REPORT OF THE DIRECTORS Your Directors have pleasure in presenting the 62nd Annual Report together with the Audited financial statements for the year ended 31st March 2016. The Management Discussion & Analysis Report which is required to be furnished as per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as the Listing Regulations) has been included in the Directors' Report so as to avoid duplication and overlap. ECONOMIC OVERVIEW & COMPANY PERFORMANCE Economic Overview The year 2015 witnessed unusual volatility in the international economic environment. Global economic activity remained subdued. As per International Monetary Fund (IMF), growth in emerging market and developing economies declined, while a modest recovery continued in advanced economies. The global economy growth rate is estimated at 3.1 per cent in 2015. As per IMF update, the three key transitions that continue to influence global outlook are: (1) the gradual slowdown and rebalancing of economic activity in China away from investment and manufacturing towards domestic consumption and services (2) lower prices for energy and other commodities; Oil prices have declined markedly since September 2015 due to oversupply and continued moderate demand. Lower oil prices strain the fiscal positions of fuel exporters and weigh on their growth prospects while supporting household demand and lowering business energy costs in importers especially in advanced economics, where price declines have been passed on to end users, and (3) a gradual tightening in monetary policy in the United States in the context of a resilient U.S. recovery as several other major economy's central banks continued to ease monetary policy. Amidst this depressed outlook, India stood out as a haven of stability and an outpost of opportunity. Its economic growth is amongst the highest in the world, helped by a reorientation of Government spending towards needed public infrastructure. Economic growth in India accelerated in fiscal year 2015, despite a double-digit decline in exports. Regardless of a weak monsoon for a second consecutive year, agriculture grew by 1.1 per cent in FY 2015, mainly due to strong growth in livestock. As per Asian Development Bank, after growing by 5.9 per cent in FY 2014, industry accelerated further to 7.3 per cent in FY 2015. Expansion in services moderated to 9.2 per cent. Private consumption growth is estimated to have picked up to 7.6 per cent in FY 2015 from 6.2 per cent a year earlier. Advance Government estimates point to the economy growing at 7.6 per cent in FY 2015-16 similar to last year. On the Government's "reform to transform" agenda, a series of measures, each incremental but collectively meaningful have been enacted. There have also been some disappointments especially such as the delay in introduction of Goods & Services Tax, Land and Labour Law reforms. Markets remained volatile amidst fears that the global recovery could be getting delayed. Company Performance Revenues The standalone business grew at 11 per cent driven by Abrasives and Electromineral business. Demand improvement from user industries, new product launches, expanding customer base, wresting market share resulted in a better topline growth. The Company's consolidated revenue from India increased by 6 per cent and from rest of the world dropped by 3 per cent resulting in worldwide revenues increasing by 2 per cent from last year levels. At a consolidated level, Abrasives sales grew by 6 per cent, whereas sales of Electrominerals segment remained at the same level due to rouble translation and winding down of operations at Thukela Refractories Isithebe Pty Ltd., South Africa. Ceramic sales at a consolidated level decreased by 3 per cent. Manufacturing Most of the plants in India operated at about 70 per cent capacity utilisation levels. The manufacturing team continued implementation of Total Productive Maintenance (TPM) at shop floors leading to improvement in efficiency of machines and the entire production process Lower fuel rates, coupled with moderation in commodity prices, usage of alternate cost effective raw materials, improvement in raw material consumption and process improvements resulted in containment of the manufacturing costs. Various value adding, cost cutting and productivity improvement projects were undertaken to minimise the impact on the operating profits despite lower plant uilisaion. Capital expenditure during the year across all geographies was in the nature of maintenance, automation, quality enhancement, line balancing and general infrastructure. The relocation projects from South African entities to India is in progress and is expected to be completed in the next financial year. Earnings & Profitability Aided by the growth in revenues, standalone earnings from operations before exceptional items, interest, depreciation and tax improved to Rs.1985 million (previous yearRs.1490 million). Profit before interest and tax margin expanded for all segments due to higher sales and lower costs mainly from fuel and other commodities. Finance costs were at Rs.89 million compared to Rs.87 million in previous year. Profit before tax and exceptional income increased from Rs.1125 million to Rs.1673 million. Profit after tax of Rs.1163 million was lower compared to that of the previous year Rs.1483 million (previous year included an exceptional item of Rs.869 million). On a consolidated basis, profit before exceptional items and tax increased from Rs.1639 million to Rs.2439 million. Profit after tax and minority interest was Rs.1428 million (previous year Rs.1326 million included exceptional item of Rs.565 million). Segmental profitability improved for Abrasives and Electrominerals; however it dropped for Ceramics. In Electrominerals, profits increased due to restructuring of the South African entities. Financial Position On a standalone basis, shareholders funds as on 31st March 2016 was Rs.9470 million. Additions for the year (net of dividends) was Rs.871 million. Non-current liabilities was Rs.682 million. Current liabilities increased from Rs.1887 million to Rs.2438 million. Non-current assets (including fixed assets, capital work-in-progress etc.) increased from Rs.6629 million to Rs.7265 million primarily on account of capital expenditure incurred during the year. Current assets were higher at Rs.5325 million. On a consolidated basis, shareholders funds as on 31st March 2016 was Rs.11859 million. There was an increase (net of dividends) to the extent of Rs.972 million. Minority interest was at Rs.713 million. Non-current liabilities was Rs.797 million and Current liabilities was Rs.5466 million. Non-current assets (including fixed assets, capital work-in-progress etc.) increased from Rs.8786 million to Rs.8679 million. Current assets increased to Rs.10157 million. Cash Flow On a standalone basis, net cash generation from operations was Rs.1236 million in FY 2015-16. Net cash outflow on account of investing activities was Rs.885 million. Net cash outflow on account of financing activities was Rs.322 million which is attributable primarily to repayment of borrowings and dividends paid. The net increase in cash and cash equivalents was Rs.29 million against a decrease of Rs.50 million in FY2014-15. On a consolidated basis, net cash generation from operations was Rs.2239 million in FY 2015-16. Net cash outflow on account of investing activities was Rs.1009 million. Net cash outflow on account of financing activities was Rs.891 million which is attributable primarily to repayment of borrowings and dividends paid. The net increase in cash and cash equivalents was Rs.131 million against an increase of Rs.282 million in FY 2014-15. SHARE CAPITAL The paid up equity share capital as on 31st March 2016 is Rs.188.38 million and increased during the year by Rs.0.20 million, consequent to allotment of shares upon exercise of stock options by employees under the Company's ESOP Scheme, 2007. During the year, the Hon'ble High Court of Madras sanctioned and confirmed the Scheme of Amalgamation of Cellaris Refractories India Limited (CRIL), a wholly owned subsidiary of the Company with it, effective from the appointed date 1st April 2015. Consequent to this merger, the authorised share capital of the Company increased from Rs.250 million (25,00,00,000 equity shares of Rs.1 each) to Rs.387.25 million (38,72,50,000 equity shares of Rs.1 each). DIVIDEND Considering the past dividend payout ratio and the current year's