ANDHRA CEMENTS LIMITED
ANNUAL REPORT 2011-2012
DIRECTOR`S REPORT
To the Members,
Your Directors have pleasure in presenting the 73rd Annual Report and the
Audited Accounts of your Company for the Nine months period i.e from 1st
July 2011 to 31st March 2012.
FINANCIAL RESULTS (Rs in Lakhs)
Current Period Previous Period
2011-12 2010-11
(9 Months) (15 Months)
Gross Sales 3.40 7091.45
Net Sales 2.78 6298.10
Other Income 228.19 314.47
PBIDT (2476.37) (1639.33)
Finance Cost 887.16 1330.94
Depreciation 67.51 127.94
Profit/(Loss) before exceptional items (3431.04) (3108.92)
Exceptional Items (Income) 5508.87 -
Profit/(Loss) before Tax 2077.83 (3108.92)
Deferred Tax 1111.12 (648.84)
Net Profit/(Loss) 966.71 (2460.08)
DIVIDEND
Efforts are being made to revive the plants of the Company which were lying
closed. In the absence of operations during the period under review, the
Directors regret their inability to recommend any dividend.
OPERATIONS
During the period under review, both the plants remained shutdown and non
operational. The Durga Cement Works (DCW) plant of the Company was in
production primarily till the end of the first quarter of 2010 and
production at Visaka Cement Works (VCW) plant could not be continued from
the beginning of September, 2010. The production activities remained
suspended thereafter. Consequent to this, the Company faced severe
liquidity crisis leading to stoppage of supply of material and services,
disconnection of power and termination of agreement thereof; non-payment of
employee related costs, statutory and other obligations thereby adversely
affecting the business of the Company.
CHANGE IN MANAGEMENT
As stated above, the Company has been going through a severe financial
crisis and the production at its plants stood suspended. The revivial and
restructuring of the company`s business required substantial capital
infusion. In order to overcome the situation, the erstwhile Promoters
decided to transfer their controlling stake in the Company and entered into
a Share Subscription and Share Purchase Agreement (SSSPA) on 15th November,
2011 with Jaypee Development Corporation Limited (JDCL), a wholly owned
subsidiary of Jaypee Infra Ventures ( A Private Company with Unlimited
Liability), the companies belonging to Jaypee Group. In terms of the SSSPA,
the erstwhile Promoters agreed to transfer 4,81,19,550 Equity Shares of the
Company held by them to JDCL in tranches @ Rs.12 per share. JDCL also
agreed to subscribe for 14,75,00,000 Equity Shares of Rs.10 each of the
Company at a premium of Rs 2 per share aggregating to Rs.177 crores on
preferential basis, the proceeds whereof are being utilized for reviving
the Plants.
The proposal of acquisition of Promoters` holding by and the Preferential
Allotment to JDCL triggered the obligation of the acquirer to make the Open
Offer to the existing shareholders of the Company. Accordingly, an Open
Offer was made by JDCL to the existing shareholders to acquire upto
7,63,15,328 Equity Shares of the Company representing 26% of the expanded
paid up Equity Capital of the Company. The offer remained open from 25th
January, 2012 to 8th February, 2012.
Thus, during the year under report, JDCL acquired 14,75,00,000 Equity
Shares of the Company by way of Preferential Issue, purchased of
2,17,22,336 Equity Shares from erstwhile Promoters and 63,06,856 Equity
Shares through Open Offer. Consequently, as on 31st March, 2012 the
shareholding of JDCL in the Company stood at 17,55,29,192 Equity Shares
constituting 59.80% of the expanded capital base. With the acquisiton of
the above shares, JDCL also acquired the managing control over the company
and was categorised as Promoter with effect from 10th February, 2012.
Accordingly, Andhra Cements Limited became a subsidiary of Jaypee
Development Corporation Limited and in turn, a subsidiary of Jaypee Infra
Ventures (A Private Company with Unlimited Liability) thus becoming part of
the Jaypee Group. Post 31st March, 2012, further tranch of 4,84,160 Equity
Shares has been transferred by the erstwhile Promoters to JDCL in terms of
the said SSSPA, leaving a balance of 2,59,13,054 Equity Shares yet to be
transferred to JDCL.
