Mar 31, 2023
Your Directors are pleased to present 87th Annual Report on business and operations, together with the audited financial statements (consolidated as well as standalone) of your company for the year ended March 31, 2023 (FY-2022-23).
1. STATE OF THE AFFAIRS OF THE COMPANY:
The performance of the Cement and Ready Mix Concrete business are detailed out in the Management Discussion and Analysis Report, which forms part of the Annual Report.
2. FINANCIAL PERFORMANCE 2022-2023:
('' in crore) |
||||
Consolidated |
Standalone |
|||
Particulars |
2022-23 |
2021 |
2022-23 |
2021 |
Revenue from Operations |
22,210.18 |
16,151.67 |
22,209.97 |
16,151.35 |
Other Income |
341.89 |
206.71 |
337.18 |
204.76 |
Total Income |
22,552.07 |
16,358.38 |
22,547.15 |
16,356.11 |
Profit before Tax* |
1,202.60 |
2,506.38 |
1,182.13 |
2,460.39 |
Tax Expenses |
317.39 |
643.28 |
312.22 |
640.12 |
Profit for the year |
885.21 |
1,863.10 |
869.91 |
1,820.27 |
Attributable to |
||||
Owners of the Company |
885.07 |
1,862.99 |
869.91 |
1,820.27 |
Non-controlling Interest |
0.14 |
0.11 |
- |
- |
Other Comprehensive Income (OCI) |
30.96 |
5.43 |
31.05 |
5.44 |
Total Comprehensive Income |
916.17 |
1,868.53 |
900.96 |
1,825.71 |
Attributable to |
||||
Owners of the Company |
916.03 |
1,868.42 |
900.96 |
1,825.71 |
Non-controlling Interest |
0.14 |
0.11 |
- |
- |
Opening Balance in retained earnings |
10,471,56 |
8,866.04 |
10,396.83 |
8,834.02 |
Amount available for appropriations |
11,387.59 |
10,734.46 |
11,297.79 |
10,659.73 |
Appropriations |
||||
Final Dividend Paid for 2021 |
1,089.17 |
262.90 |
1,089.17 |
262.90 |
Closing balance in retained earnings |
10,298.42 |
10,471.56 |
10,208.62 |
10,396.83 |
*Profit before Tax for 2022 - 23 includes charge of H66.42 Crore towards restructuring cost and H95.35 crore towards one time transition cost and for 2021 includes charge of H54.76 Crore towards restructuring cost and H38.10 Crore towards impairment of assets.
The performance of the current year is not comparable to that of the previous year due to change in accounting period, as the current year comprises of a period of 15 months as against 12 months of the previous year.
CHANGE OF MANAGEMENT - ENTRY OF ADANIGROUP
During FY 2022-23, the Company became a part of the Adani group, as Holcim divested their entire
shareholding and control in the company by way of transfer of 100% shareholding of Holderind Investment Limited (Holderind) to Endeavour Trade and Investment
Ltd.(Endeavour), a company belonging to Adani Group. In view of the above, Endeavour also became one of the Promoter of the company.
With the change in the promoters, there was a change in the Management of the company. The company also revised its financial year from January- December to April-March to comply with the provisions of the Companies Act, 2013 Accordingly, the financial
performance presented is for the period of 15 months i.e. from January 1, 2022 to March 31, 2023.
3. OVERVIEW OF COMPANY''SOPERATIONAL AND PERFORMANCE HIGHLIGHTS:
⢠Consolidated income, comprising Revenue from Operations and other income, for the FY 2022-23
was H22,552.07 Crore as compared to H16,358.38 Crore in 2021.
⢠Consolidated Profit before Tax for the year was H1,202.60 Crore vis-a-vis H2,506.38 Crore in 2021.
⢠Consolidated Profit after Tax for the FY 2022-23 was H885.21 Crore compared to H1,863.10 Crore in 2021.
⢠Cement production increased from 26.92 Million Tonnes in 2021 to 33.08 Million
tonnes in 2022-23.
⢠Cement Sales Volume increased from 28.89 Million Tonnes in 2021 to 37.93 Million tonnes in 2022-23.
⢠The net revenue from operations in cement increased from 15,105 Crore in 2021 to 20,659 Crore in 2022-23
⢠RMX Production Volume has increased from 2,809 Million M3 in 2021 to 3,591 M3 in 2022-23.
The company has a robust track record of rewarding its shareholders with a generous dividend pay-out. In view of the strong operational and financial performance during the year under review, the Board of Directors is pleased to recommend a dividend of H9.25 per share (95 %) for the period ended March 31, 2023. This represents a pay-out ratio of 20%.
The Dividend payment is in accordance with the Company''s Dividend Distribution Policy. In terms of the provisions of Regulation 43A of the SEBI
(Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended (''the Listing Regulations''), It is also available on the Company''s website and can be accessed at www.acclimited. com/assets/new/new pdf/Dividend Distribution Policv.pdf
The Company has not transferred any amount to the Reserves for the period ended March 31, 2023.
6. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report for the period under review, as stipulated under the Securities and Exchange Board of India (SEBI Listing Obligations and Disclosure Requirements), Regulations, 2015, (''SEBI Listing Regulations'') is presented in a separate section, forming part of this Annual Report.
7. CAPITAL STRUCTURE OF THE COMPANY
The Company''s paid-up equity share capital continues to stand at H187.79 Crore as on March 31, 2023.
During the year, the Company has not issued any shares or convertible securities. The Company does not have any scheme for the issue of shares, including sweat equity to the Employees or Directors of the Company.
Cash and cash equivalent as on March 31, 2023 was H256.63 Crore vis-a-vis H7,366.59 Crore in the previous year.
The Company''s working capital management is robust and involves a well-organised process, which facilitates continuous monitoring and control over receivables, inventories and other parameters.
9. CAPACITY EXPANSION AND NEW PROJECTS
The Company''s current installed cement manufacturing capacity is 36.05 MTPA. Detailed information on capacity expansion and new projects is covered in the report on Management Discussion and Analysis, forming part of this Annual Report.
As in the previous years, CRISIL, the reputed rating agency, has given the highest credit rating of AAA for the long-term and A1 for the short-term financial instruments of the Company. This reaffirms the reputation and trust your Company has earned for its sound financial management and its ability to meet its financial obligations.
There were no outstanding deposits within the meaning of Section 73 and 74 of the Act read with rules made thereunder at the end of the FY 2022- 23
or the previous financial years. Your Company did not accept any deposit during the period under review.
12. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
The details of loans, guarantees and investments covered under the provisions of Section 186 of the
Act read with the Companies (Meetings of Board and its Powers) Rules, 2014 are given in the Notes to the Financial Statements (Refer note no. 47)
13. INTERNAL CONTROL SYSTEMS Internal audit and its adequacy
The scope and authority of the internal audit function is defined in the Internal Audit Charter.
To maintain independence and objectivity in its functions, the internal audit function reports directly to the Audit Committee.
At the beginning of each financial year, a risk-based annual audit plan is rolled out after it is approved by the Audit Committee. The audit plan aims to evaluate the efficacy and adequacy of the internal control system(s) and compliance(s) thereof, robustness of internal processes, policies and accounting procedures, compliance with laws and regulations.
The Internal Audit function, consisting of professionally qualified accountants, engineers, Fraud Risk and Information Technology audit specialists, is adequately skilled and resourced to deliver audit assurances at highest levels.
Based on the reports of internal audit function, process owners undertake corrective action in their respective areas. Significant audit observations and corrective actions thereon are presented to the Audit Committee.
Internal Controls over Financial Reporting
The Company''s internal financial controls are commensurate with the scale and complexity of its operations. The controls were tested during the year and no reportable material weaknesses either in their design or operations were observed.
The Company has put in place robust policies and procedures, which inter alia, ensure integrity in conducting its business, safeguarding of its assets, timely preparation of reliable financial information, accuracy & completeness in maintaining accounting records and prevention & detection of frauds & errors.
14. VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has adopted a Whistle Blower Policy and has established the necessary vigil mechanism for its employees and Directors to report concerns about any unethical and improper activity, without fear of retaliation. No person has been denied access to the Chairman of the Audit Committee. The Audit Committee monitors and reviews the investigations of the whistle blower complaints. During the FY 2022-23, 41 complaints were received under Whistle Blower Policy and were resolved after investigation.
The Whistle Blower policy is uploaded on the website of the Company at Vigil Mechanism Whistle Blower Policv.pdf (acclimited.com).
15. SUBSIDIARY, ASSOCIATE AND JOINT VENTURE COMPANIES
As of March 31, 2023, the Company has four subsidiaries, five joint ventures and two associate companies.
The Board of Directors of the Company has approved a Policy for determining material subsidiaries in line with the Listing Regulations. The Policy has been uploaded on the Company''s website.
Pursuant to the provisions of Section 129, 134 and 136 of the Act read with rules made thereunder and Regulation 33 of the SEBI Listing Regulations, your Company has prepared Consolidated Financial Statements of your Company and a separate statement containing the salient features of Financial Statement of subsidiary, joint venture and joint operation entities in Form AOC-1, which forms part of this Annual Report.
The Annual Financial Statements and related detailed information of the subsidiary / joint venture companies shall be made available to the shareholders of the holding and subsidiary / joint venture companies seeking such information on all working days during business hours. The financial statements of the subsidiary / joint venture companies shall also be kept for inspection by any shareholders during working hours at your Company''s registered office and that of the respective subsidiary / joint venture companies concerned. In accordance with Section 136 of the Act, the Audited Financial Statements, including Consolidated Financial Statements and related information of your Company and audited accounts of each of its subsidiary joint venture, are available on website of your Company under Investor Section.
Pursuant to Section 134 of the Act read with rules made thereunder, the details of developments of subsidiaries and joint ventures of your Company are covered in the Management Discussion and Analysis Report, which forms part of this Annual Report.
16. BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL
16.1 Directorate
A. Appointments/Re-appointments
With effect from September 16, 2022, the
Board was re-constituted as under:
Mr. Karan Adani, Non-Executive Chairman, Mr. Vinay Prakash, Non-Executive Director, Mr. Arun Kumar Anand, Non-Executive Director, Mr. Sandeep Singhi, Independent Director, Mr. Rajeev Agarwal, Independent Director, Mr. Nitin Shukla, Independent Director, and Ms. Ameera Shah, Independent Director, were appointed.
Mr. Ajay Kapur was appointed as Wholetime Director and CEO, being liable to retire
by rotation, on the Board of Directors of the Company by the Members by way of postal ballot on January 14, 2023 with effect from December 3, 2022 till November 30, 2025.
Retirement by Rotation
In accordance with the provisions of Section 152 of the Act, read with rules made thereunder and Articles of Association of the Company, Mr. Vinay Prakash (DIN: 03634648) is liable to retire by rotation at the ensuing Annual General Meeting (AGM) and being eligible, offers himself for re-appointment.
B. Cessation
During the year under review NonExecutive Directors- Mr. Jan Jenisch, Mr. Martin Kriegner, Mr. Vinayak Chatterjee, Mr. Shailesh Hairbhakti, Mr. S.K. Roongta, Ms. Falguni Nayar, Mr. Damodarannair Sundaram, Mr. Sunil Mehta, Mr. M R Kumar, Mr. Neeraj Akhoury and Mr. N.S. Sekhsaria resigned w.e.f September 16, 2022 due to change in management.
The Board placed on record its appreciation for the valuable services rendered by all outgoing Directors.
16.2 Key Managerial Personnel Cessation
During the year under review Mr. Rajiv Choubey,
Company Secretary resigned w.e.f April 27, 2022, Mr. Yatin Malhotra, Chief Financial Officer resigned w.e.f August 31, 2022, Ms. Rashmi Khandelwal, Company Secretary resigned w.e.f November 15, 2022 and Mr. Sridhar Balakrishnan
WTD and CEO resigned w.e.f December 3, 2022 from the Company.
The Board placed on record its appreciation for the valuable services rendered by Mr. Sridhar Balakrishnan, Mr. Rajiv Choubey, Mr. Yatin Malhotra and Ms. Rashmi Khandelwal.
The Company appointed Mr. Vinod Bahety as Chief Financial Officer w.e.f September 16,
2022 and Mr. Ajay Kapur as WTD & CEO w.e.f December 3, 2022.
16.3 Independent Directors
The Company''s Independent Directors have submitted requisite declarations confirming that they continue to meet the criteria of independence as prescribed under Section
149(6) of the Act and Regulation 16(1) (b) of the Listing Regulations. The Independent Directors have also confirmed that they have complied with Schedule IV of the Act and the Company''s Code of Conduct.
The Board is of the opinion that the Independent Directors of the Company possess requisite qualifications, experience and expertise in the fields of finance, people management, strategy, auditing, tax and risk advisory services, infrastructure, banking, insurance, financial services, investments, mining and mineral industries and e-marketing; and they hold highest standards of integrity.
16.4 Board effectiveness
a. Familiarisation programme for Independent Directors
Over the years, the Company has developed a robust familiarisation process for the newly appointed Directors with respect to their roles and responsibilities, way ahead of the prescription of the regulatory provisions. The process has been aligned with the requirements under the Act and other related regulations. This process inter-alia includes providing an overview of the cement industry, the Company''s business model, the risks and opportunities, the new products, innovation, sustainability measures, digitisation measures etc.
Details of the familiarisation programme are explained in the Report on Corporate
Governance and are also available on the Company''s website and can be accessed
at www.acclimited.com/assets/new/ ndf/CG/Familiarization-Proaramme-for-Indenendent.-Direct.ors.ndf
b. Formal annual evaluation
The Board carries out its annual performance evaluation of its own performance, the Directors individually, as well as the evaluation of the working of its Audit, Nomination & Remuneration, Risk Management, Stakeholders Relationship and Corporate Social Responsibility Committees as mandated under the Act and SEBI Listing Regulations, as amended from time to time. The criteria applied in the evaluation process are explained in the Report on Corporate Governance, which forms part of this Annual Report.
16.5 Remuneration policy and criteria for
selection of candidates for appointment as Directors, Key Managerial Personnel and Senior Leadership positions
The Company has in place, a policy for remuneration of Directors, Key Managerial Personnel as well as a well-defined criterion for the selection of candidates for appointment to the said positions, which has been approved by the Board. The Policy broadly lays down the guiding principles, philosophy and the basis for payment of remuneration to the Executive and Non-Executive Directors (by way of sitting fees and commission), Key Managerial Personnel.
The criteria for the selection of candidates for the above positions cover various factors and attributes, which are considered by the Nomination & Remuneration Committee
and the Board while selecting candidates. The policy on remuneration of Directors, Key Managerial Personnel is also available at the website of the Company and can be accessed at www.acclimited.com/assets/new/ pdf/CG/Policy remuneration selection for appointment-mrif
The Board has also formulated and adopted the policy on the ''Diversity of the Board''
and ''Succession Policy for Directors''. The details of the same are available at the website of the Company and can be accessed at www.acclimited.com/assets/ new/new ndf/Policvondiversitvoftheboard. pdf www.acclimited.com/assets/new/ndf/CG/ succession policy for directors.pdf
17. NUMBER OF MEETINGS OF THE BOARD & ITS COMMITTEES
Regular meetings of the Board and its Committees are held to discuss and decide on various business policies, strategies, financial matters and other businesses. The schedule of the Board/Committee Meetings to be held in the forthcoming financial year is circulated to the Directors in advance to enable them to plan their schedule for effective participation in the meetings. Due to business exigencies, the Board has also been approving several proposals by circulation from time to time.
During the FY 2022-23, twelve (12) Board Meetings
were convened and held, the details of which are given in the Report on Corporate Governance, which forms part of this Annual Report.
During the FY 2022-23, with an objective of further
strengthening the governance standards so as to match with internationally accepted better practices, the Board had reconstituted certain existing Committees to bring more independence; constituted certain new Committees and Subcommittees; and amended / adopted the terms of reference of the said Committees. All Committees are chaired by an Independent Director. Details of the various Committees constituted by the Board, including the Committees mandated pursuant to the applicable provisions of the Act and SEBI Listing Regulations, are given in the Corporate Governance Report, which forms part of this Annual Report.
18. INDEPENDENT DIRECTORS* MEETING
The Independent Directors met on March 23, 2023,
without the attendance of Non-Independent Directors and members of the management. The Independent Directors reviewed the performance of Non-Independent Directors, the Committees and the Board as a whole along with the performance of the Chairman of your Company, taking into account the views of Non-Executive Directors and assessed the quality, quantity and timeliness of flow of information between the management and the Board that is necessary for the Board to effectively and reasonably perform their duties.
19. CORPORATE SOCIAL RESPONSIBILITY
Your Company has constituted a Corporate Social Responsibility (CSR) Committee and framed a CSR Policy. The brief details of CSR Committee are provided in the Corporate Governance Report, which forms part of this Annual Report.
In compliance with Section 135 of the Act read with
the Companies (Corporate Social Responsibility Policy) Rules, 2014 as amended, the statutory
disclosures with respect to the CSR Committee and an Annual Report on CSR Activities forms part of this Report as Annexure-2.
The CSR Policy as recommended by the CSR
Committee and as approved by the Board is available on the website of the Company and can be accessed at https://www.acclimited.com/assets/ new/pdf/ACC- CSR-policv.pdf
Further, the Chief Financial Officer of your Company
has certified that CSR spends of your Company for the FY 2022-23 have been utilised for the purpose
and in the manner approved by the Board of the Company.
The Company''s governance structure has well-defined roles and responsibilities, which enable and empower the Management to identify, assess and leverage business opportunities and manage risks effectively. There is also a comprehensive framework for strategic planning, implementation and performance monitoring of the business plan, which inter alia includes a well-structured Business Risk Management process (BRM).
To systematically identify risks and opportunities and monitor their movement, a heat map has been designed comprising two (2) parameters:
a) likelihood of the event and
b) the impact it is expected to have on the Company''s operations and performance.
The risks that fall under the purview of high likelihood and high impact are identified as key risks. This structured process in identifying risks supports the ManCom in strategic decision-making and in the development of detailed mitigation plans. The identified risks are then integrated into the Company''s planning cycle, which is a rolling process to, inter alia periodically review the movement of the risks on the heat map and the effectiveness of the mitigation plan.
The detailed section on key business risks and opportunities forms part of Management Discussion and Analysis Report, which forms part of this Annual Report.
21. TRANSACTIONS WITH RELATED PARTIES
The Company has developed a Related Party Transactions (''RPTs'') Manual and Standard Operating Procedures to identify and monitor RPTs.
All transactions with related parties are placed before the Audit Committee as well as the Board
for approval. Prior omnibus approval of the Audit Committee and the Board is obtained for the RPTs, which are foreseeable and repetitive. The RPTs are entered with prior approvals of the Audit Committee and the same are subject to audit. A statement giving details of all RPTs is placed before the Audit Committee and the Board of Directors on a quarterly basis. The statement is supported by a certificate from the WTD & CEO and the CFO.
All transactions with related parties during the year were on arm''s length basis and were in the ordinary course of business. The details of the material related-party transactions entered into during the year as per the policy on RPTs approved by the Board have been reported in Form AOC 2, which is given in Annexure-3 to this Report.
None of the Directors and the Key Managerial Personnel has any pecuniary relationships or transactions vis-a-vis the Company.
Your Company did not enter into any related party transactions during the year which could be prejudicial to the interest of minority shareholders. No loans / investments to / in the related party have been written off or classified as doubtful during the year under review.
The policy on RPTs as approved by the Board of Directors has been uploaded on the Company''s website and can be accessed at https://www. acclimited.com/assets/new/pdf/Related%20 Part¦v%20Transact¦ion%20Policv.pdf
22. TRANSFER OF EQUITY SHARES UNPAID/ UNCLAIMED DIVIDEND TO THE IEPF
In line with the statutory requirements, your Company has transferred to the credit of IEPF set up by the Government of India, equity shares in respect of which dividend had remained unpaid/unclaimed for a period of seven (7) consecutive years within the time lines laid down by the Ministry of Corporate Affairs. Unpaid/unclaimed dividend for seven (7) years or more has also been transferred to the IEPF pursuant to the requirements under the Act.
23. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
Builders Association of India complaint under the provisions of the Competition Act, 2002 against the cement manufacturers -Order of the Supreme Court of India in Appeal
As has been reported in detail in the earlier years a penalty of H1,147.59 Crore was levied on the company by the Competition Commission of India (''CCI'') based on a complaint filed by the Builder''s
Association of India for alleged violation of the provisions of the Competition Act, 2002.
By Order dated July 25, 2018, the National Company
Law Appellate Tribunal (''NCLAT'') dismissed the appeal of the company upholding the levy of penalty of H1,147.59 Crore as imposed by the CCI vide its order dated August 31, 2016. The NCLAT on November 7, 2016 initially stayed the operation of the CCI''s order subject to deposit of 10% of the penalty amount.
The company preferred an appeal before the Hon''ble Supreme Court against the above order of NCLAT. The Honâble Supreme Court vide its order
dated October 5, 2018 has admitted the companyâs Civil Appeal and ordered for continuance of the interim orders passed by NCLAT towards stay of the demand subject to deposit of 10% of the penalty amount. The matter is currently sub-judice and as on March 31, 2023 the penalty amount of H1,147.59 Crore and interest thereon has been disclosed as a contingent liability in the Notes to Financial Statements [Refer Note - 40 A(a)].
CCI''s order on complaint filed by Director, Supplies & Disposals, State of Haryana in 2013
The Director, Supplies & Disposals, State of Haryana had filed a complaint before CCI alleging collusion and bid rigging by cement manufacturers in violation of Section 3(1) and 3(3)(d) of the Competition Act, 2002. In January 2017, the CCI passed an order against seven (7) cement manufacturers, including the Company imposing a penalty calculated at the rate of 0.3% of the average turnover of the last three (3) years from financial year 2012-13 to financial year 2014-15. In respect of the company, the amount of penalty works out to H35.32 Crore.
An appeal is pending before NCLAT in the said matter against the orders of the CCI. The "Note of Submissionâ as directed is filed. As on March 31, 2023, the penalty amount of H35.32 Crore is
disclosed as a contingent liability in the Notes to Financial Statements [Refer Note. - 40 A(b)].
There are no further developments during the year under review in respect of the above cases.
24.1 Statutory Auditor & Auditorsâ Report
M/s. S R B C & Co. LLP, Chartered Accountants (ICAI Firm Registration Number 324982E/ E300003) were appointed as the Statutory Auditors of the Company for a period of 5 years to hold office from the conclusion of the 86th AGM till the conclusion of the 91st AGM to be held in the year 2027. The Auditors
have also furnished a declaration confirming their independence as well as their armâs length relationship with the Company as well as declaring that they have not taken up any prohibited non-audit assignments for the Company. The Audit Committee reviews the independence of the Auditors and the effectiveness of the Audit process. The Auditors attend the Annual General meeting of the Company. The Auditorâs Report for FY 202223 on the financial statement (standalone and consolidated) of the Company forms part of this Annual Report.
The Notes to the financial statements referred in the Auditorsâ Report are self-explanatory. The AuditorsâReport is enclosed with the financial statements forming part of this Annual Report.
Explanation to Auditors'' Comment
The Auditorsâ Qualification has been appropriately dealt with in Note No.58 and 61 of the Notes to
the Audited Financial Statements on Standalone and Consolidated basis respectively.
24.2 Cost Auditor
The cost accounts and records are required to be maintained under Section 148(1) of the Act. They are duly made and maintained by the Company. In terms of the provisions of Section 148 of the Act read with the Companies (Cost Records and Audit) Rules, 2014, the Board has on the recommendation of the Audit Committee appointed M/s. D. C. Dave & Co., Cost Accountants, Mumbai (Firm Registration No 000611), to conduct the cost audit of the Company for the financial year ending March 31, 2023, at a remuneration as mentioned in the Notice convening the 87th AGM.
As required under the Act read with the Companies (Cost Records and Audit) Rules, 2014, the remuneration payable to Cost Auditors must be placed before the Members at a general meeting for ratification. Hence, a resolution for the same forms part of the Notice of the ensuing AGM.
M/s. D. C. Dave & Co. have confirmed the cost records for the financial year ended December 31, 2021 are free from any
disqualifications as specified under Section 141 (3) and proviso to Section 148(3) read with Section 141(4) of the Act. They have further confirmed their independent status.
The cost audit report for the FY 2021 was filed before the due date with Ministry of
Corporate Affairs.
24.3 Secretarial Auditor and Secretarial Audit Report
In terms of the provisions of Section 204 of the
Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has appointed M/s. Mehta & Mehta, Company Secretaries in Practice, Mumbai, as the Secretarial Auditor for conducting Secretarial Audit of the Company for the financial year ended March 31, 2023.
The report of the Secretarial Auditor is given in
Annexure-4. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
25. MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE COMPANY
There are no material changes and commitments, affecting the financial position of the Company, which has occurred between the end of FY 2022-23
and the date of this report.
26. CORPORATE GOVERNANCE
The Board of Directors reaffirm their continued commitment to good corporate governance practices. During the year under review, the Company complied with the provisions relating to
corporate governance as provided under the Listing Regulations. The compliance report together with a certificate from the Company''s auditors confirming the compliance is provided in the Report on Corporate Governance, which forms part of this Annual Report.
BOARD POLICIES
The details of the policies approved and adopted by the Board, as required under the Act and SEBI Listing Regulations, are provided in Annexure - 1 to this report.
27. BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT
Report, describing the initiatives taken by your
Company from environment, social and governance perspective, for the FY 2022-23, Business Responsibility and Sustainability forms part of this Annual Report as required under Regulation 34(2) (f) of the Listing Regulations.
28. PARTICULARS OF EMPLOYEES
Your Company had 5,472 employees on standalone basis as on March 31, 2023. Disclosures pertaining
to remuneration and other details as required under Section 197(12) of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure-5 to this Report.
Further, a statement showing the names and other particulars of employees drawing remuneration in excess of limits set out in the Rules 5(2) and 5(3) of the aforesaid Rules forms part of this Report. However, in terms of the first proviso of Section 136(1) of the Act, the Annual Report and Accounts are being sent to the Members and other entitled thereto, excluding the aforesaid information. The said information is available for inspection by the Members at the Registered Office of your company during business hours. Any Member, who is interested in obtaining these, may write to the Company Secretary at the Registered Office of the Company.
29. REPORTING OF FRAUDS BY AUDITORS
During the FY 2022-23, neither the Statutory Auditors nor the Secretarial Auditor have reported
to the Audit Committee of the Board, under Section 143(12) of the Act, any instances of fraud committed against the Company by its officers or employees, the details of which would need to be mentioned in this Report.
30. ANNUAL RETURN
Pursuant to the provisions of Section 134(3)(a) and Section 92(3) of the Act read with Rule 12 of
the Companies (Management and Administration) Rules, 2014, the draft of the Annual Return of the
Company for the financial year March 31, 2023 is uploaded on the website of the Company and can be accessed at www.acclimited.com
31. COMPLIANCE WITH SECRETARIAL STANDARDS
The Board of Directors affirms that the Company has complied with the applicable Secretarial Standards
(SS) issued by the Institute of Company Secretaries of India (SS1 and SS2), relating to Meetings of the Board and its Committees respectively, which have mandatory application during the year under review.
32. CONSERVATION OF ENERGY, TECHNOLOGY ABSORBTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The disclosures required to be made under Section 134(3) (m) of the Act read with Rule 8 of The
Companies (Accounts) Rules, 2014, on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are given as under:
A. Conservation of energy
A1. Power cost optimisation
During the period Jan''22 - Mar''23, efforts were made to reduce the impact of increasing electrical energy cost by partly replacing grid and CPP power through consumption of Renewable energy initiatives power from comparatively cheaper sources. The plants which actively participated in procurement of power were Jamul, Lakheri, Tikaria, Thondebhavi, Kudithini, and Thondebhavi & Madukkarai. Overall purchase of power from OA has resulted in a saving of ~ ''57.1 Crore. In addition, the Waste Heat Recovery System (WHRS) at Gagal, Kymore & Jamul generated ~103 Million units for internal consumption in place of grid power.
A2. Renewable power obligation
Your Company is putting all efforts to increase the share of Renewable Energy. The captive wind power generation from Tamil Nadu and Rajasthan wind farms contributed considerably in this front. This has resulted in a saving of ~ ''0.44 Crore on account of RPO cash outgo.
Following energy conservation and efficiency improvement measures were undertaken in various areas of the cement manufacturing and Captive Power Plants (''CPPs''), through Operational and Capex measures. A few highlights are as under:
⢠Energy efficiency improvement through installation of efficient equipment such as fans, blowers, compressors and motors across all ACC plants;
⢠Conduction of mandatory energy audits and identification of energy conservation projects;
⢠Implementation of projects identified as part of Mandatory Energy audits;
⢠Focus on Productivity Rate Index (''PRI'') improvement through Computational Fluid Dynamics (''CFD'') studies and through other inhouse modification at Wadi, Bargarh & Lakheri.
⢠Installation of medium voltage variable frequency drives (''MVVFD'') and low voltage variable frequency drives (''LVVFD'') for process fans across all ACC plants. Some of the additional
proposals being implemented for further conservation of energy
⢠Installation of variable frequency drives and high efficiency fans, across ACC plants;
⢠Reduction of Preheater pressure drop through enlargement of kiln inlet neck and improving heat exchange within cyclones by checking / installation of new flap damper in kiln feed pipes;
⢠Installation of water spray system in preheater down comer duct& modification of clinker cooler inlet;
⢠Installation of vacuum pumps &energy efficient screw compressor in CPP
Impact of the above measures for reduction of energy consumption and consequent impact on cost of production
The measures stated in points (A) above would further improve the thermal and electrical energy efficiency of the ACC Plants.
The capital investment on energy conservation equipment
Your Company invested ~''387.00 Crore on
productivity/ efficiency improvement, besides implementation low -cost measures to reduce energy consumption.
The steps taken by the Company for utilising alternate sources of energy
Besides the use of Renewable Energy (Solar and Non -Solar), your Company utilised 0.56 Million tonnes of Alternative Fuels during the cement manufacture,
with an investment for ~''16.00 Cr.
B. Technology Absorption Research and Development (R&D)
1. Specific areas in which R&D is carried out by the Company
a) Conservation of resources through maximisation of the use of low -grade limestone for cement manufacturing, improvement in the quality of blended cement through innovative process utilising industrial by -products for improved quality and performance of ACC plants;
b) Maximsation of industrial wastes
utilisation and looking into
possibilities of environmentally
friendly co -processing of wastes in cement manufacture leading to
thermal substitution and conservation of natural resources;
c) Optimisation of fuel mix for lowering the cost;
d) Effective replacement of the costlier natural Gypsum by other form of gypsum and byproducts without affecting the quality of cement;
d) Effective replacement of dry fly ash with wet / conditioned fly ash, by installation of dryers & additional feeding system in cement mills;
e) Productivity research for increased efficiency in use of resources development of application oriented cements with decreased CO 2 emissions;
f) Development of Integral
waterproofing Compound;
g) Development of cement based niche products like water repellent and self curing Dry Mix Mortar, thin bed jointing mortar, plasters, tile adhesives range;
h) Development of Concrete Admixture for ACC RM.
2. Benefits derived as result of above R&D
a) Effective use of marginal quality raw materials and fuels with improved clinker quality;
b) Reduction in raw material cost-gypsum and fly ash;
c) Increased production of high -performance products like F2R, Concrete , ACC Gold for specific market segments/ market climatic conditions;
e) Increased absorption of blending materials like fly ash and slags in blended cements;
f) Fuel efficiency;
g) Reduction in special power consumption for grinding;
h) ACC Concrete admixture project resulted in cost savings on admixture buying cost with a consistent quality.
3. Plan of action
a) Development of application oriented cement focusing customer pain points with reduced carbon footprint;
b) Development of cement-based niche products;
c) Exploratory research works on the above specified areas;
d) Maximisation of use of waste/ byproducts in cement manufacture as alternative materials;
e) Improve product quality particularly with respect to long-term durability and reduction in cost of manufacture;
f) Implementing & developing complete range of concrete admixture for ACC RMX to maximise the potential for quality & cost;
g) Maximisation of utilisation of renewal power & energy from WHRS system.
4. |
Expenditure on R&D |
|
'' in Crore |
||
a) Capital |
NIL |
|
b) Recurring (Gross) |
1.05 |
|
c) Total |
1.05 |
|
Total R&D expenditure as percentage of total turnover |
0.0004 |
|
C. |
Foreign Exchange Earnings and Outgo |
|
'' in Crore |
||
Foreign Exchange earned |
1.50 |
|
Foreign exchange outgo |
1,310.00 |
33.1 There were no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of this report.
33.2 The Company has not issued any shares with differential voting rights/sweat equity shares.
33.3 There was no revision in the Financial Statements.
33.4 There has been no change in the nature of business of the Company as on the date of this report.
33.5 There are no proceedings, either filed by the company or filed against the company, pending under the Insolvency and Bankruptcy Code,
2016 as amended, before National Company
Law Tribunal or other courts during the FY 2022-23.
33.6The WTD & CEO of your Company is not drawing any remuneration or commission from any of the subsidiary of the Company.
33.7Your Company has taken appropriate insurance for all assets against foreseeable perils.
33.8Prevention of Sexual Harassment of Women at the Workplace
As per the requirements of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 and rules made thereunder, your Company has constituted Internal Complaints Committees (ICs) at all relevant locations across India to consider and resolve the complaints related to sexual harassment. The ICs includes external member with relevant experience. The ICs, presided by senior women, conduct the investigations and make decisions at the respective locations. The ICs also work extensively on creating awareness on relevance of sexual harassment issues, including while working remotely. During FY 2022-23, there were no complaints pertaining to sexual harassment. All new employees go through a detailed personal orientation on anti-sexual harassment policy adopted by the Company.
34. DIRECTORS* RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 134 of the Act:
a) that in the preparation of the annual Financial Statements for the year ended March 31, 2023, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any
b) that such accounting policies as mentioned in Note 1 of the Notes to the Financial Statements have been selected and applied consistently and judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of
the Company as on March 31, 2023, and of the profit of the Company for the year ended on that date;
c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) that the annual accounts have been prepared on a going concern basis;
e) that proper internal financial controls laid down by the Directors were followed by the Company and such internal financial controls are adequate and were operating effectively;
f) that proper systems to ensure compliance with the provisions of all applicable laws have been devised and such systems were adequate and were operating effectively.
For the 4th year, the Company has drawn up an Integrated Report, which encompasses both financial and non-financial information to enable Members to have a more holistic understanding of the Company''s long term perspective.
The Directors express their deep sense of gratitude to the Central and State Government Ministries and departments, shareholders, customers, business associates, bankers, employees, trade unions and all other stakeholders for their support and look forward to their continued assistance in future.
For and on behalf of the Board of Directors
For ACC Limited
Karan Adani
Ahmedabad Chairman
April 27, 2023 DIN:03088095
Dec 31, 2018
TO THE MEMBERS OF ACC LIMITED
The Directors are pleased to present the Eighty Third Annual Report of the Company together with the audited financial statements (Consolidated and Standalone) for the year ended December 31, 2018. The section on Management Discussion and Analysis (MD&A) forms a part of this report.
1. FINANCIAL RESULTS
Consolidated |
Standalone |
|||
Rs. Crore |
Rs. Crore |
|||
2018 |
2017 |
2018 |
2017 |
|
Revenue from Operations* |
14,801.62 |
13,263.12 |
14,801.35 |
13,262.59 |
Other Income |
142.66 |
128.86 |
138.50 |
131.65 |
Total Income |
14,944.28 |
13,391.98 |
14,939.85 |
13,394.24 |
Profit before Tax |
1,510.11 |
1,310.06 |
1,494.29 |
1,298.36 |
Tax Expenses** |
(10.51) |
385.55 |
(12.34) |
382.91 |
Profit for the year |
1,520.62 |
924.51 |
1,506.63 |
915.45 |
Attributable to: |
||||
Owners of the Company |
1,520.47 |
924.41 |
1,506.63 |
915.45 |
Non-controlling interests |
0.15 |
0.10 |
- |
- |
Other Comprehensive Income (OCI) |
(4.84) |
2.24 |
(4.85) |
2.37 |
Total Comprehensive Income |
1,515.78 |
926.75 |
1,501.78 |
917.82 |
Owners of the Company |
1,515.63 |
926.65 |
1,501.78 |
917.82 |
Non-controlling interests |
0.15 |
0.10 |
- |
- |
Opening Balance in retained earnings |
5,526.05 |
4,983.63 |
5,541.33 |
5,007.74 |
Amount available for appropriations |
7,041.68 |
5,910.28 |
7,043.11 |
5,925.56 |
Appropriations: |
||||
Interim Dividend paid for 2017 |
- |
206.57 |
- |
206.57 |
Final Dividend paid |
||||
- For 2017 |
281.68 |
- |
281.68 |
- |
- For 2016 |
- |
112.67 |
- |
112.67 |
Tax on Equity Dividend |
57.90 |
64.99 |
57.90 |
64.99 |
Closing Balance in retained earnings |
6,702.10 |
5,526.05 |
6,703.53 |
5,541.33 |
*Figures for Revenue from Operations are comparable numbers .i.e Excise Duty has been removed as the same does not form part of Revenue post GST implementation.
**Including write back of Rs.500.63 crore relating to tax provision of earlier years.
2. OVERVIEW OF COMPANYâS FINANCIAL PERFORMANCE
- Consolidated income, comprising of revenue from operations (net of excise) and other income, for the year was Rs. 14,944.28 crore, 12% higher as compared to Rs. 13,391.98 crore in 2017.
- Total consolidated revenue from operations (net of excise) increased to Rs. 14,801.62 crore from Rs. 13,263.12 crore in 2017.
- Other operating revenue for the year 2018 was Rs. 324.15 crore representing a decrease of 8 % over the previous year.
- Consolidated Profit Before Tax for the year was Rs. 1,510.11.crore as compared to Rs. 1,310.06 crore in 2017.
- Consolidated Profit After Tax for the year was Rs. 1,520.62 crore as compared to Rs. 924.51 crore in 2017.
- No material changes or commitments have occurred between the end of the financial year and the date of this Report which affect the financial statements of the Company in respect of the reporting year.
3. DIVIDEND
The Board of Directors has recommended payment of dividend of Rs. 14 /- per Equity Share of Rs. 10 face value aggregating to Rs. 316.94 crore (including tax on dividend).
The Dividend Distribution Policy of the Company is annexed to this Report as Annexure âAâ and is also uploaded on the Companyâs website at http://www.acclimited.com/assets/new/new_ pdf/Dividend_Distribution_Policy.pdf
Unclaimed dividends pertaining to the 73rd Final dividend and the 74th Interim dividend respectively for the years 2010 and 2011 totaling to Rs. 4.08 crore have been transferred to the Investor Education and Protection Fund in accordance with Statutory requirements.
4. SHARE CAPITAL
The Companyâs paid-up Equity Share Capital continues to stand at Rs.187.79 crore as on December 31, 2018.
During the year, the Company has not issued any shares or convertible securities. The Company does not have any Scheme for issue of shares including sweat equity to the employees or Directors of the Company.
5. FINANCIAL LIQUIDITY
Cash and cash equivalent as at December 31, 2018 was Rs. 2,933.21 crore (Previous year Rs. 2,559.66 crore).
The Companyâs working capital management is robust and involves a well-organized process which facilitates continuous monitoring and control over receivables, inventories and other parameters.
6. CREDIT RATING
As in the previous years, CRISIL has given the highest credit rating of CRISIL AAA/ STABLE for long term and CRISIL A1 for short term financial instruments of the Company. This reaffirms the high reputation and trust the Company has earned for its sound financial management and its ability to meet financial obligations.
7. DEPOSITS
The Company has not accepted any deposits falling under the ambit of Section 73 of the Companies Act, 2013 (hereinafter referred to as âThe Actâ) and the Rules framed thereunder during the year under review.
8. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Act are given in the Notes to Financial Statements (Refer Note No. 47).
9. VIGIL MECHANISM / WHISTLE BLOWER POLICY
Your Company has over the years established a reputation for doing business with integrity and displays zero tolerance for any form of unethical behavior/âEthicalView Reporting Policyâ (EVRP) is the vigil mechanism instituted by the Company to report concerns about unethical behavior in compliance with the requirements of the Act and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as SEBI Listing Regulations). The Audit Committee of the Board oversees the functioning of this policy. Protected disclosures can be made by a whistle blower through several channels to report actual or suspected frauds and violation of Companyâs Code of Conduct and/or Ethics Policy. Details of the EthicalView Reporting Policy have been disclosed on its Companyâs website -http://www.acclimited.com/assets/new/pdf/ ethicalview-reporting-policy.pdf
During the year, the Company reached out to employees through e-learning modules and face-to-face training sessions for creating greater awareness with respect to the Companyâsâ Anti Bribery and Corruption Directive (ABCD) This has helped in achieving a high level of engagement and compliance among the employees.
