UltraTech Cement Ltd
Directors Reports
Dear Shareholders,
Your Directors present the Twentieth Annual Report together with the Audited Accounts
of your Company for the year ended 31st March, 2020.
OVERVIEW AND THE STATE OF YOUR COMPANY'S AFFAIRS
2019-20 was a year of contrasting global economicscenarios. Marred by trade wars and
the weakening economicscenario in China, the global outlook remained weak during the
initial months. This was worsened by the slow growth in the manufacturing sectors, which
were either hit by a recession or close to it, across many countries.
In an effort to revive the economicgrowth, central banks offered support in the form of
favourable monetary policies, with some countries such as China, providing an additional
stimulus to enable fast-paced revival. The latter parTof CY19 saw some relief, with
diminished risk of a no-deal Brexit and as the uneasy trade hostilities between China and
the United States came to a halt. This was supported by easing of the financial
conditions, as stimulus provided by central banks began to filter through. While global
financial conditions started indicating signs of improvement in the second half of the
calendar year, rising debt levels posed a future threat to the economy.
The domesticeconomy also witnessed a slowdown in FY20 as the GDP growth rate was pegged
at 4.2%. This was primarily on accounTof weak demand across sectors, tightening of credit,
and the lingering effecTof previous policy measures. A key development, however, was the
decline in the prices of crude, oil and coal, on the back of moderation in global
economicactivities.
Several steps were taken to address the situation, including monetary easing by the
Reserve Bank of India throughout the fiscal year; introduction of reforms to improve ease
of doing business; steps to liberalise FDI; lower corporate income tax rates and
disinvestment plans by the GovernmenTof India among other measures.
The cement industry, after witnessing a healthy demand growth of ~13% in 2018-19,
exhibited slowdown with de-growth. Apart from the general economicslowdown, cement demand
was sluggish during H1FY20 post the general elections in April-May, 2019. H2FY20 witnessed
extended monsoons, low-capital expenditure on infrastructure and road activities, along
with financial stress in the NBFCand housing sectors. Though the demand started indicating
some signs of improvement since December, 2019, the momentum could not be sustained due to
the outbreak of the COVID-19 pandemic. This severely impacted construction activities,
which consequently resulted in the industry witnessing de-growth for the year, the first
time in the last two decades.
With anticipated pick-up in private investment, financial sector reforms and resolution
of stressed assets under the Insolvency and Bankruptcy Code, expected to contribute to
cleaning up of banks' balance sheets and positive interventions by the GovernmenTof India,
the outlook for fiscal 2020-21 was seen to remain largely positive. These initiatives,
coupled with the fact that the fundamentals of the Indian economy remain intact, were
expected to have a positive impacTon economicgrowth and demand for cement.
Just when the sector was reviving, the world was hit by the COVID-19 pandemic. With no
cure presently available, the virus has become one of the biggest threats to the global
economy.
India has been no exception to the impacTof COVID-19, which spread across the country
rapidly. In this unprecedented situation, the Government announced a nationwide lockdown
beginning from 25th March, 2020 to curb the spread of the virus. In line with
the Government's directive and to contain the impacTof the virus, manufacturing activities
across sectors came to a standstill. However, to mitigate hardship to the public, select
activities were allowed to operate from 20th April, 2020, after due compliance
with the lockdown guidelines and preparatory arrangements with social distancing in
offices, workplace, factories and establishments.
As a responsible corporate citizen, your Company has initiated various steps across the
country to fight the coronavirus outbreak. Our teams across our facilities in India are
working with Government authorities and the local administration to support the fight
against this pandemic. Collectively, it has helped more than half a million people. The
magnitude of work can be ascertained from the fact that the teams have so far provided
people with over 1.80 lakhs free meals, 0.50 lakh grocery kits, 6 lakhs masks and hand
sanitisers, and over 1 lakh medical PPEs, hand gloves and other items like soap,
disinfectants, etc. Alongside, online learning and wellness programmes have been organised
for the employees and business associates.
The nationwide lockdown, amid the coronavirus outbreak, will have a significant
near-term impacTon the cement industry. While the sector witnessed robust demand prior to
the lockdown, the event led to the closure of all major cement plants, including those of
your Company, and cessation of construction activities at the sites. This brought your
Company's cement dispatches to a complete halt. As a result, volumes were negligible
during the last week of March, 2020 and the whole of April, 2020.
Once the lockdown is fully relaxed, the migrant task force is expected to return from
their native towns and resume activity at the construction sites in about 10-15 days.
Similarly, the companies are also expected to take a week to ramp up the activities within
the plants post relaxation. Increase in Government spends on health and publicwelfare;
weak real estate and an overall slowdown in the economy is expected to reflect in a
subdued performance of your Company in the current financial year. Nonetheless, given your
Company's healthy credit profile, it is confidenTof its ability to weather the storm and
come out stronger.
It is against this backdrop, that we share your Company's performance during FY20.
BUSINESS PERFORMANCE
Production and Capacity Utilisation (grey cement):
| Particulars |
FY20 |
FY19 |
% change |
| Installed capacity in India (MTPA) |
111.35 |
109.35 |
2 |
| Production (MMT) |
76.57 |
77.87 |
(2) |
| Capacity Utilisation |
69% |
76% |
(6) |
MTPA – Million MetricTonnes Per Annum. MMT– Million MetricTonnes.
Cement production at 76.57 million tonnes in FY20 is lower by 2% as compared to 77.87
million tonnes in the previous year. This is mainly attributable to the de-growth in the
cement industry, witnessed after 20 years. Consequently, capacity utilisation was also
lower at 69% as compared to 76% last year.
During the year, your Company acquired the Cement Business of Century Textiles and
Industries Limited ("Century") haveing a capacity of 14.6 MTPA ("Century
Cement Business"). In terms of the order dated 3rd July, 2019 passed by
the National Company Law Tribunal, Mumbai Bench ("NCLT"), the Appointed Date for
the Scheme of Demerger amongst Century, your Company and their respective shareholders and
creditors ("Scheme of Demerger") was 20th May, 2018. Consequently,
your Company has restated its financial statements with effect from 20th May,
2018, to include the performance of the Century Cement Business.
Your Company also commissioned a 2.0 MTPA cement grinding capacity at Bara, Uttar
Pradesh, taking its total capacity in India to 111.35 MTPA, including 6.25 MTPA capacity
of its wholly owned subsidiary, UltraTech Nathdwara Cement Limited ("UNCL").
Your Company's consolidated capacity stands at 114.8 MTPA, including its overseas
operations, which makes it the 3rd largest cement player globally, excluding
China.
Sales Volume:
(Figures in MMT)
| Particulars |
FY20 |
FY19 |
% Change |
| DomesticSales |
76.40 |
79.34 |
(4) |
| Exports & Others |
2.36 |
3.02 |
(22) |
| Total Sales Volume |
78.76 |
82.36 |
(4) |
Domesticsales volume registered de-growth of 4%. This was mainly on accounTof lower
demand, attributable to the overall economicslowdown, general elections during Q1FY20,
extended monsoons, and the impacTof COVID-19.
