Directors Report of Star Ferro and Cement Ltd.
Mar 31, 2016
Dear Shareholders,
The Directors have pleasure in presenting Sixth Annual Report of the Company together with the Audited Balance Sheet as at 31st March, 2016 and the Statement of Profit & Loss for the year ended on that date.
SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES
Your Company has five subsidiaries including step-down subsidiaries namely, Cement Manufacturing Company Limited (CMCL), Star Cement Meghalaya Limited (SCML), Megha Technical & Engineers Private Limited (MTEPL), Meghalaya Power Limited (MPL) and NE Hills Hydro Limited (NHHL).
CMCL along with its subsidiaries operates integrated Cement plants in the State of Meghalaya and Assam with a combined installed capacity of 2.87 MMTPA of Cement and 2.54 MMTPA of cement clinker. MPL is in the business of power generation and operates 51 MW Thermal Power Plant in the State of Meghalaya. NHHL is exploring possibilities of power generation in the North Eastern Part of India. The report on the financial position of
the Company''s Subsidiaries for the year ended 31st March, 2016 in Form AOC 1 is attached and marked as Annexure  1 to this report.
Your Company does not have any Associate or Joint Venture.
A Policy has been formulated for determining the Material Subsidiaries of the Company. The said Policy has been posted on the Company''s website at the weblink: http://www.starferrocement.co.in/admin/docs/policy-on-
material-subsidiary.pdf
INDIAN ECONOMY AND GLOBAL HEADWINDS
Amidst mixed global economic landscape, India stands out as a haven of stability and an outpost of opportunity. Its macro-economy remains stable, founded on the Government''s commitment to fiscal consolidation and low inflation. Country''s economic growth has remained the highest in the world, helped by a reorientation of Government spending towards needed public infrastructure and have been accomplished in the face of global headwinds and a second successive season of poor rainfall. During the Financial Year 2015-16 India as an economy fared well as compared to
most of the developing economies as also compared to developed economies. The signs of consolidation of Indian Economy which started reflecting during October-December Quarter of FY 2014- 15 were sustained and confirmed during the year under review. As against 7.2% of GDP growth during Financial Year 2014-15, Indian Economy is expected to register GDP growth rate of 7.6% during the FY 2015-16. Despite a weak monsoon for a second consecutive year, agriculture and food production both grew, although marginally, over previous year. Improvement in private consumption was witnessed largely on account of a pickup in urban consumption, while rural consumption remained subdued as a result of two consecutive weak monsoons. Government consumption growth also stayed tepid as the Central Government boosted capital expenditure and curtailed current expenditure. Increase in capital expenditure undertaken by the Central Government helped investment growth to improve further during the year under review as compared to previous Financial Year.
Inflationary pressures were largely under control mainly on account of sharp fall witnessed in the prices of oil as also on account of base rate effect and softening of food prices.
As against this, Global economic growth slowed in FY 2015-16 to its weakest pace since the year 2008-09. This was mainly led by slower growth in emerging economies. China''s real GDP growth was witnessed at 6.9% during the year 2015 which is one of the slowest in last 25 years reflecting a weaker growth in country''s industrial sector. Growth in other emerging economies also slowed in 2015 and more particularly in commodity producing countries. All major developed economies are expected
to see the growth momentum picking up. Despite expectations of a more robust recovery, developed economies continue to face considerable headwinds from the legacies of the global financial crisis, including subdued employment levels, elevated private and public sector debt and financial sector fragilities.
In the backdrop of above, Indian Economy is expected to pick up further growth momentum during the ensuing Financial Year, helped by the Government''s strengthening of public sector banks'' capital and operations, private investment benefitting from corporate deleveraging, the financing of stalled projects and an uptick in bank credit.
CEMENT SCENARIO IN INDIA - OPPORTUNITIES, CHALLENGES AND OUTLOOK
Cement is major business vertical for subsidiaries of your Company. India is one of the largest producer of Cement in world and only second to China. It accounts for nearly 8% of the total global production having close to 400 Million MT per annum installed capacity. The cement industry capacity doubled in the last decade, with about 70 Million MT added in the last three years alone. Cement, being a bulk commodity, is a freight intensive industry and transporting it over long distances can prove to be uneconomical. This has resulted in cement being largely a regional play with the industry divided into five main regions viz. North, South, West, East and the Central Region. The Southern region of India has the highest installed capacity, accounting for about one-third of the country''s total installed cement capacity.
On the consumption side, India has witnessed sustained growth in cement consumption since 2001. However, consumption growth has slowed down in last 4-5 years mainly on account of a slump in housing, infrastructure and commercial sector. The gap in the pace between capacity additions and actual demand has led to an excess capacity situation in the industry, resulting in sub-optimal utilization rates.
On Per Capita consumption front, cement in India still remains substantially low at about 195 kg which is less than 50% as compared with the world average and thus underlines the tremendous scope for growth in the Indian cement industry in the long term.
Cement is a cyclical commodity with a high correlation with GDP The housing sector is the biggest demand driver of cement, accounting for about two-thirds of the total consumption. The other major consumers of cement include infrastructure, commercial construction and industrial construction.
First half of FY 2015-16 witnessed slowdown in consumption and demand growth. However, second half of the Financial Year started with up-tick in demand which further consolidated during the last quarter of the Financial Year. Housing sector is the major demand driver. The slow growth in cement sector is expected to remain a short-term phenomenon with the Government''s focus on constructing 50 million houses under ''Housing for All'' scheme by 2022. Government''s other initiatives such as 100 smart cities, AMRUT cities, affordable housing as well as initiatives undertaken towards development of ports, roads, bridges, freight corridor, etc. are likely to provide further impetus to cement demand in India. This also gets reflected with Government''s intention to unshackle
the impediments in economic and infrastructural growth. The years ahead are expected to bring more cheers for Indian Cement Industry.
On the cost front power, fuel and logistic costs are the major cost drivers. Cost, quality and availability of coal are major cost driver for power as well as fuel so far as cement industry is concerned. Indian cement industry continued to face challenges on this front, both in terms of quality as well as prices. However, with all time low Baltic Dry Index (BDI), the landed cost of imported Petroleum Coke has been seen to be more cost effective for cement industry in terms of its cost as well as consistency in quality parameters. With unblocking of coal blocks and Governments intent to bring perceptible difference in power supply situation, both in terms of quantity and quality, it is expected that in years to come, the challenges currently being faced by Indian cement industry will be eased out.
In the backdrop of opportunities in Housing and Infrastructure sectors, India as an economy presents a promising future for cement industry.
EAST INDIA AND LAND OF SEVEN SISTERS Â AN OPPORTUNTY FOR CEMENT INDUSTRY
East India which comprises of States of West Bengal, Bihar, Jharkhand and Orrisa as well as eastern most North Eastern Region comprising of contiguous Seven Sister States namely, Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland and Tripura and Himalayan State Sikkim is endowed with opportunities. North East India is 8% of land size of India
where around 4% of Indian populace resides. The region offers a unique agglomeration comprising varied cultures, languages and dialects, different forms of belief and worship and diverse ways of life. Topography of North Eastern Region (NER) presents a panoramic view and an awe-inspiring landscape. Within these fascinating and fabulous environment of NER, rich potential wealth of mineral resources have been lying untapped, ready to be exploited for the benefit of the people and economy. Despite being endowed with vast natural resources in terms of
forests, biological diversity, hydroelectricity and petroleum, the
region has remained largely underdeveloped on account of poor infrastructure and limited connectivity, both within the region as well as with the rest of the country. The region, connected to the rest of India by a narrow stretch of land called the ''chicken''s neck'', needs infrastructure to support. Large Hydro potential that exists in NER and if exploited, has potential to export power to the power deficit Northern and Western regions of the country. This under development of the region presents a lot of opportunities for industrial and infrastructure growth within the region. Development of infrastructure such as roads, communications and electricity supply to remote hilly area will result in better quality of life. The improvement in power generation will in
turn help in establishing industries by annulling the effects of high transportation costs. Owing to proximity of the region with neighboring countries such as Bangladesh and Myanmar, the region has potential of augmenting trade.
On the socio-economic front, the region stands way below in comparison with the rest of India. Underdeveloped infrastructure has been one of major bottlenecks in development of region on socio-economic front. During recent years the Government has taken several steps to overcome these infrastructural bottlenecks to induce sustainable development in the region. The strong focus on roads, airports and hydropower developments are some of the key steps in this direction.
Realizing these opportunities, subsidiary of your Company CMCL started setting up its first cement plant in the State of Meghalaya of NER with a very small capacity of 0.3 Million MT more than a decade ago and started its commercial operations during later part of the FY 2004-05. The product and brand was well accepted in the markets of North East. Looking at the potential of the market, your subsidiary Company kept on adding the capacity which has reached to the level of 2.54 Million MT per annum
of Cement Clinker and around 2.87 Million MT of Cement in North East alone. With passage of time, your subsidiary has been able to spread its foot print in the entire North Eastern region in terms of its distribution network and enjoys a premium brand reputation commanding highest market share in North Eastern Region. Owing to the vast opportunities, markets of North Eastern Region continued to remain the focus market for the products of your subsidiaries.
During the year under review the region witnessed infrastructure growth story getting realized on the ground with two major highway projects dedicated to NER on 1st May, 2015. Shillong Bye-pass Highway Project and four-lane Jorabat - Barapani section of NH- 40 was opened for public on its completion. This has helped decongest the traffic in the city of Shillong from trucks and heavy vehicles coming from or moving towards North Eastern parts of Assam, Mizoram and Tripura apart from significant reduction in travel time and also ease of logistic operations for cement industry like your Company''s subsidiaries having factories in Meghalaya.
Much awaited broad gauge conversion work of Silchar-Lumding railway line on a stretch of 210 Kms was completed and opened for Goods and Passenger Traffic during the year under review. Similarly, the capital town of the landlocked State of Tripura appeared on a broad-gauge railway network connecting Tripura with the rest of the country. The project consists of 79 major bridges, 340 minor bridges and 21 tunnels. The rail line brings
Assam''s underdeveloped but strategically important Barak Valley as well as State of Tripura on the broad gauge map. During the year under review, the State of Arunachal Pradesh was presented with second Broad Gauge connectivity with the commissioning of Balipara - Bhalukpong gauge conversion project. Similarly, North Lakhimpur - Murkongselek sections were converted into broad- gauge during the year under review. Commissioning of newly converted North Lakhimpur - Murkongselek section marked the completion of Rangiya - Murkongselek Gauge Conversion project
running all along the North Bank of Brahmaputra. There are other major railway projects which are on a fast track of completion.
All the above developments are expected to provide better connectivity for goods and passenger traffic for overall benefit of public residing in these States and presents a promising future for cement industry in North East Region as also for economy of the region.
Simultaneous with expanding its horizon in the markets of North Eastern Region, your subsidiary which started its network expand in the markets of West Bengal and Bihar during the latter part of Financial Year 2013-14 has further consolidated its presence in these markets during the year under review. States of West Bengal and Bihar have also remained under developed as compared to rest of India and has tremendous growth opportunities in infrastructure and housing sector, two major demand drivers of cement. During the year under review the subsidiary Company
has successfully driven the marketing campaign in these States to bring the recall of its brand "STAR CEMENT" at the top of people''s mind. Looking at opportunities in these markets, subsidiary Company has further augmented its capacity in form of arrangements with grinding units in the State of West Bengal.
