DIRECTORS DEAR MEMBER your Directors have pleasure in presenting Company's Twenty Second Annual Report and Audited Financial Statements for the year ended 31st March, 2016. 2. PERFORMANCE OF THE COMPANY Your Company's performance during the year under report has been satisfactory. The Company's gross turnover increased by 6% to Rs. 4098 Crore during the year compared to Rs. 3859 Crore in previous year. Profit before Depreciation & Tax increased to Rs. 299 Crore compared to Rs. 296 Crore. 3. PERFORMANCE OF THE SUBSIDIARY/ ASSOCIATE SUBSIDIARY COMPANIES The Company has three subsidiaries and one joint venture Company as on March 31, 2016. There has been no material change in the nature of the business of subsidiaries. J.K. Cement (Fujairah) FZC recorded a loss of AED 49,317 (equivalent to Rs. 8.90 Lacs) for the year ended 31st December, 2015 (Previous year loss of AED 48,821 equivalent to Rs. 7.90 Lacs) J.K. Cement Works (Fujairah) FZC recorded a loss of AED 28,312,829 (equivalent to Rs. 4089.41 Lacs) for the year ended 31st December, 2015 (Previous year loss of AED 18,620,471 equivalent to Rs. 1489.77 Lacs) Jaykaycem (Central) Ltd. recorded a loss of Rs. 12,444 (previous year Rs. 11,440) for the year ended 31st March, 2016. Associate Company Bander Coal Company Private Limited This Company recorded a loss of Rs. 16.55 Lacs for the year ended 31st March, 2016 (Previous year loss of Rs. 2.89 Lacs) 4. CONSOLIDATED FINANCIAL STATEMENTS The statement as required under Section 129 of the Companies Act, 2013, in respect of the subsidiaries of the Company viz.J.K. Cement (Fujairah) FZC, J.K. Cement Works (Fujairah) FZC and Jaykaycem (Central) Ltd. is annexed and forms an integral part of this Report. Consolidated Financial Statements prepared in accordance with relevant Accounting Standards viz AS-21 and AS-27 issued by the Institute of Chartered Accountants of India, form part of the Annual Report and Accounts. 5. DIVIDEND Your Directors are pleased to recommend dividend of Rs. 4 per equity share of face value of Rs. 10 each aggregating to Rs. 33.67 Crore (Previous Year Rs. 33.67 Crore) for the financial year ended 31st March, 2016 which is similar to the financial year ended 31st March, 2015. 6. TRANSFER TO RESERVES The Company proposes to transfer Rs. 1583 Lacs to Debenture Redemption Reserve and Rs. 3000 Lacs to General Reserve during Financial Year 2015-16. 7. SHARE CAPITAL The paid up Equity Share Capital as at 31st March, 2016 remained at Rs. 69.93 Crore. During the period under report, your Company has not issued any share including Sweat Equity, ESOP and/or Convertible Debentures. 8. FINANCE During the year under report, your Company has availed disbursement of term loans of Rs. 374.10 Crore from various Banks and repaid Rs. 148.64 Crore on this count. In May 2015, your Company has raised Rs. 100 Crore through 9.65% - 1000 privately placed Secured Redeemable (after 7th/8th/9th/10th years) Non-Convertible Debentures (NCDs) of Rs. 10,00,000 each for cash at par to Institution which is listed with wholesale debt segment of BSE Limited. 9. CREDIT RATING Inspite of challenging cement industry scenario, CARE has reaffirmed your Company's rating as "CARE AA-" for long term bank facilities and "CARE A1+" for short term bank facilities. 10. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS BY THE COMPANY Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the Notes to the Financial Statements. 11. OPERATIONS Grey Cement During the year under report production increased by 9.4% at 6.89 Million Tonne (compared to 6.30 Million Tonne last year) and sales increased by 9.19% at 6.86 Million Tonne (compared to 6.29 Million Tonne last year). White Cement Production of White Cement increased by 2.49% at 5.01 Lac Tonne during the year compared to 4.89 Lac Tonne while production of value added product Wall Putty registered increase of 22%. Sale was also in tandem with production. 12. PROJECTS OF THE COMPANY Projects Completed During the year under report, your Company has completed 1st phase implementation of a White Cement based Wall Putty project of 2 Lac Tonne per annum capacity in Madhya Pradesh. Commercial Production started on 26.5.16. 13. PERSONNEL 13.1 Industrial Relations The industrial relations during the period under review generally remained cordial at all cement plants. 