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The Directors present the 41st Annual Report along with the Audited Accounts and Auditors Report for the Financial Year ended 31st March, 2015.
The economy and cement production showed signs of improvement. The cement production during 2014–15 grew by about 5.6 percent as against less than 4 percent during the previous year.
Similarly, consumption of cement in our home market of Gujarat increased by about 6 percent resulting in improved sales and prices, profitability as compared to the previous year. The international prices of coal were lower than previous year. However the taxes by way of Royalties on minerals, excise duties and sales tax continued to be high and further increased in the budget of 2014–15. Additional Customs duty and CVD was also imposed on coal imports.
The infrastructural constraints in rail and ports adversely affect the economic transportation of cement to distant markets. Power cost escalations resulted from the restrictions imposed in the energy exchange under Open Access, increased the manufacturing cost. The inordinate delay in the statutory approvals for the new lease area for mining of raw materials resulted in procurement of limestone from distant sources, which has further increased the manufacturing cost.
Production and Sales
The production of clinker for the year ended March 2015 was 1.27 million tonnes, which is 9 percent more than the clinker production of 1.17 million tonnes for the previous year ended March 2014.
The cement production for the year ended March 2015 is 1.28 million tonnes, which is 11 percent more than the cement production of 1.16 million tonnes for the previous year ended March 2014.
Additionally, clinker was sold in the local market and the overall sales (cement and clinker) is 1.37 million tonnes during the year ended March 2015, which is around 8 percent more than the overall sale of 1.27 million tonnes in the previous year ended March 2014.
The procurement of power from the energy exchange under Open Access was restricted and the entire power was sourced from the state grid, which has resulted in higher manufacturing cost. Change in the quality of available limestone, necessitated procurement of limestone from other sources, which escalated the manufacturing cost. The disruption of plant operation due to closure of limestone mines for a brief period as per the directives of the Ministry of Environment & Forest, higher raw material cost, increase in the cost of power sourced from state grid and the higher cost of delivery resulted in loss for the year.
The export of cement for the year ended March 2015 was 0.064 million tonnes as compared to 0.076 million tonnes in the previous year. The export market remained less viable with un–remunerative prices and high cost of transportation to the available port.
Fresh Infusion of Funds
Hon'ble BIFR while sanctioning rehabilitation scheme of the Company had put the following condition vide its order dated 6.12.2012 issued on 16.1.2013.
Further equity infusion of Rs. 50 crore (in addition to Rs. 19.73 crore already brought in) into the Company for funding of the Scheme by The Mehta International Ltd., a promoter group Company, its shareholders / its subsidiaries / other group companies / associates of promoters, their relatives, friends, etc.
In compliance with the said order, Bhadra Consultancy Private Limited, a Promoter Company has invested Rs. 28.80 crores in March 2015 towards purchase of 2,38,00,000 equity shares of the Company at par fully paid up and 2,00,00,000 equity shares of the Company at Rs. 2.50 per share. The Company has since allotted 4,38,00,000 equity shares to Bhadra Consultancy Private Limited.
The Directors have not recommended any dividend for the Financial Year ended March 31,2015,in view of the loss for the year.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report on the operations of the Company is provided in a separate section and forms a part of this Report as Annexure A.
CONSOLIDATED FINANCIAL STATEMENTS
As required under Clause 32 of the Listing Agreement with the Stock Exchange and Section 136 of the Companies Act, 2013, the Consolidated Financial Statement has been prepared by the Company in accordance with the requirements of Accounting Standard 21 'Consolidated Financial Statements' issued by 'The Institute of Chartered Accountants of India'. The Audited Consolidated Financial Statements together with Auditors' Report thereon form part of the Annual Report.
The Consolidated Net Loss of the Company and its subsidiaries amounted to Rs. 470.99 lacs for the Financial year ending 31st March, 2015 as compared to a loss of Rs. 272.42 lacs in the previous year.
The Company has one subsidiary company.
Section 136 of the Companies Act, 2013 has exempted listed companies from attaching the financial statements of their Subsidiaries to the Annual Report of the company.
In accordance with Section 129(3) of the Companies Act, 2013 read with the rules made there under; a statement containing the salient features of the Financial Statement of the Company's subsidiary is disclosed separately in this Annual Report under Form AOC 1.
The Company will make available the Annual Accounts of the subsidiary company to any member on their request and shall also be kept open for inspection by any member at the Registered office of the Company. The statements are also available at the website of the company at <http://gscl–mehtagroup.com/investors/financials>.
