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Directors Report of Shree Cements Ltd.

Jun 30, 2015

Dear Members

It is with pleasure that we present our report together with Management Discussion and Analysis for the year ended on 30th June, 2015.

1. FINANCIAL PERFORMANCE

A brief of financial performance for the year gone by and its comparison with previous year is given below: -

(Rs. in crore)

Particulars Standalone

2014-15 2013-14

Revenue from Operations 6,453.57 5,887.31

Profit Before Interest, Depreciation and Taxes 1,481.70 1,574.76

Profit Before Tax 400.83 815.15

Tax Expense (25.50) 27.91

Profit After Tax 426.33 787.24

Balance brought forward from previous year 867.04 1,114.28

Profit available for appropriation 1,293.37 1,901.52

Appropriations

Interim Dividend 34.84 76.65

Tax on Interim Dividend 5.92 13.03

Proposed Final Dividend 48.77 -

Tax on Final Dividend 9.93 -

Transferred to General Reserve 500.00 550.00

Transferred to Special Reserve - 394.80

Net Surplus 693.91 867.04

Consolidated

Particulars 2014-15 2013-14

6,453.57 5,887.31

Revenue from Operations 1,481.67 1,574.73 Profit Before Interest, Depreciation and Taxes 400.80 815.12

Profit Before Tax (25.50) 27.91

Tax Expense 426.30 787.21

Profit After Tax 866.98 1,114.25

Balance brought forward from previous year 1,293.28 1,901.46

Profit available for appropriation

Appropriations 34.84 76.65

Interim Dividend 5.92 13.03

Tax on Interim Dividend 48.77 -

Proposed Final Dividend 9.93 -

Tax on Final Dividend 500.00 550.00

Transferred to General Reserve - 394.80

Transferred to Special Reserve 693.82 866.98

Net Surplus

2. DIVIDEND

The Directors are pleased to recommend a final dividend @ Rs. 14/- per share for the financial year 2014-15. Taking the Interim Dividend of Rs. 10 per share, the total dividend payment for the year 2014-15 works out to C 24 per share as against C 22 per share for the year 2013-14. The total outgo on dividend payment for the year 2014-15 amounts to C 99.46 crore including dividend distribution tax of C 15.85 crore as against C 89.68 crore including dividend distribution tax of C 13.03 crore for year 2013-14.

4. STATE OF THE COMPANY AFFAIRS

Brief summary of the Company's performance is as under:

Particulars Unit 2014-15 2013-14 /-%

Cement Production Lac Tons 159.22 142.22 12.0

Cement & Clinker Sale Lac Tons 161.62 142.52 13.4

Power Generation Million Units 2,987 2,910 2.6

Power Sale Million Units 1,885 1,860 1.3

Revenues

* Cement Rs. Crore 5,747.24 5,244.39 9.6

* Power Rs. Crore 706.33 642.92 9.9

* Total D Crore 6,453.57 5,887.31 9.6

Operating profit

* Cement C Crore 1,368.55 1,509.01 (9.3)

* Power C Crore 1 13.15 65.75 72.1

* Total D Crore 1,481.70 1,574.76 (5.9)

EBIDTA Margin to Revenue % 22.96 26.75 (14.0)

Net Profit Rs. Crore 426.33 787.24 (45.8)

Cement Business

Company registered growth of 13.4% in its sales volume mainly because of entry into new market of Bihar as well as additional volume garnered in the North India market. The overall cement demand growth however remained subdued resulting in a drop in cement realisation by 3%. Consequently, EBITDA from the cement business fell by 9% during the year to Rs. 1,368.55 crore against Rs. 1,509.01 crore during the previous year.

On the cost front, Company has been able to contain its costs through rationalisation and optimisation efforts across its operations and thereby achieving better efficiency to continuously maintain its competitiveness.

* Raw Materials costs have gone up 12% during the year. One of the reasons for the rise was increase in royalty on limestone from Rs. 63 to Rs. 80 per ton. Company was able to however control the cost of Fly ash, another key raw material, through optimal procurement. The cost of Gypsum was up driven by an increase in the prices of the Mineral Gypsum. Further, Company procured part of the clinker requirement for its Bihar unit from market, considering overall cost optimisation, cost whereof was added in Raw Materials. Also, it has started procuring Granulated Blast Furnace Slag (GBFS) for producing Slag Cement in Bihar, which though adds up to Raw material cost, brings in overall savings in clinker requirement.

* Power & Fuel costs were up marginally by 2% mainly because of higher fuel prices during the year. Sustained efforts on energy conservation helped bring down Power consumption from 75.2 units to 73.8 units. Similarly, there was improvement in the ratio of fuel consumption to clinker production.

* Logistics costs went up by 5% during the year. This was mainly because of long distance involved in clinker transfer to its Bihar unit. The situation will correct with commissioning of its clinker unit in Chhattisgarh.

Power Business

The aggregate net power generation from all the power plants during the year was 2,987 million units as against 2,910 million units during the previous year. Dwindling power purchases by utilities owing to poor financials and increased availability due to addition of new power generation capacities in the market has led to fall in prices in the short term bilateral market as well as on the Exchange platform thereby making selling power difficult. Despite the tough market conditions, Company marginally improved its power sales which stood at 1,885 million units as against 1,860 million units in the previous year. The power sale revenues were, however, up by 9% during the year from C640 crore to C700 crore.

Company also has its power trading division which carries out trading activities for other parties as well. Total income from power trading activities was Rs. 6.65 crore during the year as against Rs. 3.18 crore in previous year.

New Projects

The Company has been rapidly expanding its capacity and stepping up its market share in the highly competitive cement business. It has added 6.10 million ton capacity during the year and its total cement capacity stands at 23.60 MTPA as of 30th June, 2015. Following capacity additions were made during 2014-15: -

(a) Integrated unit of 2.6 million ton at Balodabazar, near Raipur, Chhattisgarh.

(b) Cement Grinding Unit "Ras New Cement Unit- phase II" of 2.0 million ton at Ras in Rajasthan.

(c) Acquisition of a 1.5 million ton cement grinding unit at Panipat from Jaiprakash Associates Ltd. which was the first inorganic expansion of cement capacity for the Company. After taking over the possession of this unit, the Company has started setting up new solid waste management facility at this unit. This facility is expected to be commissioned by February, 2016. Necessary approvals have been taken from authorities.

Company is in advanced stage of completing the 2.0 million ton cement unit at Bulandshahr in UP. Company has also decided to undertake expansion of its Bihar Grinding Unit by increasing its capacity from current 2.0 MTPA to 3.6 MTPA.

5. RISK MANAGEMENT

Company has implemented a risk management framework aimed at timely identification and assessment of risks and implementing mitigation measures. These risks are continuously reviewed to ensure their relevance and to also identify existence of any new risks.

The Board of Directors of the Company has formed a Risk Management Committee to monitor the risk management plan for the Company and ensuring its effectiveness. The key risks identified by the Company and their mitigation measures are as under:

a) Demand slowdown and Supply Overhang in the

Industry - The slackness in demand growth and supply overhand due to continual capacity addition pose risk of under-utilisation of cement capacities and fall in prices to un-remunerative levels. Company has adopted measures like multi-brand strategy, expanding market base, faster delivery to consumers and consistent quality to contain the risk. As also it keeps adding capacity in markets where demand-supply conditions are considered to be relatively favourable. Its new cement plant in Bihar has already helped it garner market share in Eastern India. The recently commissioned new cement plant in Chhattisgarh will further help it to quickly gain extra market share. The acquisition of Panipat unit in Haryana and upcoming new plant in Bulandshahr, UP will enable the Company to stepup its market share in North India market. All these measures will continue to help the Company in increasing its market share and better capacity utilisation rates.

b) Fuel cost - Company sources fuel from open market and hence is exposed to volatility in international prices of coal. Company has deployed multi-fuel usage strategy as well as best technology which allows it to use different fuels and use the most economical fuel among a basket of different fuels as per prevailing trends in the market. Also the Company has been continually working on optimising its transportation cost of fuel. Additionally, Company has invested in Waste Heat Recovery Power Plants which have reduced its fuel requirement and thereby cushioned it from fuel price volatility to that extent.

c) Limestone resource - Limestone is a key input in cement production and any risk to its availability can severely affect the operations. Company has adequate limestone deposits at its existing operational sites as well as new project sites to support existing as well as future expansion. Company is also acquiring additional areas in the vicinity of these sites to augment its limestone reserves. Company is also continuously looking out for newer limestone reserves and undertaking exploratory activities at various places.

d) Power prices - Company's power business model which entails selling of power on short term basis exposes it to price volatility in this segment which has been showing downward trend. Company manages this challenge through active monitoring of demand and supply movements of various states, tracking power procurement plans of buyers and other developments in power business.