MARKET DEVELOPMENT
Despite slowdown in cement demand in rest of the country, growth in cement demand in NER was close to country''s GDP growth rate. During the year under review, cement demand in NER has grown by more than 7% over previous Financial Year. Over a period of time, cement import to NER from outside region has also reduced considerably. During the year under review less than 15% of cement was imported in the region from outside as
against more than 17% during previous Financial Year. During the year under review your subsidiary companies were able to sale 17,03,415 MT of cement in the markets of NER as against 14,98,380 MT during the FY 2014-15 and thus recording a growth of 13.7% over previous year.
Your Directors are pleased to report that markets of West Bengal and Bihar where the brand "STAR CEMENT" has been relatively a new player as compared to its positioning in the markets of North Eastern Region, has fared well during the year under review. Your subsidiary companies have been able to sale 9,26,280 MT of cement during the Financial Year 2015-16 in these markets as against 6,70,871 MT during the Financial Year 2014-15
registering a growth of 38% over previous year. To augment its capacity further in these markets, your subsidiary has made arrangements with one more grinding unit in the State of West Bengal during the year under review. With this arrangement, subsidiary has grinding arrangement of close to 1 Million MT of cement per annum. The capacity augmentation will help further in cutting down the logistic time to make the product available in these markets.
In line with its endeavor to focus trade segment of the business, your subsidiaries continued adding dealer and retail network across length and breadth of the North East Region as well as in the States of West Bengal and Bihar to make its foot prints more visible in these markets. At the close of the fiscal, your subsidiaries had dealer and retail network of more than 6000 spread across entire North East Region and 4000 in the States of West Bengal and Bihar on consolidated basis.
During the year under review your subsidiary Company CMCL has undertaken various marketing initiatives in order to make the brand "STAR CEMENT" more visible and attain top of mind recall. In the markets of North Bengal and Bihar, they launched its premium product "Star Anti-Rust Cement". Marketing Campaign called "Kismat Ki Bori" was launched in various markets of North Eastern Regions and outside the region too. During the year under review your subsidiary''s branding initiative in form of "Largest Idol of Goddess Durga" was a huge success story.
To make the brand more visible in remote areas, a block level branding campaign was undertaken. In addition, they conducted various knowledge sharing events mainly related to construction techniques in form of "Engineers'' Workshop" and "Star Tech" to impart training to engineers. Your subsidiary also conducted more than 50 "Mason Certification Programme" wherein masons were trained and their construction skills were certified jointly by your subsidiary Company and local engineering institutes. These initiatives has helped them to promote the brand "STAR
CEMENT" in a more effective manner in these markets and has also resulted into creation of better informed category of masons and engineers.
POWER BUSINESS
During the year under review, the performance of Meghalaya Power Limited, a step down subsidiary of the Company was very optimistic. The power generation has increased to 1,831.14 Lacs units as compared to 1,679.23 Lacs units recorded in the previous year. During the Financial year 2015-16, the Company has posted PBT of Rs. 1,472.07 Lacs and PAT of Rs. 1,082.84 Lacs as against Rs. 1,287.39 Lacs and Rs. 544.66 Lacs respectively recorded in the previous Financial Year.
OPPORTUNITIES & THREATS, RISKS AND CONCERNS
In the backdrop of initiatives being undertaken by the Central Government in form of "Housing for All'' and "Affordable Housing" in the urban and rural housing sector and initiatives in the areas of "Amrut and Smart Cities", Development of Ports, Roads and Highways, dedicated Freight Corridors, Gauge conversion Projects undertaken by Railways, development in the area of alternative source of energy vis Hydro and Solar Power and other infrastructure projects is expected to boost Cement and Power
Demand in the region where subsidiaries of your Company operates as well as in other parts of the country too.
India''s economy being too much dependent upon vagaries of monsoon, rains play an important factor which determines commodity demand growth including cement. Cement and power industry being majorly dependent upon availability of quality coal at affordable cost remains to be a concern. However, recent initiatives in the areas of unblocking of coal mines as also all-time low Baltic Dry Index (BDI) making availability of Petroleum Coke at a cheaper cost with high consistency in quality is expected to
address the concern to a great extent.
Your Company having business operations through its subsidiaries only, the Company has evolved a risk management framework to identify, assess and mitigate the key risk factors of the business of its Subsidiaries impacting your Company''s performance. The Board of the Company is kept informed about the risk management of the Company.
FINANCIAL PERFORMANCE
The highlights of the financial performance of the Company for the Financial Year ended 31st March, 2016 and previous Financial Year are
as under:
(Rs. in Lacs)
Particulars Consolidated Standalone
2015-16 2014-15 2015-16 2014-15
Net Sales/ Income 1,71,644.98 1,43,121.01 2,375.38 0.10
Profit Before
Depreciation,
Interest & Tax 39,931.24 43,584.75 2,225.93 (138.55)
Depreciation (17,149.21) (22,374.29) - -
Interest and
Finance Charges (8,336.77) (8,738.47) (0.01) (0.03)
Exceptional Items (53.14) 1.83 - -
Profit Before
Tax 14,392.13 12,473.82 2,225.92 (138.58)
Tax Expenses (551.06) (480.13) 44.56 -
Profit after Tax
before Minority
Interest 13,841.06 11,993.69 2,270.48 (138.58)
Less: Minority
Interest (4,643.59) (3,650.03) - -
Net profit after
Minority
Interest 9,197.48 8,343.66 - -
Surplus in the
Statement of
Profit & Loss:
At the beginning
of the year 44,838.24 37,165.12 41.61 180.20
Add: Profit for
the year 9,197.48 8,343.66 2,270.48 (138.58)
-Less: Interim
Dividend on
Equity Shares 2,221.73 - 2,221.73 -
-Less: Tax on
Interim Equity
Dividend - - - -
-Less: Tax on
Proposed Equity
Dividend - 670.55 - -
-Less: Transfer
to General
Reserve - - - -
Balance at the
end of the year 51,813.98 44,838.24 90.36 41.61
SHARE CAPITAL
The paid up Equity Share Capital as on March 31, 2016 was Rs. 2,221.73 Lacs. During the year under review, the Company has not issued any shares with differential voting rights nor granted stock options or sweat equity shares.
EXTRACT OF ANNUAL RETURN
In terms of requirement of Section 134 (3) (a) of the Companies Act, 2013, the extract of the Annual return in form MGT-9 is annexed herewith and marked Annexure-2.
MEETINGS OF THE BOARD
During the year seven (7) Board meetings and five (5) Audit Committee meetings were convened and held. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. The details of the Board meetings and the Committee meetings are provided in the Corporate Governance Report.
MEETINGS OF INDEPENDENT DIRECTORS
During the year under review, a meeting of Independent Directors was held on 21st March, 2016 wherein the performance of the Non-Independent Directors and the Board as a whole was reviewed. The Independent Directors at their meeting also, inter-alia, assessed the quality, quantity and timeliness of flow of information between the Company management and the Board of Directors of the Company.
COMMITTEES OF THE BOARD
The composition and terms of reference of the Audit Committee, Nomination and Remuneration Committee and Stakeholders Relationship Committee have been furnished in the Corporate Governance Report forming part of this Annual Report. There has been no instance where the Board has not accepted the recommendations of the Audit Committee and Nomination and
Remuneration Committee.
WHISTLE BLOWER POLICY/ VIGIL MECHANISM
The Company has a Whistle Blower Policy/ Vigil Mechanism as required under Section 177 of the Companies Act, 2013 and as per Listing Obligations and Disclosures Requirements Regulations, 2015 formulated by Securities and Exchange Board of India (SEBI). The Vigil (Whistle Blower) mechanism provides a channel to the employees and Directors to report to
the management, concerns about unethical behavior, actual or suspected fraud or violation of the Code of Conduct or policy. The mechanism provides for adequate safeguards against victimization of employees and Directors to avail the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases. The said policy may be referred to at the Company''s website at the weblink: http://www.starferrocement. co.in/admin/docs/Whistle-Blower-Policy.pdf
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to requirement of Section 134 (3) (c) read with Section 134 (5) of the Companies Act, 2013, the Directors hereby confirm and state that:
- In the preparation of Annual Accounts, the applicable Accounting Standards have been followed along with the proper explanation relating to material departures, if any.
- The Directors have selected such accounting policies and have 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, 2016 and of the profit of the Company for the year under review.
- The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities.
- The Directors have prepared the annual accounts on going concern basis.
- The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
- The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.
DECLARATION BY INDEPENDENT DIRECTORS
All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013. Mr. Manindra Nath Banerjee, Mr. Santanu Ray, Mr. Mangilal Jain and Mrs. Plistina Dkhar are Independent Directors on the Board of your Company. In the opinion of the Board and as confirmed by these Directors, they fulfil the conditions specified in Section 149 of the Act and the Rules made thereunder about their status as Independent
Director of the Company.
FAMILIARIZATION PROGRAMME UNDERTAKEN FOR INDEPENDENT DIRECTORS
In order to enable the Independent Directors to perform their duties optimally, the Board has devised a familiarization programme for the Independent Directors to familiarize them with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc. They are
periodically updated about the development which takes place in the Company. The Independent Directors have been issued Letter of Appointment setting out in detail, the terms of appointment, duties, responsibilities and commitments etc. The familiarization program is available on the Company''s website under the weblink: http://www.starferrocement.co.in/admin/ docs/familiarisation-programme.pdf
POLICY ON APPOINTMENT AND REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND SENIOR MANAGEMENT EMPLOYEES
The Board has framed a Remuneration Policy for selection, appointment and remuneration of Directors, Key Managerial Personnel and Senior Management Employees. The remuneration policy aims to enable the Company to attract, retain and motivate highly qualified members for the Board and at other
executive levels. The remuneration policy seeks to enable the Company to provide a well-balanced and performance-related compensation package, taking into account shareholder interests, industry standards and relevant Indian corporate regulations. The details on the same are given in the Corporate Governance Report.
AUDITORS & AUDITORS'' REPORT
M/s. Kailash B. Goel & Co., Chartered Accountants (Firm Registration no. 322460E) Statutory Auditors of the Company, will retire at the conclusion of the ensuing Annual General Meeting of the Company. Being eligible, they have offered themselves for re-appointment and have confirmed that their appointment, if made, will be in accordance to the provisions
of Section 141 read with Section 139 of the Companies Act, 2013 and the rules framed there under for re-appointment of auditors. The Board, on recommendation of the Audit Committee, recommends the appointment of M/s. Kailash B. Goel & Co., as Statutory Auditors of the Company for a period of 5 (five years) from the date of ensuing Annual General Meeting
subject to approval of their appointment by the shareholders in the ensuing Annual General Meeting and ratification of their appointment in Annual General Meetings to be held subsequent to ensuing Annual General Meeting during the tenure of their appointment.
Members are requested to consider and approve their appointment as Statutory Auditors of the Company and are also requested to empower the Board of Directors for fixation of Auditor''s Remuneration.
The notes to the accounts referred to in the Auditors'' Report are self-explanatory and therefore, do not call for any further comments.
SECRETARIAL AUDIT
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. Manoj Kumar Banthia, Practicing Company Secretary of M/s. MKB & Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith
marked Annexure-3. The report is self-explanatory and do not call for any further comments.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
During the year under review, your Company has not given any loan or guarantee to any person falling under ambit of Section 186 of the Companies Act, 2013.
Details of Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.
RELATED PARTY TRANSACTIONS
During the year under review, there were no materially significant related party transactions made by the Company with Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the Company at large.
A policy on ''Related Party Transactions'' has been devised which may be referred to at the Company''s website at the weblink: http://www.starferrocement.co.in/admin/docs/related-party- transaction-policy.pdf.
RESERVES
During the year under review no amount was transferred to reserves.
DIVIDEND
During the year, your Company has declared an interim dividend of Rs. 1.00 per equity share. In order to conserve resources for future operations, your Directors do not recommend any final dividend for the year ended March 31, 2016.
CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
As the Company does not have any direct business operations, there is nothing to report under this segment.
FOREIGN EXCHANGE EARNING AND OUT-GO
During the year under review, there was no Foreign Exchange Earning and Out-go.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES (CSR)
Your Company''s Corporate Social Responsibility (CSR) Policy is committed towards improving the quality of life of communities by working on four thrust areas - employability, education, health and environment.
Company''s Corporate Social Responsibility Committee is headed by Mr. Sajjan Bhajanka, Director of your Company and consists of members as stated below:
Sl. Name Category Chairman/ Members
No.
1. Mr. Sajjan Bhajanka Non-Independent Chairman
2. Mr. Hari Prasad Agarwal Non-Independent Member
3. Mr. Mangilal Jain Independent Member
Annual Report on CSR as required to be annexed in terms of requirement of Section 135 of Companies Act, 2013 and rules framed thereunder is annexed herewith and marked Annexure-4.
The CSR Policy of the Company is available on the Company''s website under the weblink: http://www.starferrocement.co.in/ admin/docs/csr-policy.pdf
EVALUATION OF THE BOARD''S PERFORMANCE
In compliance with the Companies Act, 2013 and as per Listing Obligations and Disclosures Requirements Regulations, 2015 formulated by Securities and Exchange Board of India (SEBI), the Company has adopted a policy for evaluation of performance of the Board of Directors. The Board follows a formal mechanism for the evaluation of the performance of the Board as well as Committee.
A structured questionnaire was prepared after taking into consideration inputs received from the Directors, covering various aspects of the Board''s functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance.
The Nomination and Remuneration Committee at its meeting established the criteria based on which the Board will evaluate the performance of the Directors.
A separate exercise was carried out to evaluate the performance of individual Directors including the Chairman of the Board on parameters such as level of engagement and contribution, independence of judgment, safeguarding the interest of the Company and its minority shareholders, etc. The performance evaluation of the Non-Independent Directors and Board as a whole was also carried out by the Independent Directors.
The Directors expressed their satisfaction over the evaluation process and results thereof.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year under review, Mr. Sanjay Agarwal will retire by rotation and being eligible offers himself for re-appointment. In view of his considerable experience, your Directors recommend his re-appointment as a Director of the Company.
The shareholders have ratified the appointment of Mr. Manindra Nath Banerjee, Mr. Santanu Ray, Mr. Mangilal Jain and Mrs. Plistina Dkhar as Independent Directors at the Annual General Meeting held on 20th September, 2014 for a period of five years.
The following personnel are the Key Managerial Personnel of the Company:
1. Mr. Sanjay Kumar Gupta - Chief Executive Officer
2. Mr. Dilip Kumar Agarwal - Chief Financial Officer
3. Mr. Debabrata Thakurta - Company Secretary
POLICY ON PREVENTION OF SEXUAL HARASSMENT
The Company values the integrity and dignity of its employees. The Company has put in place a ''Policy on Prevention of Sexual Harassment'' as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 ("Sexual Harassment Act"). We affirm that adequate access has been provided to any complainants who wish to register a complaint under the policy. No complaint was received during
the year.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company have been prepared in accordance to requirements of Accounting Standards (AS-21), as prescribed by the Institute of Chartered Accountants of India and has been included as a part of this Annual Report.
The detailed financial statements and audit reports of each of the subsidiaries of the Company are available for inspection at the Registered Office of the Company during office hours between 11 A.M. and 1 P.M. As per the provisions of Section 136 of the Companies Act, 2013, separate audited financial statements of its subsidiaries are being
placed on its website: www.starferrocement.co.in and the Company will arrange to send the financial statements of the subsidiaries upon written request from the shareholders to their registered address.
DEPOSITS
During the year under report, the Company has not accepted any deposits from public or from any of the Directors of the Company or their relatives falling under ambit of Section 73 of the Companies Act, 2013.
CHANGES IMPACTING GOING CONCERN STATUS AND COMPANY''S OPERATIONS
During the year under review, there have been no material orders passed by the Regulators/Courts impacting, materially, the going concern status or future operations of the Company.
There were no material changes and commitments affecting the financial position of the Company during the period under review.
ADEQUACY OF INTERNAL FINANCIAL CONTROL
The Company maintains comprehensive internal control system, commensurate with the size of its operations and monitoring procedure for all the major processes to ensure reliability of financial reporting, timely feedback on achievement of operational and strategic goals, compliance with policies, procedures, laws and regulations, safeguarding of assets and economical and efficient use of resources.
The Internal Audit Department of the Company periodically reviews the effectiveness and efficacy of Internal Control Systems and procedures. Audits are finalized and conducted based on internal risk assessments. Significant deviations from the standard procedures are brought to the notice of the Board periodically and corrective measures are recommended for implementation. All these steps facilitate timely detection of any
irregularities, frauds and errors and early remedial measures to be undertaken so that no monetary losses are sustained. Significant audit observations, if any, and corrective actions thereon are presented to the Audit Committee of the Board.
INTERNAL CONTROL OVER FINANCIAL REPORTING
The Company has in place adequate internal financial controls commensurate with the size, scale and complexity of its operations. During the year, such controls were tested andno reportable material weakness in the design or operations were observed. The Company has policies and procedures in place for ensuring proper and efficient conduct of its business, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information.
MANAGERIAL REMUNERATION
Disclosures with respect to the remuneration of Directors and employees as required under Section 197 of Companies Act, 2013 and Rule 5 (1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith and marked Annexure- 5.
PARTICULARS OF EMPLOYEES
The Company has no employee whose remuneration exceeds the limit prescribed under Section 197 of the Companies Act, 2013 read with Rule 5(2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
CORPORATE GOVERNANCE
The Company has complied with the corporate governance requirements as stipulated under the Listing Obligations and Disclosures Requirements Regulations, 2015 formulated by Securities and Exchange Board of India (SEBI). A separate section on corporate governance, along with a certificate from the auditors confirming the compliance, is annexed and forms part of the Annual Report. This certificate will be forwarded to the Stock Exchanges along with the Annual Report of the Company.
CHIEF EXECUTIVE OFFICER (CEO) /CHIEF FINANCIAL OFFICER (CFO) CERTIFICATION
As required under Regulation 17(8) of the Listing Obligations and Disclosures Requirements Regulations, 2015 formulated by Securities and Exchange Board of India (SEBI), the CEO/CFO certification has been submitted to the Board and a copy thereof is contained in this Annual Report.
GREEN INITIATIVES IN CORPORATE GOVERNANCE
Ministry of Corporate Affairs has permitted Companies to send copies of Annual report, Notices, etc., electronically to the email IDs of shareholders. Your Company has arranged to send the soft copies of these documents to the registered email IDs of the shareholders, wherever applicable. In case, any shareholder would like to receive physical copies of these documents, the same shall be forwarded upon receipt of written request in this respect.
HUMAN RESOURCE DEVELOPMENT & INDUSTRIAL RELATIONS
The Company has always provided a congenial atmosphere for work to all sections of society. It has provided equal opportunities of employment to all irrespective to their caste, religion, color, marital status and sex. The Company believes that human capital of the Company is its most valuable assets and its human resource policies are aligned towards this objective.
The Company focuses on enhancing organizational performance by focusing on quick grievance resolution mechanisms and maintaining cordial relations with employees and workmen across all levels. The relation amongst its employees remained harmonious and the year under review remained free from any labor unrest.
Your Directors are pleased to report that during the year under review, direct subsidiary of your Company M/s. Cement Manufacturing Company Limited (CMCL) was awarded with Certificate of Appreciation in recognition for the valuable contribution towards "Best HR Practices in Employee Engagement" held by National HRD Network (NHRDN)
in Bhubaneswar on 29th January, 2016 followed by HR & Leadership Award in the area of "Excellence in Employee Engagement" by ABP News on 16th February, 2016 at Mumbai.
During the year under report, there has not been any material change in Human Resources, Industrial Relations and number of people employed.
AWARDS AND ACCOLADES
Your Directors are pleased to report that during the year under review, your Company was awarded ET Bengal Corporate Awards 2016 under category "Fastest Growing Company above Rs. 1000 Crs." on 23rd January, 2016 at Kolkata. Your power Subsidiary M/s. Meghalaya Power Limited (MPL) was awarded with First Prize in National Energy Conservation Awards, 2015
by Ministry of Power, Government of India under <100 MW Thermal Power Plants category at a ceremony held at New Delhi on 14th December, 2015.
CAUTIONARY STATEMENT
Statements in this report describing the Company''s objectives, expectations or predictions, may be forward looking within the meaning of applicable securities laws and regulations.
Actual results may differ materially from those expressed in the statement. Important factors that could influence the Company''s operations include: global and domestic demand and supply conditions affecting selling prices, new capacity additions, availability of critical materials and their cost, changes in
Government policies and tax laws, economic development of the country and other factors which are material to the business operations of the Company.
ACKNOWLEDGEMENT
Your Directors take this opportunity to express their deep sense of gratitude to the Banks, Central and State Governments and their departments and the Local Authorities, Customers, Vendors, Business partners/associates and Stock Exchanges for their continued guidance 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 Company and recognize their contribution towards Company''s achievements. Your Directors express their gratitude to the shareholders of the Company for reposing their confidence and trust in the Management of the Company.
For and on behalf of the Board of Directors
Place: Kolkata Sajjan Bhajanka
Date: 3rd May, 2016 Chairman
(DIN: 00246043)
Mar 31, 2015
Dear Shareholders,
The Directors have pleasure in presenting the Fifth Annual Report of
the Company together with the Audited Balance Sheet as at 31st March,
2015 and the Statement of Profit and Loss for the year ended on that
date.
FINANCIAL PERFORMANCE
Financial Statements for the year ended on 31st March, 2015 have been
drawn after considering the effect of the demerger of Ferro Alloy
Division with effect from 1st April, 2014, being the appointed date and
are not comparable with Financial Results for the year 2013-14.
The highlights of the financial performance of the Company for the
financial year ended 31st March, 2015 and previous financial year are
as under:
(Rs.in lacs)
Particulars Consolidated Standalone
2014-15 2013-14 2014-15 2013-14
Net Sales/Income 143,121.01 1,17,587.81 0.10 15,318.86
Profit Before
Depreciation,
Interest and Tax 43,584.75 25,745.67 (138.55) 2848.06
Depreciation (22,374.29) (16,163.64) - (480.46)
Interest and
Finance Charges (8,738.47) (8,721.20) 0.03 (399.57)
Exceptional Items 1.83 (101.21) - 9.56
Profit Before Tax 12,473.82 759.62 (138.58) 1,977.58
Tax Expenses (480.13) (270.80) - (404.35)
Profit after Tax
before Minority
Interest 11,993.69 488.82 (138.58) 1,573.23
Less: Minority
Interest (3,650.03) (123.63) - -
Net profit after
Minority Interest 8,343.66 612.44 - -
Surplus in the
Statement of Profit
and Loss:
At the beginning
of the year 37,165.12 37,994.31 180.20 (558.86)
Add: Profit for
the year 8,343.66 612.44 (138.58) 1,573.23
-Less: Interim
Dividend on Equity
Shares - 1,042.52 - 733.17
-Less: Tax on
Interim Equity
Dividend - 178.11 - -
-Less: Tax on
Proposed Equity
Dividend (670.55) - - -
-Less: Transfer
to General Reserve - 221.00 - 101.00
Balance at the
end of the year 44,838.23 37,165.12 41.61 180.20
SHARE CAPITAL
The paid up Equity Share Capital as on March 31, 2015 was Rs.2,221.73
lacs. During the year under review, the Company has not issued shares
with differential voting rights nor granted stock options or sweat
equity shares.