FINANCIAL PERFORMANCE
(Rs. in crores)
|
Standalone |
Consolidated |
|
FY20 |
FY19 |
FY20 |
FY19 |
| Net Turnover |
40,033 |
39,234 |
41,476 |
40,904 |
| Domestic |
39,706 |
38,728 |
39,588 |
38,797 |
| Exports |
327 |
506 |
1,888 |
2,107 |
| Other Income |
1,343 |
1,262 |
1,297 |
1,168 |
| Total Expenditure |
31,997 |
32,920 |
32,841 |
34,262 |
| Profit before Interest, Depreciation and Tax (PBIDT) |
9,379 |
7,576 |
9,931 |
7,810 |
| Less: Depreciation |
2,455 |
2,321 |
2,702 |
2,451 |
| Profit before Interest and Tax (PBIT) |
6,924 |
5,255 |
7,229 |
5,360 |
| Interest |
1,704 |
1,648 |
1,986 |
1,778 |
| Profit before Impairment and Tax Expenses / share in profiTof |
5,220 |
3,606 |
5,244 |
3,582 |
| Associates |
|
|
|
|
| Stamp duty on acquisition of assets |
- |
(114) |
- |
(114) |
| Share in Profit / (Loss) of Associates and Joint Venture (neTof tax) |
- |
- |
(1) |
1 |
| Profit before Tax Expenses |
5,220 |
3,492 |
5,242 |
3,468 |
| Normalised Tax Expenses |
1,569 |
1,080 |
1,544 |
1,068 |
| Reversal of Deferred Tax Liability |
(1,805) |
- |
(2,112) |
- |
| Profit after Tax |
5,456 |
2,412 |
5,810 |
2,400 |
| Profit attributable to Non-controlling Interest |
- |
- |
(4) |
(3) |
| Profit attributable to Owner of the parent |
- |
- |
5,814 |
2,404 |
Net Turnover:
Your Company's Net Turnover at Rs. 40,033 crores is 2% higher than the previous year.
Other Income:
Other income is higher compared to the previous year due to higher income generated on
the funds deployed in money markets. All investments are in AAA rated debt instruments
only.
Operating Profit (PBIDT) and Margin:
PBIDT for the year at Rs. 9,379 crores is 24% higher than the previous year. Operating
margin improved due to savings in operating costs.
Cost Highlights:
(i) Energy Cost:
The o verall energy cost declinedRs. 8% 1,065/t tofrom
Rs. 985/t, mainly due to a drop in fuel prices. Imported pet coke prices declined 18%
from US$ 102/t to US$ 84/t. Similarly, indigenous pet coke prices were also down 17%.
Furthermore, your Company continuously strives towards efficiency improvement. The key
initiatives in this regard are:
- During the year, your Company commissioned 33MW of Waste Heat Recovery System
("WHRS") capacity, which is under stabilisation and its full benefit will be
realised from FY21. Your Company will commission another 27MW of WHRS capacity during this
year, taking the total WHRS capacity to 145 MW catering to ~13% of your Company's current
total power requirement;
- Your Company plans to increase its solar and wind power capacity from 99 MW to >
350 MW by the end of FY22 and cater to ~7% of the total power requirement;
- Use of low-cost fuel viz. industrial waste;
- Impr oved thermal power plant efficiency by reducing auxiliary consumption power.
(ii) Input material cost:
Raw materials cost rose marginally from Rs. 491/t to Rs. 493/t due to an increase in
additive prices and impacTof additional royalty on the transfer of limestone mines to your
Company's name, subsequent to the acquisition of the Century Cement Business.Your Company
is working on improving share of the blended and premium products, which will improve the
overall profitability.
(iii) Freight and Forwarding expenses:
Logis tics cost reduced Rs. 1,187/t tofrom Rs. 1,144/t due to a reduction in lead
distance and exemption from busy season surcharge on railway freight for an extended
period. Diesel prices were also lower by 4% over the previous year. Moreover, the
integration of acquired assets supported in realising synergies, thereby lowering
logistics costs.
(iv) Employee costs:
Employee costRs. stands 2,336 crores as compared toat Rs. 2,158 crores in the previous
year. This was on accounTof normal annual increments and increase in the number of
employees from the acquisition of the Century Cement Business.
Depreciation:
Depreciation for the year at Rs. 2,455 crores is higher by
Rs. 134 crores over the previous year, mainly on accounTof the impacTof implementation
of new Indian Accounting Standard (IndAS) 116 Leases and full year depreciation relating
to the acquired Century Cement Business.
Finance Cost:
Increase in finance cost from Rs. 1,648 crores to Rs. 1,704 crores relate to the full
year impacTof debt taken for acquiring UNCL, full year impacTon borrowings transferred
alongwith the Century Cement Business, and the impacTof IndAS 116 Leases.
Your Company does not accept any fixed deposits from the publicfalling under Section 73
of the Companies Act, 2013 ("the Act") and the Companies (Acceptance of
Deposits) Rules, 2014.
Credit rating:
Your Company has adequate liquidity and a strong Balance Sheet. CRISIL and India
Ratings and Research have reaffirmed their credit rating as CRISIL AAA and IND AAA for
Long Term and CRISIL A1+ and IND A1+ for Short Term, respectively.
Income Tax:
Normalised income tax expenses increased in line with an increase in taxable income.
During the year, your Company reversed its opening deferred tax liability amounting to Rs.
1,805 crores due to a reduction in the income tax rate.
Net Profit:
Normalised Profit after Tax increased by 51% from Rs. 2,412 crores to Rs. 3,650 crores.
The Profit after Tax, taking into account the reversal of deferred tax liability, stands
at
Rs. 5,456 crores.
Significant changes in key financial ratios, along with detailed explanations:
| Particulars |
FY20 |
FY19 |
% Change |
| Debtors Turnover (Days) |
17 |
22 |
(23) |
| Inventory Turnover (Days) |
44 |
42 |
4 |
| Interest Coverage Ratio |
4.31 |
3.19 |
35 |
| Current Ratio |
1.01 |
1.04 |
(3) |
| Debt Equity Ratio (Gross) |
0.48 |
0.62 |
(23) |
| Debt Equity Ratio (Net) |
0.32 |
0.52 |
(38) |
| Operating Profit Margin (%) |
22 |
18 |
4 |
| Net Profit Margin (%) – |
9 |
6 |
3 |
| Normalised |
|
|
|
| Return on Net Worth (%) |
10 |
8 |
2 |
Cash Flow Statement:
(Rs. in crores)
| Particulars |
FY20 |
FY19 |
| Sources of Cash: |
|
|
| Cash from operations |
7,843 |
6,325 |
| Non-operating cash flow |
345 |
309 |
| Proceeds from issue of share capital |
3 |
5 |
| Increase in borrowings (net) |
- |
228 |
| Decrease in working capital |
433 |
- |
| Total |
8,624 |
6,867 |
| Uses of Cash: |
|
|
| Net capital expenditure |
1,595 |
1,632 |
| Increase in investments |
2,719 |
2,677 |
| RepaymenTof borrowings (net) |
2,468 |
- |
| RepaymenTof lease liability including interest thereof |
112 |
- |
| Purchase of Treasury Shares (net) |
3 |
81 |
| Interest |
1,631 |
1,575 |
| Dividend |
380 |
346 |
| Increase in working capital |
- |
209 |
| Total |
8,907 |
6,520 |
| Increase / (Decrease) in cash & cash equivalents |
(283) |
347 |
Sources of Cash
Cash from operations:
Cash from operations was higher compared to the previous year on accounTof higher sales
realisation and lower operating costs.