6. INTERNAL CONTROLS SYSTEM AND THEIR ADEQUACY

In order to ensure orderly and efficient conduct of business, Company has put in place necessary internal control systems considering its business requirements, scale of operations, geographical spread and applicable statues. The systems include policies and procedures, IT systems, delegation of authority, segregation of duties, internal audit and review framework etc.

Company has designed the necessary internal financial controls and systems with regard to adherence to Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, accuracy and completeness of the accounting records and the timely preparation of reliable financial information. Company has documented Standard Operating Procedures (SOPs) for procurement, human resources, sales and marketing, logistics, finance and treasury, financial reporting, compliances and other areas of operations.

The compliance to these controls and systems including SOPs is periodically reviewed by the Internal Audit function and exceptions are reported. Company has engaged services of a professional Chartered Accountancy firm to carry out internal audit of the Company. It also has in-house Internal Audit department manned by qualified professionals to carry out audit activities. All material audit observations and follow- up actions thereon are reported to the Audit Committee for its review. The Committee holds regular discussions with the auditors to ensure adequacy and effectiveness of the internal control systems and monitors implementation of audit recommendations.

7. HUMAN RESOURCES / INDUSTRIAL RELATIONS

Developing and retaining talented leaders is integral to achievement of business objectives. Company has nurtured dedicated and talented people which it considers as its foremost stakeholders. Company continuously focus on people related programmes aimed at attracting, developing and retaining talent within organisation.

a) Employee Engagement - Company enjoys high engagement levels from its employees which is reflected in its consistently improving performance. Company continuously aims to enhance the engagement levels of its people by ensuring that its business practices are in alignment with the holistic growth and development of its people which drives them to be actively engaged with the Company.

b) Talent Management - Company is continuously working on strengthening and building talent in its Human Resources management team for supporting its growth. Company made recruitments from prestigious institutes to strengthen its capabilities in talent acquisition and management, performance management, employee wellness to further support its leadership pipeline development programme aimed at meeting future business growth of the Company.

c) Work Environment - Company provides a congenial work atmosphere where every employee enjoys his work. It works on creating people practices which makes it the best place to work for everyone.

d) Occupational Health and Safety - Safety and health of employees at the workplace has always been the focus area for the Company. The Company continuously undertakes initiatives aimed at providing a healthy and safe workplace to its people. Company has undertaken 'Safety Excellence Journey' under which training and guidance are imparted to workers about safety of men and machines. Company has prepared standards for Electrical, Excavation, Incident Investigation and First Party Safety Audit to provide a systematic, in-depth approach to reduce or eliminate occupational hazards. Company has also developed an in- house Safety Observation Portal which is a structured six steps, two-way safety conversation process with people at their workplace to recognise and reinforce positive safety behaviour, identify and rectify behaviour at risk and engage in conversation regarding safety concerns or issues.

Company has evolved a unique practice of Toolbox talks to strengthen its safety practices wherein prior to commencement of any maintenance activity, the engineers hold an informal talk with the group to discuss and highlight the safety hazards and emphasise on safe working practices. The discussion is done at the most opportune time when such group are about to embark on maintenance activity. This has helped the Company to reinforce its safety practices across its sites and promoting a safety culture across the organisation. Company regularly conducts Safety Audit to identify and eliminate potential safety risks through an objective assessment of various equipment. Further, Mock drills on emergency preparedness in night hours are conducted to meet any contingency. All these initiatives have resulted in strengthening safety systems and improving people welfare.

Total no. of employees as on 30th June, 2015 were 5139.

8. SUSTAINABILITY

Sustainability is an intrinsic part of the Company's business and is vital to its long term growth strategy. Sustainability is manifested in its operating practices and systems which is geared towards conservation of resources, environment management, innovation, people motivation to create value for all stakeholders. Company puts emphasis on using efficient state-of-the-art technologies which help reduce emissions of harmful gases, support use of alternative raw materials and fuels and ensure conservation of resources while meeting the expectations of all its stakeholders.

Company's sustainability initiatives are focussed on low carbon emission, use of alternate fuels, water & resource conservation and environment management. Sustainability is regularly discussed at Board level. Company has a Chief Sustainability Officer to put emphasis on the sustainability efforts of the Company. Focus on sustainability is manifested in the Company being recognised as one of the most efficient cement manufacturing organisation with low energy consumption levels, use of alternative fuel and raw materials, low GHG emissions, etc.

Sustainability Initiatives - Some of the initiatives taken on the environment front during the year are as under:-

a) Power Generation from Waste Heat Recovery Plants

* Company considers waste heat recovery power plants as a potent source of renewable energy due to the various benefits of these plants which include conservation of fossil fuels and water, elimination of GHG emissions, controlling fugitive emission etc. Company has invested in such renewable energy sources as a long term environment management plan. During the year, Company expanded its waste heat recovery power plants capacity to 96 MW. Company has also completed the work of setting up waste heat recovery power plant in its new project at Raipur in Chhattisgarh in July 2015. Company continues to have the distinction of having the largest such capacity in world cement industry outside China.

b) Alternative Fuels and Raw Materials - Company has always put focus on use of alternate fuels to promote resource conservation. Company has a dedicated team which continuously scouts for opportunities in alternate fuel and material usage. Company has used a variety of alternate fuels such as paint sludge and other industrial wastes.

c) Energy Conservation and Management - Energy conservation and management is a focus area for the Company and is driven at the lowest operational level. Several efforts were undertaken to bring down energy consumption levels and making the plant more energy efficient and energy conscious. Company has a dedicated "Energy Cell" for overseeing energy consumption and management and creating awareness about energy efficiency.

d) Sustainability Report - Company released its 10th Corporate Sustainability Report for 2013-14 detailing Company's efforts towards sustainability. As in previous years the report was certified the highest level of certification by an independent third party verifying agency.

Recognition for Sustainability - Company was appreciated for its sustainability practices with various reputed organisations giving recognition to its efforts towards sustainable business practices. Company was awarded the "Corporate Governance and Sustainability Vision Award for the year 2015" instituted by the Indian Chamber of Commerce for its practices on Environmental Sustainability, Economic & Social performance, Sustainability Reporting, Corporate Governance etc. Company was also conferred on the "Best Sustainability Performance Award 2015" by World CSR Congress in recognition of its overall sustainability performance based on Sustainability Indicators like Environment, Economic and Social parameters.

9. CORPORATE SOCIAL RESPONSIBILITY

Company has always considered Corporate Social Responsibility (CSR) as a voluntary activity and part of its extended business activity. Company believes that giving back to society is not a mandate but something which is integral to its beliefs. Accordingly, Corporate Social Responsibility is an integral part of the Company's business.

In order to oversee all its CSR initiatives and activities, the Company has constituted a Board level Committee - "Corporate Social and Business Responsibility" Committee (CSBR) which comprises of Shri O. P. Setia - Chairman, Shri Prashant Bangur, Shri Ramakant Sharma, Shri Nitin Desai and Dr. Leena Srivastava as other members.

The Annual Report on CSR activities of FY 2014-15 with requisite details in the specified format is attached at Annex-1.

The CSR Policy of the Company is attached at Annex-2 and forms part of the Annual Report. The same may also be accessed on the website of the Company at link:- http:// www.shreecement.in/pdf/Shree-csr-policy.pdf.