operating profit, the Board has considered it appropriate to recommend to the shareholders of the Company, confirmation of the interim dividend of Rs.1.50 per equity share of Rs.1 each paid during the year as the final dividend. This dividend was paid as Rs.1 per equity share in February 2016 and Rs.0.50 per equity share in March 2016. The dividend of Rs.1.50 per equity share of Rs.1 each paid during the year is higher than last year. PERFORMANCE OF BUSINESS SEGMENTS The business profile, market developments and current year performance are elaborated in the following sections: Abrasives Business Profile This business comprises the following major product groups viz. Bonded Abrasives, Coated Abrasives (including Non-Wovens), Super Abrasives, Metal working fluids and Power Tools. The operations are carried out through eleven manufacturing facilities located in India, Russia, China and Thailand. The marketing entities located in North America and Middle East enables the division to reach out to those geographies. Abrasives are materials that are used to grind, abrade or clean work pieces to give desired shape and finish. They are of different types, but can be broadly classified into Bonded, Coated, Loose Abrasive Grains, Super Abrasives and others. Abrasives are used in a wide spectrum of industries, the key among them being automobile, engineering, fabrication, wood working, construction, home maintenance and infrastructure. The Company caters to customers located around fifty five countries through its network of manufacturing facilities and marketing establishments. It is one of the major players in India and Russia. Industry scenario The global industry continues to be led by few players who have a complete portfolio of Abrasive products. There are also a large number of players specialising in specific categories of Abrasives. No major international mergers & acquisitions deals were witnessed during the year. The Indian Abrasives industry is catered to by a few large players, numerous smaller players specialising in select products and imports from China catering to the low end of the market. India continues to be a focus region for major global players with its economic growth better than most of the other regions in the world. In the domestic Russian market there are three major players. The Company is a major player in Vitrified Bonded Abrasives. Imports continue to service a sizeable portion of the market though in the last couple of years import quantum has marginally reduced owing to a depreciated rouble. Demand for Industrial Abrasives is fostered by renewed industrialisation activity in the developing regions, rising per capita income and consumer spending, enhanced manufacturing activities in the durables sector and increased fixed investments. Boost in the construction and manufacturing sectors and per capita income would result in bolstering demand for Industrial Abrasives. There was no major change in the industry structure during the year. Sales Overview Notwithstanding the delay in implementation of several announced projects, deluge in the Southern region of India as well as lower than average festive season demand, the Abrasives business on a standalone basis recorded a growth in revenue from Rs.6689 million to Rs.7260 million, a growth of 9 per cent. The growth was fuelled by recovery in the domestic business of select Resinoid products from prior year lows, increase in exports of smaller size Resinoid wheels, better performance from Coated products, import substitution, introduction of new technical products and continued usage of captive high performance grains across products. During the year, the business aggressively appointed new channel partners and expanded its dealer network. Retail development and industrial storming initiatives were carried out which gave the necessary mileage. Emphasis was given on the core business with introduction of new products and brands in the Vitrified standard range and select Resinoid ranges. New technically advanced products were launched in Bonded non-standard space. Successful realisation of the synergy effect of consolidation of Super Abrasives and Power Tools gave higher growth in those product segments. In Coated products, business aggressively targeted new territories through new product launches, upgraded select products to international benchmarks and targeted Tier II and Tier III segments. In Exports, bulk supplies were made to international customers and talks were also initiated with new customers. In Non-Woven business, the focus during the year continued on increased participation in the industrial segment and development of new products. Continued marketing activities with various partners, introduction of new technically advanced products and favourable pricing with a superior application engineering helped CUMI Abrasives division to remain competitive in the market ahead of its peers. The Abrasives consumption in Russia further declined this year due to the economic recession and a contraction in the economic activity. The translation of sales in Russian rouble into Indian rupees further accentuated the impact. Chinese entity also had a lower sales. Wendt India which addresses the Super Abrasives & Grinding machines market had a marginal growth in its revenues. Manufacturing Manufacturing supported the marketing initiatives well in terms of timely delivery, product performance and consistency. The key strategy over the years has been to increase the indigenous sourcing and lowering the gap between exports and imports to ensure sustainable profitability in Abrasives business. Key initiatives undertaken towards fulfillment of the strategy were commencement of techno commercial projects to sustain cost reductions, joint projects with Electrominerals division, identification of alternate suppliers and business partnering with key suppliers. Raw material, power and fuel costs were contained below the planned levels which led to better profitability. Significant number of value projects tailored to meet cost reduction through improvement in material efficiencies, labour productivity improvements and maintenance efficiencies continued during the year. Modifications were made in the production process which resulted in better product consistency and performance. Focus continued to be on consolidation of operations and maximising the investments made in the earlier years. Last year, Sriperumbudur and Maraimalai Nagar plants were awarded Total Productive Maintenance (TPM) award for Excellence - Category "A" by Japan Institute of Plant Maintenance (JIPM). The journey continued this year also with Thiruvottriyur plant passing the first test, thus qualifying for the JIPM audit after clearing the CII TPM Health check. TPM activities were also initiated in the Hosur and Uttarakhand plants. TPM benefits in enhancing equipment effectiveness, debottlenecking various constraints in the production process, thus releasing additional capacity and reducing lead time in production. As a part of the restructuring initiatives in China, the manufacturing operations have been discontinued and a new business model for the future business operations is being evaluated. Aided by buoyancy in revenues and cost reduction projects and others initiatives, the business recorded an increase in standalone operating profits before interest and taxes at Rs.941 million from Rs.679 million last year. At a consolidated level, the profits grew from Rs.627 million last year to Rs.892 million this year. Ceramics Business Profile The Ceramics business has three product groups viz. Industrial Ceramics, Super Refractories and Anti-corrosives. Industrial Ceramics business offers Alumina and Zirconia products of technical ceramic grades addressing wear protection, electrical insulation, thermal protection and ballistic protection applications. The Super Refractories product group supplies fired, monolithic, flow control products, POW wellfiler and fibre as also refractory design and installation services addressing the insulation and thermal resistance requirements of industries. The Refractory fibre, Refractory design and installation businesses are addressed through our joint ventures Murugappa Morgan Thermal Ceramics Limited and Ciria India Limited. The Anti-corrosives product group offers acid resistant cements, polymer concrete cells and various other products addressing the anti-corrosion requirements of industries. The key