Non-Operating Cash Flow:
Cash from other activities was higher due to higher income on liquid investment due to
an increase in average treasury size.
Decrease in Working Capital:
Working capital decreased on accounTof reduction in receivables.
Uses of Cash
Net Capital Expenditure:
Your Company spent Rs. 1,595 crores on various capex during the year, primarily
towards:
- WHRS at various locations;
- Bar a Grinding Unit;
- Bicharpur Coal Block;
- Other normal return-based schemes, regulatory capex, as well as plant modernisation
and maintenance.
Increase in Investments:
Investment increased on accounTof higher operating cash flows, which resulted in an
increase in liquid investment during the year.
RepaymenTof Borrowing:
During the year, your Company has repaid the high-cost, long-term debt amounting to Rs.
1,982 crores transferred from Century as parTof the acquisition of its cement business and
also repaid the short-term loans as per due dates. Furthermore, your Company has repaid
the long-term rupee loan of Rs. 927 crores linked to overall cash flow generated during
the year. This has resulted in improved Net Debt: Equity ratio and Net Debt / EBITDA
ratio.
Purchase of Treasury Shares:
The UltraTech Employee Welfare Trust ("the Trust") constituted in terms of
your Company's Employee Stock Option Scheme, 2018 ("ESOS - 2018") acquired
equity shares of your Company to be allotted to eligible employees under ESOS - 2018. As
per IndAS, the purchase of own equity shares is treated as treasury shares during the year
in which the Trust has purchased additional shares for new grants allotted to eligible
employees.
Transfer to General Reserve:
Your Company proposes to transfer an amounTof Rs. 5,000 crores to the General Reserves.
DIVIDEND
Your Directors have recommended a dividend of Rs. 13/- per equity share (as compared to
Rs. 11.50/- per equity share in the previous year) of Rs. 10/- each for the year ended 31st
March, 2020. In terms of the provisions of the Finance Act 2020, dividend shall be taxed
in the hands of shareholders at applicable rates of tax and your Company shall withhold
tax at source appropriately.
In terms of the provisions of Regulation 43A of the Securities and Exchange Board of
India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing
Regulations"), your Company has formulated a dividend distribution policy. The policy
is given in Annexure I to this Report. It is also accessible from your Company's
website viz. www.ultratechcement.com.
Unclaimed dividend for the year ended 31st March, 2012 aggregating to Rs.
1.12 crores has been transferred to the Investor Education and Protection Fund
("IEPF") in accordance with the statutory requirements. In line with the
statutory requirements, your Company has transferred to the crediTof the IEPF set up by
the GovernmenTof India, equity shares in respecTof which dividend had remained unpaid /
unclaimed for a period of seven consecutive years within the timelines laid down by the
Ministry of Corporate Affairs, GovernmenTof India. Unpaid / unclaimed dividend for seven
years or more has also been transferred to the IEPF, pursuant to the requirements under
the Act.
CAPITAL EXPENDITURE PLAN
The Board of Directors of your Company had approved capex of Rs. 940 crores during the
year for making premium products, with an increase in its grinding capacities in Bihar and
West Bengal by 0.6 MTPA each and a new grinding uniTof 2.2 MTPA in Odisha. While work on
the projects in Bihar and West Bengal is in progress, work relating to setting up of the
new grinding unit in Odisha has been puTon hold in the wake of the coronavirus outbreak.
With a view to conserve cash, your Company has reduced the overall capex cash flow plan to
Rs. 1,000 crores for FY21, largely related to grinding units in eastern India, the 2nd
phase of Bara Grinding Unit, Bicharpur Coal Block, ongoing WHRS, as well as other
return-based capex schemes and plant maintenance and modernisation capex.
CORPORATE DEVELOPMENT
Acquisition of the Century Cement Business
The Scheme of Demerger for acquisition of the Century Cement Business was made
effective from 1sToctober, 2019. Your Company's financials were restated from
20th May, 2018, to include the financials of the acquired Century Cement
Business in terms of the NCLTorder sanctioning the Scheme of Demerger. In terms of the
Scheme of Demerger, your Company has allotted 13,961,960 equity shares of Rs. 10/- each to
the shareholders of Century as on 14th October, 2019, being the Record Date
fixed by Century in terms of the Scheme of Demerger.
With this acquisition, your Company's cement manufacturing capacity stands augmented to
114.8 MTPA, including its overseas capacity. This makes your Company the 3rd
largest cement Company in the world, outside of China, and also the largest cement Company
in the 2nd largest market, globally. It is also the only Company in the world
to have a capacity of over 100 MTPA in a single country, outside of China. This
acquisition has further strengthened your Company's leadership position in the Central,
Eastern and Southern Indian markets.
The acquired plants are being rapidly integrated with the systems and processes of your
Company and have achieved capacity utilisation of over 80% during the quarter ended March,
20. Further, a cost reduction plan has been implemented to streamline the operations and
bring them in line with the existing standards. During Q4FY20, 65% of sales from the
acquired Century Cement Business plants was made under the UltraTech brand. Brand
integration is underway and is expected to reach over 80% by Q3FY21. Q4FY20 also witnessed
a remarkable improvement in the operating margin. The overall integration is likely to be
completed by the end of Q3FY21. Given your Company's vast experience in integrating
acquired units and bringing them to its operating standards, your Company is confidenTof
replicating the same at the acquired Century Cement Business plants.
Bangladesh Operations
During the year, your Company's wholly owned subsidiary, UltraTech Cement Middle East
Investments Limited, divested its entire shareholding in Emirates Cement Bangladesh
Limited and Emirates Power Company Limited to HeidelbergCement Bangladesh Limited at a
final Enterprise Value of BDT equivalenTof US$ 30.2 million.
UltraTech Nathdwara Cement Limited ("UNCL")
UNCL is fully integrated with your Company's systems and processes. The plants have
achieved optimal efficiencies and are PBT accretive.
CORPORATE GOVERNANCE
Your Directors reaffirm their continued commitment to good corporate governance
practices. During the year under review, your Company was in compliance with the
provisions relating to corporate governance as provided under the Listing Regulations. The
compliance report is provided in the Corporate Governance section of the Annual Report and
the auditor's certificate on compliance with the conditions of corporate governance of the
Listing Regulations is provided in Annexure II to this Report.