10. SUBSIDIARY COMPANIES

The Company has a 100% subsidiary i.e. Shree Global Pte. Ltd., Singapore. There have been no operations in the Company. During the year, Katni Industries Pvt. Ltd ceased to be a subsidiary of the Company. The Company is not having any Associate Company or Joint Venture. Those Shareholders, who wish to receive a copy of Annual Accounts of the Subsidiary Company, may request the Company Secretary for the same. As required by Section 129 (3) of the Companies Act, 2013 statement showing the salient features of the financial statements of the Subsidiary Company in form AOC-1, forms part of the Consolidated Financial Statements of Company. The policy for determining material subsidiaries as approved by the board, can be accessed on the website of the Company at link:- http://www.shreecement.in/pdf/Shree- material-subsidiary-policy.pdf.

11. CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company are prepared as required in terms of Accounting Standards (AS-21) issued by Institute of Chartered Accountants of India and forms part of the Annual Report.

12. DIRECTORS' RESPONSIBILITY STATEMENT

Your Directors state that:

a) in the preparation of the annual accounts for the year ended 30th June, 2015 the applicable accounting standards have been followed and there are no material departures from the same;

b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 30th June, 2015 and of the profit and loss of the Company for the year ended on that date;

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

d) they have prepared the annual accounts on a going concern basis; and

e) they have laid down necessary internal financial controls to be followed by the Company commensurate with its size of operations and that such internal financial controls are adequate and were operating effectively; and

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

13. DIRECTORS AND KEY MANAGERIAL PERSONNEL

At the Annual General Meeting of the Company held on 10th November, 2014, the members had approved:-

a. the appointment of Shri R. L. Gaggar, Shri O. P. Setia, Shri Shreekant Somany, Dr. Y. K. Alagh, Shri Nitin Desai and Dr. Leena Srivastava as Independent Directors to hold office for 5 (five) consecutive years w.e.f. 1st September, 2014, being a director not liable to retire by rotation.

b. the appointment of Shri Ramakant Sharma, as a non- executive Director of the Company liable to retire by rotation.

Shri Ashok Bhandari, CFO of the Company retired from the services of the Company at the close of Business hours on 31st August, 2014 and Shri Subhash Jajoo was appointed as CFO of the Company w.e.f. 1st September, 2014.

In accordance with the provisions of the Companies Act, 2013 and Article 112 of the Articles of Association of the Company, Shri H. M. Bangur, Managing Director will retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

The Board of Directors of the Company appointed Shri Sanjiv Krishnaji Shelgikar as an Additional Director on the Board of the Company w.e.f. 5th August, 2015, to hold office up to the date of ensuing Annual General Meeting. Notice pursuant to Section 160 of the Companies Act, 2013 has been received from a Member proposing his candidature for appointment as Independent Director of the Company.

The Company has received declarations from all the Independent Directors of the Company including Shri Shelgikar confirming that they meet the criteria of independence as prescribed both under the Companies Act, 2013 as well as Clause 49 of the Listing Agreement with the Stock Exchanges.

14. PERFORMANCE EVALUATION OF BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS

During the year, the Board has carried out an annual evaluation of its own performance, performance of its committees including the evaluation of individual directors.

The performance of the Board was evaluated by the Board on the basis of criteria such as Board composition and structure, effectiveness of Board processes, information flow to Board, functioning of the Board etc.

The performance of committees was evaluated by the Board on the basis of criteria such as composition of committees, effectiveness of Committee working, independence etc.

The Board and Nomination cum Remuneration Committee evaluated the performance of individual directors on the basis of criteria such as attendance and contribution of director at Board/Committee Meetings, adherence to ethical standards and code of conduct of the Company, interpersonal relations with other directors, meaningful and constructive contribution and inputs in the Board/Committee meetings etc.

In a Separate meeting of the Independent Directors, performance evaluation of non-independent directors and the Board as a whole and performance evaluation of Chairman was carried out, taking into account the views of executive and non-executive directors. The quality, quantity and timeliness of flow of information between the Company management and the Board that is necessary for the Board to effectively and reasonably perform their duties was also evaluated in the said meeting.

Company appointed an External Facilitator for the purpose of carrying out the performance evaluation in fair and transparent manner.

15. FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS

A detailed presentation is given to the Independent Directors of the Company at the time of their appointment, which covers their Role, Duties and Responsibilities, Company's strategy, business model, operations, markets, organisation structure, products etc. The said presentation is also given to existing independent Directors every year.

As part of board discussions, presentation on performance of the Company is given to the Board of Directors during the Board Meeting(s). Plant visits are also arranged for independent directors from time-to-time for better understanding of the Company's operations.

The details of such familiarisation programmes for Independent Directors are posted on the website of the Company and can be accessed on the website of the Company at link:- http://www.shreecement.in/pdf/Shree- familiarisation-programme-for-independent-directors.pdf.

16. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS / OUTGO

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings / outgo, as required to be disclosed under the Companies Act, 2013 is set out at Annex-3 which forms part of this report.

17. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided at Annex-4.

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits as provided in the said rules are set out in the Directors' Report as an addendum thereto. However, in line with the provisions of the first proviso to Section 136(1) of the Act, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available

for inspection at the registered office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request.

18. AUDITORS

Statutory Auditors

M/s. B. R. Maheswari & Company, Chartered Accountants, who are the Statutory Auditors of the Company, hold office till the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment. They have confirmed their eligibility to the effect that their re-appointment, if made, would be within the prescribed limits under the Act and that they are not disqualified for re-appointment. The Board, on the recommendation of Audit Committee proposes to re-appoint them as Statutory Auditors of the Company from the conclusion of the forthcoming Annual General Meeting till the conclusion of the Annual General Meeting to be held thereafter. The Auditor's Report does not contain any qualification, reservation or adverse remark.

Secretarial Auditors

The Board has appointed M/s. P. Pincha & Associates, Company Secretaries, Jaipur as Secretarial Auditors of the Company to conduct Secretarial Audit for the Financial Year 2014-15. They have submitted their report in prescribed format and the same has been attached at Annex-5.

The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

Cost Auditors

The Board has appointed M/s. K. G. Goyal & Associates, Cost Accountants, Jaipur (Registration No. 000024) as Cost Auditors of the Company to conduct Cost Audit for the Financial Year 2014-15.

19. OTHER DISCLOSURES

(i) Audit committee: The Audit Committee comprises of Independent Directors viz. Shri O. P. Setia as Chairman and Shri R. L. Gaggar, Dr. Y. K. Alagh, Shri Nitin Desai as other Members. All the recommendations made by the Audit Committee were accepted by the Board.

(ii) Details of board and its committees: Details of the composition of the Board and its Committees and of the Meetings held and attendance of the Directors at such Meetings are provided in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Act and the Listing Agreement.

(iii) Extract of the Annual Return: Extract of Annual Return of the Company is annexed as Annex-6 which forms part of this report.

(iv) Particulars of Loan, Guarantees or Investments:

Particulars of loans given, investments made, guarantees given and securities provided under Section 186 of the Companies Act, 2013 along with the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient are provided in the accompanying financial statements.

(v) Particulars of Contracts or Arrangements with Related Parties: All Related Party Transactions that were entered into during the financial year were on an arm's length basis and in the ordinary course of business and were in compliance with the applicable provisions of the Companies Act, 2013 and the Listing Agreement. There were no material Related Party contract/arrangement/ transactions made by the Company during the year that would have required Shareholders' approval under Section 188 or Clause 49 of the Listing Agreement.

The Company has adopted a Related Party Transactions Policy duly approved by the Board, which is uploaded on the Company's website and may be accessed at link: http://www.shreecement.in/pdf/Shree-related-party- transction-policy.pdf.

Details of the Related Parties disclosures (transactions) are provided in the accompanying financial statements.

(vi) Deposits from public: The Company has not accepted any deposits from public covered under Chapter V of the Companies Act, 2013 and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.

(vii) Vigil Mechanism / Whistle Blower Policy: The Company has adopted a whistle blower policy and has established the necessary vigil mechanism for employees and directors to report concerns about unethical behaviour. The Policy provides for adequate safeguards against victimisation of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee.

The whistle blower policy may be accessed on the website of the Company at link:- http://www.shreecement.in/pdf/ Shree-whistle-blower-policy.pdf.

(viii) Remuneration Policy: Company believes in nurturing a people friendly environment which is geared to drive the organisation towards high and sustainable growth. Its Remuneration Policy is therefore designed to achieve this vision. The Policy has been approved by the Board on the recommendation of Nomination cum Remuneration Committee. The Policy is applicable to Directors, Key Managerial Personnel and other employees.

