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Andhra Cements Ltd.
BSE: 532141 Sector: Industrials
NSE: ANDHRACEMT ISIN Code: INE666E01012
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Andhra Cements Ltd. (ANDHRACEMT) - Director Report
Company director report
The Directors of your Company are pleased to present the Eighty Third Annual Reporttogether with the Audited Accounts of the Company for the Year ended 31st March 2022.
Summary of the financial results of the Company for the year under report are as under:
(Rs. in lakhs)
Current Year Previous Year
Net Sales - 10
Other Income 61 145
PBIDT (3002) (2779)
Finance Cost 15836 12972
Depreciation 4658 4753
Profit/(Loss) before exceptional Items (23496) (20504)
Exceptional Item (134) -
Profit/(Loss) before Tax (23630) (20504)
Deferred Tax - -
Net Profit / (Loss) (23630) (20504)
Other Comprehensive Income - (28)
Total Comprehensive Income (23630) (20532)
The paid-up equity share capital as at 31st March 2022 is Rs. 293.52 Crores. Duringthe period under review your Company has not issued any shares with differential rightssweat equity shares and equity shares under employees stock option scheme. Your Companyhas also not bought back its own shares during the period under review.
No Dividend is recommended in view of the loss during the year and non-availability ofany carry forward surplus.
During the year under review Company's plants viz Durga Cement Works (DCW) and VisakaCement Works (VCW) were not operated due to some operational technical reasons and alsoin view of the massive outbreak of the COVID-19 pandemic. Further the plant operations ofthe Company are at halt due to shortage of working capital and consequential attachment ofstocks and bank accounts of the Company by the GST authorities and Power disconnection bythe concerned Electricity Board.
COMMENEMENT OF INSOLVENCY RESOLUTION PROCESS (CIRP)
During the year under review our Term Lender the Edelweiss ARC has published Notice forE-Auction Swiss Challenge Process for Assignment of Debt on 29th September 2021 andfixed the date of e-auction on 20th October 2021. Consequent to this process ofassignment of Debt our term lenders Edelweiss ARC and Karur Vysya Bank informed theCompany vide their letters dated 04.02.2022 and 03.02.2022 that their Total Debt of Rs.11170366326/- has been assigned and transferred to M/s Pridhvi Asset Reconstructionand Securitisation Company Ltd Hyderabad (PARAS) as per the Assignment Agreement dated02.02.2022. Later M/s Pridhvi Asset Reconstruction and Securitisation Company LtdHyderabad (PARAS) also intimated to the Company vide their letter dated 07.02.2022 thatthe Debt Assignment / Transfer of both the above mentioned parties was completed and alsoissued the debt recall notice to the Company. Pursuant to an application filed by PridhviAsset Reconstruction and Securitisation Company Limited before the Hon'ble NationalCompany Law Tribunal Amaravati Bench ("NCLT") against Andhra CementsLimited ("Corporate Debtor"/"Company") under Section 7 of theInsolvency and Bankruptcy Code 2016 read with the rules and regulations thereunder ("Code")NCLT has by virtue of the order dated April 26 2022 ("Order") in CP No.37/7/AMR/2022 commenced the corporate insolvency resolution process of the Company as perthe provisions of the Code and Mr. Nirav K Pujara has been appointed as the InterimResolution Professional of the Company ("IRP") as per the Code.Subsequently he was appointed as the Resolution Professional ("RP") bythe Committee of Creditors.
The provisions of Code read with the Order from the date of appointment of IRP w.e.fApril 26 2022: a) the management of the affairs of the Company shall vest in the IRP /RP; b) the powers of the board of directors shall stand suspended until the completion ofthe corporate insolvency resolution process of the Corporate Debtor or its liquidation asthe case may be and be exercised by the IRP / RP; c) the officers and managers of theCompany shall report to the IRP / RP and provide access to such documents and records ofthe Company as may be required by the IRP / RP; d) the financial institutions maintainingaccounts of the Company shall act on the instructions of the IRP / RP in relation to suchaccounts and furnish all information relating to the Company available with them to theIRP / RP.
