") 21 and Paragraph 38 of AS 27, consolidation of the Financial Statements of these companies as at 31st March, 2017 are not mandated. Therefore, a Report on the performance and financial position of these companies, as required under Rule 8(1) of the Companies (Accounts) Rules, 2014, is not annexed to this Report.
A Statement containing salient features of the financial statement of the wholly-owned subsidiary in Form AOC-1 is attached in Annexure V to this Report.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
The following inter corporate financial exposures were taken by the Company during the year:
Company |
Balance as at 31st March, 2017 (Rs. in crores) |
A. Cygnet, wholly-owned subsidiary |
|
(i) Investment (ii) Loan |
30.05 529.29 |
B. Camden Industries Limited |
|
(i) Loan |
0.58 |
Subject to the above, the Company has taken no other financial exposure to any other company within the meaning of the provisions of Sections of 186 of the Act during the year whether in terms of loans, guarantees or investments.
VIGIL MECHANISM
The Whistle Blower Policy of the Company is available on its website www.kesocorp.com.
STATUTORY AUDITORS AND REPORT
Messrs. Price Waterhouse, Chartered Accountants, ("PW") were appointed Auditors for a period of three years at the Company''s Ninety-sixth Annual General Meeting ("AGM") from the conclusion of the Ninety-fifth AGM till the conclusion of the Ninety-eighth AGM. As such, PW retire at the conclusion of the Ninety-eighth AGM. In view of the provisions of Section 139 of the Act, PW can no more continue as the Auditors. The Board, upon the advice of the Audit Committee, wishes to recommend the appointment of Deloitte Haskins & Sells, Chartered Accountants, as Auditors for a period of five years from the conclusion of the Ninety-eighth AGM. A Resolution to this effect is being proposed at the forthcoming AGM.
The Report of the Statutory Auditors for the year ended 31st March, 2017; forming part of the Annual Report does not contain any qualification, reservation, observation, adverse remark or disclaimer.
COST AUDITORS
Upon a recommendation from the Audit Committee, Mani & Co., Cost Accountants were appointed to audit the cost accounting records maintained by the Company, for the Financial Year ended 31st March, 2017 at a total remuneration of B5.02 lakhs, excluding taxes and reimbursement of out of pockets as stated herein:
Product |
Name of Cost Auditor |
Remuneration in lakhs |
Cement |
Mani & Co. |
3.10 |
Tyre, Tube & Flaps |
Mani & Co. |
1.92 |
Total |
|
5.02 |
As per Section 148(3) of the Act, the remuneration payable to the Cost Auditors requires ratification by Shareholders. An appropriate Resolution, to this effect, is being proposed at the forthcoming Annual General Meeting.
SECRETARIAL AUDITOR
The Board reappointed Salil Banerjee, FCS, Practicing Company Secretary (CP Registration No. 1140) to audit the secretarial records of the Company in respect of the Financial Year 2016-17.
The Report of the Secretarial Auditor is attached in Annexure VI to this Report. There are no qualifications in the Report. PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other particulars as prescribed under the provisions of Section 197 of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are set out in Annexure VII and forms part of this Report. None of the employees listed in the said Annexure is related to any Director of the Company.
As per the provisions of Section 136 of the Act, this Annual Report and Accounts is being sent to each Member and others entitled thereto, excluding the information on employee particulars as per Rule 5(2) and Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended. This information is readily available for inspection by Members at the Company''s Registered Office between 3 PM and 5 PM on all working days (excluding Saturdays) up to the date of the forthcoming Annual General Meeting. Should any Member be interested in obtaining a copy (including through email: [email protected]), s/he should write to the Company Secretary at the Company''s Registered Office.
DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
The Company has in place the requisite Internal Committees as envisaged in the Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013.
No complaints on the issues covered by the above Act were received during the year.
DIRECTORS'' RESPONSIBILITY STATEMENT:
Pursuant to Section 134(5) the Act and, based upon representations from the Management, the Board, to the best of its knowledge and belief, states that:
(a) In the preparation of the Annual Accounts, applicable accounting standards has been followed along with proper explanation relating to material departures,
(b) such accounting policies have been selected and applied consistently and such judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year ended 31stMarch, 2017 and of the loss for that period,
(c) Proper and sufficient care was taken 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 Annual Accounts have been prepared on a going concern basis,
(e) Internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and operating effectively, and
(f) Proper systems have been devised to ensure compliance by the Company with the provisions of applicable laws and that such systems were adequate and working effectively.
DIRECTORS
Manjushree Khaitan''s (DIN 00055898) term as a Whole-time Director will end owing to efflux of time from close of business on 4th February, 2018. It is proposed to renew her term for another two years and an appropriate Resolution, to this effect is being proposed at the forthcoming AGM. Her brief profile is given in the Report on Corporate Governance.
Tridib Kumar Das (DIN 01063824), was appointed as a Whole-time Director, effective 1st April, 2016. The arrangement was determined through mutual consent from close of business hours on 31st March, 2017. It is proposed to appoint him afresh for a three year term effective 1st April, 2017 and an appropriate Resolution, to this effect is being proposed at the forthcoming AGM. His brief profile appears in the Report on Corporate Governance.
All Independent Directors have furnished to the Company the requisite declarations that they meet the independence criteria as laid down under Section 149(6) of the Act and the Listing Agreement/SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Vinay Sah (DIN 02425847), Director, nominated by Life Insurance Corporation of India, retires by rotation and, being eligible, offers himself for reappointment. His brief profile is given in the Report on Corporate Governance.
KEY MANAGERIAL PERSONNEL
The following functioned as Key Managerial Personnel during the year:
Manjushree Khaitan Executive Vice Chairperson
Tridib Kumar Das Whole-time Director and Chief Financial Officer
Gautam Ganguli Company Secretary
Upon cessation of employment, Arvind Kumar Singh, Chief Executive Officer - Business Operations and Enrico Malerba, Chief Business Officer ceased to be Key Managerial Personnel effective 5th May, 2016 and 1st March, 2017, respectively.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO
Information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014, set out in Annexure VIII to this Report.
MATERIAL CHANGES BETWEEN THE END OF THE FINANCIAL YEAR AND DATE OF REPORT
There have been no material changes between the end of the Financial Year and the date of this Report.
EXTRACTS FROM ANNUAL RETURN
Details forming part of extract from the Company''s Annual Return in Form MGT 9 are furnished in Annexure IX to this Report. ANNEXURES FORMING PART OF THIS REPORT
Annexure |
Particulars |
I |
Management Discussion & Analysis |
II |
Report on Corporate Governance |
III |
Nomination & Remuneration Policy |
IV |
Report on Corporate Social Responsibility (CSR) activities |
V |
AOC - 1 |
VI |
Secretarial Audit Report |
VII |
Remuneration related disclosures per Section 197 |
VIII |
Energy Conservation Particulars |
IX |
Annual Return Extracts |
APPRECIATION
The Board wishes to gratefully acknowledge the understanding and support received by the Company from its employees. It would wish to thank the banking system, the Central Government, the various State Governments and the local authorities for the support received during the year.
This Report will be incomplete without a specific appreciation for the Members of the Company who have shown immense confidence and understanding in the Company''s well being.
Basant Kumar Birla
Chairman
Manjushree Khaitan
Tridib Kumar Das Executive Vice Chairperson
Whole-time Director &
Chief Financial Officer
Amitabha Ghosh
Kashi Prasad Khandelwal
Sudip Banerjee Director
Lee Seow Chuan
Place: Kolkata Gautam Ganguli Vinay Sah
Date: 28th April, 2017 Company Secretary
Mar 31, 2015
The Board presents its Ninety-sixth Annual Report and the Audited
Statement of Accounts of the Company for the year ended 31st March,
2015.
FINANCIAL RESULTS
/ crore
Particulars 31st March, 31st March,
2015 2014
Total Revenue 4939.12 5205.45
Profit/(Loss) before interest,
depreciation, tax and other
amortisations ("EBIDTA") 181.60 410.63
Add: Exceptional Income 409.20 -
Less :
Depreciation and Amortisation Expenses 276.90 318.10
(Net of transfer from Revaluation
Reserve)
Finance Costs 680.58 572.83
Tax Expenses Net - 35.25
957.48 926.18
Loss for the year 366.68 15.55
Balance of Profit / (Loss) at the
beginning of the year (221.67) 293.88
Add : Loss for the year 366.68 515.55
Loss Carried Forward 588.35 221.67
DIVIDEND
No dividend is recommended in view of the loss in respect of the
Financial Year and non availability of carry forward surplus.
SHARE CAPITAL
The Paid-up Equity Share Capital as on 31st March, 2015 stood at Rs.
109.77 crores. The Company has not, during the year under report,
issued any shares with or without differential voting rights, granted
stock options or issued sweat equity shares.
SECURED REDEEMABLE NON-CONVERTIBLE DEBENTURES
Upon obtaining Shareholder approvals, the Company, during the year
under report, issued 10.50% Secured Redeemable Non-Convertible
Debentures amounting to Rs. 200 crores to Axis Bank Limited on private
placement basis.
DEPOSITS
The Company has not, during the year under report, accepted any deposit
within the meaning of Section 73 of the Companies Act, 2013 ("the
Act").
Deposits amounting to Rs. 5.46 lakhs from three persons remained
unclaimed as at the end of the year. These depositors have once again
been asked for instructions.
All deposits accepted as on 31st March, 2014 were fully repaid and
there was no default whatsoever in repayment of any deposit.
There are, therefore, no deposits not in compliance with the
requirements of Chapter V of the Act.
GENERAL REVIEW
The year under report was a watershed year for the Company.