The Policy provides that while nominating appointment of a Director, the Nomination cum Remuneration Committee considers that the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the Company.

(ix) Policy on Prevention, Prohibition and Redressal of Sexual Harassment at Workplace: The Company has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace, in line with the provisions of the "Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013" and the Rules there under. Company has formed an "Internal Complaints Committee" for prevention and redressal of sexual harassment at workplace. The committee is having 4 members and is Chaired by a senior woman member of the organisation.

The Company has not received any complaint of sexual harassment during the financial year 2014-15.

(x) Material Changes after the Close of Financial Year:

There have been no material changes and commitments which have occurred after the close of the year till the date of this Report, affecting the financial position of the Company.

(xi) Significant and Material Orders passed by the Regulators or Courts: No significant material orders have been passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations.

20. ACKNOWLEDGEMENT

Directors take this opportunity to express their deep sense of gratitude to the Banks, Central and State Governments and their departments and the local authorities for their continued co-operation and support. Directors would also like to place on record their sincere appreciation for the commitment, dedication and hard work put in by every member of the Shree family for the Company's success and achievements and to its various stakeholders i.e. customers, dealers, supplies, transporters, advisors, local community etc. for their continued committed engagement with the Company.

For and on behalf of the Board

Place: Kolkata B. G. Bangur Date: 5th August, 2015 Chairman








Jun 30, 2014

Dear shareholders,

We are pleased to present our report together with management discussion and Analysis for the year ended on 30th June, 2014.

FINANCIAL RESULTS

Brief summary of the Company''s standalone and consolidated fnancial performance is as under:

(Rs. in Crore)

Standalone performance Consolidated performance

Particulars 2013-14 2012-13 2013-14 2012-13

Revenue from operations 5887.31 5590.25 5887.31 5590.25

Profit Before Interest, Depreciation and Taxes 1574.76 1749.25 1574.73 1749.22

Profit Before Tax 815.15 1119.42 815.12 1119.39

Tax expense 27.91 115.45 27.91 115.45

Profit After Tax 787.24 1003.97 787.21 1003.94

Balance brought forward from previous year 1114.28 1091.61 1114.25 1091.61

Profit available for appropriation 1901.52 2095.58 1901.46 2095.55

Appropriations:

Interim dividends 76.65 27.87 76.65 27.87

Tax on Interim dividends 13.03 4.52 13.03 4.52

Proposed Final dividend - 41.81 - 41.81

Tax on Final dividend - 7.10 - 7.10

Transferred to general Reserve 550.00 900.00 550.00 900.00

Transferred to Special Reserve 394.80 - 394.80 -

Net surplus 867.04 1114.28 866.98 1114.25

Dividend

The directors declared two interim dividends during the year viz. Rs. 10/- per share and Rs. 12/- per share. Thus, total dividend paid for 2013-14 is Rs. 22/-per share as against Rs. 20/- per share for the year 2012-13. The total outgo on dividend payment for the year 2013-14 amounts to Rs. 89.68 crore including dividend distribution tax of Rs. 13.03 crore as against Rs. 81.30 crore including dividend distribution tax of Rs. 11.62 crore for year 2012-13.

inDiAn eConomY – 2013-14 AnD futuRe outlooK

Indian economy grew at 4.7% during 2013-14 (April to march) compared to 4.5% growth achieved in 2012-13. economic growth continued to face challenges in terms of depreciating rupee, persistent infation and overall uncertain political and economic environment. This adversely impacted the investment climate and overall growth. of late, however, a positive environment has started emerging in the country with rising capacity infows and a feeling of optimism after the formation of new government with adequate mandate at the Centre. The new government has indeed shown its resolve and has started taking steps towards economic revival by speeding up project approvals and announcing new investment proposals. The changed economic atmosphere indicates a sense of confdence and a positive turnaround in the economic situation towards high growth albeit in a gradual manner.

The path to economic recovery though is not without challenges, stubbornly high infation being among the prime concerns. High infation limits room to ease monetary policy, which is necessary to boost economic revival. overall weak monsoon in the country till now also adds to the worries even as prospects of kharif crop are not good. Any drop in agriculture growth may hamper overall growth. The good news is that the Central government and Reserve Bank of India have shown their resolve to tackle these challenges. one therefore, hopes, with cautious optimism, that year 2014-15 will be the beginning of another period of sustained economic growth for the country.

CEMENT INDUSTRY - DEVELOPMENTS AND OUTLOOK

Cement industry continued to witness surplus capacity as well as lack of demand momentum during year 2013-14. The cement demand is estimated to have grown at about 3% during April 2013 to March 2014 as against 6% clocked in the same period last year. High interest rates, declining investment in industrial and infrastructure projects and poor real estate demand resulted in slackening growth in cement consumption. On the other hand, new capacity addition still continued thereby increasing the pressure of over-supply situation. The pricing situation which remained subdued in first half of the year improved in the second half. For the year as a whole, price realizations remained almost same as they were in the previous year. The industry also had to deal with increasing transportation cost due to consistent increase in diesel prices. As a result, operating margins were down during the year.

Going forward, the cement demand situation is expected to improve. A stable government at the Centre is expected to bring about a structural change in the economy which is likely to speed up the economic growth. The new Government has displayed its intention of focus on providing affordable housing and rapid development of infrastructure. It has announced development of 100 new smart cities with better facilities, connectivity and environment. There are indications that the Government is considering greater use of cement in highways development. Major capacity additions are behind us and new capacity addition has now slowed down. Further, the per capita consumption of cement in India at 194 Kg is still quite low and provides good scope for improvement. All these factors point towards better prospects for the cement industry, going forward.

POWER SECTOR - CURRENT SCENARIO AND OUTLOOK

Indian power sector is in a peculiar situation where on one end, many of the power generators face problem of poor offtake while on the other end consumers in many areas face regular power cuts. This is mainly because of two reasons. One, there are severe transmission constraints which restrict flow of power from surplus areas to deficit regions. Second, the poor financial health of the distribution utilities because of which they have a tendency of resorting to power cuts than meeting their supply commitment. There is, therefore, an urgent need to step up investment in the transmission sector to enable congestion free flow of power. Also, Distribution Companies need to be allowed to charge remunerative tariff from the consumers. Although, over last one or two years, many of the state utilities have indeed increased their tariffs, there is more action needed on their part to bridge the gap. Timely release of subsidies from State Government to utilities can enable them to make timely investment on their distribution system thereby reducing their losses as well as enabling them to procure power to meet their supply commitment.

The Company is into power market which is characterized by short term power sale of upto 12 months or less as well as day to day trading on Energy Exchange platform. In view of transmission bottlenecks and lack of buying by power utilities, power prices continued to remain subdued.

The new Central Government has promised to ensure 24 hours supply to all the consumers and has shown its commitmentto take necessary actions in this respect. This bodes well for the future of power sector.

PERFORMANCE HIGHLIGHTS

The Company''s operating and financial performance during 2013-14 vis-a-vis 2012-13 was as hereunder:-

Particulars Unit 2013-14 2012-13 /-%

Cement Lac Tonnes 142.22 123.32 15.3% Production

Cement Sale Lac Tonnes 140.66 122.77 14.6%

Clinker Sale Lac Tonnes 1.86 1.84 1.1%

Cement & Lac Tonnes 142.52 124.61 14.4% Clinker Sale

Power Million Units 2910 3569 -18.5% Generation

Power Sale Million Units 1860 2610 -28.8% Revenue

- Cement Rs. Crore 5244.39 4544.31 15.4%

- Power Rs. Crore 642.92 1045.94 -38.5%

-Total Rs. Crore 5887.31 5590.25 5.3%

Operating profit

- Cement Rs. Crore 1509.01 1496.32 0.8%

- Power Rs. Crore 65.75 252.93 -74.0%

-Total Rs. Crore 1574.76 1749.25 -10.0%

EBIDTA Margin % 26.7% 31.3% - to Revenue

Net Profit Rs. Crore 787.24 1003.97 -21.6%

Cement Business

The Company achieved a respectable growth of 15% in its cement volumes during year 2013-14 as against close to 3% clocked by the industry. Total cement revenue thus grew by 15% during the year. On the cost front, the freight costs per tonne were up by 13% due to increase in diesel prices and railway freight. Raw materials cost per tonne increased marginally by 1%. The power and fuel costs per tonne were however down by 1% during the year. The price realizations were up marginally by around

1% mainly because of competitive market conditions and slack growth in cement demand. The operating profit of the Company remained almost same at Rs. 1,509 crores as against Rs. 1,496 crores in the previous year.