OUTLOOK
After the taking over of management by the new Promoters and infusion of
funds by them, the work on revivial of the Plants started in its right
earnest. The production is expected to be resumed from September / October,
2012. Thus, the future outlook for the Company is bright.
CHANGES IN SHARE CAPITAL
During the year under report, the Company issued and allotted 14,75,00,000
equity shares of Rs 10/- each at a premium of Rs 21- per shares on 10th
February, 2012 aggregating to Rs. 177 crores to IWs. Jaypee Development
Corporation Limited (JDCL) on preferential issue as per the Securities
Exchange Board of India (Issue of Capital and Disclosure Requirments)
Regulations, 2009. Consequently the paid-up capital of the Company stooc
increased from Rs. 146,02,04,920/- to Rs. 293,52,04,920/-. There is no
change in the paid-up capital of the Company thereafter. The proceeds of
the Issue are being utilized for the purpose for which it was made.
DIRECTORATE
During the period under report, Shri Amitava Mondal, submitted resignation
from the office of Directorship and ceased to be Director of the Company
w.e.f. 12.07.2011.
Shri J. Jayaraman, submitted resignation from the office of Directorship
and ceassd to be Director of the Company w.e.f. 07.10.2011.
Shri G.P. Goenka, Dr. A.L. Ananthanarayanan, Shri R.K. Bhargava and Dr.
Sushil Chandr; submitted resignations from their office of Directorships
and ceased to be Directors o the Company w.e.f. 10.02.2012.
Your Directors wish to place on record their appreciation for their
contribution during their tenure on the Board.
Shri Vinayak Mavinkurve was nominated as Director by IDFC Ltd as their
nominee w.e.f. 09.11.2011.
Shri Sain Ditta Mai Nagpal and Shri Radha Krishna Pandey were appointed as
Additional Directors w.e.f. 15.11.2011 and their appointment was confirmed
in the Annual General Meeting held on 30.12.2011.
Shri Manoj Gaur was appointed as Director of the Company in the casual
vacancy of Shri G P Goenka, Shri Pankaj Gaur was appointed in the casual
vacancy of Dr. A L Ananthanarayanan, Shri Naveen Kumar Singh was appointed
in the casual vacancy of Dr. Sushil Chandra and Shri Ravindra Kumar Singh
was appointed in the casual vacancy of Shri R K Bhargava, w.e.f.
10.02.2012. The proposal for their appointment as Directors is included in
the notice for your approval.
Shri Harish K. Vaid and Shri Shailendra Gupta were appointed as Additional
Directors on the Board w.e.f 10.02.2012 and Shri B.K. Taparia and Shri V.K.
Jain were appointed as Additional Directors on the Board w.e.f 18.05.2012.
They will hold office till the date of ensuing Annual General Meeting and
are eligible for re-appointment.
Shri K.N. Bhandari and Shri S.D.M. Nagpal and Shri R.K. Pandey, Directors
of the Company who retire by rotation and being eligible offer themselves
for re-appointment. Proposals for their re-appointment have been included
in the Notice of the Annual General Meeting for your approval.
AUDITORS
M/s. Lodha & Co, Chartered Accountants and M/s. Chaturvedi & Partners,
Chartered Accountants will retire at the ensuing Annual General Meeting.
While, M/s. Chaturvedi & Partners have expressed their willingness to
continue in the office, M/s Lodha & Co, have expressed their unwillingness
to continue as Auditors due to their other assignments. Hence, the Board
recommends appointment of M/s Chaturvedi & Partners as Auditors of the
Company till the conlcusion of next Annual General Meeting. The proposed
Auditors have furnished the requisite certificate of eligibility under
section 224 (1B) of the Companies Act, 1956. Members are requested to
approve the appointment of the Auditors and to fix their remuneration.