10. SUBSIDIARY, ASSOCIATE AND JOINT VENTURE COMPANIES
10.1 SUBSIDIARIES
Bulk Cement Corporation (India) Limited (BCCI)
During the year under review, the revenue from operations of BCCI increased to Rs.18.76 crore in 2018 compared to Rs.17.27 crore in 2017. The Profit before tax before considering exceptional items for the year 2018 was Rs.3.39 crore as against Rs.2.88 crore in the year 2017.
ACC Mineral Resources Limited (AMRL)
ACC had entered into a Joint Venture with Madhya Pradesh State Mining Corporation Limited (MPSMC) for development of four coal blocks allotted to MPSMC by the Government of India through its wholly owned subsidiary ACC Mineral Resources Limited. Consequent upon the cancellation of the allocation of all coal blocks including the four coal blocks allotted to MPSMC by the Government of India as per the Orders of the Supreme Court passed in September 2014, AMRL does not have any business activity and correspondingly did not have any operating income during the period under review.
OTHER SUBSIDIARIES
The Company has three other Subsidiary Companies having limestone deposits, viz. Lucky Minmat Limited, National Limestone Company Private Limited and Singhania Minerals Private Limited. Singhania Minerals Private Limited is operational, while the other two companies are not operational.
10.2. MATERIAL SUBSIDIARIES
None of the subsidiaries mentioned in para 25.1 above is a material subsidiary as per the thresholds laid down under the SEBI Listing Regulations.
The Board of Directors of the Company has approved a Policy for determining material subsidiaries in line with the SEBI Listing Regulations. The Policy is also being revised effective from April,1, 2019 in line with the amendments made to the SEBI Listing Regulations. The Policy has been uploaded on the Companyâs website at: http://www.acclimited.com/assets/new/pdf/CG/ Determiningmaterialsubsidiaries.pdf
10.3 JOINT VENTURE /ASSOCIATE COMPANIES
OneIndia BSC Private Limited is a Joint Venture Company with equal participation with Ambuja Cements Limited to provide back office services to the two Companies with respect to routine transactional processes.
Your Company also has a Joint Venture with Aakaash Manufacturing Company Private Limited, for manufacture and supply of ready mix concrete. As on December 31, 2018, the following is the list of Associate Companies:
- Alcon Cement Company Private Limited
- Asian Concretes and Cements Private Limited
11. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company for the year 2018 are prepared in compliance with the applicable provisions of the Act including Indian Accounting Standards specified under Section 133 of the Act. The audited consolidated financial statements together with the Auditorsâ Report thereon form part of the Annual Report.
Pursuant to Section 129(3) of the Act, a Statement containing salient features of the financial statements of each of the Subsidiaries, Associates and Joint Venture Companies in the prescribed Form AOC-1 is attached.
The Financial Statements of the subsidiaries, associates and joint venture companies are available for inspection by the Members at the Registered Office of the Company pursuant to the provisions of Section 136 of the Act. The Company shall provide free of cost, a copy of the financial statements of its subsidiary companies to the Members upon their request. The statements are also available on the website of the Company at www.acclimited.com under the âInvestorsâ section.
12. DIRECTORS & KEY MANAGERIAL PERSONNEL
12.1 Changes in Directorate
The Independent Directors of the Company have been appointed by the shareholders at the Extra Ordinary General Meeting held on September 10, 2014 for a term of five years from their respective dates of appointment as per the requirements of the Act and the SEBI Listing Regulations. The appointments of Mr Shailesh Haribhakti, Mr Sushil Kumar Roongta, Mr Ashwin Dani and Mr Farrokh Kavarana were effective from July, 24, 2014 while those of Mr Arunkumar Gandhi and Ms Falguni Nayar were effective from April, 24, 2014.
Pursuant to the Companyâs Succession policy applicable to the directors which provides that a person shall not be eligible for appointment as a director of the Company upon attaining the age of seventy five years. Mr Ashwin Dani, Mr Farrokh Kavarana and Mr Arunkumar Gandhi have attained or will attain the age of seventy five years during their current tenure of appointment and have expressed their inability to seek re-appointment from the conclusion of the forthcoming Annual General Meeting.
The Board of Directors has placed on record its sincere appreciation for the rich contribution made by Mr Ashwin Dani, Mr Farrokh Kavarana and Mr Arunkumar Gandhi during their tenure of association as Independent Directors.
Considering the above, it is proposed to appoint Mr Damodarannair Sundaram, Mr Sunil Mehta and Mr Vinayak Chatterjee as Independent Directors with effect from the conclusion of the forthcoming Annual General Meeting for a period of five consecutive years subject to their appointment being approved by the Members. All the above named persons have given their consent for the appointment and have confirmed that they are not in any way disqualified from being appointed as directors. They have also given their confirmation with regard to their independent status vis-a-vis the Company.
The persons identified for appointment are persons of pre-eminence and the Board feels that it would be enriched further by their induction as Independent Directors. Detailed profiles of the above named persons setting out their accomplishments are appended to the Explanatory Statement accompanying the Notice for the Annual General Meeting. The Company has received notices from a Member under Section 160 of the Act proposing their candidature for appointment as Directors and the Nomination and Remuneration Committee as also the Board of Directors have recommended their appointment.
Approval of the Members by ordinary resolutions for appointing the aforesaid persons as Independent Directors for a term of five consecutive years has been sought in the Notice convening the Annual General Meeting of the Company. (Please refer to Item Nos. 8, 9 and 10 of the Notice).
Mr Shailesh Haribhakti, Mr Sushil Kumar Roongta and Ms Falguni Nayar upon completion of their first term of appointment as Independent Directors during the current year are eligible for re-appointment for another term of five consecutive years subject to approval of the Members by special resolution. The said Directors have given their consent for re-appointment and have confirmed that they still retain their status as Independent Directors and that they do not suffer from any disqualifications for appointment. The proposal for their re-appointment is based on the evaluation of their performance carried out by the Board other than the persons evaluated.
The Company has received notices under Section 160 of the Act, from a Member proposing the re-appointment of Mr Shailesh Haribhakti, Mr Sushil Kumar Roongta and Ms Falguni Nayar as Independent Directors of the Company. Approval of the Members by special resolutions for appointing the aforesaid persons as Independent Directors for a further term of five consecutive years has been sought in the Notice convening the Annual General Meeting of the Company. (Please refer to Item Nos. 5, 6 and 7 of the Notice).
12.2 Directors liable to retirement by rotation
The Independent Directors hold office for a fixed period of five years from the date of their appointment and are not liable to retire by rotation. Out of the remaining 5 Non-Executive/ Non-Independent Directors, in accordance with the provisions of the Act and the Articles of Association of the Company, Mr N. S Sekhsaria and Mr Christof Hassig being longest in office retire by rotation and being eligible, offer their candidature for re-appointment as Directors.
12.3 Board Effectiveness
a. Familiarization Program for the Independent Directors
The Company has over the years developed a robust familiarization process for the newly appointed Directors with respect to their roles and responsibilities, way ahead of the prescription of the regulatory provisions. The process has been aligned with the requirements under the Act and other related Regulations. This process inter-alia includes providing an overview of the Cement Industry, the Companyâs business model, the risks and opportunities etc.
Details of the Familiarization Programme are explained in the Corporate Governance Report and are also available on the Companyâs website at http:// www.acclimited.com/assets/new/pdf/ CG/Familiarization-Programme-for-Independent-Directors.pdf
b. Board Evaluation
The Board has carried out its annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration, Risk Management and Compliance Committees as mandated under the Act and SEBI Listing Regulations. The criteria applied in the evaluation process are explained in the Corporate Governance Report.
12.4 Key Managerial Personnel
The following are the Key Managerial Personnel of the Company in terms of the provisions of the Act read with The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as on December 31, 2018:
- Mr Neeraj Akhoury, Managing Director & Chief Executive Officer
- Mr Sunil Nayak, Chief Financial Officer
- Mr Ramaswami Kalidas, Company Secretary & Head Compliance
12.6 Remuneration Policy and Criteria for selection of candidates for appointment as Directors, Key Managerial Personnel and Senior leadership positions
The Company has in place a policy for remuneration of Directors, Key Managerial Personnel and Members of the Executive Committee (ExCo) as well as a well-defined criteria for the selection of candidates for appointment to the said positions which has been approved by the Board. The Policy broadly lays down the guiding principles, philosophy and the basis for payment of remuneration to the executive and non-executive Directors (by way of sitting fees and commission), Key Managerial Personnel and ExCo. The criteria for selection of candidates for the above positions cover the various factors and attributes which are considered by the Nomination & Remuneration Committee and the Board of Directors while making a selection of the candidates. The above policy alongwith the criteria for selection is available at the website of the Company at http://www.acclimited.com/ assets/new/pdf/CG/Policy remuneration selection for appointment.pdf
13. MEETINGS
13.1 Board Meetings
During the year six Board Meetings were convened and held, the details of which are given in the Corporate Governance Report.
13.2 Audit Committee
The Audit Committee comprises five members. The Chairman of the Committee is an Independent Director. The Committee met six times during the year. Details of the role and responsibilities of the Audit Committee, the particulars of meetings held and attendance of the Members at such Meetings are given in the Corporate Governance Report.
13.3 CSR Committee
The CSR Committee comprises of four members of which three are Independent Directors. The Chairman of the Committee is an Independent Director. The Committee met thrice during the reporting period. Details of the role and functioning of the Committee are given in the Corporate Governance Report.
15. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
The Company has developed a Related Party Transactions Manual and Standard Operating Procedures for the purpose of identification and monitoring Related Party transactions.
All transactions with Related Parties are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee and the Board is obtained for the transactions which are foreseeable and of a repetitive nature. The transactions entered into pursuant to the approvals so granted are subjected to audit and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors on a quarterly basis. The statement is supported by a certificate from the CEO & MD and the CFO.
The policy on Related Party Transactions as approved by the Board of Directors has been uploaded on the Companyâs website and can be seen at the link http://www.acclimited. com/assets/new/pdf/CG/PolicyonRPT.pdf All transactions entered into with related parties during the year were on armâs length basis and were in the ordinary course of business. The details of the material related party transactions entered into during the year as per the policy on Related Party Transactions approved by the Board have been reported in Form AOC 2 annexed to the Directorsâ Report as Annexure âCâ.
None of the Directors and the Key Managerial Personnel has any pecuniary relationships or transactions vis-a-vis the Company.
16. TRANSFER OF EQUITY SHARES UNPAID/UNCLAIMED DIVIDEND TO THE INVESTOR EDUCATION AND PROTECTION FUND
In line with the statutory requirements, the Company has transferred to the credit of the Investor Education and Protection Fund set up by the Government of India, equity shares in respect of which dividend had remained unpaid/ unclaimed for a period of seven consecutive years within the time lines laid down by the MCA. Unpaid/unclaimed dividend for seven years of more has also been transferred to the IEPF pursuant to the requirements under the Act.
17. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
Complaint filed under the Competition Act by the Builders Association of India against cement manufacturers - Appeal before the Supreme Court of India
As reported in detail in reports of earlier years, a penalty of Rs.1,147.59 crore was levied on the Company by the Competition Commission of India based on a complaint filed by the Buildersâ Association of India for alleged violation of the provisions of the Competition Act.
The National Company Law Appellate Tribunal (NCLAT) vide its judgment dated 25th July 2018, has dismissed the appeal of the Company upholding the levy of penalty of Rs.1147.59 crore as imposed by the Competition Commission of India vide its Order dated 31st August 2016. The NCLAT initially vide its Order dated 7th November 2016 had stayed the operation of the CCIâs Order subject to deposit of 10% of the penalty amount.
The Company has preferred an appeal before the Honâble Supreme Court against the above Order of NCLAT. The Honâble Supreme Court vide its Order dated 5th October 2018, has admitted the Companyâs civil appeal and ordered for continuance of the interim orders passed by NCLAT towards stay on the demand subject to deposit of 10% of the penalty amount. The matter is still subjudice.
As at December 31, 2018, the penalty amount of Rs.1147.59 crore and interest thereon has been disclosed as a contingent liability in the Notes to Financial Statements.(Refer Note -40(A)(a)).
CCIâs Order on Complaint filed by Director, Supplies & Disposals, State of Haryana in 2013
The Director, Supplies & Disposals, State of Haryana had filed a complaint before CCI alleging collusion and bid rigging by cement manufacturers in violation of Section 3(1) and 3(3)(d) of the Competition Act. In January 2017, the Competition Commission of India (CCI) passed an Order against seven cement manufacturers including the Company imposing a penalty calculated at the rate of 0.3% of the average turnover of the last three years viz. 2012-13 to 2014-15. In respect of the Company, the amount of penalty works out to Rs.35.32 crore.
An Appeal is pending before NCLAT in the said matter against the Orders of the Competition Commission of India.
As at December 31, 2018, the penalty amount of Rs.35.32 crore is disclosed as a contingent liability in the Notes to Financial Statements.(Refer Note 40(A)(b)).
Reference is drawn to the âEmphasis of Matterâ by the Auditors in their reports on the above matters.
18. AUDITORS
18.1 Statutory Auditor
M/s. Deloitte Haskins & Sells LLP, Chartered Accountants (ICAI Firm Registration Number 1 17366W/W-100018) were appointed as Statutory Auditor of the Company at the 81st Annual General Meeting held on March 29, 2017 to hold office from the conclusion of the said Meeting till the conclusion of the 86th Annual General Meeting to be held in 2022 subject to ratification of their appointment by the Members at every intervening Annual General Meeting held thereafter. The requirement of seeking ratification of the members for continuance of their appointment has been withdrawn consequent upon the changes made by the Companies (Amendment)Act, 2017 with effect from May 07, 2018.Hence the resolution seeking ratification of the members for their appointment is not being placed at the ensuing Annual General Meeting.
18.2 Cost Auditor
M/s D C Dave & Co., Cost Accountants (Firm Registration No 3061 1), have been appointed as Cost Auditor of the Company for the year 2018 under Section 148 of the Act read with The Companies (Cost Records and Audit) Amendment Rules 2014.
M/s D C Dave & Co have confirmed that they are free from any disqualifications as specified under the Act. They have further confirmed their independent status.
The remuneration payable to the Cost Auditor is required to be placed before the Members in a general meeting for their ratification. Accordingly, Resolution seeking Membersâ ratification for the remuneration payable to M/s D C Dave & Co, Cost Auditor is included at item No.11 of the Notice convening the Annual General Meeting.
18.3 Secretarial Auditor
M/s. Pramod S Shah & Associates, a firm of Company Secretaries in Practice, have been appointed to undertake the Secretarial Audit of the Company pursuant to the provisions of Section 204of the Act, the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and the SEBI Listing Regulations as amended. The Report of the Secretarial Auditor is annexed to the Boardâs Report as Annexure âD.
19. AWARDS
During the year under review, your Company received numerous awards and accolades which were conferred by reputable organizations and distinguished bodies for achievements in diverse fields such as Health & Safety, Manufacturing and Environment Management, Corporate Governance, etc.
Corporate Excellence
- CII-ITC Sustainability Awards 2018 -Received the highest recognition for âOutstanding Accomplishmentâ, under Corporate Excellence category.
Business and Financial Reporting Excellence
- Institute of Chartered Accountants of India (ICAI) - Awarded a plaque âCommended Annual Report in Category VII - Manufacturing and Trading Sector (Turnover equal to Rs.3000 crore or more)â for Excellence in Financial Reporting.
Corporate Social Responsibility
- The Government of Odisha awarded ACC the âMost Innovative CSR Projectâ for VidyaUtkarsh, at the Make in Odisha Conclave 2018 in Bhubaneswar, in recognition towards creating a social, environmental and economic value for its host Communities in Odisha.
- Indywood CSR Excellence Award 2018 in the category of Best CSR practices in Promoting Biodiversity.
- Lakheri plant was awarded the CSR Health Impact Award - Bronze, for the Women and Child Health Initiative category.
- âGolden Peacock Award for Corporate Social Responsibilityâ at the 12th International Conference on Corporate Social Responsibility (CSR) held in Bengaluru.
Environment & Sustainability
- 5 Star rating by the Ministry of Mines for Sustainable Development to Govari Limestone Mines in Chanda, Mehgaon and Bamangawan Mines in Kymore and Jamul Limestone Mines.
- Gagal Plant won âSustainability 4.0 2018 awardâ instituted by Frost & Sullivan and The Energy and Resources Institute (TERI) for continious improvement in the field of Sustainable Development in the category âLeaders Award-Large Business Process Sectorâ. Sustainability 4.0 awards is designed to honour the efforts made by the companies who actively integrate sustainability principles into their business culture.
- The Company was awarded the GreenPro certification for ACC Suraksha Power, ACC Concrete Xtra Strong, ACC HPC Long Life, ACC Gold Water Shield and ACC F2R Superfast products by the Confederation of Indian Industries (CII) at the 14th Green Cementech conference.
- Thondebhavi Plant was recognised as an Energy Efficient Unit by the Confederation of Indian Industry (CII) at the 19th National Award function for Excellence in Energy Management 2018.
- Kymore, Jamul and Wadi Plants were recognised as âExcellent Energy Efficient Unitâ by the Confederation of India Industry (CII) at the 19th National Award function for Excellence in Energy Management 2018.
- Jamul Plant was awarded 1st Runner-Up in Large Scale Category at the Confederation of Indian Industry (CII) Energy Conservation (encon) Awards function 2018.
- Thondebhavi Plant won the 1st Prize in Energy Excellence in Grinding Unit category at the Quality Circle Forum of India (QCFI), Hyderabad Chapter awards, in collaboration with Cement Manufacturers Association (CMA), National Council for Cement and Building Materials (NCCBM) and Cement Sustainability Initiative.
- Jamul Plant won the 1st Prize in Energy Excellence in Integrated Unit category at the Quality Circle Forum of India (QCFI), Hyderabad Chapter awards, in collaboration with Cement Manufacturers Association (CMA), National Council for Cement and Building Materials (NCCBM) and Cement Sustainability Initiative.
- Wadi Plant won the 1st Prize in Alternate Fuels and Raw Materials Excellence and 2nd Prize in Environment Excellence at the Quality Circle Forum of India (QCFI), Hyderabad Chapter awards, in collaboration with Cement Manufacturers Association (CMA), National Council for Cement and Building Materials (NCCBM) and Cement Sustainability Initiative.
- ACC was conferred with the prestigious âYes Bank Natural Capital Award 2018â in theâEco-Corporate category under Manufacturing Sectorâ for its sustainability initiatives.
Manufacturing
- At the Mines Environment and Mineral Conservation Week (MEMCW) celebrated in Dehradun, Gagal Plant won the 1st Prize in Overall Performance, Mineral Conservation, Scientific Development of Mines, Sustainable Development and Afforestation and the 2nd prize in Air and Water Monitoring.
Communication
- Awarded Silver Prize in the Environmental Communications category for Sustainable Development Report 2017 at the 58th ABCI Annual Awards.
- Awarded Bronze Prize in the Social Responsibility Communications category for Muskaan - an animated film on female infanticide at the 58th ABCI Annual Awards.
- Awarded Bronze Prize in the External Magazines category for the Indian Concrete Journal at the 58th ABCI Annual Awards.
Corporate Governance
- ACC won the Golden Peacock Award for Excellence in Corporate Governance for the year 2018 at the 18th Annual London Global Convention on Corporate Governance & Sustainability and Global Business Meet in London.
- Awarded a Certificate of Recognition for Excellence in Corporate Governance by the Institute of Company Secretaries of India (ICSI).
Corporate
- Awarded the title of the âThird Fastest Growing Company - Large Category 201718â (Cement Category) at the Third Indian Cement Review Awards, held at the 10th Cement Expo.
Health &Safety
- Chaibasa Plant won the award for âOSH Innovation Award-Employee Awareness-Reactiveâ for the implementation of In-Cab assessment for drivers and counselling on critical driving behaviours during an assessment on harsh acceleration, harsh brakes, over speeding and harsh manoeuvres.
- Lakheri Plant won the award for âOSH Innovation Award-Employee Awareness-Proactiveâ for the implementation of Proactive analysis of GPS data and counselling through Driver Management Centres, which resulted in a lower incidence of road accidents and an increase in the percentage of safe kilometres at the Occupational Safety and Health (OSH) India Awards 2018.
- ACC was adjudged winner of âInnovation in OSH-Safety implementation-Proactiveâ for its implementation of In-Cab camera in truck - a tool used to identify behavioural aspects of truck drivers of truck drivers in response to highly dynamic traffic conditions at the Occupational Safety and Health (OSH) India Awards 2018.
- Thondebhavi Plant received the prestigious Greentech Safety Award 2018 in the âGold Category,â in the Cement sector for âOutstanding Achievements in Safety Management,â at the 17th Annual Greentech Safety Award.
- Jamul Plant won the âRio Tinto Health & Safety Award - for Opencast Minesâ (20172018) for their exemplary performance in implementation of safety management systems and safe work culture.
20. ENHANCING SHAREHOLDERS VALUE
Our commitment is to create and return value to shareholders. Accordingly, your Company is committed to achieving high levels of operating performance, cost competitiveness, enhancing the productive asset and resource base and striving for excellence in all areas of operations. Your Company firmly believes that its success in the market place and good reputation are among the primary determinants of value to the shareholder. Our close relationship with customers and an understanding of their challenges drive the development of new products and services. With our expertise and know-how, we aim to offer our customers solutions that enhance their projects and build trust in our partnerships. Beyond these solutions, our market growth activities are focused on creating new channels to serve our customers more effectively. Innovation is present not only in our products and services, but also in the way we execute growth opportunities. Anticipating customer needs early and being able to address them effectively requires a strong commercial backbone. At ACC, we are developing this strength by institutionalizing sound commercial processes and building world-class commercial capabilities across our marketing and sales.
Your Company is also committed to creating value for its other stakeholders by ensuring that its corporate actions positively impact the economic, societal and environmental dimensions of the Triple Bottom Line.
21. CORPORATE GOVERNANCE
The Annual Report contains a separate section on the Companyâs corporate governance practices, together with a certificate from the Companyâs Auditors confirming compliance, as per SEBI Listing Regulations.
22. BUSINESS RESPONSIBILITY REPORTING
A separate section on Business Responsibility forms part of this Annual Report as required under Regulation 34(2)(f) of SEBI Listing Regulations.
23. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated in Section 134(3)(m) of the Act read with Rule, 8 of The Companies (Accounts) Rules, 2014 is provided in Annexure âEâ to the Directorsâ Report.
24. PARTICULARS OF EMPLOYEES
Disclosure pertaining to the remuneration and other details as required under Section 197(12) of the Act, and the Rules framed thereunder is enclosed as Annexure âFâ to the Boardâs Report.
The information in respect of employees of the Company required pursuant to Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 will be provided upon request. In terms of Section 136 of the Act, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the aforesaid Annexure which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard.
25. ANNUAL RETURN
The Annual Return of the Company has been placed on the website of the Company and can be accessed at http://www.acclimited.com/newsite/ annualreport2018/Form_MGT_7.pdf
26. COMPLIANCE WITH SECRETARIAL STANDARDS
The Board of Directors affirms that the Company has complied with the applicable Secretarial Standards issued by the Institute of Companies Secretaries of India (SS1 and SS2) respectively relating to Meetings of the Board and its Committees which have mandatory application.
27. DIRECTORSâ RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 134 of the Act:
a) that in the preparation of the annual financial statements for the year ended December 31, 2018, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
b) that such accounting policies as mentioned in Note 2 of the Notes to the Accounts have been selected and applied consistently and judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on December 31, 2018, and of the profit of the Company for the year ended on that date;
c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) that the annual accounts have been prepared on a going concern basis;
e) that proper internal financial controls laid down by the Directors were followed by the Company and such internal financial controls are adequate and were operating effectively; and
f) that proper systems to ensure compliance with the provisions of all applicable laws have been devised and such systems were adequate and were operating effectively.
28. INTEGRATED REPORTING
The Company being one of the top 500 companies in the Country in terms of market capitalization, as part of its voluntary initiatives, has drawn up its first Integrated Report which encompasses both financial and non-financial information to enable the Members to take well-informed decisions and have a better understanding of the Companyâs long term perspective. The Report also touches upon aspects such as Organisationâs strategy, governance framework, performance and prospects of value creation based on the six forms of capital viz. financial capital, manufactured capital, intellectual capital, human capital, social and relationship capital and nature capital. The Integrated Report for the year 2018 has also been hosted on the Companyâs website www. acclimited.com.
The Annual Report also carries a detailed section containing the âBusiness Responsibility Reportâ. Since 2007, the Company has been publishing an annual Corporate Sustainable Development Report conforming to the guidelines of the Global Reporting Initiative. From the year 2014, these reports are based on the GRI G4 guidelines in accordance with the âComprehensiveâ option and have been externally assured.
29. ACKNOWLEDGEMENTS
The Directors acknowledge the support received by the Company from the Central and State Government Ministries and Departments, shareholders, customers, business associates, bankers, employees, trade unions and all other stakeholders.
30. CAUTIONARY STATEMENT
The Boardâs Report and Management Discussion & Analysis may contain certain statements describing the Companyâs objectives, expectations or forecasts that appear to be forward-looking within the meaning of applicable securities laws and regulations while actual outcomes may differ materially from what is expressed herein.
The Company is not obliged to update any such forward-looking statements. Some important factors that could influence the Companyâs operations comprise economic developments, pricing and demand and supply conditions in global and domestic markets, changes in government regulations, tax laws, litigation and industrial relations.
For and on behalf of the Board of Directors
N S Sekhsaria
Chairman
Mumbai
February 05, 2019
Dec 31, 2017
TO THE MEMBERS OF ACC LIMITED
The Directors are pleased to present the Eighty Second Annual Report of the Company together with the audited financial statements for the year ended December 31, 2017. The Section on Management Discussion and Analysis (MD&A) forms a part of this report.
1. FINANCIAL RESULTS
Consolidated |
Standalone |
|||
Rs, Crore |
Rs, Crore |
|||
2017 |
2016 |
2017 |
2016 |
|
Revenue from Operations (Gross) and Other Income |
14,329.58 |
12,646.20 |
14,331.84 |
12,651.73 |
Profit before Tax |
1,310.06 |
885.31 |
1,298.36 |
871.47 |
Tax Expenses |
385.55 |
226.89 |
382.91 |
224.42 |
Profit attributable to the Owners of the Company |
924.41 |
658.29 |
915.45 |
647.05 |
Other Comprehensive Income (OCI) |
2.24 |
(15.63) |
2.37 |
(15.63) |
Total Comprehensive Income |
926.65 |
642.66 |
917.82 |
631.42 |
Opening Balance in retained earnings |
4,983.63 |
4,755.16 |
5,007.74 |
4,790.51 |
Profit available for appropriations |
5,910.28 |
5,397.82 |
5,925.56 |
5,421.93 |
Appropriations: |
||||
Interim Dividend Paid |
206.57 |
206.57 |
206.57 |
206.57 |
Final Dividend Recommended |
112.67 |
112.65 |
112.67 |
112.65 |
Tax on Equity Dividend |
64.99 |
64.97 |
64.99 |
64.97 |
Transfer to General Reserve |
- |
30.00 |
- |
30.00 |
Closing Balance in retained earnings |
5,526.05 |
4,983.63 |
5,541.33 |
5,007.74 |
2. OVERVIEW OF COMPANY''S FINANCIAL PERFORMANCE
- Consolidated income, comprising Revenue from Operations (Gross) and other income, for the year was Rs,14,329.58 crore, 13.31% higher as compared to Rs,12,646.20 crore in 2016.
- Total consolidated Revenue from operations (Gross) increased to Rs,14,200.72 crore from Rs,12,523.39 crore in 2016.
- Other Operating revenue for the year 2017 was Rs,354.18 crore representing an increase of 59.59 % over the previous year.
- Consolidated Profit before Tax for the year was Rs,1,310.06 crore as compared to Rs,885.31 crore in 2016.
- Consolidated Profit after Tax for the year was Rs,924.41 crore as compared to Rs,658.29 crore in 2016.
- No material changes or commitments have occurred between the end of the financial year and the date of this Report which affect the financial statements of the Company in respect of the reporting year.
3. DIVIDEND
The Board of Directors of the Company has formulated a Dividend Distribution Policy in line with the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 (hereinafter referred to as "SEBI Listing Regulations"). The Policy is annexed to this Report as ''Annexure A'' and is also placed on the Company''s website at http://www.acclimited. com/sh/DDP.pdf
In line with the said Policy, the Board of Directors has recommended payment of final dividend at Rs,15/- per Equity Share of Rs,10 face value
aggregating to Rs,339.02 crore (including tax on dividend). The total dividend for the year, including interim dividend of ''11/- per Equity Share paid in August 2017, adds up to Rs,26/-per Equity Share involving a total outflow of Rs,587.64 crore (including tax on dividend).
Unclaimed dividend pertaining to the 72nd final dividend for the year 2009 and the 73rd interim dividend for the year 2010 totaling to Rs,2.77 crore were transferred to the Investor Education and Protection Fund in accordance with statutory requirements.
4. TRANSFER TO RESERVES
As there is no statutory obligation for the Company to transfer a certain portion of its distributable profits for the year to General Reserves, the entire undistributed profits amounting to Rs,5,526.05 crore is proposed to be retained in the Statement of Profit and Loss.
5. SHARE CAPITAL
The Company''s paid-up Equity Share Capital as on December 31, 2017 was ''187.79 crore.
During the year, the Company has not issued shares with differential rights as to dividend, voting or otherwise nor has the Company issued shares (including sweat equity shares) to the employees or Directors of the Company, under any Scheme. As on December 31, 2017, none of the Directors of the Company hold shares in the Company except Mr Shailesh Haribhakti who holds 3,100 Equity Shares of the Company.
No disclosure is required under Section 67(3)(c) of the Companies Act 2013, in respect of voting rights not exercised directly by the employees of the Company as the provisions of the said Section are not applicable to the Company.
The Company has not issued any convertible security during the year.
6. FINANCIAL LIQUIDITY
Cash and cash equivalent as at December 31, 2017 was Rs,2,559.66 crore (Previous year Rs,1,809.63 crore).
The Company''s working capital management is
- robust and involves a well-organized process, which facilitates continuous monitoring and control over receivables, inventories and other parameters.
7. CREDIT RATING
The Company enjoys a good reputation for its sound financial management and its ability to meet financial obligations. CRISIL, the reputed Rating Agency, has re-affirmed the highest credit rating of CRISIL AAA/STABLE for the long term and CRISIL A1 for the short term financial instruments of the Company.
8. DEPOSITS
The Company has not accepted any deposits falling under the ambit of Section 73 of the Act and the Rules framed there under during the year under review.
Unclaimed and unpaid matured deposits for an amount of Rs,0.02 crore relating to the previous years have been transferred by the Company to the Investor Education and Protection Fund set up by the Government of India.
9. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
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.
25. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company for the year 2017 are prepared in compliance with the applicable provisions of the Companies Act, 2013 and the Indian Accounting Standards specified under Section 133 of the Act. The audited consolidated financial statements together with the Auditors'' Report thereon form part of the Annual Report.
Pursuant to Section 129(3) of the Companies Act, 2013, a statement containing the salient features of the financial statements of each of the Subsidiaries, Associates and Joint Venture Companies in the prescribed Form AOC-1 is attached.
The Financial Statements of the Subsidiaries, Associates and Joint Venture Companies are available for inspection by the Members at the Registered Office of the Company pursuant to the provisions of Section 136 of the Companies Act 2013. The Company shall provide free of cost, a copy of the financial statements of its subsidiary companies to the Members upon request. The statements of the subsidiaries companies are also available on the website of the Company at www.acclimited.com under the ''Investors'' section.
26. DIRECTORS & KEY MANAGERIAL PERSONNEL
26.1 Change in Directorate
During the year, the Company received a request from Holderind Investments Limited, one of the Promoter Group companies for the appointment of Mr Jan Jenisch, CEO LafargeHolcim Limited as Director of the Company. Pursuant thereto the Board of Directors on the recommendation of the Nomination and Remuneration Committee, has appointed Mr Jan Jenisch, as an Additional Director of the Company with effect from October 17, 2017 in the capacity of a Non Executive Non Independent Director to hold office up to the date of the next Annual General Meeting.
The Company has received a notice under Section 160 of the Companies Act, 2013 from a member proposing the candidature of Mr Jan Jenisch as a Director of the Company. Approval of the members for appointing Mr Jenisch as a Director in the capacity of Non Executive Non Independent Director has been sought in the Notice convening the Annual General Meeting of the Company. The Directors recommend the Resolution set out at Item No. 5 of the Notice for approval by the members.
The Board of Directors has also elected Mr Jan Jenisch, CEO of LafargeHolcim Limited, as Deputy Chairman of the Board with effect from October 17, 2017.
Mr Eric Olsen, Non Executive and Non Independent Director tendered his resignation from the Board of Directors of the Company, consequent upon his resignation as the CEO of LafargeHolcim Limited.
The Board of Directors has placed on record its appreciation for the contribution made by Mr Eric Olsen during his tenure as Director of the Company.
26.2 Director liable to retirement by rotation
In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr Vijay Kumar Sharma being longest in office retires by rotation and being eligible offers his candidature for reappointment as Director.
26.3 Independent Directors
The Independent Directors hold office for a fixed period of five years from the date of their appointment at the Extra-ordinary General Meeting of the members held on September 10, 2014 and are not liable to retire by rotation.
The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and SEBI Listing Regulations.
26.4 Board Effectiveness
a. Familiarization Programme for the Independent Directors
Long before it was mandated by the law, the Company had developed a process to familiarize the newly appointed Directors with respect to the roles and responsibilities outlined under the Companies Act, 2013 and other related Regulations. This process has been made more robust and it, inter alia includes providing an overview of the Cement Industry, the Company''s business model, risks and opportunities and other necessary information.
Details of the Familiarization Programme are explained in the Corporate Governance Report and are also available on the Company''s website at http://www.acclimited.com/sh/FPID.pdf
b. Board Evaluation
The Board has carried an annual self performance evaluation, the evaluation of Directors individually as well as the working of its Audit, Nomination & Remuneration and Compliance Committees as mandated under the Companies Act, 2013 and SEBI Listing Regulations. The criteria applied in the evaluation process are explained in the Corporate Governance Report.
27. MEETINGS
27.1 Board of Directors
During the year seven Board Meetings were convened and held, the details of which are given in the Corporate Governance Report.
27.2 Audit Committee
The Audit Committee comprises of five members. The Chairman of the Committee is an Independent Director. The Committee met six times during the year. Details of the role and responsibilities of the Audit Committee, the particulars of meetings held and attendance of the Members at such Meetings are given in the Corporate Governance Report.
27.3 CSR Committee
The CSR Committee comprises of four members, of which three are Independent Directors. The Chairman of the Committee is an Independent Director. The Committee met twice during the reporting period. Details of the role and functioning of the Committee are given in the Corporate Governance Report.
28. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
The Company has developed a Related Party Transactions Manual and Standard Operating Procedures for the purpose of identification and monitoring of Related Party transactions.
All transactions with Related Parties are placed before the Audit Committee and also the Board for approval. Prior omnibus approval of the Audit Committee and the Board is obtained for the transactions which are foreseeable and of a repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are subjected to audit and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for approval on a quarterly basis. The statement is supported by a certificate from the MD&CEO and the CFO.
The Policy on Related Party Transactions as approved by the Board of Directors has been placed on the Company''s website at: http://www. acclimited.com/sh/RPT.pdf All transactions entered into with related parties during the year were on "arm''s length" basis and were in the "ordinary course of business". There were no material related party transactions entered into during the year as per the Policy on Related Party Transactions approved by the Board. Accordingly, there were no transactions that were required to be reported in Form AOC 2.
None of the Directors or the Key Managerial Personnel have any pecuniary relationships or transactions vis-a-vis the Company.
29. RENEWAL OF AGREEMENT FOR PAYMENT OF TECHNOLOGY & KNOWHOW FEES TO HOLCIM TECHNOLOGY LTD
Members of the Company had given their consent through a postal ballot conducted in the year 2013 for entering into a Technology & Knowhow Agreement with Holcim Technology Ltd., a LafargeHolcim Group Company, for a period of five years with effect from January 1, 2013. The Technology and Knowhow fees payable for an agreed list of technical and managerial services, use of intellectual property and end-to-end solutions was initially approved @ 1 % of the net sales of the Company for each financial year for the first two years which was thereafter retained for the remaining period of three financial years until December 31, 2017.
It is proposed to renew the Technology & Knowhow Agreement for a further period of three years effective from January 1, 2018 on the same terms and conditions except that the proposed fees shall be @1% of the net sales of the Company for each financial year or at such rate as may be determined by the Competent Authorities of India and Switzerland under the Bilateral Advance Pricing Agreement (BAPA). Applications have been filed by the Company under BAPA to confirm the arm''s length rate for payment under the TKH Agreement, which applications are still pending with the concerned authorities.
Members attention is drawn to the Resolution proposing the approval for the renewal of Technology and Knowhow Agreement as aforesaid. As the transactions proposed under the aforesaid arrangement would be related party transaction, all related parties shall abstain from voting on the resolution. The Directors recommend the resolution set out in Item No. 7 of the Notice convening the Annual General Meeting.
30. MASTER SUPPLY AGREEMENT WITH AMBUJA CEMENTS LIMITED
Members of the Company have through the process of a Postal Ballot passed an Ordinary Resolution granting their approval on April 16, 2018 for the Company to enter into a Master Supply Agreement (MSA) with Ambuja Cements Limited, the holding Company for sale and purchase of material and services on a reciprocal basis for maximizing synergies between the two companies and unlock value for the shareholders of both the Companies.
The Board of Directors on April 18, 2018, have determined that the MSA shall be valid for a period of three years from the date of its execution, with either party continuing to enjoy the right to unilaterally terminate the same during the above period by serving three months prior notice.
31. TRANSFER OF EQUITY SHARES TO THE INVESTOR EDUCATION AND PROTECTION FUND
In line with the statutory requirements, the Company has transferred to the credit of the Investor Education and Protection Fund set up by the Government of India, equity shares in respect of which dividend had remained unpaid/ unclaimed for a period of seven consecutive years within the time lines laid down by the MCA.
32. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
Complaint filed under Sections 3 and 4 of the Competition Act by the Builders Association of India against cement manufacturers - Appeal before the National Company Law Appellate Tribunal (NCLAT)
In the matter relating to the complaint filed by the Builders'' Association of India for alleged violation of the provisions of Sections 3 and 4 of the Competition Act, CCI had passed an Order on June 12, 2012 imposing a penalty of 0.5 times of the profit of the Company for the year 2009 (calculated pro-rata from May 20, 2009) and for the full year 2010. For the Company the penalty amounts to Rs,1147.59 crore. Thereafter, in an Appeal preferred by the Cement Manufacturers before the Competition Appellate Tribunal (COMPAT) against the Order of CCI, COMPAT remanded the matter back to CCI for a fresh hearing and adjudication. CCI on rehearing the arguments, by its Order dated August 31, 2016, once again held the cement companies and the Cement Manufacturers'' Association (CMA) guilty of violation of the Sections 3(1) read with 3(3)(a) and 3(3)(b) of the Competition Act and imposed the same penalty.
The honorable National Company Law Appellate Tribunal (NCLAT), before who the matter was pending, has completed hearing the arguments of all the appellant cement manufacturers as well as the respondent CCI and its decision has been reserved.
As at December 31, 2017, the penalty amount of Rs, 1147.59 crore and interest thereon has been disclosed as a contingent liability in the Notes to Accounts.(Refer Note - 43(A)(b)).
CCI''s Order on Complaint filed by Director, Supplies & Disposals, State of Haryana in 2013
The Director, Supplies & Disposals, State of Haryana had filed a complaint before CCI alleging collusion and bid rigging by cement manufacturers in violation of Section 3(1) and 3(3)(d) of the Competition Act. In January 2017, the Competition Commission of India (CCI) passed an Order against seven cement manufacturers including the Company imposing a penalty calculated at the rate of 0.3% of the average turnover of the last three years viz. 2012-13, 2013-14 and 2014-15. In respect of the Company the amount of penalty works out to Rs,35.32 crore.
An appeal is pending before NCLAT in the said matter against the Orders of the Competition Commission of India.
As at December 31, 2017, the penalty amount of Rs,35.32 crore is disclosed as a contingent liability in the Notes to Accounts.(Refer Note 43(A)(c)).
33. AUDITORS
33.1 Statutory Auditor
M/s. Deloitte Haskins & Sells LLP, Chartered Accountants (ICAI Firm Registration Number 117366W/W-100018) were appointed as the Statutory Auditor of the Company at the 81st Annual General Meeting held on March 29, 2017 and were assigned to hold office from the conclusion of the said Meeting till the conclusion of the 86th Annual General Meeting to be held in 2022. As per the provisions of Section 139 of the Companies Act, 2013, the appointment of the Auditors is required to be ratified by the Members of the Company at every intervening Annual General Meeting held after the 81st Annual General Meeting. The Statutory Auditors have confirmed their eligibility for appointment as also there independent status.