The Company''s consistent efforts to step up its supplies helped it to increase its all India market share which rose to 5.35% as against 4.95% in the previous year. In order to further enhance its market share, the Company has stepped up its marketing activities in the Eastern India markets. The production from the company''s unit in Chhattisgarh is going to hit the market soon. As such, the higher marketing effort will help the Company shore up its presence in this market.

Power Business

The total installed power generation capacity of the Company has increased to 597 MW. The Company uses part of the power generated for captive consumption and sells the balance in the market.

Total power generation from all the power plants during the year stood at 2910 Million Units (MUs) as against 3569 MUs during the previous year. The year was a challenging period for power sale. On one hand, there was intense competition from other suppliers in the short term power market and on the other, power distribution utilities reduced power purchases on account of their poor financials. This led to fall in prices in the short term power market, making power sale a difficult proposition. As a result, total power sale came down by 29% from 2610 MUs to 1860 MUs during the year.

Apart from selling power generated from Company''s power plants, the power trading division carries out trading activities for other parties as well. The power trading activities generated an income of Rs. 3.18 crore during the year against Rs. 3.12 crore in the previous year. Total revenues from power sale and power trading activities came down by 38% from Rs. 1,046 crores in 2012-13 to Rs. 643 crores in 2013-14.

NEW PROJECTS

During the year, the following new projects were completed: -

Location Type of plant Capacity (Million Tonnes Per Annum)

Ras, Rajasthan Clinker 2.00

Manufacturing

Ras, Rajasthan Cement Grinding 2.00

Aurangabad, Bihar Cement Grinding 2.00

As a result, total cement capacity of the Company now stands increased from 13.50 Million Tonnes Per Annum (MTPA) to 17.50 MTPA.

The work on setting up an integrated unit (clinkerization cum grinding) of 2.0 MTPA at Baloda Bazar, near Raipur in Chhattisgarh is going on in full swing and is scheduled for completion by March 2015. A Cement Grinding unit of 2.0 MTPA in Bulandshahr of Uttar Pradesh is also being set up which is scheduled to be completed by December 2015. The Company has also planned to manufacture Aerated Autoclave Concrete (AAC) blocks at this site which is a high quality and lightweight building material. This project is a forward integration of its cement plant and will replace the use of red clay bricks used in construction.

The Company intends to add more grinding capacity in Northern and Eastern India and has initiated steps for identifying suitable locations in this regard.

RISK MANAGEMENT AND OPPORTUNITY

The Company has in place, a Risk management framework aimed at timely identification and assessment of risks and implementing mitigation measures. Key risks identified by the Company and the steps taken to mitigate them are:

a) Over Supply in the Industry: Supply overhang due to large capacity additions over lastfewyears is continuing. This has resulted in lower capacity utilization across the cement industry. The Company perceived this risk well in advance and adopted measures like multi- brand strategy, expanding market base, faster delivery to consumers and consistent quality, etc. It also concentrated on its capacity additions in markets where demand-supply conditions are relatively favorable. All these measures have helped the Company in increasing its market share and better capacity utilization rates. With new cement plants in Chhattisgarh and Bihar, the Company is now entering into Eastern India which is a new market and will enable it to enhance its all India market share.

b) Input price rise - Logistics and Fuel: As part of its reform measures, the Government started increasing diesel prices from the year 2012-13. This has resulted in consistent rise in diesel prices. This has not only put pressure on the cost of all input prices of the Company but has also resulted in increase in logistic cost of cement and clinker. The Company has set up split grinding units in proximity of its markets as well as fly ash sources which helps it reduce its transportation cost.

The Company is completely dependent on the open market for meeting its fuel requirement. International prices of coal have volatile movements; which exposes the Company to high volatility risk in its energy costs as it uses large amount of fuel for its cement and power plants. The Company has deployed multi-fuel usage strategy and has opted for best technology in its cement and power operations which allows it to use different fuels and not remain straddled with any particular type of fuel. This strategic measure enables it to rationalize its fuel cost.

c) Exchange rates volatility: The Company makes payments in foreign currency for import of fuel and project equipments. Exchange rates of Indian Rupee vis-a-vis other foreign currencies especially US dollar has been exhibiting high volatility. In order to mitigate the risk, the Company, as a policy, hedges all its foreign currency transactions through appropriate forward covers and swap instruments.

d) Power prices: Company''s power business model which entails selling of power in short term market exposes it to price volatility in this segment which has been showing downward trend. The Company manages this challenge through active monitoring of demand and supply indicators of various states, tracking power procurement plans of buyers and other developments in power business. Company''s power trading division helps it market the power at competitive prices.

e) Entry into new geography: With Bihar and Chhattisgarh cement plants, the Company is entering into new geographical areas. Hitherto, Company''s operations were mainly concentrated in North India. Entry into a new geographical area, poses risks of developing new markets, operations in different culture, etc. To ensure seamless operations in these new areas, the Company has undertaken detailed market assessment study, brand awareness exercise and has developed dealer-base which will help in developing the market in this new geography. To address culture challenge, the Company has adapted its recruitment plans in such a way that most of the senior management positions are manned by employees from existing operations to ensure that its current culture is extended to the new geographical locations.

SUSTAINABILITY

The Company treats sustainability as a key business lever, similar to way as it treats production, finance, marketing and other functions. This way, sustainability is well integrated into the fabric of the Company''s business and is viewed as a source of advantage which is very well manifested in its continual growth and high performance.

The Company adopts practices and systems that help conserve resources, improve environment, foster innovation, motivate people and create trust amongst all the stakeholders. The Company''s mainstay is on low carbon growth. The continued emphasis is, therefore, to promote application of efficient and state-of-the-art technologies which help reduce emissions of harmful gases, support use of alternative raw materials & fuels and ensure conservation of resources while meeting the expectations of all its stakeholders.

In view of its exemplary performance in terms of low energy consumption levels, resource conservation through use of alternative fuel and raw materials, low GHG emissions, etc., the Company is recognized as one of the leaders of the world cement industry which have been proactively working on sustainability agenda.

Some of the initiatives taken on the environment front during the year are as under:-

Power Generation from Waste Heat Recovery Plants

The Company has been evaluating various options for utilizing renewable energy in its operations and has realized that the bestform of renewable energy available is from Waste Heat Recovery Plants (WHRP). This conclusion is arrived at based on the several benefits like conservation of Fossil Fuels & water, avoidance of Green House Gases (GHG) emissions, controlled Fugitive Emissions, reduced land requirement and reliable power supply source.

In pursuance of its policyto increase investments in WHRP, Company has installed Waste Heat Recovery Power Plant (WHRP) of 25 MW in its cement plants at Ras (Unit 9). With the implementation of the plant, capacity of WHRPs has increased to 81 MW which is the highest such capacity in the world cement industry excluding China. Further, the Company is also installing WHRPs in its integrated cement unit being set up at Raipur in Chhattisgarh.

Alternative Fuels and Raw Materials

The Company regularly scouts for utilizing alternate fuels in its operations. The Company has a dedicated unit under its Research and Development wing which constantly looks for opportunities to utilize alternate fuels and raw materials to reduce use of fossil fuels and other natural resources. During the year, the Company experimented and utilized various industrial wastes. The Company has also identified other waste materials from different sources for augmenting its usage of alternative resources.

Sharing Information on Sustainability Issues

The Company is a member of Cement Sustainability Initiative (CSI) of the World Business Council of Sustainable Development (WBCSD), Switzerland. It is also associated with World Economic Forum (WEF), TERI - BCSD, Global Reporting Initiative (GRI) for various sustainability related matters.