EXTRACT OF ANNUAL RETURN
In terms of requirement of Section 134(3)(a) of the Companies Act,
2013, the extract of the Annual return in form MGT-9 is annexed
herewith and marked Annexure 1.
MEETINGS OF THE BOARD
During the year, six (6) Board Meetings and five (5) Audit Committee
Meetings were convened and held. The intervening gap between the
Meetings was within the period prescribed under the Companies Act,
2013. The details of the Board meeting and the Committee meeting are
provided in the Corporate Governance Report.
MEETINGS OF INDEPENDENT DIRECTORS
During the year under review, a meeting of Independent Directors was held
on 19th March, 2015 wherein the performance of the Non-independent
Directors and the Board as a whole was reviewed. The Independent
Directors at their meeting also assessed the quality, quantity and
timeliness of flow of information between the Company management and
the Board of Directors of the Company.
COMMITTEES OF THE BOARD
The composition and terms of reference of the Audit Committee,
Nomination and Remuneration Committee and Share Transfer cum
Stakeholders Relationship Committee has been furnished in the Corporate
Governance Report forming a part of this Annual Report. There has been
no instance where the Board has not accepted the recommendations of the
Audit Committee and Nomination and Remuneration Committee.
WHISTLE BLOWER POLICY/VIGIL MECHANISM
The Company has formed a Whistle Blower PolicyA/igil Mechanism as
required under Section 177 of the Companies Act, 2013 and Clause 49 of
the Listing Agreement. A Vigil (Whistle Blower) mechanism provides a
channel to the employees and Directors to report to the management
concerns about unethical behaviour, actual or suspected fraud or
violation of the codes of conduct or policy. The mechanism provides for
adequate safeguards against victimisation of employees and Directors to
avail of the mechanism and also provide for direct access to the
Chairman of the Audit Committee in exceptional cases. The said policy
may be referred to at the Company's website at the web link:
http://www.starferrocement.co.in/admin/docsAA/histle-
Blower-Policy.pdf.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirements of Section 134(3)(c) read with Section
134(5) of the Companies Act, 2013, the Directors hereby confirm and
state that:
In the preparation of Annual Accounts, the applicable Accounting
Standards have been followed along with the proper explanation relating
to material departures, if any;
The Directors have selected such accounting policies and have 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, 2015 and of the profit of the Company
for the year under review;
The Directors have taken proper and sufficient care for the maintenance
of adequate accounting records in accordance with the provisions of
this Act for safeguarding the assets of the Company and for preventing
and detecting fraud and other irregularities;
The Directors have prepared the Annual Accounts on going concern basis;
The Directors have devised proper systems to ensure compliance with the
provisions of all applicable laws and that such systems were adequate
and operating effectively;
The Directors have laid down internal financial controls to be followed
by the Company and that such internal financial controls are adequate
and were operating effectively.
DECLARATION BY INDEPENDENTDIRECTORS
All Independent Directors have given declarations that they meet the
criteria of independence as laid down under Section 149(6) of the
Companies Act, 2013. Mr. Manindra Nath Banerjee, Mr. Santanu Ray, Mr.
Mangilal Jain and Mrs. Plistina Dkhar are Independent Directors on the
Board of your Company. In the opinion of the Board and as confirmed by
these Directors, they fulfil the conditions specified in Section 149 of
the Act and the Rules made thereunder about their status as Independent
Directors of the Company.
FAMILIARISATION PROGRAMME UNDERTAKEN FOR INDEPENDENT DIRECTORS
In order to enable the Independent Directors to perform their duties
optimally, the Board has devised a familiarisation programme for the
Independent Directors to familiarise them with the Company, their
roles, rights, responsibilities in the Company, nature of the industry
in which the Company operates, business model of the Company, etc. They
are periodically updated about the development which takes place in the
Company. The Independent Directors have been issued Letters of
Appointment setting out in detail, the terms of appointment, duties,
responsibilities and commitments etc. The familiarisation programme is
available on the Company's website under the web link: http://www.
starferrocement.co. in/ad mi n/docs/Familiarisation-Programme, pdf.
POLICY ON APPOINTMENT AND REMUNERATION OF DIRECTORS
The Board has framed a Remuneration Policy for selection, appointment
and remuneration of Directors, Key Managerial Personnel and Senior
Management Employees. The Remuneration Policy aims to enable the
company to attract, retain and motivate highly qualified members for
the Board and other executive levels. It seeks to enable the Company to
provide a well-balanced and performance-related compensation package,
taking into account shareholder interests, industry standards and
relevant Indian corporate regulations. The details on the same are
given in the Corporate Governance Report.
AUDITORS AND AUDITORS' REPORT
M/s. Kailash B. Goel and Co., Chartered Accountants, Statutory Auditors
(Firm Registration no. 322460E) of the Company, will retire at the
conclusion of the ensuing Annual General Meeting of the Company. Being
eligible, they have offered themselves for re-appointment and have
confirmed that their appointment, if made, will be in accordance with
the provisions of Section 141 read with Section 139 of the Companies
Act, 2013 and the rules framed thereunder for re-appointment of
auditors. Members are requested to approve and ratify their
appointment. Members are also requested to empower the Board of
Directors for fixing the Auditor's Remuneration.
The notes to the accounts referred to in the Auditors' Report are
self-explanatory and, therefore, do not call for any further comments.
SECRETARIAL AUDIT
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, the Company has appointed. Mr. Manoj Kumar
Banthia, Practising Company Secretary of M/s. M K B & Associates, a
firm of Company Secretaries in Practice, to undertake the Secretarial
Audit of the Company. The Secretarial Audit Report is annexed herewith
and marked Annexure 2. The report is self-explanatory and does not
call for any further comments.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
During the year under review, your Company has not given any loan or
guarantee to any person falling under the ambit of Section 186 of the
Companies Act, 2013.
Details of investments covered under the provisions of Section 186 of
the Companies Act, 2013 are given in the notes to the Financial
Statements.
RELATED PARTY TRANSACTIONS
During the year under review, there were no materially significant
related party transactions made by the Company with Promoters, Key
Managerial Personnel or other designated persons which may have
potential conflict with interests of the Company at large.
A policy on Related Party Transactions has been devised by the Company
which may be referred to at the Company's website at the web link
http://www.starferrocement.co.in/admin/docs/
Related-Party-Transaction-Policy.pdf.
RESERVES
During the year under review, no amount was transferred to reserves.
DIVIDEND
Keeping in view the tight liquidity position in the market and in order
to conserve funds for working capital needs, your Directors do not
recommend any dividend for the FY 2014-15.
CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
In view of the transfer of Ferro Alloy business of the Company, there
is nothing to report under this segment.
FOREIGN EXCHANGE EARNING AND OUT-GO
During the year under review, there was no foreign exchange earning and
out-go.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES (CSR)
Your Company's Corporate Social Responsibility (CSR) Policy is
committed towards improving the quality of life of communities by
working on four thrust areas - employability, education, health and
environment.
During the year under review, the Company has constituted the Corporate
Social Responsibility Committee as per the requirements of Section 135
of the Companies Act 2013. The Committee is headed by Mr. Sajjan
Bhajanka, Director of your Company and consists of members as stated
below:
Name Category Chairman/ Members
Mr. Sajjan Bhajanka Non-independent Chairman
Mr. Mangilal Jain Independent Member
Mr. Hari Prasad Non-independent Member
Agarwal
Annual Report on CSR, as required to be annexed in terms of requirement
of Section 135 of Companies Act, 2013 and rules framed thereunder, is
annexed herewith and marked Annexure- 3.
The CSR Policy of the Company is available on the Company's website
under the web link: http://www.starferrocement.co.in/
admin/docs/CSR-Policy.pdf.
EVALUATION OF THE BOARD'S PERFORMANCE
In compliance with the Companies Act, 2013 and Clause 49
of the Listing Agreement, the Company has adopted a policy for
evaluation of performance of the Board of Directors. The Board follows
a formal mechanism for the evaluation of the performance of the Board
as well as Committee.
A structured questionnaire was prepared after taking into consideration
inputs received from the Directors, covering various aspects of the
Board's functioning such as adequacy of the composition of the Board
and its Committees, Board culture, execution and performance of
specific duties, obligations and governance.
The Nomination and Remuneration Committee at its meeting established
the criteria based on which the Board will evaluate the performance of
the Directors.
A separate exercise was carried out to evaluate the performance of
individual Directors including the Chairman of the Board, on parameters
such as level of engagement and contribution, independence of
judgement, safeguarding the interest of the Company and its minority
shareholders, etc. The performance evaluation of the Non-independent
Directors and the Board as a whole was also carried out by the
Independent Directors.
The Directors expressed their satisfaction over the evaluation process
and results thereof.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year under review, Mr. Hari Prasad Agarwal resigned as
Managing Director of the Company with effect from 1st September, 2014
and is continuing as Non-Executive member of the Board. In accordance
with the provisions of Companies Act, 2013 and in terms of the
Memorandum and Articles of Association of the Company, Mr. Hari Prasad
Agarwal will retire by rotation and, being eligible, offers himself for
re-appointment. In view of his considerable experience, your Directors
recommend his re-appointment as a Director of the Company.
The shareholders have ratified the appointment of Mr. Manindra Nath
Banerjee, Mr. Santanu Ray, Mr. Mangilal Jain and Mrs. Plistina Dkhar
as Independent Directors at the Annual General Meeting held on 20th
September, 2014 for a period of five years.
During the year under review Mr. Ravi Prakash Mundhra, Company
Secretary, and Mr. Om Prakash Lohia, Chief Financial Officer, resigned
from the services of the Company with effect from 9th August, 2014 and
28th August, 2014 respectively. The Board places on record their
appreciation for the services and contribution made by them during
their tenure.
The Board of Directors had, on the recommendation of the Nomination and
Remuneration Committee, appointed Mr. Sanjay Kumar Gupta as Chief
Executive Officer and Mr. Dilip Kumar Agarwal as Chief Financial
Officer with effect from 20th September, 2014 and Mr. Debabrata
Thakurta has been appointed as Company Secretary with effect from 13th
August, 2014.
The following personnel are Key Managerial Personnel of the Company:
Name Chairman/ Members
Mr. Sanjay Kumar Gupta Chief Executive Officer
Mr. Dilip Kumar Agarwal Chief Financial Officer
Mr. Debabrata Thakurta Company Secretary
SUBSIDIARIES AND ASSOCIATES
Consequent to the Scheme of Arrangement being effective, the Company's
investment in Meghalaya Power Limited has been transferred to and
vested in Shyam Century Ferrous Limited.
Cement Manufacturing Company Limited (CMCL), Star Cement Meghalaya
Limited (SCML), Megha Technical and Engineers Private Limited (MTEPL),
Meghalaya Power Limited (MPL) and NE Hills Hydro Limited (NHHL)
continued to be the subsidiaries of your Company. CMCL, along with its
subsidiaries, operates integrated cement plants in the states of
Meghalaya and Assam with a combined installed capacity of 2.87 MMTPA of
cement and 2.54 MMTPA of clinker. MPL is in the business of power
generation and operates 51 MW Power Plant in the state of Meghalaya.
NHHL is exploring possibilities of power generation in the North
Eastern region of India.
A Policy has been formulated for determining the Material Subsidiaries
of the Company pursuant to Clause 49 of the Listing Agreement with the
Stock Exchanges. The said Policy has been posted on the Company's
website at the web link http:// www. starferrocement. co. in/ad m
in/docs/Pol icy-On-Materia I- Subsidairy.pdf.