Members'' attention is drawn to the Resolution proposing the ratification of the appointment of Deloitte Haskins & Sells LLP as Statutory Auditors of the Company which is included at Item No. 4 of the Notice convening the Annual General Meeting. The Directors recommend the resolution for approval by the members.
33.2 Cost Auditor
M/s D C Dave & Co., Cost Accountants (Firm Registration No 30611), have been appointed as Cost Auditor of the Company for the year 2018 under Section 148 of the Companies Act 2013 read with The Companies (Cost Records and Audit) Amendment Rules 2014.
M/s D C Dave & Co have confirmed that they are free from any disqualifications as specified under Section 141 (3) and proviso to Section 148 (3) read with Section 141 (4) of the Companies Act 2013. They have further confirmed their independent status and that they have an arm''s length relationship with the Company.
The remuneration payable to the Cost Auditor is required to be placed before the Members in a general meeting for their ratification. Accordingly, Resolution seeking Members'' ratification for the remuneration payable to M/s D C Dave & Co, Cost Auditor is included at item No. 6 of the notice convening the Annual General Meeting. The Directors recommend the resolution for approval by the members.
33.3 Secretarial Auditor
M/s Pramod S Shah & Associates, a firm of Company Secretaries in Practice, have been appointed to undertake the Secretarial Audit of the Company pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The Report of the Secretarial Auditor is annexed to the Board''s Report as Annexure ''E''.
34. AWARDS
During the year under review, your Company received numerous awards and felicitations conferred by reputable organizations and distinguished bodies for achievements in diverse fields such as Health & Safety, Manufacturing, Environment Management and others.
CSR & Societal Initiatives
ISC-FICCI first-ever Sanitation award for "Best Corporate Initiative in Sanitation" has been conferred by India Sanitation Coalition (ISC) and the Federation of Indian Chambers of Commerce & Industry for ACC''s dedicated efforts to meet the country''s Sanitation objectives.
Wadi Limestone Mines was conferred the National Mineral Development Corporation (NMDC) Social Awareness Award 2016-17 by the Federation of Indian Mineral Industries (FIMI) for significant contribution in socio-economic development of communities.
Vidyasaarathi, a CSR initiative on education, was awarded the 1st runner-up prize at the 4th National Human Resources Development Network - Birla Institute of Management Technology (NHRDN-BIMTECH) Corporate Social Responsibility Summit.
Alliance for Immunization and Health (AIH) recognized ACC''s CSR Arogyam Project initiatives, at the State Level Meet held in January 2017.
ACC was conferred the prestigious ''2 Good'' rating by media house The Economic Times and global consultancy firm KPMG for its Corporate Social Responsibility (CSR) initiatives.
Business and Financial Reporting Excellence
ACC was conferred with the "Demand Planning and Forecasting Award 2017" in the category ''Best Use of Analytics in Demand planning and Forecasting'' - Manufacturing Sector - organized by the Institute of Supply Chain Management.
ACC''s Annual Report for 2016 was awarded the ''Certificate of Merit'' in the ''Manufacturing Sector'' category by the South Asian Federation of Accountants.
Environment & Sustainability
ACC received a memento from the Chief Minister of Chhattisgarh for the Company''s innovative solution for municipal waste management as demonstrated by Company''s Clean and Green CSR project at Madukkarai that is currently being replicated at Jamul.
ACC Gagal was awarded the Sustainability
4.0 Award by Frost & Sullivan & TERI, in the ''Challengers'' category for Large Business.
ACC Chanda won the Golden Peacock Environment Management Award during the Institute of Directors (IOD) 19th World Congress on Environmental Management at Hyderabad.
ACC Sindri Cement Works won the Industry Champions for Sustainable Development Goals (SDGs) Awards, the first Jharkhand Corporate Social Responsibility Award.
Manufacturing
We are pleased to state that our plants, Gagal - II and Gagal - I were ranked first and Second respectively in the LafargeHolcim Group for the year 2017 in terms of the Cement Industrial Performance Report. The Lakheri Unit bagged the 14th rank based on the same criteria.
ACC Jamul won the National Award for Manufacturing Competitiveness in the Silver category from the International Research Institute for Manufacturing.
ACC Jamul has bagged the 18th National Award for Excellence in Energy Management 2017 conferred by the Confederation of Indian Industries.
A ''5 Star Rating'' by the Ministry of Mines, Government of India was awarded to Kymore Limestone Mines.
Logistics
Awards for "Industry Excellence in Supply Chain-Manufacturing" and "Warehouse Innovation/ Initiative of the Year" were won at the 11th Express Logistics and Supply Chain Leadership Awards 2017.
Communication
ACC won the Silver Prize in the Environmental Communication category for its Sustainable Development Report 2016 and the Bronze Prize in the Social Responsibility Communication category for Community Counts at the 57th ABCI Annual Awards.
35. ENHANCING SHAREHOLDERS VALUE
Your Company has always remained committed towards creating and enhancing shareholders'' value as also the Company''s long-term sustainability, through robust management processes and improved business performance. Accordingly, your Company is firmly focused in achieving high levels of operating performance, cost competitiveness, enhancing the productive asset and resource base and striving for excellence in all areas of operations. Supported by an in-depth understanding of customer values coupled with sound business acumen, your Company has constantly endeavored to identify and address the areas of concern within its value delivery process, thereby also ensuring enhanced product quality and a premium position in the market. Innovation in our products and services as well as the way in which we execute growth opportunities, have also contributed in the process of value augmentation.
Your Company is also committed to creating value for its other stakeholders by ensuring that its corporate actions positively impact the economic, societal and environmental dimensions of the Triple Bottom Line.
36. CORPORATE GOVERNANCE
The Annual Report contains a separate section on the Company''s corporate governance practices, together with a certificate from the Company''s Auditors confirming compliance, as per SEBI Listing Regulations.
38. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated in Section 134(3)(m) of the Companies Act, 2013 read with Rule, 8 of The Companies (Accounts) Rules, 2014 is provided in Annexure ''F'' to the Directors'' Report.
39. PARTICULARS OF EMPLOYEES
Disclosure pertaining to the remuneration and other details as required under Section 197(12) of the Act, and the Rules framed there under, is enclosed as Annexure ''G'' to the Board''s Report.
The information in respect of employees of the Company required pursuant to Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 will be provided upon request. In terms of Section 136 of the Companies Act 2013, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the aforesaid Annexure which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard.
40. EXTRACT OF ANNUAL RETURN
Details forming part of the extract of the Annual Return in Form MGT 9 is enclosed as Annexure ''H''.
41. COMPLIANCE WITH SECRETARIAL STANDARDS
The Board of Directors affirms that the Company has complied with the applicable Secretarial Standards issued by the Institute of Companies Secretaries of India (SS1 and SS2) respectively relating to Meetings of the Board and its Committees which have mandatory application during the year under review
42. DIRECTORS''RESPONSIBILITYSTATEMENT
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 134 of the Companies Act, 2013:
a) that in the preparation of the annual financial statements for the year ended December 31, 2017, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
b) that such accounting policies as mentioned in Note 1 of the Notes to the Financial Statements have been selected and applied consistently and judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on December 31, 2017, and of the profit of the Company for the year ended on that date;
c) that 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 and for preventing and detecting fraud and other irregularities;
d) that the annual accounts have been prepared on a going concern basis;
e) that proper internal financial controls laid down by the Directors were followed by the Company, and such internal financial controls are adequate and were operating effectively; and
f) that proper systems to ensure compliance with the provisions of all applicable laws have been devised and such systems were adequate and were operating effectively.
43. ACKNOWLEDGEMENTS
The Directors gratefully acknowledge the support received by the Company from the Central and State Government Ministries and Departments, shareholders, customers, business associates, bankers, employees, trade unions and all other stakeholders.
For and on behalf of the Board of Directors
N S Sekhsaria
Chairman
Mumbai
April 18, 2018
Dec 31, 2016
BOARD''S REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS
TO THE MEMBERS OF ACC LIMITED
The Directors are pleased to present the Eighty First Annual Report of the Company together with audited financial statements for the year ended December 31, 2016. Management Discussion and Analysis forms part of this report.
1. FINANCIAL RESULTS
Consolidated Rs, Crore |
Standalone Rs, Crore |
|||
2016 |
2015 |
2016 |
2015 |
|
Revenue from Operations (Net) and Other Income |
11,274.75 |
11,916.94 |
11,271.05 |
11,916.18 |
Profit before Tax |
805.32 |
765.53 |
808.87 |
783.97 |
Provision for Tax |
209.60 |
189.98 |
206.47 |
192.40 |
Profit After Tax (PAT) |
604.38 |
587.60 |
602.40 |
591.57 |
Balance brought forward from previous year |
4,605.50 |
4,433.04 |
4,634.07 |
4,456.64 |
Profit available for appropriations |
5,210.88 |
5,020.64 |
5,236.47 |
5,048.21 |
Appropriations: |
||||
Interim Dividend |
206.57 |
206.52 |
206.57 |
206.52 |
Proposed Final Equity Dividend |
112.67 |
112.65 |
112.67 |
112.65 |
Tax on Equity Dividend |
64.99 |
64.97 |
64.99 |
64.97 |
Transfer to General Reserve |
30.00 |
30.00 |
30.00 |
30.00 |
Surplus carried to the next year''s account |
4,796.65 |
4,606.50 |
4,822.24 |
4,634.07 |
2. OVERVIEW OF COMPANY''S FINANCIAL PERFORMANCE Consolidated Income
Consolidated income, comprising Revenue from Operations (Net) and other income, for the year was Rs, 11,274.75 crore, 5.39% lower as compared to Rs, 11,916.94 crore in 2015.
Total consolidated Revenue from operations (Net) decreased to Rs, 11,167.55 crore from Rs, 11,797.16 crore in 2015.
Other operating revenue
Other Operating revenue for the year 2016 on a like-for-like basis remained flat at Rs, 221.93 crore.
Consolidated profit before tax
Consolidated profit before tax for the year was Rs, 805.32 crore as compared to Rs, 765.53 crore in 2015.
Consolidated Profit after tax
Consolidated Profit after Tax for the year was Rs, 604.38 crore as compared to Rs, 587.60 crore in 2015.
Material Changes
No material changes or commitments have occurred between the end of the calendar year and the date of this Report which affect the financial statements of the Company in respect of the reporting year.
3. DIVIDEND
The Board of Directors of the Company had approved the Dividend Distribution Policy on December 17, 2016 in line with the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. The Policy is uploaded on the CompanyRs,s website at http://www.acclimited.com/assets/new/new pdf/Dividend Distribution Policy.pdf
In line with the said Policy, the Board of Directors has recommended payment of final dividend at Rs, 6/- per Equity Share of Rs, 10 face value aggregating to Rs, 112.67 crore. The total dividend for the year, including interim dividend of Rs, 11/- per Equity Share paid in August 2016, adds up to Rs, 17/- per Equity Share involving a total outflow of Rs, 384.23 crore (including tax on dividend). The dividend payout ratio is 64%. The dividend per Equity Share for the year 2016 is the same as in the previous year.
During the year, unclaimed dividend pertaining to the 71st final dividend for the year 2008 and the 72nd Interim dividend for the year 2009 totaling Rs, 2.15 crore was transferred to the Investor Education & Protection Fund.
4. TRANSFER TO RESERVES
The Company proposes to transfer an amount of Rs, 30 crore to the General Reserves. An amount of Rs, 4,796.65 crore is proposed to be retained in the Consolidated Statement of Profit and Loss.
5. SHARE CAPITAL
The Company''s paid-up Equity Share Capital as on December 31, 2016 was Rs, 187.79 crore as compared to Rs, 187.75 crore in the previous year.
Pursuant to the Orders passed by The Special Court - Trial of Offences Relating to Transactions in Securities (TORTS), during the year the Company was required to allot 41,907 Equity Shares of Rs, 10 face value into the âCustodian Account - Jyoti Harshad Mehtaâ out of the shares which were kept in abeyance of âRight Issue - 1999â, as then directed by the Special Court (TORTS).
The Company has neither issued shares with differential rights as to dividend, voting or otherwise nor issued shares (including sweat equity shares) to the employees or Directors of the Company, under any Scheme. As on December 31, 2016, none of the Directors of the Company hold shares in the Company except Mr Shailesh Haribhakti who holds 3,100 Equity Shares of the Company.
No disclosure is required under Section 67(3)(c) of the Act, in respect of voting rights not exercised directly by the employees of the Company as the provisions of the said Section are not applicable.
The Company has not issued any convertible instrument during the year.
6. FINANCIAL LIQUIDITY
Cash and cash equivalent as at December 31, 2016 was Rs, 1,944 crore (Previous year Rs, 1,389 crore).
The Company''s working capital management is based on a well-organized process of continuous monitoring and controls on Receivables, inventories and other parameters.
7. CREDIT RATING
The Company enjoys a good reputation for its sound financial management and the ability to meet its financial obligations. CRISIL, a reputed Rating Agency, has reaffirmed the highest credit rating of CRISIL AAA/ STABLE for the long term and CRISIL A1 for the short term financial instruments of the Company.
8. DEPOSITS
The Company''s Fixed Deposit Scheme was discontinued in the year 2001-02. The total amount of fixed deposits matured and remaining unclaimed as on December 31, 2016 is Rs, 0.02 crore. The Company has not accepted deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013 and the Rules framed there under .
9. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
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.
10. ECONOMIC SCENARIO AND OUTLOOK
Indian economy followed a path of recovery registering growth in the first three quarters of the year 2016. The prospect for economic growth became buoyant with the agrarian and rural economy benefiting from a good monsoon after two successive rain-deficient years. The growth was affected in the last two months of the year by the impact of the demonetization scheme. The calendar year is expected to end with GDP growth estimated at around 7.0%.
2016 closed as a momentous year for the country marked by two landmark economic reforms even as the global economic scenario was indifferent. The first is the Goods and Services Tax (GST), a single tax intended to replace the existing Central and State indirect taxes, which is expected to come into force in 2017.
The second reform was the rollout of the demonetization scheme in early November. In the long run, this reform aims to usher in greater transparency in financial transactions and a transition towards a cashless economy; in the short term, it has squeezed liquidity and consumption across the economy, notably in the construction sector.
The wholesale and consumer price inflation rates rose to ~ 1.8 % and ~5.1% in 2016 from last year''s (2.8) % and 4.9% following a rise in global fuel and commodity prices, near flat domestic demand conditions and an increase in food inflation.
In 2016, manufacturing growth was ~8.5%, at par with 2015, while growth in agriculture, mining and construction was lower at 2.4%, 2.5% and 3.1% respectively. The Cement sector which grew at over 6% in the first three quarters tapered off in the last quarter due to the effect of demonetization to end the year with growth of ~5% in 2016.
The outlook for 2017 brightens as liquidity in the economy moves towards normalization, with expectations for early revival and growth in overall consumption across several sectors including construction and building materials.
The Union Budget for 2017-2018 was welcomed for its thrust on the rural sector, infrastructure development, housing and a boost to the overall investment climate. If 2017 also experiences a normal monsoon, GDP growth is likely to rebound in the second half of the year. Better liquidity and improved tax collections will enhance government''s ability to spend on infrastructure and other development projects, leading to faster growth.
11. CEMENT INDUSTRY - OUTLOOK AND OPPORTUNITIES
With available capacity of approximately more than 375 million tonnes per annum in the Indian Cement Industry, overall domestic consumption during 2016 is estimated at ~283 million tonnes. Cement demand is estimated to have grown at the rate of ~5% in 2016, as compared to ~1.5% in 2015. Effective capacity utilization in the industry remained low at ~75%; while cement plants in the northern, central and eastern regions of the country were able to produce at levels above 85% of capacity, excess capacity in the south dragged down the industry''s average capacity utilization.
In 2017 we foresee that the cement industry will continue to be dogged by the challenge of excess capacity leading to intense competition. Overall demand for cement is likely to grow at ~5% in 2017. If government is successful in increasing its investment expenditure on large infrastructure and other development projects as announced in the Union Budget 2017-2018, it will further energize construction activity. Any cut in interest rates on housing loans is likely to boost investment in the housing sector. Together these developments can give a much-needed fillip to demand for cement and concrete in the coming year.
The critical challenges before your Company in 2017 would include the following:
- To pursue a judicious value-cum-volume strategy so as to maximize utilization of existing capacity including the additional capacity from the newly expanded Jamul plant.
- To continue to step up the sale of value creating Premium products
- To further streamline channel management and strengthen marketing activities in a manner that leverages the Company''s brand equity
- To continue promotion and facilitation of cashless transactions in the retail network with a view to ensure uninterrupted retail off takes.
- To develop the means to foresee changes in the value chain and the agility needed to keep strict control on the costs of fuel and raw materials amid volatile global prices
The above initiatives together with your Company''s continued focus on cost efficiency and other customer excellence initiatives should help in presenting an improved performance.
12. CEMENT BUSINESS - PERFORMANCE
2016 |
2015 |
Change % |
|
Production - |
|||
million tonnes |
23.18 |
23.84 |
(2.8) |
Sales Volume - |
|||
million tonnes |
22.99 |
23.62 |
(2.7) |
2016 |
2015 |
Change % |
|
Net Sale Value (Rs, crore) |
10,068.26 |
10,652.60 |
(5.5) |
Operating EBITDA (Rs, crore) |
1,342.23 |
1,482.88 |
(9.5) |
Operating EBITDA Margin (%) |
13.33 |
13.92 |
12.1 Sales Volume & Pricing
Domestic sales in 2016 decreased by 2.7% to 22.99 million tonnes from 23.62 million tonnes achieved in 2015.
Individual House Builders (IHB) remain the largest customer segment in terms of volume and profitability. In addition, the Company gainfully utilizes its core strengths as a pioneer in cement and concrete technology to demonstrate its techno-promotion capabilities in the nation-building sectors of growing importance in infrastructure, commercial and institutional projects such as smart cities, urban rejuvenation, roads, highways, ports, airports, power plants, dams and irrigation schemes.
The cement market continued to witness vigorous price competition. Average selling prices of cement reduced by ~3 % in 2016 over 2015.
12.2 Costs - Cement Business
During the year 2016, the Company maintained a close focus on effective cost management through various initiatives.
a) Cost of materials consumed
A combination of cost efficiency measures and lower input costs helped bring down the cost of materials consumed by 14.2% in 2016 as compared to 2015. The cost of materials consumed as a share of total income from operations came down from 12.3% in 2015 to 11.3% in 2016.
The cost of gypsum reduced by 10.8% as a result of changes made in the mix optimization as well as due to the lower landed cost of imported gypsum.
Continuous efforts were made to reduce the clinker factor by producing a higher share of blended cements using flyash and slag. Procurement costs of flyash and slag were re-negotiated and brought down. This coupled with changes in source and mix optimization enabled a reduction of 5.9% in the cost of flyash. In respect of slag, a reduction of 14.3% was achieved as compared to the previous year.
b) Power & Fuel
Power & Fuel efficiencies enabled a cost reduction of 10% in 2016 as compared to 2015. The Power & Fuel spend in 2016 was Rs, 2,142.55 crore as compared to Rs, 2,377.85 crore spent in 2015.
To take advantage of softening global prices of petcoke, vigorous efforts were made to implement the ongoing plans already in place since the previous year to achieve a higher share of petcoke in the overall fuel mix and thus moderate the Company''s dependence on domestic and imported coal. This enabled the consumption of pet coke to leap from a level of 18% in 2015 to as much as 62% in 2016.
The cost of generation at our Captive Power Plants (CPP) was brought down by 2.4 % to '' 4.56 per KWh in 2016 against'' 4.67 per KWh in 2015 mainly due to better efficiencies.
The average cost of purchased power during the year was '' 6.3 per KWh as compared to '' 6.5 per KWh in the preceding year.
c) Freight & Forwarding expenses
Despite an increase in rail tariffs, Freight and Forwarding expenses during the year were Rs, 2,560.02 crore as compared to Rs, 2,640.76 crore in 2015, registering a decrease of 3.1%.
This was partly on a account of lower dispatches but also on account of the Management''s proactive intervention such as changes in the rail-road mix, increase in direct ex-factory dispatches, greater penetration and expansion into home markets and markets with shorter leads as well as through renegotiation of road transport and C&F rates.
d) Employee costs
Employee costs during the year increased by 3.3% on a like-for-like basis. Overall employee costs as a share of total income from operations increased from 6.5% in 2015 to 7.0% in 2016. Various initiatives taken under India Manufacturing Transformation programme are expected to continue to reflect improvement in employee costs.
e) Packing materials
Packing material cost reduced by Rs, 51 crore on account of renegotiation of commercial terms with suppliers, a fall in the prices of Poly Propylene granules and other initiatives like standardization of bags across plants.
13. READY MIXED CONCRETE (RMX)
2016 |
2015 |
Change % |
|
RMX Production -Lakh Cubic Metres |
24.43 |
22.15 |
10.3 |
RMX Sales volume -Lakh Cubic Metres |
25.90 |
23.44 |
10.5 |
Net Sale value -(Rs, crore) |
1,054.62 |
967.50 |
9.0 |
Operating EBITDA -(Rs, crore) |
74.77 |
54.29 |
37.7 |
Operating EBITDA Margin (%) |
7.09 |
5.61 |
The Company''s Ready Mixed Concrete business performed well during the year maintaining its spotlight on infrastructure, commercial and realty segments and a sharp focus on promoting value-added special products that are more customer service-oriented. This enabled it to follow a consistent course of growth with an increase of 10.5 % in sales by volume and 9.0 % in sales by value. Operating EBITDA of RMX business rose by 37.7% from Rs, 54.29 crore in 2015 to Rs, 74.77 crore during the year.
RMX business expanded its footprint adding plants in the new markets of Luck now, Nagpur and Raipur and a dedicated plant at a power project site in Aligarh. Four plants were phased out. At year-end the nationwide network comprised 50 state-of-the-art concrete plants catering mainly to major metro cities, state capitals and Tier II cities.
Your Company has shaped its RMX business to perform as a solution provider with a special thrust on serving different customer segments ranging from prestigious metro rail projects, roads and highways, irrigation schemes, power plants, high-rise buildings and townships each with their own varied requirement of concrete applications.
With its experience and expertise the Company expects to be well-positioned to serve major construction projects materializing out of Government''s plans for Infrastructure development, Smart cities, urban rejuvenation projects and the growing trends in commercial and realty segments.
14. NEW JAMUL INTEGRATED PROJECT
The integrated Jamul Project was commissioned during the year; It comprises a new clinkering line of capacity 2.79 million tonnes per annum at Jamul and cement grinding units of capacity 1.10 million tonnes at Jamul and 1.35 million tonnes at Sindri. With this, the Company''s total cement capacity has now risen to 33.41 million tonnes per annum.
The new Jamul Plant has state-of-the-art features to enable high performance levels in environment management and pollution control systems, safety and quality excellence.
With excellent connectivity by rail and road, the new integrated plant will complement the Company''s existing network in Eastern India, strengthening its presence in important markets with the supply of environment-friendly blended cements.
15. SUSTAINABLE DEVELOPMENT
During the year, your Company was felicitated with the prestigious CII-ITC Sustainability Award 2016 for âOutstanding Accomplishmentâ in recognition of its continued effort and commitment to the cause of Sustainable Development. This award, among the country''s most coveted in the field of corporate sustainability development, has been received by ACC three times in the last four years which is an external endorsement of the sustainable manner in which your Company conducts its business. Over the years, the Company''s business model has incorporated practices and systems geared towards good governance, customer excellence, environment conservation, human resource management, community development and value creation for all stakeholders.
The Sustainable Development Report for 2015 conforming to Global Reporting Initiative GRI-G4 principles in accordance with âComprehensive Optionâ was released during the year. The Report is available on the company''s website at www.acclimited.com.
During the year, the Company participated for the first time in the Dow Jones Sustainability Indices (DJSI) under âEmerging marketsâ category.
Your Company is aligning its Sustainable Development agenda to the Groups Sustainability Strategy which is supportive of the UN âSustainable Development Goalsâ. The Plan incorporates measurable targets related to the following significant areas:
- Climate - Reduction of Net specific CO2 emissions
- Circular Economy - Enhanced utilization of waste-derived resources
- Water & Nature - Reduction of specific freshwater withdrawal in cement operations
& enhancing the biodiversity in all operating mines Implementation of Water Access, Sanitation and Health (WASH) pledge
- People & Communities - Improving, performance, gender diversity Low cost shelter & sanitation solutions
15.1 Climate
CO2 Emissions
Your Company is a prominent member of the India chapter of the Cement Sustainability Initiative (CSI) set up under the auspices of the World Business Council for Sustainable Development (WBCSD), a global partnership effort. All CSI member companies have voluntarily charted for themselves the âLow Carbon Technology Roadmap for the Indian Cement Industryâ with time bound targets leading to the year 2050. This incorporates a commitment to reduce CO2 emissions.
The Company''s carbon footprint continues to be among the industry''s best-in-class though specific CO2 emissions during the year 2016 was 545 kg per tonne of cement as against 533 kg CO2/tonne of cement in 2015, representing an increase of ~2%. This was mainly due to prevailing market conditions, increased demand for OPC and lower capacity utilization.
Your Company is among the leading Indian business houses that have participated in the Carbon Disclosure Project (CDP), a global not-for-profit organization and continued to be ranked high in terms of its disclosure forming part of the Carbon Disclosure Project index.
15.2 Clinker Factor
Reducing the clinker factor in cement is an important pillar of the Low Carbon Technology Roadmap for the Indian Cement Industry. Your Company strives to achieve this through the promotion of blended cements using slag and flyash. Increasing demand for Ordinary Portland Cement (OPC) during the year 2016 has resulted in decrease in share of Blended Cements in the total product portfolio to 83.5%.
When fully stabilized, the newly commissioned Jamul Integrated project with its grinding units in Jamul and Sindri, geared to offer superior varieties of Portland Slag Cement, will augment the Company''s overall blended cements portfolio which will in turn serve to reduce the overall clinker factor and thus help in cutting Specific CO2 emissions in the coming years.
15.3 Alternative Fuels and Raw Materials (AFR):
Your Company is leading the initiative to provide waste management solutions to waste generating industries and organizations in the country through co-processing of wastes in cement kilns.
The co-processing infrastructure was strengthened following the establishment of two pre-processing facilities at Wadi in Karnataka and Kymore in Madhya Pradesh in 2014. As these facilities stabilize and pick up momentum, they serve to increase the Company''s capacity to handle larger volumes of waste with greater ease and safety, while ensuring zero harm to the environment, communities and ensuring product quality. A third preprocessing facility at Madukkarai, Tamil Nadu is under execution.
Your Company is redoubling its efforts to expand its capacity to manage higher waste volumes in the near future thereby increasing thermal substitution rates and securing alternative fuels & resources for use in cement manufacturing process to replace naturally mined materials.
With the conviction that co-processing ensures a safe and environmentally sustainable solution for the disposal of hazardous and non-hazardous wastes, the Company has been making consistent efforts through advocacy and stakeholder awareness programmes to ensure that this technology gains more legal traction in the country. These efforts have borne fruit; a legislation brought into force in 2016, recognizes co-processing as a preferred technology for waste management for all types of waste generated in the country.
15.4 Green Energy
Your Company''s renewable energy portfolio consists of 19 MW in the form of wind farms across three States viz. Tamil Nadu, Rajasthan and Maharashtra. During the year 2016, 36.51 million units of renewable energy came from these captive sources.
Additional green power of 1.67 million units was procured through Power Purchase Agreement.
In all, the total Green Energy used was 38.18 million units, representing an increase of 9% as compared to the previous year.
15.5 Power generation through Waste Heat recovery system
The Waste Heat recovery system at Gagal Cement Works generated 49.45 million kWh of electrical energy during the year. This resulted in financial savings of about Rs, 21 crores.
15.6 Controlling Emissions
The Indian cement industry is facing increasing stringency from regional, state and central authorities with regard to regulations and standards formulated by them for permissible levels of various types of emissions including SOx, NOx and particulate airborne emissions.
Your Company endeavors to keep its performance in this respect at levels far better than the regulatory requirement so as to maintain good ambient air quality in its environs. Accordingly various measures were implemented across all operations of the Company to control stack emissions by up gradation/modification/installation of new air pollution control equipments to ensure compliance with new environment regulations and fugitive emissions by installing dust extraction and dust suppression systems.
During the year 2016, your Company had commissioned Hybrid Electrostatic Precipitators (ESP) at Jamul and upgraded Coal Mill Bag House and Cooler ESP at Gagal. Implementation of primary measures for NOx reduction is underway at various plants. Orders for Selective Non Catalytic Reduction (SNCR) were placed for NOx emissions reduction at Kymore and Gagal. Online reporting of emissions and effluents are being uploaded on Central Pollution Control Board (CPCB) website and respective State Pollution Control Boards wherever available.
15.7 Circular Economy
During the year, your Company utilized 3.90 million tonnes of flyash, 2.67 million tonnes of slag, 1.10 million tonnes of crushed rock fines, 0.32 million tonnes of alternative materials, thus providing sustainable environmental friendly services to the nation.
15.8 Water & Nature:
a) Water:
With an objective to continuously improve water performance and to achieve a water positive status, efforts were focused on the following:
(i) Reduction of fresh water intake by lowering water demand in process and non-process areas
(ii) Process optimization and up gradation to water efficient technologies wherever feasible
(iii) Installation of Sewage treatment plants (STP), Effluent Treatment Plants (ETP), Zero Liquid Discharge (ZLD) systems for effective reutilization of waste water. During the year 2016, the Company ordered ZLDs for Wadi and Chanda Cement Works, STPs for Lakheri and Damodhar Cement Works
(iv) Conservation of water by rain water harvesting in plants, mines, colonies, community areas and sustained water harvesting measures
b) Biodiversity
Your Company is committed to the conservation of biodiversity and mine rehabilitation. Efforts on biodiversity conservation are focused on following areas:
(i) To study and assess biodiversity around the limestone mines operated by the Company. During the year biodiversity assessment studies were conducted by an independent third party at Jamul and Chanda Cement Works. With this the Company has completed the biodiversity assessment at all its mining sites
(ii) A biodiversity action plan developed for Gagal Cement Works
(iii) On-ground implementation of activities which conserves biodiversity.
15.9 Green Building Centreâs
As part of the ongoing programme to promote green, cost-effective and affordable construction in semi-urban and rural India through Green Building Centreâs, your Company supports local micro-entrepreneurs and small businesses to make and distribute affordable cement-based home building components and pre-fabricated materials such as concrete blocks, sanitation and toilet units, tiles, pavers, roofing, walling, and frames in pursuit of promoting the cause of sustainable construction.
16. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
ACC was chosen from among several leading companies to receive the first ever âICSI CSR Excellence Awards 2016â instituted by The Institute of Company Secretaries of India to recognize the good practices undertaken by Corporate under the CSR umbrella.
Your Company continued the social development schemes initiated in previous years along with some new interventions to address the developmental needs of host communities around the Company''s operations. These projects covered the broad thematic areas of Livelihood, Education, Health & Sanitation that are compliant with Companies Act 2013.
Total CSR expenditure incurred during the year was Rs, 22.27 crore which is higher than the statutory requirement of 2% of the average profit of the last three years.
The Company''s community development projects reached out to benefit more than 4.23 lakh people residing in 202 villages across the country.
Education initiatives in the vicinity of plants addressed needs of 36,709 students during the year. Scholarships were awarded to 465 meritorious students belonging to weaker sections of society. Modern methods of learning such as smart classes and interactive kiosks benefited students of 70 rural schools. Efforts were made to provide education to 1,495 girl children as part of the âACC ki Laadliâ project. Support continued to be extended to seven government-run Industrial Training Institutes under the Public Private Partnership Scheme with Ministry of Labour and Employment, Government of India.
About 4,234 unemployed youth received skill development training under the Company''s DISHA programme; as on the date of this report, over 60% of them had received job placements in various manufacturing and service sector enterprises. Support was provided for the establishment of 129 new Self Help Groups (SHGs) while existing 1,233 SHGs were trained in institutional strengthening; many of them were assisted in setting up a federation and obtaining registration for it.
Health and nutrition initiatives benefited 28,566 people. 9,731 children received access to better health and nutrition through the support provided to 201 anganwadi centres. Valuable assistance was provided to nearly 5,400 persons through counseling, testing and treatment for HIV/AIDS.
Four villages were declared Open Defecation Free (ODF) during the year, in the corporate campaign to promote access to water, sanitation and improved hygiene practices. The programme, which supports Government''s Swachh Bharat Abhiyan, includes the creation, repair and maintenance of toilet and wash facilities in local communities.
Your Company''s CSR Footprint has been audited by a third party Social Audit team comprising renowned experts from development sector, led by Head of DOC Research Institute, an independent international think-tank organization.
The Corporate CSR Policy has been re-stated making it more comprehensive and in addition to alignment with the requirements of the Companies Act, 2013 and Global Goals it has also been aligned with the LH Group''s CSR Policy. The CSR Policy Statement and Report on the activities undertaken during the year is annexed to the Board''s Report in Annexure ''A''
17. HEALTH & SAFETY (H&S)
17.1 H&S Improvement Plan
The key focus area during the year was implementation of the Health & Safety Improvement Plan (HSIP). This was prepared based on the feedback and involvement of the Company''s senior management. The plan contained seven Health & Safety (H&S) objectives, clearly indicating the ownership of each objective assigned to a senior executive. Salient aspects of the HSIP comprised H&S Leadership & Accountability, People''s H&S Capability, H&S management systems, Road Safety and Electrical Safety.
The launch of Visible Personal Commitment (VPC) - a systematic tool for senior executives and management staff to interact with shop floor people on safety matters and take feedback - has helped demonstrate enhanced safety leadership capabilities and Management''s commitment. This initiative is expected to be critical in the Endeavour to reach the goal of Zero Harm.
H&S audits were conducted during the year. Electrical Safety audits were conducted at all cement manufacturing units by external experts with an objective to carry out a systematic, critical appraisal of all potential electrical hazards involving personnel, premises, services and operation method and to review compliance of electrical (installation & maintenance) with reference to the statutory regulations, international standards and Industry best practices.
A drive to use Personal Protective Equipment (PPE) was strengthened with the initiation of a reward and consequence management approach.
A number of specialized training programs were organized targeting different work groups to enhance their H&S capability. These included topics like NEBOSH International General Certificate, Risk Assessment, H&S auditing, Incident Investigations and behavior based training on âDeveloping Safety Commitmentâ.
Employees and workmen of contractors at all locations participated enthusiastically in the Group''s Global H&S days campaign âI care, I share, I actâ which included competitions for poster drawing and slogan writing. During the campaign, the Company''s leadership team also connected with all employees over a webcast to re-emphasize the importance of H&S in the organization.
17.2 Health Initiatives
Your Company pursued its well-structured approach to reduce health risk factors among employees and their families. Numerous steps were taken to enhance medical facilities at plants and engage with employees and their families to create awareness and build capabilities.
Infrastructure and facilities were upgraded at the hospitals of four plants. Emergency Medical Response (EMR) capabilities have been optimized at all cement manufacturing units through steps such as outsourcing ambulance services which ensures round-the-clock availability of trained EMR technicians. Other arrangements are also being tied up to secure excellent pre-hospital care in the event of any medical emergency, trauma or any other health care issue concerning employees such as the use of air ambulances.
Significant steps were initiated to induct digitization in the field of employee health. An on-line health management system is being developed which will standardize health processes across all units. It will facilitate the management and retrieval of health data of all employees during their life cycle; this is scheduled to Go live in March 2017.
Other effective measures included the regular use of the Company intranet to disseminate health awareness, conducting health sensitization programmes, personalized health care, identifying health peers from among Shopfloor Associates (SFA) to spread health awareness among employees and their families. Training in office ergonomics was imparted to 500 line managers. 200 teachers from all township schools were trained as part of the âH&S promoting schools initiativeâ to proliferate and spread awareness among more than 10,000 students.
17.3 Logistics Safety
Logistics is among the most challenging areas in safety, a large part of which relates to offsite situations and environments that cannot be easily influenced. The Company has developed a logistics safety roadmap for 2020, which encompasses an analysis of past incidents, current initiatives and wide-ranging activity-based risk assessments spanning various stages of the shipping cycle from the point a vehicle approaches a plant to its end destination.
The plan also prioritizes focus areas based on likelihood, consequence, controllability.
Driver Management Centreâs were implemented at nine cement plants to educate drivers on various H&S matters and inculcate the right behaviors seen in the context of the three pillars of Driver, Vehicle and Journey Management. Efforts were continued to create greater alertness and awareness among drivers and employees using simulator training, seat belt convincer training and defensive driver training techniques.
External audits were conducted at all cement plants to check the efficacy of logistics safety management.
18. HUMAN RESOURCES
During the year, the Company took many initiatives to increase organizational capability and productivity so as to be value driven and future-ready.
18.1 Productivity improvement
In 2015, the Company implemented its âIndia Manufacturing Transformationâ initiative to introduce a more responsive, efficient and lean organization design in all cement plants; it incorporated a new way of working with streamlined work practices, enhanced people skills and capabilities and centreâs of excellence (CoEs) for continuous improvement through exchange of best practices. This was initiated after careful benchmarking of best in class practices of LafargeHolcim plants across the globe. This Organizational reform continued to show its benefits with improvement in productivity by 30%. This is a continuous process through which your Company proposes to transform itself into becoming one of the most productive companies in the country.
18.2 Strengthening core values and performance
Your Company is respected for its strong values and ethics which are embedded in its corporate culture. During the year, the Company adopted a new set of core values aligned with those introduced by the LafargeHolcim group worldwide. The new code is abbreviated simply as CRISP, an acronym that enjoins emphasis on five distinct values viz. Customer, Results, Integrity, Sustainability and People which now form the basic dimensions of the high performance culture the Company wants its employees to demonstrate in all their actions. These values were cascaded in the Organization through various workshops and activities at all locations for the benefit of all employees and contract labour. The values are recommended to be demonstrated with Agility, Collaboration and Empowerment (ACE) -also a new internal motto adopted for desirable behaviors.
Along with the new set of values, a new Performance Management System has also been put in place.
18.3 Talent Development
Several initiatives were taken to identify, develop and nurture talent at all levels within the Organization through various training programmes and exposure to make them future ready for various positions in the Organization.
A leadership convention was conducted to transform the leadership team in the Manufacturing function. Similarly for the Sales & Marketing function an assessment was undertaken for the front line sales team with a view to benchmark individuals against a global high performer for that role. This behavior and skill assessment was completed for 1,036 sales profiles. The assessment helped in understanding key motivators that drive performance and retention, enabling the preparation of individual development plans for the sales team.
These interventions have enabled the Company to create succession plans for leadership positions so that the Company''s talent pipeline is kept ready to meet future requirements and contingencies.
Talent development efforts are also made in respect of Shop floor Associates with interventions to help build up-skilling and multitasking capabilities.
18.4 Prevention of Sexual Harassment of Women at the Workplace
The Company is an equal opportunity provider and consciously strives to build a work culture that promotes the dignity of all employees. As required under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules framed there under , the Company has implemented a policy on prevention, prohibition and redressal of sexual harassment at the workplace. All women -permanent, temporary or contractual, including service providers - are covered under the policy. This has been widely communicated internally and is uploaded on the Company''s intranet portal. An internal Committee comprising four management staff is in place which includes three women to redress complaints relating to sexual harassment. Besides in each of the units there is one nodal person to receive and forward complaints to the âFirst Instance Person (FIP) who is a womanâ or directly to the Committee.
During the year the Company received one complaint which was investigated and closed within 90 days.
Awareness programmes were conducted across the Company to sensitize employees to uphold the dignity of their colleagues at the workplace, particularly with respect to prevention of sexual harassment. A few employees also attended training programmes conducted by an external agency.
18.5 Industrial Relations
The Company continued to enjoy peaceful industrial relations during the year. Your Company is known for its best in class workplace practices that has ensured 81 years of industrial harmony, considered to be one of the best in the country. The Company is proud of its work culture which emphasizes safety, high productivity, good health, quality of life and overall wellbeing of employees.
During the year, an amicable settlement was reached with Pragatisheel Cement Shramik Sangathan (PCSS), a trade union representing a section of contract workers in the old Jamul Plant. The settlement paved the way to resolve their long pending issue in a cordial and mutually beneficial manner.
19. INNOVATION
Your Company''s unique track record of innovative research and development has led to its recognition as a pioneer and trendsetter with several breakthroughs in cement and concrete applications over the years. More recently the Company has added many new products that have widened its portfolio of value-added varieties of cement and concrete for special and customized applications. The spirit of innovativeness has helped the Company achieve cost efficiencies in the areas of energy, raw materials sourcing, logistics, customer excellence and manpower optimization leading to productivity improvement.