13.2 Particulars of Employees List of employees getting salary in excess of the limits as specified under the provisions of Section 134 of the Companies Act, 2013 read with Companies (Appointment & Remuneration) Rules 2014 throughout or part of the financial year under review is annexed separately marked as Annexure - F. However, the Annual Report excluding the aforesaid information is being sent to all the members of the Company pursuant to proviso to Section 136 of the Companies Act, 2013. Any member interested in obtaining such particulars may inspect and/or send the request to the Company at its Registered & Corporate Office. None of the employee listed in the said Annexure is a relative of any Director of the Company except Shri Yadupati Singhania, Chairman and Managing Director. None of the employee hold (by himself or along with his spouse and dependent children) more than two percent of the equity shares of the Company 13.3 Human Resources and Industrial Relations The Company has a structured induction process at all locations. Objective appraisal systems based on Key Result Areas (KRAs) are in place for Senior Management Staff. The Corporate HR is effectively involved in nurturing, enhancing and retaining talent through job satisfaction, management development programme, etc. 4. SIGNIFICANT AND MATERIAL ORDER PASSED BY THE REGULATOR(S) OR COURT(S)/MATTER OF EMPHASIS The Competition Commission of India ('CCI'), on the complaint filed by Builders Association of India on the ground of alleged contravention of Competition Law, in Case No. 29/2010, passed an Order dated 20.6.2012 imposing total penalty of Rs. 6307 Crore against Cement Manufacturers Association and 11 Cement Companies including Rs. 128.54 Crore on your Company. Aggrieved by CCI's Order your Company preferred stay petition and appeal before the Competition Appellate Tribunal ('COMPAT'). COMPAT has, by its order dated 11th December, 2015, set aside order dated 20th June,2012 passed by CCI. COMPAT has remitted the matter to CCI for fresh adjudication. Further, in terms of the order, the Company has received refund of Rs.1285 lacs, being 10% amount of penalty, along with accumulated interest deposited with COMPAT. No significant or material order has been passed by the Regulator or Courts or Tribunals which impact the going concern status and Company's operations in future. 5. CORPORATE GOVERNANCE A report on Corporate Governance along with the Auditors' Certificate on its compliance, forms an integral part of this Report. 16. PUBLIC DEPOSITS Your Company has not invited any deposits from public/ shareholders under Section 73 and 74 of the Companies Act, 2013. 17. WHISTLE BLOWER POLICY/VIGIL MECHANISM The Company has a Whistle Blower Policy to report genuine concerns or grievances, if any. The Whistle Blower Policy has been posted on the website of the Company. 18. MITIGATION OF RISK. The Company has been addressing various risks impacting the Company which is morefully provided in annexed Management Discussion and Analysis. However, as per the Listing Regulation constitution of Risk Management Committee for enforcing Risk Management Policy is not applicable to the Company. 19. REMUNERATION POLICY The Board of Directors has, on the recommendation of the Nomination & Remuneration Committee, framed a policy which lays down a framework concerning remuneration of Directors, Key Managerial Personnel and Senior Management of the Company. The Policy also covers criteria for selection and appointment of Board Members and Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report. 20. RELATED PARTY TRANSACTIONS: All the related party transactions are entered on arm's length basis, in the ordinary course of business and are in compliance with the applicable provisions of the Companies Act, 2013 and the Listing Regulations. There are no materially significant related party transactions made by the Company with Promoters, Directors or Key Managerial Personnel etc. which may have potential conflict with the interest of the Company at large or which warrants the approval of the shareholders. Accordingly, no transactions are being reported in Form AOC-2 in terms of Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014. However, the details of the transactions with Related Party are provided in the Company's financial statements in accordance with the Accounting Standards. All Related Party Transactions are presented to the Audit Committee and the Board. Omnibus approval is obtained for the transactions which are foreseen and repetitive in nature. A statement of all related party transactions is presented before the Audit Committee on a quarterly basis, specifying the nature, value and terms and conditions of the transactions. The statement is supported by the certificate from the CMD and the CFO. The Related Party Transactions Policy as approved by the Board is uploaded on the Company's website at www.jkcement.com 21. AUDITORS' REPORT Your Company prepares its financial statements in compliance with the requirements of the Companies Act, 2013 and the Generally Accepted Accounting Principles (GAAP) in India. The financial statements have been prepared on historical cost basis. The estimates and judgements relating to the financial statements are made on a prudent basis, so as to reflect a true and fair manner, the form and substance of transactions and reasonably present the Company's state of affairs, profits and cash flows for the year ended 31st March, 2016. Auditors' Report to the shareholders does not contain any qualification in the standalone or in the consolidated financial statements for the year under report. 