POLICY ON PREVENTION OF SEXUAL HARASSMENT
The Company values the integrity and dignity of its employees. The
Company has put in place a 'Policy on Prevention of Sexual Harassment'
as per the Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013 ("Sexual Harassment Act"). We
affirm that adequate access has been provided to any complainants who
wish to register a complaint under the policy. No complaint was
received during the year.
AUDITED FINANCIAL STATEMENTS OF THE COMPANY'S SUBSIDIARIES
Pursuant to Sub-section (3) of Section 129 of the Act, the statement
containing the salient features of the financial statements for the
year ended March 31, 2015 for each of the Company's subsidiaries viz.
Cement Manufacturing Company Limited (CMCL), Star Cement Meghalaya
Limited (SCML), Megha Technical and Engineers Private Limited (MTEPL),
Meghalaya Power Limited (MPL) and NE Hills Hydro Limited (NHHL) are
annexed in the Form AOC - 1 and marked as Annexure-4.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company have been prepared
as per Accounting Standards - AS 21, as prescribed by the Institute of
Chartered Accountants of India, and has been included as a part of this
Annual Report.
The detailed financial statements and audit reports of each of the
subsidiaries of the Company are available for inspection at the
Registered Office of the Company during office hours between 11 A.M.
and 1 P.M. As per the provisions of Section 136 of the Companies Act,
2013, separate audited financial statements of its subsidiaries are
being placed on its website www.starferrocement.co.in and the Company
will arrange to send the financial statements of the subsidiaries upon
written request from the shareholders to their registered address.
DEPOSITS
During the year under report, the Company has not accepted any deposits
from public or from any of the Directors of the Company or their
relatives falling under the ambit of Section 73 of the Companies Act,
2013.
CHANGES IMPACTING GOING CONCERN STATUS AND COMPANY'S OPERATIONS
During the year under review, there have been no material orders passed
by the Regulators/Courts impacting materially the going concern status
or future operations of the Company except the order passed by the
Hon'ble Meghalaya High Court in respect of Scheme of Arrangement as
mentioned in the foregoing paragraph.
ADEQUACY OF INTERNAL FINANCIAL CONTROL
The Company maintains a comprehensive internal control system
commensurate with the size of its operations and monitoring procedure
for all the major processes to ensure reliability of financial
reporting, timely feedback on achievement of operational and strategic
goals, compliance with policies, procedures, laws and regulations,
safeguarding of assets and economical and efficient use of resources.
The Internal Audit Department of the Company periodically reviews the
effectiveness and efficacy of Internal Control Systems and procedures.
Audits are finalised and conducted based on internal risk assessments.
Significant deviations from the standard procedures are brought to the
notice of the Board periodically and corrective measures are
recommended for implementation. All these steps facilitate timely
detection of any irregularities, frauds and errors and early remedial
measures to be undertaken so that no monetary losses are sustained.
Significant audit observations and corrective actions thereon are
presented to the Audit Committee of the Board.
MANAGERIAL REMUNERATION
Disclosures with respect to the remuneration of Directors and employees
as required under Section 197 of Companies Act, 2013 and Rule 5 (1)
Companies (Appointment and Remuneration of Managerial Personnel) Rules,
2014 is annexed herewith and marked Annexure- 5.
PARTICULARS OF EMPLOYEES
The Company has no employee whose remuneration exceeds the limit
prescribed under Section 197 of the Companies Act, 2013 read with Rule
5(2) of The Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014.
CORPORATE GOVERNANCE
The Company has complied with the Corporate Governance requirements as
stipulated under the Listing Agreement with the Stock Exchanges. A
separate Section on Corporate Governance, along with a certificate from
the auditors confirming the compliance, is annexed and forms part of
the Annual Report. This certificate will be forwarded to the Stock
Exchanges along with the Annual Report of the Company.
CHIEF EXECUTIVE OFFICER (CEO) /CHIEF FINANCIAL OFFICER (CFO)
CERTIFICATION
As required under Clause 49 of the Listing Agreement, the CEO/ CFO
certification has been submitted to the Board and a copy thereof is
contained in this Annual Report.
GREEN INITIATIVES IN CORPORATE GOVERNANCE
Ministry of Corporate Affairs has permitted Companies to send copies of
Annual report, Notices, etc., electronically to the email IDs of
shareholders. Your Company has arranged to send the soft copies of
these documents to registered email IDs of shareholders, wherever
applicable. In case any shareholder would like to receive physical
copies of these documents, the same shall be forwarded upon receipt of
written request in this respect.
HUMAN RESOURCE DEVELOPMENT AND INDUSTRIAL RELATIONS
The Company has always provided a congenial atmosphere for work to all
Sections of society. It has provided equal opportunities of employment
to all irrespective of caste, religion, colour, marital status and sex.
The Company believes that the human capital of the Company is its most
valuable assets and its human resource policies are aligned towards
this objective.
The Company focuses on enhancing organisational performance by focusing
on quick grievance resolution mechanisms and maintaining cordial
relations with employees and workmen across all levels. The relation
amongst its employees remained harmonious and the year under review
remained free from any labour unrest.
Pursuant to the Scheme of Arrangement, the employees relating to the
Ferro alloys business have been transferred to the resultant company,
M/s Shyam Century Ferrous Limited.
RISK MANAGEMENT
The Company has evolved a risk management framework to identify, assess
and mitigate the key risk factors of the business. The Board of the
Company is kept informed about the risk management of the Company.
Key risks impacting the cement business:
Excess cement capacity in the region could dampen the growth prospects
for the Company.
Mitigation: The Company's entrenched presence in the geography has
created a brand loyalty among discerning customers. Besides, the speedy
clearance of bottlenecked projects provides optimism for increased
offtake over the coming months. The Company has successfully
established the Star Cement brand in the markets of West Bengal and
Bihar. Furthermore, Bangladesh provides a good business opportunity for
the Company as infrastructure development continues to get the
Bangladeshi government's favour. Moreover, the nation does not have its
own supply of limestone and cannot produce clinker domestically - it
imports about 10-15 million tonnes of clinker annually.
Inflationary headwinds could dampen business margins.
Mitigation: With the operation of new capacities reaching their optimum
levels, economies-of-scale will start optimising the overall cost
structure. Besides, the team is continuously striving to minimise power
and logistics costs (significant expense heads) through a
differentiated strategy which is expected to yield results during the
current year.
ACKNOWLEDGEMENT
Your Directors take this opportunity to express their deep sense of
gratitude to the banks, Central and State Governments and their
departments and the local authorities, customers, vendors, business
partners/associates and Stock Exchanges for their continued guidance
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 Company, and recognise their contribution towards
the Company's achievements. Your Directors express their gratitude to
the shareholders of the Company for reposing their confidence and trust
in the Management of the Company.
For and on behalf of the Board of Directors
SAJJAN BHAJANKA
Place: Kolkata Chairman
Date: 7th May, 2015 (DIN: 00246043)
Mar 31, 2014
Dear Shareholders,
The Directors have pleasure in presenting 4th Annual Report of the
Company together with the Audited Balance Sheet as at 31st March, 2014
and the Statement of Profit & Loss for the year ended on that date.
Financial Results
Particulars Consolidated
2013-14 2012-13
Gross Income 117366.99 69534.91
Net Income 117574.06 66115.89
Profit Before Depreciation, Interest & Tax 25731.93 11993.91
Depreciation (16163.64) (5029.09)
Interest and Finance Charges (8721.20) (2852.13)
Exceptional Items (87.46) (19.29)
Profit Before Tax 759.62 4131.18
Tax Expenses (270.80) (370.95)
Profit after Tax before Minority Interest 488.82 3760.23
Less: Minority Interest (123.63) 1268.21
Net profit after Minority Interest 612.44 2492.02
Surplus in the Statement of Profit & Loss
At the beginning of the year 37994.31 (0.10)
Add: Profit for the year 612.44 2492.02
Add: Amount adjusted on acquisition of subsidiaries - 35502.39
pursuant to the Scheme of Arrangement
Less:
-Interim Dividend on Equity Shares 1042.52 -
-Tax on Interim Equity Dividend 178.11 -
-Transfer to General Reserve 221.00 -
At the end of the year 37165.12 37994.31
Standalone
Particulars 2013-14 2012-13
Gross Income 14976.89 6858.57
Net Income 15318.86 6485.76
Profit Before Depreciation, Interest & Tax 2848.04 (12.90)
Depreciation (480.46) (551.63)
Interest and Finance Charges (399.57) (201.78)
Exceptional Items 9.56 0.18
Profit Before Tax 1977.57 (766.49)
Tax Expenses (404.34) 207.73
Profit after Tax before Minority Interest 1573.23 (558.76)
Less: Minority Interest - -
Net profit after Minority Interest - -
Surplus in the Statement of Profit & Loss
At the beginning of the year (558.86) (0.10)
Add: Profit for the year 1573.23 (558.76)
Add: Amount adjusted on acquisition of subsidiaries - -
pursuant to the Scheme of Arrangement
Less:
-Interim Dividend on Equity Shares 733.17 -
-Tax on Interim Equity Dividend
-Transfer to General Reserve 101.00 -
At the end of the year 180.20 (558.86)
Dividend
The Company has declared and paid an interim dividend of 33% (H0.33 per
equity share of H1/- each) in the month of March, 2014. Total outgo on
account of dividend for the year under review amounts to H733.17 Lacs.
To meet the operational requirements of funds, your directors do not
recommend any further dividend for the year under review.
Performance and Operations Review
Ferro Alloy Business
The year 2013-14 was a difficult one in terms of operating business
environment with Indian economy facing various challenges. Persistent
inflationary conditions together with poor market sentiments and high
interest rates pegged industrial growth. Infrastructural bottlenecks,
weak rupee coupled with a tapered demand and contraction of industrial
production
was observed during the year under review. Liquidity conditions have
worsened due to persistent hardening of interest rates, resulting into
drying of availability of funds for the Industry.
The Steel sector, one of the largest consumers of your Company''s
products witnessed weak demand and dumping of Ferro Silicon from China
into India. As a result, the demand for Ferro Alloys remained subdued.
Despite these constraints and challenging environment, your Company
continued to focus on its fundamental strength of its ability to
continuously focus on productivity and quality. There was strong
emphasis on internal efficiencies together with an improvement in the
sales mix which enabled your Company to withstand inflationary
pressures on costs and profitability.
During the year under review, your Company achieved highest production.
Your Company produced 16,164 MT of Ferro Silicon during the year under
review as against 9,463 MT during the immediate preceding financial
year, registering a growth of 71%.
Despite intense competitive market conditions and slowdown in
industrial and economic activities, your company has been able to sale
17,331 MT of Ferro Silicon during the year under review as against
8,893 MT during the immediate previous year registering a growth of
95%. While your Company constantly strives to increase stakeholder''s
value, emphasis continues to be on delivering value to customers and
strengthening processes while driving sustainable practices, resulting
into expanding our customer base.
Operational Performance Of Subsidiaries  Cement
The conditions prevailing for the business of subsidiaries were no
different than the ones faced by your Ferro Alloy Unit. For subsidiary
M/s. Cement Manufacturing Company Limited (CMCL), FY 2013-14 was first
full year of operation for its recently commissioned Grinding Unit at
Guwahati. Similarly, FY 2013-14 was first full year of operation for
M/s. Star Cement Meghalaya Limited, subsidiary of CMCL which commenced
commercial operation of its Clinkerization unit at Lumshnong
(Meghalaya) during last quarter of FY 2012-13. On the one hand there
was slowdown in economy, inflationary pressures were on all-time high,
rupee continued to erode its value which touched upon all spheres of
industrial activities and so was the cement industry in general. On the
other hand, these subsidiaries had before them, challenges of
optimizing operations of their newly commissioned units and also to
sell their product which multiplied in terms of volume as compared to
previous year under these pressing market conditions. However, these
challenges were also an opportunity for your subsidiaries. During the
year under review, the newly commissioned units could optimize its
operations to a large extent and at the same time have also been able
to sale the increased volume in the market which provided a distinct competitive edge to their advantage.