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 31st March, 2015, the applicable accounting standards had been followed along with proper explanation relating to material departures; if any;
(b) that the accounting policies as mentioned in Note No. 1 to the Financial statements 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 at the end of the financial year and of the profit and loss of the company for that period;
(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; and
(f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
A separate report on compliance with Clause 49 of the Listing Agreement with the Stock Exchanges on Corporate Governance along with a Certificate of Compliance from the Statutory Auditors forms a part of this Report as Annexure B.
The Company is committed to maintain the highest standards of Corporate Governance and adhere to Corporate Governance requirements set out by SEBI. The report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms an integral part of this Report. Also a certificate of Compliance from the Auditors of the Company confirming compliance with the conditions of Corporate Governance forms a part of this Report. A declaration by CEO and CFO that Board and senior management have complied with the Code of Conduct of the Company also forms a part of this Report.
RELATED PARTY TRANSACTIONS
All related party transactions are on arms length basis at prevailing market prices. The other details as required under Clause 49 of the Listing Agreement and Section 134(3) of the Companies Act, 2013 are mentioned in the Corporate Governance Report.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
The particulars of every contract or arrangements entered into by the Company with related parties referred to in sub–section (1) of Section 188 of the Companies Act, 2013 including certain arms length transactions under third proviso thereto is Annexed herewith at Annexure C in Form No. AOC –2.
CORPORATE SOCIAL RESPONSIBILITY
The Company has been committed towards various social measures and has taken initiatives to cater to the needs of the society. Pursuant to introduction of Section 135 of the Companies Act, 2013 and the rules made thereunder the Company has constituted a CSR committee.
The Board of Directors have based on the recommendation of the committee, formulated a Corporate Social Responsibility Policy for welfare of the society. The policy is available atthe following link <http://gscl.mehtagroup.com/policy/csr–policy>.
Due to carry forward losses, the Company was not required to spend on the Corporate Social Responsibility Activities under Section 135 of the Companies Act, 2013.
The constitution and functions of the Corporate Social Responsibility Committee are provided under the Corporate Governance Report.
Company has taken certain initiatives under Corporate Social responsibility (though not required under Section 135 of the Companies Act, 2013) and the same have been detailed under the Management Discussion and Analysis Report.
A formal Risk Management System is being implemented on an Enterprise Risk Management (ERM) as a part of strengthening and institutionalizing the decision making process and monitoring the exposures that are faced by the Company.
Managing Risk is a skill that is sought to be strengthened through this process and an effort at making decisions more consistent in away that the business objectives are met most of the times. The ERM process seeks to provide greater confidence to the decision maker and thus enhance achievement of Objectives.
Pursuant to the requirements of Clause 49 of the Listing Agreement, the Company has constituted a Risk Management Committee and has also adopted a Risk Management Policy. The constitution of the committee along with principles pertaining to the management of risk are set out in the Corporate Governance Report of the Company.
DIRECTORS & KEY MANAGERIAL PERSONNEL
During the year, Gujarat Industrial & Investment Corporation Limited nominated Mr. Y K. Vyas (DIN: 03420201) as their Nominee on the Board of the Company who was appointed as a Nominee Director with effect from 10.2.2015.
Cessation of Directors
Mr. Sanat Mehta (DIN: 00313385) and Dr. Kala S. Pant (DIN: 00003915) ceases to be the Directors of the Company with effect from 9.6.2014and 18.9.2014 respectively.
During the year, Gujarat Industrial & Investment Corporation Limited withdrawn the nomination of Mr. A. B. Shah (DIN:00175496) as Director from the Board of the Company. Accordingly, Mr. A. B. Shah ceases to be Director with effect from 10.2.2015.
The Board has placed on record its appreciation for the contribution made by Mr. Sanat Mehta, Dr. Kala S. Pant and Mr. A. B. Shah.
Reappointment of Directors
In accordance with the provisions of Section 152 of the Companies Act, 2013, Mr. Hemnabh Khatau (DIN: 02390064) will retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment. Brief resume of the Director seeking
re–appointment along with other details as stipulated under Clause 49 of the Listing Agreement, are provided in the Notice for convening the Annual General Meeting.
The Board of Directors at its meeting held on 15th May 2015, has reappointed Mr. Jay Mehta as Executive Vice Chairman and Mr. M. S. Gilotra as Managing Director for a further period of five years from 1st January 2016 to 31st December, 2020 and remuneration payable over a period 3 years from 1st January, 2016to31st December, 2018, subject to the approval of the Members and Central Government.
The resolutions seeking approval of the Members for the appointment and remuneration of Mr. Jay Mehta and Mr. M. S. Gilotra have been incorporated in the Notice of the forthcoming Annual General Meeting of the Company along with brief details about them.
The Board recommends their re–appointments.
