Shree Cement Ltd
Directors Reports
#MDStart#
Management Discussion and Analysis
Dear Members,
The Directors take pleasure in presenting their 43rd Report and Audited
Financial Statements of the Company for the financial year 2021-22. Management Discussion
and Analysis
1. FINANCIAL PERFORMANCE
A brief of financial performance for the year gone by and its comparison with previous
year is given below:-
|
Standalone |
|
Consolidated |
|
| Particulars |
2021-22 |
2020-21 |
2021-22 |
2020-21 |
| Revenue from Operations |
14,305.88 |
12,668.87 |
15,009.56 |
13,559.77 |
| Other Income |
537.34 |
432.89 |
545.89 |
438.26 |
| Total Income |
14,843.22 |
13,101.76 |
15,555.45 |
13,998.03 |
| Total Expenditure |
10,658.04 |
8,689.04 |
11,301.63 |
9,480.32 |
| Profit Before Interest Depreciation and Taxes (PBIDT) |
4,185.18 |
4,412.72 |
4,253.82 |
4,517.71 |
| Finance Costs |
217.78 |
247.10 |
216.12 |
251.29 |
| Depreciation and Amortization expenses |
1,036.48 |
1,139.90 |
1,145.88 |
1,262.34 |
| Profit Before Tax |
2,930.92 |
3,025.72 |
2,891.82 |
3,004.08 |
| Tax Expense |
554.30 |
713.79 |
555.21 |
714.49 |
| Profit After Tax |
2,376.62 |
2,311.93 |
2,336.61 |
2,289.59 |
| Profit attributable to Owners of the Company |
- |
- |
2,331.94 |
2,285.87 |
| Profit attributable to Non-ControllingInterest |
- |
- |
4.67 |
3.72 |
Key highlights of the year (Standalone performance)-
• Sale volume (cement and clinker) witnessed an increase of 3% in 2021-22 from
26.84 million tons of previous year to 27.74 million tons during 2021-22. A notable
improvement was seen in sales volume from Kodla unit in Southern India which went up
significantly from 2.26 million tons to 2.69 million tons.
• Net revenue from operations grew by 13% from Rs.12,669 Crore to Rs.14,306 Crore
mainly due to increase in sales volumes.
• Key Cost components- Company faced input cost pressure due to
spiraling inflation as a result of rising coal, diesel and other input costs. Key details
for 2021-22 were as below:
(a) Raw material- Rising diesel prices led to increased mining cost despite
continued optimization drive in our limestone mining operations. All major inputs
including fly-ash witnessed increase compared to previous year. Resultantly, overall raw
material cost increased by 20% from Rs.834 Crore in FY
2020-21 to Rs.1,002 Crore in FY 2021-22.
(b) Power Fuel- Global commodity crisis and supply disruption resulted in high cost
of fuel and power for the Company. Company’s cost optimization measures continued to
help
Company contain the impact. Its focus on energy management practices helped reduce
power consumption per ton of cement from 68.65 kWh/ ton of year 2020-21 to 67.15 kWh/ ton
of in year 2021-22. Company also increased share of green power in total energy
consumption. Overall power and fuel cost shot up by 52% compared from Rs.2,082 Crore in
previous year to Rs.3,161 Crore in FY2021-22.
(c) Logistics Cost- Logistics and transportation costs witnessed increase of 7%
from Rs.3,037 Crore in FY 2020-21 to Rs.3,241 Crore in FY2021-22. Company continues to
work on efficiency improvement initiatives, routes rationalization and raising use of
technological tools in supply management, etc. to keep the logistics cost under check. One
notable development was the work on building rail connectivity for some of its cement
plants which will help enhance movement of materials through Railways and help contain the
transportation cost.
• Overall the year witnessed continued input price rise leading to higher cost of
production and freight. Resultantly, Profit Before Interest Depreciation and Tax (PBIDT)
for the year 2021-22 came down by 5% to Rs.4,185 Crore compared to Rs.4,413 Crore of
previous year 2020-21.
Key Financial Ratios
Key financial ratios showing the financial performance of the Company are as under: -
| Particulars |
2021-22 |
2020-21* |
Change |
Remarks |
| Operating Profit Margin (without other income) (%) |
25.50 |
31.41 |
-18.83% |
Decreased mainly due to increase in power and fuel cost |
| Net Profit Margin (%) |
16.61 |
18.25 |
-8.97% |
|
| Return on Net Worth (%) |
13.76 |
15.16 |
-9.23% |
|
| Interest Coverage Ratio (Times) |
19.22 |
17.86 |
7.61% |
Improved due to reduction in finance cost |
| Debtors Turnover (Times) |
33.58 |
24.66 |
36.14% |
Improved due to increase in revenue from operations & decrease in trade
receivables |
| Inventory Turnover (Times) |
7.86 |
8.72 |
-9.84% |
Reduced due to increase in inventory |
| Current Ratio (Times) |
1.69 |
1.69 |
- |
No change |
| Debt-Equity Ratio (Times) |
0.10 |
0.11 |
-9.20% |
No significant change |
* Ratios updated wherever necessary due to re-grouping/ re-classification of underlying
financial numbers
2. DIVIDEND AND RESERVES
The Board of Directors have recommended a final dividend of Rs.45/- per equity share
amounting to Rs.162.36 Crore for the year 2021-22 for approval of the members at the 43rd
Annual General Meeting of the Company. The total dividend for 2021-22 aggregates to
Rs.90/- per equity share which includes interim dividend of Rs.45/- per equity share paid
for the year 2021-22. During the year 2020-21, Company had paid dividend of Rs.60/- per
share amounting to Rs.216.48 Crore for the year 2020-21. financial health, The Board of
Directors of the Company in line with provisions of Regulation 43A of Securities Exchange
Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (as
amended) had approved Dividend Distribution Policy on 12th August, 2016. The policy is
uploaded on Company’s website and can be accessed at the link
https://www.shreecement.com/uploads/ cleanupload/dividend-distribution-policy.pdf.