The key change during the year under report was the re-organisation of
the Tyre Business. This was achieved through the transfer of the tyre
manufacturing facility at Laksar, District Haridwar, Uttarakhand as a
going concern, effective close of business 31st March, 2015, to a
subsidiary upon the receipt of the required Shareholder approvals under
Sections 180(1)(a) and 188 of the Act. As at 31st March, 2015, the
Company's shareholding interest in the subsidiary was in excess of 99%.
This position continues as on date. The transfer was effected based
upon a consideration of Rs. 2194.95 crores through the slump sale route
under Section 50B of the Income Tax Act, 1961. A binding Term Sheet,
dated 12th September, 2015, has since been executed with the JK Tyre
Group for transfer of ownership of this subsidiary to this Group. An
appropriate Resolution seeking shareholder consent for disposal of this
material non-listed subsidiary has been proposed in the Notice
convening the Ninety-sixth Annual General Meeting.
From the operations point of view, the year under report was
disappointing. While the Earnings Before Interest, Depreciation, Taxes
and other Amortisations ("EBIDTA") at Rs. 182 crores was positive, this
was far lower than the previous year's figure of Rs. 411 crores. Several
initiatives were taken during the year to address this position. The
Tyre Business re-organisation was amongst them. Initiatives actioned
upon by the Cement Business have begun yielding satisfactory returns.
These will be consolidated going forward. Although the operating
environment of the Rayon Business was demanding, its continuous spun
yarn project which should go into full production during the current
year should help alter future profitability dimensions.
A brief resume on the Performance Analysis of each Business during the
year and the forward outlook appears in the Management Discussion &
Analysis.
Kesoram Spun Pipes and Foundries and Hindustan Heavy Chemicals'
manufacturing facilities continued to be under suspension of work.
MANAGEMENT DISCUSSION & ANALYSIS AND CORPORATE GOVERNANCE
A Management Discussion & Analysis and the Report on Corporate
Governance are attached as Annexures I and II respectively of this
Annual Report.
ANNUAL GENERAL MEETING
The Registrar of Companies, by an Order dated 10th August, 2015,
extended the time for holding the Company's Ninety-sixth Annual General
Meeting to 31st December, 2015. The Ninety-sixth Annual General Meeting
will, therefore, be held on 12 th December, 2015.
RISK MANAGEMENT
The Company has a Risk Management Policy to deal with perceived risks
in its three businesses by identifying and evaluating business risks
and opportunities.
Minimising the adverse impact on business objectives and thus further
refining the Company's competitive advantage are key considerations
underlying the Policy.
The approach to risk management is defined across the Company at
various levels, including documentation and reporting, interspersed
with diverse risk models to help identify risk trends, exposure and
potential impact analysis at the corporate level.
GOING CONCERN STATUS
During the year under report, there were no significant or material
orders passed by regulators or courts or tribunals impacting the
Company's going concern status and/or its future operations.
INTERNAL FINANCIAL CONTROL
The Company has an adequate system of internal financial controls
commensurate with its size and nature of business. Detailed procedures
are in place to ensure that all assets are safeguarded and protected
against losses, all transactions authorised, recorded and appropriately
reported. The internal control system is monitored and evaluated by an
Internal Audit team which interacts closely with the Audit Committee.
No material issues in relation to the adequacy of Company's control
systems were raised during the year.
EVALUATION OF BOARD PERFORMANCE
The Board carried out an annual evaluation exercise of its own
performance, the performance of its Committees as well as those of
individual Directors since the last Annual Report.
In evaluating its own performance, the Board looked closely, inter
alia, at its own composition, diversity, acumen at its disposal,
ability to strategise, competence in marrying plurality of views and
the capability of functioning in an uncertain operating environment.
In evaluating the efficacy of its Committees, the Board's paramount
consideration was the value that these were adding to its own role.
The Board was of the considered view that each Committee handled its
charge satisfactorily.
Each individual Director was appraised based upon background,
competence, level of engagement at the Board level, capability of
comprehending problem situations and suggesting solutions, interaction
with Shareholders at Annual General Meetings as well as independence of
judgment.
The evaluation exercises, in the opinion of the Board, were
satisfactory and appraisal measures will be further fine tuned over
time.
As required under Section VII of Schedule IV of the Companies Act,
2013, all Independent Directors together met during the year. No other
person was present at the Meeting.
NUMBER OF BOARD MEETINGS
The Board met six times during the Financial Year 2014 - 15. Details of
Meetings and the attendance of each Director is provided in the Report
on Corporate Governance.
NOMINATION AND REMUNERATION POLICY
The Company has in place a formal Nomination and Remuneration Policy
formulated as per the provisions of Section 178(3) of the Act as well
as with Clause 49 of the Listing Agreement. The policy text is
attached in Annexure III to this Report.
AUDIT COMMITTEE
The Board's Audit Committee comprises Pesi Kushru Choksey, Amitabha
Ghosh, Vinay Sah, Kashi Prasad Khandelwal, Sudip Banerjee and Lee Seow
Chuan. Pesi Kushru Choksey is Chairman of the Committee. Till he
resigned from the Board on 8th June, 2015, Stephen John Dekrey was also
a Member of the Committee. There were, during the year under report, no
disagreements whatsoever between the Audit Committee and the Board. All
recommendations of the Committee were accepted by the Board.
CORPORATE SOCIAL RESPONSIBILITY
The Company fully recognises its commitment to the fulfillment of its
social responsibilities. Programmes to benefit the society in general
and those living in the vicinity of its facilities in particular have
been consistently implemented over the years. In so doing, the Company
has been faithfully following and implementing the vision of its
Chairman, Basant Kumar Birla, who instilled in the Company the
consciousness of being responsive to the needs of those less
privileged, especially those living in close proximity to its
facilities. Such observance has been company policy for decades much
before statutory mandates were even thought of.
The Company's responsibility to society was thus never bottled up
within the confines of statutory enactments but absolutely free flowing
arising as it did out of its own internal consciousness. The Company
has not compromised on its commitment towards its social
responsibilities even though under the provisions of Section 135(5) of
the Act, it need not statutorily incur any social responsibility
spending owing to the absence of profits over the last three years.
For the record and for complying with the provisions of Section 135 of
the Act, the Company has codified a Corporate Social Responsibility
Policy, the text whereof is available on www.kesocorp.com. As required
under the provisions of this Section, it has also constituted a
Corporate Social Responsibility Committee consisting of three
Directors, Amitabha Ghosh, Manjushree Khaitan and Kamal Chand Jain. But
the Company's determination to the cause of upliftment of the less
privileged has conventionally been dehors statutory mandates.
Amongst the many dedicated social activities conducted by the Company
during the year under report, the following are prominent:
- medical camps including conducting comprehensive health checks on
local villagers ;
- installation of facilities for water purification to improve
accessibility to potable water ;
- provision of street lights on certain arterial roads in adopted
villages ;
- training villagers in water conservation methodologies ;
- animal husbandry camps including setting up of model dairy farms;
- imparting of vocational training spanning sections of the population
around most facilities of the Company. These programmes enable a large
number of unemployed or underemployed beneficiaries to transform
themselves into self respecting earning family members. Tailoring,
stitch craft and needlework training, computer literacy, pickle and
papad making, feature prominently amongst the vocational training
initiatives taken ;
- distribution of blankets in winter across all facilities to the less
privileged;
- promotion of road safety and moulding the mindset of young adults to
the need for observing road safety norms.
The Report on Corporate Social Responsibility (CSR) activities as
required under the Companies (Corporate Social Responsibility Policy)
Rules, 2014 is given in Annexure IV to this Report.
RELATED PARTY TRANSACTIONS
Based upon Shareholder approvals granted under Section 188 of the Act,
the Company's automotive tyre manufacturing facility at Laksar,
District Haridwar, Uttarakhand was transferred during the year under
report to Cavendish Industries Limited, a subsidiary of the Company.
Subject to the above, all related party transactions / arrangements
entered during the year under report were on an arm's length basis and
in the ordinary course of business.
There were, however, no materially significant related party
transactions as contemplated under Section 188 of the Act read together
with the relevant Rules as well as the Company's policy on related
party transactions entered into by the Company with the Promoters,
Directors, Key Managerial Personnel or other designated persons
As required under Clause 49 of the Listing Agreement, related party
transactions are placed before the Audit Committee for approval. Where
required, prior approval of the Audit Committee is obtained, on an
omnibus basis, for continuous transactions and the corresponding actual
transactions become a subject of review at subsequent Audit Committee
Meetings.
As required under Rule 8(2) of the Companies (Accounts) Rules, 2014,
the completed Form of AOC-2 is attached in Annexure V to this Report.
The approved Related Party Transaction Policy of the Company appears on
its website with web link www.kesocorp.com/DOCS/
management_corner.php#slide_5.
SUBSIDIARY AND JOINT VENTURE COMPANY
As at 31st March, 2015, the Company had a subsidiary, Cavendish
Industries Limited ("Cavendish") and a Joint Venture Company Gondkhari
Coal Mining Limited ("Gondkhari").
Effective close of business 31st March, 2015, the Company's automotive
tyre manufacturing facility at Laksar, District Haridwar, Uttarakhand
was transferred, upon obtaining Shareholder approvals, to Cavendish. As
at close of business on 31st March, 2015, the Company held 99.99% of
the Cavendish shareholding. This shareholding position continues as on
date. Cavendish, however, had no material operations to report during
the year under report. As already stated elsewhere in this Report, it
is proposed to transfer the Company's ownership of Cavendish to the JK
Tyre Group. Consequently, Cavendish is held for disposal in the near
future.