20. BUSINESS RISKS & OPPORTUNITIES
The Company has a robust Business Risk Management (BRM) process which systematically identifies risks and opportunities and supports the Executive Committee in strategic decision-making. This is a rolling process reviewed periodically at regional and corporate level. It involves mapping of all the risk elements on two parameters viz. likelihood of the event and the impact it is expected to have on the Company''s operations and performance. The risks that fall under high likelihood and high impact are identified as key risks for which detailed mitigation plans are developed and integrated with the Mid-Term Planning Cycle and the Audit plan.
Key business risks and their mitigation plans are as described herein below:
Fuel Risk: The manufacture of cement isan energy intensive process requiring large quantities of thermal and electrical energy. Coal and pet coke are the principal fuels used by the Indian cement industry to produce thermal energy. The Company requires more than 5 million tonnes of coal and pet coke to meet the requirements of its kilns and captive power plants. Linkage coal has continued to be in short supply, leaving the Company to source its requirements at higher prices from the domestic open market and from imports. In recent years, pet coke emerged as a viable substitute for coal on account of attractive prices and supply. There is a likelihood that the prices of both coal and pet coke would increase significantly. To mitigate this risk the Company has already initiated steps to progressively increase the usage of Alternative Fuels, improving fuel mix at certain plants, entering into firm contracts for part volume and balance on spot to capture opportunities, spread out purchases throughout the year and explore long term off take from local refineries.
Fair Competition Directive: The Competition law in India is still evolving and an intensely competitive industry like cement is vulnerable to various interpretations of its provisions which expose it to significant risks that may include administrative, civil or criminal proceedings, financial consequences such as fines and penalties or loss of reputation.
The Company has in place a Fair Competition Directive which entails compulsory adherence by identified employees. Regular training is imparted to all relevant employees through e-learning modules and face-to-face sessions.
Market Actions: The Indian Cement Industry is becoming intensely competitive, with the foray of new entrants and existing players expanding inorganically. This could potentially impact the sales volumes, market share and profitability.
To mitigate this risk, the Company is leveraging its newly created capacity at Jamul and Sindri to increase its market share, enhance its brand equity and visibility, enlarge its product portfolio and service offerings. The Company is also exploring asset light options such as tolling and de-bottlenecking at some of its existing plants to increase volume and market share.
Limestone: As limestone is the primary raw material required in the manufacture of cement, the security of its uninterrupted long-term availability is critical, particularly in view of changing regulations. Under the new Mines and Minerals (Development & Regulation) Amendment Act 2015 (MMDR), leases granted before the commencement of the Act, for captive use are extended up to a period ending on March 31, 2030, or till the completion of their renewal period, whichever is later. Most of the Company''s limestone leases thereby get an extension up to March 31, 2030 by virtue of this Act. For new leases, the period of lease will be fifty years from the date of grant.
With the new Act, the earlier policy of deemed renewal has been discontinued and all the mining leases will henceforth be allotted through an auction, which has made it difficult to retain existing leases /acquire new leases. Forest & Wild Life clearances are now a pre-requisite and land acquisition is becoming more challenging and expensive.
To address this risk, the Company plans to secure new mining leases for its existing plants as well as for new expansions at different locations. Further the Company continues to increase consumption of pet coke and additives which enables it to use low grade limestone and thereby conserve minerals and increase the life of the mine.
21. INTERNAL CONTROL SYSTEMS
21.1 Internal Audit and their adequacy
The Internal Audit (IA) function reports to the Audit Committee of the Board, which helps the function to maintain its objectivity and independence. The scope and authority of the IA function is defined in the Internal Audit Charter. The IA Department evaluates the efficacy and adequacy of internal control system, its compliance with operating systems and policies of the Company and accounting procedures at all locations of the Company. Based on the report of internal audit function, process owners 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.
21.2 Internal Controls Over Financial Reporting (ICFR)
The Company has in place adequate internal financial controls commensurate with the size, scale and complexity of its operations. During the year such controls were tested and no reportable material weakness in the design or operations were observed. The Company has policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to 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 information.
22. INDIAN ACCOUNTING STANDARDS (IND AS) - IFRS CONVERGED STANDARDS
Pursuant to the notification, issued by The Ministry of Corporate Affairs dated February 16, 2015 relating to the Companies (Indian Accounting Standard) Rules, 2015, the Company and its subsidiaries and joint venture company will adopt âIND ASâ with effect from January 01, 2017, with the comparatives for the periods ending December 31, 2016.
The implementation of IND AS is a major change process for which the Company had established a project team and had dedicated considerable resources. The impact of the change on adoption of IND AS has been assessed and the Company is ready to adopt IND AS .
23. VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has a vigil mechanism named âEthical View Reporting Policyâ (EVRP) to report concerns about unethical behavior, actual/ suspected frauds and violation of Company''s Code of Conduct and/or Ethics Policy. Protected disclosures can be made by a whistle blower through several channels. The Audit Committee of the Board oversees the functioning of the Ethical View Reporting Policy. The Company has disclosed the details of the Ethical View Reporting Policy on its website http://www.acclimited. com/assets/new/pdf/ethicalViewPolicy.pdf
During the year, the Company reached out extensively to employees to conduct greater awareness on Fair Competition Directive and on Anti Bribery and Corruption Directive (ABCD) through e-learning modules and face-to-face training sessions, achieving a high level of engagement and compliance. This reflected your Company''s strong commitment to âZero toleranceâ for non-compliance in this regard and to do business with integrity.
24. SUBSIDIARY, ASSOCIATE AND JOINT VENTURE COMPANIES
24.1 SUBSIDIARIES
Bulk Cement Corporation (India) Limited (BCCI)
During the year under review, BCCI handled cement volumes of 10.13 lakh tonnes as against
10.02 lakh tonnes in 2015. The Profit before tax and exceptional items for the year 2016 was Rs, 3.89 crore as against Rs, 3.04 crore in the year 2015.
ACC Mineral Resources Limited (AMRL)
This Company had entered into a Joint Venture with Madhya Pradesh State Mining Corporation Limited (MPSMC) for the development of four coal blocks allotted to MPSMC by the Government of India. Pursuant to Orders of the Supreme Court passed in August 2014 and September 2014, the allocations of four coal blocks to MPSMC were cancelled by the Government of India along with all other coal blocks. AMRL did not have any operating income during the period under review.
OTHER SUBSIDIARIES
The Company has three other Subsidiary Companies, viz. Lucky Minmat Limited, National Limestone Company Private Limited and Singhania Minerals Private Limited. These are limestone deposit companies.
24.2 MATERIAL SUBSIDIARIES
None of the subsidiaries mentioned in para 24.1 above is a material subsidiary whose income or net worth in the immediately preceding accounting year exceeds twenty percent of the consolidated income or net worth respectively of the Company and its subsidiaries.
The Board of Directors of the Company has approved a Policy for determining material subsidiary in line with the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. The Policy has been uploaded on the Company''s website at http://www.acclimited.com/assets/ new/pdf/CG/Determiningmaterialsubsidiaries.pdf
24.3 JOINT VENTURE /ASSOCIATE COMPANIES
One India BSC Private Limited is a Joint Venture Company with equal participation with Ambuja Cements Limited to provide back office services to the two Companies with respect to routine transactional process.
As on December 31, 2016, the following is a list of Associate Companies:
- Alcon Cement Company Private Limited
- Aakaash Manufacturing Company Private Limited
- Asian Concretes and Cements Private Limited
25. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company for the year 2016 are prepared in compliance with the applicable provisions of the Companies Act, 2013, and as stipulated under
Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The audited consolidated financial statements together with the Auditors'' Report thereon form part of the Annual Report.
Pursuant to Section 129(3) of the Companies Act, 2013, a Statement containing salient features of the financial statements of each of the Subsidiaries, Associates and Joint Venture Companies in the prescribed Form AOC-1 is attached.
Pursuant to the provisions of Section 136 of the Companies Act, 2013, the Financial Statements of the subsidiary and joint venture companies are kept for inspection by the Members at the Registered Office of the Company. The Company shall provide free of cost, a copy of the financial statements of its subsidiary companies to the Members upon their request. The statements are also available on the website of the Company at www.acclimited.com under the Investors section. The consolidated net profit of the Company and its subsidiaries amounted to Rs, 604.38 crore for the Company''s financial year ended December 31, 2016 as compared to Rs, 587.60 crores for the previous year.
26. AMALGAMATION OF HOLCIM INDIA PRIVATE LIMITED WITH AMBUJA CEMENTS LIMITED
Through a Scheme of Amalgamation between Holcim (India) Private Limited and Ambuja Cements Limited, your Company has become a subsidiary of Ambuja Cements Limited with effect from August 12, 2016 while the ultimate Holding Company remains unchanged viz. LafargeHolcim Ltd.
27. CHANGES IN PROMOTER HOLDING
During the year, Holderind Investments Limited one of the Promoters of the Company has purchased through the Stock Exchange 78,70,000 Equity Shares of the Company constituting 4.19% of the Equity Share Capital. The total Promoter shareholding of the Company hence stands increased to 54.53% from 50.34%.
28. DIRECTORS & KEY MANAGERIAL PERSONNEL
28.1 Change in Directorate
The Board of Directors has accepted the resignation of Mr Harish Badami, Chief Executive Officer & Managing Director of the Company with effect from February 4, 2017.
The Board of Directors has placed on record its warm appreciation of the rich contribution made by Mr Harish Badami and the leadership provided by him during his tenure as CEO&MD of the Company.
The Board of Directors has appointed Mr Neeraj Akhoury as an Additional Director on the Board of the Company with effect from December 16, 2016 and has nominated him as MD&CEO (Designate).
Mr Neeraj Akhoury takes charge as Managing Director & CEO with effect from February 4, 2017 upon Mr Harish Badami demitting his office.
28.2 Directors coming up for retirement by rotation
In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr N S Sekhsaria and Mr Martin Kriegner retire by rotation and being eligible offer their candidature for reappointment as Directors.
28.3 Independent Directors
The Independent Directors hold office for a fixed period of five years from the date of their appointment at the Extraordinary General Meeting held on September 10, 2014 and are not liable to retire by rotation.
In accordance with Section 149(7) of the Companies Act 2013, each Independent Director has given a written declaration to the Company confirming that he/she meets the criteria of independence as mentioned under Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
28.4 Board Effectiveness
a. Familiarization Program for the Independent Directors
In compliance with the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has put in place a Familiarization Programme for Independent Directors to familiarize them with the working of the Company, their roles, rights and responsibilities vis-a-vis the Company, the industry in which the Company operates, business model etc. Details of the Familiarization Programme are explained in the Corporate Governance Report and are also available on the Company''s website at http://www.acclimited.com/assets/new/ pdf/CG/Familiarization-Programme-for-Independent-Directors.pdf
b. Board Evaluation
Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations,
2015, the Board has carried out an annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration and Compliance Committees. The criteria applied in the evaluation process are explained in the Corporate Governance Report.
28.5 Key Managerial Personnel
Pursuant to the provisions of Sections 2(51), 203 of the Companies Act, 2013 read with The Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the following are the Key Managerial Personnel:
- Mr Sunil Nayak, Chief Financial Officer
- Mr Burjor D Nariman, Company Secretary & Head Compliance
- Mr Harish Badami, CEO & Managing Director (up to February 3, 2017)
28.6 Criteria for selection of candidates for appointment as Directors, Key Managerial Personnel and Senior leadership positions.
A well-defined criteria is in place for the selection of candidates for appointment as Directors, Key Managerial Personnel and senior leadership positions. The relevant information has been given in Annexure ''B'' which forms part of the Board''s Report.
28.7 Remuneration Policy for Directors
The policy for remuneration of directors, Key Managerial Personnel and ExCo Members is set out in Annexure ''C'' which forms part of the Board''s Report.
29. MEETINGS
29.1 Board Meetings
During the year seven Board Meetings were convened and held, the details of which are given in the Corporate Governance Report.
29.2 Audit Committee
The Audit Committee comprises five members. The Chairman of the Committee is an Independent Director. The Committee met seven times during the year. Details of the role and responsibilities of the Audit Committee, the particulars of meetings held and attendance of the Members at such Meetings are given in the Corporate Governance Report.
29.3 CSR Committee
The CSR Committee comprises four members of which three are Independent Directors. The Chairman of the Committee is an Independent Director. The Committee met twice during the reporting period. Details of the role and functioning of the Committee are given in the Corporate Governance Report.
30. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All transactions with Related Parties are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee and the Board is obtained 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 and the Board of Directors for their approval on a quarterly basis. The statement is supported by a certificate from the CEO & MD and the CFO. Your Company has developed a Related Party Transactions Manual, Standard Operating Procedures for the purpose of identification and monitoring of Related Party transactions.
All transactions entered into with related parties during the year were on arm''s length basis, in the ordinary course of business and in line with the threshold of materiality defined in the Company''s policy on Related Party Transactions which can be accessed through we blink http:// www.acclimited.com/assets/new/pdf/CG/ PolicyonRPT.pdf. In particular there were no material transactions with related parties (i.e. transactions exceeding 10% of the annual consolidated turnover entered into during the year as per the last audited financial statements). Accordingly, no transactions are required to be reported in Form AOC 2. The details of transactions entered into with related parties is given in Note No. 34 of the Notes to Accounts.
None of the Directors and the Key Managerial Personnel has any pecuniary relationships or transactions vis-a-vis the Company.
31. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS Appeal before Competition Appellate Tribunal (COMPAT)
The Competition Commission of India (CCI)had originally passed an Order in June 2012 against
several cement manufacturing companies, including the Company, in the matter of a complaint filed by the Builders'' Association of India for alleged violation of the provisions of Sections 3 and 4 of the Competition Act and in terms of the said Order, imposed a penalty of 0.5 times of the profit of the Company for the year 2009 (calculated prorate from May 20, 2009) and for the full year 2010. For the Company the penalty amounted to Rs, 1147.59 crore.
CCI had also passed an Order directing the Company to âcease and desistâ from indulging in any activity relating to agreement, understanding or arrangement on price, production and supply of cement in the market.
Pursuant to an Appeal filed by the Company before the Competition Appellate Tribunal (COMPAT), the said order of CCI of June 2012 was stayed, subject to deposit of 10% of the amount of penalty. Thereafter COMPAT by its order dated December 11, 2015 set aside CCI''s Order of June 20, 2012, remanding the matter back to the CCI for a fresh hearing and adjudication. Further in terms of the said Order, the deposit amount along with interest thereon was refunded to the Company.
CCI on rehearing the arguments, by its order dated August 31, 2016, once again held that the cement companies and the Cement Manufacturers'' Association (CMA) are guilty and in violation of the Sections 3(1) read with 3(3)(a) and 3(3)(b) of the Competition Act and imposed the same penalty which in the case of the Company again works out to Rs, 1,147.59 crore. The usual order for cease and desist was also imposed.
The Company thereafter approached the COMPAT, which by its order dated November 7, 2016 stayed the operation of the CCI order of August 31, 2016 subject to deposit of 10% of the penalty amount within one month. The Company accordingly deposited an amount ofRs, 114.76 crorein December 2016 in the form of a bank Fixed Deposit in favour of COMPAT on behalf of the Company. The case is now pending before the COMPAT.
As at December 31, 2016, the penalty amount of Rs, 1147.59 crore and interest thereon is disclosed as a contingent liability in the Notes to Accounts (Refer Note 36(A)(d)(i)).
Subsequent Event:
CCI''s Order on Complaint filed by Director, Supplies & Disposals, State of Haryana in 2013
In January 2017, the Competition Commission of India (CCI) passed an Order against seven cement manufacturers including the Company imposing a penalty calculated at the rate of 0.3% of the average turnover of the last three years viz. 2012-13, 2013-14 and 2014-15. In respect of the Company the amount of penalty works out to Rs, 35.32 crore. The said Order was issued on the basis of a complaint filed in 2013 by the Director, Supplies & Disposals, State of Haryana before the CCI.
The Company believes it has a strong case on merits to challenge the Order and plans to file an appeal before the Competition Appellate Tribunal (COMPAT) As at December 31, 2016, the penalty amount of Rs, 35.32 crore is disclosed as a contingent liability in the Notes to Accounts (Refer Note 36(A)(d)(ii)).
32. AUDITORS
32.1 Statutory Auditors
As per the provisions of Section 139 of the Companies Act 2013, the term of office of M/s S R B C & CO LLP, as Statutory Auditors of the Company will conclude from the close of the forthcoming Annual General Meeting of the Company.
The Board of Directors places on record its appreciation for the services rendered by M/s S R B C & CO LLP as the Statutory Auditors of the Company.
Subject to the approval of the Members, the Board of Directors of the Company has recommended the appointment of Deloitte Haskins & Sells LLP, Chartered Accountants (ICAI Firm Registration Number 117366W/W-100018) as the Statutory Auditors of the Company pursuant to Section 139 of the Companies Act, 2013.
Members'' attention is drawn to a Resolution proposing the appointment of Deloitte Haskins & Sells LLP as Statutory Auditors of the Company which is included at Item No 5 of the Notice convening the Annual General Meeting.
32.2 Cost Auditors
On the recommendation of the Audit Committee, the Board of Directors appointed M/s D C Dave & Co., Cost Accountants (Firm Registration No 30611), as Cost Auditors of the Company for the year 2017 under Section 148 of the Companies Act 2013 read with The Companies (Cost Records and Audit) Amendment Rules 2014. M/s D C Dave & Co have confirmed that they are free from disqualification specified under Section 141 (3) and proviso to Section 148 (3) read with Section 141 (4) of the Companies Act 2013 and that their appointment meets the requirements of Section 141 (3) (g) of the Companies Act 2013. They have further confirmed their independent status and an arm''s length relationship with the Company.
M/s N I Mehta & Co. Cost Accountants (Firm Registration No. 000023) who were earlier the Cost Auditors of the Company have given their âNo Objectionâ certificates for the appointment of M/s D C Dave & Co as the Cost Auditor for the year 2017.
The Board of Directors has placed on record its appreciation of the service rendered by M/s N I Mehta & Co.
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 for seeking Members'' ratification for the remuneration payable to M/s D C Dave & Co, Cost Auditor is included at item No 8 of the notice convening the Annual General Meeting.
32.3 Secretarial Audit
The Company has appointed Messrs Pramod S Shah & Associates, a firm of Company Secretaries in Practice, to undertake the Secretarial Audit of the Company pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014. The Report of the Secretarial Auditor is annexed to the Board''s Report as Annexure ''D''.
33. AWARDS
Your Company received numerous awards and felicitations during the year from distinguished bodies for achievements in fields as diverse as Health & Safety, financial reporting excellence, sustainable development, CSR and business communication. Notable among these are the first ever award instituted for excellence in CSR by The Institute of Company Secretaries of India and the CII-ITC Sustainability Award 2016 for Corporate Excellence.
CSR
- ''First ICSI CSR Excellence Awards 2016'' instituted by The Institute of Company Secretaries of India in the Award Category ''Best Corporate - Medium''
- ''FIMI - Sita Ram Rungta Social Awareness Award'' to the Company''s Jamul Limestone Mine conferred by the Federation of Indian Mineral Industries (FIMI)
- ''BT-CSR Excellence Award 2016'' awarded by CII to the Company''s Jamul plant as ''CSR Company of the Year'' for its CSR initiatives particularly DISHA.
SUSTAINABILITY
- CII-ITC Sustainability Awards 2016 for Corporate Excellence-Outstanding Accomplishment -in category âA Large Companiesâ by the CII-ITC Centre of Excellence for Sustainable Development
- The Company''s featured in CIIâs list of ten Sustainable Plus Platinum 2015 companies and rated "Indiaâs Most Sustainableâ
- CII National Award in the category ''Energy Efficient Unit'' for Excellence in Energy Management 2016 conferred on Chanda, Kymore, Thondebhavi and Wadi Cement Works at the 17th CII National Award Function
- ''4 Star Rating'' by the Ministry of Mines, Government of India awarded to Jamul Limestone Mines
HEALTH & SAFETY
- NSCI Shreshtha Suraksha Puraskar awarded to ACC Sindri by the National Safety Council
- ''FIMI - Health & Safety Award 2015-16'' received by ACC''s Wadi Limestone Mine instituted by the Federation of Indian Mineral Industries (FIMI)
- State level Safety award for Plant safety performance & State level Best Safe Worker award from Dept. of Factories, Boilers, Industrial Safety & Health, Govt. of Karnataka presented to ACC Kudithini plant.
WASTE MANAGEMENT
- GreenCo Best Practices Award 2016 for the best practices in waste management to Kymore plant
- Clean & Green India 2016 Award for solid waste management initiatives of the company awarded to Madukkarai plant.
FINANCIAL EXCELLENCE
- The Company''s Annual Report 2015 won the highest award for excellence in Financial Reporting from the institute of Chartered Accountants in India.
- 13th National award for Excellence in Cost Management conferred by The Institute of Cost Accountants of India
- Your Company has been adjudged Second Runner-Up (Joint) in the Manufacturing Sector as the recipient of Best Presented Annual Report Awards 2015 by South Asian Federation of Accountants (SAFA)
LOGISTICS
ACC was awarded for logistics excellence in "Supply Chain Technology Advancement/Solution Implementationâ category at the Manufacturing Supply Chain Awards 2016.
COMMUNICATIONS
- Association of Business Communicators of India (ABCI) - Gold award to âACC Community Countsâ - A Collection of Case Studies, Silver to âTogether for Communitiesâ, ACCâs CSR newsletter and Silver to ACCâs âSustainable Development Report 2015â at the 56th ABCI Awards
- Association of Business Communicators of India (ABCI) - Gold award to ACC Logistics Safety Excellence programme, Silver to ACC Parivar (Hindi) and Bronze to Sustainable Development Report 2014 at the 55th ABCI Awards.
OTHERS
- National Institute of Industrial Engineering''s ''Lakshya Avartan - On the Job Achiever''s Contest'' Award to ACC Concrete - Sales and Marketing.
34. ENHANCING SHAREHOLDERS VALUE
The creation of maximum value for shareholders is among your Company''s principal objectives of strategic planning. Central to the Company''s decision-making process is a systematic focus on the allocation and utilization of all corporate resources in the most profitable and productive manner so as to create value for all its stakeholders. Your Company''s strategic operations are managed with a view to achieve the highest possible levels of operating performance and cost competitiveness, strengthening its productive assets and resource base, building for growth, while nurturing corporate reputation. In this the Company is guided by the philosophy of ensuring that all of its strategic corporate actions are aligned towards sustainable development and thus have a positive impact on the economic, societal and environmental dimensions.
35. CORPORATE GOVERNANCE
The Annual Report contains a separate section on the Company''s corporate governance practices, together with a certificate from the Company''s Auditors confirming compliance, as per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
36. BUSINESS RESPONSIBILITY REPORTING
A separate section on Business Responsibility forms part of this Annual Report as required under Regulation 34(2)(f) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
37. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated in Section 134(3)(m) of the Companies Act, 2013 read with Rule, 8 of The Companies (Accounts) Rules, 2014 is provided in Annexure ''E'' to the Directors'' Report.
38. EXTRACT OF ANNUAL RETURN
Details forming part of the extract of the Annual Return in form MGT 9 is enclosed as Annexure ''F''.
39. PARTICULARS OF EMPLOYEES
Disclosure pertaining to the remuneration and other details as required under Section 197(12) of the Act, and the Rules framed there under is enclosed as Annexure ''G'' to the Board''s Report. The information in respect of employees of the Company required pursuant to Rule 5 of the
Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 will be provided upon request. In terms of Section 136 of the Companies Act 2013, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the aforesaid Annexure which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard.
40. DIRECTORS'' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 134 of the Companies Act, 2013:
a. that in the preparation of the annual financial statements for the year ended December 31,
2016, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
b. that such accounting policies as mentioned in Note 2 of the Notes to the Accounts have been selected and applied consistently and judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on December 31, 2016, and of the profit of the Company for the year ended on that date;
c. that 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 and for preventing and detecting fraud and other irregularities;
d. that the annual accounts have been prepared on a going concern basis;
e. that proper internal financial controls laid down by the Directors were followed by the Company and such internal financial controls are adequate and were operating effectively; and
f. that proper systems to ensure compliance with the provisions of all applicable laws have been devised and such systems were adequate and were operating effectively.
41. INTEGRATED REPORTING
Your Company believes in transparent reporting that is value-friendly to shareholders and investors. The Company''s Annual Reports, including the last one for the year 2015, have received the highest awards for excellence in financial reporting from the Institute of Chartered Accountants of India (ICAI) several times in recent years. The Annual Report for 2015 was forwarded by ICAI to the South Asian Federation of Accountants (SAFA) who adjudged it as one of the winners.
The Annual Report carries a detailed section containing the âBusiness Responsibility Reportâ. Since 2007 the Company also publishes an annual Corporate Sustainable Development Report conforming to the guidelines of the Global Reporting Initiative. The reports for 2014 and 2015 were based on the GRI G4 guidelines in accordance with the âComprehensiveâ option and were externally assured.
As one of the Top 500 listed companies, the Company is studying the requirements of the Integrated Reporting Framework and will place an integrated report on its website in due course.
42 ACKNOWLEDGEMENTS
The Directors gratefully acknowledge the support received by the Company from the Central and
State Government Ministries and Departments, shareholders, customers, business associates, bankers, employees, trade unions and all other stakeholders.
43. CAUTIONARY STATEMENT
The Board''s Report and Management Discussion & Analysis may contain certain statements describing the Company''s objectives, expectations or forecasts that appear to be forward-looking within the meaning of applicable securities laws and regulations while actual outcomes may differ materially from what is expressed herein. The Company is not obliged to update any such forward-looking statements. Some important factors that could influence the Company''s operations comprise economic developments, pricing and demand and supply conditions in global and domestic markets, changes in government regulations, tax laws, litigation and industrial relations.
For and on behalf of the Board of Directors
N.S. Sekhsaria
Chairman
Mumbai
February 03, 2017
Dec 31, 2015
The Directors take pleasure in presenting the Eightieth Annual Report
together with the audited accounts for the year ended December 31,
2015. The Management Discussion and Analysis has also been incorporated
into this report.
1. FINANCIAL RESULTS
Consolidated Standalone
Rs, Crore Rs, Crore
2015 2014 2015 2014
Revenue from Operations
(Net) and other income 11,916.94 11,995.42 11,916.18 12,006.49
Profit Before Tax (PBT) 765.53 1,119.54 783.97 1,135.20
Provision for Tax 189.98 (31.13) 192.40 (33.09)
Profit After Tax (PAT) 587.60 1,161.82 591.57 1,168.29
Balance brought forward
from previous year 4,433.04 4,158.74 4,456.64 4,175.87
Profit available for
Appropriations 5,020.64 5,320.56 5,048.21 5,344.16
Appropriations:
Interim Equity
Dividend 206.52 281.62 206.52 281.62
Proposed Final
Equity Dividend 112.65 356.72 112.65 356.72
Tax on Equity Dividends 64.97 119.18 64.97 119.18
Transfer to General
Reserve 30.00 130.00 30.00 130.00
Surplus carried to the
next year's account 4,606.50 4,433.04 4,634.07 4,456.64
2. OVERVIEW OF COMPANY'S FINANCIAL PERFORMANCE
Consolidated Income
Consolidated income, comprising Revenue from Operations (Net) and other
income for the year was Rs, 11,916.94 crore, 1% lower as compared to Rs,
11,995.42 crore in 2014.
Total consolidated Revenue from Operations (Net) increased to Rs,
11,797.16 crore from Rs, 11,738.79 crore in 2014.
Other Operating Revenue
Other operating revenue for the year ended December 31, 2015 includes Rs,
139.74 crore being accrual of sales tax incentives at Chaibasa Plant,
in the State of Jharkhand pertaining to the period August 2005 to March
2015.
Other Income
Other income reduced due to lower cash and cash equivalent on account
of utilization of funds for various capex projects as compared to the
previous year. Average rate of return on investment was also lower as
compared to the previous year.
Finance Costs
Finance costs decreased mainly due to reduction in interest on income
tax by Rs, 12.87 crore.
Depreciation and Exceptional Items
Pursuant to the provisions of Schedule II of the Companies Act, 2013
(hereinafter referred to as "the Act") becoming applicable to the
Company w.e.f. January 1, 2015, the Company has reviewed and where
necessary, revised estimates of the useful life of fixed assets.
Accordingly, an additional charge of Rs, 164.45 crore, being the carrying
amount as of January 1, 2015 of the fixed assets with no remaining
useful life (as revised) as of that date, is recognized in the year
ended December 31, 2015 and has been disclosed as an exceptional item.
With this change the current year's depreciation is
also higher by Rs, 111.81 crore.
Consolidated Profit Before Tax
Consolidated profit before tax for the year was Rs, 765.53 crore as
compared to Rs, 1,119.54 crore in 2014.
Consolidated Profit After Tax
Consolidated Profit after Tax for the year was Rs, 587.60 crore as
compared to Rs, 1,161.82 crore in 2014.
In the previous year, on completion of assessments and review of
certain tax positions, an amount of Rs, 309 crore had to be written back,
whereas no such write backs were necessary in 2015.
In the year under review, as stated above, an additional depreciation
charge of Rs, 181 crore (net of tax) was made on account of change in
useful life of fixed assets in accordance with the provisions of
Schedule II of the Act.
There are no material changes or commitments affecting the financial
position of the Company, which have occurred between the end of the
calendar year and the date of this Report.
3. DIVIDEND
Your Directors are pleased to recommend a final dividend of Rs, 6/- per
equity share of Rs, 10 each. The Company had distributed an interim
dividend of Rs, 11/- per equity share of Rs, 10 each in July 2015. The
total dividend for the year ended December 31, 2015 would accordingly
be Rs, 17/- per equity share of Rs, 10 each as compared to Rs, 34/- per
equity share of Rs, 10 each. The total outgo for the current year amounts
to Rs, 384.14 crore, including dividend distribution tax ofRs, 64.97 crore
as against Rs, 757.52 crore including dividend distribution tax of Rs,
119.18 crore in the previous year.
A general slowdown in the cement industry impacted the performance of
the Company. This, coupled with a provision for higher depreciation, as
explained in the previous paragraph, led to lower profits and reduced
Earnings Per Share. Consequently, dividend for the year is recommended
at a lower rate as compared to the previous year. However, the dividend
payout ratio has been maintained at previous year's level at 65% of
the Profit After Tax (PAT) for the year 2015.
During the year, the unclaimed dividend pertaining to the 70th Final
Dividend for the year ended December 31, 2007 and the 71st Interim
Dividend for the year ended December 31, 2008 aggregating Rs,2.16 crore
were transferred to the Investor Education & Protection Fund after
sending due reminders to the shareholders.
4. TRANSFER TO RESERVES
The Company proposes to transfer an amount of Rs, 30 crore to the General
Reserves. An amount of Rs, 4,606.50 crore is proposed to be retained in
the Consolidated Statement of Profit and Loss.
5. SHARE CAPITAL
The paid up Equity Share Capital as on December 31, 2015 was Rs, 187.95
crore. The Company has neither issued shares with differential rights
as to dividend, voting or otherwise nor issued shares (including sweat
equity shares) to the employees or Directors of the Company, under any
Scheme. As on December 31, 2015, none of the Directors of the Company
hold shares or convertible instruments of the Company.
No disclosure is required under Section 67(3)(c) of the Act, in respect
of voting rights not exercised directly by the employees of the Company
as the provisions of the said Section are not applicable
6. FINANCIAL LIQUIDITY
The Company's cash and cash equivalent as at December 31, 2015 was Rs,
1,389 crore. The Company continues to focus on judicious management of
its working capital. Receivables, inventories and other working capital
parameters were kept under strict check through continuous monitoring.
7. CREDIT RATING
CRISIL, a reputed Rating Agency, has reaffirmed the highest credit
rating of CRISIL AAA/ STABLE for long term and CRISIL A1 for short
term financial instruments of the Company.
8. DEPOSITS
The Company had discontinued its fixed deposit scheme in the financial
year 2001-2002. Despite sustained efforts to identify and repay
unclaimed deposits, the total amount of fixed deposits matured and
remaining unclaimed with the Company as on
December 31, 2015 was Rs, 0.02 crore. The Company has not accepted
deposits from the public falling within the ambit of Section 73 of the
Act, and the Rules framed there under.
9. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Details of Loans, Guarantees and Investments covered under the
provisions of Section 186 of the Act, are given in the notes to the
Financial Statements.
10. CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements of the Company for the calendar
year 2015 are prepared in compliance with the applicable provisions of
the Act, Accounting Standards and as prescribed by Securities and
Exchange Board of India (SEBI) under SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015 (hereinafter referred to as
'the SEBI Regulations'). The consolidated financial statements have
been prepared on the basis of the audited financial statements of the
Company, its subsidiaries, joint venture and associate companies, as
approved by their respective Boards of Directors.
Pursuant to the provisions of Section 136 of the Act, the Financial
Statements of the Company, the Consolidated Financial Statements along
with all relevant documents and the Auditors' Report thereon form part
of this Annual Report. The Financial Statements as stated above are
also available on the website of the Company and can be accessed at the
we blink http://www.acclimited.com/newsite/ finance/an
nual_report_2015.pdf
11. CONTINUANCE OF THE EXISTING FINANCIAL YEAR
Pursuant to a favorable Order from the Company Law Board, the Company
will continue to have the calendar year (1st January - 31st December)
as its financial year, in respect of itself as well as its
subsidiaries.
12. ECONOMIC SCENARIO AND OUTLOOK
As compared to many other countries, India enjoyed relative macro
economic stability in 2015.
Last year, Government realigned its methodology for compiling the
country's GDP using value added data that makes it closer to accepted
international practice. Based on this, India's economic growth in the
calendar year 2015 is estimated to have risen to 7.5% as compared to
the previous year 2014, making it among the world's fastest growing
economies.
The rate of inflation, as per the wholesale price index, maintained its
year-long negative trend and showed a decline of (-)2.8% as compared
to the previous year's rate of inflation of 3.9%. This was on account
of a high base rate effect and other factors such as the sharp fall in
global oil and commodity prices, sluggish domestic demand conditions
and some softening of food prices.
Notwithstanding some slackening in the last quarter, manufacturing
growth in 2015 was strong at 7.5% as compared to 6% growth in 2014,
although there was some loss of steam in certain sectors. This spurt in
manufacturing resulted in higher industrial production and revival in
urban consumer demand. However, the spurt in manufacturing activity
did not translate into growth in the construction sector which was
lower by 3.7% as compared to 2014. In turn, the cement sector also
experienced dampened growth in cement production of 2% in 2015 as
compared to the preceding year, the slowest in the last decade.
With a second consecutive year of a weak monsoon and unseasonal rains,
agricultural growth and rural demand remained muted in 2015.
Official estimates for GDP growth expected in the fiscal year 2015-2016
is of the order of 7.6%. Disregarding some sect oral imbalances, the
outlook for India's national economy in calendar year 2016 and beyond
shows a strong emerging potential. It is expected that GDP growth in
2016 would be more positive, amid expectations of higher investments in
infrastructure and industry. This would drive overall growth, generate
incomes and lower inflation rate.
13. CEMENT INDUSTRY - OUTLOOK AND OPPORTUNITIES
The Indian Cement Industry has an installed capacity of Rs. 72 million
tonnes per annum while domestic consumption of cement in 2015 was ~271
million tonnes. As already indicated, cement consumption grew at the
rate of 2% in the calendar year 2015, the slowest rate of growth in a
decade. As a result, the cement market in the country remained very
competitive.
Consistent with the positive outlook for the Indian
economy, we foresee a similar revival in demand for cement and
concrete. Signs of increased construction activity have been witnessed
in industrial and commercial segments as well as from mass housing and
mid-income housing schemes across the country. Besides this, there are
healthy indicators of an uptrend in demand for cement and concrete from
projects such as concrete roads, flyovers & bridges, power plants,
irrigation schemes, ports, railways and metro rail projects.
Overall cement demand in the calendar year 2016 is estimated to grow at
a rate faster than the preceding year, if supported by a faster pace of
infrastructure development, housing and industrial growth. Consumption
could pick up well beyond 6% if investments in infrastructure
development and ambitious projects such as "Make in India", Smart
Cities Mission, Atal Mission for Rejuvenation & Urban Transformation
(AMRUT), and Housing For All (including low cost housing) are
accelerated. Demand in the housing sector may be stimulated with a
gradual reduction in interest rates, wider supply of affordable
housing, tax benefits and an increase in disposable incomes and
household savings.
14. CEMENT BUSINESS - PERFORMANCE
20151 2014 Change %
Production - million 23.84 24.24 -1.7
tonnes
Sales Volume - million 23.62 24.21 -2.4
tonnes
Net Sale Value (Rs,crore) 10,652.60 10,842.82 -1.8
Operating EBITDA 1,482.88 1,473.13 0.7
(crore)
Operating EBITDA 13.92 13.59
Margin (%)
14.1 Sales Volume & Pricing
Cement sales volume in 2015 was 23.62 million tonnes as compared to
24.21 million tonnes in 2014, a decrease of 2.4%. Sales volume was
impacted mainly in the Eastern region where production at Chaibasa and
Bargarh was constrained on account of temporary suspension of mining
operations during the earlier part of the year on account of regulatory
changes.
During the year, the sales volume of the Company's premium products
increased to 2.3 million tonnes in 2015 as compared to 2.1 million
tonnes in 2014.
Selling prices of cement improved by 1% in 2015 over 2014.
Your Company's main focus areas included managing costs of distribution
and logistics, promoting the sale of its premium products, enhancing
customer service levels and various other customer excellence
initiatives.
While Individual House Builders remained the major customer segment
catered by an extensive dealer and retailer network, the ICI
(Infrastructure, Commercial and Industrial) team of the Company's sales
division has also been actively servicing the growing requirements from
infrastructure, industrial and commercial projects. With increasing
urbanization, demand from these sectors is also expected to accelerate.
14.2 Costs - Cement Business
During the year 2015, the Company maintained a close focus on effective
cost management through various initiatives.
a) Cost of Materials consumed
Cost of materials consumed was reduced by 7% in 2015 over 2014, despite
an additional cost burden of Rs, 23 crore towards purchase of clinker due
to temporary suspension of limestone mining operations at Chaibasa and
Bargarh mines during the earlier part of the year. Thus, the cost of
materials consumed as share of total income from operations came down
to 12.7% from 13.5% in 2014.
The landed cost of gypsum rose by 5% on account of an increase in the
price of imported gypsum and also due to a shortage of wagons at
Paradip port that necessitated costlier road transportation to some
plants. To mitigate such cost increases, the Company is taking steps to
optimize its gypsum mix by reducing its reliance on imported gypsum and
instead increasing the consumption of phosphor-gypsum, chemical gypsum,
activated gypsum and also the more cost effective variety of high
purity domestic mineral gypsum.
The landed cost of flyash increased by 4% as it had to be procured over
longer leads, following a drop in availability from sources close to
our plants. Efforts were made to achieve cost reductions by entering
into long term contracts with slag and flyash suppliers. Slag prices
were negotiated to achieve a reduction of 27%.
b) Power & Fuel
Power & Fuel costs were reduced by 2% in 2015 as compared to 2014. The
Power & Fuel spend in 2015 was Rs, 2,377.85 crore, as compared to Rs,
2,427.45 crore spent in 2014. This constituted 22% of the total income
from operations, the same as in the previous year.
The Company continues to focus on reducing the overall cost of fuel as
well as shifting its dependence on linkage and imported coal by
optimizing the fuel mix to enhance the use of alternative fuels and
petcoke. The supply of petcoke became attractive following a general
decline in global oil prices. Taking advantage, the Company put plans
in place to enable increased consumption of petcoke. During the year,
this enabled petcoke consumption to rise from average consumption of
16% in 2014 to 27% during the last quarter of 2015.
As a result of various initiatives taken with respect to power & fuel,
kiln thermal efficiency was maintained at 3050 MJ/per tonne of clinker,
the same level as in the last year.
The generation cost per KW of our Captive Power Plants (CPP) in 2015
rose by 2% to Rs, 4.67 per unit against Rs, 4.59 per unit in 2014, mainly
due to increase in rail freight on coal and electricity duty on
generation of power.
Power generated by the Company's waste heat recovery plant of 7.5 MW at
Gagal Plant delivered saving of Rs, 22 crore during the year, thus also
helping reduce overall power and fuel costs.
c) Freight & Forwarding expenses
A general hike in rail tariffs impacted the cost of inward and outbound
transportation in 2015, particularly because 44% of total cement
despatches during the year were moved by rail.
Freight and forwarding expenses during theyear were Rs, 2,640.76 crore as
compared to Rs, 2,530.30 crore in 2014, an increase of 4%. Freight and
forwarding expenses constituted a significant share of 24% of the
Company's total income from operations, up marginally from a share of
23% in the previous year.
Freight on clinker transfers, effected mainly by rail, increased by
about 8% due to the rail tariff hikes and the movement of clinker over
longer leads to Chaibasa and Bargarh occasioned by the curtailment of
clinker production at these plants for reasons explained heretofore.
Freight on cement despatches also rose by about 6% on account of the
increase in rail tariffs.