KEY FINANCIAL RATIOS
Pursuant to Reg. 34(3) and 53(1) and Schedule V (B) of SEBI (LODR) Regulations 2015the Key Financial Ratios for the year 2021-22 are given below:
Sl. Particulars 31.03.2022 31.03.2021 Formula adopted
1 Debtors Turnover Ratio (Days) (#) 49197.22 365 Days/(Net Revenue/ Average Trade Receivables)
2 Inventory Turnover Ratio (Days) (#) 54064.22 365 Days/ Net Reveue/Average Inventories)
3 Interest Coverage Ratio (0.49) (0.58) (Profit before Tax +Interest)/(Interest + Interest Capitalised)
4 Current Ratio 0.01 0.05 Current Assets/(Total Current Liabilities-Security Deposits payable on demand-Current maturities of Long Term Debt)
5 Debt-equity Ratio (*) (*) Total Debt/ Total Equity
6 Operating Profit Margin Ratio (#) (270.61) EBITDA/Niet Revenue
7 Net Profit Margin Ratio (#) 1996.74) Net Profit/Net Revenue
8 Return on Networth (**) (**) Total Comprehensive Income/Average Networth
(#) Since Net Sales Revenue is zero these ratios cannot be calculated. (*) Sinceequity is negative ratio cannot be calculated.
(**) Since Netwoth is negative ratio cannot be calculated a. EBITDA denotes Profitbefore Interest+Tax+Depreciation. b. Increase in Debtor Turnover Ratio is on account ofreduction in Sales. c. Reduction in Interest Coverage Ratio is due to reduction in Salesand Profit. d. Current Ratio is reduced as current liability has increased due toreduction in Sales and Profit.
As per the provisions of the Companies Act 2013 and Regulation 34 of LODR Companiesare required to prepare financial statements to be laid before the Annual General Meetingof the Company. Accordingly the financial statements along with the Auditors' Reportthereon form part of this Annual Report.
As per section 136(1) of the Companies Act 2013 the Financial Statements are availableat the Company's website i.e www. andhracements.com.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year under report the following changes took place in the Board of theCompany:
1. Shri Pankaj Gaur and Smt Manju Sharma Directors would retire by rotation at theensuing Annual General Meeting and being eligible they offer themselves forre-appointment. Shri K.V. Rajendran and Shri Suresh Chand Rathi were appointed asDirectors in the capacity of non-executive Independent Directors at the AGM held on29.09.2021. Shri R.B Singh Director submitted resignation and he ceased to be a Directorw.e.f 06.10.2021 and Shri S.D. Nailwal was appointed as Additional Director in thecapacity of non-executive and non-independent Director of the Company by the Board w.e.f11.10.2021.
2. During the year under report the Board Meet 6 times the details whereof are givenin Report on Corporate
Governance. The meetings of Board of Directors were held on 27.05.2021 26.06.202114.08.202111.10.2021 13.11.2021 and 14.02.2022.
3. All Independent Directors have given declaration that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and Regulation16(1)(b) and 25(1) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
4. Pursuant to the provisions of the Companies Act 2013 and SEBI (LODR) Regulations2015 the Board has carried out an annual performance evaluation of its own performancethe Directors individually as well as the evaluation of the Committees constituted by it.The manner in which the formal annual evaluation has been carried out has been explainedin the Report on Corporate Governance.
5. The Board has on the recommendation of the Nomination & Remuneration Committeeadopted a policy for selection and appointment of Directors Senior Management and theirremuneration. Brief features of the said Policy are: a) Nomination and RemunerationCommittee shall formulatethecriteriafordeterminingqualifications positive attributes andindependence of Director; b) Nomination and Remuneration Committee shall identify personswho are qualified to become Director and persons who may be appointed in Key Managerialand Senior Management Position;
11 c) While selecting Independent Directors the Nomination and RemunerationCommittee shall identify persons of integrity who possess relevant expertise andexperience required for the position; d) Non-executive/Independent Director may receiveremuneration by way of sitting fees for attending meetings of Board or Committee thereofas amount as may be approved by the Board of Directors within the limits prescribed underthe Companies Act 2013 and the rules made thereunder provided that the amount of suchfees shall not exceed Rs. One lakh per meeting of the Board or Committee or such amount asmay be prescribed by the Central Government from time to time. The sitting fee forIndependent Directors and Women Directors shall not be less than the sitting fee payableto other Directors; e) An Independent Director shall not be entitled to any stock optionof the Company; f) Other employees of the Company shall be paid remuneration as per theCompany's HR policies. The breakup of the pay scale and quantum of perquisites includingemployer's contribution to PF pension scheme medical expenses etc. shall be as per theCompany's HR Policy.
The Company shall reimburse actual expenditure incurred by the Directors in theperformance of their duties as per the rules and policies of the Company.