During the year under review, on consolidated basis, Clinker production
was at 13,78,616 MT as against 835,576 MT during the FY 2012-13,
registering a growth of 65%. On the cement side, your subsidiaries
produced 16,64,037 MT of cement on consolidated basis as against
10,67,465 MT during FY 2012-13, registering a growth of 56%. Cement
dispatch on consolidated basis was 16,53,279 MT during the year under
review as against 10,69,489 MT during FY 2012-13, registering a growth
of 55% over previous year. Similarly, sale of cement grew from
10,65,097 MT on consolidated basis during the year 2012-13 to 16,31,048
MT during FY 2013-14, registering a growth of 53%. Both of the newly
commissioned units have been able to achieve close to two-third of
their installed capacity in first full year of operation itself.
Marketing Performance of Subsidiaries
On the marketing side, subsidiaries of your company have been able to
capitalize on potential of markets of North Eastern Region (NER).
Despite flat demand growth in the markets of North East, these
subsidiaries have been able to grow their sales volume by 37% in the
region and have been able to sale 14,16,426 MT of cement on
consolidated basis in the markets of NER during the year under review
as against 10,32,839 MT during the last financial year. Their market
share further improved from 18% during last financial year to 23%
during the year under review. This was achieved by concentrating on
more focused approach to expand reach in rural and semi-urban markets
of NER. This was further supported by increased brand visibility and
focused campaigning of brand "STAR CEMENT" in remotest areas of the
region. Your Subsidiary''s Brand "STAR CEMENT" continues to enjoy
leadership position in the region.
Apart from intensifying their effort in NER market, the product of your
subsidiaries has been successfully placed in the markets of West Bengal
and Bihar too under the brand "STAR CEMENT". Keeping in view the short
time frame since launch of their product in these markets, the efforts
put in the markets of West Bengal & Bihar have started bearing fruits
for your subsidiaries. Your subsidiaries have been able to clock a
sales volume of 2,14,622 MT of Cement in a very short span of time in
these markets during the year under review as compared to 32,258 MT
during the immediate preceding financial year which accounts for more
than five times growth during the year under review over previous year.
While in NER, the dealer and retail network has been under expansion
during the year under review to further consolidate feet in the region;
your subsidiaries have started appointing dealer and retailers in the
markets of West Bengal & Bihar too. A dedicated team has already been
placed for these new and upcoming market areas to strengthen their
retail network. A huge marketing and visibility campaign has been put
in place to have a better brand visibility and top of mind recall
amongst the users of cement in all these markets.
With sustained marketing efforts on continued basis, your subsidiaries
expect to put a much better performance during the ensuing year. In
addition, your subsidiaries are also exploring possibility of placing
their product in the markets of neighboring countries viz. Nepal,
Bhutan and Bangladesh. M/s. Star Cement Meghalaya Limited, a
subsidiary of CMCL is already exporting clinker to these neighboring
countries. Your subsidiaries are further exploring avenues to export
cement too in these markets.
Financial Performance
In the backdrop of a weak economy and a challenging market situation,
your Company''s Gross sales on standalone basis stood at H14,235.54 lacs
as against H6858.18 lacs for last year, recording a growth of 108% and
Profit before Tax (excluding exceptional items) for the year on
standalone basis stood at H1977.57 lacs, as against loss of H766.49
lacs last year. Net profit after tax on a standalone basis for the
year under review stood at H1573.23 lacs as against loss of H588.76
lacs last year. Your Company''s Gross sales on a consolidated basis
stood at H1,17,130.26 lacs for the year under review as against
H69,378.85 lacs recorded last year, registering a growth of 69%.
During the year under review, Profit before Tax on a consolidated basis
for the year stood at H759.62 lacs as against H4131.18 lacs recorded
last year. This was mainly on account of higher interest charge and
depreciation during the year under review. The net profit after
minority interest for the year under review stood at H612.44 lacs as
against H2492.02 lacs recorded last year.
Change of Registered Office of the Company
During the year under review, the Company has filed a petition under
Section 17 of the Companies Act, 1956 with the Regional Director,
Eastern Region, Ministry of Company Affairs, seeking approval for
Change of Registered Office of the Company from the State of West
Bengal to the State of Meghalaya. The Company has received the approval
from the Regional Director on 10th April, 2014. The Company has filed
the certified true copy of the order on 19th April, 2014 with the
Registrar of Companies, West Bengal, which shall be considered as the
effective date of the Change in Registered office. With effect from
19th April, 2014, the registered office of your company stands shifted
to Vill: Lumshnong, P.O. Khaliehriat, District: East Jaintia Hills,
Meghalaya  793210.
Internal Control Systems and their Adequecy
The Company maintains comprehensive internal control system
commensurate with the size of its operations and monitoring procedure
for all the major processes to ensure reliability of financial
reporting, timely feedback on achievement of operational and strategic
goals, compliance with policies, procedures, laws and regulations,
safeguarding of assets and economical and efficient use of resources.
The Internal Audit Department of the Company periodically reviews the
effectiveness and efficacy of Internal Control Systems and procedures.
Audits are finalized and conducted based on internal risk assessments.
Significant deviations from the standard procedures are brought to the
notice of the Board periodically and corrective measures are
recommended for implementation. All these steps facilitate timely
detection of any irregularities and early remedial measures to be
undertaken so that no monetary losses are sustained.
Subsidiaries and Associates
During the year under report, Cement Manufacturing Company Limited and
its subsidiaries, viz. Star Cement Meghalaya Limited (SCML), Meghalaya
Power Limited (MPL), Megha Technical & Engineers Private Limited
(MTEPL) and NE Hills Hydro Limited (NHHL) continued to be the
subsidiaries of your Company. CMCL along with its subsidiaries
operates integrated Cement plants in the State of Meghalaya and Assam
with a combined installed capacity of cement 2.86 MnTPA and 2.54 MnTPA
of clinker.
MPL is in the business of power generation and operates 51 MW Power
Plant in the State of Meghalaya. NHHL is exploring possibilities of
power generation in the North Eastern Part of India.
Deposits
During the year under report, the Company has not accepted any deposits
from public or from any of the Directors of the Company or their
relatives as per the requirement of Section 58A or 58AA of the
Companies Act, 1956.
Consolidated Financial Statements
The Consolidated Financial Statements of the Company have been prepared
as per Accounting Standards- AS 21, as prescribed by the Institute of
Chartered Accountants of India and has been included as a part of this
Annual Report.
The Ministry of Corporate Affairs, Government of India has granted
general exemption under section 212(8) of the Companies Act, 1956 from
the requirement to attach detailed financial statements of each
subsidiary. In compliance with the exemption granted, we have presented
summary of financial statement for each subsidiary of the Company in
this Report. A statement of holding company''s interest in subsidiaries
is also furnished separately.
The detailed financial statements and audit reports of each of the
subsidiaries of the Company are available for inspection at the
registered office of the Company during office hours between 11 A.M.
and 1 P.M. The Company will arrange to send the financial statements of
the subsidiaries upon written request from a shareholder to the
registered address of the said shareholder. Further the reports and
accounts of the subsidiary companies will also be available on the
Company''s website, www.starferrocement.com.
Future Outlook
Ferro Alloy Industry mainly caters to the needs of the steel industry.
Ferro alloys are used as additives and de-oxidizing agents in steel
manufacture. The Indian Ferro Alloy Industry has a capacity of 5.15
million tonnes. It accounts for nearly 10% of the world''s Ferro alloy
production and is amongst the 10 largest producers of the material in
the world. In the midst of raw material availability being a key factor
for Ferro alloy industry growth, production is concentrated in a few
pockets. India, South Africa, China and CIS countries represent a
large source of Ferro alloys. India''s Ferro alloy supply constitutes of
Ferro Chrome (about 32%), Ferro Manganese and Silicon Manganese (about
62%) and rest others. At present, though there is surplus capacity in
the country, severe power cuts is hampering production.
Ferro Alloy producers across the globe in last couple of years were one
of the worst hit in history with drastic collapse in demand and
vertical fall in prices of finished products. After a couple of
difficult years, well-coordinated efforts at the global level and
various stimulus packages (policy, fiscal and monetary) have helped to
put the world economy back on track.
Strong growth in steel and stainless steel is expected in the near
future with strong demands in infrastructure industry. On the back of
these expectations, it is expected that the excess capacity will stand
absorbed and further growth is anticipated in Ferro alloys Industry in
the years to come to match the growth of Steel Industry. In view of
potential growth of housing and infrastructure, the overall demand for
Ferro alloy is expected to remain buoyant.
Directors
In accordance with the Articles of Association of the Company and
provisions of Companies Act, 2013, Mr. Sajjan Bhajana will retire by
rotation and being eligible offers himself for re-appointment. In view
of his considerable experience, your Directors recommend his
re-appointment as a director of the Company.
The Particulars of the Directors seeking re-appointment as per the
requirement of Clause 49 of the Listing agreement are provided in the
Notice to this Report.
Directors'' Responsibility Statement
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
state as follows:- (i) in the preparation of the annual accounts of the
Company for the year ended 31st March, 2014, the applicable accounting
standards have been followed and that no material departures are made
from the same;
(ii) the Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company as at the end of the financial year and of the
profit/loss of the Company for that period;
(iii) the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
(iv) the Directors have prepared the annual accounts for the financial
year ended 31st March, 2014 on a going concern basis;
Management Discussion and Analysis
In terms of Clause 49 of the Listing Agreement, the Management
Discussion and Analysis on Company''s performance and industry trends is
set out separately in this Annual Report.
Corporate Governance
The Company has complied with the corporate governance requirements as
stipulated under the listing agreement with the stock exchanges. A
separate section on corporate governance, along with a certificate from
the auditors confirming the compliance, is annexed and forms part of
the Annual Report. This certificate will be forwarded to the stock
exchanges along with the Annual Report of the Company.
CEO/CFO Certification
As required under Clause 49 of the Listing Agreement, the CEO/ CFO
certification has been submitted to the Board and a copy thereof is
contained elsewhere in this Annual Report.
Auditors & Auditors'' Report
M/s. Kailash B. Goel & Co., Chartered Accountants, Statutory Auditors
of the Company, will retire at the conclusion of the ensuing Annual
General Meeting of the Company. Being eligible, they have offered
themselves for re-appointment and have confirmed that their
appointment, if made, will be in
accordance to the provisions of Section 141 read with Section 139 of
the Companies Act, 2013. In terms of requirement of Section 177 of the
Companies Act, 2013 read with the Companies (Audit and Auditors) Rules,
2014, the audit committee of the Company in their meeting dated 28th of
May, 2014 have recommended their re-appointment as statutory auditors
for the year 2014-15 to Board of Directors. Members are requested to
approve and ratify their appointment. Members are also requested to
empower the Board of Directors for fixation of Auditor''s Remuneration.
The notes to the accounts referred to in the Auditors'' Report are
self-explanatory and, therefore, do not call for any further comments.
Cost Auditors
Your Company had appointed M/s B. G. Chowdhury & Co., Cost Accountants
of 4A, 11/47A, Panditya Road, Kolkata  700029, having Firm
Registration number 000064 and Membership Number 13497, as Cost Auditor
for audit of cost records maintained in respect of Ferro Alloy business
of the Company for the financial year ended 31st March, 2014. The due
date of filing the Cost Audit Reports is 27th September, 2014.