3. MANAGEMENT OUTLOOK OF MACRO ECONOMY AND INDUSTRY
I. Indian Economy-Developments and
Outlook
The biggest question as regards economic growth in 2021-22 is concerned was whether
India’s GDP would regain pre-pandemic levels. Based on advance estimates, GDP data
for 2021-22 suggests that it has. With an expected growth rate of 8.9% in 2021-22,
India’s GDP is likely to be 1.8% more than what it was in 2019-20. The swift
recovery, after the pandemic induced contraction, is mainly due to the rapid vaccination
coverage as well as accommodative monetary and fiscal policy support. Government’s
policy thrust on quickening virtuous cycle of growth via capex and infrastructure spending
has increased capital formation in the economy lifting the investment to GDP ratio (GFCF)
at around 28.3 percent in 2021-22 (based on Second Advance Estimates) from 26.6 percent in
2020-21 (based on Final Revised Estimates). The private investment is also on the path of
recovery.
Currently, because of government’s thrust on capital expenditure and improved
economycorporatesector’s stands on strong growth momentum. Strong
GST collection is a testimony to the strong macro-economic fundamentals of the Indian
economy. Continued support by RBI by way of accommodative policy stance is also helping
the economy. Rising number of private investment projects under implementation in
manufacturing sector and increasing mobilization of risk capital bode well for
acceleration in private investment. A sturdy and cleaned-up banking sector stands ready to
support private investment adequately. Expected increase in private consumption levels
will propel capacity utilization, thereby fueling private investment activity. There are
thus signals indicating that India is poised for stronger investment.
If regaining pre-pandemic levels was the biggest challenge for 2021-22, the major
challenge in 2022-23 is going to be to return to a high growth trajectory. There is
greater uncertainty on this question led by elevated international commodity prices,
increasing inflation, tight monetary policies, ongoing geopolitical crisis between Russia
and
Ukraine and continuing global supply-side disruptions.
Over the past few years, Government has undertaken several structural reforms aimed at
fulfilling the vision of Atmanirbhar Bharat and speeding up infrastructure development.
The Production Linked Incentive (PLI) scheme launched in 2020 with an intent to give boost
to the domestic manufacturing is attracting large investment. PLI Scheme covering 14
sectors is likely to result in manufacturing of $500 billion worth goods in the next five
years. During 2021-22, Government has initiated Gatishakti - a National Master Plan for
Multi-modal Connectivity that will accelerate development of seamless multimodal transport
network and reduce the infrastructure gap. The Government is taking many more such steps
to continue the growth momentum going. The initial estimates of real economy growth of
year 2022-23 are projected at around 7.5 percent to 8 percent. There are challenges
however in terms of heightened fears of inflation, emergence of another COVID wave and
rising geo-political tensions. RBI’s stand on macro trends after Ukraine crisis has
been instructive with focus being on gradual withdrawal of accommodation to control the
inflation while supporting growth. All in all, while the Indian economy’s
fundamentals appear capable of weathering the above challenges, Government and RBI will
need to do continuous monitoring of external developments and take actions accordingly.
Considering this, the overall outlook remains cautiously positive.
II. Cement Industry Development and
Outlook
On the back of a lower base, the cement production is estimated to have clocked a solid
growth of around 20% during FY22 over FY21. With production volumes of around 345-350
million tons, the industry is expected to have surpassed pre-COVID levels by around 6%.
The solid growth during FY22 is largely because of rising government spending on
infrastructure, continuation of strong demand from real estate sector and rural and
affordable housing segment. Higher fiscal deficit of 6.9% during FY22 provided
Government with extra cushion for spending on infrastructure and development thereby
creating demand for other sectors such as cement. The continuation of accommodative
monetary policy by RBI ensured easy credit which in turn termsforhousing generated
continued strong demand from housing segment. On the back of good monsoon and remunerative
MSP/ market prices, the rural incomes have seen upward movement resulting in higher
spending on housing. With continued focus of the Government on urban and rural affordable
housing schemes have witnessed higher allocation and spending. All in all, FY 2022 has
been a good year as far as demand is concerned. Industry has however faced the challenge
of high input costs because of The coal prices have jumped due to pandemic induced supply
side disruptions as well as Ukrain-Russia conflict which has increased the cost of power
and fuel significantly general inflation has increased the cost of transportation and
other input costs. Overall, the inflationary pressures have increased costs and impacted
the margins.
Going forward, the demand conditions are expected to be strong. The factors such as
higher fiscal space with Government for capital and infrastructure spending, rising rural
incomes and continuation of
Government’s flagship scheme of affordable housing will drive cement demand. RBI
is considering to gradually withdraw its accommodative stance which is likely to make
housing finance dearer. This, however, is unlikely to hit housing demand in the near term.
The outlook for cement demand is considered positive.
4. NEW/EXPANSION PROJECTS
• Projects completed during the year- During the year 2021-22,
commercial operation of Clinker Grinding Unit having capacity of 3.0 Million Ton Per Annum
(MTPA) at Patas in Pune District of Maharashtra and Clinkerisation Unit (Kiln-3) having
capacity of 12,000 Tons Per Day (4.0 MTPA) at Baloda Bazar, near Raipur in Chhattisgarh,
has been started.
• New Proects undertaken during the year- During the year, the Company
has started work on the following projects: -
| Integrated Cement |
At Gothra in Nawalgarh Tehsil of Rajasthan having Clinker Capacity of 3.80 MTPA and |
| Plant(s) |
Cement Capacity of upto 3.50 MTPA. The project is scheduled to be completed by Quarter
ending March, 2024. |
| Solar Power Plants |
At different locations aggregating to 106 MWp to meet captive power requirement of
cement plants of the Company. The same are expected to be completed by Quarter ending
September, 2022. |
• New Proects undertaken by wholly owned subsidiary during the year- Company’s
wholly owned subsidiary, Shree Cement East Pvt. Ltd. has started work on setting up of
clinker grinding unit at Village Digha &
Parbatpur, in Purulia District of West Bengal having capacity of 3.0 MTPA. The project
is likely to be completed by Quarter ending June, 2023.