EMPLOYEE STOCK OPTION SCHEMES
ESOS - 2006
The Nomination Remuneration and Compensation Committee ("the NRCCommittee")
allotted 1,632 equity shares of Rs. 10/- each of your Company to option grantees upon
exercise of options.
ESOS – 2013
14,890 Stock Options and 14,948 Restricted Stock Units ("RSUs") vested in
eligible employees. The NRCCommittee allotted 18,793 equity shares of Rs. 10/- each of
your Company upon exercise of stock options and RSUs by the option grantees.
ESOS – 2018
During the year, the NRCCommittee:
- granted 3,320 stock options at an exercise price Rs. 4,120.45 per stock option,
exercisable into the same number of equity shares of Rs. 10/- each, and 917 RSUs at an
exercise price of Rs. 10/- each on 23rd December, 2019; - gr anted 12,620 stock
options at an exercise price Rs. 4,299.90 per stock option, exercisable into the same
number of equity shares of Rs. 10/- each, and 3,482 RSUs at an exercise price of Rs. 10/-
each on 4th March, 2020 and, - v ested 37,519 stock options to eligible
employees, subject to the provisions of the ESOS – 2018, statutory provisions as may
be applicable from time to time and the rules and procedures seTout by your Company in
this regard.
Applications were received during the year from some option grantees for transfer of
1,286 equity shares of your Company in their account, from the Trust account, of which
1,163 equity shares have been transferred.
In terms of the provisions of the Securities and Exchange Board of India (Share Based
Employee Benefits) Regulations, 2014, the details of the stock options and RSUs granted
under the aforementioned Schemes are available on your Company's website viz. www.ultratechcement.com.
A certificate from the Statutory Auditor on implementation of your Company's Employee
Stock Option Schemes will be available at the ensuing Annual General Meeting
("AGM") for inspection by the Members.
SHARE CAPITAL
During the year, your Company allotted 20,425 equity shares of Rs. 10/- each to option
grantees upon exercise of stock options and RSUs in terms of ESOS-2006 and ESOS-2013. It
also allotted 13,961,960 equity shares of Rs. 10/- each to shareholders of Century in
terms of the provisions of the Scheme of Demerger. As a result, the paid-up equity share
capital of your Company stood at Rs. 2,886,251,050 comprising of 288,625,105 equity shares
of Rs. 10/- each.
AWARDS
Your Company's constant endeavour to optimise operational procedures and build greater
efficiencies continue to win recognition and prestigious awards, some of which conferred
during the year are:
- A wards of Mines Safety Week 2019-20 - Awarpur Works;
- National Safety Awards 2019 (MSME) by National Safety Council – Ready Mix
Concrete;
- Gr een Pro Certification from the Confederation of Industry's (CII) - Ready Mix
Concrete;
- 1st Kaizen Award under Environment category_—"Lignite based TPP
Fly Ash utilisation" – Sewagram Cement Works ("SCW");
- 2nd Kaizen Award under 5S & Safety - Installation of Anti-collision
Radar System for stacker and reclaimer in raw material handling area – SCW;
- 3rd Championship Award under Digitisation / New Technology -
"Installation of ExperToptimiser system to improve cement uniToperations
stability" – SCW;
- Met alliferous Mines Safety Week – 2019 – Cement Works.
RESEARCH AND DEVELOPMENT
In its endeavour to meet the current and futuristicrequirements of customers and
provide unmatched scientificand technical support to the Manufacturing Units, Key Account
Customers, and Marketing, Ready Mix Concrete and Corporate Cells, heightened focus was
placed by your Company's Research and Development ("R&D") on the
developmenTof new products, processes and technologies.
With a view to remain competitive and make desirable scientificand technical progress,
all global developments in the field of cement, concrete and construction materials were
actively tracked.
Your Company considers Customers, Sustainability, Innovation, Quality and Profitability
as the five pillars of all R&D projects, which have constantly contributed to the
optimisation of processes and helped your Company surpass challenging bottlenecks.
The five pillars have also been instrumental in the preservation of natural raw
materials and the promotion of alternative fuels and raw materials, while complying with
the quality and environmental norms.
Using these pillars as the cornerstone to its R&D's success, your Company has
developed premium products that extend the life of limestone deposits, reduce limestone
consumption, save fossil energy, while ensuring top-notch functionality.
New products like masonry cement, a series of ultra-lightweight concrete as per ISO
standards, high-impact resistance concrete for special applications and concrete
admixtures have also been developed by your Company's Indian R&D.
While the pillars have helped your Company explore new products and ways of preserving
the environment and non-renewable resources, they have also encouraged all stakeholders to
utilise the resources more responsibly, pushing everyone towards improved environmental
sustainability.
Your Company's R&D is accredited by National Accreditation Board for Testing and
Calibration Laboratories ("NABL"), making it future-ready, and enhancing its
capabilities in Pollution Abatement and Carbon Capture, Nanotechnology of Cement and
Concrete, Concrete Durability, Concrete Rheology, 3D Printable Concrete, Geopolymer
Concrete, Modelling Cement and Concrete Hydration and Chemical Admixtures for Cement and
Concrete. Your Company's
R&D has also collaborated with Aditya Birla Science and Technology Company Private
Limited ("ABSTCPL") and Academia and is represented by it in the national and
international scientificand technical forums.
SUSTAINABILITY
It has always been your Company's endeavour to ensure environmental conservation,
remain sensitive towards societal wellbeing and deliver sustained profits. Given its quest
to become better stewards of natural resources, your Company consistently adopts new
cleaner and greener technology, and constantly drives its plants and processes towards
enhanced energy efficiency.
With its thrusTon use of alternative fuels, your Company relentlessly strives to reduce
consumption of fossil fuels by substituting it with wastes from other industries. These
efforts have resulted in your Company's fuel requirements being met through an increased
use of alternative fuels. Your Company also continues to increase the use of renewable
energy as a parTof its energy mix, increasing its consumption by more than 50% as compared
to the previous year. It is currently exploring further opportunities for enhancing the
use of green energy in the form of solar and wind power. During the year, your Company
reduced its intensity by 19.14% compared to FY06 and has overachieved the energy
efficiency target set by the GovernmenTof India for the first Perform, Achieve and Trade
("PAT") cycle.
Your Company is a founding member of Global Cement and Concrete Association
("GCCA") and has been playing a key role in driving sustainability and
innovation agenda at the global and national level. It also featured amongst the top 10
companies on Dow Jones Sustainability Index ("DJSI") in the construction
material category. This disclosure has helped your Company to benchmark itself against
world best companies in sustainability performance, an accomplishment that will be used to
identify further opportunities to excel in the area.