user industries for Ceramics business are power generation and transmission, coal washeries, grain handling, sanitary tiles and sanitary ware, ballistic protection, cement, non-ferrous metals, iron and steel industries, carbon black, insulators, furnace building, glass, petrochemicals and construcion. The operations are carried out through ten manufacturing/ service facilities located in India, Australia and Russia. The subsidiaries in North America, Middle East and China also support this business in getting an extended customer reach. The Company is one of the major players in India, Australia and Russia in specific productgroups. Industry scenario There has been no material change in the Ceramics industry structure in India, which is catered to by a few major players. Globally however, NTK Japan exited Metallized ceramics business and its equipment and technology were acquired by CUMI Ceramics business. CUMI is a reputed and a leading international player in specific market segments. In Australia, CUMI is one of the major players in the lined equipment and mineral processing industry. There are about a dozen players in the industry, most of whom market products imported from China and USA. The Refractory industry in Russia is a highly fragmented market with several players. Volzhsky Abrasives Works (VAW) caters primarily to the aluminium industry in Russia. Sales Overview Revenues of the Ceramics business grew by 1 per cent on a standalone basis from Rs.3146 million to Rs.3189 million. The Industrial Ceramics division had a reasonable growth on the back of significant increase in Metallized Ceramics and Engineering Ceramics business. The business was able to tide over the challenges of deferment in schedules from select customers by adding new customers and augmenting the customer basket. Domestic Wear Ceramics business, which is around fifty to sixty per cent project dependent, continued to grapple with the issues of project deferrals in power sector. In order to derisk project dependency, the business focussed on ceramics conversion opportunities and repairs & maintenance in coal washeries, mining, cement and private power plants. The business also strengthened relationship with Original Equipment Manufacturers (OEM) from non-power sector. In exports, cement and power segments were targeted in ASEAN countries, Middle East, China and South Africa. The business in lined equipments from Australian market continued to be good. The American ceramics business leadership has been strengthened and consequently future strategies to target that market have been initiated. The growth in Industrial Ceramics was offset by lower sales in Refractories business in India. In Russia, Nitride Bonded Silicon Carbide Refractories which primarily caters to aluminum industry registered growth on revenues abetted by broad basing the range of Refractory products Manufacturing The Industrial Ceramics division was able to successfully complete the debottlenecking project in Metallized business resulting in increasing the current capacity to 1 million cylinders per annum. For this innovation, the division won recognition as one of the top 25 innovating companies in India from the Confederation of Indian Industry. This year the business embarked on a significant milestone to double the capacity of the Metallized Cylinder plant in Hosur by acquiring machinery and technology from NTK Japan. The new plant will have the capability to produce 720000 cylinders per annum and is expected to be operational in the next financial year. With this expansion, the Company can boast of being a significant player in the Metallized space internationally with an overall capacity of 1.72 million cylinders per annum. Key Research and Development projects were initiated targeting steel applications, implementing casting and moulding technologies and conceptualizing new product development with composites. Successful completion of these R&D projects would enable the business to target high value added products. The Refractories business over the last two years has invested on new technology for new product lines, mainly for iron & steel and foundry industry. Last year, the Company took a decision to shift the plants of Thukela Refractories Isithebe Pty Ltd., South Africa relating to flow control and POW wellfiller products to Jabalpur, India. The facility will target mini steel plants in India and is expected to get commissioned in the next financial year. With these investments, the Refractory business intends to leverage technology, new products and service capabilities to be competitive in the target market segments. Electrominerals Business Profile The major product groups of this segment are Fused Alumina (comprising brown and white Alumina), Silicon Carbide, Fused Zirconia, Alumina Zirconia and Zircon mullite. The Company also manufactures a range of 'specialities' like Semi Friable, Azure-S and fine powders for niche markets. The operations are carried out through eight manufacturing facilities located in India, Russia and South Africa. Key user industries for this business are abrasives, refractories, steel, photovoltaic, brake linings, nuclear energy, wooden laminates, semiconductor and others. The business also has captive bauxite mines, sand mines and a captive power plant. Industry Scenario The market structure in the global Electrominerals business remained largely unchanged. In Fused Alumina, the Company is largely a national player with customers based in India. Apart from the domestic players, imported products have a visible share in the market. Competitive imports become favourable or unfavourable depending on Free Trade Agreements between countries, duty structures and exchange rates. In the global Electrominerals business, the Company continues to retain its position as one of the reputed manufacturers of Silicon Carbide and Fused Zirconia. Sales Overview The Electrominerals business recorded revenues of Rs.3127 million, which was 34 per cent higher compared to last year standalone revenues of Rs.2338 million. The growth was largely due to higher Alumina sales. In the standalone business, demand for Electrominerals grains was moderate from Refractory customers, however, the Abrasive grains showed a good growth trend. The business could establish its special products with domestic and internal customers. Bulk supplies of Silicon Carbide Micro fine powders were made to some of the solar photovoltaic customers. In South Africa, the Fused Zirconia sales was marginally lower, but the profits grew at the back of operational efficiency and restructuring. The Russian operations continued to fuse with full capacity utilisation. The business being a net exporter in foreign currency, continued to benefit from a depreciated rouble, delivering a stellar top line growth in rouble currency. The entity also launched various grits with new fractions meeting industry requirements. Manufacturing The fused minerals operations in South Africa, which was acquired during the second quarter of FY 2012-13, were mothballed and the two furnaces meant for fusion is being relocated to Edapally plant in India in this year. The production is expected to commence from next financial year. The Bubble Zirconia plant in South Africa which faced production related challenges is also being relocated to Edapally, India. The new plant is expected to commence next year. The merger of wholly owned subsidiary, Cellaris Refractories India Limited with the Company was completed during the year. The commercial establishment of light weight alumina cells for use in Refractory industry is in progress. A grain treatment facility is in the process of being set up which will enable creation of value added grains. With an aim to meet the applications and serve the user industry better, the business continues to modify, adapt and improve various production processes for ensuring improvement in recovery, minimising generation of by-products, achieving a higher throughput and generating grains with higher purity and better specifications. In Russia, in order to provide the required level of quality and production volume, the Silicon Carbide processing plant commissioned a crushing complex which is now operational. This has enabled the plant to introduce various grit sizes in the market. With higher sales and reduction in the losses from the South African entities, the profit before tax and interest has increased from Rs.797 million