5. RISK MANAGEMENT
Company’s risk management process is designed to identify and mitigate risks that
have the potential to materially impact its business objectives and maintains a balance
between managing risk and making most of the opportunities. The Board is responsible for
overseeing the overall risk management framework of the Company. The Risk Management
Committee of Board, keeps an eye on execution of the risk management plan of the Company
and advises the management on strengthening mitigating measures wherever required. The
actual identification, assessment and mitigation of risks are however done by key
executives of the Company in consultation with professional in a systematic manner. The
risks are prioritised according to significance and likelihood. Risks having high
likelihood and high significance are classified as ‘key risk’.
The details of the Key Risks identified by the Company and its mitigation measures are
given in ‘Risks and the Mitigation Strategies’ section of this Annual Report at
page no. 20.
6. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Company has put in place adequate internal control systems commensurate with its size
of operations. Company’s internal control systems include policies and procedures, IT
systems, delegation of authority, segregation of duties, internal audit and review
framework, etc. Company has laid down internal financial controls and systems with regard
to adherence to Company’s policies, safeguarding of its assets, prevention and
detection of frauds and errors, accuracy and completeness of the accounting records and
timely preparation of reliable financial information. The framework is in compliance with
the requirements of the Companies Act, 2013. The Company periodically assesses design
as-well-as operational effectiveness of its internal controls across multiple functions
and locations through extensive internal audit exercises. For carrying out internal audit,
Company has an experienced in-house team manned by professionals. Based on the assessment
and observations of internal audit, process owners undertake corrective action in their
respective areas of operations, and thereby strengthen the processes and controls.
Significant audit observations and corrective actions thereon are presented to the Audit
Committee of the Board on periodical basis. The Audit Committee evaluates the adequacy
and effectiveness of internal financial control systems periodically.
Further, during the year, to improve and strengthen processes, finding opportunities
for automation and optimizing costs, the Company has appointed conducting internal audit
of different geographical firm locations of the Company. For this purpose, three renowned
audit firms viz. one audit firm earlier.
7. HUMAN RESOURCES / INDUSTRIAL RELATIONS
Over last two years, we have seen the world order getting reinvented in a zillion ways.
And along with it, changes have happened the way we work. As new practices figured out,
it’s proven that people are the only competitive advantage that differentiate a
company and its culture, the one that is most difficult to replicate, the advantage that
walks out of the door every single day.
At SCL, people have been at the core of our business since our founding years. One of
the few organizations that has Care and Happiness for all stakeholders as its guiding
philosophy. The values that have become especially significant in these past years, the
years that witnessed high turnover all over. Creating Happiness for all our stakeholders
is the ‘WHY’ that our organization
| 115 has been founded on, this drives the ‘WHAT’ what needs to be done to
create happiness, followed by the ‘HOW’ how do we do this. Purpose that drives
the practice which defines the process. Few highlights for the last year were viz. a viz.
one audit firm earlier.
a) A step ahead toward a Learning Organisation- As an extension of School of
Training Education and Personal Success (‘STEPS’), the Company launched a
unified portal https://www.shreesteps.com/ of its own, that aggregates all its initiatives
towards building a learning organization. This was combined with native apps such as
edcast for Android and iOS platforms to enable Anytime-Anywhere learning. The Company also
introduced byte sized learning content to enable learning in the pace of work.
b) Simplified Moining experience- Recruitz, an app and online portal was launched
to introduce a seamless joining experience for new hires from Selection to On-Boarding. It
not only enhanced the joining experience, but also reduced process redundancies and
increased efficiencies.
c) Improved process time in HR enabled by automation- Multiple processes that were
partially o ine were automated 100%, thereby reducing response and solution time. This
also adds to the data and predictive analytics for HR, which would help us build processes
for the future.
d) Being there for people- The Health & Wellness teams organized regular
vaccination camps across locations to ensure that all employees and their families were
vaccinated. This was supported by a portal developed by Company’s in-house team,
which tracked vaccination status and sent regular follow ups to ensure 100% compliance.
Along with it the Health, Wellness and Administration team supported people who tested
positive, helping them with medicines, food, periodic check-ups, oxygen support, tie up
with hospitals, etc.
e) Significant Achievement in HR Excellence-
The Confederation of Indian Industries (CII) recognized the Company under category
‘Significant Achievement in HR Excellence’, which was a 100-point improvement
from the last year, a milestone in our journey towards excellence. This recognition is
based on a detailed examination of Company’s policies and practices as per the
framework designed by CII followed by an onsite audit by senior members of the industry.
f) Commitment to being a Great Place to
Work- The Company was certified as a Great Place to Work for the 3rd consecutive
year and also earned a badge for ‘Commitment to Being a Great Place to Work’.
This was in addition to recognition of (a) being among India’s 100 Best Places to
Work for, (b) among India’s Top 30 in the Manufacturing Sector for 3rd
consecutive year and (c) among the best companies in Cement and Building Materials.
g) Industrial Relations- Company considers its employees as its biggest asset. It
therefore, always strives to build healthy relationship with them and resolve issues
through dialogue and discussions. As a result, employee relations remained cordial during
the year. Total number of employees as on 31st March, 2022 were 6,445.
8. OCCUPATIONAL HEALTH AND SAFETY
Following a ‘Safety First’ approach, health and safety is a top priority area
of the Company. Company has built a robust safety management system based on the globally
recognized and practised OHSAS 18001 standard to institutionalize the organisation-wide
focus on Occupational Health and Safety.
Safety Committees’ have been formed at all manufacturing units with equal
representation from both management and non-management categories. These committees play a
pivotal role in achieving the objective of ‘Safety First’ by undertaking
assessment of safety issues on an ongoing basis and implementing suitable initiatives and
programs for the same. To transform the way workers’ look at safety and make them
aware and adopt best practices related to safety, these Committees periodically organise
online and o ine trainings, mentoring and coaching with the help of internal and external
safety experts. This has helped bringing about a consistent positive change to the
workers’ safety performance. Such interactions are also helping the plant level
safety committees get feedback from workers and thereby identifying hazards and minimise
the recurrence of the same. The Company has established a structured hazard identification
and risk assessment process which helps it identify potential risks which could have
resulted in production disruptions and liabilities.
