DIRECTORS’ REPORT

Dear Shareholders,

We have pleasure in presenting the 119th Annual Report of the Company along with the audited statement of accounts for the year ended 31st March, 2016. The financial results for the year are shown below. The working and operational parameters of all the plants of the Company were quite satisfactory during the year. Although Earnings before finance cost, tax, depreciation and amortisation (EBITDA) have shown some improvement, there is a net loss mainly due to high interest burden, depreciation and lower profitability in cement, because of lacklustre demand and pressure on selling prices. Labour relations at all the plants are cordial and an atmosphere of mutual trust and confidence prevails.

2.. DIVIDEND:

The Board of Directors has recommended a dividend of 55% i.e. Rs.5.50 (Rupees Five and paise fifty) per share, of the face value of Rs.10/- each, for the approval of the shareholders. Last year the dividend was paid at the same rate. This dividend will be paid when declared by the shareholders, in accordance with law, out of General Reserve and will be free of tax in the hands of the shareholders. The Company will have to pay dividend distribution tax plus applicable surcharge, education cess and/or any other cess applicable on the dividend distribution tax at the time of declaration and payment of dividend which amounts to 20.36% approximately.

3. SHARE CAPITAL:

The Company's equity Share Capital has increased by Rs.10.18 crore during the year raising the total equity capital to Rs.111.69 crore. The increase was on account of preferential allotment of shares to promoters/ promoter group due to conversion of preferential warrants.

4. EXPORTS:

The total exports of the Company amounted to Rs.504 crore (Previous year Rs.589 crore) representing about 7 percent of the net sales.

5. EXPANSION & MODERNISATION:

a) Rayon, Tyre Cord & Chemicals

Eight CSY machines have been commissioned during the year, thus a total of 50 CSY machines are in the production line.

During the year, capacity of the doubling & twisting unit has been enhanced from 90 tonnes per month to 150 tonnes per month. Additional capacity for Zero Twist Rayon Tyre Yarn was commissioned by adding 72 winding position during the second half of the year.

b) General

Modernisation & Technological upgradation programmes continue at all the units of the Company, to maintain competitiveness and achieve better quality. Stringent cost control measures remain in place in all possible areas and are regularly reviewed. Special emphasis is being given to water and energy conservation.

6. FORMATION OF BIRLA ESTATES:

A new Division called 'Birla Estates' has been set up, which will undertake work related to property development of available existing land parcels of the Company, as well as new land to be purchased/acquired in the future for the purpose of development.

Based on a market feasibility study for each of the existing land parcels, newer projects in commercial, residential or other segments would be developed, ensuring optimum viability. Necessary steps are being taken to procure various government approvals which will help pave the way for smooth progress.

Two new office buildings, Birla Aurora, adjacent to Century Bhavan, and Century Greenspan, on erstwhile Century Mill's land, are complete and both the buildings have been partially leased out. All efforts are being taken to fully lease out the buildings.

7. DIRECTORS:

(a) Shri B.L. Jain, Senior President of the Cement Divisions and Whole-time Director, retired from the services of the Company on 31st March, 2016. Your Company wishes to place on record its appreciation for the valuable services rendered by Shri Jain during his long tenure with the Company, including that of a Director.

(b) Shri D.K. Agrawal, President (Corporate Affairs) of the Company has been appointed as Whole-time Director of the Company with effect from 1st April, 2016. A suitable resolution in this behalf is being proposed at the forthcoming Annual General Meeting for the approval of the members, for his appointment as Whole-time Director of the Company.

(c) Pursuant to the provisions of Section 152 of the Companies Act, 2013, Shri Kumar Mangalam Birla (DIN 00012813) retires by rotation as Director at the ensuing Annual General Meeting and being eligible, offers himself for the re-appointment. The Board recommends his re-appointment.

(d) Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and SEBI Regulations, the Board has carried out the annual performance evaluation of its own performance, of the Directors individually, as well as the evaluation of the working of its Audit, Nomination & Remuneration and other Committees of the Board. At the meeting of the Board, all the relevant factors that are material for evaluating the performance of individual Directors, the Board and its various Committees, were discussed in detail. A structured questionnaire each, for evaluation of the Board, its various Committees and individual Directors, was prepared and recommended to the Board by the Nomination & Remuneration

Committee, for doing the required evaluation, after taking into consideration the input received from the Directors, covering various aspects of the Board's functioning, such as adequacy of the composition of the Board and its Committees, execution and performance of specific duties, obligations and governance, etc.

A separate exercise was carried out to evaluate the performance of individual Directors, including the Chairman of the Board, who were evaluated 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 independent Directors was carried out by the entire Board. The performance evaluation of the Chairman and non-independent Directors was also carried out by the Independent Directors at their separate meeting. The Directors expressed their satisfaction with the evaluation process.