to Rs.1299 million on a consolidated basis FINANCE During the year, the Company generated Rs.1236 million of cash surplus from its operations on a standalone basis. All debts have been serviced on time. The Company's long term debt position as on 31st March 2016 stands at Rs.259 million and total debt position stands at Rs.1091 million. The capital expenditure program of Rs.1031 million was financed largely from internal accruals. The consolidated loan funds has come down to Rs.3108 million from Rs.3402 million. The credit ratings of the Company, 'A1+' for short-term borrowings and 'AA+Stable' for long-term borrowings were reaffirmed by CRISIL. Over the years, the Company has been resorting to a prudent mix of rupee and foreign currency borrowings to finance its operations and achieve reduction in financing cost. The finance cost at a standalone level is at Rs.89 million compared to Rs.87 million last year. At a consolidated level, the interest cost has come down from Rs.253 million to Rs.227 million. With the Indian entity enjoying a significant natural hedge, a cautious approach was adopted to hedge the remaining exposures. The Company adopts prudent tax management policies. The Company's debt equity ratio continues to be healthy at 0.12 on a standalone basis and 0.26 on a consolidated basis. There are no material changes and commitments, affecting the financial position of the Company which have occurred between 31st March 2016 and the date of this report. INTERNAL CONTROL The Company has an Internal Control System commensurate with the size, scale and complexity of its operations. The controls have been designed and categorised based on the nature, type and the risk rating. The Internal Audit team evaluates the effectiveness and adequacy of internal controls, compliance with operating systems, policies and procedures of the Company and recommends improvements, if any. Significant audit observations and the corrective/preventive action taken or proposed to be taken by the process owners are presented to the Audit Committee. Annual review of adherence to the agreed action plan is carried out. The scope of Internal Audit is annually determined by the Audit Committee considering the inputs from Statutory Auditors and management. Capital and revenue expenditure are monitored and controlled with reference to approved budgets. Investment decisions are subject to formal detailed evaluation and approval according to schedule of authority in place. Review of capital expenditure undertaken with reference to benefits forecasted is done. Physical verification of assets is periodically undertaken. The Audit Committee reviews the overall functioning of Internal Audit on a periodical basis. The Committee also discusses with the Auditors periodically on their views on the financial statements including the financial reporting system, compliance with accounting policies & procedures and the adequacy/effectiveness of the Internal Control Systems in the Company. ADEQUACY OF INTERNAL FINANCIAL CONTROLS The adequacy of Internal Financial Controls existing in the Company to ensure orderly and efficient conduct of its business, including adherence to the Company's policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records and the timely preparation of reliable financial information is ensured by: • Documentation of the risks and controls associated with the major processes; • Validation and classification of existing controls to mitigate risks; • Identification of improvements and upgrades to the controls; • Improving the effectiveness of controls on residuary risks through data analytics; • Performing testing of controls; • Implementation of sustainable solutions to Internal Audit observations; The Audit Committee periodically evaluates Internal Financial Controls to ensure that they are adequate and operating effectively. HUMAN RESOURCES In the year 2015-16, CUMI recorded an impressive double digit growth in spite of continued uncertainty and volatility in the market. CUMI HR played a significant role in the ever demanding VUCA world in attracting right talents, nurturing and retaining them. The key HR imperatives were addressed through six strategic pillars namely building leadership pipeline, scaling up capability across the organisation, propelling performance, enhancing people productivity, improving safety performance and corporate social responsibility. Building Leadership Pipeline The HiPo exercise was launched into the second orbit with the culmination of psychometric profiling and development of Individual Development Programme. The goal of the HiPo initiative is to secure long-term talent planning and ensure a strong leadership pipeline. These future leaders are taken through targeted development and succession planning techniques. The second round of talent identification has been initiated across all SBU's through an online evaluation by managers and individual assessments. To build a career path for eligible employees, a strategic initiative called Career management framework has been evolved by a committee comprising the senior leadership of CUMI. The framework provides guidelines on lateral career mobility, assessment based promotions, inter-functional movements and a well-articulated roadmap. Scaling up Capability CUMI encourages employees to constantly upgrade the skills/competencies in their areas of work and supports any initiative that gives them this opportunity. The Group organised Business Leadership Programme has had many leaders from CUMI. The recently launched Young Leadership Programme for middle management also saw highest participation from CUMI. Both these leadership programmes are running successfully and the executives upon completion will take over different roles. To enhance the technical know-how of the operation managers, the Company has extended sponsorship for Bachelors/Masters programmes in field of manufacturing technology. Capability Development The Learning and Development plan was rolled out with the same rigour and attention as any other management task. At CUMI, the objective is to have a well-managed learning and development programme to enhance right skill sets and relevant knowledge to enable people to achieve operational and futuristic outcomes. The learning solutions were designed in accordance with Training Needs Analysis and besides this, SBU specific learning initiatives were designed and implemented leading to a quantum jump in the performance. CUMI leadership team and key executives were trained on the three box strategic thinking and the concept has been percolated across the organisation with a vision to identify individuals or teams to come up with breakthrough ideas and growth initiatives. Propelling Performance Several initiatives on structural alignment were taken up during the year to improve the business unit efficiency and productivity. The structural changes and movement of talent between functions has given impetus to the marketing and R&D functions with competitive advantage to each SBU. Certain businesses have been strategically realigned to improve efficiencies and synergy during the year and the people transition were well addressed. Employee Engagement The Engagement Survey conducted lastyearwas instrumental in identifying the areas of disaffection. The results were shared to all stakeholders and focus groups were formed to address different drivers. Concrete plans were taken up to engage employees on parameters like care, recognition and career opportunities. The results of the dipstick survey showed significant improvement in these parameters. Employee Relations Proactive steps and structured problem solving mechanisms with focus on people issues and regular communication on business related issues ensured cordial industrial relations. A purposive and positive climate was maintained throughout the year in all the manufacturing plants. A comprehensive long term settlement incorporating new productivity parameters with flexibility in operation was signed in the Abrasives and Electrominerals divisions Corporate Social Responsibility Sustainable Community Building is a guiding philosophy of the Murugappa Group. Imbibing this philosophy, CUMI which had successfully set up the CUMI Centre for Skill Development (CCSD) in Hosur a few years ago, replicated this model in Edapally during the year. These centres host over 160 students from the less privileged community in the skill building scheme and