During the year, the Company was rated "GreenCO- Gold" under the Green Company Rating System by the Confederation of Indian Industry (CII) - Green Business Center (GBC), Hyderabad based on the Company''s exemplary work in the areas of Energy Efficiency, Water Conservation, GHG Management, Waste Management, Resource Conservation, Recycling, Green Supply Chain, etc.

The Company stood 1st in the "Material" sector and overall 3rd among all companies in the "India Climate Disclosure Leadership Index (CDLI)" issued by Carbon Disclosure Project (CDP) for 2013, a Global Disclosure project for companies to report their environment strategies and impacts. The report analyzed top 200 Indian companies by market capitalization for their carbon disclosure. After initial screening, 55 companies participated in it.

Energy Conservation and Management

The Company has a Central Energy Cell for overseeing energy management and carrying out energy audit for identifying areas for energy efficiency improvement as well as suggesting better ways of energy management. The Energy Cell monitors energy consumption on daily basis and deputes energy audit checks in the areas where deviations are significant. This has helped in creating a system of continual awareness about the energy conservation and an effective energy management system across the Company.

Water Conservation

The Company has always considered conservation of water as a focused area. In line with this commitment, the Company developed a 42000 KL capacity of water storage pit near mining lease area in Ras for harvesting rain water. A water pit for rain water harvesting has also been constructed atjobner plant in Jaipur. Further, the Company has installed Sewage Treatment Plant (STP) of various capacities at all its location in Rajasthan for treatment of domestic waste water. The treated water is used for plantation activities.

Green Building

In recognition of the Company''s green initiatives, the administrative building of Company''s Shree Mega Power Plant of 300 MW was certified as "LEED INDIA GOLD" green building by the "Indian Green Building Council" for being an environment friendly building. Also, the Central Control Room (CCR) building of Jaipur Cement Plant of the Company has achieved "LEED India Silver" rating.

Sustainability Report

The Company has released its 9th Sustainability Report during the year. The report is prepared as per the GRI 3.1 guidelines issued by Global Reporting Initiative (GRI). The report was independently vetted by assurance agency LRQA and GRI have concluded that the report fulfills the requirement of application level A .

''SAMAJ SEWA'' - CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility (CSR) is a focus area for the Company as it considers social development as a part of business activity. Adhering to the firm belief that sustainable growth is only possible when it builds a truly synergistic relationship with members of the society in and around the area of its plant operations, especially those belonging to the bottom of the pyramid, the Company has embraced the policy of giving back to the society. Details of various social projects and initiatives undertaken as part of Samaj Sewa are given in Company''s Business Responsibility Report which forms part of this Report. A brief of the major initiatives is given below: -

The Company arranged a mass blood donation camp in August, 2013 at all its locations wherein Company''s people voluntarily donated blood. A total of 3678 units of blood was collected from this mega camp which is a unique record in the Indian Corporate sector.

Similarly, the Company in collaboration with State Government supported a mega surgical camp in December, 2013 wherein doctors across medical spectrum like eye, ear, oral, gynecology, general medicines, etc. participated and helped the villagers in treating various ailments.

The Company distributes smokeless chulha to BPL households of nearby villages, which uses less fuel, cooks faster and reduces smoke & harmful gases to prevent many health hazards and reduce carbon foot print.

"Shree Ki Pathshala" project covering 12 villages, is running twelve schools for imparting basic education to children who never attended any school.

For improving physical infrastructure of nearby government schools. Company provides water & sanitation facilities, furniture, etc. and collaborates to supplement the efforts of the State Government. This helps promote education amongst students in villages.

To promote girl child, the Company conducted a "Save the Girl Child Campaign" by providing help in the form of a fixed deposit of Rs. 5,000 at the time of birth of girl child which is available to her after attaining 18 years of age. Further, the Company provided basic required items for marriage of girl child after attaining the age of 18 years and above.

The Company in association with Municipal Body of Beawar City in Rajasthan, has undertaken a beautification project to construct a high quality four lane road within the City. The road has smoothened traffic, relieved congestion and improved surrounding environment by making it dust-free with adequate drainage facilities.

For improving road connectivity for the nearby villages, the Company undertook reconstruction and dressing work of various roads near its plants. Also, the Company undertook civil works in nearby villages for construction and repair of temples, boundary walls, renovation of old Panchayat Bhawans, community centers and melaground, etc.

Under the Company''s employee volunteerism programme, the Company people regularly contribute voluntarily in Samaj Sewa activities in a structured way.

OCCUPATIONAL HEALTH AND SAFETY

The Company places utmost importance to the need for ensuring safe and healthy work place across its manufacturing locations and offices. The Company has prepared a Safety Manual, which is a guidebook for all the people working at the Company''s facilities with regard to matters related to safety. It helps them to be aware of the safety norms/practices that must be followed. A ''Safety Department'' has been set up that focuses on building the desired safety culture and practices across all the plants.

In-house Safety Observation Portal:- The Portal launched last year, has been operating quite successfully and has brought all employees on one platform for strengthening the behavioral and other safety aspects. Under the portal, all safety related information such as Safety Policy, Safety Manual of the Company, safety related observations, safety check lists, incidents reports, on-sight emergency plans, etc. have been provided and can be viewed online. Anyone, who finds any incidence of safety norms being not followed, may post the same on the portal. A time bound remedial action is taken on all such incidents and details thereof are placed on the portal for on-line viewing. The Safety Department regularly conducts safety awareness programmes (training) for employees, workers, contract labours, truck drivers, etc. which helps in building the overall ''Safety First'' culture across the Company.

Toolbox Talks, a unique safety initiative, has been undertaken by the Company executives at all its plants to reinforce safety practices. The toolbox talk involves plant engineers getting together with all workers at the site before any maintenance activity is initiated. An informal discussion is done in the group highlighting the possible safety hazards in the task being initiated and safeguards that one needs to follow to ensure safety for all. As this discussion takes place just at the time entire team is ready with their tools to start the job, it is called Toolbox Talk. Toolbox Talks help in safety communications amongst all concerned at plant site, re-enforcement of safe work practices among them, timely identification of safety concerns/risks, better planning for their addressal and promoting safety culture in general at the plant level.

Safety Audit, used by the Company as a management tool, comprises of a systematic, periodic and objective evaluation of how well the safety organization, management and equipment are performing. These Safety Audits helps to safeguard Company''s assets by facilitating management control of safety, health and environmental practices and assessing compliance with established standards. Safety Audit teams undertake periodic inspection of different sections of the plant site and observe any safety related lapses. A detailed report with photographs of the unsafe place and corrective measures required, is sent to concerned department. Upon implementation, the report is updated with the photograph post-improvement alongside pre- improvement photograph for ready understanding of the improvement. The audit observations, action plan prepared and implemented by respective sections are presented to all concerned including the plant head.

HUMAN RESOURCES

The Company has integrated the belief of Human Resource Development in all its policies and strategies. The Company''s human resource management function is aimed at the sole objective of achieving high engagement level of its people which in turn ensures both higher productivity and happy people and thereby improves the bottom line. The Company continuously works towards building and retaining talent for the Company through appropriate policies and practices for talent acquisition, performance management, learning and development, career management, employee wellness, communication mechanism, etc.

The Company''s HR practices help its people realize individual potential and aspirations in line with the growth of the Company. These people centric strengths have helped the Company become a Dream Companyto work for with unique value proposition for its employees. In recognition of the unique processes and practices adopted by the Company in evolving a people centric approach, a case study has been written by Prof. Abhoy Ojha of IIM, Bangalore which is titled "Shree Cement Limited: Cementing the People First Agenda". The study has been published by the prestigious Harvard Business Press. The case study describes accomplishment of people first agenda of the Company and explains the results of employee perception and very high levels of engagement at the Company.

In yet another recognition of the Company''s HR practices, "Shree''s Happiness Management model" was referred and highlighted in the prestigious and reputed book on "Organizational Behaviour" by well known management experts Stephen P. Robbins, Timothy A. Judge and Niharika Vohra. This book is a course book in reputed management schools like IIMs, ISB, XLRI, etc.

Number of employees as on 30th June, 2014 were 4698.