Remuneration of other employees shall be reviewed/decided on an annual basis or earlierif deemed necessary based on performance appraisal of individual employees taking intoaccount several factors such as job profile qualifications seniority experiencecommitment including time commitment performance and their roles and duties in theorganization. g) The age term of appointment and retirement of ManagingDirector/Whole-time Director shall be determined in accordance with the provisions ofCompanies Act 2013 read with Rules made thereunder;
h) Managing Director/Whole-time Director and Key Managerial Personnel shall be paid theremuneration within the overall limit prescribed under the Companies Act 2013 and theRules made thereunder as recommended by the Nomination and Remuneration Committee subjectto the approval of the Board;
i) The Company shall provide suitable training to Independent Directors to familiarizethem with the Company their roles rights responsibilities in the Company nature of theIndustry in which the company operates business model of the Company etc;
The Company has received necessary declarations from all the Independent Directorsunder Section 149(7) of the Companies Act 2013 that they meet the criteria ofindependence as provided in Section 149 (6) of the Companies Act 2013. IndependentDirectors have complied with the Code for Independent Directors prescribed in Schedule IVof the Companies Act 2013. As required under Regulation 25(7) of LODR the Company hasprogrammes for familiarization for the Independent Directors.
Board Evaluation: Pursuant to Section 134(3)(p) of the Companies Act 2013 andRegulation 25(4) of LODR Independent Directors have evaluated the quality quantity andtimeliness of the flow of information between the management and the board performance ofthe Board as a whole and its Members and other required matters. Pursuant to Regulation17(10) of LODR Board of Directors have evaluated the performance of Independent Directorsand observed the same to be satisfactory and their deliberations beneficial inBoard/Committee Meetings.
The Company had formulated a code of conduct for the Directors and Senior Managementpersonnel and the same has been complied.
All Related Party Transactions that were entered into during the financial year were onan arm's length basis and were in the ordinary course of business. During the year theCompany had not entered into any contract/ arrangement/ transaction with related partieswhich could be considered material in accordance with the policy of the Company onmateriality of related party transaction.
The policy on materiality of Related Party Transactions and dealing with Related PartyTransactions as approved by the Board may be accessed on the Company's website at www.andhracemens.com.
The details of Related Party Transactions as required under IND AS-24 are provided inthe accompanying financial statements forming part of this Annual Report. Form AOC- 2pursuant to Section 134 (3)(h) of the Companies Act 2013 read with Rule 8(2) of theCompanies (Accounts) Rules 2014 is set out as "Annexure-A" to thisReport.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant and material orders passed by the Regulators / Courts whichwould impact the going concern status of the Company and its future operations except theOrder passed by the Honble NCLT Amaravati Bench Hyderabad dated 26.04.2022 for theCommencement of Insolvency Resolution Process (CIRP) and appointment of IRP. This order isaccessed on the Company's website at www.andhracemens.com.
1. Statutory Auditors
As the members are aware in accordance with the provisions of Section 139 of theCompanies Act 2013 and the Rules made there under M/s. M/s Dass Gupta & AssociatesChartered Accountants (Firm Registration No. 000112N) were appointed as StatutoryAuditors of the Company in the 80th Annual General Meeting (AGM) for a period of Fiveconsecutive years till the conclusion of 85th AGM of the Company to be held in the year2024. The Company has obtained a written consent and a certificate from the StatutoryAuditors to the effect that their appointment if ratified would be in accordance withthe conditions as prescribed and they fulfill the criteria laid down in Section 141 of theCompanies Act 2013.
Based on the recommendations of the Audit Committee the Board has recommended theratification of appointment of M/s. Dass Gupta & Associates Chartered Accountants asStatutory Auditors of the Company for the Financial Year 2022-23 and to hold office tillthe conclusion of the 85th Annual General Meeting to be held in the year 2024 subject toratification of their appointment in every AGM.
2. Cost Auditors
For the Financial Year 2022-23 the Board of Directors of the Company have on therecommendation of Audit Committee appointed M/s. J.K. Kabra & Associates CostAccountants (Firm Regn No. 00009) Cost Auditors of the
Company for auditing the Cost Records relating to the product 'Cement'. In thisregard they have submitted a certificate certifying their independence and their arm'slength relationship with the Company. The Resolution for ratification of theirremuneration has been included in the Notice for ensuing Annual General Meeting.