support their eventual employment. CUMI works closely with the neighbouring communities across the manufacturing plants and provide them need based support. Safety and Health In a continuous effort towards maintaining a safe working environment, awareness sessions, training on usage of personal protective equipments were conducted. Identifying and eliminating unsafe working conditions were focus areas at the unit level. These dedicated efforts have resulted in reduced occurrence of accidents. All locations strive constantly towards a zero accident scenario. Initiatives on preventive health care for all employees backed by an Online Health Monitoring System has also been a constant focus area. Ongoing efforts including development of a safety manual with detailed Standard Operating Procedure and clear roles & responsibilities, near miss identification exercise, TPM implementation will take safety performance to the next level. The Company continues its commitment to employ and empower women through various initiatives including establishing and implementing extended maternity leave policies, friendly work place policies for women etc. The Company also has a policy on prevention of Sexual Harassment at workplace in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress any complaint regarding sexual harassment and the ICC did not receive any complaints during the year. AWARDS & ACCOLADES The year 2015-16 was a year of recognition for the Company in varied fields. The Super Refractories division of the Company completed 50 years and the golden jubilee celebration was graced by the presence of its esteemed customers and dealers. The Edapally unit of Electrominerals division earned the Silver Medal for the India Green Manufacturing Challenge conducted by International Research Institute for the Manufacturing (IRIM). The Jabalpur plant of the Company was conferred the Business Excellence Award by the Jabalpur Chamber of Commerce & Industries. As indicated earlier, the Industrial Ceramics division was recognised as one of the Top 25 Innovative organisations at the CII Innovation Awards 2015. Besides, it also received the 5S model company award at an event organised by ABK-AOTS. The division was also recognised as the Best Supplier by ABB India Limited besides winning the golden award for Kaizen display from Quality Circle forum of India. Besides the above, the Company participated in several exhibitions and conferences, the significant among them being the Grindtec in Augsbury, Germany and Ceramitec, Munich, Germany where it was well received. Further, the CUMI Centre for Skill Development in Edapally received the formal approval order by the State Industrial Training Department from Mr. Shibu Baby John, Minister of Labour and Rehabilitation at a function organised by the Government of Kerala on 19th May 2015. The total staff on rolls, of the Company (including joint ventures and subsidiaries) as on 31st March 2016 was 5066 with 3225 employees in India. (Previous year 5020 with 3111 employees in India) PERFORMANCE OF SUBSIDIARIES Volzhsky Abrasive Works, Russia recorded net sales growth over the previous year from RUB 3428 million to RUB 4284 million due to improvement in sales volumes of Silicon Carbide and higher realisation due to exports. The entity had the highest ever fusion volumes surpassing last year levels. The sales of Refractories improved due to robust order book and costlier imports. Abrasives sales remained at around the same level. The Abrasives consumption in Russia declined this year due to the economic recession and contraction in the economic activity. On the profitability front, despite hike in power rate on the back of price gain from exports, the entity registered an increase in profitability (after tax) from RUB438 million to RUB 686 million. Foskor Zirconia, South Africa recorded net sales of Rand 192 million compared to Rand 197 million last year. The entity's profit after tax improved from last year's loss of ZAR 8 million to a profit of ZAR 13 million. In CUMI Australia, the business in lined equipment continued to be good. Net sales grew from AUD 15.44 million to AUD 16.2 million. Profit after tax remained same at last years' level of AUD 1.8 million. Sterling Abrasives had a net sales of Rs.620 million, compared to the last years' net sales of Rs.625 million. Profit after tax dropped from Rs.54 million to Rs.52 million on account of higher depreciation arising out of capacity expansion. The user industry comprises majorly of agro polishing industry. CUMI Abrasives and Ceramics Company, the Chinese subsidiary had a net sales of CNY27 million for the year, which was lowerthan the last year's level of CNY33 million. The loss was CNY 20 million against a loss of CNY 13 million in the last financial year. As part of the restructuring initiatives in China, the manufacturing operations have been discontinued and a new business model for the future business operations is being established. The net sales of CUMI America recorded a good growth (USD 5.1 million from USD 4.5 million), driven mainly by the increase in sales of both Bonded Abrasives and Industrial Ceramics. The losses were in the levels of USD 0.8 million as against a loss level of USD 0.6 million in FY 2014-15. During the year, consequent to the consolidation of its operations with CUMI America, CUMI Canada was legally wound up and hence ceased to be a subsidiary of the Company. For CUMI Middle East, net sales almost remained flat at USD 2 million owing to a tepid Middle East market. Profits for the year reduced from USD 0.15 million to a loss of 0.16 million. During the year CRIL was merged with the Company and its operations were integrated with Electromineral operations. Therefore, CRIL ceased to be a subsidiary of the Company. Consequently financial results of the entity forms part of the Electromineral standalone numbers. Southern Energy Development Corporation Limited (SEDCO), the gas based power generation subsidiary, recorded a net sales of Rs.219 million as against Rs.180 million last year due to improved supply in gas from Oil and Natural Gas Corporation. Profits after tax substantially grew from Rs.7 million to Rs.23 million due to favourable gas price. Net Access India, which provides IT facilities management and other allied services increased its net sales from Rs.252 million to Rs.296 million. Profits after tax grew from Rs.15.9 million to Rs.16.7 million. The business has introduced new service offerings and is increasing the share of its external customers. Thukela Refractories Isithebe, South Africa, recorded a net sales of Rand 0.8 million as compared to Rand 77 million last year. The drop in net sales was due to winding down of its operations. The loss levels subsequent to the exit has come down from Rand 54 million to Rand 14 million and its closure is in the final stages. CUMI International Limited, Cyprus recorded a revenue of USD 3.2 million representing mainly dividend income, as against last year income of USD 4.8 million. CUMI Europe s.r.o, based out of Europe, to serve the European markets better with products and services of CUMI group, had a turnover of CZK 7.9 million. Loss levels were at CZK 3.7 million. The entity is in the process of establishing its business presence. Performance of joint ventures are given in note no. 42 of the standalone financials. Consolidated financial statements (incorporating the financial results of the Company, its subsidiaries and joint ventures) have been provided in the Annual Report. Other than the joint ventures, there are no associate companies within the meaning of Section 2(6) of the Companies Act, 2013. A statement containing the key financial highlights of each subsidiary, based on the financial statements prepared by them under applicable local regulations for their respective financial years, is also attached. RISKS, CONCERNS AND THREATS Pursuant to the requirements of the Listing Regulations and the Companies Act, 2013 the Company has constituted a Risk Management Committee. The details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of this Report. The Company has a robust business risk management process to identify, evaluate and mitigate risks impacting business including those which may threaten the existence of the Company. This framework seeks to create transparency, minimise adverse impact on the business objectives and enhance the Company's competitive advantage. This also defines the