To provide its employees and contractual workers access to quality and instant
healthcare services, Company has established ‘Wellness Management Centres’ (WMC)
at all the locations. WMCs are equipped with qualified doctors and modern facilities which
help carry out day to day health-care services and also conduct annual health check-ups
for employees & contract workers. Health talks by experts and specialists are also
organised to propagate awareness on chronic and lifestyle diseases.
All safety initiatives and employee engagement programs have been designed to ensure
their continuous review and monitoring. Through a regular internal audit protocol, the
Company assesses the overall safety performance and examines the existing procedures,
systems and control measures for fire & safety hazards. Observations and
recommendations are implemented by concerned departments within set timelines. As part of
the process, monthly safety performance of all grinding units are reviewed and discussed
with all safety professionals for implementation of common safety system and practices.
9. SUSTAINABILITY
Sustainability is at the forefront of the Company since inception and imbibed in its
business model as a way of life. Company’s operational strategy is built on a
long-term commitment to experiment and implement new ideas for improving efficiencies,
minimising the use of input resources and promote circular economy in the process.
Following were key initiatives / developments:-
a) Generation of power from renewable resources Company continued to lay strong
focus on increasing use of renewable energy (RE) as part of its sustainability agenda.
While
Company maintains its leadership position with regard to use of RE in its total energy
consumption, it is steadily ramping up its RE power generation capacity spanning across
Waste Heat Recovery (WHR), Solar and Wind power plants. During the Company has increased
share of renewable energy in total energy consumption from 47.9% in FY 2020-21 to 48.2% in
FY 2021-22. It has already undertaken work on setting up solar power plant capacity of 106
MWp at different locations for meeting its captive requirement.
The Company continues its recognition of having the largest WHR capacity in World
Cement Industry excluding China. This apart, in terms of operational efficiency of WHRP,
Company is regarded as one of the best in the industry. During the year, the Company
installed 10.5 MW wind power plant in Maharashtra and 8.4 MW in Karnataka. Its total
renewable power generation capacity (including WHR) stood at 263 MW at the end of
financial year 2021-22.
b) Energy Conservation Energy conservation derives extreme focus of the Company
and has seen numerous innovations and initiatives over the years ranging from shop-floor
experiments to large capex. This has helped Company to reduce its carbon intensity and
rationalize production costs. More details on initiatives taken in the area of energy
conservation are given in Annexure 3 to this report. Company’s performance in
energy conservation field is getting exemplified at platforms like "Perform, Achieve
& Trade" (PAT) scheme of the Govt. of India wherein the Company overachieved its
targets in PAT Cycle I, II and III continuously. The Company was awarded with the
‘Best Performer’ award for energy saving under PAT Cycle I by Bureau of Energy
Efficiency.
c) Alternative Fuels and Raw Materials
Company is constantly working on to increase usage of alternative raw materials and
fuels in its operations. Company uses of wastes of various industries such as Pharma,
Chemical, Sponge Iron as alternate fuel. Company has also started utilizing MSW (Municipal
Solid Waste), RDF (Refused Derived Fuel) and Agriculture Crop Residue as alternate fuel to
conserve the natural resources. These measures have helped the Company to improve its
Thermal Substitution Rate to 2.41% in FY 2021-22.As alternative raw materials, the Company
has been using marginal grade limestone and quarry rejects with high grade material in a
cost effective manner. Company’s share of alternate fuel and raw material in total
fuel and raw material consumption stood at 9.84% and 27.23% in FY 2021-22.
d) Green products The Company has been producing blended cement under following
categories: Portland Pozzolana Cement (PPC), Portland Slag Cement (PSC) and
Composite Cement (CC) conforming strictly to the specified BIS norms. Blended cement
contributes to sustainable design by making concrete stronger and durable, reducing
consumption of natural resources such as limestone, lowering greenhouse gas emissions and
contributes to a circular economy by utilizing wastes from power, iron and steel plants.
Use of blended cement also has cost benefits for Company’s customers. The share of
blended cement in total cement production stood at 75.13% in FY 2021-22.
e) Emission Reduction Company has been constantly working on ways to reduce its
carbon emissions. Over the years, measures such as installation of waste heat recovery
plants, increased production of blended cement, increased usage of renewable energy, etc.
have been taken by the Company in this direction. The Company has targeted to reduce
Scope-1 GHG emissions by 12.7% per ton of cementitious materials by 2030 from a 2019 base
year and Scope-2 GHG emissions by 27.1% per ton of cementitious materials within the same
timeframe. These have been validated by Science Based Targets initiative (SBTi). Further
as part of its membership of Global Cement and Concrete Association (GCCA), it is
committed to achieve the carbon goals as are decided by GCCA from time to time.
f) Water Conservation Water is increasingly becoming a scarce and precious
natural resource. The Company has been working on two-pronged approach of optimising water
consumption as well as increasing availability of water through water harvesting and
recharging. Company’s macro level initiatives in this regard such as installation of
Air
Cooled Condensers in all its thermal power plants and setting-up Waste Heat Recovery
based power plants have been a great success. Micro initiatives include construction of
rain water harvesting structures around operating sites and mining area, installation of
Sewage Treatment Plants for treating domestic waste water, use of recycled water in
operations, online monitoring of ground water level, installation of water sensors &
fixtures, etc. which help in reducing water consumption, increase water availability and
reduce dependence on ground water.
g) Sustainability Reporting Company released its 17th annual
Corporate
Sustainability Report for the reporting period 2020-21 titled "Progressing
Responsibly with hard work and innovation". The said report was prepared in
accordance with the "GRI Standards Comprehensive Option" and assured by an
independent certifying agency.
The Company has also consistently issued its Business Responsibility Report as part of
Annual Report since year 2012-13 disclosing its performance with respect to various
Business Responsibility principles. This apart, it has been consistently participating in
various benchmarking and rating exercises such as CDP, Dow Jones Sustainability Index,
MSCI sustainability index, etc. to gauge its performance with peers and improve upon the
same. Company is part of various global industry membership such as Global Cement and
Concrete Association wherein also it shares its performance details on various aspects.
h) Engaging as knowledge partner In a unique initiative, during the year, the
Company, held discussions with World Bank to act as a knowledge partner with them, on
projects / programs relating to sustainability and climate change. The Company has offered
to participate in initiatives, workshops, training programs, etc. relating to
sustainability issues and fund research in the areas of Carbon Capture Usage & Storage
(CCUS), use of waste materials, resource conservation, power storage technology and
pollution control measures. It also facilities for setting-up pilot projects in these
areas.