The Company's policy on material subsidiaries appears on its website
www.kesocorp.com
Gondkhari was incorporated in 2008 as a Joint Venture between the
Company (45.46% shareholding), Maharashtra Seamless Limited (30.30%
shareholding) and Dhariwal Infrastructure Limited (24.24%
shareholding). The joint venture was set up as per approval accorded
by the Central Government which had, in November, 2008, allocated the
Gondkhari Coal block in the State of Maharashtra to the Joint Venture.
The coal block was de-allocated by the Central Government in November,
2012. The Supreme Court, vide judgment dated 25th August, 2014, read
with Order dated 24th September, 2014, has cancelled the allocation of
all coal blocks (including Gondkhari) by the Central Government. This
significantly impairs Gondkhari's ability to continue as a joint
venture. This restriction, therefore, severely limits Gondkhari's
ability to transfer fund to its parents.
In view of the above and given that as per Paragraphs 11 and 28 of
Accounting Standard ("AS") 21 and 27 respectively, consolidation of the
Financial Statements of these companies as at 31st March, 2015 are not
mandated, a Report on the performance and financial position of these
companies, as required under Rule 8(1) of the Companies (Accounts)
Rules, 2014, is not annexed.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Except for an investment of Rs. 700,04,60,000 in its material non-listed
subsidiary, Cavendish, upon obtaining such approvals, as were
necessary, the Company has given no loans or corporate guarantees or
made any other investment covered under Section 186 of the Act during
the year under report.
VIGIL MECHANISM
The Company has a codified whistle blower policy which is hosted on its
website www.kesocorp.com.
STATUTORY AUDITORS
Shareholders have already reappointed, at the Company's Ninety-fifth
Annual General Meeting, Price Waterhouse, Chartered Accountants,
Kolkata (Firm Regn. No.301112E) as the Company's Auditors for a period
of three years till the conclusion of the Company's Ninety-eighth
Annual General Meeting. Their appointment needs to be ratified by
shareholders at the Company's forthcoming Ninety-sixth Annual General
Meeting for which an appropriate Resolution is proposed at the Annual
General Meeting.
COST AUDITORS
The Board, upon a recommendation from the Audit Committee, appointed
Mani & Co. and B. Ray & Associates, Cost Accountants as Cost Auditors
to audit the cost accounting records maintained by the Company for the
Financial Year ended 31st March, 2015 at a total remuneration of Rs. 7.55
lakhs, excluding taxes and reimbursement of out of pockets as indicated
in the matrix below :
Product Name of Cost Remuneration
Auditor (in lakh)
Cement Mani & Co. 2.56
Tyre, Tube & Flaps Mani & Co. 3.17
Rayon B. Ray & Associates 0.75
Transparent Paper B. Ray & Associates 0.50
Inorganic Chemicals B. Ray & Associates 0.57
Total 7.55
As required under Section 148(3) of the Act, the remuneration payable
to the Cost Auditors require ratification by Shareholders.
Accordingly, a Resolution seeking such ratification has been included
as part of the Notice convening the Ninety-sixth Annual General
Meeting.
SECRETARIAL AUDITOR
The Board appointed Salil Banerjee, FCS, Practising Company Secretary
(CP Registration No. 1140) to audit the secretarial records of the
Company in respect of the Financial Year 2014 - 15.
The Report of the Secretarial Auditor is attached in Annexure VI to
this Report. There are no qualifications in the Report.
PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other particulars as
prescribed under the provisions of Section 197 of the Act read with
Rule 5 of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 are set out in Annexure VII and forms part of
this Report.
In terms of Section 136 of the Act, this Annual Report and Accounts is
being sent to each Member and others entitled thereto, excluding the
information on employee particulars as per Rule 5(2) and Rule 5(3) of
the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014. This information is readily available for inspection by
Members at the Company's Registered Office between 3.00 P.M. and 5.00
P.M. on all working days (excluding Saturdays) up to the date of the
forthcoming Annual General Meeting. Should any Member be interested in
obtaining a copy, s/he should write to the Company Secretary at the
Company's Registered Office or send an email to [email protected].
DISCLOSURE UNDER SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE
No complaints on the issues covered by The Sexual Harassment of Women
at the Workplace (Prevention, Prohibition & Redressal) Act, 2013, were
received during the year. Consequently, the question of disposal of
complaints did not arise.
DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuant to Section 134(5) the Act and, based upon representations from
the Management, the Board, to the best of its knowledge and belief,
states that :
(a) in the preparation of the Annual Accounts, the applicable
accounting standards had been followed along with proper explanation
relating to material departures, if any;
(b) such accounting policies have been selected and applied
consistently and such judgments and estimates have been made that are
reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company at the end of the Financial Year ended 31st
March, 2015 and of the loss for that period;
(c) proper and sufficient care was taken 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 Annual Accounts have been prepared on a going concern basis;
(e) internal financial controls have been laid down to be followed by
the Company and that such internal financial controls are adequate and
operating effectively; and
(f) proper systems have been devised to ensure compliance by the
Company with the provisions of applicable laws and that such systems
were adequate and working effectively.
DIRECTORS
Non Independent Director, Krishna Gopal Maheshwari's (DIN 00078470),
seven decade long association as a Board Member came to an end owing to
his demise on 5th December, 2014. The Board wishes to place on record
its deep appreciation for the sagacious advice and wise counsel it
received from him during his long tenure.
Pesi Kushru Choksey (DIN 00060508), Amitabha Ghosh (DIN 00055962),
Kashi Prasad Khandelwal (DIN 00748523) and Sudip Banerjee (DIN
05245757), existing Independent Directors, were re-appointed as such
for a period of five years at the Company's Ninety-fifth Annual General
Meeting per Section 149 of the Act.
Steven John Dekrey (DIN 06906347) and Lee Seow Chuan (DIN 02696217)
were appointed Additional Independent Directors during the year under
report. Steven John Dekrey resigned from the Board effective 8th June,
2015. Lee Seow Chuan is, therefore, being proposed for appointment as
an Independent Director at the forthcoming Annual General Meeting. This
appointment will be for a period of five years from the conclusion of
the Ninety-sixth Annual General Meeting as per the provisions of
Section 149 of the Act. The Board wishes to place on record Steven
John Dekrey's rich contributions to the deliberations of the Board and
the Committee in which he was a Member during his brief association
with the Company.
All Independent Directors have furnished to the Company the requisite
declarations that they meet the independence criteria as laid down
under Section 149(6) of the Act and the Listing Agreement.
Shareholders, at the Ninety-fourth Annual General Meeting, appointed
Manjushree Khaitan (DIN : 00055898), Director, as Executive Vice
Chairperson, for a period of five years effective 5th February, 2013,
at 'Nil' remuneration. In view of the time and effort she has been
devoting to the Company, the Board, based upon a recommendation of its
Nomination and Remuneration Committee, has proposed that she be
suitably remunerated effective 1st April, 2015. A Special Resolution to
this effect is included as part of the Notice convening the Company's
forthcoming Ninety-sixth Annual General Meeting for Shareholder
approval.
Kamal Chand Jain's (DIN 00029985) tenure as a Whole-time Director
expired by efflux of time effective close of business on 31st March
2015. In recognition of his long experience with the Company, the Board
recommends his re-appointment for a further period of one year
effective 1st April, 2015. A Special Resolution to this effect is
included as part of the Notice convening the forthcoming Ninety-sixth
Annual General Meeting for Shareholder approval.
The appointment of and remuneration to Amolak Preet Singh (DIN
07019247) as a Whole-time Director from 1st December, 2014 to 14th
January, 2015, both days inclusive, was approved by Shareholders during
the year under report as an Ordinary Resolution through postal ballot.
Amolak Preet Singh ceased association with the Company effective close
of business on 14th January, 2015. His scale of compensation will
require Shareholder approval through a Special Resolution. Accordingly,
a Special Resolution is included as part of the Notice convening the
forthcoming Ninety-sixth Annual General Meeting. In the event of the
Special Resolution being passed, the payment of remuneration to him
will not require Central Government approval. However, an application
will have to be made to the Central Government, nonetheless, for
approval to his appointment since at the time of his appointment he was
a non resident Indian.
Vinay Sah (DIN 02425847), LIC Nominee on the Company's Board, retires
by rotation and, being eligible, offers himself for re- appointment. An
Ordinary Resolution is included as part of the Notice convening the
forthcoming Annual General Meeting.
Brief profiles of Directors being appointed /re-appointed are given in
the Report on Corporate Governance.
KEY MANAGERIAL PERSONNEL
Manjushree Khaitan, Executive Vice Chairperson, Kamal Chand Jain,
Whole-time Director, Arvind Kumar Singh, Chief Executive
Officer-Business Operations, Tridib Kumar Das, Chief Financial Officer
and Gautam Ganguli, Company Secretary, continued to function as Key
Managerial Personnel during the year.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING
AND OUTGO
The information on conservation of energy, technology absorption and
foreign exchange earnings and outgo stipulated under Section 134(3)(m)
of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts)
Rules, 2014, is given as Annexure VIII to this Report.
MATERIAL CHANGES BETWEEN THE END OF THE FINANCIAL YEAR AND DATE OF
REPORT
The execution of a binding Term Sheet dated 12th September, 2015 with
the JK Tyre Group for disposal of its material non-listed subsidiary,
Cavendish Industries Limited, has already been covered elsewhere in
this Report.
EXTRACTS FROM ANNUAL RETURN
Details forming part of extract from the Company's Annual Return in
Form MGT 9 are furnished in Annexure IX to this Report.