The observations of the Auditors and the Notes on Financial Statement are
self explanatory. The observations in para 4 of the Auditors` Report are
further explained by the Management as follows:
Since the production activities were suspended during the period and there
being limitation & constrains and non-availability of employees & their
support, confirmation/verification, reconciliation of various assets and
liabilities could not be carried out. These shall be carried out upon
resumption of normal production. Adjustments with respect to advances,
debtors, claims, interest and other charges/expenses etc. shall be
accounted for after negotiation/settlement/finalisation of the related
matters as explained in Note no. 36(a) & (b). Interest on borrowing has
been capitalised and necessary allocation/adjustment shall be carried out
on completion of the project and certain bills, claims relating to project
supplies/services shall also be accounted for on complete documentation,
negotiation, etc, as explained in Note no. 38 (a) & (b). In view of the
proposed recommencement of production and emerging certainty with respect
to the profitability, there would be sufficient taxable income to claim the
deferred tax credit.
COST AUDITOR
Since the production at both the plants of the Company stood suspended
during the period under review. Cost Auditor had not been appointed to
conduct the Cost Audit for the nine months period i.e from 1st July 2011 to
31st March, 2012.
INSURANCE
During the period under review, all the properties of the Company including
its buildings, plant and machinery and stocks are adequately insured.
LISTING
All the shares of the Company are listed on National Stock Exchange of
India (NSE) and BSE Ltd. (BSE).
CORPORATE GOVERNANCE
A report on Corporate Governance together with Management Discussion and
Analysis Reports and the certificate of compliance from Practicing Company
Secretary regarding compliance with clause 49 of the Listing Agreement with
the Stock Exchanges are attached to this Report.
DIRECTORS` RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 217 (2AA) of the Companies Act, 1956,
the Directors, based on the representation received from the Operating
Management, certification by the CFO to the Board of Directors and after
due enquiry, confirm in respect of the audited annual accounts for the
period of 9 months ended 31st March, 2012:
a. that in the preparation of the accounts in respect of the period under
report, the applicable accounting standards have been followed along with
proper explanation relating to material departures;
b. that they have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of the
Company as at the end of the reporting period and of the Profit for the
period ended 31st March 2012;
c. that they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safe guarding the assets of the Company and for
preventing and detecting fraud and other irregularities, and
d. that the accounts have been prepared on a going concern basis.
REDEMPTION OF PREFERENCE SHARES
A sum of Rs.1.92 lacs towards redemption of Preference Shares remains
unclaimed. It has not been possible to locate the addresses of the
shareholders, despite notices being published in daily newspapers. These
are being paid as and when claimed. There is no liability for dividend on
these shares.
REPAYMENT OF FIXED DEPOSITS
In accordance with the Modified Rehabilitation Scheme (MS-08), the Company
is settling the claims lodged by fixed deposit holders. During the period
no claim has been received from the Fixed Deposit holders.
REDEMPTION OF DEBENTURES
In terms of MS-08, Debentures amounting to Rs. 0.74 lacs were redeemed
during the period. An amount of Rs.195.68 lacs being balance of principal
remain unclaimed and ` deposited with bank, under lien in favour of
Debenture Trustees (Canara Bank).
INVESTOR EDUCATION AND PROTECTION FUND
Repayment of the matured fixed deposits and debentures are covered by the
BIFR Sanctioned Scheme.
PARTICULARS OF EMPLOYEES
A statement showing the particulars of employees, pursuant to Section
217(2A) of the Companies Act, 1956 read with the Companies (Particulars of
Employees) Rules, 1975, as amended, is annexed and forms an integral part
of this Report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS/OUTGO
The information required under Section 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 with respect to those matters is appended
hereto and forms part of this Report.
EMPLOYEES RELATIONS
Employees` salaries, wages and other benefits which were in arrears since
July 2010 have been settled as per the terms of the memorandum of
settlement under Section 18(1) of Industrial Disputes Act, 1947 entered on
6th March 2012 between the Company and Andhra Cement Company Employees
Union. Your Directors wish to place on record their appreciation for the
dedication and spirit with which the employees and officers of the Company
are working for revival of the Plants.