The Company, as part of its membership with Global Cement and Concrete Association, has
participated in INNOVANDI project, which is designed to accelerate deployment of enabling
technologies for CCUS. Under this initiative, the Company is collaborating with other
member companies to identify solutions and technologies to address cement and
concrete’s carbon footprint.
10. CORPORATE GOVERNANCE
Your Directors reaffirm their continued commitment to good corporate governance
practices. During the year under review, Company was in compliance with the provisions
relating to corporate governance as provided under the Securities Exchange Board of India
(Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended). The
compliance report is provided in the Corporate Governance section of this Annual Report.
The Auditor’s Certificate on Corporate Governance is enclosed at Annexure - 1.
. BUSINESS RESPONSIBILITY REPORTING
Company is also releasing Business Responsibility Report (BRR) as part of this Annual
Report covering its compliances towards the Business Responsibility Principles enunciated
by the Securities and Exchange Board of India as required under Regulation 34(2) (f) of
Securities Exchange Board of India (Listing Obligations and Disclosure Requirements)
Regulations, 2015 (as amended).
. CORPORATE SOCIAL RESPONSIBILITY
As part of its triple bottom-line approach to its business, Company has always
considered the community as its key stakeholder. It believes that the community around its
operations should also grow and prosper in the same manner as does its own business.
Accordingly, Corporate Social Responsibility forms an integral part of the Company’s
business philosophy. To oversee all its CSR initiatives and activities, the Company has
constituted a Board-level Committee - Corporate Social and Business Responsibility
Committee. The major thrust areas of the Company include healthcare, education, women
empowerment, infrastructure support, integrated rural development, etc. which are aligned
to the areas specified under Schedule VII of the Companies Act, 2013. The Annual Report on
CSR activities of FY 2021-22 with requisite details in the specified format as required
under Companies (Corporate Social Responsibility Policy) Rules, 2014 (as amended) is
enclosed at Annexure and forms part of this report. The CSR Policy of the Company
may be accessed on website of the Company at link
https://www.shreecement.com/investors/policies.
. SUBSIDIARY COMPANIES
The Company has following subsidiaries:
| S. No. Name of Subsidiaries |
Nature of Interest |
| 1 Shree Global FZE |
|
| 2 Raipur Handling and Infrastructure Private Limited |
|
| 3 Shree Cement East Private Limited |
Wholly Owned Subsidiaries |
| 4 Shree Cement North Private Limited |
|
| 5 Shree Cement South Private Limited |
|
| 6 Shree Enterprises Management Ltd |
|
| 7 Shree International Holding Ltd |
|
| 8 Union Cement Company PrJSC |
Step-down Subsidiaries |
| 9 U C N Co. Ltd LLC (earlier Union Cement Norcem Co. Ltd. LLC) |
|
| 10 Shree Cement East Bengal Foundation |
Subsidiary Company (Incorporated under Section 8 of the Companies Act, 2013) |
Audited financial statements of the subsidiaries of the Company are available on the
website of the Company. The shareholders, who wish to receive a copy of Annual Accounts of
the Subsidiary Companies, may request the Company Secretary for the same. The policy for
determining material subsidiaries as approved by the Board can be accessed on the website
of the Company at link https://www.shreecement.com/investors/policies.
Pursuant to Section 129(3) of the Companies Act, 2013 read with the Companies
(Accounts) Rules, 2014, a statement containing salient features of the financial
statements of the subsidiary companies in prescribed Form AOC-1 is given in the
Consolidated Financial Statements of
Company and forms part of this Annual Report.
14. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the
Company have been prepared in terms of provisions of Companies Act, 2013 and Securities
Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations,
2015 (as amended) by following the applicable Accounting Standards notified by the
Ministry of Affairs and forms part of this Annual Report.
. DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors of the
Company, to the best of their knowledge and belief and according to the information and
explanations obtained by them, state that:
• In the preparation of the annual accounts for the year ended 31st March, 2022
the applicable accounting standards have been followed and there are no material
departures from the same;
• They have selected such accounting policies, judgments and estimates that are
reasonable and prudent and have applied them consistently so as to give a true and fair
view of the state of affairs of the Company as at 31st March, 2022 and of the statement of
Profit and Loss as well as Cash Flow of the company for the 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, 2013, for
safeguarding the
| 119 assets of the Company and for preventing and detecting fraud and other
irregularities;
• The annual accounts have been prepared on a going concern basis;
• Necessary internal financial controls have been laid down by the Company and the
same are commensurate with its size of operations and that they are adequate and were
operating effectively; and
• Proper systems have been devised to ensure compliance with the provisions of all
applicable laws and that such systems were adequate and operating effectively.
16. PERFORMANCE EVALUATION OF BOARD, ITS COMMITTEES & INDIVIDUAL DIRECTORS
In terms of requirements of Securities Exchange Board of India (Listing Obligations and
Disclosure Requirements) Regulations, 2015 (as amended) and provisions of Companies Act,
2013,
Nomination cum Remuneration Committee of the
Board of Directors of the Companyspecified the manner for effective evaluation of
performance of Board, its Committees and Individual Directors.
Based on the same, the Board carried out annual evaluation of its own performance,
performance of its Committees, Individual Directors including Independent Directors during
the year. Company had adopted the evaluation parameters as suggested by the Institute of
Company Secretaries of India and Securities and Exchange Board of India with suitable
changes from Company’s perspective. The performance of the Board was evaluated by the
Board on the basis of criteria such as Board composition and structure, effectiveness of
Board processes, information flow to Board, functioning of the Board, etc. The performance
of Committees was evaluated by the Board on the basis of criteria such as composition of
Committees, effectiveness of Committee working, independence, etc. The Board evaluated the
performance of individual Director on the basis of criteria such as attendance and
contribution of Director at Board/Committee Meetings, adherence to ethical standards and
code of conduct of the Company, inter-personal relations with other Directors, meaningful
and constructive contribution and inputs in the Board/ Committee meetings, etc.