(e) Meetings

During the year, five Board meetings were convened and held. The details thereof are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

8. AWARDS:

Various Divisions of the Company have received notable awards as mentioned below:-

(a) Rayon, Tyre Cord & Chemicals:

• IMC Ramkrishna Bajaj National Quality Award 2015 - Certificate of Merit.

• Bagged IMC Ramkrishna Bajaj National Quality 'Best Practices award' for in-house developed system for monitoring statutory compliance and e-intelligence data bank.

• Awarded as "Excellent Energy Efficient Unit" for the year 2015 by CII for energy conservation & management.

• Platinum Award by Greentech Foundation in the chemical sector for good safety practices for the year 2015 at our Chemical plant.

(b) Century Cement:

• First prize for "Overall Performance" and maintenance of HEMMS & workshop for the limestone mines during Annual Safety Celebrations-2015 held under the aegis of the Directorate General of Mines Safety, Bilaspur & Raigarh Region.

(c) Maihar Cement:

• First prize in "Water Quality Management" in the group, of fully mechanized mines (more than 1 million tonnes) and First prize in "Noise Vibration and Aesthetic Beauty", "Water Quality Management" and "Air Quality Management" in the group, of fully mechanized mines (less than 1 million tonnes) for its limestone mines, from the Indian Bureau of Mines, Jabalpur Region, during the Mines Environment & Mineral Conservation week 2015­16.

(d) Manikgarh Cement:

• First prize in the "Explosives" for its limestone mines, during the Mine Safety Week 2015-16, from the Dy. Directorate General of Mines Safety, Western Zone, Government of India, Nagpur.

• First prize in the "Noise Vibration Control and Aesthetic Beauty" for its limestone mines, during the Mines Environment and Mineral Conservation Week 2015-16 held under the aegis of the Indian Bureau of Mines, Nagpur, Chhattisgarh & Madhya Pradesh Region and also received special award namely "PANDWANI" award for achieving First prize in the "Noise Vibration Control and Aesthetic Beauty" consecutively for three years.

(e) Century Pulp & Paper (CPP):

• During the year, CPP, Lalkua, participated in 98th Agro-Industrial Exhibition organised by and held at G B Pant University of Agriculture and Technology, and CPP has been adjudged First place.

This was consecutively for the eighth time, to remain adjudged First.

• CPP has bagged "National energy Efficient Unit Award" in the Paper & Sugar sector, by CII in a National Level Award competition for "Excellence in energy Management-2015".

9. AUDITORS:

M/s. Dalal & Shah, Chartered Accountants (Firm Registration Number: 102021W), who are the Statutory Auditors of the Company, will hold office up to the forthcoming Annual General Meeting. As per the Companies Act, 2013, a new firm M/s. SRBC & Co. LLP, Chartered Accountants (ICAI Firm Registration No.324982E) has been recommended for appointment as Statutory Auditors of the Company for a term of 5 years from the conclusion of the forthcoming Annual General Meeting of the Company subject to ratification by the shareholders every year. They have confirmed their eligibility under Section 141 of the Act, and the Rules framed there under, for their appointment as Auditors of the Company.

10. AUDITORS' REPORT:

The Auditors' Report to the Shareholders does not contain any reservation, qualification or adverse remark.

11. COST AUDITORS AND COST AUDIT REPORT:

Pursuant to Section 148 of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Rules, 2014, the cost audit records maintained by the Company, in respect of various manufacturing activities are required to be audited. The cost audit report for the financial year 2014-15 was filed with the Ministry of Corporate Affairs on 24th September, 2015. M/s. R. Nanabhoy & Co., Cost Accountants, were nominated as the Company's Lead Cost Auditor.

Your Directors have, on the recommendation of the Audit Committee, appointed M/s. R. Nanabhoy & Co., Cost Accountants, to audit the cost accounts of the Cement, Paper and Textile products of the Company on a remuneration of Rs. 3.40 lacs and appointed Shri M.R. Dudani, Cost Accountants, to audit the cost accounts of the Rayon & Chemicals products on a remuneration of Rs.2.08 lacs for the year 2016-17.

As required under the Companies Act, 2013, the remuneration payable to the cost auditor is required to be placed before the members in a general meeting for their ratification. Accordingly, a resolution seeking members' ratification for the remuneration payable to M/s. R. Nanabhoy & Co. and Shri M.R. Dudani, Cost Auditors, is included in the Notice convening the Annual General Meeting of the Company.

12. 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 Gagrani & Gagan, Company Secretaries in practice (CP No.1388), to undertake the Secretarial Audit of the Company for the year ending 31st March, 2017. The Secretarial Audit Report for the year ended 31st March, 2016 is annexed herewith as 'Annexure -I' to this Report. The Secretarial Audit Report does not contain any adverse qualification, reservation or remark.