Corporate Social Responsibility
Your Company''s CSR policy is committed towards improving the quality of
life of communities by working on four thrust areas - employability,
education, health and environment. Your Company strives to focus upon
its social responsibility towards the growth of the regions where the
plant of your Company is situated. It also supports several health
initiatives and educational services in the area where the Company has
its operations.
Green Inititatives in Corporate Governance
Ministry of Corporate Affairs has permitted Companies to send copies of
Annual report, Notices, etc., electronically to the email IDs of
shareholders. Your Company has arranged to send the soft copies of
these documents to the registered email IDs of the shareholders,
wherever applicable. In case, any shareholder would like to receive
physical copies of these documents, the same shall be forwarded upon
receipt of written request in this respect.
Human Resource Development & Industrial Relations
The Company has always provided a congenial atmosphere for work to all
sections of society. It has provided equal opportunities of employment
to all without regard to their caste, religion, colour, marital status
and sex. The Company believes that human capital of the Company is its
most valuable assets and its human resource policies are aligned
towards this objective of the Company.
The Company focuses on enhancing organizational performance by focusing
on quick grievance resolution mechanisms and maintaining cordial
relations with employees and workmen across all levels. The relation
amongst its employees remained harmonious and the year under review
remained free from any labor unrest.
Particulars as per Section 217(2A) of the Companies Act, 1956
Particulars of Employees
The Company has no employee whose salary exceeds the limit prescribed
under section 217(2A) of the Companies Act, 1956. Hence, information
required to be given under the said section read with Companies
(Particular of Employees) Rules, 1975 as amended has not been provided
in this report.
Information as to Conservation of Energy
Your Company has taken conscious efforts towards conservation of energy
at all the plants and offices of the Company. Detailed Information on
conservation of energy is set out in a separate statement, annexed to
and forming part of this report.
Information as to Technology Absorption
You Company has always been first to adopt new technologies which
provide superior quality of finished products. The Company has
automated its operations and has embraced information technology in its
operations.
Foreign Exchange Earnings and Outgo
During the year under review, the foreign exchange outgo was H0.99
Lacs. There were no earnings recorded in foreign currency during the
year under review.
Acknowledgement
Your Directors take this opportunity to express their deep sense of
gratitude to the banks, Central and State governments and their
departments and the local authorities, customers, vendors, business
partners/associates and stock exchanges for their continued guidance
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 Company and dedicates the credit for the Company''s
achievements to them. Last but not least, your directors express their
gratitude to the shareholders of the Company for reposing their
confidence and faith in the Management of the Company.
For and behalf of the Board of Director
Place: Kolkata Sajjan Bhajanka
Date: 28th May, 2014 Chairman
Mar 31, 2013
Dear shareholder
The Directors have great pleasure in presenting the 3rd Annual Report
together with the audited Balance Sheet as at 31st March, 2013 and
Statement of Profit & Loss for the year ended on that date.
FINANCIAL RESULTS
(Rs.in Lacs)
Particulars CONSOLIDATED STANDALONE
2012-13 2011-12 2012-13 2011-12
Gross Income 69,545.15 0.20 6,858.57 0.20
Net Income 66,126.13 0.20 6,485.76 0.20
Profit Before
Depreciation,
Interest & Tax 12,001.49 (0.03) (13.08) (0.03)
Depreciation 5,029.09 551.63
Interest & Finance
Charges 2,858.86 201.78
Exceptional
Items (1164)
Profit Before Tax 4,131.18 (0.03) (766.49) (0.03)
Tax Expenses 37095 (207.73)
Profit after Tax
before Minority
Interest 3,760.23 (0.03) (558.76) (0.03)
Less: Minority
Interest 1,268.21
Net Profit after
Minority Interest 2,492.02 (0.03) (558.76) (0.03)
Surplus in Statement
of Profit and Loss
At the beginning
of the year (0.10) (0.07) (0.10) (0.07)
Add : Amount
adjusted on
acquisition of
subsidiaries
pursuant to the
Scheme of
Arrangement 35,502.39
Add: Profit
for the year 2,492.02 (0.03) (558.76) (0.03)
At the end of
the year 37,994.31 (0.10) (558.86)
SCHEME OF ARRANGEMENT
Pursuant to the Scheme of Arrangement (''the Scheme'') approved by the
Hon''ble High Court of Calcutta, all the assets and liabilities of the
Ferro Alloys and Cement division of Century Plyboards (India) Ltd.
(CPIL) (i.e. business and interest of CPIL in manufacture of ferro
alloys and cement including captive power plants attached thereto) have
been transferred and vested in Star Ferro and Cement Limited (Resulting
Company) at their respective book values on going concern basis from
1st April, 2012 being the appointed date. As per the Scheme, the
appointed date as approved by the Hon''ble Court is 1st April, 2012 and
effective date is 28th June, 2013 being the date on which the certified
copies of the order sanctioning the said scheme was filed with the
Registrar of Companies, West Bengal, in accordance with the Companies
Act, 1956. Though the Scheme has become effective after the balance
sheet date, it is operative from the appointed date 1st April, 2012 and
accordingly effect of the same has been given in the accounts for the
financial year 2012-13.
The figures for current year are not comparable with figures of
previous year due to effect of the Scheme in current year figures.
ALLOTMENT OF SHARES
In accordance with the scheme, the Board of Directors of the Company at
their meeting held on 22nd July, 2013, has issued and allotted
22,21,72,990 Equity Shares ofRs. 1/- each to every member of Century
Plyboards (India) Ltd. (CPIL) holding fully paid up equity shares of
CPIL and whose name appeared in the Register of Members of CPIL as on
19th July, 2013, the Record date fixed by CPIL for this purpose. These
shares were allotted in the ratio of 1:1, i.e. one fully paid-up Equity
Share ofRs. 1/- each in the Company for every one Equity Share of Rs. 1/-
each held in CPIL.
PERFORMANCE AND OPERATIONS REVIEW
The performance of the Ferro alloy unit remained subdued during the
first three quarters of the financial year under review mainly due to
global market scenario but there has been increase in demand of Ferro
alloys during the last quarter along with significant improvement in
the overall performance.
During the year under review the Ferro al loy division has completed
its capacity expansion from 18MVA Furnaces to 27 MVA Furnaces.
However, due to poor demand and power shortage, the unit has been able
to utilize only 59% of its enhanced capacity. The production quantity
during the year under review was 9462.834 MT only, yet the team needs
to be appreciated for achieving this level of production in-spite of
unprecedented power crisis due to unavailability of coal to run the
captive power plant.
The first quarter of the year under review was also partly under the
influence of lingering after-effects of Global Meltdown experienced
during previous years. But gradually, with the depletion of stock piles
across the world due to shutdown of Ferro alloy facilities, the demand
of Ferro Alloys has slowly picked up.
The Consolidated clinker production of the Company''s subsidiaries was
8,35,576 MT registering a growth of 16.90% over the previous year. The
Consolidated cement production, on the hand was 10,67,465 MT as against
11,03,800 MT during last financial year, a drop of little over 3%
compared to the previous year. Consol idated sales of cement was
10,65,097 MT of Cement as against 11,06,422 MT during the previous
year, depicting a marginal drop of approximately 4%. Consolidated Gross
Income during the year wasRs. 69,545.15 Lacs while Net Profit after
minority interest was Rs. 2492.02 Lacs.
DIVIDEND
In view of the loss incurred, the Board of Directors did not recommend
any dividend for the year.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company maintains appropriate systems of internal control,
including monitoring procedures, to ensure that all assets are
safeguarded against loss from unauthorised use or disposition. Company
policies, guidelines and procedures are in place to ensure that all
transactions are authorised, recorded and reported correctly as well as
provide for adequate checks and balances.
The internal audit department reviews the effectiveness and efficiency
of these systems and procedures. Audits are finalised and conducted
based on internal risk assessment. Significant deviations are brought
to the notice of the Board periodically and corrective measures are
recommended for implementation. All these steps facilitate timely
detection of any irregularities and early remedial measures with no
monetary loss.
SUBSIDIARIES & ASSOCIATES
Consequent to the Scheme of Arrangement becoming effective, the
pre-demerger share capital of the company has been cancelled and as
such the company is no more a subsidiary of Century Plyboards (India)
Ltd. Further, Cement Manufacturing Company Ltd (CMCL) and its
subsidiaries Meghalaya Power Ltd. (MPL), Megha Technical & Engineers
Pvt. Ltd (MTEPL), Star Cement Meghalaya Ltd. (SCML) and NE Hills Hydro
Ltd. (NHHL) have now become subsidiaries of Star Ferro and Cement Ltd.
with effect from appointed date 1st April, 2012.
CMCL along with its subsidiary MTEPL operates integrated Cement plant
at Meghalaya with aggregate annual installed capacity of 1.20 MTPA.
During last quarter of FY 2012-13, the new 1.60 MTPA cement grinding
unit of CMCL at Guwahati, Assam and 1.75 MTPA Clinkerisation unit of
SCML at Meghalaya have also commenced their commercial operation and
their operations. During the FY 2012-13, MPL has completed its second
phase of 51 MW power project. NHHL is exploring possibilities of power
generation in the North-east.
CONSOLIDATED FINANCIAL STATEMENTS
The Ministry of Corporate Affairs, Government of India, has granted a
general exemption under section 212(8) of the Companies Act, 1956 from
the requirement to attach detailed financial statements of each
subsidiary. In compliance with the exemption granted, we have presented
summary financial information for each subsidiary in this Report. A
statement of holding company''s interest in subsidiaries is also
furnished separately.
The detailed financial statements and audit reports of each of the
subsidiaries are available for inspection at the registered office of
the company during office hours between 11 am to 1 pm and upon written
request from a shareholder, your company will arrange to send the
financial statements of subsidiary companies to the said shareholder.
Further, the report and accounts of the subsidiary companies will also
be available on the Company''s website, www.starferrocement.com.
The Consolidated Financial Statements of the Company prepared as per
Accounting Standards-AS 21, consolidating the Company''s accounts with
its subsidiaries, has also been included as part of this Annual Report.
FUTURE OUTLOOK
The Indian Ferro Alloy industry has a capacity of 5.15 million tonnes.
It is accounting for nearly 10% of the world''s Ferro alloy production
and is among the 10 largest producers of the material in the world. In
the midst of raw material availability being a key factor for Ferro
alloy industry growth, production is concentrated in a few pockets.
India, South Africa, China and the CIS countries represent a large
source for Ferro alloys. India''s Ferro alloy supply constitutes of
Ferro chrome about 32%, Ferro Manganese and Silicon Manganese about 62%
and rest others.
Ferro Alloy Industry mainly caters to the needs of steel industry.
Ferro alloys are used as additives and deoxidizing agents in steel
manufacture. At present, though there is surplus capacity in the
country, severe power cuts is hampering the production.
Ferro Alloy producers across the globe in last couple of years was also
one of the worst hit in history, with drastic collapse in demand
and vertical fall in prices of finished products. After a couple of
difficult years, well-coordinated efforts at the global level and
various stimulus packages (policy, fiscal and monetary) have helped to
put the world economy back on track.
Strong growth in steel and stainless steel is expected in the near
future with strong demands in infrastructure industry. And it is
expected that the excess capacity will be absorbed and further growth
is anticipated in Ferro alloys Industry in the years to come to match
the growth of Steel Industry. In view of potential growth of housing
and infrastructure, the overall demand for Ferro alloy is expected to
remain buoyant.
FUTURE PLANS OF EXPANSION
To meet the requirement of coal for its captive power plant, the
Company has started mining operations in the State of Nagaland and the
operation is expected to yield results in the coming years. In order
to further reduce the power costs, the Company is exploring the
prospects of hydel power project in the State of Mizoram.