3. Secretarial Auditor
Secretarial Audit Report for the financial year ended on 31st March 2022 issued byM/s. Savita Jyoti Associates Company Secretaries in form MR-3 forms part of this reportand marked as "Annexure-B".
The said report does not contain any qualification or observation requiring explanationor comments from Board under section 134(3)(f)(ii) of the Companies Act 2013.
Pursuant to the provisions of Section 204 of the Companies Act 2013 read with Rule 9of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 onrecommendations of the Audit Committee the Board has appointed M/s. Savita JyotiAssociates a firm of Company Secretaries in Practice to undertake the Secretarial Auditof the Company for the financial year ended 31st March 2023.
The Directors of the Company wish to state that though the Statutory Auditors of theCompany has not given modified opinion on the Financial Statements of the Company for theyear ended 31st March 2022 but have expressed their view on Material Uncertainty Relatedto Going Concern and management response to the aforesaid view is given under:
Auditors /View Qualification Management's Reply
1. We draw attention to Note 35 to the financial statements which describe the status of Corporate Insolvency Resolution Process ("CIRP"). The Company has been referred to National Company Law Tribunal (NCLT) under Insolvency and Bankruptcy Code (IBC). NCLT has admitted the case vide Order No. CP (IB) No. 37/7/AMR/2022 Dated 26.04.2022 and Insolvency Resolution Professional (IRP) has also been appointed. The process is currently underway as on date of report and consequently effect in the financial statements will be given once the process is complete. These events indicate the existence of a material uncertainty that may cast significant doubt on the company's ability to continue as going concern. 1. With the appointment of Resolution Professional (RP) Company is hopeful to find suitable resolution and to continue as going Concern.
2. (a) In our opinion and based on our examination though the company is required to have and internal audit system under section 138 of the Act it does not have the same established for the year. 2. (a) & (b) With a view to have independent Internal audit Company appointed an external renowned CA Firm. However there were no operations during the year due to non-availability of Power at plants and also there were no significant
(b) the Company did not have an internal audit system for the period under audit. Internal Audit could not be carried out for the year under Audit.
Note: The Auditors have also drawn attention to some items under Emphasis of matterin their report. However they have not modified their opinion in respect of the saidmatters.
EXTRACT OF ANNUAL RETURN
In accordance with Section 92(3) of the Companies Act 2013 extract of the AnnualReturn in Form MGT-9 for the year ended 31st March 2022 and in accordance with Clause 22of Secretarial Standard on Report of the Board of Directors (SS4) a copy of Annual Returnfor the year ended 31st March 2022 has been placed on the website of the Company whichforms part of this Report.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
During the year under review there were no Loans Guarantees and Investmentsmade/given as per the provisions of Section 186 of the Companies Act 2013.
The Company has formulated a Risk Management Policy. The Risk Management Policy whichinter-alia: a) define framework for identification assessment monitoring mitigation andreporting of risks. b) ensures that all the current and future material risk exposures ofthe Company are identified assessed quantified appropriately mitigated minimized andmanaged i.e to ensure adequate systems for risk management.
The Risk Management policy of the Company is available at the Company's website.
In view of absence of required profit/net worth/turnover the provisions of theCompanies Act 2013 relating to Corporate Social Responsibility are not applicable to theCompany.
MATERIAL CHANGES AND COMMITMENTS
In terms of Section 134(3) (i) of the Companies Act 2013 except as disclosedelsewhere in this report no material changes and commitments which could affect theCompany's financial position have occurred between the end of the year and date of thisreport.
CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT
A Report on Corporate Governance as stipulated by Regulation 34(3) of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 forms part of this AnnualReport along with the required Certificate from the Practicing Company Secretaryconfirming compliance with conditions of Corporate Governance.
As required under Regulation 34(2)(c) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Management Discussion & Analysis Report onoperations and financial position of the Company has been provided in a separate sectionwhich forms part of this Annual Report.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134(5) of the Companies Act 2013 the Directorsbased on the representation received from the operating management certification by CEOand CFO to the Board of Directors and after due enquiry confirm that in respect of theAudited Annual Accounts for the year ended 31st March 2022 that: a) in the preparation ofthe annual accounts the applicable accounting standards had been followed and that therewere no material departures;
b) the Directors had in consultation with the Statutory Auditors selected suchaccounting policies and applied them consistently and made judgments and estimates thatare reasonable and prudent so as to give a true and fair view of the state of affairs ofthe Company for the year ended 31st March 2022 and the loss of the Company for thatperiod;
c) the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
d) the Directors had prepared the annual accounts on a going concern basis;
e) the Directors had laid proper internal financial controls to be followed and thatsuch internal financial controls were adequate and were operating effectively; and
f) Directors had devised proper systems to ensure compliance with the provisions of allapplicable laws that such systems were adequate and operating effectively.