ANNEXURES FORMING PART OF THIS REPORT
Annexure Particulars
I Management Discussion & Analysis
II Report on Corporate Governance
III Nomination & Remuneration Policy
IV Report on Corporate Social Responsibility (CSR) activities
V Form AOC-2
VI Secretarial Audit Report
VII Remuneration related disclosures per Section 197
VIII Energy Conservation Particulars
IX Annual Return Extracts
APPRECIATION
The Board gratefully acknowledges the understanding and support
received by the Company from its employees. It also places on record
its deep gratitude for the unstinted support, the Company has received
from the banking system, the Central Government, the various State
Governments and the local authorities during the year under report.
This Report will be incomplete without a specific appreciation for the
Members of the Company who have shown immense confidence and
understanding in the Company's well being.
Kamal Chand Jain Manjushree Khaitan
Whole-time
Director Executive Vice
Chairperson
Arvind Kumar Singh
CEO - Business
Operations
Tridib Kumar Das Kashi Prasad
Khandelwal
Directors
Chief Financial
Officer Sudip Banerjee
Place: Kolkata Gautam Ganguli
Date : 19th October,
2015 Company Secretary
Mar 31, 2013
The Board presents its Ninety-fourth Annual Report and the Audited
Statements of Accounts of the Company for the year ended 31st March,
2013.
FINANCIAL RESULTS
Rs. Crores
Particulars 31st March, 31st March,
2013 2012
Total Revenue 5,841.86 6,004.86
Profit/(Loss) before Interest,
Depreciation, Tax and other 443.10 (13.92)
Amortisations ["EBIDTA"]
Less :
Depreciation and Amortisation Expenses 305.93 297.40
(Net of transfer from
Revaluation Reserve)
Finance Costs 514.36 410.15
Exceptional item - Income Nil (11.22)
Tax Expenses  Net (47.96) (330.51)
772.33 365.82
Loss for the year 329.23 379.74
Balance at the beginning of the year 628.46 948.51
Add : Loss for the year (329.23) (379.74)
Amount transferred from Debenture
Redemption Reserve (Net) Nil 65.00
Amount available for appropriation 299.23 633.77
Appropriations :
(i) Proposed Dividend 4.57 4.57
(ii) Tax on Proposed Dividend 0.78 0.74
(iii) Balance Carried Forward 293.88 628.46
299.23 633.77
ISSUE OF RIGHTS SHARES
After the closure of the year under report, the Company issued Rs. 6.40
Crore Equity Shares on Rights basis ("the Shares") amounting to Rs.
416.18 crores The shares of face value of Rs. 10 were issued at a premium
of Rs. 55 (aggregate issue price Rs. 65 per share).
The Issue opened for subscription on Monday, the 3rd June, 2103 and
closed on 17th June, 2013. The shares were allotted to eligible
shareholders in consultation with Bombay Stock Exchange on 27th June,
2013.
The proceeds of the issue will assist the Company begin the process of
reducing debt in its books.
Arising out of the Rights Issue, the Company''s Issued and Paid-up
Capital as on date stands at Rs. 109.77 crores. The balance in the
Securities Premium Account as on the above date stands at Rs. 352.15
crores.
The Board wishes to thank all shareholders for their unstinted support
to the Rights Issue.
DIVIDEND
The Board recommends maintaining the same rate of dividend as declared
by the shareholders in the previous year i.e. Rs. 1 per share in respect
of the year under report as well. All shareholders holding shares as on
the Record Date of 16th May, 2013 are entitled to such dividend subject
to the dividend being approved at the forthcoming Annual General
Meeting.
GENERAL REVIEW
The Company took in its stride significant operating adversities during
the year under report to record a positive Earning Before Interest,
Depreciation, Tax and other Amortisations ("EBIDTA") of Rs. 443.10
crores during the year against a negative EBIDTA of Rs. 13.92 crores in
the previous year.
Driven by a series of measured initiatives across the organisation, the
Company has been on the path of recovery from the beginning of the
calendar year 2012. These initiatives have begun to bear fruit. The
Tyre Business which recorded a negative EBIDTA of Rs. 428.08 crores in
the Financial Year 2011-12 turned around determinedly and recorded a
positive EBIDTA of Rs. 73.79 crores during the year under report.
Equally, the Rayon Business turned EBIDTA positive during the year. The
Cement Business, however, recorded a lower EBIDTA than that in the
previous year, on account of poor market conditions in the second half
of the year.
Brief commentaries on the performance of the Tyre, Cement and Rayon
Businesses are appended :
Tyre
The year under report saw the Tyre Business steadily improve
profitability. EBIDTA was at a positive Rs. 73.31 crores as compared to a
negative EBIDTA of Rs. 428.08 crores in the previous year. Net Revenue at
Rs. 3529 crores declined by approximately 8%. This decline in sales was
as much on account of depressed market conditions as on account of a
conscious decision to focus efforts on profitable product and market
segments, resulting in partial vacation of poor contribution product
segments.
The swing in EBIDTA to the extent of Rs. 501 crores during the year under
report as compared to the previous year was on account of a variety of
actions taken on the revenue front - focused at bettering the net
realisation per unit of product sold, as well as on the cost front -
through the entire value chain. These internal efforts were
supplemented by softening raw material costs.
The Business continues to have the distinction of being certified for
ISO Â 9001, TS-16949, ISO-14001, SA-8000, OSHAS- 18001 and TPM.
With operations of the Tyre Business showing continuous improvement,
the Board views the Business''s future prospects with confidence.
Cement
The production of the Cement Business during the year under report as
compared with that of the previous year was as follows :
Lakh/MT
2012-13 2011-12
Clinker 42.44 39.94
Cement 51.60 49.57
Though the year under report began positively with robust demand from
the housing and infrastructure sectors, demand began to slacken in the
Business''s command areas from the second quarter of the year. The
resulting erosion of cement prices put pressure on the Business''s
margins. Rising input costs added to this pressure. Consequently,
EBIDTA of the Business declined to Rs. 433.72 crores as against Rs. 543
crores in the previous year.
The Company''s Vasavadatta Cement plant commissioned its fifth power
plant during the year. In addition to meeting the entire power
requirements of the facility, it was able to evacuate power into the
local grid and sell to buyers in the open market.
The Cement Business continues its pioneering efforts in the field of
usage of alternate fuel. It has, at its Vasavadatta Cement facility,
installed a Hot Disc for co-incineration of materials like used tyres,
municipal wastes, industrial wastes etc. which emit useful Heat Value
of above 2500 kcal. This development will, in future, assist in
significantly reducing power costs.
The Business continued to be a recipient of several awards and
accolades during the year under report. Both its facilities received
the National Award for Mine Safety. The Business also received awards
from Confederation of Indian Industry ("CII") for energy efficiency
and water management. The Vasavadatta facility was certified
"GreenCo. Gold" under the Green Company Rating System instituted by
the CII.
The challenge before the Cement Business during the current year would
be to enhance margins for increased profitability. This goal is being
seriously pursued through modulated inputs in all sectors of the
Business.
Rayon
The Rayon Business did well during the year under report and turned
EBIDTA positive.
Efficiencies improved significantly during the year and the Business
was able to absorb increases in input costs on its way to turning
EBIDTA positive.
Although the viscose filament yarn industry in the country was impacted
by low demand in the international market and imports from China, the
Rayon Business maintained its market share by improving and further
diversifying its product range. Customer focus was further enhanced
and the emphasis on producing finer denier material proved to be
extremely rewarding.
Spun Pipes and Heavy Chemicals
Kesoram Spun Pipes and Foundries and Hindustan Heavy Chemicals
facilities continued to be under suspension of work during the year
under report.
CORPORATE SOCIAL RESPONSIBILITY
The Company is deeply conscious of its obligations to society and
strives to care for those living in the vicinity of its facilities.
Amongst the major welfare programmes undertaken during the year were :
- setting up of water purification plants for supplying potable water
to local villagers ;
- distribution of blankets in winter across all facilities to the
less privileged ;
- operating vocational training centres for training youth from the
weaker section of society in various self employment schemes. These
include computer training, needle work, stitch craft, pickle and papad
making. Such schemes are under implementation around the facilities of
the Company ;
- distribution of sewing machines to village women for promoting self
employment ;
- laying of concrete roads in adopted villages ;
- running agricultural demonstration and model Dairy Farms in
villages in close proximity to the cement manufacturing facilities ;
- setting up Animal Health Camps ;
- distribution of uniforms, text books, lunch utensils and conducting
mid day meal schemes to benefit school children from the weaker
sections of society ;
- conducting health camps for villagers ;
- renovation of schools and places of worship.
Such welfare programmes will be further intensified in the years to
come in keeping with the Company''s reputation as an entity fully
alive to its social obligations.
In the urban areas, the Tyre Business continued its close association
with the local traffic police to foster observance of road safety norms
amongst school children and young adults. The Business perceives these
efforts as a means to make urban roads safer for both vehicles and
pedestrians in the years to come.
FORFEITURE OF SHARES
The Board, during the year under report, forfeited 2,238 Equity Shares
standing in the name of 175 allottees who did not pay the Allotment
Money against the convertible portion of the Company''s 16% Secured
Partly Convertible Debentures issued in the Financial Year 1992-93
despite repeated reminders. These Shares have not been re-issued.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956 and, based upon
representations from the management, the Board, to the best of its
knowledge and belief, confirms that :
- In the preparation of the Annual Accounts, applicable Accounting
Standards have been followed and there are no material depatures ;
- It has 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 as at 31st March, 2013 and of the loss of the Company for
the Financial Year ended on that date ;
- Proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities ; and
- The Annual Accounts have been prepared on a going concern basis.
MANAGEMENT DISCUSSION AND ANALYSIS AND CORPORATE GOVERNANCE
A Management Discussion & Analysis and a Report on Corporate Governance
together with the corresponding Compliance Certificate are attached as
part of this Annual Report.
DIRECTORS
Smt. Manjushree Khaitan, a Non-executive Director, was appointed a
Whole-time Director effective 5th February, 2013 and designated
Executive Vice Chairperson.