As parTof its continuing initiatives for sustainable growth, your Company has completed
Life Cycle Assessment ("LCA") studies for four products. It is amongst a few
companies to conduct the LCA study, and has used this to identify hotspots over the value
chain and reduce environmental impact. This year, your Company has considered carbon price
at US$ 10 per ton of CO2, which has enabled it to evaluate the impact
of any project / capex on the environment and support eco-friendly decisions. In
addition, your Company launched
Project Jagruti, its Sustainability Culture Building Program, under which
sustainability awareness sessions were held across the manufacturing locations, covering
more than 650 employees.
HUMAN RESOURCES
The employees of your Company are the pillars of its success and growth. Your
Company's human capital has been at the helm of its success through all its endeavours
be it expansion through greenfield and acquisitions, building newer markets and entry into
new products. Innovation is encouraged as a way of life thus creating many small
improvements and breakthroughs alike. Your Company continued to invest in building
talent from within, through a structured process of talent identification and
development, in preparation for roles required by your Company, as it grows. During the
current global pandemic, employees have been working on various social-help initiatives in
supporting the community through the crisis.
Your Company's employee strength stood at 21,592 as on 31st March, 2020.
(2019: 19,557)
SAFETY
For your Company, safety is non-negotiable and an integral componenTof its operations.
It has been relentlessly striving to take it to the next level of maturity and realise the
organisational goal of "zero harm."
Your Company has adopted the proven Plan-Do-Check-Act ("PDCA") cycle to drive
safety initiatives. As far as safety governance is concerned, the Occupational Health and
Safety Board, chaired by your Company's Managing Director, reviews the overall
effectiveness of safety management systems once every two months to ensure its functional
efficiency. Additionally, eight sub-committees headed by Cluster Heads and Corporate
Function Heads and six sub-committees headed by Unit Heads, periodically review
area-specificinitiatives and progress of the safety protocols set by your Company.
Despite attaining maturity in the area of behaveioural safety, employees are still
encouraged to report unsafe behaveiours of fellow employees and workmen across all Units
which help in continual rectification of the "at-risk" behaveiour of people as
well as reinforcemenTof positive safety behaveiour at the workplace. Around 300 employees
across all Units, including the Century Cement Business plants and UNCL, have championed
15 safety standards through the "Train the
Trainer" programme. These employees, in turn, can serve as excellent in-house
resources to impart further training to a larger number of employees.
Your Company initiated the Second Party Safety Audit ("SPSA") Programme,
wherein, cross-functional teams of line managers from other Units critically audit safety
practices at the host Unit. SPSA aims at evaluating the effectiveness of safety
initiatives being taken by the Unit as well as facilitates the sharing of safety best
practices amongst Units. This has helped your Company to reduce safety incidents
significantly. Additionally, your Company also commenced the practice of Surprise Safety
Audit to get a real insight into the safety culture of the Unit being audited.
In order to mitigate risk of process-related, high-impact incidents, your Company
conducted Hazard & Operability ("HAZOP") studies for its various Alternative
Fuel and Raw Materials ("AFR") handling facilities by an expert third-party
agency and is taking utmost care in implementing the HAZOP study recommendations.
Through all the above initiatives and a proper safety governance structure, your
Company ensures the safety of its assets, employees, and stakeholders.
CORPORATE SOCIAL RESPONSIBILITY
In terms of the provisions of Section 135 of the Act read with the Companies (Corporate
Social Responsibility Policy) Rules, 2014, the Board of Directors of your Company has
constituted a Corporate Social Responsibility ("CSR") Committee which is chaired
by Mrs. Rajashree Birla. Other Members of the Committee are Mrs. Sukanya Kripalu,
Independent Director; Mr. K. K. Maheshwari, Vice Chairman and Non-Executive Director and
Dr. Pragnya Ram, Group Executive President-CSR, who is a permanent invitee to the
Committee. Your Company also has in place a CSR Policy which is available on your
Company's website viz. www.ultratechcement.com.
Your Company's CSR activities are focused on Social Empowerment and Welfare,
Infrastructure Development, Sustainable Livelihood, Health Care and Education. Various
activities across these segments have been initiated during the year around its plant
locations and the neighbouring villages. During the year, Rs. 124.51 crores was spent for
the purpose of CSR, which constituted over 3.50% of the average net profits of the last
three years.
A reporTon CSR activities is attached as Annexure III forming parTof this
Report.
SUBSIDIARY, JOINT VENTURE OR ASSOCIATE COMPANIES
The audited financial statements of your Company's subsidiaries and joint ventures viz.
Dakshin Cements Limited, Harish Cement Limited, Gotan Lime Stone Khanij Udyog Private
Limited, Bhagwati Lime Stone Company Private Limited, UNCL, UltraTech Cement Middle East
Investments Limited, UltraTech Cement Lanka (Pvt.) Limited, PT UltraTech Mining Indonesia
and PT UltraTech Investments Indonesia and their related information are available on your
Company's website viz. www.ultratechcement.com and also available for inspection.
Any Member who is interested in obtaining a copy of the audited financial statements of
your Company's subsidiaries may write to the Company Secretary.
An application has been made with the Registrar of Companies, Hyderabad
("RoC") in terms of the provisions of the Act and Rules made thereunder for
striking off / removal of the name of Dakshin Cements Limited, one of your Company's
subsidiary, from the register of companies maintained by the RoC.
In accordance with the provisions of Section 129(3) of the Act read with the Companies
(Accounts) Rules, 2014, a reporTon the performance and financial position of each of the
subsidiaries, joint venture or associate companies is attached as Annexure IV to
this Report.
PARTICULARS OF LOAN, GUARANTEE AND INVESTMENT
Details of Loan, Guarantee and Investment 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.
ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE
Information on conservation of energy, technology absorption and foreign exchange
earnings and outgo, required to be disclosed pursuant to Section 134(3)(m) of the Act read
with the Companies (Accounts) Rules, 2014, is given in Annexure V to this Report.
PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other details as required under Section
197(12), read with the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014, are attached as Annexure VI. In accordance with the provisions of the
aforementioned Section, the names and other particulars of employees drawing remuneration
in excess of the limits seTout in the aforesaid Rules forms parTof this Report. However,
in line with the provisions of Section 136(1) of the Act, the Report and Accounts as
seTout therein, are being sent to all Members of your Company, excluding the aforesaid
information. Any Member, who is interested in obtaining these particulars, may write to
the Company Secretary.
BUSINESS RESPONSIBILITY REPORT
In terms of Regulation 34(2)(f) of the Listing Regulations, a Business Responsibility
Report forms parTof the Annual Report.
CONTRACT AND ARRANGEMENT WITH RELATED PARTIES
During the financial year, your Company entered into related party transactions
completely on an arm's length basis and in the ordinary course of business. There are no
material transactions with any related party, as defined under Section 188 of the Act read
with the Companies (Meetings of Board and its Powers) Rules, 2014. All related party
transactions have been approved by the Audit Committee of your Company and are reviewed by
iTon a periodicbasis. The policy on Related Party Transactions, as approved by the Audit
Committee and the Board, is available on your Company's website viz. www.ultratechcement.com.