WHISTLE BLOWER POLICY AND VIGIL MECHANISM
The Company has in terms of the provisions of Section 177(9) of the Companies Act 2013read with Rule 7 of the Companies (Meeting of Board and its Powers) Rules 2014 andRegulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 formulated Whistle Blower Policy and Vigil Mechanism for Directors and employeesunder which protected disclosures can be made by a whistle blower. (www.andhracements.com)
INTERNAL FINANCIAL CONTROL
The Internal Financial Controls with reference to financial statements as designed andimplemented by the Company are adequate. During the year under review no material orserious observation has been received from the Internal Auditors of the Company forinsufficiency or inadequacy of such controls.
The information about internal financial controls is set out in the ManagementDiscussion & Analysis Report which forms part of this Report.
The Company has not accepted or renewed any amount falling within the purview ofprovisions of Section 73 of the Companies Act 2013 ("the Act") read with theCompanies (Acceptance of Deposit) Rules 2014 during the year under review. Hence thedetails relating to deposits as also requirement for furnishing of details of depositswhich are not in compliance with Chapter V of the Act is not applicable.
However in accordance with the Modified Rehabilitation Scheme (MS-08) the Company issettling the claims lodged by fixed deposit holders. As per the provisions of Section 125of the Companies Act 2013 the company is in the process to transfer the Unclaimed Amountto the 'Investor Education and Protection Fund'.
REDEMPTION OF PREFERENCE SHARES
The payments against these shares are being made as and when claimed by the holders. Ithas not been possible to locate the addresses of the shareholders despite notices beingpublished in daily newspapers. No claims were received during the year. There is noliability for dividend on these shares.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 astatement showing the names and other particulars of the employees drawing remuneration inexcess of the limits set out in the said Rules forms part of this Annual Report and isprovided as "Annexure- D" in this report.
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are provided as "Annexure- D" to thisReport.
PARTICULARS OF ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGSAND OUTGO
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of The Companies (Accounts) Second Amendment Rules 2015 (as per the notificationdated 4th September 2015) is annexed herewith as "Annexure-E".
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMAN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has in place an Anti Sexual Harassment Policy in line with the requirementsof the Sexual Harassment of Woman at Workplace (Prevention Prohibition and Redressal)Act 2013. During the year under review no complaints were received by the Company.
FUTURE OUTLOOK
GDP growth for the year 2021-22 was around 8% which is more than previous years beforeCOVID-19 pandemic and expected to increase in the year 2022-23. However there are severaluncertainties which can have an impact in the projected GDP. The outlook of oil pricescontinue to be hazy both on upside and downside. It is expected that the demand for cementwould increase and will grow to a higher for the financial year 2022-23. Our plants arefully equipped and supported with grinding units at strategic locations. Our company willbe able to make suitable measures to take advantage of the present economic momentum inthe coming years.
The Sanctions imposed on countries from where India is imposing maximum crude wouldadversely affect the fuel price which would have negative impact on our manufacturing andtransportation cost. The Mines and Minerals (Development & Regulation) Amendment Act2015 (MMDR) has made the Limestone as a notified mineral. Pursuant to the amendment actgrant of mining lease for all notified minerals shall be through public auction process bythe respective State Governments. Since several State Governments do not have therequired geological data of availability of the reserves and they are not able to proceedwith the auction. This is delaying the process of getting fresh mining leases allotted.
The Company's products have always been perceived to possess superior quality standardsin the market and the company has been enjoying a high-level customer satisfaction index.Hence products will be sold at higher profitability and revenue. The Company is planningto introduce products catering to specific customers to meet their customized applicationsand requirements.
The Board places on record its sincere appreciation and gratitude to variousDepartments and Undertakings of the Central Government and State Governments FinancialInstitutions Banks and other authorities for their continued co-operation and support tothe Company. The Board sincerely acknowledges the faith and confidence reposed by theShareholders in the Company.
For and on behalf of the Board
K.V. RAJENDRAN
Place : New Delhi Erstwhile Chairman
Date : 30th May 2022 [DIN: 02468551]
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