For the above evaluation, the Board members completed questionnaires providing feedback
on different parameters as already stated above including on performance of Board /
Committees
/ Directors, engagement levels, independence of judgment and other criteria. This is
followed with review and discussions at the level of Board. The results of evaluation
showed high level of commitment and engagement of Board, its various committees and
working directors.
In a separate meeting of the Independent
Directors, performance evaluation of Non-Independent Directors, the Board as a whole
and performance evaluation of Chairman was carried out, taking into account the views of
Executive and Non-Executive Directors. The quality, quantity and timeliness of flow of
information between the Company Management and the Board which is necessary for the Board
to effectively and reasonably perform their duties were also evaluated in the said
meeting.
The Independent Directors well appreciated the functioning of the Board of Directors,
Working Directors as well as Committee of the Board. They were also highly satisfied with
leadership role played by the Chairman.
Company had appointed an External Facilitator for the purpose of carrying out the
performance evaluation in a fair and transparent manner.
17. DIRECTORS AND KEY MANAGERIAL PERSONNEL
Director retiring by rotation - In accordance with the provisions of the
Companies Act, 2013 and Articles of Association of the Company, Shri Prakash Narayan
Chhangani (DIN: 08189579), Director of the Company (designated as Whole Time Director)
will retire by rotation in the ensuing Annual General Meeting (AGM) and being eligible,
offers himself for re-appointment. Item seeking approval of members for the same is
included in the Notice convening the 43rd AGM. The Board recommends the reappointment of
Shri Prakash Narayan Chhangani. His reappointment at the 43rd AGM as a director
retiring by rotation would not constitute break in his appointment as a Whole Time
Director.
Key Managerial Personnel - Shri Prashant Bangur (DIN: 00403621) was last
appointed as Joint Managing Director of the Company for a period of 5 years from 1st
April, 2017. His tenure as Joint Managing Director completed on 31st March,
2022. The Board of Directors of the
Company in its meeting held on 4th February, 2022, on the recommendation of
Nomination cum Remuneration Committee and after evaluating his performance and considering
the Company’s growth under his stewardship, approved his reappointment as Jt.
Managing Director of the Company for a period of 5 st April, 2022 subject to approval of
the members. Approval of Members was obtained by passing of Special Resolution through
Postal Ballot on 1st April, 2022.
Independent Directors - The Board of Directors of the Company in its meeting
held on 21st May, 2022, on the recommendation of Nomination cum Remuneration Committee),
appointed Mr. Zubair Ahmed (DIN: 00182990) as Additional Director of the Company w.e.f.
21st May, 2022. He holds office as Additional Director up to the date of the ensuing
Annual General Meeting. Further, the Board appointed him as Independent Director of the
Company for a period of 5 (five) years w.e.f. 21st May, 2022 subject to approval of the
members.
Profile and other information of the aforesaid Directors, as required under Regulation
36 of SEBI
(Listing Obligations and Disclosure Requirements) Regulations, 2015 and Secretarial
Standard - 2 forms part of the Notice convening the 43rd Annual General Meeting.
During the year, Shri Om Prakash Setia (DIN: 00244443) resigned from the position of
the Independent Director of the Company from close of Business Hours on 29th October, 2021
due to his personal reasons. Further, at the time of resignation, he confirmed that there
were no material reasons for his decision to resign.
In accordance with Section 149(7) of the Companies Act, 2013 and Regulation 25(8) of
the Securities and Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015 (as amended), each Independent Director has given a
declaration to the Company confirming that he/she meets the criteria of independence as
Section 149(6) of the Companies Act, 2013 and Securities and Exchange Board of India
(Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended). They
have also confirmed the compliance of Rule 6 of the Companies (Appointment and
Qualification of Directors) Rule, 2014 regarding inclusion of their name in the data bank
of Indian Institute of Corporate Affairs (IICA).
18. FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS
In order to acquaint the new directors with the Company, a detailed presentation is
given to them at the time of their appointment which covers their role, duties and
responsibilities, Company’s strategy, business model, operations, markets,
organizational structure, products, etc. A detailed yearsw.e.f.1 presentation along
similar lines is sent to existing
Independent Directors every year to keep them apprised of the above details.
As part of Board discussions, presentation on performance of the Company is made to the
Board during its meeting(s). Plant visits are also arranged for Independent Directors
from time-to time for better understanding of the Company’s operations. The details
of such familiarisation programmes for Independent Directors are posted on the website of
the Company and can be accessed at link https://www.shreecement.com/
investors/shareholder-information.
19. CONSERVATION OF ENERGY, TECHNOLOGY
ABSORPTION AND FOREIGN ECHANGE
EARNINGS/ OUTGO
The particulars relating to conservation of energy, technology absorption, foreign
exchange earnings and outgo, as required to be disclosed under Section 134(3)(m) of the
Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is set out
at Annexure - 3 which forms part of this report.effective
20. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
Disclosures pertaining to remuneration and other details as required under Section
197(12) of the Companies Act, 2013 read with Rule 5(1) of the
Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 are provided at
Annexure - 4.
In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with
Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, a statement showing the names and other particulars of under the
top ten employees and employees drawing remuneration in excess of the limits as provided
in the said rules are set out in the Board’s Report as an addendum thereto. However,
in terms of provisions of the first proviso to of the Companies Act, 2013, the Annual
Report is being sent to the members of the Company excluding the aforesaid information.
The said information is available for inspection at the Registered Office of the Company
during such working hours as are provided under the Articles of Association of the Company
and any member interested in obtaining such information may write to the Company Secretary
and the same will be furnished on request.
21. AUDITORS
I. Statutory Auditors
M/s. Gupta & Dua, Chartered Accountants (Firm Registration No. 003849N), who are
the Statutory Auditors of the Company, shall hold office till the conclusion of the
ensuing Annual General Meeting. They have given their report on the Annual Financial
Statements for Financial Year 2021-22. The Audit Report does not contain any or adverse
remark. As per the provisions of Section 139 of the Companies Act 2013, the term of office
of M/s. Gupta & Dua, as Statutory Auditors of the company will conclude with the
ensuing AGM of members of the Company.