Shri B K Birla and Shri P K Mallik retire by rotation and being
eligible, offer themselves for reappointment. AUDITORS
Price Waterhouse, Chartered Accountants, ("PW") Auditors of the
Company, retire at the forthcoming Annual General Meeting and offer
themselves for re-appointment. The Company has received the requisite
Certificate pursuant to Section 224(1B) of the Companies Act, 1956. PW
has also confirmed that it complies with the ongoing cycle of the peer
review process as required under the Regulations of The Institute of
Chartered Accountants of India.
AUDITOR''S REPORT
The Auditors have referred to what they call "deficiencies in
relation to information, technology general controls ("ITGC") for
sale of tyre" in para (iv) of the Annexure to the Auditor''s Report.
The Auditor''s comments are no longer valid as the Tyre Business has
instituted, effective 1st April, 2013, an ERP system covering the
entire gamut of its operations. Consequently, the entire range of ITGC
controls have been efficaciously built into the Business''s internal
control system.
COST AUDIT
As required under the Central Government Circular Number 15/2011 dated
11th April, 2011, the Board wishes to record that the following
Auditors were appointed to conduct Cost Audit in the Company in respect
of the year under report:
i) Mani & Co., Cost Accountants, in respect of:
a) the Balasore manufacturing facility of the Tyre Business; and
b) the Cement Business.
ii) D. Sabyasachi & Co., Cost Accountants, in respect of the Laksar
manufacturing facility of the Tyre Business; and
iii) B. Ray & Associates, Cost Accountants, in respect of the Rayon
Business.
Mani & Co., were nominated as the Lead Auditors. In that capacity, they
were responsible for the Compliance Report as envisaged under the
Companies (Cost Accounting Records) Rules, 2011. All Reports for the
Financial Year 2011-12 were completed and uploaded on the website of
the Ministry of Corporate Affairs on 30th January, 2013 as against the
extended due date of 28th February, 2013.
PARTICULARS OF EMPLOYEES
The information required under Section 217(2A) of the Companies Act,
1956 read together with the Companies (Particulars of Employees) Rules,
1975, forms a part of this Report. However, based upon the provisions
of Section 219(1)(b)(iv) of the Act, the Report and Accounts that are
being circulated to members do not include the Statement of Particulars
of Employees under Section 217(2A). Any Member interested in obtaining
a copy may write to the Company Secretary at the Registered Office and
a copy thereof will be forwarded by post.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING
AND OUTGO
A Statement containing the information, as required under the Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules,
1988, is annexed.
APPRECIATION
The Board gratefully acknowledges the understanding and support
received by the Company from its employees. It also places on record
its deep gratitude for the unstinted support the Company has received
from the Banks, Institutions, the Central Government, the various State
Governments and the local authorities during the year.
Specific acknowledgement is also made for the confidence and
understanding shown by the Members in the Company.
B. K. Birla Chairman
Manjushree Khaitan i Executive
I Vice Chairperson
K. C. Jain K. G. Maheshwari
Whole-time Director P. K. Choksey
Amitabha Ghosh
Tridib Kumar Das P. K. Mallik Directors
Chief Financial Officer Vinay Sah
K. P. Khandelwal
Place: Kolkata Gautam Ganguli
Date : 2nd July, 2013 Company Secretary
Mar 31, 2011
The Directors have pleasure in presenting the ninety-second Annual
Report and the Audited Statements of Accounts of the Company for the
year ended 31st March, 2011.
FINANCIAL RESULTS
(Rupees in Crore)
Particulars 31st March, 31st March,
2011 2010
Sales/Income from Operations 5,750.72 5,020.63
Less: Excise Duty 352.84 289.98
Net Sales 5,397.88 4,730.65
Other Income 161.62 130.72
Total Income 5,559.50 4,861.37
Gross Profit 120.24 648.30
Less:
Depreciation (Net of transfer from
Revaluation Reserve) 272.59 172.80
Provision for Income Tax -- 36.00
Provision for Fringe Benefit Tax written
back [charge/(credit)] (0.12) (0.13)
Provision for Deferred Tax [charge/
(credit)] 57.98 202.29
330.45 410.96
Net Profit/(Loss) (210.21) 237.34
Less:
Debenture Redemption Reserve/(Transfer
back) (61.25) 101.25
Surplus/ (Deficit) for the year (148.96) 136.09
Add: Opening Balance in P&L A/c. 1,126.75 1,044.04
Amount available for appropriation
which the Directors have appropriated
as under: 977.79 1,180.13
(i) Proposed Final Dividend 14.87 14.87
(ii) Tax on Proposed Final Dividend 2.41 2.47
(iii) Interim Dividend 10.29 10.29
(iv) Income Tax on the Interim Dividend 1.71 1.75
(v) General Reserve -- 24.00
(vi) Balance carried forward to next year948.51 1,126.75
977.79 1,180.13
DEFERRED TAX
In terms of the Accounting Standard on Accounting for Taxes on Income
(AS-22) a sum of Rs.57.98 crore has been debited to the Profit & Loss
Account being Deferred Tax Liability for the year under review.
TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND
In terms of Sections 205A and 205C of the Companies Act, 1956 read
together with General Circular no.22/2002 dated 23rd September, 2002
issued by the Department of Corporate Affairs, the Company deposited
about Rs. 14.92 lac, being Unclaimed Dividend and interest on Fixed
Deposits of the Company, during the year under review in the Investor
Education and Protection Fund created by the Central Government.
DIVIDEND
The Board of Directors in its meeting held on 10* November, 2010
declared an interim dividend and today has recommended the final
dividend for the year ended 31st March, 2011 on Ordinary Shares as
under:
31st March, 31st March,
2011 (Rs.) 2010 (Rs.)
Interim on 4,57,43,318
Ordinary Shares of 10,29,22,466 10,29,22,466
Rs.10 each @ Rs.2.25 per
Share (Previous year
Rs. 2.25 per Share )
Final on 4,57,43,318
Ordinary Shares of 14,86,65,784 14,86,65,784
Rs. 10 each @ Rs.3.25
per Share (Previous year
Rs. 3.25 per Share )
Because of loss in the current financial year, the Interim and Final
dividends are paid/recommended out of accumulated profits of the
Company. Thus, the total dividend of Rs 5.50 per share, as per detail
given herein above, has been paid/ recommended by the Board for the
financial year ended 31.03.2011.
AUDIT REPORT
As regards paragraphs 1 (b) and 2(a) referred to by the Auditors in
Annexures to Auditors Report, the physical verification of the fixed
assets (in phased manner) and inventories, as referred in para nos.l(b)
and 2(a) respectively at the Spun Pipes & Foundries Section of the
Company, could not be possible because of continued suspension of work
and barricade in front of the factory gate by a section of workers at
the said Section. So far as paragraph 9(b) of the said Annexure to the
Report is concerned, the same is self-explanatory and needs no further
explanation by the Board.
Regarding the paragraph 4 of the Annexure to Auditors Report, the
Company is taking necessary steps to rectify the deficiencies in
relation to information technology general control with regard to the
Tyre & Cement Sections by getting the existing programme modified to
meet the required controls.
GENERAL REVIEW
The Companys turnover has increased about 15% to Rs. 5750 crore
compared to Rs.5020 crore in previous year. The growth is mainly due to
increase in sales of Tyre Section which standalone registered a growth
of about 27% from Rs.2850 crore to Rs.3609 crore. Current year was a
tough period as the Company faced challenges, where Tyre Section went
through sharp hikes in raw material cost and Cement exhibited a
sluggish trend for most part of the year.
Cement sales have dropped about 3% due to lower cement prices industry
wide, especially in southern India. Other Sections of the Company i.e
Rayon and Chemicals have witnessed about 16% growth in turnover.
The Company could manage the overall volume growth in various business
segments, but the margins were adversely affected by sharp increase in
input and distribution costs as well as higher depreciation cost by
Rs.100 crore and higher interest cost by Rs.130 crore.
Work at Spun Pipe Section and Hindusthan Heavy Chemicals section
continues to be under suspension.
CEMENT SECTIONS Vasavadatta Cement
Operational performance of this section continues to be good and it has
achieved highest-ever production of Cement during the year. The
production figures of this Section are as under:
2010-11 2009-10
(Metric Tons) (Metric Tons)
Clinker 39,20,723 42,98,390
Cement 42,77,698 42,03,373
Increase in the production of cement, though marginal, has been
achieved despite sluggish demand conditions prevailing in the
construction sector. New capacity additions by other companies have
created a supply surplus situation, which has depressed the cement
prices. Substantial increase in the cost of coal and raw materials has
additionally increased pressure on the profit margins.
Shortage of rail wagons for movement of Cement has also hampered our
Cement production, due to which clinker stock continued to remain high.
This Industry considerably depends on railway for movement of its input
as well as finished products to long-distance market. The shortage of
wagons coupled with increase in freight charges by railway as well as
road has increased the distribution cost.
This Section has been able to withstand severe competition coupled with
depressed demand, due to its consistent quality, strong brand image and
extensive distribution network.
Captive power generation was 444.33 million kwh during the year under
review which has catered to about 97% of the total power requirement of
the section. 71.13 million kwh of power generated from the power plants
was sold to Gulbarga Electricity Supply Company Ltd., as against last
years 54.15 million kwh.
As a part of corporate social responsibility, the unit has continued to
undertake various social welfare and development activities around the
area of the unit such as Free Health Check up and Treatment Camps, Free
Eye Camps, Blood Donation Camps, Dental Camps, Pulse Polio Camps,
Fixing Street Lights, Fixing of Animal Trackers, Tree Plantation, Soil
Testing & Agriculture Camps and other social activities.