Further, steps have also been taken for iron ore mining at Chanderdigha
in Assam to meet the mill scale requirement for production of Ferro
Silicon.
DIRECTORS
Sri Manindra Nath Banerjee, Sri Mangi Lai Jain and Sri Santanu Ray were
appointed as Additional Directors of the Company on 12th April, 2013 by
the Board of Directors of the Company to hold office till the ensuing
Annual General Meeting. The Company has received notices under section
257 of the Companies Act, 1956 proposing their candidature to the
office of Directors of the Company. In view of considerable experience
of Sri Banerjee, Sr, Jain and Sri Ray, your Directors recommend their
appointment.
In accordance with Articles of Association of the Company, Sr, Sajjan
Bhajanka and Sri Sanjay Agarwal retire by rotation, and being eligible,
offer themselves for re-appointment. In view of their considerable
experience, your Directors recommend their re-appointment.
DIRECTORS''RESPONSIBILITY STATEMENT
Pursuant to the requirement of Section 217(2AA) of the Companies Act,
1956, with respect to Directors'' Responsibility Statement, the
Directors hereby confirm that :-
(i) in the preparation of the annual accounts for the year ended March
31, 2013, the applicable Accounting Standards have been followed and
that no material departures are made from the same;
(ii) the Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the company as atthe end of the financial year and of the loss of
the company for that period;
(iii) the Directors had taken proper and sufficient care 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 Directors had prepared the annual accounts for the financial
year ended March 31, 2013, on a going concern basis.
MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis on Company''s performance and
industry trends with respect to the company is attached separately to
this Annual Report.
CORPORATE GOVERNANCE
The Company is committed to good corporate governance. A detailed
report on your company''s Corporate Governance practices is provided
separately in this Annual Report.
AUDITORS & AUDITORS''REPORT
M/s. Kailash B. Goel & Co., Chartered Accountants, Statutory Auditors
of the Company, retire at the conclusion of the ensuing Annual General
Meeting of the Company. They have offered themselves for reappointment
as Statutory Auditors and have confirmed that their appointment, if
made, will be within the limits prescribed under Section 224(lB)ofthe
Companies Act, 1956. Your Directors recommend their appointment for the
ensuing year.
COST AUDITORS
Your Company had appointed M/s. B. G. Chowdhury & Co., Cost Accountant,
of 4A, 11/47A, Panditia Road, Kolkata- 700029, having Firm registration
number 000064 and ICWA Membership No. 13497, as Cost Auditor for audit
of cost records maintained in respect of ferro alloy business for the
financial year ended 31st March, 2013. The due date for filing the Cost
Audit Reports is 27th September, 2013.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The CSR philosophy of the Company is embedded in its commitment to all
stakeholders, consumers, employees, the environment and the society.
Your Company believes that it is this commitment which will deliver
competitive, profitable and sustainable growth. The Company contributes
a part of its income to social, charitable and cultural organizations.
It reaches out with the objective of improving the quality of life of
the economically deprived people in the places where the Company has a
presence.
GREEN INITIATIVES IN CORPORATE GOVERNANCE
Ministry of Corporate Affairs has recently permitted companies to send
electronic copies of Annual Report, notices etc., to the e-mail IDs of
shareholders. You Company has accordingly arranged to send the soft
copies of these documents to the e-mail IDs of shareholders wherever
applicable. Incase any shareholder would like to receive physical
copies of these documents, the same shall be forwarded upon receipt of
written request.
HUMAN RESOURCE DEVELOPMENT & INDUSTRIAL RELATIONS
The human resource philosophy and strategy of your Company has been
designed to attract and retain the best talent on offer. Employees are
your Company''s most valuable assets and your Company''s processes are
designed to empower employees and support creative approaches in order
to create enduring value. Your Company''s human resource management
systems and processes aim to enhance organisational performances. The
Company focuses on quick grievance resolution mechanisms and maintains
absolute harmony with its work force and as such it has not faced any
labour trouble since inception.
PARTICULARS AS PER SECTION 217 OF THE COMPANIES ACT, 1956.
Particulars of Employees
No employee was in receipt of remuneration, requiring disclosure under
section 217(2A) of the Companies Act, 1956 read with the
Companies(ParticularsofEmployee)Rules,1975.
Information as to conservation of energy
The Company has always been conscious of the need of conservation of
energy. Adequate energy conservation steps are being taken in all
plants and offices of the Company. Additional information on
conservation of energy is set out in a separate statement, attached to
and forming part of this Report.
Information as to technology absorption
There is no specific area in which research and development is carried
out by the Company, but the Company constantly carries out research for
improvement of its products. The technologies used by the Company are
indigenous. Constant efforts are made towards absorption, adaptation
and innovation of technologies used, for improvement/development of
products of the company.
Foreign Exchange earnings and outgo
There were no foreign exchange earnings and outgo during the year.
PUBLIC DEPOSITS
The Company has not invited or accepted deposits from the public
covered under Section 58Aofthe Companies Act, 1956.
APPRECIATION
The Directors commend the contribution made by employees to the
continued satisfactory business performance during the year. Their
dedication and competence has ensured that the Company continues to be
a significant and leading player in the industry.
Your Directors take this opportunity to thank the customers,
shareholders, vendors, business partners/associates, bankers, financial
institutions, regulatory and government authorities and stock exchanges
for their consistent support and encouragement to the Company.
For and on behalf of the Board ofDirectors
Place : Kolkata Sajjan Bhajanka
Date :22nd July, 2013 Chairman
Mar 31, 2012
Dear Members
The Director have Pleasentinh the Annual Report and the Audit Account
of the Company for year ended 31st March,2012
FINANCIAL RESULTS
Year ended Year ended
31.03.2012 31.03.2011
Total Income 20432
Total Expendeing 23349 70409
Provision tor Taxation
(including Deferred Tax) 29.132 (70.49)
Your directors are hopeful that the performance of the Company will
improve in the coming year.
FUTURE OUTLOOK
The general business conditions affecting business are expected to
remain stable and company Is expected to perform well * ^
DIVIDEND
With a view to create long term pool of resources, no dividend is
recommended for the year.
DEPOSITS
Your Company has not accepted any Deposit within the meaning of Section
58A of the Companies Act, 1956 and the Rur framed thereunder.
AUDITORS AND AUDITORS'' REPORT
Auditors'' Report contains no remark requiring explanation.
M/s Kailash B. Goel g Co, Chartered Accountants, Statutory Auditors of
the Company, hold office until the conclusion of few ensuing Annua;
General Meeting and being eligible have offered themselves for
re-appointment The Company has received a certificate from them to the
effect that their re-appointment, if made, would be within the limits
prescribed under Section 224 (1B) of the Companies Act, 1956.
Accordingly the Board recommends their re- appointment.
DIRECTORS
In accordance with Articles of Association of the Company, Sri Sanjay
Agarwal retires by rotation, and being eligible offers himself for
re-appointment. In view of his considerable experience, your Directors
recommend his re-
PARTICULARS AS PER SECTION 217 OF THE COMPANIES ACT.1956
Particulars of Employees
The Company did not have any employee during the financial year, hence
disclosure under Section 217(2A) of the Companies Act, 1956 read with
the Companies (Particulars of Employees) Rules 1973 is not applicable
Conservation of Energy & Technology Absorption:
The company has no activity relating to conservation of energy or
technology absorption, details of which are required to be furnished in
this report as per the provision of Section 217(1)(e) of the Companies
Act, 1956
Foreign Exchange Earning & Outgo
Therewere no foreign exchange earning and outgo during the year.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to sub-section (2AA)of Section 217 of the Companies Act, 1956,
the Board of Directors of the Company hereby state and confirm that:
1 In the Preparation of the Annua! Accounts for the year ended 31st
March, 2012, the applicable accounting standards have been followed
along with proper explanation relating to material departures.
2 The Directors had adopted such accounting policies and applied them
consistently and made judgements and estimates in a reasonable and
prudent manner 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 on 31 st
March, 2012 and of the profit of the Company for that year.
3 The Directors had taken proper and sufficient care 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
4 The Annual accounts for the year ended 31 st March, 2012 have been
prepared on a going concern basis.
ACKNOWLEDGEMENT
Your Directors take this opportunity to appreciate contributions made
by the Company''s bankers, shareholders
and business associates for their respective services and patronage.
For and on Behalf of the Board
6 Lyons Range,
Kolkata - 700 001
Date: 20th April, 2012 (Sajjan Bhajanka) (Sanflay Agarwal)
Director Director
Mar 31, 2011
Dear Members
The Directors have pleasure in presenting the 1st Annual Report and
the Audited Accounts of the Company for the year ended 31st March 2011.
FINANCIAL RESULTS
Your company has not commenced operations during the year under review.
REVIEW OF OPERATIONS & FUTURE OUTLOOK
Your directors are hopeful that the operations of the company would
commence in the coming year.
DIVIDEND
Since the operations of the company has not yet commenced, there has
been no profit and consequently no dividend has been recommended.
DEPOSITS
Your Company has not accepted any Deposit within the meaning of Section
58A of the Companies Act, 1956 and the Rules framed thereunder.
AUDITORS AND AUDITORS'' REPORT
Auditors'' Report contains no remark requiring explanation.
M/s. Kailash B. Goel & Co., Chartered Accountants, Statutory Auditors
of the Company, hold office until the conclusion of the ensuing Annual
General Meeting and being eligible have offered themselves for
re-appointment. The Company has received a certificate from them to the
effect that their re-appointment, if made, would be within the limits
prescribed under Section 224 (1B) of the Companies Act, 1956.
Accordingly the Board recommends their re- appointment.
DIRECTORS
In accordance with Articles of Association of the Company, Sri Sajjan
Bhajanka retires by rotation, and being eligible, offers himself for
re-appointment. In view of his considerable experience, your Directors
recommend his re- appointment.
PARTICULARS AS PER SECTION 217 OF THE COMPANIES ACT.1956
PARTICULARS OF EMPLOYEES
The Company did not have any employee during the financial year, hence
disclosure under Section 217(2A) of the Companies Act, 1956 read with
the Companies (Particulars of Employees) Rules 1973 is not applicable
CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION:
The company has no activity relating to conservation of energy or
technology absorption, details of which are required to be furnished in
this report as per the provision of Section 217(1)(e) of the Companies
Act, 1956
FOREIGN EXCHANGE EARNING & OUTGO
There were no foreign exchange earning and outgo during the year.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to sub-section (2AA)of Section 217 of the Companies Act, 1956,
the Board of Directors of the Company hereby state and confirm that:
1 In the Preparation of the Annual Accounts for the year ended 31st
March 2011, the applicable accounting standards have been followed
along with proper explanation relating to material departures.
2 The Directors had adopted such accounting policies and applied them
consistently and made judgements and estimates in a reasonable and
prudent manner 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 on 31st
March 2011 and of the profit of the Company for that year.
3 The Directors had taken proper and sufficient care 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.
4 The Annual accounts for the year ended 31st March 2011 have been
prepared on a going concern basis.
ACKNOWLEDGEMENT
Your Directors take this opportunity to appreciate contributions made
by the Company''s, bankers, shareholders and business associates for
their respective services and patronage.
For and on Behalf of the Boarad
6, LYONS RANGE
KOLKATA-700 001 (Sajjan Bhajanka) (Sama Agarwal)
Director Director
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Star Ferro and Cement Ltd. Key Financial Ratios
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Star Ferro and Cement Ltd. Financial Data
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Star Ferro and Cement Ltd. Reports
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Star Ferro and Cement Ltd. Corporate Announcements
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