The details of contracts and arrangements with related parties of your Company for the
financial year ended 31st March, 2020 is given in Note No. 40 to the standalone
financial statements of your Company.
RISK MANAGEMENT
Risk is an integral and unavoidable componenTof business, and given the challenging and
dynamicenvironmenTof your Company's operations, it is committed to proactively managing
risk and accomplishing its ambitious goals. Though risks cannot be completely eliminated,
an effective risk management plan ensures that risks are reduced, avoided, retained or
shared. To maintain oversighTof your Company's risks, the Risk Management and
Sustainability Committee of your Company is mandated to review its Enterprise Risk
Management Framework (including plan/process), analyse the risks more deeply and define
risk mitigation actions, where necessary.
Through the Annual Risk Report processes, which are based upon Business Environment,
Operational Controls and Compliance Procedures, your Company aims to assess and prioritise
risks, according to their significance and likelihood. The key business risks identified
by your Company include economicenvironment and market leadership; inflation and cosTof
production; legal and compliance with local laws; financial and accounting; environment
and sustainability; information technology and talent management. Needless to mention that
with the challenges presented by the COVID-19 outbreak, pandemicand epidemic-related
business risks have also been identified by your Company.
The risk horizon considered includes long-term strategicrisks, short to medium-term
risks as well as single events. The risks are analysed considering likelihood and impact
as a basis to determine their management.
Key Business Risks identified by your Company
EconomicEnvironment and Market Demand
The demand for construction material is fundamentally driven by the economicgrowth in
the country. Economicslowdown and subdued infrastructural development might lead to a
slowdown in construction projects, thus leading to a reduction in cement consumption in
the country. The growth in construction activity in the country has been slow over the
last few years, impacting the cement demand. In a scenario where incremental cement demand
exceeds incremental capacity addition, the Government's push on infrastructure and housing
will aid the growth in cement consumption and reduce the overcapacity gap.
The cement industry in India is an aggregation of small and large companies. In such an
environment, the risk of protecting market share is optimal. With the expanding capacities
of existing players and the emergence of new entrants, competition is a sustained risk. To
mitigate this, continuous endeavours to enhance brand equity through innovative marketing
activities, enhancement in the product portfolio and value-add services have been the
thrust areas for your Company. The engineering expertise of your Company and its emphasis
on quality also minimise its risk against market fluctuations considerably.
Inflation and CosTof Production
Your Company faces the risk of inflation and fluctuations in the market-driven cosTof
coal, pet coke, power, and other fuels. Since the cement industry is extremely
energy-intensive, changes in fuel prices can significantly impact its production cost. To
de-risk, your Company has established specificpolicies of long deliveries and continuously
optimises its fuel mix and energy efficiency, while exploring the use of alternative
fuels.
The procuremenTof raw materials at an economical cosTor of suitable quality faces a
high degree of inflationary certainty. Your Company mitigates this through the
establishmenTof exhaustive policies for procuremenTof specificraw materials and stores and
those amenable to just in time inventories.
Limestone, being the primary raw material required for the production of cement, its
continuous and long-term availability is critical, particularly under the
dynamicregulatory environment. Your Company currently possesses sufficient limestone
reserves. Securing additional reserves is critical to address your Company's expansion
plans. Apart from the preservation and elongation of existing reserves, a range of
measures including strategicsourcing and changing input mix are adopted by your Company to
mitigate the risk of unavailability of limestone.
Legal and Compliance
This comprises of the risk if your Company is found to have inadvertently violated laws
covering business conduct.
The country's regulatory framework is ever-evolving and the risk of non-compliance and
penalties may increase for your Company, leading to reputational risks. A comprehensive
risk-based compliance program involving inclusive training and adherence to the Code of
Conduct is thus institutionalised by your Company.
As a step to mitigate the legal and compliance risk, your Company's management
encourages its employees to place their reliance on professional guidance and opinion to
discuss the impacTof any changes in laws and regulations to ensure total compliance.
Periodicand ad-hocreporting to various internal committees for oversight ensures the
effectiveness of such a programme.
Financial and Accounting Risks
This comprises of the risk of exposure to interest rates, foreign exchange rates and
commodity price fluctuations. The risk management strategy is to identify the risks
exposure, measure and evaluate the financial impact, decide on steps to mitigate the risks
and regular monitoring and reporting.
With the objective of minimising risks arising from uncertainty and volatility of
foreign exchange fluctuations, an elaborate financial risk management policy is followed
for every transaction undertaken in foreign currency. Your Company's policies to counter
such risks are reviewed periodically and constantly aligned with the financial market
practices and regulations.
Changing laws, rules, regulations and standards relating to accounting, corporate
governance, publicdisclosure and listing regulations are generating newer and unforeseen
risks for companies. The new or changed laws, regulations and standards may lack
precedence and are subject to varying interpretations. Their application in practice may
evolve as new guidance is provided by regulatory and governing bodies. Thus, your Company
maintains a high standard of corporate governance and publicdisclosure to de-risk itself
from such dynamicregulatory changes.
Environment and Sustainability
This comprises of risks associated with environmental pollution through the discharge
of waste, which may cause damage to the fragile surrounding environment, and is a legal
offence.
Various initiatives such as sewage treatment plants, recycling of industrial
wastewater, bag filters, WHRS and extensive plantation and creation of green belts have
been undertaken by your Company to de-risk and protect the environment.
Apart from the risk arising from waste disposal, other long-term climate-related risks
that may lead to higher GHG emissions and water scarcity also exist. Your Company's risk
mitigation strategy from higher GHG emissions includes a change in product mix, creating
higher energy efficiency, use of alternative fuels and raw materials, WHRS and the use of
renewable energy. Your Company has also adopted measures such as rainwater harvesting that
has prepared it to overcome the water availability-related challenges.
Information Technology Risks
This comprises of risks related to Information Technology systems; data integrity and
physical assets. Your Company deploys Information Technology systems, including ERP, SCM,
Data Historian, and Mobile Solutions to support its business processes, communications,
sales, logistics, and production. Risks could primarily arise from the unavailability of
systems and/or loss or manipulation of information. To mitigate these risks, your Company
uses backup procedures and stores information at two different locations. Systems are
upgraded regularly with the latest security standards. For critical applications, security
policies and procedures are updated periodically and users are educated on adherence to
the policies to eliminate data leakages.
Talent Management
Your Company's growth has been driven by its ability to attract and retain top-quality
talent and effectively engage them in the right jobs. The risks in talent management are
mitigated by following a policy of being an employer of choice and inculcating a sense of
belonging. Specialised training courses are adopted to enhance and reskill the employees
to prepare them for future roles and create a talent pipeline.
Pandemic-linked disruptions in global markets
The COVID-19 outbreak has been declared a pandemicby the World Health Organization,
causing huge impacTon people's lives, families and communities. The pandemicpresents a
potentially different threat, impacting organisations in numerous concurrent ways, and
potentially limiting their options around recovery if other companies are also affected or
challenged by logistical constraints.