Taking advantage of the decline in diesel prices, proactive efforts
were made to bring down the cost of road transportation which accounts
for about 56% of total despatches. Average road freight rates were cut
by 6%. The Company is taking further steps to rationalize freight and
C&F rates and pursue improvements in other operational levers such as
lead distances and the share of direct despatches.
d) Employee Costs
Employee costs during the year were brought down by 2.7% on a
like-for-like basis. Overall employee costs, as a share of total income
from operations, declined to 6.5% in 2015 from 6.8% in 2014. In the
forthcoming year, certain initiatives taken as part of the India
Manufacturing Transformation programme, as explained later, are
expected to reflect further improvement in employee costs.
e) Other Expenditure
Other expenditure constitutes 23% of total income from operations of
the Company (as compared to 22% in 2014). This includes (i) provision
for additional royalty on limestone of Rs, 52 crore necessitated by the
Mines and Minerals (Development and Regulation) Amendment Act, 2015 for
contributions to be made to the District Mineral Foundation (DMF) and
National Mineral Exploration Trust (NMET) in the districts where mining
takes place,
(ii) increase in royalty rate from Rs, 63 to Rs, 80 per tonne of
limestone mined effective September 2014 impacting an additional cost
incidence of Rs, 24 crore and (iii) severance cost of Rs, 13 crore on
account of rationalization of third party manpower. Despite these
increases, the overall escalation in "Other Expenditure" was restricted
to 1.4% in 2015 over 2014.
Packing material cost reduced by Rs, 79 crore on account of a fall in the
prices of polypropylene granules and other initiatives like
standardization of bags across plants.
15. READY MIXED CONCRETE (RMX)
20151 2014 Change %
RMX Production - 22.15 17.61 25.8
Lakh Cubic Metres
RMX Sales Volume - 23.44 18.34 27.8
Lakh Cubic Metres
Net Sale Value - 967.50 760.77 27.2
(7 crore)
Operating EBITDA - 54.29 34.12 59.1
(Rs, crore)
Operating EBITDA 5.61 4.48
Margin (%)
The Ready Mixed Concrete Business of the Company performed well.
Concrete Sales Volume increased by 28% and Operating EBITDA grew at a
much higher rate on account of volume growth and new value added
products and solutions. EBITDA from RMX business for the year rose to Rs,
54 crore as compared to Rs, 34 crore in 2014, an increase of 59%. Your
Company has a wide spread of RMX plants in the country; the number of
RMX plants rose to 50 by the close of 2015 as compared to 48 plants in
2014.
A large share of the Company's concrete business comes from
Infrastructure and Industrial projects in addition to mass housing
schemes. In the last two years, this business has implemented a
programme of widening its customer base, broadening its portfolio with
a range of value-added products and customized solutions while
simultaneously keeping a close focus on costs. This programme has
yielded increased sales volumes and margins, despite an intensely
competitive environment.
As part of its Endeavour to enrich customer service levels, the
Company's concrete business introduced an on-line Customer Feedback
system which has resulted in improved customer satisfaction and better
customer retention, especially of large customers with good financial
credentials.
While there was some uptake in a few markets, the concrete industry at
large continues to face issues of tight liquidity and increased
participation by unorganized local players.
The construction sector is expected to grow at a steady pace in 2016.
Consistent growth is foreseen in housing, Infrastructure, commercial
and Industrial projects in addition to the rapid urbanization taking
place in the country. Accordingly, the Company's Concrete Business
plans to extend its reach to address segments where the markets are
promising.
16. CAPEX
The ongoing integrated Jamul Project in Chhattisgarh, which partly
comprises a new clinkering line of capacity 2.79 million tonnes per
annum at Jamul and grinding facilities of capacity 1.10 million tonnes
at Jamul and 1.35 million tonnes at Sindri, is nearing completion and
expected to be commissioned during the second quarter of 2016.
17. COAL BLOCKS
Pursuant to Orders of the Supreme Court passed in August 2014 and
September 2014, the allocations of four coal blocks to Madhya Pradesh
State Mining Corporation Limited (MPSMC) were cancelled. The Company
had entered into through its wholly owned subsidiary company ACC
Mineral Resources Limited (AMRL), a Joint Venture Agreement with MPSMC,
for development of these four coal blocks viz. Bicharpur, Marki Barka,
Semaria Piparia and Morga IV (all in the State of Madhya Pradesh) all
of which stood cancelled.
The Ministry of Coal, Government of India completed the auction of
Bicharpur Coal Block in February 2015 and the block was allotted to the
successful bidder. The reimbursement of expenses incurred on
development of coal blocks is awaited. The auction/allocation process
of other three Coal Blocks viz. Marki Barka, Morga IV and Semaria
Piparia are yet to be carried out by the Ministry of Coal, Government
of India.
18. SUSTAINABLE DEVELOPMENT
The Company's Sustainable Development programme is comprehensive and
robust. Your Company was felicitated with the prestigious CII-ITC
Sustainability Award 2015 for "Outstanding Accomplishment" in
recognition of its continuous effort and commitment to the cause of
Sustainable Development and its improvement in all sustainability
parameters. This is one of the Country's most coveted awards in the
field of corporate sustainable development.
During the year, the Company released its 8th Sustainable Development
Report - 2014 adhering to GRI G4 principles in accordance with
comprehensive reporting. The Report is available on the Company's
website www.acclimited.com. Significant advancements were made against
targets set in its sustainable development roadmap for 2014-2017.
The brand "ACC" was one of those prominently displayed in the India
Pavilion at the COP 21 (Conference of Parties) meet held in Paris in
December 2015, organized by the United Nations Conference on Climate
Change.
18.1 CO2 Emissions:
Your Company is committed to cut its carbon footprint in line with the
Low Carbon Technology Roadmap for the Indian Cement Industry of the
Cement Sustainability Initiative (CSI).
The Company maintained its best-in-class position in terms of its
carbon footprint with specific C02 emissions per tonne of cement at 533
kg CO2 / tonne in 2015. However, there was a small increase of 1% in
these emissions as compared to the previous year, which was due to some
change in the pattern of cement production caused by the suspension of
limestone mining at Chaibasa and Bargarh for part of the year.
The Company has been identified as one of the leading business houses
in India, for the quality of climate change related information, which
it has disclosed through the Carbon Disclosure Project (CDP), a
non-profit global initiative, that shares information to help drive
carbon reduction strategies for sustainable economies.
The reported data was independently assessed against CDP's scoring
methodology and your Company is one of the few organizations that
received a high score of 98 points out of 100 in respect of its
disclosure.
18.2 Clinker Factor
Reducing the clinker factor in cement is an important pillar of the Low
Carbon Technology Roadmap for the Indian Cement Industry. Your Company
strives to achieve this through the promotion of blended cements using
slag and flyash and plays a lead role in the Industry in this respect.
Some shortfall in the availability of flyash from regular sources
nearer the plants did have a small impact in the supply of flyash and
hence on the clinker factor which showed a minor change of 1%. Despite
this and the increasing demand for Ordinary Portland Cement (OPC), the
share of Blended Cements in the total product portfolio was maintained
at 84.5%.
18.3 Alternative Fuels and Resources (AFR):
Your Company takes pride in being one of the few in the forefront of
the national effort to promote co-processing of both hazardous and
non-hazardous industrial and municipal wastes in cement kilns in order
to reduce dependence on fossil fuel.
The Company has two state-of-the-art pre- processing facilities at Wadi
and at Kymore to enable safe handling of varied types and volumes of
waste streams. These facilities added momentum to co-processing of
hazardous wastes in a safer and more efficient manner. With the
stabilization of these pre-processing facilities, we expect to enhance
both the quality and quantity of waste feed processed in cement kilns
and thus increase the thermal substitution rate in the forthcoming
year.
18.4 Green Energy
(a) Wind Energy:
The Company has 19 MW capacity from wind farms in three states viz. 9
MW in Tamil Nadu, 7.5 MW in Rajasthan and 2.5 MW in Maharashtra. These
wind farms helped the Company meet its non-solar renewable purchase
obligations for Madukkarai, Lakheri, Thane Campus and the Kalamboli
Bulk Cement Terminal Plant. Various options are being evaluated to
enhance the renewable energy portfolio such as setting up new assets of
renewable energy and by use of renewable energy through the Power
Purchase Agreement route. During the year 2015, 29.2 million kilowatt
hours (Kwh) of renewable energy was produced as compared to 32.5
million Kwh in 2014.
(b) Waste Heat Power generation from process waste heat
During the year 2015, the Waste Heat Recovery System (WHRS) at Gagal
Cement Plant produced 51.8 million Kwh of electrical energy as compared
to 46.6 million Kwh in 2014.
18.5 Controlling Emissions
Various measures were implemented across all operations of the Company
to control fugitive emissions by installing dust extraction and dust
suppression systems.
Kiln stack dust emissions data and ambient air quality data are
uploaded on Central Pollution Control Board (CPCB) website and those of
the respective State Pollution Control Boards wherever available. The
installation of dust monitors as per the statutory requirement was
completed at various plants. The Company also installed Continuous
Ambient Air Quality Monitoring stations (CAAQMS) at Wadi and Chanda
plants.
18.6 Water Performance:
With an objective to continuously improve water performance and to
achieve a water positive status, the Company has focused its efforts on
two approaches:
(i) Reduction of fresh water intake by lowering water demand in process
and non-process areas and waste water recycling after treatment. Water
metering and monitoring systems were installed at various plants.
(ii) Conservation of water by rain water harvesting in plants, mines,
colonies, community areas and sustained water harvesting measures
undertaken over the years has helped Kymore and Jamul Plants become
self-reliant without being dependent on natural water sources like
rivers and bore wells.
These two approaches have helped your Company reduce its specific water
consumption per tonne of cement by 7.6% with respect to the previous
year.
18.7 Biodiversity
Your Company is committed to the conservation of biodiversity and mine
rehabilitation. Efforts on biodiversity conservation are focused on
following areas:
(i) To study and assess the biodiversity around the limestone mines
operated by the Company. During the year, biodiversity assessment
studies were conducted by an independent third party at five mines.
(ii) On-ground implementation of activities which conserves
biodiversity:
(iii) A forestation activities in and around our plant premises with
native species of trees at all our plants.
(iv) Water harvesting in mined out pits. This is a regular practice at
the plants.
19. CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES
Total CSR expenditure incurred by your Company during the year was Rs,
31.16 crore which was higher than the statutory requirement of 2% of
the average profit of the last three years.
The CSR Projects of the Company mainly focus on Livelihood, Education,
Water, Health and Sanitation. These projects fall under Schedule VII
of the Act.
The Company's community development efforts reached out to more than 4
lakh people residing in 156 villages across the country.
Education initiatives in the vicinity of plants addressed 35,000
students during the year. Scholarships were awarded to 400 meritorious
students belonging to weaker sections of society. Modern methods of
learning such as smart classes and interactive kiosks benefitted
students in 27 rural schools. Efforts were made to provide education
to 1,500 girl children as part of the "ACC ki Ladli" Project. We
continued to support seven government-run Industrial Training
Institutes as part of the Public Private Partnership Scheme with
Ministry of Labour and Employment, Government of India.
About 1,800 unemployed youth attended skill development training
programmes and received job placements in various manufacturing and
service sector enterprises. Support was provided for the establishment
of 200 new Self Help Groups (SHGs) while existing SHGs were assisted
in obtaining registration and formation of a "Farmers' Producer
Companies".
Our health and nutrition initiatives benefitted to 58,000 people.
About 8,000 children received access to better health and nutrition
through support provided to 156 anganwadi centres. Our existing Anti
Retroviral Treatment (ART) Centres provided valuable support to nearly
5,400 persons through counseling, testing and treatment for HIV/AIDS.
Your Company's CSR Footprint has been duly audited by a team of social
auditors chaired by Executive Director, Global Compact Network of
India. Your Company's CSR effort has been ranked twelfth amongthetop
100 listed companies and first among the Cement Sector companies
therein as per the annual CSR ranking initiative by Economic Times and
Indian Institute of Management, Udaipur.
The Company's CSR Policy has been re-stated making it more
comprehensive and in alignment with the requirements of the Act, and
United Nation's Sustainable Development Goals (SDGs). The CSR Policy
Statement and Report on the activities undertaken during the year is
annexed to the Board's Report in Annexure 'A'.
20. HEALTH & SAFETY (H&S) 20.1 H&S Policy and Rules
Health and Safety (H&S) of employees and all stakeholders is an
overarching value of your Company. During the year, the Company's H&S
Policy and H&S Rules were restated to be in alignment with the new
Group global vision on H&S. The revised policy reiterates the pledge to
conduct the Company's business in a manner that helps create a healthy
and safe environment for all stakeholders (employees, contractors,
communities and customers) based on the adoption of a true safety
culture. It further directs that H&S be embedded in everything the
Company does when it comes to its people, its processes, its customers,
in delivering results and in leading sustainability. The H&S rules
redefine essential behavior necessary to ensure safety. Identifying
H&S not as a separate activity but as a critical success factor for
operational performance, the policy places personal responsibility on
every individual employee at all levels for ensuring safe working
conditions in their respective work areas coupled with a fair and
transparent consequence management process, in the event of negligence
or willful disregard for safety rules. The policy and rules were widely
communicated across the organization to employees and contractor
workmen.
20.2 H&S Initiatives
The thrust on "Surakhsha Samvad" and Zone Improvement initiatives that
were launched in the preceding year in the plants was maintained.
A new strategy was adopted to provide impetus to implementation of
Fatality Prevention Elements (FPE) and requirements of Contractor
Safety Management (CSM) directives, thereby creating an environment
which strives to ensure "Zero harm to people". Nine facilitators were
nominated from Corporate and Regional H&S teams to support plants in
implementing the directive requirements with each facilitator assigned
to work in these areas with two Cement Plants and the nearest RMX
plant/s and thus help raise the implementation level of CSM and FPE
requirements. The progress was closely monitored by top management with
the facilitator team to review activities, sharing of learning and
resolving bottlenecks.
H&S business processes and information systems across the Company were
further strengthened with the launch of an online H&S application
called "Click2Safety". This application helps streamline reporting in a
manner that gives access to all employees, is standardized, is faster
and enriches the H&S database.
As part of the UN Global Road Safety Week in May 2015, your Company
extended wholehearted support to the "SaveKidsLives" campaign to
demonstrate a serious commitment to road safety for children and to
enhance general road safety awareness. The campaign was planned and
implemented as a high- involvement campaign across the organization.
In the course of this campaign, all units engaged with their key
stakeholders comprising children of employees and the community,
parents, schools, teachers, guardians, drivers and the general public.
This campaign engaged over 32,000 people around our units, making it
among the largest Employee Volunteering programmes.
Considering road safety to be an essential part of the Company's
logistics excellence objective, your Company also decided to extend
this to make it an ongoing three-year commitment to road safety to be
implemented as a CSR project.
20.3 Logistics Safety
Logistics safety is one of the majorfocus areasfor your Company.
Ongoing initiatives undertaken in this regard included provisions of
various plant and parking level protocols, creation of certain hygiene
factors for truck drivers and their crew such as amenities at truck
parking yards, improving tarpaulin tying practices, improving Personal
Protective Equipment usage, renewal of logistics contracts to include
safety parameters and issue of "passports" for drivers as well as
vehicles which are informal internal databases that provide details of
individual identity, registration, roadworthiness and safety
preparedness.
Your Company focused on six projects pertaining to the Indian logistics
scenario which consisted of Driver Management Centre (DMC), Community
road safety education with the help of CSR, use of technology (GPS &
RFID) in logistics safety, engagement of drivers and transporters and
reduced dependence on market trucks.
Another focus area was inclusion of safety awareness in warehouses.
This involved display of standardized safety posters and observation of
safety day/month at each warehouse with a fixed safety topic being
discussed.
20.4 Health Initiatives
In the area of health, your Company worked to raise EMR (Emergency
Medical Response) capabilities in mines and in Captive Power Plants
(CPP) during the year. Each Cement Manufacturing Unit is now equipped
with basic life-saving equipment in the health centre, well-equipped
first aid room in mines and CPP. Each site has an Advanced Life Support
(ALS) ambulance with stretchers and AEDs (Automated External
Defibrillator). Your Company has trained all the shift supervisors at
each plant in basic life support techniques, thus creating a
companywide pool of 3,500 trained shift supervisors.
To reduce health risk factors among employees and their families a
well-structured approach has been started which involves all
stakeholders. The strategy includes use of Company's internal
electronic portal for health sensitization programme and nomination of
"Health Peers" from among Shop Floor Associates (SFA) cadre to spread
health awareness among their colleagues, other employees and their
families. This structured approach is yielding results and we estimate
it to have helped reduce the health risk factor among employees by 2%.
During the year, your Company tied up with Air ambulance services, to
expedite evacuation in the event of medical emergencies at remote plant
locations. This will go a long way in ensuring timely medical care to
the employees when needed.
21. HUMAN RESOURCES
The Company adopted a new functional organization structure with effect
from April 1, 2015, replacing the earlier regional-based structure in a
smooth swift transition. The new structure is intended to enable the
organization to be more collaborative, agile and streamlined in
implementing strategy, harnessing internal functional expertise to the
fullest and in enhancing stakeholder value.
24. INTERNAL CONTROL SYSTEMS
24.1 Internal Control Systems and their adequacy
The Company has in place well defined and adequate internal controls
commensurate with the size of the Company and the same were operating
effectively throughout the year.
The Company has an in-house Internal Audit (IA) function. The scope and
authority of the Internal Audit function is defined in the Internal
Audit Charter. To maintain its objectivity and independence, the IA
function reports to the Chairman of the Audit Committee of the Board.
The IA Department evaluates the efficacy and adequacy of internal
control system, its compliance with operating systems and policies of
the Company and accounting procedures at all locations of the Company.
Based on the report of IA function, process owners 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.
24.2 Internal Controls Over Financial Reporting
The Company has in place adequate internal financial controls
commensurate with the size, scale and complexity of its operations.
During the year, such controls were tested and no reportable material
weakness in the design or operations were observed. The Company has
policies and procedures in place for ensuring proper and efficient
conduct of its business, the safeguarding of its assets, the prevention
and detection of frauds and errors, the accuracy and completeness of
the accounting records and the timely preparation of reliable financial
information.
The Company has adopted accounting policies which are in line with the
Accounting Standards and the Act. These are in accordance with
generally accepted accounting principles in India. Changes in
policies, if required, are made in consultation with the Auditors and
are approved by the Audit Committee.
The Company has a robust financial closure, certification mechanism for
certifying adherence to various accounting policies, accounting hygiene
and accuracy of provisions and other estimates.
25. INDIAN ACCOUNTING STANDARDS (IND AS) - IFRS CONVERGED STANDARDS
The Ministry of Corporate Affairs vide its notification dated February
16, 2015 has notified the Companies (Indian Accounting Standard) Rules,
2015.
In pursuance of this notification, the Company, its subsidiaries and
joint venture company will adopt IND AS with effect from January 01,
2017, with the comparatives for the periods ending December 31, 2016.
The implementation of IND AS is a major change process for which the
Company has established a project team and is dedicating considerable
resources. The impact of the change on adoption of IND AS is being
assessed.
26. VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has a vigil mechanism named Ethical View Reporting Policy
(EVRP) to report concerns about unethical behavior, actual/suspected
frauds and violation of Company's Code of Conduct. Protected
disclosures can be made by a whistle blower through several channels.
An Ethical View Committee has been constituted to discuss the finding of
the investigations of the complaints and to recommend remedial actions.
The Audit Committee of the Board oversees the functioning of the
Ethical View Committee. The Company has disclosed the details of the
Ethical View Reporting Policy on its website www.acclimited.com.
Also during the year, your Company reached out extensively to employees
to conduct greater awareness on Value Creation in Competitive
Environment (VCCE) and on Anti Bribery and Corruption Directive (ABCD)
through e-learning modules and face to face sessions, achieving a high
level of engagement and compliance. This reflects your Company's strong
commitment to "Zero tolerance" for non-compliances in this regard and
to doing business the right way and with integrity.
27. SUBSIDIARIES, ASSOCIATE AND JOINT VENTURE COMPANIES
27.1 SUBSIDIARIES
Bulk Cement Corporation (India) Limited (BCCI)
During the year under review, BCCI handled cement volumes of 1.00
million tonnes as against 1.03 million tonnes in 2014. The Profit
before tax and exceptional items for the year 2015 was Rs, 3.04 crore as
against Rs, 6.29 crore in the year 2014.
ACC Mineral Resources Limited (AMRL)
AMRL had entered into a Joint Venture for developing four coal blocks.
Consequent upon the cancellation of these coal blocks during 2014, this
Company does not have any operating income.
Other Subsidiaries
As regards the other three Subsidiary Companies, i.e Lucky Minmat
Limited, National Limestone Company Private Limited and Singhania
Minerals Private Limited, these are limestone deposit companies and are
currently not operational.
27.2 ASSOCIATE / JOINT VENTURE COMPANIES
As on December 31, 2015, the following are Associate Companies:
Alcon Cements Company Private Limited Aakaash Manufacturing Company
Private Limited Asian Concretes and Cements Private Limited
During the year, the Company has invested Rs, 2.5 crore in equity shares
of "One India BSC Private Limited" which is a jointly controlled entity
with equal participation with Ambuja Cements Limited, a fellow
subsidiary Company, with an aim to provide back office services with
respect to routine processes.
27.3 Statement containing salient features of Accounts of the Company's
Subsidiaries / Associate / Joint Venture Companies
Pursuant to Section 129(3) of the Act, a statement in Form "AOC 1"
containing the salient features of the Financial Statements of each of
the subsidiaries, associates and joint venture companies is attached.
Although the audited statements of account, relating to the Company's
subsidiaries are no longer required to be attached to the Company's
Annual Report, the same are enclosed as and by way of better disclosure
practices. These are also available on the Company's website and can be
accessed at the we blink http://www.acclimited. com/new site/finance/an
nual_report_2015.pdf
28. LAFARGEHOLCIM LTD.
In April 2014, Holcim Limited (which represents your Company's promoter
group) had announced its intention to combine with Lafarge S.A through
a merger of equals to create the most advanced company in the global
building materials industry. Holcim and Lafarge completed their global
merger to create a new company called LafargeHolcim Ltd. which was
launched on July 15, 2015 and which has emerged as a world leader in
the building materials industry.
While the global merger has no immediate impact on your Company's
operations, the Company has taken advantage of the opportunity to align
itself with some of the group's policies in the areas of Health &
Safety and Sustainable Development as also benefit from the access to a
larger pool of global best practices.
29. DIRECTORS & KEY MANAGERIAL PERSONNEL
29.1 Appointment of Directors
Pursuant to the request received from Holcim (India) Private Ltd, to
consider the appointment of their representatives on the Board of
Directors and on the recommendation of the Nomination & Remuneration
Committee, the Board of Directors has appointed:
Mr Eric Olsen, CEO of LafargeHolcim Ltd. (LH), as an Additional
Director of the Company with effect from July 17, 2015 in the category
of Non-Executive, Non-Independent Director.
Mr Christof Hassig, as an Additional Director of the Company with
effect from December 9, 2015 in the category of Non-Executive,
Non-independent Director. Mr Hassig, heads the Corporate Strategy and
Mergers & Acquisitions function in LH.
Mr Martin Kriegner, as Additional Director of the Company with effect
from February 11, 2016 in the category of a Non-Executive,
Non-Independent Director. Mr Kriegner who is currently Area Manager for
LH operations in Central Europe, will be taking over as Area Manager
for India in the LH group with effect from March 1, 2016.
In accordance with Section 161 of the Act, the aforesaid Directors hold
office upto the date of the forthcoming Annual General Meeting of the
Company and being eligible offer their candidature for appointment as
Directors. Your approval for their appointment as Directors in the
category of Non-Executive, Non-independent Directors has been sought in
the Notice convening the forthcoming Annual General Meeting of the
Company.
The Board of Directors has elected Mr Eric Olsen, CEO of LafargeHolcim
Ltd., as Deputy Chairman of the Board with effect from February 11,
2016.
29.2 Resignation of Directors
Consequent upon his resignation as CEO of former Holcim Limited, Mr
Bernard Fontana, a Non-Executive and Non-independent Director of the
Company resigned from the Board of Directors with effect from July 17,
2015.
Mr Aidan Lynam, a Non-Executive and a Non-Independent Director of the
Company also resigned from the services of former Holcim Limited and
consequently stepped down from the Board of Directors of the Company
with effect from July 14, 2015.
Mr Bernard Terver, Deputy Chairman,
a Non-Executive and Non-Independent Director decided to retire from the
services of LafargeHolcim Ltd. and has therefore stepped down from the
Board of Directors of the Company with effect from February 11, 2016.
The Board of Directors has placed on record its warm appreciation of
the rich contribution made by Mr Fontana, Mr Lynam and Mr Terver during
their respective tenures as Directors of the Company.
29.3 Directors coming up for retirement by rotation
In accordance with the provisions of the Act, and the Articles of
Association of the Company, Mr Vijay Kumar Sharma retires by rotation
and being eligible offers his candidature for re-appointment as a
Director.
29.4 Independent Directors
The Independent Directors hold office for a fixed term of five years
and are not liable to retire by rotation.
In accordance with Section 149(7) of the Act, each Independent Director
has given a written declaration to the Company confirming that he/she
meets the criteria of independence as mentioned under Section 149(6) of
the Act and SEBI Regulations.
29.5 Board Effectiveness
a. Familiarization Programme for the Independent Directors
In compliance with the requirements of SEBI Regulations, the Company
has put in place a familiarization programme for the Independent
Directors to familiarize them with their role, rights and
responsibility as Directors, the working of the Company, nature of the
industry in which the Company operates, business model etc. The details
of the familiarization programme are explained in the Corporate
Governance
Report. The same is also available on the website of the Company and
can be accessed by web link http://www.acclimited.com/ newsite/pdf/lnd
uction_program.pdf
b. Board Evaluation
Pursuant to the provisions of the Act and the SEBI Regulations, the
Board has carried out the annual performance evaluation of its own
performance, the Directors individually as well as the evaluation of
the working of its Audit, Nomination & Remuneration and Compliance
Committees. The criteria applied in the evaluation process are
explained in the Corporate Governance Report.
29.6 Key Managerial Personnel
The following persons have been designated as Key Managerial Personnel
of the Company pursuant to Section 2(51) and Section 203 of the Act,
read with the Rules framed there under.
1. Mr Harish Badami, CEO & Managing Director
2. MrSunil Nayak, Chief Financial Officer
3. Mr Burjor D Nariman, Company Secretary & Head Compliance
None of the Key Managerial Personnel have resigned during the year
under review.
29.7 Criteria for selection of candidates for appointment as Directors,
Key Managerial Personnel and Senior leadership positions
Your Company has laid down a well-defined criteria for the selection of
candidates for appointment as Directors, Key Managerial Personnel and
senior leadership positions. The relevant information has been given
in Annexure 'B' which forms part of the Board's Report.
29.8 Remuneration Policy for Directors
The policy for remuneration of Directors, Key Managerial Personnel and
Senior Management Personnel is set out in Annexure 'C which forms part
of the Board's Report.
30. DIRECTORS' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the
information and explanations obtained by them, your Directors make the
following statement in terms of Section 134 of the Act:
a. that in the preparation of the annual accounts for the year ended
December 31, 2015, the applicable accounting standards have been
followed along with proper explanation relating to material departures,
if any;
b. that such accounting policies as mentioned in Note 2 of the Notes
to the Financial Statements have been selected and applied consistently
and judgment and estimates have been made that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company as on December 31, 2015, and of the profit of the Company
for the year ended on that date;
c. that 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 and for
preventing and detecting fraud and other irregularities;
d. that the annual accounts have been prepared on a going concern
basis;
e. that proper internal financial controls laid down by the Directors
were followed by the Company and such internal-financial controls are
adequate and were operating effectively; and
f. that proper systems to ensure compliance with the provisions of all
applicable laws have been devised and such systems were adequate and
were operating effectively.
31. MEETINGS
31.1 Board Meetings
During the year, six Board Meetings were convened and held, the details
of which are given in the Corporate Governance Report.
31.2 Audit Committee
The Audit Committee comprises five Members of which four including the
Chairman of the Committee are Independent Directors. During the year,
six Audit Committee Meetings were convened and held. Details of the
Committee are given in the Corporate Governance Report.
31.3 CSR Committee
The CSR Committee comprises five members of which three including the
Chairman of the Committee are Independent Directors. The Committee met
twice during the reporting period. Details of the Committee are given
in the Corporate Governance Report.
32. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All transactions with Related Parties are placed before the Audit
Committee as also the Board for approval. Prior omnibus approval of
the Audit Committee and the Board is obtained 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 and the Board of Directors for their
approval on a quarterly basis. The statement is supported by a
certificate from the CEO & MD and the CFO. Your Company has developed a
Related Party Transactions Manual, Standard Operating Procedures for
the purpose of identification and monitoring of Related Party
Transactions.
The policy on Related Party Transactions as approved by the Board is
available on the Company's website and can be accessed through we blink
http://www. acclimited.com/new site/pdf/CG/PolicyonRPT.pdf All
transactions entered into with related parties during the year were on an
arm's length pricing basis and were in the ordinary course of business.
There were no material related party transactions i.e transactions
exceeding ten percent of the annual consolidated turnover as per the
last audited financial statements entered into during the year.
Accordingly, there are no transactions that are required to be reported
in Form AOC 2.
None of the Directors nor the Key Managerial Personnel has any
pecuniary relationships or transactions vis-Ã -vis the Company.
33. ADOPTION OF NEW ARTICLES
The Companies Act, 2013 and The Companies (Amendment) Act, 2015 has
necessitated changes in the Articles of Association of the Company. It
is accordingly proposed that a new set of Articles of Association be
adopted by the Members and a Resolution to this effect is included at
Item No. 9 in the Notice of the Annual General Meeting. The Board
recommends the resolution for adoption by the Members.
34. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant or material orders passed by the Regulators,
Courts or Tribunals which impact the going concern status of the
Company and its future operations. However, Members' attention is drawn
to the following development.
Chaibasa Mining
The District Mining Officer, Chaibasa, by his letters dated January 2,
2015 and March 21, 2015, demanded amounts of Rs, 215 crore and Rs, 666
crore towards alleged illegal mining on the part of the Company in
mining lease areas of 63.87 hectares and 598.88 hectares, respectively.
The basis for the State to issue these demands were two judgments of
the Hon'ble Supreme Court viz. the Goa Foundation case (dated April
21, 2014) and Common Causes case (dated May 16, 2014). It was the
contention of the State that in view of the aforesaid judgments the
benefit of deemed renewal cannot be made available for second and
subsequent renewals and the mining activity therefore subsequent to
validity of the last renewals would attract penalties under Section
21(5) of the Mines & Mineral (Development & Regulation) Act (MMDR Act)
and hence the levy of penalties as aforesaid.
The aforesaid demands were challenged by your Company by way of a Writ
Petition before the Hon'ble High Court of Jharkhand at Ranchi on the
grounds that pursuant to the Supreme Court Judgments, Parliament had
introduced the MMDR Amendment Ordinance on 12.01.2015, which
subsequently became the MMDR (Amendment) Act, 2015. As per Section
8A(5) of the MMDR (Amendment) Act, in those cases where application for
renewal of mining leases were pending, the leases stood automatically
extended from the date of the last expiry upto 2030.
The Hon'ble High Court, after hearing the Senior Counsel for the
Company, has stayed both the demands upon the deposit of Rs, 48 Crore,
which is without prejudice to the rights and contentions of both the
parties. Members' attention is invited to Note No. 36(B)(f) of the
Notes to the Financial Statements.
Members' attention is also invited to Notes on Contingent Liabilities,
in the notes forming part of the Financial Statements.
35. AUDITORS
35.1 Statutory Auditors
The Company's Auditors Messrs S R B C & CO LLP, Chartered Accountants,
Mumbai, who retire at the ensuing Annual General Meeting of the Company
are eligible for re-appointment. They have confirmed their eligibility
under Section 141 of the Act, and the rules framed there under for
re-appointment as Auditors of the Company. As required under SEBI
Regulations, the Auditors have also confirmed that they hold a valid
certificate issued by the Peer Review Board of the Institute of
Chartered Accountants of India.
The Auditors have given an unqualified Audit Report.
35.2 Cost Auditors
The cost audit records maintained by the Company in respect of its
cement activity are required to be audited pursuant to Section 148 of
the Act and the Rules framed there under. Your Directors have on the
recommendation of the Audit Committee, appointed Messrs N I Mehta & Co.
to audit the cost accounts of the Company for the financial year ended
December 31, 2015. As required under the Act, 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 for seeking Members
ratification for the remuneration payable to Messrs N I Mehta & Co.,
Cost Auditor, is included at Item No. 8 of the Notice convening the
Annual General Meeting.
35.3 Secretarial Audit
Pursuant to the provisions of Section 204 of the Act, and the Rules
framed hereunder, the Company has appointed Messrs. Pramod S Shah &
Associates, a firm of Company Secretaries in Practice to undertake the
Secretarial Audit of the Company. The Report of the Secretarial Auditor
is annexed to the Board's Report as Annexure'.
36. AWARDS
ACC has been recognized for Corporate Excellence in Sustainability and
felicitated with the prestigious CII-ITC Sustainability Award 2015 for
"Outstanding Accomplishment" in the Category A (large companies with
turnover > Rs, 2000 crore). Winners of the CII-ITC Sustainability Award
are considered as the country's best role models in sustainability
practices.
Celebrating its 20th anniversary, National Stock Exchange of India
Limited (NSE) felicitated your Company and fifteen other companies out
of the 50 companies whose scrip constitutes the Nifty 50 Index and have
been a part of the index from its inception.
Your Company's Annual Report for 2014 won the "Silver Shield" from the
prestigious Institute of Chartered Accountants of India for "Excellence
in Financial Reporting".
During the year under review, your Company also received several other
awards and citations from reputed bodies for good performance in areas
as diverse as Safety, Manufacturing, Energy Conservation, Logistics,
Environment Management and Communication.
37. ENHANCING SHAREHOLDER VALUE
Your Company firmly believes that its success in the marketplace and a
good reputation are among the primary determinants of value to the
shareholder. The organizational vision is founded on the principles of
good governance and by the resolve to be a customer-centric
organization which motivates the Company's Management to be aligned to
deliver leading-edge building products backed with dependable after
sales services.
Your Company is committed to creating and maximizing long-term value
for shareholders and essentially follows a four pronged approach to
achieve this end.
a) by increasing all-round operational efficiencies,
b) by identifying strategies that enhance its competitive advantage,
c) by managing risks and pursuing opportunities for profitable growth,
and
d) by cementing relationships with other important stakeholder groups
through meaningful engagement processes and mutually rewarding
associations that enable it to create positive impacts on the economic,
societal and environmental dimensions of the Triple Bottom Line.
Underlying this is also a dedication to value-friendly financial
reporting that assures the shareholder and investor of receiving
transparent and unfettered information on the Company's performance.
38. CORPORATE GOVERNANCE
A separate section on corporate governance practices followed by the
Company, together with a certificate from the Company's Auditors
confirming compliance, forms a part of this Annual Report, as per SEBI
Regulations.
39. BUSINESS RESPONSIBILITY REPORTING
A separate section on Business Responsibility forms part of this Annual
Report as required by SEBI Regulations.
40. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
The information on conservation of energy, technology absorption and
foreign exchange earnings and outgo as stipulated in Section 134(3)(m)
of the Act, and the Rules framed hereunder is annexed herewith as
Annexure 'E' to the Board's Report.
41. EXTRACT OF ANNUAL RETURN
As required by Section 92(3) of the Act and the Rules framed
hereunder, the extract of the Annual Return in Form MGT 9 is enclosed
as Annexure 'F' to the Board's Report.
42. PARTICULARS OF EMPLOYEES
Disclosure pertaining to the remuneration and other details as required
under Section 197(12) of the Act, and the Rules framed there under is
enclosed as Annexure 'G' to the Board's Report.
The information on employees who were in receipt of remuneration of not
less than Rs, 60 lakhs during the year or Rs, 5 lakhs per month during any
part of the year forms part of this Report and will be provided to any
Member on a written request to the Company Secretary. In terms of
Section 136 of the Act, the Report and Accounts are being sent to the
Members and others entitled thereto, excluding the aforesaid Annexure
which is available for inspection by the Members at the Registered
Office of the Company during business hours on working days of the
Company up to the date of the ensuing Annual General Meeting.
44. ACKNOWLEDGEMENTS
Your Directors are thankful to the Central and State Government
Departments, Organizations and Agencies for their continued guidance
and co-operation. The Directors are grateful to all valuable
stakeholders of the Company viz. our customers, shareholders, dealers,
vendors, banks and other business associates for their excellent
support and help rendered during the year. The Directors also
acknowledge the unstinted commitment and valued contribution of all
employees of the Company.
For and on behalf of the Board of Directors
N S Sekhsaria
Chairman
Mumbai
February 10, 2016
Dec 31, 2014
Dear Members,
The Directors take pleasure in presenting the Seventy Ninth Annual
Report together with the audited financial statements for the year
ended December 31, 2014. The Management Discussion and Analysis has
also been incorporated into this report.
1. HIGHLIGHTS OF PERFORMANCE
* Consolidated income for the year increased by 5% to Rs. 11,995.42
Crore as compared to Rs. 11,431.10 Crore in 2013;
* Consolidated net sales for the year was
Rs. 11,480.31 Crore as compared to
Rs. 10,889.08 Crore in 2013, a growth of 5.4%;
* Consolidated profit before tax for the year was Rs. 1,119.54 Crore as
compared to Rs. 1,213.64 Crore in 2013;
* Consolidated Profit after tax for the year was Rs. 1,161.82 Crore
(including tax write back of Rs. 309.23 Crore) as compared to Rs.
1,094.67 Crore in 2013 (including tax write back of Rs. 216.74 Crore).
2. FINANCIAL RESULTS
Consolidated
Rs. Crore
2014 2013
Revenue from Operations(Net) and
other income 11,995.42 11,431.10
Profit Before Tax (PBT) 1,119.54 1,213.64
Provision for Tax (31.13) 131.91
Profit After Tax (PAT) 1,161.82 1,094.67
Balance brought forward from previous year 4,158.74 3,845.79
Profit available for Appropriations 5,320.56 4,940.46
Appropriations:
Interim Equity Dividend 281.62 206.52
Proposed Final Equity Dividend 356.72 356.72
Tax on Equity Dividends 119.18 95.72
Previous Year Tax on Equity Dividends - 2.76
General Reserve 130.00 120.00
Surplus carried to the next year''s account 4,433.04 4,158.74
Standalone
Rs. Crore
2014 2013
Revenue from Operations(Net) and
other income 12,006.49 11,435.28
Profit Before Tax (PBT) 1,135.20 1226.96
Provision for Tax (33.09) 131.20
Profit After Tax (PAT) 1,168.29 1,095.76
Balance brought forward from previous year 4,175.87 3,861.83
Profit available for Appropriations 5,344.16 4,957.59
Appropriations:
Interim Equity Dividend 281.62 206.52
Proposed Final Equity Dividend 356.72 356.72
Tax on Equity Dividends 119.18 95.72
Previous Year Tax on Equity Dividends - 2.76
General Reserve 130.00 120.00
Surplus carried to the next year''s account 4,456.64 4,175.87
The Company proposes to transfer an amount of Rs. 130 Crore to the
General Reserves. An amount of Rs. 4,456.64 Crore is proposed to be
retained in the Statement of Profit and Loss.
3. DIVIDEND
Your Directors are pleased to recommend a final dividend of Rs. 19/-
per equity share of Rs. 10 each. The Company had distributed an interim
dividend of Rs. 15/- per equity share of Rs. 10 each in August 2014.
The total dividend for the year ended December 31, 2014 would
accordingly be Rs. 34/- per equity share of Rs. 10 each. The total
outgo for the current year amounts to Rs. 757.52 Crore, including
dividend distribution tax of Rs. 119.18 Crore as against Rs. 658.96
Crore including dividend distribution tax of Rs. 95.72 Crore in the
previous year.
During the year, the unclaimed dividend pertaining to the 69th dividend
for the year ended December 31, 2006 and the 70th Interim dividend for
the year ended December 31, 2007 were transferred to the Investor
Education & Protection Fund after giving due notice to the Members.
4. SHARE CAPITAL
The paid up Equity Share Capital as on December 31, 2014 was Rs. 187.95
Crore. During the year under review, the Company has not issued shares
with differential voting rights nor granted stock options nor sweat
equity. As on December 31, 2014, none of the Directors of the Company
hold shares or convertible instruments of the Company.
5. FINANCE
Cash and cash equivalent as at December 31, 2014 was Rs. 1,686 Crore.
The Company continues to focus on judicious management of its working
capital. Receivables, inventories and other working capital parameters
were kept under strict check through continuous monitoring.
