REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 31st MARCH, 2013
The Board presents its Ninety-fourth Annual Report and the Audited Statements of
Accounts of the Company for the year ended 31st March, 2013.
Rs. / Crores
||31st March, 2013
||31st March, 2012
|Profit/(Loss) before Interest, Depreciation, Tax and other Amortisations
|Depreciation and Amortisation Expenses (Net of transfer from Revaluation Reserve)
|Exceptional item - Income
|Tax Expenses Net
|Loss for the year
|Balance at the beginning of the year
|Add : Loss for the year
|Amount transferred from Debenture Redemption Reserve (Net)
|Amount available for appropriation
|(i) Proposed Dividend
|(ii) Tax on Proposed Dividend
|(iii) Balance Carried Forward
ISSUE OF RIGHTS SHARES
After the closure of the year under report, the Company issued Rs. 6.40 Crore Equity
Shares on Rights basis ("the Shares") amounting to Rs. 416.18 crores The shares
of face value of Rs. 10 were issued at a premium of Rs. 55 (aggregate issue price Rs. 65
The Issue opened for subscription on Monday, the 3rd June, 2103 and closed
on 17th June, 2013. The shares were allotted to eligible shareholders in
consultation with Bombay Stock Exchange on 27th June, 2013.
The proceeds of the issue will assist the Company begin the process of reducing debt in
Arising out of the Rights Issue, the Companys Issued and Paid-up Capital as on
date stands at Rs. 109.77 crores. The balance in the Securities Premium Account as on the
above date stands at Rs. 352.15 crores.
The Board wishes to thank all shareholders for their unstinted support to the Rights
The Board recommends maintaining the same rate of dividend as declared by the
shareholders in the previous year i.e. Rs. 1 per share in respect of the year under report
as well. All shareholders holding shares as on the Record Date of 16th May,
2013 are entitled to such dividend subject to the dividend being approved at the
forthcoming Annual General Meeting.
The Company took in its stride significant operating adversities during the year under
report to record a positive Earning Before Interest, Depreciation, Tax and other
Amortisations ("EBIDTA") of Rs. 443.10 crores during the year against a negative
EBIDTA of Rs. 13.92 crores in the previous year.
Driven by a series of measured initiatives across the organisation, the Company has
been on the path of recovery from the beginning of the calendar year 2012. These
initiatives have begun to bear fruit. The Tyre Business which recorded a negative EBIDTA
of Rs. 428.08 crores in the Financial Year 2011-12 turned around determinedly and recorded
a positive EBIDTA of Rs. 73.79 crores during the year under report. Equally, the Rayon
Business turned EBIDTA positive during the year. The Cement Business, however, recorded a
lower EBIDTA than that in the previous year, on account of poor market conditions in the
second half of the year.
Brief commentaries on the performance of the Tyre, Cement and Rayon Businesses are
The year under report saw the Tyre Business steadily improve profitability. EBIDTA was
at a positive Rs. 73.31 crores as compared to a negative EBIDTA of Rs. 428.08 crores in
the previous year. Net Revenue at Rs. 3529 crores declined by approximately 8%. This
decline in sales was as much on account of depressed market conditions as on account of a
conscious decision to focus efforts on profitable product and market segments, resulting
in partial vacation of poor contribution product segments.
The swing in EBIDTA to the extent of Rs. 501 crores during the year under report as
compared to the previous year was on account of a variety of actions taken on the revenue
front - focused at bettering the net realisation per unit of product sold, as well as on
the cost front - through the entire value chain. These internal efforts were supplemented
by softening raw material costs.
The Business continues to have the distinction of being certified for ISO 9001,
TS-16949, ISO-14001, SA-8000, OSHAS-18001 and TPM.
With operations of the Tyre Business showing continuous improvement, the Board views
the Businesss future prospects with confidence.
The production of the Cement Business during the year under report as compared with
that of the previous year was as follows :
Though the year under report began positively with robust demand from the housing and
infrastructure sectors, demand began to slacken in the Businesss command areas from
the second quarter of the year. The resulting erosion of cement prices put pressure on the
Businesss margins. Rising input costs added to this pressure. Consequently, EBIDTA
of the Business declined to Rs. 433.72 crores as against Rs. 543 crores in the previous
The Companys Vasavadatta Cement plant commissioned its fifth power plant during
the year. In addition to meeting the entire power requirements of the facility, it was
able to evacuate power into the local grid and sell to buyers in the open market.
The Cement Business continues its pioneering efforts in the field of usage of alternate
fuel. It has, at its Vasavadatta Cement facility, installed a Hot Disc for co-incineration
of materials like used tyres, municipal wastes, industrial wastes etc. which emit useful
Heat Value of above 2500 kcal. This development will, in future, assist in significantly
reducing power costs.
The Business continued to be a recipient of several awards and accolades during the
year under report. Both its facilities received the National Award for Mine Safety. The
Business also received awards from Confederation of Indian Industry ("CII") for
energy efficiency and water management. The Vasavadatta facility was certified
"GreenCo. Gold" under the Green Company Rating System instituted by the CII.
The challenge before the Cement Business during the current year would be to enhance
margins for increased profitability. This goal is being seriously pursued through
modulated inputs in all sectors of the Business.
The Rayon Business did well during the year under report and turned EBIDTA positive.
Efficiencies improved significantly during the year and the Business was able to absorb
increases in input costs on its way to turning EBIDTA positive.