There are several associated risks viz. cyber and fraud risks, operations risks, supply
chain risks, health and safety, among others. Your Company has captured these risks as
parTof the risk identification and mitigation process and is considering the impact
thereof while making business decisions. In the midsTof the COVID-19 crisis, your Company
is updating and expanding its crisis management and business continuity plans with an
emphasis on employees, customers, supply chain, contacts, other stakeholders and business
assets.
Your Company currently operates in 54 locations in India and 5 overseas locations.
Managing the risk of a multicultural and diverse workforce is extremely critical to the
sustained growth of your Company. Continuous dissemination of the Group Values and strict
adherence to the adopted Code of Conduct for the employees are reiterated through various
forums to contain this risk.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
Your Company has put in place adequate internal control systems that are commensurate
with the size of its operations. Internal control systems comprising policies and
procedures are designed to ensure sound managemenTof your Company's operations,
safekeeping of its assets, optimal utilisation of resources, reliability of its financial
information, and compliance. Clearly defined roles and responsibilities have been
institutionalised, and systems and procedures are periodically reviewed to keep pace with
the growing size and complexity of your Company's operations.
DIRECTOR'S RESPONSIBILITY STATEMENT
The audited accounts for the year under review are in conformity with the requirements
of the Act and the Accounting Standards. The financial statements reflect fairly the form
and substance of transactions carried out during the year under review and reasonably
present your Company's financial condition and results of operations.
Your Directors confirm that
i. In the preparation of the Annual Accounts, applicable accounting standards have been
followed along with proper explanations relating to material departures, if any;
ii. The accounting policies selected have been applied consistently, and judgments and
estimates are made that are reasonable and prudent to give a true and fair view of the
state of affairs of your Company as on 31st March, 2020 and of the
profiTof your Company for the year ended on that date;
iii. Pr oper and sufficient care has been taken for the maintenance of adequate
accounting records in accordance with the provisions of the Act for safeguarding the
assets of your Company and for preventing and detecting frauds and other irregularities;
iv. The Annual Accounts of your Company have been prepared on a going concern basis;
v. Your Company had laid down internal financial controls and that such internal
financial controls are adequate and were operating effectively;
vi. Your Company has devised proper systems to ensure compliance with the provisions of
all applicable laws and that such systems were adequate and operating effectively.
DIRECTORS
Cessation of Directors
Mr. O. P. Puranmalka, (DIN: 00062212) who was to retire by rotation at the previous
AGM had conveyed to your Company his decision of not seeking re-appointment due to
personal commitments. Consequently, he ceased to be a Director with effect from 18th
July, 2019.
Mr. G.M. Dave, (DIN:00036455) ceased to be a Director of your Company with effect
from 5th August, 2019 upon completion of his term of appointment.
Mrs. Renuka Ramnath, (DIN: 00147182) ceased to be a Director of your Company with
effect from 21sToctober, 2019 due to commitments to her business venture, viz.
Multiples Equity, which was at an important juncture and did not allow her to spare
adequate time to be involved as a committed Board Member outside of her investments, and
therefore the decision to step down.
Mrs. Usha Sangwan, (DIN:02609263) who was appointed Additional Director
(Independent) of your Company for a period of five years from 10th January,
2020, stepped down from your Company's Board with effect from 16th May, 2020 on
accounTof health and personal reasons.
Your Board places on record their appreciation for the services rendered by the
Directors during their tenure with your Company.
Retiring by rotation and continuing as Director
In accordance with the provisions of the Act and Articles of Association of your
Company, Mrs. Rajashree Birla (DIN: 00022995) retires by rotation, and being
eligible, offers herself for re-appointment. In terms of the provisions of the Listing
Regulations, with effect from 1st April, 2019, no listed company shall
appoinTor continue the appointmenTof a Non-Executive Director who has attained the age of
75 years, unless a special resolution is passed to that effect. Mrs. Birla will be
attaining the age of 75 years in September, 2020.
Resolutions seeking her re-appointment and continuation as Director, along with a brief
resume forms parTof the Notice convening the AGM.
AppointmenTof Director
The Board at its meeting held on 4th September, 2019, based on the
recommendation of the NRCCommittee, appointed Mr. K. C. Jhanwar (DIN:01743559) as
the Managing Director of your Company with effect from 1st January, 2020 and
appointed Mr. K. K. Maheshwari (DIN: 00017572) as Vice Chairman and Non-Executive
Director of your Company with effect from that date.
Resolution seeking appointmenTof Mr. Jhanwar along with his brief profile forms parTof
the Notice convening the AGM.
Meetings of the Board
The Board of Directors of your Company met seven times during the year to deliberate on
various matters. The meetings were held on 8th April, 2019; 24th
April, 2019; 8th August, 2019; 4th September, 2019; 30th
September, 2019; 21sToctober, 2019 and 24th January, 2020.
Additional details relating to the meetings of the Board of Directors are provided in the
ReporTon Corporate Governance forming parTof the Annual Report.
Your Company has the following six Board-level Committees, which have been established
in compliance with the requirements of the business and relevant provisions of applicable
laws and statutes:
1. Audit Committee
2. Nomination, Remuneration and Compensation Committee
3. St akeholders Relationship Committee
4. Corporate Social Responsibility Committee
5. Risk Management and Sustainability Committee
6. Finance Committee
The details with respect to the composition, terms of reference, number of meetings
held, etc. of the above Committees are included in the ReporTon Corporate Governance,
which forms parTof the Annual Report.
Independent Directors
Your Company's Independent Directors have submitted requisite declarations confirming
that they continue to meet the criteria of independence as prescribed under Section 149(6)
of the Act and Regulation 16(1)(b) of the Listing Regulations. The Independent Directors
have also confirmed that they have complied with Schedule IV of the Act and the Company's
Code of Conduct. Your Company's Board is of the opinion that the Independent Directors
possess requisite qualifications, experience, and expertise in industry knowledge;
innovation; financial expertise; corporate governance; strategicexpertise; marketing;
legal and compliance; sustainability; risk management; human resource development and
general management, and they hold highest standards of integrity. Regarding proficiency,
your Company has adopted requisite steps towards the inclusion of the names of all
Independent Directors in the data bank maintained with the Indian Institute of Corporate
Affairs, Manesar ("IICA"). All Independent Directors of your Company have
registered themselves with the IICA. In terms of Section 150 of the Act read with Rule
6(4) of the Companies (Appointment and Qualification of Directors) Rules, 2014, the
Independent Directors are required to undertake an online proficiency self-assessment test
conducted by the IICA within a period of one year from the date of inclusion of their
names in the data bank. The said online proficiency self-assessment test will be
undertaken by the Independent Directors within the scheduled timeline.
Formal Annual Evaluation
The evaluation framework for assessing the performance of Directors of your Company
comprises of contributions at the meetings and strategicperspective or inputs regarding
the growth and performance of your Company, among others.