ACKNOWLEDGEMENTS
Your Directors express their sincere gratitude for the continued support
and guidance received by the Company from various State & Central
Government Authorities, Financial Institutions and Banks.
For and on behalf of the Board
Place: Noida MANOJ GAUR
Date : 18.05.2012 Chairman
ANNEXURE TO DIRECTORS` REPORT
Information pursuant to Section 217(l)(e) of the Companies Act, 1956 read
with the Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988.
A. Conservation of Energy:
(a) Additional investments and proposals considered for reduction of
consumptions of energy
The measures for energy conservation could not be fully implemented due to
discontinuation of operations at Plants during the period.
(b) Total energy consumption and energy consumption per unit of production:
Given in Form `A` annexed.
B. Technology Absorption, Adaptation and Innovation:
Given in Form-B annexed.
C. Foreign Exchange Earnings & Outgo: Current Period Previous Year
i) Total Foreign Exchange outflow (Rs. lacs) Nil 10.36
ii) Total Foreign Exchange inflow (Rs. lacs) Nil Nil
FORM "A"
Form for Disclosure of particulars with respect to conservation of energy.
Current Period Previous Period
(9 Months) (15 Months)
A. Power and Fuel Consumption:
1. POWER:
a) Purchased:
Units (KWH in lacs) Nil 278
Total Amount (in Rs. lacs) ** Nil 1774**
Rate/Unit (in Rs.) Nil 6.37
**i) Includes Rs.401.82 lacs towards
FSA charges pertaining to 2008-09
billed by APSEB from July 2010
ii) Includes Rs. 160 lacs towards
minimum demand charges from
August 2010 to November 2010
iii) Includes Rs. 95.04 lacs towards
minimum units charged by APSEB
(i.e. 8 lacs units per month)
b) Own Generation:
Through D.G. Sets
Net Units (KWH in lacs) Nil Nil
Unit/Lt of Diesel/Furnace Oil Nil Nil
Cost/Unit (in Rs.) Nil Nil
2. COAL:
Quantity (Tonnes) Nil 22927
Total Cost (in Rs. lacs) * Nil 719
Average Rate per MT (Rs.) Nil 3137
* Excluding penalty and other charges
3. FURNACE OIL:
Quantity (K.Lts) Nil Nil
Total Cost (in Rs/lacs) Nil Nil
Average Rate (Rs./K.Ltr) Nil Nil
B. Consumption per unit of production:
Production - OPC/PPC/PSC/GGBS (in MT) Nil 220690
Power Consumption in Kwh/MT of cement Nil 84.73
Coal Consumption to Clinker Nil 0.20
Others (Specify)
FORM "B" (See Rule 2)
(Form for disclosure of particulars with respect to absorption)
1. Research & Development (R&D) The Company has not undertaken any
Research and Development activities and
no expenditure have been incurred.
2. Technology Absorption,
Adaptation & Innovation NA
Note: Current Year figures not available, due to the plant shutdown during
the current period
MANAGEMENT DISCUSSION AND ANALYSIS
(Forming part of the Report of Directors for the Nine months period ended
31st March, 2012)
1. Industry Structure and Developments
The Report of the Working Group on Cement Industry for XII Five Year Plan
(2012-17), Department of Industrial Policy and Promotion, Ministry of
Commerce and Industry (December 2011), has given some findings and
recommendations:
* Large producers contribute about 97% of the installed capacity while mini
plants account for the rest. Among these, 98% of the capacity is in the
private sector and the rest in public sector.
* During 2006-2011, while installed capacity increased at an average annual
rate of 13.6 per cent, production witnessed an increase of 9.1 per cent.
* Cement plants in India utilized about 27% of fly ash generated by thermal
power plants and almost all the granulated slag generated by steel plants
in 2010-11.