INTERNAL CONTROLS

The Company remains committed towards ensuring an effective and comprehensive internal control system. The Company has an Internal Audit department as well as has engaged the services of a professional firm to carry out internal audit spanning all production units and functions.

The internal audit covers all processes and departments in their audit process. Internal control Systems are continually reviewed and strengthened. Business as well as process risks are dealt with immediately and adequately addressed. The control systems are regularly reviewed by the functional heads, which are required to confirm the effectiveness and adequacy of the systems.

All material audit observations and follow-up actions thereon are reported to the Audit Committee which reviews the adequacy and effectiveness of the internal control systems and monitors implementation of audit recommendations.

AWARDS & ACCOLADES

Major awards and accolades received by the Company during the year are as under:-

1. BEST OVERALL SUSTAINABILITY AWARD 2013-14 -

The Company was honoured with the Best Overall Sustainable Performance Award 2013-14, in recognition of overall sustainability performance of the Company. The award was hosted by World CSR Congress. The award was presented by Dr. Bhaskar Chatterjee, Director General of Indian Institute of Corporate Affairs.

2. "DREAM COMPANY TO WORK FOR" AWARD - The

Company has been honoured with this prestigious award in the Infrastructure Section by World HRD Congress. The Award is in recognition of the Company''s inclusive business practices across social, environmental, product responsibility, innovation and sustainability dimension.

3. NATIONAL AWARD FOR QUALITY EXCELLENCE FROM NCCBM - The Company has been awarded the Second Best Quality Excellence award for the year 2011-12 & 2012-13 by National Council for Cement and Building Material (NCCBM), New Delhi for adopting cost effective, efficient and cleaner methods for producing cement such as maximizing the use of alternative fuels, establishing energy efficiency, achieving customer satisfaction, adopting modernized techniques and maintaining transparency in its business approach. The award was presented by Shri Taleen Kumar, Jt. Secretary, Department of Industrial Policy & Promotion, Government of India.

DIRECTORS

Shri Mahendra Singhi resigned during the year as Executive Director of the Company w.e.f. close of business hours of 6th December, 2013. Shri Singhi was with the Company for more than 19 years and played a key role in all facets of the business of the Company. The Board of Directors placed on record its appreciation for the valuable contribution made by Shri Singhi in the growth of the Company.

Shri Ramakant Sharma was appointed as Additional Director on the Board of the Company w.e.f. 27th December, 2013. Shri Ramakant Sharma is a science graduate and has rich experience of 45 years of dealing with various industries related matters. He has been associated with the Company for last 19 years and is therefore a Non-independent Director. He holds office uptothe date of the ensuing Annual

General Meeting (AGM). Notice pursuant to Section 160 of the Companies Act, 2013 has been received from a Member proposing the candidature of Shri Ramakant Sharma for appointment as Director of the Company.

In accordance with the provisions of Article 112 of the Articles of Association of the Company, Shri B.G. Bangur will retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

In line with the requirement of Clause 49 of the Listing Agreement entered into with the Stock Exchanges, the Company had appointed Shri R.L Gaggar, Shri O.P. Setia, Dr. Y.K. Alagh, Shri Nitin Desai, Shri Shreekant Somany and Dr. Leena Srivastava as Independent Directors of the Company. These Directors were hitherto liable to retire by rotation and did not have anyfixed term of their appointment. As per section 149(4) of the Companies Act, 2013, every listed public Company is required to have at least one-third of the total number of Directors as Independent Directors. Such Directors will be appointed for a fixed term of upto 5 years and will not be liable to retire by rotation. In order to meet the new requirements, these Directors are being appointed as Independent Directors for a fixed tenure as mentioned in the Notice of the forthcoming Annual General Meeting (AGM) of the Company.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed under sub-section (6) of Section 149 of the Companies Act, 2013.

The Board recommends the above appointments / re-appointments.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 217(2AA) of the Companies Act, 1956, the Directors, to the best of their knowledge and belief and according to the information and explanations obtained by them, confirm that they have taken all reasonable steps, as are required, to ensure that:

The applicable accounting standards have been followed in the preparation of the annual accounts (financial statements) for the year ended 30th June, 2014 and in case of material departures, proper explanation has been given in the accounts and notes thereon;

Such accounting policies (as mentioned in the Notes forming part of financial statements) have been selected and applied consistently, and that the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of Company as at 30thJune, 2014 and of the profit & loss and cash flow of Company for the 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 Company and for preventing and detecting fraud and other irregularities; and

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

AUDITORS

M/s. B. R. Maheswari & Company, Chartered Accountants, who are the Statutory Auditors of the Company, hold office till the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment. The Board, on the recommendation of Audit Committee proposes to re-appoint them as Statutory Auditors of the Company from the conclusion of the forthcoming Annual General Meeting till the conclusion of the Annual General Meeting to be held thereafter.

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

COST AUDIT

Pursuant to the directives of Central Government, the Company had appointed M/s. K. G. Goyal & Associates, Cost Accountantsjaipur (Registration No. 000024) as Cost Auditors of the Company under section 233B of the Companies Act, 1956 for the year 2013-14. In accordance with Cost Audit (Report) Rules, 2011 (as amended), the due date for filing the Cost Audit Report in XBRL for the financial year ended 30th June, 2013 was 26th December, 2013. The Company filed the same on 29th November, 2013 vide SRN No. S28216612 with the Ministry of Corporate Affairs.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

The Company has transferred a sum ofRs. 13.22 Lacs during the year 2013-14 to the Investor Education and Protection Fund established by the Central Government, in compliance with Section 205C of the Companies Act, 1956. The said amount represents unclaimed dividend pertaining to year 2005-06 (final) and year 2006-07 (Interim), which was lying with the Company for a period of 7 years from its due date of payment. Prior to transferring the aforesaid sum, the Company sent reminders to the shareholders for submitting their claims for unclaimed dividend. The amount of unclaimed dividend for subsequent years is given in the Notice convening the AGM.

CORPORATE GOVERNANCE

A separate section on Corporate Governance together with a certificate from the Auditors of the Company regarding full compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement with the Stock Exchange(s) forms part of Annual Report.

BUSINESS RESPONSIBILITY REPORT

In terms of Clause 55 of the Listing Agreement, a separate section on Business Responsibility Report is given, which forms part of the Annual Report.

PARTICULARS OF EMPLOYEES

As required under the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of employees are to be set out in the Directors'' Report as an addendum or annexure thereto. However, in line with the provisions of Section 219(1)(b)(iv) of the Act, the report and the Accounts as required therein, are being sent to all members of the Company excluding the above information regarding the particulars of the employees. The Company shall provide these particulars to any member who is interested in obtaining the same and writes to Company Secretary at the registered office of the Company.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING / OUTGO

The information required under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988 is set out in Annexure I which forms part of this report.

SUBSIDIARY COMPANIES

The Ministry of Corporate Affairs, Government of India, vide its circular no. 2 and 3 dated 8th February, 2011 and 21st February, 2011 respectively, has exempted companies from attaching the annual accounts and other particulars of its subsidiary companies along with the Annual Report of the Company as required under section 212 of the Companies Act, 1956. Therefore, the Annual Accounts of Subsidiary Companies viz. (1) Katni Industries Pvt. Ltd. & (2) Shree Global Pte. Ltd. are not attached with this Annual Report. However, a statement giving certain information as required vide aforesaid circulars is placed along with the Consolidated Accounts.

The Annual Accounts of the above subsidiary companies and the related information shall be made available to the shareholders of the Company upon receipt of a request from them. The same is also kept open for inspection at the Registered Office of the Company as well as its subsidiaries.

CONSOLIDATED FINANCIAL STATEMENT

The Consolidated Financial Statements have been prepared in order to comply, in all material respects, with the Accounting Standards notified under the Companies (Accounting Standard) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956 along with the provisions of the Listing Agreement with the Stock Exchanges. The Audited Consolidated Financial Statements together with Auditors'' Report form part of the Annual Report.

ACKNOWLEDGEMENT

Your Directors would like to take this opportunity to express their deep sense of gratitude to the Banks, Central and State Governments and their departments and the local authorities for their continued co-operation and support. Your Directors would also like to place on record their sincere appreciation for the commitment, dedication and hard work put in by every member of the Shree family for the Company''s success and achievements and to its various stakeholders i.e. customers, dealers, suppliers, transporters, advisors, local community, etc. for their continued committed engagement with the Company.