During the year, the Unit has bagged the following prizes:
a) Limestone Mines of this Section bagged two first prizes in "Drilling
& Blasting", "Operation & Maintenance of mining machines" and three
second prizes in "Overall performance", "Loading & Transportation" and
"Lighting & Electrical installation" from the Director General of Mines
Safety during Mines Safety Week Celebrations.
b) Under National Safety Awards Scheme-2009, this Section was selected
for Runners-up prize for "Lowest Injury Frequency Rate", which will be
presented by the Honble President of India.
c) Won five first prizes and three second prizes in various categories
from Indian Bureau of Mines during the Mines Environment & Mineral
Conservation Week Celebrations, Gulbarga Zone.
d) Boiler of Unit No. I Captive Thermal Power Plant of this Section has
been awarded second prize for "Safe Industrial Boiler" in the State
Level Competition conducted by Karnataka State Safety Institute &
Department of Factories & Boilers.
e) Awarded "Excellent Water Efficient Unit within the Fence" in the 7*
National Award for Excellence in Water Management 2010 Ã organised by
Indian Industries-Godrej Green Business Centre.
Apart from the above, one student of Vasavadatta Vidya Vihar has been
given "Amul Vidyashree Award" instituted by Gujarat Co-operative Milk
Marketing Federation Ltd., for excellence in CBSE examination and also
16 Scouts and Guides have been awarded the coveted Rajya Puraskar
Award for the fourth consecutive year by the Honble Governor of
Karnataka.
Industrial relations during the year were cordial.
Kesoram Cement
Production figures of this Section are as under:
2010-11 2009-10
(Metric Tons) (Metric Tons)
Clinker 8,93,920 11,61,200
Cement 11,50,486 13,78,833
Production of Clinker, Cement and Cement despatches were adversely
affected mainly due to longer stoppage of one Kiln for replacement of
existing 1978 model Cooler with LNV Cooler and replacement of cracked
tiers of both the Kilns. In addition, the political agitations in the
area further suppressed the Cement demand in the region.
Cement prices fluctuated in the market due to demand supply mismatch
and also substantial increase in the cost of raw materials, coal, power
and other inputs. Due to these reasons the performance of this Section
got adversely affected.
Captive Thermal Power Plant of this Section generated 106.59 million
kwh of Power, out of which 3.3 million kwh were supplied to APTRANSCO
during shutdown. About 89% of the power requirement of the Cement Plant
is met from the Captive generation and balance Power was purchased from
APTRANSCO. This Section is considering feasibility of power generation
by Waste Heat Recovery System which will give considerable advantage in
cost of power generation.
The suit challenging the validity of imposition of Electricity Duty on
captive power generation @ 25 paise per Unit from 17.07.2003 by the
Government of Andhra Pradesh is still pending before the Honble High
Court of Andhra Pradesh.
This Section bagged National Award for Mines Safety for the year 2008
from Ministry of Labour & Employment, Director General of Mines Safety,
Government of India, which will be presented shortly by the Honble
President of India.
Basantnagar Limestone Mines of this Section bagged first prize for "
Environment & Health Management" and two second prizes for "Heavy Earth
Moving Machinery" and "Publicity, Propaganda & Innovations" from
Director General of Mines Safety during Mines Safety Week Celebrations.
The said Mines also got first prize for "Waste Dump Management" and two
second prizes for "Sub-Grade Mineral" and "Overall Performance State
Level" from Indian Bureau of Mines during the Mines Environment &
Mineral Conservation Week celebrations.
As part of corporate social responsibility, the Section is continuing
the rural and community development activities in nearby villages,
running of Agricultural Demonstration Farm, Model Dairy Farm,
Vocational Training Centre for Youth and participating in other social
welfare activities such as Pulse Polio Programme, Health Camps,
Farmers Training, Animal Health Camps, Distribution of Agriculture
Implements to poor farmers and Tricycles & Telephone Booths to
Handicapped, etc.
Industrial relations were cordial during the year.
BIRLA TYRES SECTIONS
The gross turnover of this Section for the year increased about 27% to
Rs. 3,609 crores from Rs. 2,850 crores last year. The export sales for
the year under review amounted to Rs. 320 crore as against Rs. 361
crore in the previous year.
Though the Section has recorded commendable sales growth but due to
sharp increase in raw material prices particularly of natural rubber,
profitability has been adversely affected.
At Haridwar Plant the operations were suspended for six days due to
unprecedented floods and the profitability was further impacted due to
18 days lock-out at Balasore Plant.
Capacity expansion to increase the production of Truck/Bus Radial tyres
by 85 MT/day at Haridwar (capital ouday: Rs. 350 crores) and Passenger
Car Radial tyres by 80 MT/day at Balasore (Capital outlay: Rs. 450
crores) will be completed by 2nd quarter of 2011-12.
The Section continues to have the distinction of being certified for
ISO-9001, TS-16949, ISO-14001, SA-8000, OSHAS- 18001 andTPM.
Relations with employees have been cordial and conducive to growth.
RAYON & TRANSPARENT PAPER SECTIONS
The year started with the VFY (Viscose Filament Yarn) demand displaying
signs of weakening with the inventory built up. The weakness reversed
during the 2nd Quarter due to increase in prices of other competing
fibres. Also the VFY production cost in China increased due to limited
availability of Cotton Linter Pulp and Rayon Grade Wood Pulp. Thus the
cost of VFY imports also increased. This helped in improved sentiments
for VFY in indigenous market leading to higher realisations and
reduction in inventory level. The exports also increased substantially
from 612 M.T to 895 M.T during the year.
Production of T.P. (Transparent Paper) was marginally higher due to
improved demand from the Fireworks industry which is the main
consuming sector of this product. The exports were 332 M.T. against 293
M.T. of last year.
Chemical business was some how satisfactory. Steep rise in the price of
Sulphur, Power and Charcoal will now affect the cost of production
severely. This will put pressure on realisation which may result in
slackness in demand.
Owing to unprecedented increase in Pulp & Sulphur prices during the
year under review, the operating margins of the Section suffered. Also
due to global shortage of Cotton Linter Pulp, the price of Rayon Grade
Wood Pulp is showing strong trend of increase which coupled with recent
abnormal increase in coal price may affect the profit of the Section
adversely during the coming year. The sale prices of VFY & T.P. are
almost at saturation level and further increase, if any, may spur
substitution and subsequent fall in demand.
The technical performance of the Unit was satisfactory and relations
with the employees were cordial during the year.
SPUN PIPES SECTION
Factory is under Suspension of Work on and from 2nd May 2008 because of
day-to-day low production, quality problems and high rejections
attributable to workmen. Several Bipartite and Tripartite meetings were
held during the year. But, due to continued hostile attitude and rigid
stand taken by a section of the workmen and their unions, the efforts
made to reach a settlement were not successful. The blockade and
barricade in front of the factory gate is still continuing. Finished
goods and other material lying inside the factory could not be removed.
HINDUSTHAN HEAVY CHEMICALS SECTION
The Production figures of the Section were as under:-
Products 2010-11 2009-10
Caustic Soda 5,354 MT 11,663 MT
Sulphuric Acid 13,912 MT 19,061 MT
Hydrogen Gas 3,98,446 M3 7,53,453 M3
Production was adversely affected due to restrictions imposed by
Pollution Control Board on operation of Caustic Chlorine Plant during
July, 2010 and a fire in Rectifier-Transformer during August, 2010.
Presently, the Unit is under Suspension of Work with effect from 8th
December 2010 consequent upon an illegal strike by a section of
contract workers from 1st December, 2010.
EXCISE DUTY
During the year under review a sum of Rs. 352.84 crores (Rs. 289.98
crores in 2009-10) was paid on account of Excise Duty on various
products manufactured and sold by your Company.
INSURANCE
Appropriate Insurance cover has been taken for the properties of the
Company.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
to the best of their knowledge and belief confirm that:
i. in the preparation of the Annual Accounts, the applicable
Accounting Standards have been followed by the Company;
ii. appropriate Accounting Policies, as mentioned in Schedule 17, have
been selected and applied consistently and such judgements and
estimates have been made that are reasonable and prudent so as to give
a true and fair view of the state of affairs of the Company as at 31st
March, 2011 and of the profit of the Company for the financial year
ended on that date;
iii. proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities; and
iv. the annual accounts have been prepared on a going concern basis.
CORPORATE GOVERNANCE
Adequate steps to ensure compliance of all the mandatory provisions of
Corporate Governance as amended in the Listing Agreements of the
Stock Exchanges with which the Companys Shares are listed have been
taken and your Company has ensured its required compliance.
A separate Report each on Corporate Governance and Management
Discussion & Analysis are annexed hereto as Annexure A along with
Auditors Certificate for its due compliance and Annexure B
respectively as part of Annual Report.
DIRECTORS
Shri G. B. Pande, Nominee Director of Life Insurance Corporation of
India on the Board of the Company, resigned with effect from 10th
February, 2011.The Board placed on record, its appreciation for his
valuable contribution made to the Company during his tenure as a
Director.
Shri Deepak Tandon, Whole-time Director, also resigned from the Board
with effect from 15* April, 2011.
Shri K. C. Jain was appointed as Whole-time Director by the Board in
place of Shri Tandon, effective 15.04.2011.
Shri P K Choksey and Shri Amitabha Ghosh, Directors of your Company,
retire from the Board by rotation but are eligible for re-election.