The Government of India plans to increase its investment in infrastructure
to US $1 trillion in the Twelfth Five Year Plan (2012-17) as compared to US
$ 514 billion (estimated figure) spent on infrastructure development under
the Eleventh Five Year Plan (200712). Further, infrastructure projects such
as the dedicated freight corridors, upgraded and new airports and ports are
expected to enhance the scale of economic activity, leading to a
substantially increased in cement demand. Housing sector and road also
provide significant opportunities. The cement demand is likely to be
sensitive to the growth in these sectors and also the policy initiatives.
In view of the demand and installed capacity growth projections, the
additional installed capacity requirement during the next 15 years (up to
2027) would be approx. 1035 million tons. Global Cement Production has
continued to expand at an average rate of 6.4% in the last five years.
China (with an average annual growth of 11.4% and India (with an average
annual growth of 9.8%) have been the drivers of the growth in global cement
output.
Domestic demand for cement has been increasing in India. Among the states,
Maharashtra has the highest share in consumption at 12.2%, followed by
Uttar Pradesh, while in terms of production; Andhra Pradesh is leading with
14.7% of total production followed by Rajasthan. Theu cement industry is
one of the major beneficiaries of the infrastructure boom. Cement has
virtually no substitutes and there is hardly any credible threat to the
sector from other products with similar uses.
Private housing sector is the major consumer of cement (53%) followed by
the government infrastructure sector. A step up in demand of the sectors,
which are major users of cement, could provide some stimulus to the cement
sector as well.
Planning Commission has identified Roads as one of the thrust areas for
infrastructure development and creation of a sound and durable road
infrastructure in the country. Even after this, the condition of our roads
network is poor. One of the reasons for the poor road conditions is the
adoption of conventional `Bitumen Roads`, which results in numerous
problems during operation, particularly after rains. Consequently, a
substantial amount of expenditure is to be incurred repeatedly on
maintaining these roads every year, entailing extra costs. A better option
to solve this problem is opting for techno economically superior cement
concrete roads and thus ensuring a quality network of roads, which need
almost no maintenance throughout their life, apart from generating fuel
savings, being environment friendly and facilitating free and smooth flow
of traffic.
Thus with a view to creating a world-class road infrastructure in the
country for the rapid and inclusive growth of the economy, the Working
Group recommended that:
i. All new expansions in the National and State Highways may be made of
cement concrete as a Policy. To begin with, this percentage could be 30% of
the total allocations.
ii. All existing National and State Highways constructed by using bitumen
should be replaced with concrete surface wherever strengthening is
required, by adopting the technology of concrete overlays, popularly known
as White Topping.
iii. Use of PPC may be made mandatory in the construction of roads as
policy not only for National and Highways but also in the construction of
roads by all agencies including CPWD, State PWDs etc. This has already been
permitted by the Indian Roads Congress.
iv. All existing city roads having bitumen surface be converted gradually
to cement concrete and new ones should preferably be constructed with
cement concrete technology.
v. All connection roads in villages must be done with cement concrete
technology.
Thus, the attention of the Government, is very clear on infrastructure
development and cement being an integral part of this development process,
its importance and value will increase more in the days to come.
Road Ahead
It is anticipated that the cement industry players will continue to
increase their annual cement output in coming years and the country`s
cement production will grow at a compound annual growth rate (CAGR) of
around 12 per cent during 2011-12 - 2013-14 to reach 303 Million Metric
Tons, according to a report titled `Indian Cement Industry Forecast to
2012`, by research firm RNCOS.
As per Cement Manufacturers Association, it is well known that the Industry
recorded an exponential growth with the introduction of partial decontrol
in 1982 culminating in total decontrol in 1989. The capacity, which was 29
Million tons in 1981-82, rose to 219 Million tons at the end of FY 09.
While it took 8 decades to reach the 1st 100 Million ton capacity, the 2nd
100 Million ton was added in just 10 years. The Industry has been facing a
chronic problem of insufficient availability of the main fuel coal, driving
the manufacturers to resort to use of alternatives at steep cost.
Developments in the domestic environment and a huge number of
infrastructure projects are likely to boost demand for cement consumption
in India, which is bound to increase manifold in the coming years. With
rising demand and adequate supply, the industry has a bright future.