In accordance with the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board of Directors evaluated the performance of the Board, having regard to various criteria such as Board composition, Board processes, Board dynamics etc. The Independent Directors, at their separate meetings, also evaluated the performance of the Board as a whole based on various criteria. The Board and the Independent Directors were of the unanimous view that performance of the Board of Directors as a whole was satisfactory.
Declaration by Independent Directors
All Independent Directors have furnished declarations stating 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.
Appointment / Change in Key Management Personnel :
Mr. M. S. Gilotra, Managing Director of the Company was also designated as Key Managerial Personnel with effect from 1st October, 2014.
Mrs. Anupama Pai resigned as the Company Secretary of the Company with effect from 30th September, 2014.
Mr. V. R. Mohnot was appointed as Chief Financial Officer & Company Secretary of the Company with effect from 1st October, 2014.
M/s. Manubhai & Shah, Chartered Accountants, Ahmedabad, the Statutory Auditors of the Company, who hold office upto the conclusion of the ensuing Annual General Meeting in accordance with the provisions of the Companies Act, 2013, who are eligible for re–appointment are recommended for re–appointment to audit the Accounts of the Company for the Financial Year 2015–16. As required under the provisions of the Companies Act, 2013, the Company has received written confirmation from M/s. Manubhai & Shah, Chartered Accountants that their appointment, if made, will be in conformity with the limits specified in the Section 141(3)(g) of the Companies Act, 2013.
M/s Ragini Chokshi & Company, Practicing Company Secretaries were appointed by the Board of Directors as the Secretarial Auditor of the Company to carry out Secretarial Audit under the provisions of Section 204 of the Companies Act, 2013 for the Financial Year 2014 –15. The report of the Secretarial Auditor is annexed as Annexure D to this report.
The Board of Directors of the Company on the recommendation of the Audit Committee appointed M/s. Ragini Chokshi & Company, Practicing Company Secretaries as Secretarial Auditor of the Company for the Financial Year 2015–16.
The Board of Directors on the recommendation of the Audit Committee appointed M/s. Manubhai & Shah, Chartered Accountants to carry out the Tax Audit for the Assessment Year 2015–16.
The Board of Directors on the recommendation of the Audit Committee appointed M/s. Haribhakti & Co.LLP Chartered Accountants, to carry out the Internal Audit of the Company for the Financial Year 2015–16.
In accordance with the provisions of Section 148 of the Companies Act 2013, M/s. M. Goyal & Co. Cost Accountants, have been appointed by the Board as Cost Auditor of the Company for the Financial Year 2015–16. A Certificate of eligibility under Section 148 of the Companies Act, 2013 has been received.
The Company has an Audit Committee and details of its constitution, terms of reference are set out in the Corporate Governance Report.
Nomination & Remuneration Committee & Policy
The Company has a Nomination & Remuneration Committee and has also adopted a Remuneration Policy, the constitution of the committee along with the terms of reference to the committee are set out in the Corporate Governance Report.
The Company has established a Vigil Mechanism / Whistle Blower Policy and the directors and employees of the Company can approach the Audit Committee when they suspect or observe unethical practices, malpractices, non–compliances ofcompany policies.
Number of Board Meetings
During the year under review, four meetings of the Board of Directors were held on 30th May 2014, 4th August 2014, 5th November 2014 and 9th February2015.
Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo.
The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 134 (3) of the Companies Act, 2013 are provided in Annexure E forming a part of this Report.
Extract of the Annual Return
The extract of the Annual Return in Form No. MGT – 9 forms a part of this report and is annexed as Annexure F. Particulars of Employees
The disclosures in terms of the provisions of Section 197 read with rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014forms a part of this report as Annexure G.
Disclosure under Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Acts, 2013
The Company has in place, a formal policy on Prohibition, Prevention and Redressal of Sexual Harassment of Women at Workplace. Detailed note is set out in the Corporate Governance report.
There were no cases filed under this act during this financial year.
Listing Of Equity Shares
The Company's equity shares are listed on the Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE). The Company has paid listing fees as prescribed for Financial Year 2015–16.
Industrial relations at our factory and offices remained cordial.
The Company has not invited and/or accepted any deposits, during the year. There are no deposits unpaid or unclaimed as at the end of the year.
There has been no default in repayment of deposits or payment of interest thereon during the year.
The Directors wish to thank the Hon'ble Board for Industrial & Financial Reconstruction (BIFR), The Hon'ble Appellate Authority for Industrial & Financial Reconstruction (AAIFR), Central Government, Government of Gujarat, Gujarat Industrial & Investment Corporation Limited, Bankers, Shareholders, Employees, Stockists, Dealers and all other stakeholders associated with its operations for the cooperation and encouragement extended to the Company.
On behalf of the Board of Directors
M. S. Gilotra
Executive Vice Chairman