5.1 NON CONVERTIBLE DEBENTURES
During the year, the Non-Convertible Debentures aggregating Rs. 32
Crore were redeemed (Rs. 125 Crore were bought back/ redeemed in 2013).
Accordingly all the debentures stand extinguished.
5.2 DEPOSITS
The Company had discontinued its fixed deposit scheme in the financial
year 2001- 02. Despite efforts to identify and repay unclaimed deposits
the total amount of fixed deposits matured and remaining unclaimed with
the Company as on December 31, 2014 was Rs. 0.02 Crore. The Company has
not accepted deposit from the public falling within the ambit of
Section 73 of the Companies Act, 2013 and The Companies (Acceptance of
Deposits) Rules, 2014.
5.3 PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
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.
6. ECONOMIC SCENARIO AND OUTLOOK
Indian economic growth in 2014 rose to ~5.2% from 4.7% last year as a
result of the improving macro-economic situation. The wholesale and
consumer price inflation has fallen to ~4.2% and 7.4% from last year''s
6.3% and 10.1% on the back of a strong base effect. Falling oil prices,
lower food and commodity prices and the proactive measures taken by the
Government helped in containing inflation in 2014.
Contrary to expectations, agricultural growth was strong at ~4.5% in
2014. However, the slow pace of reforms, lack of impetus for
infrastructure projects, high interest rates and tightening of fiscal
policies adversely impacted the capital goods sector. Industrial
production / output was also sluggish.
The low economic growth appears to have bottomed out and a gradual
increase in economic activity is expected in 2015. The medium term to
long term growth prospects look positive in view of the Government''s
determination to bring in reforms. For the year 2015, the economy is
expected to grow at a higher rate than in 2014. The long term prospects
for the economy is optimistic.
7. CEMENT INDUSTRY OUTLOOK AND OPPORTUNITIES
The Indian Cement Industry has an installed capacity of ~360 million
tonnes and the domestic consumption in the calendar year 2014 was
~264 million tonnes. Cement consumption grew at the rate of ~6% in the
calendar year 2014.
The overall cement demand is estimated to grow at the rate of 6% in
2015. The consumption growth may go beyond 6% if investment is made in
the infrastructure segment. With the gradual reduction in fiscal
deficits and Consumer Price Index, it is expected that the interest
rates would gradually come down which would stimulate demand in the
housing sector. The Company''s continued focus on cost reduction, its
thrust on increasing the sale of premium products and various other
customer excellence initiatives should help in presenting an improved
performance.
8. CEMENT BUSINESS - PERFORMANCE AT A GLANCE
2014 2013 Change
Production - 24.24 23.86 1.59
million tonnes
Sales Volume- 24.21 23.93 1.17
million tonnes
Sale Value (Rs. Crore) 10,720.28 10,233.17 4.76
(Operating EBITDA 1,473.13 1,609.19 -8.45
(Rs. Crore)
Operating EBITDA 13.74 15.73
Margin (%)
9. MARKET DEVELOPMENT
9.1 Volume
Domestic sales in 2014 increased by 1.5% to 24.14 million tonnes as
compared to 23.80 million tonnes achieved in 2013. Cement exports in
2014 reduced to 0.07 million tonnes as compared to 0.13 million tonnes
in 2013. Total cement sales (including exports) increased by 1.2% to
24.21 million tonnes as compared to 23.93 million tonnes achieved in
2013. The Company continues to focus on the Individual House Builder
segment for higher profitability.
The sale volumes of premium products in 2014 was 2.73 MT as against
1.55 MT in 2013.
9.2 Selling Price
Selling price of cement improved by 4% in 2014 over 2013.
10. COSTS - CEMENT BUSINESS
During the year 2014, the economy witnessed an upward movement in the
overall cost structure and the Company continued to focus on cost
improvements through its excellence programmes.
10.1 Cost of materials consumed
Cost of materials consumed accounted for 15% of total income from
operations (14.4% in 2013). Cost of material consumed increased by 11%
in 2014 over 2013. Slag prices were lower by 17% in 2014 as compared to
2013 while gypsum prices remained almost flat. Fly ash prices
increased by 11% in 2014 over 2013. The cost of material consumed
during the year increased on account of purchase of clinker as a result
of temporary suspension of limestone mining operation at Chaibasa and
Bargarh.
10.2 Power & Fuel
The power and fuel spend was Rs. 2,441.82 Crore which constitutes 21%
of the total income from operations of the Company (Rs. 2,375.97 Crore
in 2013 i.e. 21% of the total income from operations of the Company).
The various initiatives taken such as the usage of industrial waste and
biomass as alternate fuels and optimization of fuel mix, has limited
the power and fuel costs increases to 2.8% in 2014 over 2013. Coal cost
for kilns increased by 3.6% in 2014 over 2013 mainly on account of a
drop in supply of linkage coal due to shortage of rakes and resultant
higher procurement of imported and e-auction coal. Use of imported coal
increased to 24% in 2014 (21% in 2013) while linkage coal availability
reduced to 57% in 2014 (67% in 2013). Coal cost for captive power
plants increased by 10% mainly because of limited availability of CPP
grade linkage coal and resultant higher procurement of market /
imported coal. Improved operating efficiencies of kiln and captive
power plants and benefits derived from Waste Heat Recovery System
(WHRS) operations had a positive impact in limiting cost increases.
The Company continues to focus on maximizing Alternative Fuels & Raw
Materials (AFR) consumption in the cement manufacturing process.
10.3 Freight & Forwarding expenses
Freight and forwarding expenses were Rs. 2,598.33 Crore which
constitutes 22% of total income from operations of the Company (Rs.
2,308.87 Crore in 2013 i.e. ~21% of total income from operations).
Freight and forwarding expenses went up by 12.5% in 2014 over 2013.
Freight on clinker transfer increased mainly on account of railway
freight increase, freight rationalization by Railways and long lead
inter unit movements of clinker.
Freight on cement despatches increased on account of higher cement sale
volumes as also on account of hike in rail and road freight. This
increase was partially offset by improvement in logistics operational
efficiencies.
10.4 Other Expenditure
Other expenditure constitutes ~21% of total income from operations of
the Company. The increase in other expenditure was restricted to 3.5%
in 2014 over 2013.
Continued focus on reduction in fixed cost helped in restricting the
fixed cost increases to ~3% in 2014 on a YoY basis.
11. INSTITUTIONALIZING EXCELLENCE
In 2012, an Institutionalizing Excellence programme was launched across
all functions to sustain exceptional performance over time. The
programme is now central to the Company''s growth initiatives and the
whole organization is galvanized to accomplish targets. Over a period
of two years, the programme has yielded encouraging results and has
helped the Company balance inflationary pressures by improving
efficiencies. The Institutionalizing Excellence journey continues with
a strong focus on Safety.
In Manufacturing Excellence, two Plants, Chanda and Jamul, figured in
the top fifteen amongst all Holcim Plants globally in terms of
efficiency. Efforts are underway towards raising the Company''s overall
efficiency parameters closer to aspirational targets and to pursue
further reductions in input costs of coal, power generation and in
mineral components like gypsum, slag and fly ash. A manufacturing
academy was setup that drives continuous improvement in each Plant by
regular training and skill enhancement.
The Customer Excellence programme focuses on the customer and seeks to
achieve volume and price improvement and steps for the enhancement of
brand equity.
The Logistics Excellence journey saw visible and significant
initiatives to optimize cost-to- serve and time-to-serve, reduce lead
distances, eliminate multiple handling and initiate the creation of
modern infrastructure at the plants and warehouses. The Radio Frequency
Identification Device (RFID) and Global Positioning Systems (GPS)
modules which were successfully deployed at three plants are being
replicated at all plants of the Company in a phased manner.
12. CAPEX
The ongoing Jamul Project in Chhattisgarh, which comprises a new
state-of-the-art clinkering line of a capacity of 2.79 million tonnes
per annum and grinding facilities of a capacity of 1.10 million tonnes
at Jamul and of 1.35 million tonnes at Sindri are expected to be
commissioned during 2015.
The pre-processing and co-processing Alternative Fuel and Raw Materials
(AFR) platforms at Wadi in Karnataka and Kymore in Madhya Pradesh have
been commissioned in December 2014.
13. COAL BLOCKS
During the year 2009, the Company through its wholly owned subsidiary,
ACC Mineral Resources Limited (AMRL), had entered into four separate
Joint Venture Agreements (JVA) with Madhya Pradesh State Mining
Corporation Limited (MPSMC) for the development and operation of four
coal blocks with an equity participation of 49% by AMRL and 51% by
MPSMC. The coal from these four coal blocks was earmarked for supplies
to cement plants of the Company.
Out of the four coal blocks being developed, the Bicharpur Coal Block
in district Shahdol was in an advanced stage of development. The second
coal block Marki Barka in district Singrauli was also ready for
commencement of mine development activities with all its regulatory
clearances in place.
While the development of coal blocks was in progress, on September 24,
2014, the Hon''ble Supreme Court of India cancelled the allocation of
Coal Blocks by the Government of India to State and private sectors.
Consequently, allocation of Marki Barka, Semaria/Piparia and Morga IV
coal blocks to MPSMC stood cancelled with immediate effect. However, by
virtue of an advanced stage of development, the Bicharpur coal block is
liable for cancellation with effect from March 31,2015.
As of December 31, 2014, the amount incurred, invested and advanced
(including deposits / advances to MPSMC and other parties) by the
Company in this regard is ~ Rs. 153.79 Crore. Subsequently, the
Government promulgated The Coal Mines (Special Provisions) Ordinance,
2014, which intends to take appropriate action to deal with the
situation arising pursuant to the Hon''ble Supreme Court''s decision. The
Management, based on its understanding of it''s contractual rights under
its JV agreements, its interpretation of the Ordinance and on the basis
of legal advice, believes that the financial loss or operational impact
if any, will not be significant.
In addition to the above "Moira Madhujore North and South" Coal block
in the State of West Bengal was allocated to six companies by Ministry
of Coal in December 2009, wherein your Company holds equity of 14.37%.
The allocation of the said coal block has also been cancelled by the
aforementioned Order of Supreme Court. The Company has impaired its
investment amounting to Rs. 0.69 Crore made in this Joint Venture
Company.
14. LIMESTONE MINING - NEW REGULATORY CHANGES:
As a sequel to the Supreme Court''s Order dated May 16, 2014 in two
separate Public Interest Litigations, policy changes were made by the
Government with regard to renewal of mines and deemed mining rights.
As per the Supreme Court''s directive, such of the mines which were
hitherto operating under "deemed renewal" without any express orders of
renewal passed by the State Governments were not allowed to operate
until express orders were passed by the respective State Governments in
terms of Section 8(3) of the Mine and Mineral (Development and
Regulation) Act, 1957. Pursuant thereto, the Government of India
amended Sub Rule, 24A(6) of the Mineral Concession Rules which had the
effect of disallowing deemed renewal status for second and subsequent
mining leases and limiting the deemed renewal status even in case of
the first renewal application to only two years. This development has
temporarily impacted the mining operations at Bargarh and Chaibasa
which in turn affected the clinker production at the said Plants and
clinker was required to be procured from other sister plants as well as
from outside. The Government has since passed the Mines and Minerals
(Development and Regulation) Ordinance on January 12, 2015 in terms of
which the mining leases would stand extended from the date of their
last renewal upto March 31, 2030 in cases where the mines were being
operated for captive consumption, such as in the case of the Company.
15. READY MIXED CONCRETE (RMX)
Ready Mixed Concrete business continues to perform well despite the
fact that in 2014, the Industry witnessed the entry of more players and
increased liquidity issues. The RMX market is greatly fragmented and
with increased participation by the unorganized segments, there is
pressure on pricing. Against this backdrop, the Operating EBITDA
increased to Rs. 34.12 Crore in 2014 from Rs. 19.61 Crore in 2013.
Sales volume improved by 18%.
The growth in business is attributed to the efforts made to enhance
customer satisfaction. ACC Concrete is being perceived as a solutions
provider rather than merely as a concrete supplier. This was made
possible by continuous customer involvement in projects and by offering
various products and providing value added services for its
stakeholders. A new line of allied products which could be supplied in
the form of ready to use mortar were developed, produced and marketed.
The Centre of Excellence set up by the Company facilitates and supports
capability demonstration initiatives, helps in engaging with customers
and trains professionals in advanced construction techniques.
There is considerable focus by the Government on infrastructure
development and in the year 2015, the construction sector is expected
to grow at a higher rate than in 2014. Demand for RMX is expected to
revive in almost all markets across the country and is likely to be
stronger in metro markets like Mumbai, Bengaluru, Chennai, and Delhi.
Major demand is expected to come from large investments in
infrastructure and development of real estate across India in proposed
future cities. Reduction in lending rates by banks and restructuring of
loans should ease the liquidity position and help boost sales and
profitability. Ready Mix Concrete is expected to maintain the momentum
and contribute to the overall business with enhanced participation.
2014 2013 Change
Production - Lakh 19.65 15.96 23.12
Cubic Meters
Sales volume - Lakh 21.24 18.00 18.00
Cubic Meters
Sale value - (Rs. Crore) 760.77 655.91 15.99
Operating EBITDA - 34.12 19.61 73.99
(Rs. Crore)
Operating EBITDA 4.48 2.99
Margin (%)
16. SUSTAINABLE DEVELOPMENT
Sustainability has been deeply embedded into the Company''s business and
has become an integral part of its decision making process while
considering social, economic and environmental dimensions. During the
year 2014, a Sustainability Development road map for the period
2014-2017 was developed with a focus on the following areas:
(a) Reduction of Specific CO2 emissions;
(b) Enhancing Thermal Substitution Rate (TSR);
(c) Reducing specific water consumption;
(d) Reduction of specific total energy intensity (Thermal &
Electrical);
(e) Improving CSR footprint focusing on inclusive business projects.
The Company''s cement operations retained its certifications under
various management systems for quality, environment, energy and safety.
16.1 CO2 Emissions:
The Company continued in its efforts towards achieving the commitments
of Low Carbon Technology Roadmap for the Indian Cement Industry under
the umbrella of the Cement Sustainability Initiative (CSI) in India of
the World Business Council for Sustainable Development (WBCSD).
The various initiatives taken resulted in reducing the specific CO2
emissions per tonne of cement to 526 Kg CO2/tonne of cement from 538 Kg
CO2/tonne of cement. The CO2 emission per tonne of cement including
emissions from on site power generation has been reduced to 617 Kg CO2/
tonne of cement from 641 Kg CO2/tonne of cement.
16.2 Alternative Fuels and Raw Materials (AFR):
The Company provides co-processing and waste management services to
over a hundred customers which facilitates disposal of a wide range of
hazardous and non-hazardous industrial waste streams in the form of
solids, sludges and liquids.
The pre-processing and co-processing platforms which were commissioned
during the year at Kymore and at Wadi will add momentum to
co-processing of larger volumes of wastes in an efficient manner. The
AFR feeding and storage systems have also been ramped up in these
plants to the required levels.
16.3 Reduction of Thermal Energy
Many initiatives for process optimization were taken to reduce specific
thermal energy in the manufacturing of clinker. These efforts resulted
in reduction of 16 MJ of specific thermal energy / tonne of clinker to
3050 MJ in 2014 as compared to 3066 MJ in 2013. Other measures such as
enhancing the usage of industrial waste and biomass as alternative
fuels and optimization of fuel mix has helped to contain the energy
costs to some extent.
16.4 Clinker Factor
Through research and product innovation, the Company has been able to
reduce clinker factor in both varieties of blended cements viz.
Portland Slag Cement and Portland Pozzolana Cement. The use of slag and
fly ash in cement manufacture helps the steel industry and power plants
to dispose of their waste in an environmentally friendly manner.
The Company''s blended cement production activities at Wadi, Kymore,
Chanda and Tikaria are registered with United Nations Framework
Convention on Climate Change (UNFCCC) as a Clean Development Mechanism
(CDM) Project. The blended cement project is one of the biggest CDM of
its kind in the Indian Cement Industry.
16.5 Renewable Energy:
The Company''s renewable energy portfolio consists of 19 MW in the form
of wind farms across three states viz. 9 MW in Tamil Nadu, 7.5 MW in
Rajasthan and 2.5 MW in Maharashtra. These helped the Company meet its
non-solar renewable purchase obligations for Madukkarai and Lakheri
Plants.
Various options are being evaluated to enhance the renewable energy
portfolio such as setting up new assets of renewable energy and by use
of renewable energy through the Power Purchase Agreement route.
16.6 Waste Heat Power generation from process waste heat
During the year 2014, the Waste Heat Recovery System (WHRS) at Gagal
Cement Works became fully operational and produced 46.64 million kWh of
electrical energy.
16.7 Dust Emissions
The Company''s average kiln stack dust emissions were well below the
statutory norms fixed by the States in which the Company operates. This
has been achieved through various controls and maintenance measures
which were implemented on a continuous basis. The Company has also
implemented various measures across all its operations to control
fugitive emissions.
16.8 Water Initiatives:
Multiple initiatives were taken in process and non process areas to
improve the water performance which resulted in 15.6% reduction of
specific water consumption/ tonne of cement.
These include:
* Increased use of recycled water for process and non-process
applications;
* Minimizing leakages and wastages;
* Implementing water metering systems for accurate measurement of water
consumption/withdrawal and to initiate more intense and focused
measures for conserving water;
* Implementing rain water harvesting measures in mines, plant, colony
and surrounding communities.
16.9 Biodiversity
A biodiversity risk assessment of all mines of the Company has been
carried out. Afforestation and biodiversity conservation programmes
have been initiated / implemented across all the Company''s plants and
mines. The Company has become a member of Indian Business Biodiversity
Initiative (IBBI) a collaborative initiative of Confederation of Indian
Industry (CII) and Ministry of Environment Forest and Climate Change
(MoEF & CC) and Leaders for Nature (LfN), an initiative led by
International Union for Conservation of Nature (IUCN) India. It has
agreed to their charters and is in the process of implementing various
associated initiatives.
16.10 Green Products
The Company made efforts to promote and increase sales of various
innovative cement products like ACC-Gold, ACC- F2R, ACC Plus, ACC
Coastal and concrete products such as Permecrete, Stampcrete and
Imprincrete, ready to use mortar, Thermocrete and Hi-densecrete which
have lower environmental footprint.
16.11 Green Building Material Centres:
During the year 2014, four new Green Building Material Centres were
setup in different parts of India. These centres provide a one-stop
solution in housing expertise and building materials required for high
quality low cost housing. These centres also offer architectural
services, skilled masons for housing construction. The building
material supplies include bricks, blocks, tiles, cement etc. These
materials are produced from local resources and incorporate waste
material like fly ash which help in reducing CO2 emissions. This
initiative received global recognition for its environment and social
benefits. The Company is planning to scale up these centres in the
coming years.
17. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
As part of its initiatives under "Corporate Social Responsibility
(CSR), the Company has undertaken projects in the areas of Education,
Livelihood, Health, Water and Sanitation. These projects are largely in
accordance with Schedule VII of the Companies Act, 2013.
During the year 2014, the Company''s community development efforts
successfully touched the lives of almost 5,00,000 people spanning ~150
villages across the country. Providing quality education initiatives in
the plants'' neighborhood schools benefited ~29,000 students during the
year. Scholarships were awarded to ~500 meritorious students from
weaker sections of the society to help them continue with their
education. Technology aided education initiatives like smart classes
and interactive kiosks reached out to students in ~26 rural schools to
keep pace with modern methods of learning. Specific support was
provided to revive education for ~750 girl children under "ACC ki
Ladli" Project. The Company continued to support 7 Government- run
Industrial Training Institutes under the Public Private Partnership
Schemes with Ministry of Labour and Employment, Government of India.
Skill development training programmes were imparted to unemployed youth
in partnership with specialized NGOs, which helped ~3,800 youth get job
placements in various manufacturing and service sector enterprises. The
Company supported the formation of 486 Self Help Groups (SHGs) and in
their strengthening through structured training activities. In matters
of health and nutrition, the Company''s initiatives benefitted more than
1,00,000 people. Support to 134 "anganwadi centers" helped ~8,000
children get access to better health and nutrition. A Centre for
awareness, prevention and treatment of Sexually Transmitted Infections
(STI) was established at Tikaria Cement Works. Nearly 3042 HIV/ AIDS
affected persons were supported through counselling, testing and
treatment through Anti Retroviral Therapy (ART) and STI Centers.
Sanitation, being a national agenda, the Company has developed four
affordable prototypes of toilets through the Green Building Center. It
has also led the forum of Confederation of Indian Industries(CII)
Sanitation Committee to promote the sanitation initiative of Government
of India and has also actively participated in forums on Public Health
& Education.
The Annual Report on CSR activities is annexed herewith as "Annexure
A".
18. OCCUPATIONAL HEALTH & SAFETY (OH&S)
In pursuit of ensuring "No harm anywhere to anyone associated with
ACC", Occupational Health & Safety (OH&S) remains the Company''s top
priority. In continuation with the "Surakhsha Laher" initiative which
was launched in 2013, "Suraksha Laher 2" and "Suraksha Laher 3"
initiatives were launched. The "Suraksha Laher 2" aimed at building
Line Ownership and OH&S Competency, establish forums for improving
communication and focused on Fatality Prevention. Under this initiative
"Suraksha Samvad" forum was set up for improving bottom up
communication. This initiative successfully involved and positively
engaged all levels of personnel on the shop floor including Shop Floor
Associates (SFA) and the Company''s business partners in the process of
identification and closure of hazards. Another major contribution of
Suraksha Laher 2 was the OH&S Leadership Training Program for improving
OH&S capabilities of Middle Management level employees. The Zone
ownership structure was further enhanced to improve visible leadership
with performance targets and reviews being conducted in the plant.
Suraksha Laher 3 aimed at revisiting the implementation of some of the
important Fatality Prevention Elements (FPEs) such as working at
heights, isolation and lockout with a view to close the gaps identified
during audit assessments.
With regard to contractor safety, two key areas of focus identified
were Facility Management for the contractors'' employees and Equipment,
Tools & Material Management. The Facility Management initiative was
implemented to ensure adequate welfare facilities for contract labour
such as washrooms with bathing facilities, rest rooms, availability of
drinking water etc. The Equipment, Tools & Material Management program
ensured that the tools used by contractors were safe. The process of
screening of contractors was made more stringent to ensure that the
contractors were aligned with the Company''s objectives to ensure ''Zero
Harm''.
18.1 Logistics Safety
The focus on Logistics Safety continued with a view to prevent vehicle
related incidents through various planned interventions viz.:
* Defensive Driving training for drivers;
* vehicle inspection at plants;
* segregation of pedestrian and vehicular traffic inside plants;
* ''Suraksha Kawach'' campaign for seat belt usage aimed at truck
drivers;
* installation of GPS in dedicated trucks in a phased manner for
journey monitoring;
* entering into MOU''s on logistics safety with our authorized road
transporters;
* engagement sessions with truck drivers and felicitating safe drivers.
A programme for improving safety in the warehouses has also been
initiated. The Company was declared as Holcim''s Regional Award Winner
for South Asia/ASEAN in recognition of its Logistics Safety Improvement
Programme.
18.2 Occupational Health
In 2014, the Emergency Medical Response (EMR) capabilities in mines
were further improved. Each mine site has an ALS ambulance, appropriate
stretchers, Automated External Defibrillator (AEDs) units and proper
first aid facilities. In each of the plants, at least 50% of the shift
supervisors have been trained in basic life support techniques and a
total 2000 shift supervisors have been trained in this regard.
To reduce health risk factors among employees and their families,
various programmes were launched and implemented with the assistance of
health peers selected and trained from Shop Floor Associates and
through the extensive use of the Company''s intranet portal
"Accelerate".
19. HUMAN RESOURCES
Many initiatives have been taken to support business through
organizational efficiency, process change support and various employee
engagement programmes which has helped the Organization achieve higher
productivity levels. A significant effort has also been undertaken to
develop leadership as well as technical/ functional capabilities in
order to meet future talent requirement.
The Company''s HR processes such as hiring and on-boarding, fair
transparent online performance evaluation and talent management
process, state-of-the-art workmen development process, and market
aligned policies have been seen as benchmark practices in the Industry.
These state-of-the-art HR processes within the Organization, have
enabled the Company to earn the No. 1 position of being the Best
Company to work for in Cement Sector by Fortune India Magazine in 2014.
During the year under review, the following Human Resources initiatives
received greater focus:
* Employer of Choice: The Company has positioned itself with leading
educational institutes as one of the best companies to work for.
Employees have an option to work with world class cement technology and
have the flexibility to pursue different functions. Employees are
encouraged to express their views and are empowered to work
independently. Employees are given the opportunity to learn through
various small projects which make them look at initiatives from
different perspectives and thus provide them with a platform to become
result oriented. This has helped greatly in overall development of the
employee and has significantly arrested the attrition rate.
* Leadership Development: As a part of leadership development ~40
talented employees have been seconded to the senior leadership team to
mentor them and prepare them for the next higher role. Apart from this,
a large number of senior, middle and other employees are sent for
leadership programmes or are assigned to small independent projects
which are planned for identified talent.
* Industrial Relations: The Company''s Industrial Relations policy has
been benchmarked by the manufacturing sector. The Company shares
relevant business information with the Unions in order to enlighten
them and make them sensitive towards business requirements. This has
helped to build a healthy relationship and resolve issues through
mutual dialogue.
* A unique dual educational program has been developed on the lines of
the Swiss German vocational educational and training program (VET). The
program has been successfully implemented in one of the Company''s
technical institutes.
20. BUSINESS RISK MANAGEMENT
Pursuant to the requirement of Clause 49 of the Listing Agreement, the
Company has constituted a Business Risk Management Committee. The
details of Committee and its terms of reference are set out in the
Corporate Governance Report forming part of the Board''s Report.
The Company has a robust Business Risk Management (BRM) framework to
identify, evaluate business risks and opportunities. This framework
seeks to create transparency, minimize adverse impact on the business
objectives and enhance the Company''s competitive advantage. The
business risk framework 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 risks
trend, exposure and potential impact analysis at a Company level as
also separately for business segments viz. cement and RMX. Risk
management forms an integral part of the Company''s Mid-Term Planning
cycle.
The key business risks identified by the Company and its mitigation
plans are as under:
Project Risks:
The Cement Industry is capital intensive in nature. Its Compound Annual
Growth Rate (CAGR) for the next five years is expected to be ~6.5 %. In
the execution of large projects which are highly capital intensive in
nature, there could be exposure to time and cost overruns. To mitigate
these risks, the project management team and the project accounting and
governance framework has been further strengthened. Whilst the Company
continues to draw on Holcim''s expertise, a separate Organization
structure at Project sites with defined roles and accountability is put
in place for large projects.
Competition Risks:
The Cement Industry is becoming intensely competitive with the foray of
new entrants and some of the existing players adopting inorganic growth
strategies. To mitigate this risk, the Company is leveraging on its
expertise, experience and its created capacities to increase market
share, enhance brand equity / visibility and enlarge product portfolio
and service offerings. It would also leverage on its Infrastructure,
Commercial and Institutional Sales team to offer value to large
customers.
OH&S Risks:
Safety of employees and workers is of utmost importance to the Company.
To reinforce the safety culture in the Company, it has identified
Occupational Health & Safety as one of its focus areas. Various
training programmes have been conducted at the plants and sales units
such as behavior based safety training program, Visible Safety
Leadership program, Logistics Safety program etc. The accountability
structure has also been strengthened with the introduction of a Zone
Ownership concept and by integrating OH&S competencies into the job
descriptions of all Top Management, Line Management and Safety
Professionals.
21. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an Internal Control System, commensurate with the size,
scale and complexity of its operations. The scope and authority of the
Internal Audit (IA) function is defined in the Internal Audit Charter.
To maintain its objectivity and independence, the Internal Audit
function reports to the Chairman of the Audit Committee of the Board.
The Internal Audit Department monitors and evaluates the efficacy and
adequacy of internal control system in the Company, its compliance with
operating systems, accounting procedures and policies at all locations
of the Company and its subsidiaries. Based on the report of internal
audit function, process owners 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.
22. VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has a vigil mechanism named Fraud Risk Management Policy
(FRM) to deal with instance of fraud and mismanagement, if any. The
details of the FRM Policy is explained in the Corporate Governance
Report and also posted on the website of the Company.
23. SUBSIDIARY COMPANIES
23.1 ACC Mineral Resources Limited (AMRL)
AMRL had entered into a Joint Venture Agreement with Madhya Pradesh
State Mining Corporation Limited (MPSMC) for development of four coal
blocks viz. Bicharpur, Marki Barka, Simaria Piparia and Morga IV.
Pursuant to the Supreme Court''s Order as discussed in para 13 above,
the allocation of three coal blocks to MPSMC viz. Marki Barka, Simaria
Piparia and Morga IV were immediately cancelled. The fourth coal block
viz. Bicharpur is liable for cancellation w.e.f. March 31, 2015. While
work on Bicharpur Coal Block has been temporarily suspended following
the Supreme Court''s Order, the safety and security of the block is
being maintained and will continue to be maintained till the vesting of
the coal block in accordance with the The Coal Mines (Special
Provisions) Ordinance, 2014.
AMRL has neither operating nor trading activity. The Consolidated Other
Income of Rs. 1.74 Crore represents the interest received on the loans
advanced by it to its Joint Venture Companies. The Consolidated loss
after depreciation, amortization and tax for the year ended December
31, 2014 was Rs. 5.85 Crore.
23.2 Bulk Cement Corporation (India) Limited (BCCI)
During the year under review, BCCI handled cement volumes of 10.30 lakh
tonnes as against 9.60 lakh tonnes in 2013. The profit after tax for
the year 2014 is Rs. 432.99 lakhs as against Rs. 270.94 lakhs in the
year 2013.
23.3 As regards the other three Subsidiary Companies i.e. Lucky Minmat
Limited, National Limestone Company Private Limited and Singhania
Minerals Private Limited, these are limestone deposit companies and are
currently not operational.
23.4 Audited financial statements of the Company''s Subsidiaries
The audited financial statements, the Auditors Report thereon and the
Board''s Report for the year ended December 31, 2014 for each of the
Company''s subsidiaries viz. ACC Mineral Resources Limited, Bulk Cement
Corporation (India) Limited, Lucky Minmat Limited, National Limestone
Company Private Limited and Singhania Minerals Private Limited are
annexed.
24. DIRECTORS
The Board of Directors had appointed Mr Arunkumar Gandhi and Mrs
Falguni Nayar as Additional Directors of the Company in the category of
Independent Directors with effect from April 24,2014. Thereafter, at
the Extraordinary General Meeting (EGM) of the Company held on
September 10, 2014, the Members of the Company appointed the said
Directors as Independent Directors under the Companies Act, 2013 for a
period of 5 years with effect from April 24, 2014.
At the said EGM held on September 10, 2014, the Members had also
appointed the existing Independent Directors viz. Mr N S Sekhsaria, Mr
Shailesh Haribhakti, Mr Sushil Kumar Roongta, Mr Ashwin Dani, Mr
Farrokh Kavarana as Independent Directors under the Act each for a term
of five years with effect from July 24, 2014.
All Independent Directors have given declarations that they meet the
criteria of independence as laid down under Section 149(6) of the
Companies Act, 2013 and Clause 49 of the Listing Agreement.
The Board of Directors had on the recommendation of the Nomination &
Remuneration Committee appointed Mr Harish Badami as Chief Executive
Officer & Managing Director (CEO & MD) Designate for the period August
1,2014 till August 12, 2014 and thereafter as the CEO & MD of the
Company for a period of 5 years with effect from August 13, 2014. The
Members of the Company had at the aforesaid EGM also approved the said
appointment and terms of remuneration of Mr Harish Badami as CEO & MD.
Mr Kuldip Kaura former CEO & MD retired from the services of the
Company with effect from August 13, 2014.
Mr M L Narula, a Non Executive Director of the Company retired from the
Board of Directors with effect from July 25, 2014.
The Board has placed on record its appreciation for the outstanding
contributions made by Mr Kuldip Kaura and Mr M L Narula during their
respective tenures of office.
In accordance with the provisions of the Companies Act, 2013 and in
terms of the Memorandum and Articles of Association of the Company, Mr
Bernard Fontana and Mr Aidan Lynam retire by rotation and are eligible
for re-appointment.
24.1 Board Evaluation
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of
the Listing Agreement, the Board has carried out an annual performance
evaluation of its own performance, the directors individually as well
as the evaluation of the working of its Audit, Nomination &
Remuneration and Compliance Committees. The manner in which the
evaluation has been carried out has been explained in the Corporate
Governance Report.
24.2 Remuneration Policy
The Board has, on the recommendation of the Nomination & Remuneration
Committee framed a policy for selection and appointment of Directors,
Senior Management and their remuneration. The Remuneration Policy is
stated in the Corporate Governance Report.
24.3 Meetings
A calendar of Meetings is prepared and circulated in advance to the
Directors.
During the year six Board Meetings and six Audit Committee 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. DIRECTORS'' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the
information and explanations obtained by them, your Directors make the
following statements in terms of Section 134(3)(c) of the Companies
Act, 2013:
a. that in the preparation of the annual financial statements for the
year ended December 31, 2014, the applicable accounting standards have
been followed along with proper explanation relating to material
departures, if any;
b. that such accounting policies as mentioned in Note 2 of the Notes
to the Financial Statements have been selected and applied consistently
and judgement and estimates have been made that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company as at December 31, 2014 and of the profit of the Company
for the year ended on that date;
c. that 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 and for
preventing and detecting fraud and other irregularities;
d. that the annual financial statements have been prepared on a going
concern basis;
e. that proper internal financial controls were in place and that the
financial controls were adequate and were operating effectively.
f. that systems to ensure compliance with the provisions of all
applicable laws were in place and were adequate and operating
effectively.
26. RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the
financial year were on an arm''s length basis and were in the ordinary
course of business. There are no materially significant related party
transactions made by the Company with Promoters, Directors, Key
Managerial Personnel or other designated persons which may have a
potential conflict with the interest of the Company at large.
All Related Party Transactions are placed before the Audit Committee as
also the Board for approval. Prior omnibus approval of the Audit
Committee is obtained on a quarterly 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 and the Board of Directors for their approval on a
quarterly basis. The statement is supported by a Certificate from the
CEO & MD and the CFO. The Company has developed a Related Party
Transactions Manual, Standard Operating Procedures for purpose of
identification and monitoring of such transactions.
The policy on Related Party Transactions as approved by the Board is
uploaded on the Company''s website.
None of the Directors has any pecuniary relationships or transactions
vis-a-vis the Company.
27. TECHNOLOGY & KNOWHOW AGREEMENT
An Ordinary Resolution was passed by the Members of the Company by
means of a Postal Ballot approving the Technology and Know-how
Agreement with Holcim Technology Limited (HTL) which, inter alia,
provided for the payment of technology and knowhow fees @ 1% of the net
sales of the Company to HTL. Whilst the Agreement was valid for a
period of five years, the technology and know-how fee was to remain in
force for a period of two years with effect from January 1,2013. The
Members had authorized the Board of Directors to review the technology
and knowhow fee rate before the end of the financial year 2014.
Accordingly, the Board of Directors had at its Meeting held on December
10, 2014 reviewed the rate of technology and know-how fee payable to
HTL and have decided that the rate be retained @ 1% of the net sales
till the end of the period of the agreement, i.e. upto and including
December 31,2017.
28. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant material orders passed by the Regulators /
Courts which would impact the going concern status of the Company and
its future operations. Pursuant to a complaint filed before the
Competition Commission of India (CCI) by the Builders Association of
India against some of the cement manufacturers including the Company,
the CCI had in June 2012 held that the cement manufacturers had
contravened the provisions of Section 3(3)(a) and 3(3)(b) read with
Section 3(1) of the Competition Act, 2002. The CCI had accordingly
imposed a penalty on the cement manufacturers aggregating Rs. 6,300
Crore. The penalty imposed on the Company is Rs. 1,147 Crore. The
cement manufacturers including the Company has filed an Appeal before
the Competition Appellate Tribunal (COMPAT) and the matter is
sub-judice. COMPAT has directed the cement manufacturers including the
Company to deposit 10% of the penalty amount. Accordingly, the Company
has deposited Rs. 114.7 Crore in the form of a bank fixed deposit with
a lien in favour of COMPAT. Based on expert legal advice, the Company
believes that it has a good case and expects a favourable decision in
the appellate proceedings.
29. AUDITORS
29.1 Statutory Auditors
The Company''s Auditors, Messrs S R B C & CO. LLP, Chartered
Accountants, Mumbai who retire at the ensuing Annual General Meeting of
the Company are eligible for reappointment. They have confirmed their
eligibility under Section 141 of the Companies Act, 2013 and the Rules
framed thereunder for reappointment as Auditors of the Company. As
required under Clause 49 of the Listing Agreement, the auditors have
also confirmed that they hold a valid certificate issued by the Peer
Review Board of the Institute of Chartered Accountants of India.
Members'' attention is invited to the observation made by the Auditors
under "Emphasis of Matter" appearing in the Auditors Reports.
29.2 Cost Auditors
Pursuant to Section 148 of the Companies Act, 2013 read with The
Companies (Cost Records and Audit) Amendment Rules, 2014, the cost
audit records maintained by the Company in respect of its cement
activity is required to be audited. Your Directors had, on the
recommendation of the Audit Committee, appointed Messrs N I Mehta & Co.
to audit the cost accounts of the Company for the financial year 2014
on a remuneration of Rs. 10 lakhs. 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 Member''s ratification for the
remuneration payable to Messrs N I Mehta & Co., Cost Auditors is
included at Item No. 6 of the Notice convening the Annual General
Meeting.
29.3 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 Pramod S Shah
& Associates, 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 B".
30. AWARDS
During the year under review, your Company received many awards and
felicitations conferred by reputable organizations for achievements in
different areas such as Safety, Manufacturing Excellence and
Environment Management. ACC ranked as "India''s Most Admired Companies"
in Cement Sector in a Fortune India - Hay Group Survey for the second
consecutive year. Your Company''s Annual Report for 2013 won the Gold
Shield from the prestigious Institute of Chartered Accountants of India
for "Excellence in Financial Reporting".
31. ENHANCING SHAREHOLDERS VALUE
Your Company believes that its Members are among its most important
stakeholders.
Accordingly, your Company''s operations are committed to the pursuit of
achieving high levels of operating performance and cost
competitiveness, consolidating and building for growth, enhancing the
productive asset and resource base and nurturing overall corporate
reputation. Your Company is also committed to creating value for its
other stakeholders by ensuring that its corporate actions positively
impact the socio-economic and environmental dimensions and contribute
to sustainable growth and development.
32. CORPORATE GOVERNANCE
As per Clause 49 of the Listing Agreement with the Stock Exchanges, a
separate section on corporate governance practices followed by the
Company, together with a certificate from the Company''s Auditors
confirming compliance forms an intergal part of this Report.
33. BUSINESS RESPONSIBILITY REPORTING
As per Clause 55 of the Listing Agreement with the Stock Exchanges, a
separate section on Business Responsibility Reporting forms an intergal
part of this Report.
34. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company prepared in
accordance with relevant Accounting Standards (AS) viz. AS 21, AS 23
and AS 27 issued by the Institute of Chartered Accountants of India
form part of this Annual Report.
35. 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 of The Companies
(Accounts) Rules, 2014, is annexed herewith as "Annexure C".
36. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form
MGT 9 is annexed herewith as "Annexure D".
37. PARTICULARS OF EMPLOYEES
The information required pursuant to Section 197 read with Rule, 5 of
The Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014 in respect of employees of the Company, will be provided
upon request. In terms of Section 136 of the Act, the Report and
Accounts are being sent to the Members and others entitled thereto,
excluding the information on employees'' particulars which is available
for inspection by the Members at the Registered Office of the Company
during business hours on working days of the Company up to the date of
the ensuing Annual General Meeting. If any Member is interested in
obtaining a copy thereof, such Member may write to the Company
Secretary in this regard.
38. 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.
39. CAUTIONARY STATEMENT
Statements in the Board''s Report and the Management Discussion &
Analysis describing the Company''s objectives, expectations or forecasts
may be forward-looking within the meaning of applicable securities laws
and regulations. Actual results may differ materially from those
expressed in the statement. Important factors that could influence the
Company''s operations include global and domestic demand and supply
conditions affecting selling prices of finished goods, input
availability and prices, changes in government regulations, tax laws,
economic developments within the country and other factors such as
litigation and industrial relations.
40. DISCLAIMER
The Ministry of Corporate Affairs vide its Circular No. 08/2014 dated
April 4, 2014 clarified that the financial statements and the documents
required to be attached thereto, the Auditor''s and Boards'' Report in
respect of the financial year under reference shall continue to be
governed by the relevant provisions of the Companies Act, 1956,
schedules and rules made thereunder. Accordingly, whilst the financial
statements and the Auditor''s Report as aforesaid are prepared as per
the requirements of the Companies Act, 1956, the Company, as per its
commitment to transparency and good governance, has to the extent
possible provided the information in the Board''s Report and the
Corporate Governance Report as per the Companies Act, 2013.