AUDITORS
The Company has received a requisite certificate pursuant to Sec. 224
(IB) of the Companies Act, 1956 and a confirmation that Price
Waterhouse, the Auditors of your Company, is complying with ongoing
cycle of peer review process as required by the Statement on Peer
Review issued by the The Institute of Chartered Accountants of India
(ICAI) together with a copy of the peer review certificate dated 21st
September, 2010 issued by the Peer Review Board of ICAI regarding
their eligibility for re-appointment as Auditors, who retire at the
ensuing Annual General Meeting and we recommend their re-appointment.
COST AUDITORS
The Company has appointed qualified Cost Auditors, in terms of the
directives of the Central Government under Section 233B of the
Companies Act, 1956, to conduct cost audits of the products
manufactured by the Company.
PARTICULARS OF EMPLOYEES
The particulars as required under section 217(2A) of the Companies Act,
1956 read with the Companies (Particulars of Employees) Rules, 1975
form part of this Report and the same is enclosed as Annexure C.
CASH FLOW ANALYSIS
The Cash Flow Statement for the year under reference in terms oã Clause
32 of the Listing agreement with the Stock exchanges is annexed hereto.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO
A Statement containing necessary information, as required under the
Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988, is annexed hereto as Annexure D
APPRECIATION
We wish to acknowledge the understanding, support and the services of
the sincere workers, staff and executives of the Company, which have
largely contributed to the efficient operations and management of the
Company. Your Directors also wish to place on record the valuable
co-operation and support received from the Financial Institutions,
Banks, the Government of India, the State Governments and the local
authorities concerned.
We would also like to express sincere thanks to our Shareholders and
Debenture holders for their confidence and understanding.
B. K. Birla Chairman
K. G. Maheshwari
B. P. Bajoria
P. K. Choksey
Directors
Amitabha Ghosh
S. K. Patodia K. C. Jain P. K. Mallik
Secretary Whole-time
Director Manjushree Khaitan
Kolkata,
28th April, 2011
Mar 31, 2010
The Directors have pleasure in presenting the ninety-first Annual
Report and the Audited Statements of Accounts of the Company for
the year ended 31st March, 2010.
FINANCIAL RESULTS (Rupees in Crore)
Particulars 31- March, 31th Match,
2010 2009
Net Sales/Income from Operations
(including Excise Ditty) 5,020,63 4,292,07
Other Income 125.07 75.94
Total Income 5.145.70 4,368.01
Gross Profit 648.30 520.97
Less:
Depreciation
(Net of transfer from Revaluation Reserve) 172.80 111.86
Provision for Income Tax 35.00 45.00
Provision for Fringe Benefit Tax [charge/(credit)] (0.13) 2.00
Provision for Deferred Tax [charge/(credit)] 202.29 (16.63)
410.96 142,23
Net Profit 237.34 378.74
Less:
Debenture Redemption Reserve 101.25 25.00
Amount available for appropriation
which the Directors have appropriated as under: 136.09 353.74
(i) Proposed Final Dividend 14 87 14.87
(ii) Tax on Proposed Final Dividend 2.47 2.53
(Hi) Interim Dividend 10.29 10.29
(iv) Income Tax on the Interim Dividend 1.75 1.75
(v) General Reserve 24.00 44.78
(vi) Balance carried forward to next year 82.71 279.52
136.09 353.74
DEFERRED TAX
In terms of the Accounting Standard on Accounting for Taxes on Income
(AS-22) a sum of Rs.202.29 crore has been debited to the Profit & Loss
Account being Deferred Tax Liability for the year under review.
TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND
In terms of sections 205A and 205C of the Companies Act, 1956 read
together with General Circular no. 22/2002 dated 23rd September, 2002
issued by the Department of Corporate Affairs, the Company deposited
about Rs. 13.26 Lac, being Unclaimed Dividend and interest on Fixed
Deposits of the Company as welt as that of an earlier merged Company,
during the year under review in the Investor Education and Protection
Fund created by the Central Government.
DIVIDEND
The Board of Directors in its meeting held on 30th October, 2009
declared an interim dividend and today has recommended the final
dividend for the year ended 31st March, 2010 on Ordinary Shares as
under:
31st March, 31st March,
2010(Rs.) 2009(Rs.)
Interim on 4,57,43,318 Ordinary Shares of
Rs.10/-each @ Rs.2.25 per Share 10.29,22,406 10,20,22,406
(Previous year 2.25 per Share)
Final on 4,57,43,31.8 Ordinary Shares of
Rs.10/-each @ Rs. 3.25 per Share 14,86,65.784 14,86,65,784
(Previous year Rs.3.25 per Share)
Thus, the total dividend of Rs.5.50 per share, as per detail given
herein above, has been paid / recommended by the Board for the
financial year ended 31.03.2010.
AUDIT REPORT
As regards paragraphs 3.1 (b) and 3.2(a) referred to by the Auditors in
its Report, the physical verification of the fixed assets (in phased
manner) and inventories as referred in para nos. 3.1(b) and 3.2(a)
respectively at the Spun Pipes & Foundries Section of the Company,
could not be carried out due to continued suspension of work and
barricade in front of the factory gate by a section of workers at the
said Section. So far as paragraphs 3.9(b) and 3.16 of the report are
concerned, the same are self-explanatory and need no further
explanation.
Regarding the paragraph 3.19 of the Report, the neccessary security or
charge pending to be created in respect of Short-term Debentures with
be created within the stipulated time provided by law if not redeemed
before. Further, the immovable properties of Birla Tyres a Section of
the Company at Uttarakhand, could not be created due to continuing
verification of search report of the said properties by the empanelled
lawyer of the Lead Banker, State Bank of India. The Short-term
Debentures issued during the year were redeemed before the security
could have been created within the stipulated period provided by law.
Further, paragraph 4(f) referred to by the Auditors in its Report is
self-explanatory and requires no explanation.
GENERAL REVIEW
During the year under review our turnover for the first time crossed
Rs.5,000 Crore. This has been primarily due to the increase in sales of
Tyre Section from Birla Tyres Unit-ll at Laksar, Haridwar. Birla Tyres
Unit-Ill and Unit-IV related to Truck / Bus Radial and Motor Cycle /
LCV tyres started Commercial Production in March, 2010 and October,
2009 respectively. Capacity at Vasavadatta Cement was also increased
which started Commercial Production in August, 2009.
The total benefit in top line and bottom line for all these expansions
will get reflected in the coming year.
The profitability of the Company during the year has also increased due
to good results of Cement Sections and enhanced capacity of Tyre
Sections besides good treasury management and cost control effected
throughout the Company. Rayon Section also showed higher profitability
due to strong domestic demand.
Work at Spun Pipe Section continues to be under suspension.
CEMENT SECTIONS
Vasavadatta Cement
Your Directors are pleased to report that the expansion undertaken at
this section by setting up the 4th Unit comprising of Cement capacity
of 1.65 million ton per annum and thermal power plant of 17.5 MW has
been completed. After completion of trial run, commercial production of
Cement has started from 7lh August, 2009.
Operational performance of this section continues to be good and it has
achieved highest ever production of Clinker as well as Cement during
the year. Production figures of this section given hereunder include
1;29,300 metric ton of clinker and 76,610 metric ton of cement produced
during trial run of the 4th Unit:
Production 2009-10 2008-09
(Metric Ton) (Metric Ton)
Clinker 42,98,390 34,41,496
Cement 42,03,373 39,24,589
Cement dispatches were adversely affected due to non-availability of
adequate wagons and as a result clinker to the extent of 4,52,045
metric ton was sold during the year.
The Section has achieved higher production despite several challenges
such as substantial build-up of new capacity by other companies in the
industry, lack of corresponding pickup in demand, shortage of rail
wagons for movement of cement, coal and raw materials and
unsatisfactory coal availability position in absence of adequate coal
linkage arrangements. However, quality of its products, established
brand image and proper logistic management have enabled the section to
achieve good performance in a year characterized by continued slowdown
in the construction sector and weak monsoon. Due to surplus capacity,
cement prices were not able to keep pace with rising costs for major
part of the year resulting in pressure on margins. Stimulus measures
undertaken by the Government, particularly reduction in excise duty,
encouragement to infrastructure development and improving liquidity in
the economy have however, helped to maintain the growth momentum.
Captive power generation was 445.07 million KWH during the year under
review as against 336.12 million KWH during the previous year. Captive
power generation catered to about 98% of the total power requirement of
the section. 54.15 million KWH being 12.17% of the power generated from
the power plants was sold to Gulbarga Electricity Supply Company Ltd.
The unit is also exploring the possibilities of power generation from
Waste Heat Recovery System which Further, the Company is also exploring
possibilities of further expansion or a Green field unit in nearby
area.
As a part of corporate social responsibility, the unit has undertaken
various social welfare and community development activities such as
construction of water tank and childrens park, plantation of trees,
water conservation, health camps, distribution of agricultural
implements to the villagers, vocational training and stall development
activities, etc. in its surrounding areas.
In the year 2009-10, the Section received two prizes in the Mines
Safety Week under the aegis of DGMS - Drilling & Blasting First
Prize and Method of Working 2nd Prize. Also in the various
Safety Day 2010 (GRISD) celebration, our employees bagged various
prizes.
Apart from the above, seven Scout & Guide students of our School -
Vasavadatta Vidya Vihar have won recently, the coveted Award of
Rashtrapati Puraskar.
Industrial relations with the employees were good during the year.
Kesoram Cement
Production figures of mis Section are as under:
Production 2009-10 2008-09
(Metric Ton) (Metric Ton)
Clinker 11,61,200 10,97,175
Cement 13,78,833 15,11,615
This Section also has achieved highest ever production of Clinker.
However, Cement production and dispatches were adversely affected due
to Telangana agitation and paucity of Railway wagons for movement of
cement. Consequently, the Section had to sell 55,024 metric ton of
clinker. There was substantial capacity expansion also in Andhra
Pradesh, which had put pressure on sales realizations and profitability
of the Section. However, from the month of March 2010, cement prices
are improving and are expected to improve further in coming months.