risk management approach across the enterprise at various levels including documentation and reporting. The framework has different risk models which help in identifying risk trends, exposure and potential impact analysis at a Company level as also separately for the business segments. Risk management forms an integral part of the Company's Business Plan. The key business risks identified by the Company and its mitigation plans are as under: Over the past few years, the Company has acquired various technologies. Delay in successful conversion of the technology and application knowledge to profitable business model may lead to an adverse impact on the return on investments. Proper training of application team, collaborator's guidance, product validation at the user's end and leveraging the external expertise are some of the mitigating efforts the Company continues to pursue. The Company operates across various technology platforms and product verticals built over the years. Relative advantages and disadvantages of such technologies are studied and advances are tracked. Any new technology may impact the performance of the Company in the long run. Such new technologies in the related space as also in adjacencies are continuously tracked and monitored. The Company seeks to address these technology gaps through continuous benchmarking the existing manufacturing processes with developments in the industry and in this connection has made arrangements with technical research institutions and technology consultants. The in-house Research and Development teams which have been strengthened over years are working on various state of the art projects. The Company manufactures various products which results in exposure to numerous raw materials. Risks associated with raw material availability, threat of substitutes and supplier concentricity could impact the quality and timely delivery of finished products. The risks are mitigated to include alternative sources after thorough testing and evaluation. Underutilisation of capacities may affect the performance of the Company going forward. The Company is ramping up its marketing efforts towards successful product establishment and market acceptance of the products, exploring development of alternate products and establishing a range of applications. This year, the Company has relocated capital projects from South Africa to India. The relocated projects are in various stages of installation and commissioning and any delay in timelines would affect the successful ramp up of business volumes. The products produced in those relocated facilities would have to be quality compliant, exhibit product consistency, gain customer acceptance and be compliant to user industry requirements. Any delay in successful production or acceptance of the product, will impact timely capacity utilisation of these projects. Considering Electromineral products are produced by way of fusion process which consumes lot of electricity, power cost remains one of the key lever which can favourably or adversely affect our profitability based on the changes in the electricity cost. Our manufacturing facilities are located in diverse geographies with differing power rates adopted and driven by the local laws and policies. Apart from pricing, in some locations, availability of power becomes a constraint. In order to mitigate this threat, the Company continues to liaise with the local regulatory bodies and local Government. The Company also constantly strives to bring about technological changes in its manufacturing processes which leads to lower power consumption. Getting access to captive power and creating facilities for captive power generation continues to be a vital strategy of CUMI, as can be exhibited from Maniyar and SEDCO. Fuel cost increase is another area of concern. Petroleum based products are used, either as direct raw material or as fuel for the firing process. Any increase in the cost of fuel impacts the profitability adversely. Improvements in firing technologies are avenues which the Company continues to pursue for dealing with the challenges. Last two years, however, the Company was favourably impacted owing to the global cool off in oil prices. The Company deals with multiple currencies and is thus exposed to translation risk on account of adverse currency movements. In the last two years, rouble depreciation has impacted our consolidated topline growth. The Company has taken steps to maximise profitability. Foreign Exchange risk on foreign denominated loans, imports and exports are mitigated by adopting a country based Forex policy, periodic monitoring and use of hedging instruments. Efforts are being taken to manage both exports and imports to ensure that at Company level, there is a natural hedging mechanism. The Company's input materials are not commoditised and does not warrant any specific hedging to be undertaken. With respect to output materials, adverse impact of changes in commodity prices on user industries could impact the sales which are mitigated by development of alternate products, establishing new range of applications etc. as detailed above. The other mitigation measures for dealing with increase in fuel costs, non-availability of raw materials etc. have been dealt separately in the above paragraphs. BUSINESS OUTLOOK AND OPPORTUNITIES According to the World Economic Outlook - January 2016 of the International Monetary Fund (IMF), global growth is forecast at 3.4 per cent in 2016. The pickup in global activity is projected to be gradual. The slowdown and rebalancing of the Chinese economy, lower commodity prices, and strains in certain large emerging market economies will continue to weigh on growth prospects in 2016-17. As far as India is concerned, while public investment and urban consumption were the major drivers of growth in FY 2015, revival of private investment and rural consumption is critical if growth is to remain strong in FY 2016. As per Asian Development Bank, growth is projected at 7.4 per cent in FY 2016, marginally lower than the 7.6 per cent achieved in FY 2015 as the expected decline in external demand offsets a pickup in domestic demand. Moreover, the weak balance sheets of public sector banks will hamper lending and growth prospects. Growth is expected to pick up a bit to 7.8 per cent in FY 2017, helped by the Government's strengthening of public sector banks' capital and operations, private investments benefitting from corporates delivering results, the financing of stalled projects and an uptick in bank credit. A revival in domestic growth would result in kick starting several postponed projects in steel, power, glass, cement, insulation and general engineering industry which would help the Company to register a good growth. The Company expects a good growth in revenue in the backdrop of positive macroeconomic factors considering favourable investment climate, perceived ability of new Government to push structural reforms like fast track clearance for infrastructure projects, GST, energy related reforms, controlled fiscal deficit and normalisation of current account deficit. The demand for Abrasives is ever increasing owing to opportunities arising out of global mega trends. Indian growth story is one of the key triggers for multinational companies to increase its presence in this region. This throws a different challenge for CUMI Abrasives to cope up with international competition to protect its market share and meet the futuristic demand through high performance products and deliver sustainable profitable growth. Rapid urbanisation and resultant growth in infrastructure, construction and auto industry would be the key market driver for Indian Abrasives consumption. Higher productivity and success of 'Make in India' initiative is also expected to favourably impact the Abrasives market. Globally, marketing entities are spread across Middle East, Europe, China and North America. The growth in Middle East is likely to come from higher spend on infrastructure and shift towards a non-oil economy and open industrialisation. In China, high speed rail network projects and creation of satellite towns is likely to expand the market. Emergence of Central and Eastern Europe as automotive hubs is expected to lead to upsurge in economic activity. In North America, increased prevalence of metal fabrication and revival in housing market will result in revenue growth for the Company. The Company will continue to