Although the viscose filament yarn industry in the country was impacted by low demand
in the international market and imports from China, the Rayon Business maintained its
market share by improving and further diversifying its product range. Customer focus was
further enhanced and the emphasis on producing finer denier material proved to be
Spun Pipes and Heavy Chemicals
Kesoram Spun Pipes and Foundries and Hindustan Heavy Chemicals facilities continued to
be under suspension of work during the year under report.
CORPORATE SOCIAL RESPONSIBILITY
The Company is deeply conscious of its obligations to society and strives to care for
those living in the vicinity of its facilities.
Amongst the major welfare programmes undertaken during the year were :
setting up of water purification plants for supplying potable water to local
distribution of blankets in winter across all facilities to the less privileged
operating vocational training centres for training youth from the weaker section
of society in various self employment schemes. These include computer training, needle
work, stitch craft, pickle and papad making. Such schemes are under implementation
around the facilities of the Company ;
distribution of sewing machines to village women for promoting self employment ;
laying of concrete roads in adopted villages ;
running agricultural demonstration and model Dairy Farms in villages in close
proximity to the cement manufacturing facilities ;
setting up Animal Health Camps ;
distribution of uniforms, text books, lunch utensils and conducting mid day meal
schemes to benefit school children from the weaker sections of society ;
conducting health camps for villagers ;
renovation of schools and places of worship.
Such welfare programmes will be further intensified in the years to come in keeping
with the Companys reputation as an entity fully alive to its social obligations.
In the urban areas, the Tyre Business continued its close association with the local
traffic police to foster observance of road safety norms amongst school children and young
adults. The Business perceives these efforts as a means to make urban roads safer for both
vehicles and pedestrians in the years to come.
FORFEITURE OF SHARES
The Board, during the year under report, forfeited 2,238 Equity Shares standing in the
name of 175 allottees who did not pay the Allotment Money against the convertible portion
of the Companys 16% Secured Partly Convertible Debentures issued in the Financial
Year 1992-93 despite repeated reminders. These Shares have not been re-issued.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956 and, based upon representations
from the management, the Board, to the best of its knowledge and belief, confirms that :
In the preparation of the Annual Accounts, applicable Accounting Standards have
been followed and there are no material depatures ;
It has 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 31st March, 2013 and of the loss
of the Company for the Financial Year ended on that date ;
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 ; and
The Annual Accounts have been prepared on a going concern basis.
MANAGEMENT DISCUSSION AND ANALYSIS AND CORPORATE GOVERNANCE
A Management Discussion & Analysis and a Report on Corporate Governance together
with the corresponding Compliance Certificate are attached as part of this Annual Report.
Smt. Manjushree Khaitan, a Non-executive Director, was appointed a Whole-time Director
effective 5th February, 2013 and designated Executive Vice Chairperson.
Shri B K Birla and Shri P K Mallik retire by rotation and being eligible, offer
themselves for reappointment.
Price Waterhouse, Chartered Accountants, ("PW") Auditors of the Company,
retire at the forthcoming Annual General Meeting and offer themselves for re-appointment.
The Company has received the requisite Certificate pursuant to Section 224(1B) of the
Companies Act, 1956. PW has also confirmed that it complies with the ongoing cycle of the
peer review process as required under the Regulations of The Institute of Chartered
Accountants of India.
The Auditors have referred to what they call "deficiencies in relation to
information, technology general controls ("ITGC") for sale of tyre" in para
(iv) of the Annexure to the Auditors Report. The Auditors comments are no
longer valid as the Tyre Business has instituted, effective 1st April, 2013, an
ERP system covering the entire gamut of its operations. Consequently, the entire range of
ITGC controls have been efficaciously built into the Businesss internal control
As required under the Central Government Circular Number 15/2011 dated 11th April,
2011, the Board wishes to record that the following Auditors were appointed to conduct
Cost Audit in the Company in respect of the year under report :
i) Mani & Co., Cost Accountants, in respect of:
a) the Balasore manufacturing facility of the Tyre Business; and
b) the Cement Business.
ii) D. Sabyasachi & Co., Cost Accountants, in respect of the Laksar
manufacturing facility of the Tyre Business; and
iii) B. Ray & Associates, Cost Accountants, in respect of the Rayon Business.
Mani & Co., were nominated as the Lead Auditors. In that capacity, they were
responsible for the Compliance Report as envisaged under the Companies (Cost Accounting
Records) Rules, 2011. All Reports for the Financial Year 2011-12 were completed and
uploaded on the website of the Ministry of Corporate Affairs on 30th January, 2013 as
against the extended due date of 28th February, 2013.
PARTICULARS OF EMPLOYEES
The information required under Section 217(2A) of the Companies Act, 1956 read together
with the Companies (Particulars of Employees) Rules, 1975, forms a part of this Report.
However, based upon the provisions of Section 219(1)(b)(iv) of the Act, the Report and
Accounts that are being circulated to members do not include the Statement of Particulars
of Employees under Section 217(2A). Any Member interested in obtaining a copy may write to
the Company Secretary at the Registered Office and a copy thereof will be forwarded by
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO
A Statement containing the information, as required under the Companies (Disclosure of
Particulars in the Report of Board of Directors) Rules, 1988, is annexed.
The Board gratefully acknowledges the understanding and support received by the Company
from its employees. It also places on record its deep gratitude for the unstinted support
the Company has received from the Banks, Institutions, the Central Government, the various
State Governments and the local authorities during the year.
Specific acknowledgement is also made for the confidence and understanding shown by the
Members in the Company.
||B. K. Birla
||Executive Vice Chairperson
||K. C. Jain
||K. G. Maheshwari
||P. K. Choksey
||Tridib Kumar Das
||P. K. Mallik
||Chief Financial Officer
||K. P. Khandelwal
|Date : 2nd July, 2013