2. Review of Financial and Operational Performance
(i) Financial Performance
During the period under review the Company recorded a net profit of
Rs.966.71 lakhs. The financial performance of the Company, in brief, is as
under:
(Rs in Lakhs)
Current Period Previous Period
2011-12 2010-11
(9 Months) (15 Months)
Gross Sales 3.40 7091.45
Net Sales 2.78 6298.10
Other Income 228.19 314.47
PBIDT (2476.37) (1639.33)
Finance Cost 887.16 1330.94
Depreciation 67.51 127.94
Profit/(Loss) before exceptional items (3431.04) (3108.92)
Exceptional Items (Income) 5508.87 -
Profit/(Loss) before Tax 2077.83 (3108.92)
Deferred Tax 1111.12 (648.84)
Net Profit/(Loss) 966.71 (2460.08)
(ii) Operational Performance
Your Company is primarily engaged in manufacture and sale of Cement
including Ordinary Portland Cement, Portland Pozolan Cement, Portland Slag
Cement and Grand Granulated Blast Slag. In the domestic market the company
operates through a net work of dealers and agents for sale of its products.
Its major markets include Andhra Pradesh, Tamilnadu, Orissa, Karnataka and
other nearby states.
During the period under review, both the plants remained shutdown and non
operational. The Durga Cement Works (DCW) plant of the Company was in
production primarily till the end of,the first quarter of 2010 and
production at Visaka Cement Works (VCW) plant could not be continued from
the beginning of September, 2010. The production activities remained
suspended thereafter. Consequent to this, the Company faced severe
liquidity crisis leading to stoppage of supply of material and services,
disconnection of power and termination of agreement thereof, non-payment of
employee related costs, statutory and other obligations thereby adversely
affecting the business of the Company. After the taking over of management
by the new Promoters and infusion of funds by them as detailed in
subsequent Para 3 of this report under the head "Change in Management", the
work on revival, upgradation and expansion of both the Plants were
undertaken to increase aggregate Plants capacity from 1.4 MTPA to 3.0 MTPA.
The production at both the Plants is likely to resume by the end of 2nd
quarter of the current year.
3. Change in Management
During the period under review, the Company has been going through a severe
financial crisis and the production at its plants stood suspended. The
revivial and restructuring of the company`s business required substantial
capital infusion. In order to overcome the situation, the erstwhile
Promoters decided to transfer their controlling stake in the Company and
entered into a Share Subscription and Share Purchase Agreement (SSSPA) on
15th November, 2011 with Jaypee Development Corporation Limited (JDCL), a
wholly owned subsidiary of Jaypee Infra Ventures ( A Private Company with
Unlimited Liability), the companies belonging to Jaypee Group. In terms of
the SSSPA, JDCL acquired 14,75,00,000 equity shares of the Company by way
of Preferential Issue, purchased of 2,17,22,336 equity shares from
erstwhile Promoters and 63,06,856 equity shares through Open Offer.
Consequently, as on 31st March, 2012 the shareholding of JDCL in the
Company stood at 17,55,29,192 equity shares constituting 59.80% of the
expanded capital base. With the acquisiton of the above shares, JDCL also
acquired the managing control over the Company and was categorised as
Promoter with effect from 10th February, 2012. Accordingly, Andhra Cements
Limited became a subsidiary of Jaypee Development Corporation Limited and
in turn, a subsidiary of Jaypee Infra Ventures (A Private Company with
Unlimited Liability) thus becoming part of the Jaypee Group.
4. Outlook
After the taking over of management by the new Promoters and infusion of
funds by them as detailed in Para 3 above of this report under the head
"Change in Management", the work on revivial of the Plants started in its
right earnest. The production is expected to be resumed from September /
October, 2012. Thus, the future outlook for the Company is bright.
5. Opportunities and Threats
Cement consumption and demand in India has been growing during the last few
years due to Government`s continuous thrust on infrastructure development.
However, due to market conditions, the selling price had been under
pressure during the year under review and for the present as well. Further,
series of recent increase" in interest rates, fuel prices and key raw
materials are the major constraining factors for increase in demand and
have significant impact on the profitability margins of the industry.