The Board of Directors of the Company in its meeting held on 21st May, 2022, on the
recommendation of Audit Committee, appointed M/s. B R Maheswari & Co LLP,
Chartered Accountants (Firm Registration
No. 001035N/N500050) as the Statutory
Auditors of the Company for a period of 5
(Five) consecutive years commencing from the conclusion of ensuing 43rd
Annual General
Meeting till the conclusion of 48th AGM, subject however to approval of the members at
the ensuing AGM. The Statutory Auditors have and eligibility for their appointment.
The members’ attention is drawn to a
Resolution proposing the appointment of
M/s. B.R. Maheswari & Co LLP, Chartered Accountants, as Statutory Auditors of the
Company which is included in the Notice convening the 43rd AGM.
II. Secretarial Auditors
The Board had appointed M/s. Pinchaa & Co.,
Company Secretaries as Secretarial Auditor of the Company to conduct Secretarial Audit
for the Financial Year 2021-22. They have submitted their report in prescribed format and
the same is enclosed at Annexure - 5. The Secretarial Audit Report does not contain
any qualification, reservation or adverse remark.
III. Cost Auditors
In terms of the provisions of Section 148 of the Companies Act, 2013 read with the
Companies (Cost Records and Audit)
Amendment Rules, 2014, the Board of
Directors of the Company have appointed M/s. K. G. Goyal & Associates, Cost
Accountants, Jaipur (Firm Registration No. 00024) to conduct the cost audit for the
financial year ending 31st March, 2023 at a remuneration as stated in the Notice convening
the 43rd Annual General Meeting of the members. As required under the Companies Act, 2013,
the remuneration payable to cost auditors has to be placed before the Members at the
general meeting for ratification. Hence, a resolution seeking ratification of remuneration
by the Members, reservation payable to the Cost Auditors, forms part of the Notice of the
ensuing 43rd AGM.
The Cost Auditors are in process of conducting the audit of cost records
fromtheconclusionof for year 2021-22 and shall submit their report in due course.
22. OTHER DISCLOSURES
(a) Composition of Audit Committee- The Audit Committee comprises of Shri Shreekant
Somany as Chairman, Shri R. L. Gaggar, Dr. Y. K. Alagh, Shri Nitin Desai and Shri
Sanjiv Krishnaji Shelgikar as other Members. More details are given in the Corporate
Governance Report. All the recommendations made by the Audit Committee were accepted by
theBoard.
(b) Details of Meetings of Board and its
Committees-theirindependencestatus The Board of Directors of your
Company met 4 times during the year to deliberate on various matters. The meetings were
held on 21st May, 2021, 9th August, 2021, 29th October, 2021 and 4th February, 2022.
Further details are available in the Corporate Governance Report forming part of this
Annual Report. The intervening gap between the meetings was within the period prescribed
under the Companies Act, 2013 and the Securities Exchange Board of India (Listing
Obligations and Disclosure Requirements) Regulations, 2015 (as amended).
(c) Annual Return- In terms of Section 92(3) of the Companies Act, 2013 and Rule 12
of the Companies (Management and Administration) Rules, 2014, the Annual Return of the
Company is available on the website of the Company at link https://www.shreecement.
com/investors/shareholder-information.
(d) Particulars of Loans Guarantees or
Investments- 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 Notes to the standalone financial statements.
(e) Related Party Transactions- All Related
Party Transactions during the financial year 2021-22 were on arm’s length basis
and in ordinary course of business. They were all in compliance with the applicable
provisions of the Companies Act, 2013 and the Securities Exchange Board of India (Listing
Obligations and Disclosure Requirements) Regulations, 2015 (as amended). All such
transactions are placed before the Audit Committee for review/approval. The necessary
omnibus approvals have been obtained from Audit Committee wherever required. There were no
material Related Party Contracts/ Arrangements/Transactions made by the Company during the
year 2021-22 that would have required Shareholders’ approval under provisions of
Section 188 of the Companies Act, 2013 or of the Securities Exchange Board of India
(Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended). The
Company has adopted a Related Party Transactions Policy duly approved by the Board, which
is uploaded on the Company’s website & may be accessed at link
https://www.shreecement.com/ investors/policies.
Further, in terms of Securities and Exchange Board of India (Listing Obligations and
Disclosure Requirements) (Amendment) Regulations, 2018, the transactions with
person/entity belonging to the promoter/ promoter group holding 10% or more shareholding
in the Company are as under:
| Name of the Entity |
Holding in the Company |
Amount ( Rs.Crore) |
Nature of Transaction |
| Shree Capital Services Ltd. |
24.90% |
0.48 |
Payment of Office Rent |
(f) Deposits from Public- The Company has not accepted any deposits from public
covered under Chapter V of the Companies Act, 2013 during the year and as such, no amount
on account of principal or interest on deposits from public was outstanding.
(g) Managing the Risk of Fraud Corruption and Unethical Business Practices Vigil
Mechanism/Whistle Blower Policy-
The Company has adopted a Whistle Blower Policy and established the necessary vigil
mechanism for employees and Directors to report concerns about unethical behaviour. The
policy provides for adequate safeguards against victimization of employees who avail of
the mechanism and also provides for direct access to the Chairman of the Audit
Committee. The Whistle Blower Policy may be accessed on the website of the Company at
link https://www.shreecement.com/ investors/policies.
Ethics Transparency and Accountability Policy Code of Conduct- Company believes
in the principle of trust, which can be derived through ethical practices, transparency
and accountability to stakeholders. Keeping the same into account, Company has in place
policy of Ethics, Transparency and Accountability Policy & Code of Conduct. Every
director and employee is required to adhere to the said policy. The details of the policy
can be accessed on the website of the Company at link https://www.shreecement.
com/investors/policies.