22. INTERNAL FINANCIAL CONTROLS AND ITS ADEQUACY The Board has adopted policies and procedures for ensuring orderly and efficient conduct of its business including adherence to the Company's Policies, the safeguarding of its assets, the prevention and detection of Frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial disclosures. The Company's internal control system is commensurate with its size, scale and complexities of its operations. The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of the internal control system and suggests improvements to strengthen the same. It also reviews the quarterly Internal Audit Reports. 23. DIRECTORS AND KEY MANAGERIAL PERSONNEL. 23.1 In accordance with the provisions of Section 152 of Companies Act, 2013 and the Company's Articles of Association, Smt. Sushila Devi Singhania (DIN 00142549) will retire by rotation at the ensuing Annual General Meeting and being eligible, offers herself for reappointment. During the year under report Shri Shayam Lal Bansal (DIN 02910086) was appointed as an Additional Director now being recommended to the shareholders to be appointed/confirmed as a Non- Executive Independent Director. The Board recommends their reappointment/appointment. All Independent Directors have given declaration that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Listing Regulations. 24. MEETINGS OF THE BOARD OF DIRECTORS During the year 2015-16, five Board Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. 25. BOARD EVALUATION Pursuant to the provisions of the Companies Act, 2013 and Regulation 17 of the Listing Regulations, the Board has carried out an annual performance evaluation of its Independent Directors and the Independent Directors also evaluated the performance of Chairman and other Non-Independent Directors. The Board of Directors expressed their satisfaction with the evaluation process. The Board of Directors also evaluated the functioning/performance of Audit Committee, Stakeholders Relationship Committee, Nomination & Remuneration Committee, CSR Committee, Committee of Directors and expressed satisfaction with their functioning/performance. 26. DIRECTORS'RESPONSIBILIY STATEMENT The Directors pursuant to the provisions of Section 134(3)(c) of the Companies Act, 2013 do hereby confirm that: (i) In the preparation of the annual accounts, the applicable Accounting Standards have been followed and that no material departures have been made from the same. (ii) They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that year. (iii) They have taken proper and sufficient care for 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. (iv) They have prepared the annual accounts on a going concern basis. (v) The proper internal financial controls were in place and that the financial controls were adequate and were operating effectively. (vi) That systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively. 27. STATUTORY AUDITOR M/s. P.L. Tandon & Co., Chartered Accountants, Kanpur, Auditors of the Company, will retire from their office at the ensuing Annual General Meeting. They are, however, eligible for re- appointment. They have furnished a Certificate to the effect that their appointment will be in accordance with limits specified in Section 139 read with Section 141 of the Companies Act, 2013. You are requested to consider their appointment. 28. COST AUDITOR Cost Audit records have been maintained in respect of Grey Cement and White Cement for the year 2015-16. Pursuant to the directives of the Central Government and provisions of Section 148 of the Companies Act, 2013, the Board of Directors, on the recommendation of the Audit Committee, has appointed M/s. K.G. Goyal & Company, Cost Accountants, as Cost Auditor to audit the cost accounts of the Company for the financial year 2016-17. As required under the provisions of Companies Act, 2013, a resolution seeking members approval for the remuneration payable to the Cost Auditor forms part of the Notice convening the Twenty second Annual General Meeting. The Cost Audit Report for the financial year 2014-15 was filed with Ministry of Corporate Affairs. 29. 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 Messrs Reena Jakhodia & Associates, Kanpur, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is annexed herewith as "Annexure - A". There is no secretarial audit qualification for the year under report. 