The threats of the Industry arise from rising input costs, restricted
availability of coal from domestic market, restricted wagon availability
and increase in logistics costs due to increase in fuel cost and railway
freight.
6. Risks and Concerns
Cement industry being highly energy intensive, any possible rise in energy
cost might affect Company`s business adversely. Cement consumption is a
function of macro external factors such as economic growth, Government
policies etc. The growth in cement demand is directly co- related to the
economic development. In the event of slowdown in economy or infrastructure
development activities, cement demand gets adversely affected, thereby
putting the selling price of cement under pressure..
Cement being a bulky material, both input and output transportation cost is
significant in the industry. With international crude prices firming up,
transportation cost is scaling new heights in the country. Another area of
concern is transportation bottle-neck due to loading restrictions. The road
transportation fleet capacity needs to be increased substantially to cater
to the increasing need of transport of cement and other industries.
Further cement sector being directly affected by coal shortage, coal prices
too have been climbing up. Freight, power and coal being major components
of cost, any increase in their prices adversely affects the profit margins
of the industry.
7. Internal Control Systems and their adequacy
The Internal Control System is an essential element of the Corporate
Governance and plays a key role in identifying, minimizing and managing
risks that are significant for the Company, contributing to the
safeguarding of stakeholders investments and the Company`s assets.
Your Company has established and is maintaining adequate internal control
system commensurate with its size and nature of business to ensure the
completeness, accuracy, and authority of all financial information and of
all other information that forms the basis for calculation of financial
information or is used for management control and accountability besides
ensuring optimum utilization of resources -and adequate protection of
Company`s assets. The adequacy and effectiveness of internal controls are
monitored regularly by the Internal Auditors and the Audit Committee and
remedial measures are being taken, wherevernecessary. However, during the
period under review, due to suspension of production for substantial part
.of the year, there being limitations and constrains, controls could not be
exercised effectively.
The Audit Committee of the Company meets periodically to review and
recommend quarterly, half yearly and annual financial statements of the
Company. The Audit Committee also reviews the important findings of the
Internal Auditors during their audits, periodically. The Committee also
holds discussions with the internal auditors, statutory auditors and the
management on the matters relating to internal controls, auditing and
financial reporting. The Committee also reviews with the statutory
auditors, the scope and results of the audits.
8. Material Developments in Human Resource and Industrial Relations
The Company believes that employees are the key to achieving goals and are
the primary source of competitive advantage.
The Company believes that training is an important tool to enhance the
capabilities of people and performance of the organization.
After the change in management, the employees` salaries, wages and other
benefits which were in arrears since July 2010 have been settled as per the
terms of the memorandum of settlement under Section 18(1) of Industrial
Disputes Act, 1947 entered on 6th March 2012 between the Company and Andhra
Cement Company Employees Union. The Industrial relations in the origination
have generally been cordial.
As at 31.03.2012, the Company had a total work-force of approx 763 persons,
including managers, staff and regular/casual workers
9. Health & Safety
The Company places considerable emphasis on health and safety of its
employees, contractors, third party and visitors and displays commitment to
ensure the high standards being maintained in compliance with applicable
laws and regulations.
The Company`s Safety Policy comprises a statement of the Organization`s
objectives regarding safety of Man and Equipment in operation at work
sites. The Management`s endeavour is to establish Risk-Free and zero
accident work environment.
Cautionary Statement
Certain statements made in this Report detailing to the Company`s
objectives, projections, outlook, estimates and expectations may be
`forward looking statements` within the applicable laws and regulations. As
these statements are based on certain assumptions and expectations of
future events over which the Company exercises no control, the Company
cannot guarantee their accuracy. The actual ] results may differ materially
from, such estimates, projections, etc. Significant factors that could make
a difference to the Company`s operations include domestic and international
economic conditions affecting demand, supply and price conditions in the
industry, changes in government regulations, tax regimes and other
statutes, over which the Company does not have any direct control. |