pursue efforts to control costs. In this year, the Company spent majority of its capital expenditure towards relocation projects. Considering the facilities that have been expanded over the last years, the Company would invest majorly in maintenance in the forthcoming year. With most of the facilities running at moderate utilisation levels, higher sales is expected to result in significant leverage leading to better results next year. FIXED DEPOSITS The Company has not accepted any deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014 and no amount of principal or interest was outstanding as on the balance sheet date. RELATED PARTY TRANSACTIONS The Company as per the requirements of the Companies Act, 2013 and Regulation 23 of the Listing Regulations has a Policy for dealing with Related Parties. In line with its stated policy, all Related Party transactions are placed before the Audit Committee for review and approval. Prior omnibus approval of the Committee is obtained on a quarterly basis for transactions which are of foreseen and repetitive nature. The statement containing the nature and value of the transactions entered into during the quarter is presented at every meeting by the Chief Financial Officer for the review and approval of the Committee. Further, transactions proposed to be entered in subsequent quarter are also presented. Additionally, details of transactions proposed to be entered into with Related Parties on an annual basis are placed before the committee at the commencement of the financial year. Besides, the Related Party transactions entered during the year are also reviewed by the Board on an annual basis. All transactions with Related Parties entered during the financial year were in the ordinary course of business and on an arm's length basis. There are no materially significant related party transactions made by the Company with its Promoters, Directors, Key Managerial Personnel or their relatives which may have a potential conflict with the interest of the Company at large. There are no contracts or arrangements entered into with Related Parties during the year to be disclosed under Sections 188 (1) and 134 (h) of the Companies Act, 2013 in form AOC-2. The Company's policy on dealing with Related Parties as approved by the Board has been uploaded and is available on the Company's website at the following link. <https://www.cumi-murugappa.com/policies.html>. None of the Directors and KMPs had any pecuniary relationship or transaction with the Company other than those relating to remuneration in their capacity as Directors/Executives and corporate action entitlements in their capacity as shareholders of the Company. CORPORATE SOCIAL RESPONSIBILITY The Murugappa Group is known for its tradition of philanthropy and community service. The Group's philosophy is to reach out to the community by establishing service oriented philanthropic institutions in the field of education and healthcare as the core focus areas. The Company being a constituent of the Group has been upholding this tradition by earmarking a part of its income for carrying out its social responsibilities. The Company continues to engage in Corporate Social Responsibility (CSR) activities directly as well as through implementation agencies. The Company has set up the CUMI Centre for Skill Development (CCSD) in year 2012 at Hosur, to build a skill bank of a technically competent and industry ready work force. During the year, the Company replicated this model in Edapally, Cochin. The Centre provides specialised training based on National Council Vocational Training syllabus for the rural youth drawn from socially and underprivileged sections of the society. The three year training is imparted with a stipendiary payment and free boarding facilities, thus enabling the enrolled students to earn while they learn. The job oriented skill training enhances their employability and aids in uplifting their socioeconomic status. The technically trained students can be employed by any industrial entity once they complete the training programme. In addition, the Company has also been contributing to the cause of health and education by making grants to AMM Foundation, an autonomous charitable trust, engaged in philanthropic activities in the field of education and healthcare since 1953. The Company also actively pursues local community assistance programmes in and around its plant and office locations. The Company headquartered in Chennai and which has three of its Abrasives plants operating in and around Chennai despite being affected by the floods in December 2015, not only kept its factories running continuously but in the quintessential CUMI-way helped the community at large through supply of food packets and other necessaries to highly impacted areas. The Company supplied water draining motors to schools inundated in the rains as well as food and safe drinking water to the authorities and volunteers engaged in the relief work. The energetic employees of the Company, regardless of the personal suffering they were undergoing during the floods quickly formed rescue teams and assisted in the evacuation activities. The Company also procured and administered cholera preventive medicines to its employees and their families. The Company's CSR policy is available on the Company's website at the following link <https://www.cumi-murugappa>. com/policies.html. The Annual report on the CSR activities in the prescribed format is annexed hereto as Annexure A and forms part of this Report. GOVERNANCE Board of Directors and Key Managerial Personnel The Board of the Company comprises eight Directors of which majority (six) are independent. During the year, Mrs. Bharati Rao, was appointed as an Independent Director under Section 149 of the Companies Act, 2013 at the 61st Annual General Meeting by the shareholders for a term of4years. Mr. M M Murugappan, retires by rotation at the forthcoming Annual General Meeting and being eligible has offered himself for re-appointment. Approval of the members is being sought at the ensuing Annual General Meeting for his re-appointment and the requisite details in this connection is contained in the Notice convening the meeting and the Corporate Governance Report. The Company has received declarations from all its Independent Directors confirming that they meet the criteria of independence prescribed both under the Companies Act, 2013 and the Listing Regulations. Mr. K Srinivasan, Managing Director, Mr. Sridharan Rangarajan, Chief Financial Officer and Mrs. Rekha Surendhiran, Company Secretary continue to be the Key Managerial Personnel of the Company as per Section 203 of the Companies Act, 2013 and there were no changes during the year. Board Meetings During the year, eight Board Meetings were held, the details of which are given in the Corporate Governance Report. Board Evaluation Pursuant to the provisions of the Companies Act, 2013 and the Listing Regulations, the Board carried out an annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its various Committees as per the evaluation framework adopted by the Board on the recommendation of the Nomination & Remuneration Committee. Structured questionnaires were used in the overall Board evaluation comprising various aspects of the Board's functioning in terms of structure, governance and dynamics of functioning besides the financial reporting process, internal controls and risk management. The evaluation of the Committees was based on their terms of reference fixed by the Board. Separate questionnaires were used to evaluate the performance of individual Directors on parameters such as their level of engagement and contribution, objective judgement etc. The Chairman was also evaluated based on the key aspects of his role. The performance evaluation of the Independent Directors was carried out by the entire Board. The performance evaluation of the Chairman and the Non-Independent Directors was carried out by the Independent Directors at their separate meeting. Policy on Appointment and Remuneration of Directors Pursuant to Section 178(3) of the Companies Act, 2013 the Nomination and Remuneration Committee of the Board of the Company has formulated the criteria for Board nominations as well as the policy on remuneration for Directors and employees of the Company. The criteria for Board nominations lays down the qualification norms in terms of personal traits, experience, background and standards for independence