For and on behalf of the Board of Directors
N S Sekhsaria
Chairman
Mumbai
February 3, 2015
Dec 31, 2013
TO THE MEMBERS OF ACC LIMITED
The Directors take pleasure in presenting the Seventy Eighth Annual
Report together with the audited financial statements for the year
ended December 31, 2013. The Management Discussion and Analysis has
also been incorporated into this report.
1. HIGHLIGHTS OF PERFORMANCE
Consolidated income for the year decreased by 2% to Rs. 11,389 crore as
compared to Rs. 11,621 crore in 2012. Consolidated profit before tax
in 2013 was Rs. 1,214 crore as against Rs. 1,441 crore in 2012.
Similarly, consolidated profit after tax was Rs. 1,095 crore as against
Rs. 1,059 crore in 2012.
2. FINANCIAL RESULTS
Consolidated Standalone
Rs. Crore Rs. Crore
2013 2012 2013 2012
Revenue from Operations(Net)
and other income 11,388.55 11,621.47 11,392.73 11,622.78
Profit Before Tax (PBT) 1,213.64 1,440.99 1,226.96 1,451.49
Provision for Tax 131.91 391.08 131.20 390.30
Profit After Tax (PAT) 1,094.67 1,059.28 1,095.76 1,061.19
Balance brought forward
from previous year 3,845.79 3,591.12 3,861.83 3,821.54
Adjustment pursuant to
Amalgamation - - - (216.29)
Profit available for
Appropriations 4,940.46 4,650.40 4,957.59 4,666.44
Appropriations:
Interim Equity Dividend 206.52 206.52 206.52 206.52
Proposed Final Equity
Dividend 356.72 356.72 356.72 356.72
Tax on Equity Dividends 95.72 91.37 95.72 91.37
Previous Year Tax on
Equity Dividends 2.76 - 2.76 -
General Reserve 120.00 150.00 120.00 150.00
Surplus carried to the
next year''s account 4,158.74 3,845.79 4,175.87 3,861.83
3. DIVIDEND
Your Directors are pleased to recommend a final dividend of Rs. 19/-
per equity share of Rs. 10 each. The Company had distributed an interim
dividend of Rs. 11/- per equity share of Rs. 10 each in August 2013.
The total dividend for the year ended December 31, 2013 would
accordingly be Rs. 30/- per equity share of Rs. 10 each which was the
same as the dividend declared for the year ended December 31, 2012. The
total outgo for the current year amounts to Rs. 658.96 crore, including
dividend distribution tax of Rs. 95.72 crore as against Rs. 654.61
crore including dividend distribution tax of Rs. 91.37 crore in the
previous year and Rs. 2.76 crore being the dividend distribution tax
pertaining to previous year.
4. ECONOMIC SCENARIO AND OUTLOOK
Indian economic growth in 2013 had slowed down to 4.5%-5% which is the
lowest in a decade. The high borrowing cost to combat inflation
coupled with lower private consumption, low investment in
infrastructure and other sectors were responsible for this. Although
agriculture and allied sectors had shown improvement following a good
monsoon and exports grew due to the depreciation in the value of the
Indian Rupee, the economic growth was mainly pulled down by the
contraction of the manufacturing sector.
The low economic growth appears to have bottomed out and a gradual
increase in economic activity is expected from the middle of 2014.
5. CEMENT INDUSTRY OUTLOOK AND OPPORTUNITIES
The Indian Cement Industry has an installed capacity of ~350 million
tonnes and the domestic consumption in the calendar year 2013 was ~260
million tonnes. Cement consumption had grown at the rate of 4% to 5% in
the calendar year 2013. Although, cement consumption is believed to
have a multiplying factor of 1.2 to the GDP growth, such lower than
expected consumption growth was mainly due to the high cost of
borrowing and low investment in the infrastructure and commercial
segments.
Your Company had a marginally negative volume growth during the last
calendar year as our large capacity in South and West could not be
placed in the market due to overcapacity in these regions and also on
account of negative consumption growth in our key markets of
Maharashtra and Karnataka. The sales volume was however, in line with
other large cement manufacturers in India.
The overall cement demand is estimated to grow at the rate of 4% to 5%
in the calendar year 2014. The consumption growth may pick up beyond
5% if investment is made in the infrastructure segment. With the
gradual reduction in fiscal deficits and Consumer Price Index, it is
expected that the interest rates would gradually come down which would
stimulate demand in the housing sector. Even with a modest increase in
the consumption growth, the cement industry will continue to have a
huge capacity surplus in 2014, particularly in the South. Your
Company''s continued focus on cost reduction under the
"Institutionalizing Excellence" programme, its thrust on increasing the
sale of its premium products and various other customer excellence
initiatives should help in presenting an improved performance.
6. CEMENT BUSINESS - PERFORMANCE AT A GLANCE_
2013 2012 Change %
Production -
million tonnes 23.86 24.12 -1
Sales Volume -
million tonnes 23.93 24.11 -1
Sale Value -
(Rs. crore) 10,908.41 11,130.45 -2
Operating EBITDA -
(Rs. crore) 1,628.79 2,195.57 -26
Your Company''s constant focus on cost reduction through various
efficiency improvement measures taken at the plants and in the areas of
logistics under "Institutionalizing Excellence" programme helped in
partially covering the high cost of inflation.
Introduction of premium products such as F2R, Concrete , ACC Gold in
the retail segment in many of our markets proved to be successful. It
has been decided to replicate this success on an all India basis.
7. INSTITUTIONALIZING EXCELLENCE
In 2012, your Company had launched the Institutionalizing Excellence
programme across all functions to sustain overall performance
excellence so as to deliver superior value to customers and pursue cost
leadership. The programme helped the Company offset inflationary
pressure by managing its operating costs and enhancing customer value
through improvements in manufacturing, sales, logistics and procurement
processes. The Institutionalizing Excellence journey continues with a
strong focus on Occupational Health
& Safety.
In Manufacturing Excellence, some plants have already achieved and have
even surpassed their individual inspirational targets in respect of
plant performance such as clinker factor, thermal and electrical energy
efficiencies. Efforts are now directed towards raising the overall
efficiency parameters closer to the inspirational targets and pursue
further reductions in input costs of coal, gypsum, slag and flash.
The Customer Excellence programme continued to focus on measures to
achieve volume and price improvement and steps for the enhancement of
brand equity.
The Logistics Excellence journey saw visible and significant
initiatives to optimize cost-to-serve and time-to-serve, reduce lead
distances, eliminate multiple handling and enable the creation of
modern infrastructure at our plants and warehouses. The RFID and GPS
modules which were successfully deployed at three plants are being
replicated at all plants of the Company in a phased manner.
8. CAPEX
The on-going Jamul project in Chhattisgarh, which comprises a new
state-of-the-art clinkering line of 2.79 million tonnes per annum
capacity and a grinding facility of 1.10 million tonnes per annum
capacity is progressing well and has reached its halfway mark. The
project will be completed in a phased manner by mid 2015. During the
year, work also commenced on the Sindri grinding unit in Jharkhand,
which will receive clinker from the new Jamul plant.
Your Company''s first Waste Heat Recovery Boiler plant, with an output
of ~7.5 MW, was commissioned at the Gagal Cement Plant in Himachal
Pradesh.
9. READY MIXED CONCRETE (RMX)
The Company''s RMX business turned around during the year with its
operating EBITDA improving substantially to Rs. 19.61 crore from Rs.
2.1 crore in the previous year, though concrete sales volume increased
marginally. The improvement in profitability was mainly a result of
close monitoring of operating and logistic costs and offering our
customers value added products and solutions. Customer focus has been
sharpened by widening the customer base and by leveraging the cement
sales network to target the retail segment.
The RMX market in the country has become more fragmented and
competitive with many new entrants from the unorganized segment. Larger
investments are foreseen in real estate and infrastructure projects
across India in the coming year leading to growth in the construction
sector. The increased demand is expected to come from the markets of
Mumbai, Chennai and Bengaluru. The Company is taking suitable steps to
consolidate its RMX business by striving to increase volumes from its
existing assets, through on-site and commercial projects.
2013 2012 Change %
Production -
Lakh Cubic Meters 15.96 16.54 -4
Sales Volume -
Lakh Cubic Meters 18.00 17.97 -
Sale Value -
(Rs. crore) 655.91 617.06 6
Operating EBITDA -
(Rs. crore) 19.61 2.12 825
10. SUSTAINABLE DEVELOPMENT
Sustainability is an integral part of our business philosophy. The
Company is in the process of consolidating inputs for a new roadmap for
sustainable development for the period 2014- 2017.
The cement operations of your Company are certified under various
management systems for quality, environment and safety. In addition to
Corporate Social Responsibility (CSR), Human Resources (HR) and
Occupational Health & Safety (OH&S), which are addressed later in this
report, the important initiatives of your Company''s sustainable
development agenda include reduction in CO2 emissions, reduction in
stack and fugitive emissions, water management and biodiversity.
10.1 CO2 Emissions:
Your Company co-chaired the group involved in developing a Low Carbon
Technology roadmap for the Indian Cement Industry under the aegis of
the Cement Sustainability Initiative in India (CSI) of World Business
Council for Sustainable Development (WBCSD). The roadmap comprises a
comprehensive plan to achieve reduction in direct emissions leading
upto the year 2050. This is the first plan of its kind which is a
country-specific and sector-specific long term action plan to cut CO2
emissions and mitigate climate change risks. Keeping in mind these
reduction targets, your Company is working on the following levers
simultaneously:
- increasing the use of Alternative Fuels and Raw materials (AFR).
- reducing Thermal Energy and Electrical Energy.
- reducing clinker factor by producing blended cements using industrial
waste materials like flash and slag.
- increasing the use of renewable energy.
- waste heat power generation from process waste heat.
Efforts in these areas helped your Company to maintain a leadership
position in reduction of CO2 emissions in the country, as illustrated
by the following:
- specific CO2 emissions for Portland Pozzolona Cement (PPC) during the
year was 529 kg CO2 / tonne of cement as compared to 545 kg CO2 / tonne
of cement in the previous year.
- specific CO2 emissions for Portland Slag Cement (PSC) during the year
was 352 kg CO2 / tonne of cement as compared to 367 kg CO2 / tonne of
cement in the previous year.
The above reduction helped the Company to maintain overall specific CO2
emissions, at 538 kg CO2 / tonne of cement despite increase in the
production of Ordinary Portland Cement.
10.1.1 Alternative Fuels and Raw Materials (AFR):
Your Company''s initiatives in utilizing Alternative Fuels and Raw
Materials (AFR) in the cement manufacturing process is gaining momentum
in an effort to mitigate the rising cost of conventional fossil fuels
and raw materials. Forty six co-processing trials of different waste
materials have so far been carried out after obtaining necessary
clearances from the concerned authorities at the State and Centre
levels. These trials have demonstrated that co-processing is
environmentally and ecologically a more sustainable technology for
managing waste than other technologies that are in practice today, such
as landfill and incineration. Our waste management services through
cement kiln co-processing are gaining wider acceptance.
Based on the demonstrated success of the suitability of co-processing
technology for waste streams, the Company has received clearances for
co-processing 127 different waste streams generated by diverse industry
segments such as automobiles, chemicals, engineering, power, steel,
refineries and petrochemicals. During the year under review, the
Company conducted seven co-processing trials of different waste
materials. Twenty three new industries accepted the co-processing
services offered by the Company as a result of which thirty two new
streams for co-processing have been added in various plants. Currently,
different types of waste streams are being co-processed from
industrial, agricultural and municipal sources as AFR.
During the year 2013, a quantum leap was achieved in the usage of AFR,
thereby enabling a Thermal Substitution Rate (TSR) of 4.36% against a
target of 4.12%. The focus on AFR, enabled your Company to reduce fuel
consumption in kilns, captive power plants and in dryers.
Your Company is also engaged in co-processing segregated non-recyclable
plastic waste from municipal solid waste, thereby assisting Society
with the disposal of plastic waste. Your Company is in an active
engagement with fifteen municipalities and local bodies in this regard
and has co-processed 433.38 tonnes of non- recyclable plastics during
the year.
To increase the AFR utilization substantially, three pre-processing
platforms are being set up at our plants which will prepare AFR
material of uniform quality from various kinds of wastes that have
different types of physical and chemical characteristics. Two of these
facilities are expected to be ready during the course of this year.
10.1.2 Reduction of Thermal Energy:
Many initiatives were taken to reduce specific thermal energy in the
manufacture of clinker as part of the Manufacturing Excellence
initiatives, which resulted in a reduction of 10 MJ specific thermal
energy / tonne of clinker as compared to 2012. In many plants, higher
percentage of petcoke is being used to reduce the cost of thermal
energy and coal costs.
10.1.3 Clinker Factor:
Clinker Factor in both varieties of blended Cements viz. Portland
Pozzolana Cement (PPC) and Portland Slag Cement (PSC) was reduced
through product innovation and research efforts.
Your Company''s blended Cement initiatives is one of the biggest Clean
Development Mechanism (CDM) project of its kind in the Indian Cement
Industry. Continuous efforts to control clinker content in PPC has
helped in reducing CO2 emissions over a period of four years in four
plants and this is currently under review for issuance of 8,46,313 CERs
(Certified Emission Reductions) by United Nations Framework Convention
on Climate Change (UNFCCC).
10.1.4 Renewable Energy:
Your Company''s Renewable Energy portfolio consists of 19 MW in the form
of wind farms across three states viz. 9 MW in Tamil Nadu, 7.5 MW in
Rajasthan and 2.5 MW in Maharashtra. Cumulatively, a total of 23.53
million units of wind power has been generated. These units helped the
Company meet its non-solar renewable purchase obligation for Madukkarai
and Lakheri Plants.
In Maharashtra, the Company was issued Renewable Energy Certificates
(RECs), besides meeting the power needs of our Thane complex and part
of the requirement of our Subsidiary Company, Bulk Cement Corporation
(India) Limited at Kalamboli. The non-solar renewable power
obligations of other plants viz. Wadi, Kymore, Bargarh, Tikaria and
Jamul were met by purchasing RECs.
The Tamil Nadu Wind Mill Project realized 21,745 CERs from UNFCCC.
10.1.5 Waste Heat Power generation from process waste heat:
The Waste Heat Recovery System at Gagal is expected to reduce 44,180
tonnes of CO2 per annum. This is an important milestone in the
Company''s sustainable development journey.
10.2 Stack Emissions and Fugitive Emissions:
The Company has implemented various initiatives/measures for improving
the environmental performance of its Plants. The current average Kiln
Stack emissions are <30mg/Nm3, as against the regulatory compliance
requirement of 30mg/Nm3. The specific kiln dust emissions per tonne of
cement have decreased by ~18% as compared to the previous year. This
was achieved through various measures like conversion of Electrostatic
Precipitators (ESPs) to Baghouse and installation of
Polytetrafluoroethylene (PTFE) membrane filter bags in place of
conventional filter bags. Many initiatives were undertaken to minimize
fugitive as well as stack emissions across all Plants. These include
installation of dust suppression systems, dust extraction systems for
material handling, loading, unloading areas of raw materials,
intermediate and finished products. In some plants, covered storage has
been provided to prevent fugitive emissions. On- line continuous
ambient air quality monitoring stations were installed in some plants
to monitor environment parameters.
10.3 Water-positive initiatives:
Your Company has adopted a two pronged strategy i.e. working
simultaneously on reducing fresh water intensity by reducing water
demand in process / non-process needs and waste water recycling after
treatment, whilst simultaneously working on rain water harvesting in
plants, mines, housing colonies and community areas.
During the year 2013, the Company''s specific water consumption per
tonne of cement was reduced by 2%. As part of its water-positive
initiatives, the Company has taken up many water harvesting schemes
during the year. Installation of water metering systems and increasing
the usage of recycled water will help the Company to become
water-positive in the near future.
10.4 Biodiversity:
As part of your Company''s overall objective to create a positive impact
on biodiversity, a risk assessment exercise of all mines has been
carried out and various initiatives are being undertaken in this
regard. The green belt area in all cement plants is being increased to
maintain at least 33% as green coverage. During the year 2013,
approximately 1 lakh trees were planted under forestation programmes
across all plants.
11. COMMUNITY DEVELOPMENT
The Board of Directors constituted a Corporate Social Responsibility
(CSR) Committee which reviewed and restated the Company''s CSR policy in
order to make it more comprehensive and aligned with the activities
specified in Schedule VII of the Companies Act, 2013. The new policy
statement emphasizes the purpose of delivering superior and sustainable
value to our stakeholders and simultaneously indicates key performance
areas and specific deliverables mainly in respect of education, health
& sanitation and sustainable livelihoods.
During the year 2013, the Company''s community development efforts
successfully touched the lives of almost 6 lakh people spanning ~130
villages across the country. Overall CSR expenditure incurred during
the year was Rs. 22.76 crore.
Efforts to enhance the quality of education in the plants neighborhood
schools benefitted approximately 18,000 students during the year.
Scholarships were awarded to 650 meritorious students from weaker
sections of society to help them continue their education. Technology
aided education initiatives like smart classes and interactive kiosks
in rural schools reached out to about 12,700 rural children to keep
pace with modern methods of learning. Specific support was provided to
revive education to about 850 girl children who had dropped out of
school. The Company continued to support
7 Government run ITIs under the Public Private Partnership Schemes with
Ministry of Labour and Employment, Government of India.
Skill development training programmes were imparted to unemployed youth
in partnership with specialized NGOs, which helped about 2,500 youth
get job placements in various manufacturing and service sector
enterprises. Your Company supported the formation of 737 Self Help
Groups (SHGs) and their strengthening through structured training
activities. Members of these SHGs saved close to Rs. 1.50 crore which
helped them to secure matching grants from banks and other financial
institutions to start micro-enterprises.
In matters of health and nutrition, your Company''s initiatives
benefitted more than 1 lakh people. Support to 102 "anganwadi centers"
helped approximately 3,000 children get access to better health and
nutrition. Nearly 1,500 HIV/AIDS affected persons were supported
through counseling, testing and treatment.
Your Company supported the process of Aadhaar enablement of the local
communities to enhance their access to government subsidies and
entitlements. A substantial part of the people living around our plants
now have Aadhaar identification cards.
Your Company has also been engaged in leadership roles in CSR at
various platforms. ACC has been nominated as an Industry representative
in the Global Fund for India''s Country Co-ordination Mechanism on
Health. The Company has also been appointed in the CII''s Sanitation
Committee to promote initiative of Government of India on better
sanitation coverage in India.
Your Company was quick to respond in providing timely relief to the
people affected in two major disasters that struck the nation in 2013.
The Chief Minister of Uttarakhand acknowledged the prompt efforts and
unstinted help rendered by the Company''s employees to the victims of
the landslide and flash floods in June 2013.
12. OCCUPATIONAL HEALTH & SAFETY (OH&S)
In pursuit of ensuring "No harm anywhere to anyone associated with
ACC", Occupational Health & Safety (OH&S) remains the Company''s top
priority. Accordingly, the Endeavour in 2013 was to instill OH&S as our
license to lead. Through widely communicated initiatives such as
"Suraksha Laher", efforts were directed to create an appropriate
infrastructure, improve OH&S systems to make them more robust by
identifying and addressing deficiencies and by building OH&S
capabilities of line and functional personnel.
There was a new thrust on visible leadership in creating a structure
within plants that ensures accountability and incorporates a concept of
Zone ownership. A Centre of Excellence has been created to implement
safety processes and systems uniformly at all plants, for capability
building and for sharing experiences and best practices. The centre has
three fulltime executives to implement OH&S priority areas. It is also
intended to involve and engage Shop Floor Associates (SFAs) and
contract workers to identify their safety concerns and execute safety
projects with a view to achieve focused improvements in their
respective work areas. The behavior based safety initiative "ACC
Chetna", launched in 2012, continued to form part of the basic
behavior expected as a practice from employees to prevent incidents.
Reaching beyond plant operations, your Company also addressed the
subject of Logistics Safety to prevent vehicle related incidents. This
programme included carefully planned interventions in people
development and training in safe driving for drivers. Plant-level
health and safety checks have been initiated in phases with the help of
external consultants. The safety checks include examination of factors
influencing vehicular safety such as overall plant layout, packing
house layout, truck parking yards, inward and outward flow of traffic,
storage areas and infrastructure for road and rail transport.
Various steps were taken to demonstrate that health constitutes an
essential part of Occupational Health & Safety. The focus on
occupational health in the areas of health surveillance, up gradation of
emergency medical response and pro-wellness programmes helped save
valuable lives while reducing health risk factors.
13. HUMAN RESOURCES
Success of any organization depends upon the engagement and motivation
levels of its employees. In Human Resources, our emphasis was to give
autonomy to people at different levels and create a sense of ownership
in order to unleash their potential.
The Human Resources Division has played a significant role in achieving
the overall business objectives by creating a common vision, building
capability amongst people and more importantly, involve and engage
employees in improvement programmes across the functions for achieving
higher results. This process of engagement and involvement through
special projects has created learning opportunities for the employees.
To support business, processes were re-engineered to bring about
various changes in systems in order to provide proactive support. Some
of the initiatives are as under:
- Recruitment and On-Boarding - Right-fit talent is hired and exposed
to a year-long induction programme in newly created On- Boarding
Centers.
- Employee Engagement Programmes - Employee feedback through various
surveys conducted show that the employees are experiencing a greater
sense of engagement. This has been achieved through various on-
the-job engagement initiatives.
- Organization Excellence - The Company has carried out a variety of
initiatives in this regard, after benchmarking Indian and Global
best-in-class organization designs.
- Skill Enhancement - A plan has been put in place for upgrading the
skills of SFAs through training and engaging them in a variety of
improvement programmes to enable them to align with business and
perform better. The unions and other stakeholders are highly
appreciative of this initiative.
- Capability Building - Your Company believes that capability can be
built by hands-on experience and exposure. Series of programmes are
being conducted where under a large number of middle and senior level
leaders are assigned various turnaround projects. A continuous
monitoring as well as a recognition and reward model has also been
created around this initiative to encourage and recognize people in
larger forums.
- Creating a future leadership pipeline - With a view to motivating and
retaining talent and providing growth opportunities for them in their
respective work areas, identified talent has been given new challenges
through engagement, mobility and special projects.
- Proactive Industrial Relations - A great deal of time is spent in
engaging Unions and sharing relevant information with them to enable
them to participate in the growth journey.
14. FINANCE
Your Company''s cash and cash equivalent as at December 31, 2013 was Rs.
2,621 crore. The Company continues to focus on judicious management of
its working capital. Receivables, inventories and other working capital
parameters are kept under strict check through continuous monitoring.
The Company''s debt programme continues to enjoy an "AAA" rating from
CRISIL. During the year under review, the Company had given an option
of premature redemption of Non-Convertible Debentures to the holders of
its Privately Placed Debentures.
Non-Convertible Debentures of the aggregate value of Rs. 105 crore,
stand prematurely redeemed whilst debentures of the aggregate value of
Rs. 20 crore, stand redeemed on maturity as on December 31, 2013.
As on date, Non-Convertible Debentures aggregating Rs. 32 crore remain
outstanding.
15. FIXED DEPOSITS
Despite efforts to identify and repay unclaimed deposits, the total
amount of fixed deposits matured and remaining unclaimed as on December
31, 2013 was Rs. 0.02 crore.
16. SUBSIDIARY COMPANIES
16.1 ACC Mineral Resources Limited (AMRL)
The wholly owned Company ACC Mineral Resources Limited is a Joint
Venture Partner in four Coal Blocks allotted by the Madhya Pradesh
State Mining Corporation Limited (MPSMC).
Preliminary and pre-development activities in the three Coal Blocks out
of four are in progress. The Bicharpur Coal Block in the Shahdol
District is in an advanced stage of development and will cater to the
coal requirement of some of your Company''s cement plants when it
becomes operational. Various clearances for Marki Barka Coal Block in
Singrauli are in an advanced stage and a detailed project report for
the Block is under preparation. The exploration activity in Morga IV
Coal Block is expected to take place after the clearance from the
Ministry of Environment & Forests.
In January 2013, the Semaria Piparia Coal Block was de-allocated by the
Ministry of Coal on the grounds of non-receipt of forest and
environmental clearances from the Ministry of Environment and Forests,
in view of the block''s proximity to the National Tiger Reserve at
Bandhavgarh. On a Writ Petition filed by MPSMC and the Semaria Joint
Venture Company, partial relief in the matter has been granted by the
High Court at Jabalpur.
16.2 Bulk Cement Corporation (India) Limited (BCCI) During the year
under review, BCCI handled cement volumes of 9.60 lakh tonnes as
against 9.20 lakh tonnes in 2012. The profit after tax for the year
2013 is Rs. 270.94 lakhs as against Rs. 179.81 lakhs in the year 2012.
16.3 Audited Financial Statements of Subsidiary Companies
As required under Section 212 of the Companies Act, 1956, the audited
financial statements along with the report of the Board of Directors
relating to the Company''s subsidiaries viz. ACC Mineral Resources
Limited, Bulk Cement Corporation (India) Limited, Lucky Minmat Limited,
National Limestone Company Private Limited and Singhania Minerals
Private Limited together with the respective Auditors'' Reports thereon
for the year ended December 31, 2013 are annexed.
17. DIRECTORS
The Board has appointed Mr Farrokh K Kavarana as an Additional Director
of the Company with effect from May 3, 2013. In accordance with Section
161 of the Companies Act, 2013 (corresponding to Section 260 of the
Companies Act, 1956), Mr Kavarana holds office upto the date of the
forthcoming Annual General Meeting of the Company and his candidature
for appointment as a Director has been included in the Notice convening
the forthcoming Annual General Meeting of the Company.
The Board has appointed Mr Bernard Terver as an Additional Director of
the Company with effect from December 4, 2013. In accordance with
Section 161 of the Companies Act, 2013 (corresponding to Section 260 of
the Companies Act, 1956), Mr Terver holds office upto the date of the
forthcoming Annual General Meeting of the Company and his candidature
for appointment as a Director has been included in the Notice convening
the forthcoming Annual General Meeting of the Company.
At the request of Life Insurance Corporation of India, the Board has
appointed Mr V K Sharma, Managing Director, Life Insurance Corporation
of India, as an Additional Director of the Company with effect from
February 6, 2014. In accordance with Section 161 of Companies Act,
2013 (corresponding to Section 260 of the Companies Act, 1956), Mr
Sharma holds office upto the date of the forthcoming Annual General
Meeting of the Company and his candidature for appointment as a
Director has been included in the Notice convening the forthcoming
Annual General Meeting of the Company.
The Board has re-appointed Mr Kuldip Kaura as Chief Executive Officer &
Managing Director for a period of one year with effect from January 1,
2014. The Members of the Company had approved of the aforesaid
re-appointment and the terms of remuneration of Mr Kaura by way of a
postal ballot, pursuant to which the Company has entered into an
agreement with Mr Kaura detailing therein his terms of re- appointment
and remuneration.
In accordance with the provisions of the Companies Act, 1956, and in
terms of the Memorandum and Articles of Association of the Company, the
following Directors, viz. Mr Aidan Lynam, Mr Sushil Kumar Roongta and
Mr M L Narula retire by rotation and are eligible for re-appointment.
18. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an Internal Control System, commensurate with the size,
scale and complexity of its operations. The scope and authority of the
Internal Audit (IA) function is defined in the Internal Audit Charter.
To maintain its objectivity and independence, the IA function reports
to the Chairman of the Audit Committee of the Board.
The Internal Audit Department monitors and evaluates the efficacy and
adequacy of the internal control system in the Company, its compliance
with operating systems, accounting procedures and policies at all the
Company''s locations, and its Subsidiaries. Based on the report of
internal audit function, process owners 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.
19. BUSINESS RISK MANAGEMENT
Your Company has a robust process to identify and assess business risks
and opportunities. The Business Risk Management (BRM) activity is
monitored both at the Corporate and at regional levels. Risks and
opportunities so identified are integrated into the business plan and a
detailed action plan to mitigate identified risks is drawn up and its
implementation monitored. Key business risks identified by the Company
fall into areas of fuels, projects, competition and OH&S. These risks
together with plans for their mitigation are as under:
Fuels Risk:
Cement production is an energy-intensive process that requires large
quantities of coal to meet its kiln and captive power generation
requirements; hence, consistent supply of this fuel at reasonable and
stable prices is a major concern for the Company. Erratic supplies of
coal due to domestic production constraints and price fluctuations
would adversely impact the input costs for an industry as dependent on
coal as the Cement Industry. The Company is gradually increasing the
use of alternative fuels and is optimizing its coal mix. To hedge this
risk, your Company has through its Subsidiary Company ACC Mineral
Resources Limited, entered into Joint Venture with Madhya Pradesh State
Mining Corporation Limited for developing four coal block as earlier
indicated. The Bicharpur Coal Block when developed would partly meet
the coal requirement of some of the Company''s Cement Plants.
Project Risks:
The Cement Industry is capital intensive in nature. Its Compound Annual
Growth Rate
(CAGR) for the next five years is expected to be ~7 %. In the execution
of large projects which are highly capital intensive in nature, there
could be exposure to time and cost overruns. To mitigate these risks,
the Company has strengthened its project management team as well as its
project accounting and governance framework. Whilst the Company
continues to draw on Holcim''s expertise, a separate organizational
structure at Project sites with defined roles and accountability has
been put in place for large projects.
Competition Risks:
The Cement Industry is becoming intensely competitive with the foray of
new entrants and some of the existing players adopting inorganic growth
strategies. To mitigate this risk, the Company is leveraging its
capacities to increase market share, enhance brand equity and
visibility, enlarge product portfolio and service offerings. It would
also leverage on its Infrastructure, Commercial and Institutional Sales
teams to offer value to large customers.
OH&S Risks:
The Cement Industry is labor intensive and hence the safety of
employees and workers is of utmost importance to the Company. To
reinforce the safety culture in the Company, it has identified
Occupational Health & Safety as a focus area of overriding importance.
The Company already has a robust approach to tackle this risk through
various programmes in all its Plants and Sales Units as detailed in
para 12 of this Report.
20. AWARDS
During the year under review, your Company received many awards and
felicitations conferred by reputable organizations for achievements in
different areas such as Safety, Manufacturing Excellence and
Environment Management. Your Company was recognized as one of India''s
most sustainable companies and was presented the CII-ITC Sustainability
Prize under the category of large manufacturing companies which is a
notable recognition.
21. ENHANCING SHAREHOLDERS'' VALUE
The processes of the Secretarial & Compliance Division, Share
Department and ISD Support, comply with ISO 9001:2008 as certified by
Det Norske Veritas AS for the robustness of quality management
processes.
Your Company believes that its Members are among its most important
stakeholders. Accordingly, your Company''s operations are committed in
the pursuit of achieving high levels of operating performance and cost
competitiveness, consolidating and building for growth, enhancing the
productive asset and resource base and nurturing overall corporate
reputation. Your Company is also committed to creating value for its
other stakeholders by ensuring that its corporate actions positively
impact the socio-economic and environmental dimensions and contribute
to sustainable growth and development.
22. DIRECTORS'' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the
information and explanations obtained by them, your Directors make the
following statement in terms of Section 217(2AA) of the Companies Act,
1956:
- that in the preparation of the annual accounts for the year ended
December 31, 2013, the applicable accounting standards have been
followed along with proper explanation relating to material departures,
if any;
- that such accounting policies as mentioned in Note 2 of the Notes to
the Financial Statements have been selected and have been applied
consistently and judgment and estimates have been made that are
reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company as on December 31, 2013, and of the profit of
the Company for the year ended on that date;
- that proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
- that the annual accounts have been prepared on a going concern basis.
23. AUDIT
The Company''s Auditors Messrs S R Batliboi & Co LLP, Chartered
Accountants, who are the Statutory Auditors of the Company and who hold
office upto the date of the Annual General Meeting, have, arising out
of their internal restructuring, expressed their inability to continue
as Auditors of the Company.
Messrs S R Batliboi & Co LLP, were appointed as Auditors of the Company
in 2012. The Board has placed on record its appreciation of the
services rendered by the Auditors.
The Members are requested to appoint S R B C & CO LLP (ICAI Firm
Registration No. 324982E) one of the four firms in the overall S R
Batliboi & Co network, as the Auditors of the Company for the year 2014
and to authorize the Board of Directors to fix their remuneration as
per Item 6 of the Notice. S R B C & CO LLP have confirmed their
eligibility under Section 224 of the Companies Act, 1956, for
appointment as Auditors of the Company.
As per the requirement of the Central Government and in pursuance of
Section 233B of the Companies Act, 1956, your Company carries out an
audit of cost records relating to cement each year. Subject to the
approval of the Central Government, your Directors have appointed
Messrs N I Mehta & Co to audit the cost accounts of the Company for the
financial year 2013.
24. CORPORATE GOVERNANCE
As per Clause 49 of the Listing Agreement with the Stock Exchanges, a
separate section on corporate governance practices followed by the
Company, together with a certificate from the Company''s Auditors
confirming compliance, is set out in the Annexure forming part of this
Report.
25. BUSINESS RESPONSIBILITY REPORTING
As per Clause 55 of the Listing Agreement with the Stock Exchanges, a
separate section on Business Responsibility forms part of this Annual
Report.
26. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company prepared in
accordance with relevant Accounting Standards viz. AS 21, AS 23 and AS
27 issued by the Institute of Chartered Accountants of India form part
of this Annual Report.
27. ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE
The information on conservation of energy, technology absorption and
foreign exchange earnings and outgo stipulated under Section 217(1)(e)
of the Companies Act, 1956, are furnished in Annexure ''A'' to the
Directors'' Report.
28. PARTICULARS OF EMPLOYEES
The information required under Section 217 (2A) of the Companies Act,
1956, read with Companies (Particulars of Employees) Rules, 1975 as
amended, in respect of the employees of the Company, is provided in the
Annexure forming part of this Report. In terms of Section 219(1)(b)(iv)
of the Act, the Report and Accounts are being sent to the Members and
others entitled thereto, excluding the aforesaid Annexure which is
available for inspection by the Members at the Registered Office of the
Company during business hours on working days of the Company upto the
date of the ensuing Annual General Meeting. If any Member is
interested in obtaining a copy thereof, such Member may write to the
Company Secretary in this regard.
29. 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,
shareholders, 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 ACC for
their unstinted commitment and continued contribution to the Company.
30. CAUTIONARY STATEMENT
Statements in the Directors'' Report and the Management Discussion &
Analysis, describing the Company''s objectives, expectations or
forecasts, may be forward-looking within the meaning of applicable
securities, laws and regulations. Actual results may differ materially
from those expressed in the statement. Important factors that could
influence the Company''s operations include global and domestic demand
and supply conditions affecting selling prices of finished goods, input
availability and prices, changes in government regulations, tax laws,
economic developments within the country and other factors such as
litigation and industrial relations.
For and on behalf of the Board of Directors
N S Sekhsaria
Chairman
Mumbai
February 6, 2014
Dec 31, 2012
TO THE MEMBERS OF ACC LIMITED
The Directors take pleasure in presenting the Seventy Seventh Annual
Report together with the audited accounts, for the year ended December
31, 2012. The Management Discussion and Analysis has also been
incorporated into this report.
1. FOREWORD
The Indian economy experienced a slowdown in the year 2012, consequent
to a deceleration in global economic growth. As a result, two important
drivers of economic growth viz. infrastructure and industrial projects
performed below expectations. Higher inflation and a depreciating
rupee lead to a fall in domestic savings and consumption. Your Company
faced these challenges with a new focus to achieve cost leadership and
enhance value. This was enabled by planning for all-round improvements
and innovativeness in productivity and profitability, leadership
development and capability enhancement of its employees. In the
process, many favourable trends were established.
Your Company closed the year by starting ground work on the next phase
of the Company''s expansion programme.
2. HIGHLIGHTS OF PERFORMANCE
- Operating EBITDA increased in 2012 by 14% to Rs. 2197 crore, from
Rs. 1921 crore in 2011.
- Consolidated income for the year increased by 11% to Rs. 11621
crore, as compared to Rs. 10428 crore in 2011.
- Consolidated profit before tax in 2012 was Rs. 1441 crore, against
Rs. 1505 crore in 2011. Similarly, consolidated profit after tax was
Rs. 1059 crore against Rs. 1301 crore in 2011.
Profit Before Tax and Profit After Tax would have been higher by Rs.
364.08 crore and Rs. 245.95 crore respectively, if there was no change
in method of depreciation from Straight Line method to Written Down
Value method in respect of Captive Power Plants.
3. FINANCIAL RESULTS
Consolidated Standalone
Rs. Crore Rs. Crore
2012 2011 2012 2011
Revenue from Operations
(Net) and Other Income 11621.47 10428.20 11622.78 9852.20
Profit Before Tax (PBT) 1440.99 1505.29 1451.49 1540.42
Provision for Tax 391.08 215.45 390.30 215.16
Profit after Tax (Pat) 1059.28 1300.80 1061.19 1325.26
Balance brought forward
from previous year 3591.12 3175.45 3821.54 3381.41
Adjustment pursuant to
Amalgamation - - (216.29) -
Profit available for
Appropriations 4650.40 4476.25 4666.44 4706.67
Appropriations:
Interim Dividend 206.52 206.52 206.52 206.52
Proposed Final Dividend 356.72 319.17 356.72 319.17
Dividend Distribution Tax 91.37 85.28 91.37 85.28
Previous Year Dividend
Distribution Tax - (1.49) - (1.49)
General Reserve 150.00 250.00 150.00 250.00
Debenture Redemption Reserve - 25.00 - 25.00
Amortization Reserves - 0.65 - 0.65
Surplus carried to the next
year''s account 3845.79 3591.12 3861.83 3821.54
4. DIVIDEND
Your Directors are pleased to recommend a final dividend of Rs. 19 per
equity share of Rs. 10 each. The Company had distributed an interim
dividend of Rs. 11 per equity share of Rs. 10 each in August 2012. The
total dividend for the year ended December 31, 2012 would accordingly
be Rs. 30 per equity share of Rs. 10 each as against the total dividend
of Rs. 28 per equity share of Rs. 10 each for the year ended December
31, 2011. The total outgo for the current year amounts to Rs. 654.61
crore, including dividend distribution tax of Rs. 91.37 crore, as
against Rs. 610.97 crore including dividend distribution tax of Rs.
85.28 crore in the previous year.
5. ECONOMIC SCENARIO & OUTLOOK
The global economy experienced a slowdown especially noticed in
developed economies, which had its impact on India as well. The Indian
economy had to contend with high inflation in the year 2012 and
increased lending rates. The tightening of the monetary policy further
slowed the growth of the economy which affected all sectors including
the cement industry.
There are signs that indicate the possibility of a revival in
consumption and government spending in 2013. Coupled with expectations
of a normal monsoon, this augurs well for the economy in the coming
year.
6. CEMENT INDUSTRY OUTLOOK AND OPPORTUNITIES
In 2012, the cement industry added ~34 million tonnes of capacity
taking its installed capacity to ~360 million tonnes. The first half of
the calendar year witnessed high demand for cement at 10% YoY. This
demand fell in the second half of the year following a slowdown in the
construction sector.
Cement Industry is expected to gather momentum driven by a revival in
the general investment climate and by reduction in interest rates which
will positively impact demand from housing, infrastructure and industry
segments. We, therefore expect a favourable rate of growth in cement
consumption. At the same time, there is a likelihood of mounting
pressure on costs mainly arising out of increases in the cost of coal,
diesel, rail freight and exchange rate fluctuations.
INSTITUTIONALIZING EXCELLENCE
In the beginning of 2012, the Company launched a new programme designed
to deliver superior value to our customers while simultaneously seeking
cost leadership through improvements in manufacturing, sales &
marketing, logistics and procurement of major inputs. The programme
called "Institutionalizing Excellence" is designed to further
strengthen these processes so as to deliver and sustain enhanced
performance levels. Built essentially around five pillars of core
processes of the Organization, the overall objective of the programme
is to achieve excellence in the functions comprising manufacturing,
logistics, sales & marketing, people processes and certain strategic
procurement projects.
The manufacturing excellence pillar includes efforts to reduce
production cost through improvements in clinker factor, plant
performance, thermal and electrical energy efficiencies. The sales and
marketing teams aim to strengthen the Company''s brand advantage,
sustain market share and strive for top-line growth. In logistics, the
plan is to achieve best-in-class performance in terms of cost-to-serve
and time-to-serve. The Company has deployed emerging technologies like
RFID (Radio Frequency Identification) and GPS (Global Positioning
Systems) for the first time in the Indian Cement Industry, to enable
easy tracking of road transport vehicles in our plants and in transit
to the end-consumer. The Institutionalizing Excellence journey has
already shown signs of improvement across the Company with traction in
all areas covered by it.