For and on behalf of the Board

Place: New Delhi B. G. Bangur

Date : 25thAugust, 2014 Chairman


Jun 30, 2012

We have pleasure in presenting this Directors' Report of the company for the 15 months period ended 30th June, 2012. The Management Discussion and Analysis also forms part of this report.

Financial Results

During the year, the Board decided to change the Accounting year of the company from "period ending March" to "period ending June". Consequently, the accounting year for 2011-12 is of 15 months (from April 11 to June 12). Brief summary of the Company's financial performance is as under:

Rs. in Crore

Particulars 2011-12 (15 Months) 2010-11

Revenue from operation 5898.12 3453.53

Profit Before Depreciation, Interest and Taxes 1808.54 1009.93

Profit before Tax 687.75 110.35

Tax Expense 69.25 (99.35)

Profit after Tax 618.50 209.70

Balance of Profit & Loss brought forward from previous year 1139.09 1136.15

Profit available for appropriation 1757.59 1345.85

Appropriations:

Interim Dividend 41.81 20.90

Proposed Final Dividend 27.87 27.87

Dividend Distribution Tax

- Interim Dividend 6.78 3.47

- Proposed Final Dividend 4.52 4.52

Transferred to Debenture Redemption Reserve 300.00 125.00

Transferred to General Reserve 285.00 25.00

Surplus carried to Balance Sheet 1091.61 1139.09

Dividend

The Directors are pleased to recommend a final dividend @ Rs. 8 per share. Together with two interim dividends of Rs. 6/-per share each, total dividend for 2011-12 (15 months period ended 30th June, 12) would be Rs. 20 per share as against Rs.14 per share paid for the year 2010-11 (12 months). The total outgo on dividend payment for the 2011-12 amounts to Rs. 80.98 Crore including dividend distribution tax of Rs. 11.30 Crore as against Rs. 56.76 Crore including dividend distribution tax of Rs. 7.99 Crore of 2010-11.

Directors

Company deeply regrets the sad demise of Dr. Abid Hussain on 21st June, 2012. Dr. Hussain was a veteran economist and diplomat. He was known for his simplicity, depth, forthrightness and eloquence. During his association as an independent director on the Board of Shree Cement, since 2004, he made laudable contribution through his grander vision, proficient advice and able guidance. The Board of Directors would like to place on record its sincere gratitude to Dr. Hussain and appreciates the contribution made by him during his association with the Company.

During 2011-12, Shri B.G. Bangur who is one of the founder Directors and promoters of the Company expressed his desire to act as a Non- Executive Chairman and as such resigned from the position of Executive Chairman of the Company w.e.f. 23rd January 2012. Board while accepting the resignation of Shri Bangur from the Executive Chairmanship of the Company, re-appointed him as the Non-Executive

Chairman of the Company thereafter. The Board placed on record its appreciation for the valuable contribution made by him during his tenure as Executive Chairman.

In accordance with the provisions of the Articles of Association of the Company, (i) Shri O.P. Setia and (ii) Shri R.L. Gaggar, Directors of the Company, will retire by rotation at the ensuing Annual General Meeting of the Company and being eligible, offer them for re-appointment. The Board recommends their re-appointment.

Shri Mahendra Singhi was appointed as Executive Director for a period of five years which term will expire on 31st March, 2013. He is proposed to be re-appointed for another term of three years from 1st April, 2013. The Board recommends for his re-appointment.

Shri Prashant Bangur has been co-opted as Additional Director on the Board on 23rd August, 2012 and appointed as Whole-time Director for a period of five years from the same date. The term of appointment of Shri Prashant Bangur as additional Director shall expire at the ensuing annual general meeting in accordance with the provisions of the Companies Act, 1956 and Articles of Association of the Company. He being eligible, offers himself for re-appointment. The Board recommends for his re-appointment.

Further details about these Directors are given in the Notice of the ensuing Annual General Meeting being sent to the shareholders along with the Annual Report.

Directors' Responsibility Statement

Pursuant to the requirements of Section 217 (2AA) of the Companies Act, 1956, the Directors, to the best of their knowledge and belief and according to the information and explanations obtained by them, confirm that they have taken all reasonable steps, as are required, to ensure that;

- The applicable accounting standards have been followed in the preparation of the annual accounts for the year ended 30th June, 2012 and in case of material departures, proper explanation has been given in the Accounts and notes thereon

- Such accounting policies (as mentioned in the Notes forming part of financial statements) have been selected and applied consistently, and that the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company as at 30th June, 2012 and of the profit and cash flow of your Company for the 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 your Company and for preventing and detecting fraud and other irregularities

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

Auditors

The Statutory Auditors' of your Company M/s. B.R. Maheswari & Company, Chartered Accountants would retire at the ensuing Annual General Meeting. They have confirmed their eligibility under section 224 of the Companies Act, 1956 and willingness for re-appointment as Statutory Auditors of the Company.

The Board of Directors recommends the re-appointment of M/s. B.R. Maheswari & Company as Statutory Auditors from conclusion of ensuing Annual General Meeting till the conclusion of next Annual General Meeting.

The observations of the Auditors' in their report are self explanatory and, therefore, do not call for any further comments of the management on the observations of auditors.

Cost Audit

Pursuant to the directives of Central Government, your Company has appointed M/s. K. G. Goyal & Associates, Cost Accountants as Cost Auditors of the Company under section 233B of the Companies Act, 1956 for the year 2011-2012.

Transfer to Investor Education and Protection Fund

The Company has transferred a sum of Rs. 6.02 lacs during the year 2011-12 to the Investor Education and Protection Fund established by the Central Government, in compliance with Section 205C of the Companies Act, 1956. The said amount represents unclaimed dividend pertaining to year 2003-04 which was lying with the Company for a period of 7 years from its due date of payment. Prior to transferring the aforesaid sum, the Company sent reminders to the shareholders for submitting their claims for unclaimed dividend. The amount of unclaimed dividend for subsequent years is given in the Notice of ensuing AGM.

Information of Unpaid Dividend on Shree Cement and Ministry of Corporate Affairs Website

Ministry of Corporate Affairs vide notification dated 10th May, 2012 has notified 'Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012', which mandates every company to submit information of unclaimed and unpaid dividend amounts as referred to in subsection (2) of Section 205C of the Companies Act, 1956 and also upload investor-wise details of unclaimed and unpaid dividend on website of the MCA as well of the Company.

For the year ended 31st March, 2011, the said information was required to be uploaded latest by 31st July, 2012 (further extended till 31st August, 2012). Company is duly complying with the above requirement and is uploading the investor-wise details of unclaimed dividend on IEPF portal of Ministry of Corporate Affairs (MCA) and website of the Company.

Shareholders are advised to visit the website of the Company viz. www.shreecement.in and check their unpaid / unclaimed dividend status and contact the Company for encashment if the same is depicting unpaid.

Corporate Governance

A separate section on Corporate Governance together with a certificate from the Auditors of the Company regarding full compliance of conditions of Corporate Governance as stipulated under clause 49 of the Listing Agreement with the Stock Exchange(s) forms part of Annual Report.

Particulars of Employees'

As required under the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of employees are set out in the Annexure I forming part of this report.

Particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earning / Outgo.

The information required under Section 217 (1)(e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988 is set out in Annexure II forming part of this report.

Acknowledgement

Your Directors take this opportunity to place on record the co-operation and support received from various agencies of the Central Government and State Government(s), various Government departments and agencies, financial institutions and banks. Your Directors thank and express their gratitude to various stakeholders i.e. customers, dealers, suppliers, transporters, advisors, local community etc. for their committed engagement with the Company. Your Directors further appreciate the support and co-operation received from the employees for their contribution to the growth and success of the Company. Your Directors further express their deep sense of gratitude to the Shareholders for their confidence, faith and trust in the Company.

Your Company's consistent growth has been made possible only through the dedication and support of all the above stakeholders and we expect this support and confidence to keep growing.

For and on behalf of the Board

Place: Kolkata B. G. Bangur

Date: 23rd August, 2012 Chairman

 
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