besides the positive attributes required for a person to be inducted into the Board of CUMI. Criteria for induction into senior management positions have also been laid down. The Remuneration policy provides the framework for remunerating the members of the Board, Key Managerial Personnel and other employees of the Company. This Policy is guided by the principles and objectives enumerated in Section 178(4) of the Companies Act, 2013 and reflects the remuneration philosophy and principles of the Murugappa Group to ensure reasonableness and sufficiency of remuneration to attract, retain and motivate competent resources, a clear relationship of remuneration to performance and a balance between rewarding short and long-term performance of the Company. The policy lays down broad guidelines for payment of remuneration to Executive and Non-Executive Directors within the limits approved by the shareholders. Further details are available in the Corporate Governance Report. The Board Nomination criteria and the Remuneration policy are available on the website of the Company at <https://www.cumi-murugappa.com/policies.html>. Composition of Audit Committee The Audit Committee of the Board of CUMI comprises only Independent Directors. Mr. T L Palani Kumar is the Chairman and the other members are Mr. M Lakshminarayan, Mr. SanjayJayavarthanavelu and Mrs. Bharati Rao. Duringthe year, five Audit Committee Meetings were held, the details ofwhich are provided in the Corporate Governance Report. Statutory Auditors M/s. Deloitte Haskins & Sells, Chartered Accountants, (FR No. 008072S) Chennai were appointed as Auditors of the Company at the 60th Annual General Meeting to hold office upto the conclusion of the 62nd Annual General Meeting subject to annual ratification by the General Body. Their office as Auditors will expire at the conclusion of the ensuing Annual General Meeting. M/s. Deloitte Haskins & Sells have offered to continue as Auditors of the Company for one more year and have furnished their consent in this regard. In view of the transition period provided in Section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, they are eligible to continue as Auditors for one more year and accordingly with the recommendation of the Audit Committee, the consent of the shareholders is being sought at the ensuing Annual General Meeting for their appointment as Statutory Auditors from the conclusion of the 62nd Annual General Meeting till the conclusion of the 63rd Annual General Meeting at a remuneration of Rs.4200000 excluding out of pocket expenses incurred during the audit and applicable service taxes. The Auditors have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed there under for continuation of their term. Further, as required under Regulation 33 of the Listing Regulations, they have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. The Report given by the Auditors on the financial statements of the Company is provided in the financial section of the Annual Report. There are no qualifications, reservations, adverse remarks or disclaimers given by the Auditors in their report. Cost Auditors Pursuant to Section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audit) Rules, 2014, the Company is required to maintain cost accounting records in respect of products of the Company covered under CETA categories like organic and inorganic chemicals, electrical or electronic machinery, steel, plastic and polymers, ores and mineral products, other machinery, base metals etc. Further, the Cost accounting records maintained by the Company are required to be audited. Your Directors, on the recommendation of the Audit Committee, had appointed M/s. S Mahadevan & Co. (firm no. 000007), Cost Accountants, Chennai to audit the cost accounting records maintained by the Company under the said Rules for the FY 2015-16 on a remuneration of Rs.400000. Further, the said firm has also been appointed to conduct the cost audit for the FY 2016-17 at the same remuneration. The Companies Act, 2013 mandates that the remuneration payable to the Cost Auditor is ratified by the members and accordingly a resolution seeking the member's ratification of the remuneration payable to the Cost Auditors is included in the Notice convening the 62nd Annual General Meeting. Secretarial Audit M/s. R Sridharan & Associates, Practicing Company Secretaries, Chennai was appointed as the Secretarial Auditor to undertake the Secretarial Audit of the Company for the FY 2015-16. The report of the Secretarial Auditor is annexed to and forms part of this Report (refer Annexure E). There are no qualifications, reservations, adverse remarks or disclaimers given by the Secretarial Auditor in the Report. Compliance Management The Company's in house compliance management system tracks compliances across the various factories and offices of the Company. This tool has a comprehensive coverage of the various applicable laws and is periodically updated based on the regulatory changes. Corporate Governance In terms of Regulation 34(3) read with Schedule V of the Listing Regulations, a separate section on Corporate Governance including the certificate from the Statutory Auditors confirming compliance is annexed to and forms an integral part ofthis Report. CEO/CFO Certificate The Managing Director and the Chief Financial Officer have submitted a certificate to the Board on the integrity of the financial statements and other matters as required under Regulation 17(8) of the Listing Regulations. Directors' Responsibility Statement Pursuant to the provisions contained in Section 134(3)(c) of the Companies Act, 2013, the Board to the best of its knowledge and belief and according to the information and explanations obtained by it confirm that: reader • in the preparation of the annual accounts, for the financial year ended 31st March 2016, applicable accounting standards have been followed and no material departures have been made from the same; • the accounting policies mentioned in Note 2 of the Notes to the financial statements have been selected and applied consistently and judgments and estimates that are reasonable and prudent have been made 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 of the Company for that period; • proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company for preventing and detecting fraud and other irregularities; • the annual accounts have been prepared on a going concern basis; • that internal financial controls to be followed by the Company have been laid down and that such internal financial controls are adequate and operating effectively; • proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. EXTRACT OF ANNUAL RETURN The extract of the Annual Return in the prescribed form MGT 9 is annexed to and forms part of this Report (refer Annexure D). ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO The information on energy conservation, technology absorption, expenditure incurred on research & development and forex earnings/outgo as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed to as Annexure B and forms part of this Report. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status of the Company's operations in future. PARTICULARS OF EMPLOYEES The information on employees and other details required to be disclosed under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed to and forms part of this Report (refer Annexure C). Further, the disclosures relating to employees stock options as per Securities and Exchange Board of India (Share based Employees Benefits) Regulations, 2014 read with the guidelines issued by SEBI on 16th June 2015 has been provided on the Company's website and is available in the link <https://www.cumi-murugappa.com/policies.html>. The Company's ESOP Scheme of 2007 governs the grant of options to employees. During the year 2015-16, there were no changes made to the Scheme. Further, no fresh options have been granted under the Scheme since February, 2012. ACKNOWLEDGEMENT The Board gratefully acknowledges the cooperation received from various stakeholders of the Company viz., customers, investors, channel partners, suppliers, government authorities, banks and other business associates during the year. The Board also places on record its sincere appreciation of all the employees of the Company for their commitment and continued contribution to the Company. On behalf of the Board M M Murugappan Chairman Date : May 4, 2016 Place: Chennai |