7. CEMENT BUSINESS - PERFORMANCE AT A GLANCE
2012 2011 Change %
Production - million tonnes 24.12 23.46 3%
Sales Volume - million 24.11 23.73 2%
tonnes
Sale Value - Rs. crore 11130.45 9429.62 18%
Operating EBITDA Rs. crore 2195.57 1920.72 14%
8. EXPANSION CAPEX
Preliminary work on the new Jamul expansion project has commenced with
ground-breaking at site and ordering out major plant equipment.
Scheduled for completion in a phased manner in 2015, the project
comprises a new clinkering line of 2.79 million tonnes capacity and
grinding facility of 1.10 million tonnes at Jamul. In addition, it also
includes the establishment of two other grinding plants in Eastern
India, which will together enhance our capacity by 5 million tonnes of
cement per annum. The total estimated cost of this expansion is Rs.
3300 crore and shall be funded through internal accruals.
9. READY MIXED CONCRETE (RMX)
During the year under review, the sales volume of RMX fell by 16%,
mainly on account of a slowdown in the construction industry. Steps
have been initiated to consolidate the Company''s RMX business through
increased volumes from its existing assets. Vigorous efforts are being
made to extend the customer base and leveraging the Company''s vast
cement network.
The outlook for the construction sector in 2013 remains stable. Maximum
demand for RMX is expected from Mumbai, Gurgaon and Bengaluru'', which
are likely to attract larger investments in real estate and infra
projects. We expect pricing to remain under pressure next year as a
result of competition.
2012 2011 Change %
Production - lakh cubic 16.54 19.79 (16%)
metres
Sales Volume - lakh 17.97 21.41 (16%)
cubic metres
Sale Value - Rs. crore 617.06 687.66 (10%)
Operating EBITDA - 2.12 (3.29) 164%
Rs. crore
10. SUSTAINABLE DEVELOPMENT
10.1 ALTERNATIVE FUELS AND RAW MATERIALS (AFR)
The Company continues to provide sustainable waste management solutions
to various industries through co-processing. Our portfolio of clients
has further increased with new waste streams. Efforts continued to be
made to reduce dependence on fossil fuel and increase the use of
biomass as a renewable source of energy.
Third party emission monitoring trial burns for hazardous waste,
conducted in close co-ordination with regulatory authorities and
industries, demonstrated that co-processing wastes in cement kilns did
not have any adverse impact on the environment and on the quality of
the end product.
10.2 RENEWABLE ENERGY & CLEAN DEVELOPMENT MECHANISM (CDM)
Your Company generated 42.33 million units of wind power from its three
wind power stations located in Rajasthan, Tamil Nadu and Maharashtra.
During the year, 1,77,299 Certified Emission Reductions (CERs) were
received from the United National Framework Convention on Climate
Change (UNFCCC) for the CDM Projects of blended cements and wind power
generation in Tamil Nadu. During the year, we registered our wind power
generation in Rajasthan as a new CDM project.
10.3 ENVIRONMENT PERFORMANCE
Your Company has installed Continuous Ambient Air Quality Monitoring
Stations and Continuous Emission Monitoring Systems for kiln stacks at
most of its plants. Online reporting of environment data to the
Central Pollution Control Board was started in respect of seven of its
plants. During the year, your Company reduced CO2 emission by ~2%. This
was achieved through several initiatives like reduction of specific
thermal energy, specific electrical energy, higher usage of blended
materials like flyash and slag and the use of alternative fuels and raw
materials.
Stack dust emissions were maintained well below statutory limits by
installation of the state-of-the-art pollution control equipment in
different plants of ACC and kiln stack emissions were lower by 15.49%
as compared to the previous year.
Several initiatives have been undertaken across all plants to reduce
specific water consumption for cement manufacturing and also enhance
water harvesting efforts in different plants and mines.
The Company has under implementation a 7 MW Waste Heat Recovery Power
generation unit at Gagal, Himachal Pradesh, which when completed, will
be capable of generating ~45 million units of power per year of green
energy, thereby further reducing the discharge of CO2 into the
environment.
As a member of the Cement Sustainability Initiative, your Company made
key contribution in developing a Low Carbon Technology roadmap for the
Indian Cement Industry.
11. COMMUNITY DEVELOPMENT
As part of its Corporate Social Responsibility, your Company undertakes
a range of activities to improve the living conditions of the weaker
sections living near its plants. These include education, healthcare,
vocational guidance and rural development. Some of these like
agriculture development were carried out in partnership with government
agencies.
During the year under review, efforts to improve the quality of
education in village schools benefitted about 28000 students. Bridge
Education Support was given to about 4200 students, and 100
Scholarships were awarded to meritorious students to help them continue
their education. Technology aided education initiatives like smart
classes and interactive kiosks in rural schools aided about 6100 rural
children to keep pace with modern methods of learning. About 800 women
members of Self Help Groups (SHG) participated in Adult Literacy
Programs run by your Company.
Skill development training programmes were imparted to unemployedyouth
in partnership with specialised NGOs which helped about 2376 youth get
job placements in various manufacturing and service sector enterprises.
Your Company also supported the formation of 604 SHGs and their
strengthening through structured training activities. Members of these
SHGs saved about Rs. 1.12 crore which helped them to secure matching
grants from banks and other financial institutions to start
micro-enterprises.
On the health and nutrition front, your Company''s initiatives for
better health benefitted 1.35 lakh people. Support to 144 anganwadi
centres helped 11,150 mothers and children get access to better health
and nutrition. Nearly 17,000 people were supported through
counselling, testing and treatment, wherever applicable, for HIV/AIDS.
The Company released its Externally Assured A rating Sustainable
Development Report 2011 in the GRI (Global Reporting Initiative)
framework.
12. OCCUPATIONAL HEALTH & SAFETY (OH&S)
Your Company engages its employees in OH&S matters through a policy of
communication, involvement and competency build-up applied consistently
and continually throughout its operation. Different programmes
targeting critical areas are being implemented across all sites to
address risks associated with operations. Effectiveness of these
programmes is being constantly assessed by the Top Management.
External audits are being conducted to check the level of
implementation of these safety programmes.
A behaviour based safety training programme "ACC Chetna" was launched
in June 2012. The programme trains people to practice 5 simple
behaviours that can prevent injuries at the workplace and at home.
Visible Safety Leadership programmes are being conducted across
business units for senior line managers. The programme comprises
practical exercises and interactive sessions and prepares line managers
to act as a role model to their subordinates by visibly leading safety
in the field.
The concept of Safety Champions has been successfully established and
aims to involve and engage line managers in safety by way of execution
of short term safety projects.
Risk assessment is an integral part of any job/ activity. Our line
managers are provided with different types of risk assessment tools to
help them identify risk and decide on appropriate control measures.
Hazard Identification and Risk Assessment (HIRA) workshops are being
continued at sites to refine anticipation capability amongst the
employees by enhancing their hazard observation skills. Apart from our
employees, contractors are also being involved in HIRA workshops, which
show an appreciable change in the attitude of contractors towards
safety.
A concept of "Safety Circle" has been rolled out across the plants to
promote safety ownership amongst line management. The intent of this
concept is to involve as well as to engage shop floor employees
including contractor workforce to identify safety concerns and execute
safety projects for focused improvements in their respective work
areas.
Our pro-wellness programmes reached more than 7,500 employees,
contractors and community members during the year.
12.1 Logistics Safety
Logistics safety was given close attention with carefully planned
interventions in people development and driver trainings. Health and
safety checks have been initiated in the plants in phases with the help
of external consultants. This includes examination of aspects such as
plant packing house layouts, truck parking yards, inward and outward
flow of traffic, storage areas and infrastructure for road and rail
transport.
13. HUMAN RESOURCES
With an intent to create a future ready talent pool for managing our
business growth, your Company has embarked on a journey towards People
Excellence during the year. The aim of this journey is to re-engineer
HR processes and ensure that each HR process is fine-tuned with current
and future business requirement and an appropriate number of employees
are groomed for future middle and senior leadership roles. Greater
focus is given to hiring and retaining talent from different
disciplines and streams.
Under a concept of ''On boarding Centres'', a complete functional
orientation programme is in place which is expected to deliver
competent cement engineers and functional specialists. The concept has
been evaluated as one of the best practices across manufacturing
companies in the industry.
As extension of faster learning for young talent, your Company has
embarked on a plan to impart intensive learning through challenging
functional/ cross-functional projects and coaching to improve
analytical and decision making capability.
The new talent management process has adopted a bottom-up approach to
conduct the talent review process, where immediate line managers are
involved in identifying high-potential employees from their own teams.
One-on-one Development Conversations have been conducted with the
identified high potentials to create their individual development plan
based on individual and Organization''s aspiration.
The industrial relations scenario was peaceful. Your Company embarked
on a major programme for Shop Floor Associates Development with an
emphasis on involving and engaging them in a variety of small
improvement projects at the shop floor level so that their engagement
level is enhanced. The Sumant Moolgaonkar Training Institute (SMTI) and
ACC Cement Technology Institute (ACTI) are giving their full
contribution in training artisans and diploma holders.
14. FINANCE
Your Company''s cash and cash equivalent as at December 31, 2012 was
Rs. 3037 crore. The Company continues to focus on judicious management
of its working capital. Receivables, inventories and other working
capital parameters are kept under strict check through continuous
monitoring. The Company''s debt programme continues to enjoy "AAA"
rating from CRISIL.
During the year, the Company had given an option of premature
redemption of Non-Convertible Debentures to the holders of its
Privately Placed Debentures having coupon rates of 8.45% and 11.30%.
Out of Rs. 500 crore of Non-Convertible Debentures, debentures
totalling Rs. 343 crore, stand prematurely redeemed as on December 31,
2012.
15. FIXED DEPOSITS
Despite efforts to identify and repay unclaimed deposits, the total
amount of fixed deposits matured and remaining unclaimed as on December
31, 2012 was Rs. 0.02 crore.
16. STATUS OF AMALGAMATION OF SUBSIDIARY COMPANIES
During the year, ACC Concrete Limited and Encore Cement and Additives
Private Limited, both wholly owned subsidiaries of your Company, have
amalgamated with your Company. The amalgamations would enable your
Company to utilize the resources of the said subsidiaries to further
augment its cement business and would bring down the cost of overheads
and other common expenses.
The Scheme of Amalgamation of Lucky Minmat Limited and National
Limestone Company Private Limited, both wholly owned subsidiary
companies of your Company, was filed with the High Court of Judicature
at Bombay and is pending due to certain regulatory approvals.
17. SUBSIDIARY COMPANIES
17.1 ACC Mineral Resources Limited (AMRL)
The wholly owned Company, AMRL, is a Special Purpose Vehicle which
looks into the development of the four coal blocks allotted by the
Madhya Pradesh State Mining Corporation Limited (MPSMC) through four
companies incorporated jointly by MPSMC and AMRL pursuant to a joint
venture agreement.
In January 2013, the Company received notice of de-allocation of one of
the Coal Blocks from the Ministry of Coal, Government of India, on the
grounds of non-receipt of forest and environmental clearances from the
Ministry of Environment and Forests, in view of the block''s proximity
to the National Tiger Reserve at Bandhavgarh. MPSMC along with the
concerned Joint Venture Company, have together filed a writ petition in
the Jabalpur High Court for relief in the matter.
During the year under review, the preliminary and pre-development
activities in the other three coal blocks are in progress. The
Bicharpur Coal Block in Shahdol District is in an advanced stage of
development. AMRL does not have any commercial activity or earnings
from investments and therefore no income.
17.2 Bulk Cement Corporation (India) Limited (BCCI)
During the year under review, BCCI handled cement volumes of 9.20 lakh
tonnes in 2012, as against 9.34 lakh tonnes in 2011. The Profit after
tax for the year 2012 is Rs. 179.81 lakhs, as against Rs. 68.35 lakhs
in the year 2011.
17.3 Singhania Minerals Private Limited
This Company was acquired in August 2012. Being wholly owned Company,
the said acquisition will help the Company in augmenting its limestone
reserves.
17.4 Audited statements of accounts of the Company''s Subsidiaries
As required under Section 212 of the Companies Act, 1956, the audited
statements of account, along with the report of the Board of Directors
relating to the Company''s subsidiaries; ACC Mineral Resources
Limited, Bulk Cement Corporation (India) Limited, Lucky Minmat Limited,
National Limestone Company Private Limited and Singhania Minerals
Private Limited together with the respective Auditors'' Reports
thereon for the year ended December 31, 2012 are annexed.
18. DIRECTORS
As per the Succession Policy for Directors, Mr Naresh Chandra and Mr R
A Shah will be stepping down from the Board of Directors of the Company
at the forthcoming Annual General Meeting of the Company. The Board has
placed on record its appreaciation for the outstanding contributions
made by Mr Naresh Chandra and Mr R A Shah during their respective
tenures as Directors of the Company since May 5, 2004 and January 24,
2006 respectively.
It is proposed not to fill up these vacancies and accordingly the
requisite resolutions in this behalf have been included at Items 5 & 6
of the Notice convening the Annual General Meeting.
In accordance with the provisions of the Companies Act, 1956, and in
terms of the Memorandum and Articles of Association of the Company, Mr
N S Sekhsaria and Mr Shailesh Haribhakti retire by rotation and are
eligible for re-appointment.
19. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has documented a robust and comprehensive internal control
framework for all the major processes to ensure reliability of
financial reporting, timely feedback on achievement of operational and
strategic goals, compliance with policies, procedures, laws and
regulations, safeguarding of assets and economical and efficient use of
resources.
The Internal Control System of the Company is commensurate with the
size, scale and complexity of its operations. It is being constantly
assessed and strengthened with new / revised standard operating
procedures and robust internal and Information Technology (IT)
controls.
The formalized systems of control facilitate effective compliance as
per Clause 49 of the Listing Agreement with the Stock Exchanges, and
Article 728(a) of the Swiss Code of Obligations applicable to the
Holcim Group since 2008.
The Company''s Internal Audit Department objectively and independently
tests the design and operating effectiveness of the internal control
system to provide a credible assurance to the Board and the Audit
Committee regarding the adequacy and effectiveness of the internal
control system. The Internal Audit function monitors the effectiveness
of controls, and also provides an independent and objective assessment
of the overall governance processes in the Company, including the
application of a systematic risk management framework.
The scope and authority of the Internal Audit activity are well defined
in the Internal Audit Charter, approved by the Audit Committee.
Internal Audit plays a key role by providing an assurance to the Board
of Directors, and value adding consultancy service to the business
operations.
20. BUSINESS RISK MANAGEMENT
Your Company has robust Business Risk Management (BRM) practices to
identify, evaluate business risks and opportunities. This is monitored
both at the Corporate and at the regional levels. The business risks
and opportunities so identified are integrated into the business plan
and a detailed action plan to mitigate the identified business risks is
thereafter drawn up and its implementation monitored.
The key business risks identified by the Company and its mitigation
plans are as under:
Fuels Risks:
Availability of fuel at reasonable rates is one of the main concerns of
the Company, as it uses large quantities of coal annually to meet its
kiln and captive power generation requirements. The year 2012 also
witnessed an increase in the price of coal which adversely impacted the
profitability of the Company. This, coupled with limited production of
the fuel in the country, is expected to result in higher input costs
for a fuel intensive industry like cement. Further, the availability of
linkage coal is gradually reducing. The Company is trying to mitigate
its fuel risk by increased usage of alternative fuels and optimization
of coal mix. It has also initiated steps and is in the process of
developing its own coal blocks which would partly go to meet its coal
requirements.
Project Risks:
The Cement Industry is capital intensive in nature. In the execution
of large projects, there could be exposure to time and cost overruns.
To mitigate these risks, the Company has strengthened its project
management team as well as its project accounting and governance
framework. Whilst the Company continues to draw on Holcim''s
expertise, a separate Organization structure at project sites, with
defined roles and accountability, is in place for large projects. A
Capex Committee of the Board oversees the feasibility and progress of
projects and makes suitable recommendations.
Competition Risks:
The Cement Industry is becoming intensely competitive with the foray of
new entrants and some of the existing players adopting inorganic growth
strategies. To mitigate this risk, the Company is working to enhance
brand equity and visibility and enlarge its product portfolio and
service offerings. Simultaneously, there are several initiatives being
taken as part of Institutionalizing Excellence programme in the areas
of cost competitiveness and cost leadership.
OH&S Risks:
The Cement Industry is labour intensive and hence safety of its
employees and shop floor associates is of utmost importance to the
Company. To reinforce the safety culture in the Company, it has
identified OH&S as a major focus area. Your Company already has various
activities and programmes under way in all its plants and sales units.
21. ENHANCING SHAREHOLDERS VALUE
The processes of the Secretarial & Compliance Division, Share
Department and ISD Support, are ISO 9001:2008 certified by Det Norske
Veritas AS for the robustness of quality management processes.
Your Company believes that its Members are among its most important
stakeholders. Accordingly, your Company''s operations are committed
to the pursuit of achieving high levels of operating performance and
cost competitiveness, consolidating and building for growth, enhancing
the productive asset and resource base and nurturing overall corporate
reputation. The Company is also committed in creating value for its
other stakeholders by ensuring that its corporate actions positively
impact the socio-economic and environmental dimensions for the society
for sustainable growth and development.
22. DIRECTORS'' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the
information and explanations obtained by them, your Directors make the
following statement in terms of Section 217(2AA) of the Companies Act,
1956:
- that in the preparation of the annual accounts for the year ended
December 31, 2012, the applicable accounting standards have been
followed along with proper explanation relating to material departures,
if any;
- that such accounting policies as mentioned in Note 2 of the Notes
to the Financial Statements, have been selected and have been applied
consistently and judgement and estimates have been made that are
reasonable and prudent, so as to give a true and fair view of the state
of affairs of the Company as on December 31, 2012, and of the profit of
the Company for the year ended on that date;
- that proper and sufficient care has been taken for the maintenance
of adequate accounting records, in accordance with the provisions of
the Companies Act, 1956, for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities;
- the annual accounts have been prepared on a going concern basis.
23. AUDIT
The Company''s Auditors Messrs S R Batliboi & Co., Chartered
Accountants, Mumbai, who retire at the ensuing Annual General Meeting
of the Company, are eligible for re-appointment. They have confirmed
their eligibility under Section 224 of the Companies Act, 1956, for
re-appointment as Auditors of the Company.
Members'' attention is invited to the observation made by the Auditors
at point (xxi) of their ''CARO Report'', issued pursuant to the
Companies (Auditor''s Report) Order, 2003 (CARO Report), which is self
explanatory.
As per the requirement of the Central Government, and in pursuance of
Section 233B of the Companies Act, 1956, your Company carries out an
audit of cost records relating to cement each year. Subject to the
approval of the Central Government, your Directors have appointed
Messrs N I Mehta & Co., to audit the cost accounts of the Company for
the financial year 2012.
24. CORPORATE GOVERNANCE
As per Clause 49 of the Listing Agreement with the Stock Exchanges, a
separate section on corporate governance practices followed by the
Company, together with a certificate from the Company''s Auditors
confirming compliance, is set out in the Annexure forming part of this
Report.
25. BUSINESS RESPONSIBILITY REPORTING
As per Clause 55 of the Listing Agreement with the Stock Exchanges, a
separate section on Business Responsibility Reporting forms part of
this Annual Report.
26. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company, prepared in
accordance with relevant Accounting Standards viz. AS21, AS23 and AS27
issued by the Institute of Chartered Accountants of India forms part of
this Annual Report.
27. ENERGY TECHNOLOGY AND FOREIGN EXCHANGE
The information on conservation of energy, technology absorption and
foreign exchange earnings and outgo stipulated under Sec 217(1)(e) of
the Companies Act, 1956, are given in Annexure ''A'' to the
Directors'' Report.
28. PARTICULARS OF EMPLOYEES
Information in accordance with the provisions of Section 217(2A) of the
Companies Act, 1956, read with the Companies (Particulars of Employees)
Rules, 1975, as amended is given in Annexure ''B'' to the
Directors'' Report.
29. ACKNOWLEDGEMENTS
Your Directors are thankful to the various Central and State Government
Departments and Agencies for their continued help and co-operation. The
Directors are grateful to the various stakeholders - customers,
shareholders, banks, dealers, vendors and other business partners for
the excellent support received from them during the year under review.
Your Directors wish to place on record their sincere appreciation to
all employees for their commitment and continued contribution to the
Company.
30. CAUTIONARY STATEMENT
Statements in the Directors'' Report and the Management Discussion &
Analysis describing the Company''s objectives, expectations or
forecasts, may be forward-looking within the meaning of applicable
securities laws and regulations. Actual results may differ materially
from those expressed in the statement. Important factors that could
influence the Company''s operations include global and domestic demand
and supply conditions affecting selling prices of finished goods, input
availability and prices, changes in government regulations, tax laws,
economic developments within the country and other factors such as
litigation and industrial relations.
For and on behalf of the Board of Directors
N S Sekhsaria
Chairman
Mumbai
February 7, 2013
Dec 31, 2010
The Directors take pleasure in presenting the Seventy Fifth Annual
Report together with the audited accounts, for the year ended December
31, 2010. The Management Discussion and Analysis has also been
incorporated into this report.
1. PREAMBLE - 2010
The Cement Industry went through challenging times in 2010 after a
heady performance in 2009. While it benefited from vibrant growth of
the national economy and the Governments continued thrust on
infrastructure development, the Industry had to contend with a decline
in selling prices across all regions simultaneously with a surge in
costs of major inputs like coal, slag, fly ash and gypsum which led to
an overall decline in profitability. The year witnessed large scale
additions of ~36 million tonnes in cement capacity which reached ~260
million tonnes, while capacity utilization slipped to barely 80 per
cent. Despite a mix of constraints such as prolonged monsoon, floods,
shortages of sand and aggregates and transport bottlenecks at different
times in different states, the Industry managed a growth of ~10 per
cent in supply to touch ~212 million tonnes.
Your Company ended the year 2010 relatively flat in terms of growth in
sales. However the successful
commissioning of expansion project at Wadi and with the commissioning
of Chanda during 2011, the total installed capacity would rise to ~30
million tonnes per annum and place your Company on the threshold of
achieving major growth.
2. HIGHLIGHTS OF PERFORMANCE
- Consolidated income for the year under review was Rs. 8,619 crore a
decrease of 1.2% as compared to Rs. 8,722 crore in 2009.
- Consolidated profit before tax declined in 2010 to Rs. 1,415 crore
against Rs. 2,247 crore in 2009.
- Consolidated profit after tax was also consequently lower in 2010 at
Rs. 1,078 crore against Rs. 1,564 crore in 2009.
- The largest kiln in the world with a capacity of 12500 tpd was
commissioned at Wadi.
- With a view on customer focus and innovation, two new cement products
viz. Concrete+ and Coastal+ were launched in key markets, which were
very well received by customers. Foundation to Roof Cement (F2R) was
introduced in new markets this year and has found good acceptance.
- The Corporate Sustainable Development Report for 2009 was released
with the contents assured by external auditors.
19. DIRECTORS
The Board has appointed Mr Aidan Lynam as a Director with effect from
April 22, 2010 in the casual vacancy caused by the resignation of Mr.
Onne van der Weijde. Mr Lynam holds office up to the date of the
ensuing Annual General Meeting (AGM) of the Company. Accordingly, his
candidature for appointment as a Director has been included in the
Notice convening the AGM.
The Board has also appointed Mr Sushil Kumar Roongta as an Additional
Director of the Company with effect from February 3, 2011. Mr Roongta
holds office upto the date of the AGM of the Company and his
candidature for appointment as a Director has been included in the
Notice convening the AGM.
The Board had appointed Mr Kuldip Kaura as the Chief Executive Officer
& Managing Director (Designate) for the period August 5, 2010 till
August 12, 2010 and thereafter as the Chief Executive Officer &
Managing Director of the Company for the period August 13, 2010 till
December 31, 2013. The Members of the Company had approved of the
aforesaid appointment and terms of remuneration of Mr Kaura by a Postal
Ballot, pursuant to which the Company has entered into an Agreement
with Mr Kaura detailing therein his terms of appointment and
remuneration.
Consequent upon the aforesaid appointment, Mr Kaura has ceased to be an
Independent Director on the Board with effect from August 5, 2010.
Mr. Sumit Banerjee, who was appointed as Managing Director of the
Company on April 1, 2007, resigned with effect from August 13, 2010.
The Board has placed on record its appreciation of the valuable
services rendered by Mr Sumit Banerjee during his tenure as Managing
Director of the Company.
In accordance with the provisions of the Companies Act, 1956, and in
terms of the Memorandum and Articles of Association of the Company, Mr.
N. S. Sekhsaria, Mr. D. K. Mehrotra and Mr. R. A. Shah retire by
rotation and being eligible, offer themselves for reappointment.
22. AWARDS
During the year under review, your Company has received many awards and
felicitations conferred by reputable organizations for achievements in
different areas.
23. ENHANCING SHAREHOLDER VALUE
Recognizing that shareholders are among its most important
stakeholders, your Company views value creation and its enhancement as
a primary objective with a view to optimizing value to shareholders.
Accordingly, your Companys operations are committed to the pursuit of
achieving the high levels of operating performance and cost
competitiveness, consolidating and building for growth, enhancing the
productive asset and resource base and nurturing overall corporate
reputation.
24. DIRECTORS RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the
information and explanations obtained by them, your Directors make the
following statement in terms of Section 217(2AA) of the Companies Act,
1956:
a) that in the preparation of the annual accounts for the year ended
December 31, 2010, the applicable accounting standards have been
followed along with proper explanation relating to material departures,
if any,
b) that such accounting policies as mentioned in Note 1 of the Notes to
the Accounts have been selected and have been applied consistently, and
judgments and estimates have been made that are reasonable and prudent
so as to give a true and fair view of the state of affairs of the
Company as on December 31, 2010, and of the profit of the Company for
the year ended on that date,
c) that proper and sufficient care has been taken for the maintenance
of adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities,
d) the annual accounts have been prepared on a going concern basis.
25. AUDIT
The Companys Auditors Messrs. S. R. Batliboi & Associates, Chartered
Accountants, Mumbai who retire at the ensuing Annual General Meeting of
the Company are eligible for reappointment. They have confirmed their
eligibility under Section 224 of the Companies Act, 1956 for
reappointment as Auditors of the Company.
Members attention is invited to the observation made by the Auditors
at point (xxi) of their ÃCARO Report issued pursuant to the Companies
(Auditors Report) Order, 2003 (CARO Report) which is self explanatory.
As per the requirement of the Central Government and in pursuance of
Section 233B of the Companies Act, 1956, your Company carries out an
audit of cost records relating to cement each year. Subject to the
approval of the Central Government, your Directors have appointed
Messrs. N. I. Mehta & Co. to audit the cost accounts of the Company
for the financial year 2010.
26. CORPORATE GOVERNANCE
As per Clause 49 of the Listing Agreement with the Stock Exchanges, a
separate section on corporate governance practices followed by the
Company, together with a certificate from the Companys Auditors
confirming compliance, is set out in the Annexure forming part of this
report.
27. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company prepared in
accordance with relevant Accounting Standards viz. AS21, AS23 and AS27
issued by the Institute of Chartered Accountants of India forms part of
this Annual Report.
28. ENERGY, TECHNOLOGY & FOREIGN EXCHANGE
The information on conservation of energy, technology absorption and
foreign exchange earnings and outgo stipulated under Sec 217 (1)(e) of
the Companies Act, 1956, are given in Annexure ÃA to the Directors
Report.
29. PARTICULARS OF EMPLOYEES
Information in accordance with the provisions of Section 217(2A) of the
Companies Act, 1956, read with the Companies (Particulars of Employees)
Rules 1975 as amended, is given in Annexure ÃB to the Directors
Report.
30. ACKNOWLEDGEMENTS
Your Directors would like to acknowledge and place on record their
sincere appreciation of all stakeholders - customers, dealers, vendors,
banks, shareholders and all other business partners for the excellent
support received from them during the year. Your Directors recognize
and appreciate the efforts and hard work of all the employees of the
Company and their continued contribution to its progress.
For and on behalf of the Board of Directors
N. S. Sekhsaria
Chairman
Mumbai
February 3, 2011
Dec 31, 2009
The Directors hereby present the Seventy Fourth Annual Report together
with the audited accounts, for the year ended December 31, 2009. The
Management Discussion and Analysis has also been incorporated into this
report.
1. PREAMBLE - 2009
The year 2009 would be marked as an important year for the Indian
cement industry. When the year began, the Indian economy was in a
recession amidst the global slowdown that was still prevailing. The
cement industry then faced the prospects of a substantial cement
capacity addition with no sign that demand would grow significantly.
However, the forecasts were belied - demand was robust, capacity
creation was delayed, cement plants achieved higher capacity
utilization and market prices were favourable. With commodity prices
including fuel remaining subdued, most cement manufacturers were able
to record good financial performances in 2009.
The cement industry posted a steady growth of about 10.3% during the
year under review. Overall cement despatches in 2009 were approximately
195 million tonnes, up from 177 million tonnes in 2008. Growth was
registered across all regions, led by rapid developments in
infrastructure and a stable housing sector. The demand-supply scenario
was generally at balance with high levels of capacity utilization in
most of the regions. In 2009, capacity additions of the order of 26.88
million tonnes went on stream. There was some delay in the
materialization of fresh capacity addition which helped ease the
pressure on selling prices. The industryÃs cost profile improved on
account of lower procurement prices of coal and other commodities.
All of the above conditions had a favourable collective impact on
overall profitability.
ACCÃs installed capacity rose to 26 million tonnes per annum at the
close of the year as compared to 23 million tonnes at the end of 2008.
The Company continued with its strict control over costs, while taking
proactive measures to conserve cash resources which are reflected in
the fact that the Company has negative net financial debt even after
spending Rs. 1561 crores as capital expenditure.
2. HIGHLIGHTS OF PERFORMANCE/EVENTS
- Total consolidated income for the year 2009 was Rs. 8,725 crore, an
increase of 9% as compared to Rs. 7,974 crore in 2008.
- Consolidated profit before exceptional items and tax for the year
2009 was Rs. 2,251 crore against Rs. 1,582 crore in the 2008, an
increase of 42%.
- Consolidated profit after tax for the year 2009 was Rs. 1,564 crore
as against Rs. 1,100 crore in 2008, an increase of 42%.
- The expansion project of the Bargarh Plant was substantially
completed during the year. The satellite grinding units which were set
up as a part of Wadi expansion programme at Thondebhavi in Chikballapur
District and Kudithini in Bellary District in Karnataka were also
partly commissioned during the last quarter of 2009.
- There was substantial progress during the year under review in the
companyÃs on-going projects at Wadi and Chanda, which are slated for
completion in the first half of 2010.
- Work was started on a project to set up a 2.5 MW wind energy farm in
Maharashtra.
3. FINANCIAL RESULTS
Consolidated Standalone
Rs Crore Rs Crore
2009 2008 2009 2008
Sale of products and services
(net of excise duty)
and other income ......... 8725.41 7974.28 8268.31 7571.58
Profit after exceptional
items and before tax ...... 2250.70 1624.82 2294.39 1736.60
Provision for Tax ......... (686.79) (525.17) (687.66) (523.81)
Profit after Tax .......... 1563.91 1099.65 1606.73 1212.79
Balance brought forward
from previous year ........ 2357.25 2057.37 2477.91 2064.89
Profit available for
appropriations ............ 3921.16 3157.02 4084.64 3277.68
Appropriations :
Interim Dividend .......... 187.70 187.65 187.70 187.65
Proposed Dividend ......... 244.06 187.68 244.06 187.68
Dividend Distribution Tax ... 73.38 63.79 73.38 63.79
General Reserve ............ 350.00 350.00 350.00 350.00
Debenture Redemption
Reserve .................... 25.00 10.00 25.00 10.00
Previous Year Dividend ....... - 0.02 - 0.02
Amortisation Reserves ........ 0.65 0.63 0.65 0.63
Balance carried forward to the
next yearÃs account ....... 3040.37 2357.25 3203.85 2477.91
4. DIVIDEND
In August 2009, your Company had paid an interim dividend of Rs. 10 per
equity share, involving an outgo (including the dividend distribution
tax) of Rs. 219.60 crore. Your Directors are now pleased to recommend a
final dividend of Rs. 13 per equity share of Rs. 10 each. The total
dividend for the year 2009 would accordingly be Rs. 23 per equity share
as against Rs. 20 per equity share for the year ended December 31,
2008.
The total dividend outgo for the current fiscal would amount to Rs.
505.14 crore, including dividend distribution tax of Rs. 73.38 crore,
as against Rs. 439.12 crore, including dividend distribution tax of Rs.
63.79 crore in the previous year.
21. DIRECTORS
Dr. Nirmalya Kumar, who was appointed on the Board of Directors with
effect from January 24, 2006, resigned as Director with effect from
January 9, 2009. The Board has placed on record its warm appreciation
of the valuable services rendered by Dr. Nirmalya Kumar during his
tenure as Director of the Company.
Ms. Shikha Sharma, who was appointed on the Board of Directors with
effect from December 13, 2006, resigned as Director with effect from
May 29, 2009, consequent upon her appointment as Managing Director &
CEO of Axis Bank. The Board has placed on record its warm appreciation
of the valuable services rendered by Ms. Shikha Sharma, during her
tenure as Director of the Company.
Mr. Onne van der Weijde, who was appointed on the Board of Directors
with effect from January 9, 2009, resigned as Director with effect from
October 24, 2009. The Board has placed on record its warm appreciation
of the valuable services rendered by
Mr. Onne van der Weijde during his tenure as Director of the Company.
Mr. Kuldip Kaura has been appointed as an Independent Director in the
casual vacancy caused by the resignation of Ms. Shikha Sharma, with
effect from October 28, 2009. He holds office upto the date of the
ensuing Annual General Meeting of the Company. Accordingly, his
appointment as a Director has been included in the Notice convening the
Annual General Meeting.
In accordance with the provisions of the Companies Act, 1956, and in
terms of the Memorandum and Articles of Association of the Company, Mr.
S. M. Palia, Mr. Naresh Chandra and Mr. Shailesh Haribhakti retire by
rotation and are eligible for reappointment.
22. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Internal Audit Department functions independently, monitors and
evaluates the efficacy and adequacy of internal control systems in the
Company, and their compliance with operating systems, accounting
procedures and policies at all the CompanyÃs locations, including its
subsidiaries. Every quarter, the Audit Committee of the Board is
presented with the audit findings and connected issues, if any,
together with an implementation tracker which highlights management
action taken on past audit issues.
Your Company has also implemented a well- structured Internal Control
System (ICS) and the internal and external audit periodically tests all
the defined controls to ensure full compliance.
23. BUSINESS RISK MANAGEMENT
Your Company has implemented a Business Risk Management (BRM) process
that systematically identifies risks and opportunities. The BRM process
supports the Managing Committee in strategic decision making. The
process is robust and is a rolling exercise, with a consistent annual
review at the regional level and at the corporate level, to examine and
evaluate risks and opportunities. A detailed mind mapping of the risks
is carried out, so as to identify the root cause of the particular
risk, to enable the Management to take effective steps to address /
mitigate such risks. The risks are plotted on a likelihood matrix and
then integrated into the annual business plans as well as the audit
plan of the Company, as relevant.
The following is an analysis of the CompanyÃs key business risks and
mitigation plans:
Fuels Risks
Your Company is a major consumer of coal for producing cement at
various locations. The release of coal and allocation of quantities of
coal, are entirely dependent upon the demand from all sectors and is in
control of the Government of India. To ensure the timely availability
of coal, your Company has taken steps to acquire coal blocks, to enter
into medium term firm contracts and also to the possibility of using
alternate fuels in place of coal.
Projects Risks
Your Company is executing large CAPEX projects to set up new cement
manufacturing facilities, where the Company is exposed to risks of
timely completion and cost competitiveness. ACC has initiated
semi-turnkey projects approach to reduce the time and costs for
completion of large projects and has also restructured the project
organisation.
Compliance Risks
Your Company is exposed to significant risks due to non-compliance with
various statutes and regulations including Competition Act. The Company
is mitigating these risks through regular reviews of legal compliance,
through internal as well as external compliance audits and training to
relevant employees. The Company has set up the processes to mitigate
the environmental compliance risks such as investments in pollution
abatement equipment, monitoring of ambient air quality, and
construction of environmental labs.
People risks
Retaining the existing talent pool and attracting new manpower are
major risks in this respect. The Company has initiated various measures
such as rollout of strategic talent management system and integration
of learning activities in order to retain talent.
The above key risks, along with all other risks and their mitigation
plans as well as opportunities assessed by the Management, are built
into the rolling business plans of the Company.
24. AWARDS
The Council for Fair Business Practices (CFBP) conferred on ACC
Limited, the 2008 Jamnalal Bajaj Award for Fair Business Practices in
the category, Large Manufacturing Enterprises. The citation states that
the award is an acknowledgement of ACCÃs commitment towards customer
satisfaction and communication, employee motivation, environment
protection, CSR, legal compliance and its business practices that
ensure sustainable development and promote social equity.
Your Directors have pleasure in informing that the CompanyÃs Annual
Report and Accounts for the year 2008 has been adjudged winner of the
Gold Shield in the category, Manufacturing and Trading Enterprises by
The Institute of Chartered Accountants of India. Winning this coveted
award is a testament to your CompanyÃs prudent accounting practices,
quality of financial statements and the transparency and fair
disclosure of information to all stakeholders.
25. ENHANCING SHAREHOLDER VALUE
The CompanyÃs strategic vision statement accords
a very singular position to value creation. The CompanyÃs operations
are guided and aligned towards maximizing shareholder value. New
projects for capacity expansion and cost reduction exercises are
continuously taken up to achieve growth in sales and improvement in
profitability.
26. DIRECTORSÃ RESPONSIBILITIES
To the best of their knowledge and belief and according to the
information and explanations obtained by them, your Directors make the
following statement in terms of Section 217(2AA) of the Companies Act,
1956:
a) that in the preparation of the annual accounts for the year ended
December 31, 2009, the applicable accounting standards have been
followed along with proper explanation relating to material departures,
if any,
b) that such accounting policies as mentioned in Note 1 of the Notes to
the Accounts have been selected and applied consistently, and judgments
and estimates have been made that are reasonable and prudent so as to
give a true and fair view of the state of affairs of the Company as on
December 31, 2009, and of the profit of the Company for the year ended
on that date,
c) that proper and sufficient care has been taken for the maintenance
of adequate accounting records, in accordance with the provisions of
the Companies Act, 1956, for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities,
d) the annual accounts have been prepared on a going concern basis.
27. AUDIT & ACCOUNTS
The CompanyÃs Auditors M/s S R Batliboi & Associates, Chartered
Accountants, who retire at the ensuing Annual General Meeting are
eligible for reappointment. They have confirmed their eligibility under
Sec. 224 of the Companies Act, 1956 for reappointment as auditors of
the Company.
As per the requirement of the Central Government and pursuant to Sec
233B of the Companies Act, 1956, your Company carries out an audit of
cost records relating to cement every year. Subject to the approval of
the Central Government, the Company has appointed M/s N I Mehta & Co.
to audit the cost accounts for the financial year 2009.
28. PEER REVIEW
During the year, the Company received a letter from Securities and
Exchange Board of India (SEBI), informing that a peer review would be
undertaken in respect of the ÃLimited Reviewà undertaken by the
Statutory Auditors for the third quarter of the financial year 2009 and
the Audited Statement of Accounts for the year ended December 31, 2008.
Pursuant thereto, BSR & Co., Chartered Accountants conducted the
aforesaid peer review.
29. CORPORATE GOVERNANCE
As per Clause 49 of the Listing Agreement with the Stock Exchanges, a
separate section on corporate governance practices followed by the
Company, together with a certificate from the CompanyÃs Auditors
confirming compliance, is set out in the Annexure forming part of this
report.
30. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements prepared in accordance with
Accounting Standard AS21 Ã Consolidated Financial Statements of the
Group form part of this report. The net worth of the Group as on
December 31, 2009 is Rs. 5868.97 crore as against Rs. 4823.12 crore, as
at the end of the previous year.
31. ENERGY, TECHNOLOGY & FOREIGN EXCHANGE
The particulars of conservation of energy, technology absorption and
foreign exchange earnings and outgo in accordance with the provisions
of Sec 217(1)(e) of the Companies Act, 1956, read with the Companies
(Disclosure of Particulars in the Report of the Board of Directors)
Rules, 1988, are given in Annexure ÃAà to the Directorsà Report.
32. PARTICULARS OF EMPLOYEES
Information in accordance with the provisions of Section 217(2A) of the
Companies Act, 1956, read with the Companies (Particulars of Employees)
Rules 1975 as amended, regarding employees is given in Annexure ÃBÃ to
the Directorsà Report.
33. ACKNOWLEDGEMENT
Your Directors would like to acknowledge and place on record their
sincere appreciation of all stakeholders à shareholders, banks,
dealers, vendors and other business partners for the excellent support
received from them during the year. Your Directors recognize and
appreciate the efforts and hard work of all the employees of the
Company and their continued contribution to its progress.
For and on behalf of the Board,
N S Sekhsaria
Chairman
Mumbai, February 4, 2010
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