13. FIXED DEPOSITS:

During the year, the Company has not accepted any deposits from the public and as such, there are no outstanding deposits in terms of the Companies (Acceptance of Deposits) Rules, 2014.

14. LOANS, GUARANTEES AND INVESTMENTS:

It is the Company's policy not to give loans, directly or indirectly, to any person or other body corporate or give any guarantee or provide any security in connection with a loan to any other body corporate or person. The details of the investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the Financial Statements.

15. DIRECTORS' RESPONSIBILITY STATEMENT:

The Board of Directors acknowledge the responsibility for ensuring compliance with the provisions of Section 134(3)(c) read with Section 134(5) of the Companies Act, 2013 in the preparation of the annual accounts for the year ended on 31st March, 2016 and state that:

a. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

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

c. the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. the directors had prepared the annual accounts on a going concern basis;

e. the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

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

16. CHANGE IN KEY MANAGERIAL PERSONNEL:

In view of the retirement of Shri B.L. Jain on 31st March, 2016 from the services of the Company, he has ceased to be a Whole-time Director. With effect from 1st April, 2016, Shri D.K. Agrawal has been appointed as Whole-time Director of the Company and has ceased as Secretary of the Company and Shri Atul K. Kedia has been designated as Company Secretary. Shri R.K. Dalmia continues to be the Chief Financial Officer of the Company.

17. CORPORATE GOVERNANCE:

A separate report on Corporate Governance is enclosed as a part of this Annual Report. A certificate from the Auditors of the Company regarding compliance with the Corporate Governance norms stipulated, is annexed to the Report on Corporate Governance.

18. AUDIT COMMITTEE, VIGIL MECHANISM & RISK MANAGEMENT:

Audit Committee comprises of four members and all members are Independent Directors. The Company Secretary is the Secretary of the Committee. All transactions with related parties are on an arm's length basis. During the year, there are no instances where the Board had not accepted the recommendations of the Audit Committee. The Company has in place a vigil mechanism for Directors and Employees, to report genuine concerns about any wrongful conduct with respect to the Company or its business or affairs. This policy covers malpractices, misuse or abuse of authority, fraud, violation of the Company's policies or Rules, manipulations, negligence causing danger to public health and safety, misappropriation of monies, and other matters or activity on account of which the interest of the Company is affected or is likely to be affected and formally reported by whistle blowers. The Policy provides that all Protected Disclosures can be addressed to the Vigilance and Ethics Officer of the Company or to the Chairman of the Audit Committee / Whole-time Director in exceptional cases. All protected disclosures under this policy will be recorded and thoroughly investigated. If an investigation leads the Vigilance and Ethics Officer / Chairman of the Audit Committee to conclude that an improper or unethical act has been committed, the Vigilance and Ethics Officer / Chairman of the Audit Committee shall recommend to the management of the Company to take such disciplinary or corrective action as he may deem fit. The details of the vigil mechanism are also available on the Company's website www.centurytextind.com

RISK MANAGEMENT

The Audit Committee has also been delegated the responsibility for monitoring and reviewing risk management, assessment and minimization procedures, developing, implementing and monitoring the risk management plan and identifying, reviewing and mitigating all elements of risks which the Company may be exposed to. The Board also reviews the risk management assessment and minimization procedures. Further, in accordance with SEBI Regulations, a Risk Management Committee has also been formed which also oversees the risk management of the Company.

19. CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE:

The CSR Committee comprises of four members. Three members of the Committee are Independent Directors.

Due to the average net profit for last three years being negative, your Company is not required to spend any amount on CSR activities during the year under review.

The Committee met once during the year to review the Corporate Social Responsibility Policy. The annual report on CSR containing the particulars specified in the Annexure to the Companies (CSR Policy) Rules, 2014 is annexed as 'Annexure-II' and forms a part of this Report

20. NOMINATION AND REMUNERATION COMMITTEE:

Nomination and Remuneration Committee comprises of five members of which four, including the Chairman of the Committee, are Independent Directors.

The Company's Remuneration Policy is attached as 'Annexure-III' and forms a part of this Report.

21. RELATED PARTY TRANSACTIONS:

All transactions entered into with related parties as defined under the Companies Act, 2013 during the financial year, were in the ordinary course of business and on an arm's length pricing basis and do not attract the provisions of Section 188 of the Companies Act, 2013. There were no materially significant transactions with the related parties during the financial year, which were in conflict with the interest of the Company and hence, enclosing of Form AOC-2 is not required. Suitable disclosure as required by the Accounting Standard (AS18) has been made in the notes to the Financial Statements.

All Related Party Transactions are placed before the Audit Committee. Prior omnibus approval of the Audit Committee is obtained on a yearly basis for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee for their approval, on a quarterly basis.