30. CORPORATE SOCIAL RESPONSIBILITY (CSR) Corporate Social Responsibility is an integral part of the Company's ethos and policy and it has been pursuing this on a sustained basis. The Company assists in running of Schools at their Cement Plants, ITIs and Sir Padampat Singhania University, Udaipur imparting value based education to students. Also the Company played a constructive role in the infrastructural development of surrounding areas. During the period under report, the Company undertook various arts and cultural promotion activities, supporting activities e.g. e-chopals, community building maintenance, contribution to Nepal Earthquake fund, providing furniture to Schools, maintaining green area and parks at Udaipur Airport, organizing programmes for tree plantations, Medical checkup camps, contribution for construction of CC Roads, water tanks, sewerage lines, boundary walls and other infrastructural facilities to rural and under developed areas, toilet constructions, contribution to J.K.Trust Gram Vikas Yojna under rural development. Technical education and training were/are imparted through Industrial Training Centres at Nimbahera and Kanpur. Emphasis was laid on creation of awareness amongst the villagers about the need to protect the environment. CSR activities carried out by the Company have strengthened the bond with local people. The Company also conducted blood donation camps, free health checkup, cataract operations, bandanas and blanket distribution in and around the plant locations. The Annual Report on CSR activities is annexed herewith as "Annexure B". 31. STATUTORY INFORMATION 31.1 Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo, Particulars with regard to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and out go in accordance with the provisions of Section 134 (3)(m) of the Companies Act 2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 in respect of Cement plants are annexed hereto as "Annexure - C" and form part of the Report. 31.2 Extract of Annual Return The details forming part of the extract of the Annual Return in form MGT 9 as required under Section 92 of the Companies Act, 2013 is annexed hereto as "Annexure- D" and forms an integral part of this Report. 31.3 Business Responsibility Reporting The Business Responsibility Report for the year ended 31st March 2016, as stipulated under regulation 34 of the Listing Regulations is annexed as "Annexure E" and forms part of the Annual Report. 31.4 Management Discussion & Analysis (MDA) Statement The MDA as required under Listing Regulation is annexed hereto and forms an integral part of this Report. 32. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND During the year, the Company has transferred a sum of Rs. 19.07 Lacs to the Investor Education and Protection Fund in compliance with provisions of the Companies Act, 2013. 33. DISCLOSURES UNDER THE COMPANIES ACT, 2013 AND LISTING REGULATIONS (I) Composition Of Audit Committee: The Board has constituted the Audit Committee which comprises of Dr. K.B. Agarwal as the Chairman, Shri A. Karati, Shri J.N. Godbole, Shri K.N. Khandelwal and Shri R.K. Lohia as members. More details on the committee are given in the Corporate Governance Report. (II) Policy On Sexual Harassment Of Women At Workplace: The Company has zero tolerance towards sexual harassment at the workplace and towards this end, has adopted a policy in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressed) Act, 2013 and the Rules there under. All employees (permanent, contractual, temporary, trainees) are covered under the said policy. An Internal Complaints Committee has also been set up to redress complaints received on sexual harassment. During the financial year under review, the Company has not received any complaints of sexual harassment from any of the women employees of the Company. 34. FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS The familiarization programmer aims to provide Independent Directors with the cement industry scenario, the socio-economic environment in which the Company operates, the business model, the operational and financial performance of the Company, significant developments so as to enable them to take well informed decisions in a timely manner. The familiarization programme also seeks to update the Directors on the roles, responsibilities, rights and duties under the Act and other statutes. The policy on Company's familiarization programme for Independent Directors is posted on the Company's website. 35. ACKNOWLEDGEMENTS Your Directors wish to place on record their appreciation for the valuable support received by your Company from Banks, Govt. of Rajasthan, Govt. of Karnataka, Govt. of Haryana, Government of Madhya Pradesh, Central Govt. and Government of Fujairah. The Board thanks the employees at all levels for their dedication, commitment and hard work put in by them for Company's achievements. Your Directors are grateful to the Shareholders/ Stakeholders for their confidence and faith reposed in Board. For and on Behalf of the Board Yadupati Singhania Chairman and Managing Director Dated : 28th May, 2016 Place : Kanpur |