The unit has built-up an excellent brand image of its blended cement
"BIRLA SHAKTI" and was able to market about 81% of its total output in
PPC cement segment.
There has been substantial increase in cost of raw materials and coal.
However, Management has taken various control measures to keep the cost
of cement under control.
Captive Thermal Power Plant of this Section generated 113.29 million
KWH of power, out of which 0.03 million KWH were supplied to APTRANSCO.
In this Section, about 82% of the power requirement of the cement plant
is met from the Captive generation and balance power was purchased from
APTRANSCO. Captive Power Plant plays a vital role in improving the cost
competitiveness and providing quality power to the Section. In view of
this, the Section is considering the feasibility of power generation by
Waste Heat Recovery System.
The suit challenging the vafidity of imposition of Electricity Duty on
captive power generation @ 25 paise per Unit from 17.07.2003 by the
Government of Andhra Pradesh is still pending before the Honble High
Court of Andhra Pradesh.
The Section bagged the FAPCCI (Federation of Andhra Pradesh Chambers of
Commerce & Industry) Award of EXCELLENCE IN WORKERS WELFARE for the
year 2008-09, which was presented by the Honble Chief Minister of
Andhra Pradesh SriK. Rosaiah on 5th April 2010.
Basantoagar Limestone Mines of this Section bagged two 1st prizes for
"Environmental & Health Management" and "Maintenance and Operation of
Heavy Earth Moving Equipments" and 2nd prize for "Drilling and
Blasting" from the Director General of Mines Safety, Hyderabad during
the Mines Safety Week celebrations.
As a part of corporate social responsibility, the Section is continuing
the rural and community development and welfare activities in nearby
villages by running of Agricultural Demonstration Farm, Model Dairy
Farm, Vocational Training Centre for Youth, Distribution of
agricultural implements, Sewing Machines, Tri-cycles for physically
challenged people, Animal Health Camps, Blood Donation Camps, Pulse
Polio Programs and promotion of Self Help Groups of women for their
economic development etc.
Industrial relations were cordial during the year.
BIRLA TYRES SECTIONS
The gross turnover of the Section this year hasbeen Rs.2,849.62 Crore
as compared to Rs.1,947.23 crore showirtgan increase of about 46.34%
compared to last year. In spite of stiff competition, we have been able
to increase our market share from 15% to 18%. The export sales for the
year under review amounted to Rs 361.48 crore as against Rs 240.41
crore in the previous year.
Though the Section has recorded commendable sales growth but due to
sharp increase in raw material prices particularly of rubber in quarter
III and quarter IV, profitability has been adversely affected.
The Companys woridélass Green field facility for production of Motor
Cycle/LCV and Truck/ Bus Radial tyres started commercial production in
October, 2009 and March, 2010 respectively.
The board has approved further expansion of capacity to produce
Truck/Bus Radial tyres by 85 MT/day at Haridwar and for Passenger Car
Radial tyres of 80 MT/day at Balasore involving capital outlay of Rs.
350 Crore and Rs. 450 Crore respectively. The civil construction for
the above expansions is in Ml swing and orter for the major productions
in both the projects are likely to commence by March, 2011.
The Section continues to have the distinction of being certified for
ISO-9001, TS-16949, ISO-14001, SA-8000, OSHAS-18001 and TPM.
Relations with employees have been cordial and conducive to growth
during the year.
RAYON & TRANSPARENT PAPER SECTIONS
Amidst challenging environment, performance of VFY (Viscose Filament
Yarn) business is satisfactory. Strong domestic demand and higher
penetration in export market led to substantial growth in volumes,
coupled with reduction in the cost of all the major raw materials -
pulp and sulphur, the Sections operating margin improved in spite of
the steep hike in coal & electricity costs. Margins in future, are
likely to decline from Current level due to upward trend in pulp and
sulphur prices. Export demands are also likely to be impacted due to
stiff competition from China and the imposition of Anti-dumping duty by
the Government has not been of much help in arresting cheap imports in
the country. The exports were 612 M.T. against 521 M.T. of previous
year.
The T.P (Transparent Paper) business continues with unfavourable market
environment resulting into poor realization mainly due to competition
with cheaper imports & substitutes. As a result of the above, again the
production capacity of this Section could not be fully utilized. The
exports were 293 M.T. against 306 M.T. of previous year. The recent
hike in the rate of Excise Duty will further impact the demand and
profitability of this product.
The performance of Sections chemical business was satisfactory despite
the prevailing global economic conditions and cheap imports.
Relations with the employees were cordial during the year.
SPUN PIPES SECTION
The factory of this Section continues to be under suspension of work on
and from 2th May, 2008. The blockade and barricade in front of the
factory gate is continuing, as a result finished goods and other
material tying inside the factory could not be removed. All finished
goods outside the factory have been sold.
During the year Rs 4.53 crore were recovered against old outstanding
while sale was of Rs.0.35 crore only.
HINDUSTHAN HEAVY CHEMICALS SECTION
The production figures of the Section were as under:
Production 2009-10 2008-09
Caustic Soda Lye 11,663 MT 11,737 M.T.
Sulphuric Acid 19,061 MT 19,139 M.T.
Hydrogen Gas 7,53,453 M3 8,18,882 M3
Demand for Caustic Soda was subdued during the year due to slow down in
Aluminium sector. However, there was improvement in demand for joint
products - Chlorine and Hydrochloric Acid - towards the end of the
year. Production of Caustic Soda was affected due to frequent
breakdowns and power trippings. Production of Hydrogen Gas was lower
due to lesser demand from Vanaspati Industry in the first half of the
year but improved considerably towards end of the year.
The Section continues to enjoy certificates for Quality and Environment
management under ISO-9001-2000 and ISO-14001-2004.
The Section takes various measures on its own and also in collaboration
with various government agencies for improving awareness of environment
and safety.
Relations with employees continue to be cordial.
EXCLSE DUTY
During the year under review a sum of Rs289.98 crore (Rs 414.35 crore
in 2008-09) was paid on account of Excise Duty on various products
manufactured and sold by your Company.
INSURANCE
Appropriate Insurance cover has been taken for the properties of the
Company.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
to the best of their knowledge and belief confirm that:
i) in the preparation of the Annual Accounts, the applicable Accounting
Standards have been followed by the Company;
ii) appropriate Accounting Policies, as mentioned in Schedule 17, have
been selected and applied consistently and such judgments and estimates
have been made that are reasonable and prudent so as to give a true and
fair view of the state of affairs of the Company as at 31ST March, 2010
and of the profit of the Company for the financial year ended on that
date;
iii) proper and. sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the.
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities; and
iv) the annual accounts have been prepared on a going concern basis.
CORRORATE GOVERNANCE
Adequate steps to ensure compliance of all the mandatory provisions of
Corporate Governance as amended in the Listing Agreements of the
Stock Exchanges with which the Companys Shares are listed have been
taken and your Company has ensured its required compliance.
A separate Report each on Corporate Governance and Management
Discussion & Analysis is annexed hereto as Annexure A along with
Auditors Certificate for its due compliance and Annexure B
respectively as part of Annual Report.
DIRECTORS
On 31st December, 2009 Shri S K Parik, Sr. President (Account, Finance
& Taxation) and Secretary resigned from the services and also from the
Board on 31st March, 2010 after more than 55 years of service to the
Company in various capacities. Your Directors wish to place on record
their appreciation for the services rendered by Shri Parik during his
tenure as a Senior Executive as well as Director of the Company.
Shri K.G. Maheshwari and Shri G.B. Pande, Directors of your Company,
retire from the Board by rotation but are eligible for re-election.
AUDITORS
The Company has received a requisite certificate pursuant to Sec.224
(1B) of the Companies Act, 1956 and a confirmation that Price
Waterhouse, the Auditors of your Company, is complying with ongoing
cycle of peer review process as required by the Statement on Peer
Review issued by The Institute of Chartered Accountants of India
(ICAI) together with a copy of the peer review certificate dated
30.8.2006 issued by the Peer Review Board of ICAI regarding their
eligibility for re-appointment as Auditors, who retire at the ensuing
Annual General Meeting and we recommend their re-appointment.
COST AUDITORS
The Company has appointed qualified Cost Auditors, in terms of the
directives of the Central Government under section 233B of the
Companies Act, 1956, to conduct cost audits of the various products
manufactured by the Company.
PARTICULARS OF EMPLOYEES
The particulars as required under section 217(2A) of the Companies Act,
1956 read with the Companies (Particulars of Employees) Rules, 1975
forms part of this Report and the same is enclosed as Annexure C
CASH FLOW ANALYSIS
The Cash Flow Statement for the year under reference in terms of clause
32 of the Listing agreement with the Stock exchanges is annexed hereto.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO.
A Statement containing necessary information, as required under the
Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988, is annexed hereto as Annexure D.
APPRECIATION
We wish to acknowledge the understanding, support and the services of
the sincere workers, staff and executives of the Company, which have
largely contributed to the efficient operations & management of the
Company. Your Directors also wish to place on record the valuable
co-operation & support received from the Financial Institutions, Banks,
the Government of India, the State Governments and the concerned local
authorities.
We would also like to express sincere thanks to our Shareholders and
Debenture holders for their confidence and understanding.
B. K. BIRLA Chairman
K.G. MAHESHWARI Directors
B. P. BAJORIA
P.K.CHOKSEY
G.B. PANDE
AMITABHA GHOSH
Kolkata, S.K.PATODIA DEEPAK TANDON P.K.MALLIK
28th April, 2010. Secretary mole-time Director MANJUSHREE KHAITAN
Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article