The policy on Related Party Transactions as approved by the Board has been uploaded on the Company's website. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company.

The Solicitors for the Company, M/s. Mulla & Mulla & Craigie Blunt & Caroe, provides the legal services required by the Company from time to time. The transactions with the said firm are on an arm's length basis and in the ordinary course of business. Shri Yazdi P. Dandiwala, one of the Directors of the Company is a Senior Partner in the said firm of Solicitors.

22. DECLARATION BY INDEPENDENT DIRECTORS:

Necessary declarations have been obtained from all the Independent Directors under sub-section (6) of Section 149 of the Companies Act, 2013.

23. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS:

The Competition Appellate Tribunal (COMPAT) set aside in December, 2015 an order passed by the Competition Commission of India (CCI) and remanded back the matter to the Commission for fresh adjudication. The said CCI order was in response to a complaint filed by the Builders Association of India against leading Cement Companies (including Century) alleging violation of certain sections of the Competition Act, 2002.

The CCI order had levied a penalty on Cement Companies, which for the Company was Rs.274.02 crore.  Responding to appeals against payment of this penalty, COMPAT had granted an interim stay while directing the Company and others, to deposit 10% of the penalty which was placed as Fixed Deposit with a bank, with the Commission having a lien thereon. The deposit amount has since been refunded to the Company.

24. INTERNAL FINANCIAL CONTROL:

The Company has in place internal financial control systems, commensurate with the size and complexity of its operations, to ensure proper recording of financial and monitoring of operational effectiveness and compliance of various regulatory and statutory requirements. The internal auditor monitors and evaluates the efficacy and adequacy of internal control systems in the Company. Based on the report of the internal auditor, respective departments undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board.

25. INDIAN ACCOUNTING STANDARDS (IND AS) IFRS CONVERGED STANDARDS:

The Ministry of Corporate Affairs vide its notification dated 16.02.2015 has notified the Companies (Indian Accounting Standard) Rules, 2015. In pursuance of this notification, the Company has adopted IND AS with effect from 1st April, 2016 with the comparatives for the year ended 31st March, 2016.

26. ASSOCIATE COMPANIES:

During the year, Kesoram Insurance Broking Services Ltd. and Vasavadatta Services Ltd. have ceased to be Associates of the Company. The Board of Bander Coal Co. Pvt. Ltd., your Company's associate, has resolved to initiate the process of closure of the said associate as there is no business left with it.

27. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of The Companies (Accounts) Rules, 2014, is annexed herewith as 'Annexure-IV'.

28. ENVIRONMENT AND POLLUTION CONTROL:

Your Company strives to maintain the highest standards of environmental care and ensures that increasing level of operations do not adversely impact standards of health and environment. To combat pollution and strengthen the area ecology, considerable emphasis is placed on plantation of fragrant and shady trees. All manufacturing facilities possess the required environmental clearance from the respective Pollution Control Boards and do comply with the relevant statutory provisions.

The Company is well aware of its responsibility towards a better and cleaner environment. Our efforts in environment management go well beyond mere compliance with statutory requirements. The Company has always maintained harmony with nature by adopting eco-friendly technologies and upgrading the same from time to time incidental to its growth programmes.

29. PARTICULARS OF EMPLOYEES:

The prescribed particulars of employees required under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are attached as 'Annexure-V' and forms part of this Report.

The information required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and forming part of the Directors' Report for the year ended 31st March, 2016 is given in a separate Annexure to this Report.

The said Annexure is not being sent along with this Report to the Members of the Company in line with the provisions of Section 136 of the Companies Act, 2013. Members who are interested in obtaining these particulars may write to the Company Secretary at the Registered Office of the Company. The aforesaid Annexure is also available for inspection by the Members at the Registered Office of the Company, 21 days before the 119th Annual General Meeting and up to the date of the said Annual General Meeting during the business hours on working days.

None of the employees listed in the said Annexure is a relative of any Director of the Company. None of the employees hold (by himself or along with his/her spouse and dependent children) more than two percent of the equity shares of the Company.

30. EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as 'Annexure-VI'.

31. ACKNOWLEDGEMENTS:

Your Directors thank the various Central and State Government Departments, Organizations and Agencies for the continued help and co-operation extended by them. The Directors also gratefully acknowledge all stakeholders of the Company viz. customers, members, dealers, vendors, banks and other business partners for the excellent support received from them during the year. The Directors place on record their sincere appreciation to all employees of the Company for their unstinted commitment and continued contribution to the Company's well being.

On behalf of the Board,

B.K. Birla

Chairman  

Registered Office:  

Century Bhavan,Dr. Annie Besant Road, Worli, Mumbai - 400 030 Dated: 3rd May, 2016