Anti-Bribery and Anti-Corruption Policy-
To conduct the business in an ethical, honest and transparent manner, the Board of
Directors of the Company has adopted Anti- Bribery and Anti-Corruption Policy. Company has
zero tolerance approach toward bribery and corruption. Every individual or group of
individuals, associated with the Company in any form, be it director or employee or worker
or contractor or dealer or supplier is required to follow the said policy. The details of
the policy can be accessed on the website of the Company at link https://www.
shreecement.com/investors/policies.
(h) Remuneration Policy- Company firmly believes in nurturing a people friendly
environment, which is geared to drive the organisation towards high and sustainable
growth. Each and every personnel working with Company strives to achieve the
Company’s vision of being the best in the industry. Its Remuneration Policy is
therefore designed to achieve this vision. The policy has been approved by the Board on
the recommendation of Nomination cum Remuneration Committee. The policy is applicable to
Directors, Key Managerial Personnel (KMP) and other employees.
The directors and KMPs are appointed on the recommendation of Nomination cum
Remuneration Committee in terms of
Companies Act, 2013. The factors for deciding the Remuneration of working directors,
KMPs and senior executives includes, responsibility and profile of Individual,
remuneration packages of peer group, accolades and recognition conferred on the
individual, performance of the sector in which company operates, overall performance of
the Company including its ESG/sustainability performance.
The Remuneration Policy can be accessed on the website of the Company at link https://
www.shreecement.com/investors/policies.
(i) Policy on Prevention Prohibition and Redressal of Sexual Harassment at Workplace- The
Company has complied with the provisions of the constitution of the Internal Committee
under the Sexual
Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013
and has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at
the Workplace, in line with the provisions of the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder. Company
has formed an ‘Internal Complaints Committee’ for prevention & redressal of
sexual harassment at workplace. The Committee has 6 members and is chaired by a senior
woman member of the organisation. The Company has not received any complaint of sexual
harassment during the financial year 2021-22.
() Material Changes after the Close of Financial Year: There have been no
material changes and commitments which have occurred after the close of the year till the
date of this report, affecting the financial position of the Company.
(k) Significant and Material Orders passed by the Regulators or Courts- No
significant material orders have been passed by the Regulators or Courts or Tribunals
which would impact the going concern status of the Company and its future operations.
(l) Maintenance of Cost Records- Company is required to maintain cost records as
specified by the Central Government under subsection (1) of section 148 of the Companies
Act, 2013, accordingly such accounts and records are made and maintained by the Company.
(m) Compliance with Secretarial Standards-
Company has complied with the Secretarial Standards issued by Institute of Companies
Secretaries of India (ICSI) on Board Meetings (SS- 1) and General Meetings (SS-2).
23. ACKNOWLEDGEMENT
The Directors take this opportunity to express their deep sense of gratitude to its
Central and
State Governments and local authorities for their continued co-operation and support.
They also would like to place on record their sincere appreciation for the commitment,
hard work and high engagement level of every member of the Shree family without which the
exemplary performance of the Company year after year, would not have been possible. The
Directors would also like to thank various stakeholders of the Company including
customers, dealers, suppliers, lenders, transporters, advisors, local community, etc. for
their continued committed engagement with the Company. The Directors would also like to
thank the Members of the Company for confidence and trust reposed inthem.
|
For and on behalf of the Board |
|
B. G. Bangur |
| Place: Kolkata |
Chairman |
| Date : 21st May, 2022 |
DIN: 00244196 |
ANNEXURE TO BOARD REPORT
Annexure-1 to the Board’s Report
Independent Auditors’ Certificate on Corporate Governance
To, The Members of
Shree Cement Limited
1. We, Gupta & Dua, Chartered Accountants, the
Statutory Auditors of Shree Cement Limited
("the Company"), have examined the compliance of conditions of Corporate
Governance by the Company, for the year ended on 31st March, 2022, as stipulated in
regulations 17 to 27 and clauses (b) to (i) of regulation 46(2) and para C and D of
Schedule V of the SEBI Listing (Obligation and Disclosure requirements) Regulations, 2015
(the Listing Regulations).
Management’s Responsibility
2. The compliance of conditions of Corporate Governance is the responsibility of the
Management. This Responsibility includes the Design, implementation and maintenance of
internal controls and procedures to ensure the compliance with the conditions of the
Corporate Governance stipulated in Listing Regulations.
Auditors’ Responsibility
3. Our responsibility is limited to examining the procedures and implementation
thereof, adopted by the Company for ensuring compliance with the conditions of the
Corporate Governance. It is neither an audit nor an expression of opinion on the financial
Statements of the Company.
4. We have examined the books of account and other relevant records and documents
maintained by the Company for the purposes of providing reasonable assurance on the
compliance with Corporate Governance requirements by the Company.
5. We have carried out an examination of the relevant records of the Company in
accordance with the Guidance Note on Certification of Corporate Governance issued by the
Institute of the Chartered Accountants of India (the ICAI), the Standards on Auditing
specified under Section 143(10) of the Companies Act 2013, in so far as applicable for the
purpose of this certificate and as per the Guidance Note on Reports or
Certificates for Special Purposes issued by the ICAI which requires that we comply with
the ethical requirements of the Code of Ethics issued by the ICAI.
6. We have complied with the relevant applicable requirements of the Standard on
Quality Control (SQC) 1, Quality Control for Firms that Perform Audits and Reviews of
Historical Financial
Information and Other Assurance and Related
Services Engagements.
Opinion
7. Based on our examination of the relevant records and according to the information
and explanations provided to us and the representations provided by the Management, we
certify that the Company has complied with the conditions of Corporate Governance as
stipulated in regulations 17 to 27 and clauses (b) to (i) of regulation 46(2) and para C
and D of Schedule V of the Listing Regulations during the year ended 31st
March, 2022.
8. We state that such compliance is neither an assurance as to the future viability of
the Company nor the efficiency or effectiveness with which the Management has conducted
the affairs of the Company.
|
For Gupta & Dua |
|
Chartered Accountants |
|
Firm’s Registration No.: 003849N |
| Place: Kolkata |
Mukesh Dua |
| Date: 21st May, 2022 |
Partner |
| UDIN: 22085323AJNBRT5935 |
Membership No.: 085323 |
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