The NRCCommittee and the Board have laid down the manner in which formal annual
evaluation of the performance of the Board, its Committees and Individual Directors has to
be made. It includes circulation of evaluation forms separately for evaluation of the
Board and its Committees, Independent Directors / Non-Executive Directors / Executive
Directors and the Chairman of your Company. The process of the annual performance
evaluation broadly comprises:
Board and Committee Evaluation
Evaluation of the Board as a whole and the Committees is done by individual Directors,
which is collated for submission to the NRCCommittee and feedback to the Board.
Independent / Non-Executive Directors Evaluation
Evaluation done by Board members, excluding the Director being evaluated, is submitted
to the Chairman of your Company and individual feedback is provided to each Director.
Chairman / Executive Director Evaluation
Evaluation as done by the individual Directors is submitted to the Chairman of the
NRCCommittee and subsequently to the Board.
The evaluation framework focused on various aspects of Board and Committees such as
review, timely information from management etc. Also, performance of individual Directors
was divided into Executive, Non-Executive and Independent Director and based on the
parameters such as contribution, attendance, decision making, action oriented, external
knowledge etc.
Outcome of the evaluation exercise:
i. The Board as a whole perform satisfactorily.
ii. Independent Directors are rated high in understanding your Company's business and
expressing their views during the Board meeting.
iii. Non-Executive Director scored well in all aspects.
iv. Dir ectors rated Executive Director as action and good in implementing Board
decisions.
v. Boar d members rated high to the Chairman Board effectively.
vi. Boar d members has shown satisfaction in of the Committees.
The details of the program for familiarisation of Independent Directors of your Company
are available on your Company's website viz. www.ultratechcement.com.
Policy on Appointment and Remuneration of Directors and Key Managerial Personnel, and
Remuneration Policy
The NRCCommittee has formulated the remuneration policy of your Company, which is
attached as Annexure VII to this Report.
KEY MANAGERIAL PERSONNEL
In terms of the provisions of Section 203 of the Act, Mr. K. C. Jhanwar, Managing
Director; Mr. Atul Daga, Whole-time Director and Chief Financial Officer, and Mr. Sanjeeb
Kumar Chatterjee, Company Secretary are the Key Managerial Personnel of your Company.
AUDIT COMMITTEE
The Audit Committee comprises of Mr. S. B. Mathur, Mr. Arun Adhikari, Mrs. Alka
Bharucha and Mr. K. K. Maheshwari. The
Committee comprises of a majority of Independent Directors with Mr. Mathur being the
Chairman. Mr. Atul Daga, Whole-time Director and CFO, is the permanent invitee. Further
details relating to the Audit Committee are provided in the ReporTon Corporate Governance,
forming parTof the Annual Report. During the year under review, all recommendations made
by the Audit Committee were accepted by the Board.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
Your Company has in place a vigil mechanism for directors and employees to report
instances and concerns about unethical behaveiour, actual or suspected fraud, or violation
of your Company's Code of Conduct. Adequate safeguards are provided against victimisation
of those who avail of the mechanism and direct access to the Chairman of the Audit
Committee, in exceptional cases, is provided to them.
The vigil mechanism / whistle blower policy is available on your Company's website viz.
www.ultratechcement.com.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
Your Company had filed appeals against the orders of the Competition Commission of
India ("CCI") dated 31st August, oriented2016 and 19th
January, 2017. Upon the National Company Law Appellate Tribunal ("NCLAT")
disallowing its appeal against the CCI order dated 31st August, 2016, the
Hon'ble Supreme leading the Court has, by its order dated 5th October, 2018,
granted a stay against the NCLATorder. Consequently, your Company has functioningdeposited
an amount equivalent to 10% of the penalty amount.
Your Company, backed by legal opinion, believes that it has a good case in both the
matters and accordingly, no provision has been made in the accounts.
AUDITORS
Statutory Auditors
In terms of the provisions of Section 139 of the Act and the Companies (Audit and
Auditors) Rules, 2014, M/s. BSR & Co. LLP, Chartered Accountants, Mumbai (Registration
No: 101248W/W-100022) ("BSR") and M/s. Khimji Kunverji & Co. LLP, Chartered
Accountants, Mumbai (Registration No: 105146W/W-100621) ("KKC"), had been
appointed as Joint Statutory Auditors of your Company for a term of five years until the
conclusion of the 20th and 21st AGM, respectively.
The present term of BSR is up to the conclusion of the ensuing AGM. They are eligible
for re-appointment for a second term of five years as provided under Section 139 of the
Act read with the Companies (Audit and Auditors) Rules, 2014. BSR has confirmed that they
are eligible to be re-appointed in accordance with the provisions of the Act and Rules
made thereunder. BSR was constituted on 27th March, 1990 as a partnership firm
and converted into a limited liability partnership on 14th October, 2013. BSR
is a member entity of B S R & Affiliates, a network registered with the Institute of
Chartered Accountants of India ("ICAI"), and has a pan-India presence with over
2,900 staff and 100 partners. BSR audits various private entities and companies listed on
stock exchanges in India across industrial, consumer, financial, technology and
infrastructure sectors. The audit engagement partner has over twenty-eight years of
experience and has been associated with your Company's audit for four years. Your
Company's Board of Directors, upon the recommendation of the Audit Committee, propose
their re-appointment for a second term, subject to the approval of your Company's
shareholders. Resolution seeking your approval forms parTof the Notice convening the AGM.
Further, in terms of the amendment to Section 139 of the Act, the requiremenTof seeking
shareholders approval to ratify the appointmenTof the Statutory Auditors has been
withdrawn. Thus, a resolution seeking ratification of the appointmenTof KKCis not being
obtained at the ensuing AGM. However, they have confirmed that they are not disqualified
to continue as Statutory Auditors and are eligible to hold office as such, of your
Company. KKC, registered with the ICAI was established in 1936 and is led by ten partners.
The firm provides a range of services, including audit and assurance, taxation, advisory
and accounting. The firm has significant experience in providing auditing, taxation and
advisory services to leading banks and corporates in the manufacturing, services and
financial services sectors. The signing partner heads the Assurance vertical of the firm.
He also holds a Diploma in Information System Audit and IFRS Certification of ICAI. In the
past, he was a member of various committees of ICAI related to auditing and accounting.
The observations made in the Auditor's Report are self-explanatory and, therefore, do
not call for any further comments under Section 134(3)(f) of the Act.
Cost Auditors
The Cost Accounts and records as required to be maintained under Section 148 (1) of the
Act are duly made and maintained by your Company. In terms of the provisions of Section
148 of the Act read with the Companies (Cost Records and Audit) Rules, 2014, the Board of
Directors of your Company have on the recommendation of the Audit Committee appointed M/s.
D. C. Dave & Co., Cost Accountants, Mumbai and
M/s.N.D.Birla&Co.,CostAccountants,Ahmedabad,toconduct the Cost AudiTof your Company
for the financial year ending
31st March, 2021, at a remuneration as mentioned in the Notice convening the
AGM.
As required under the Act, the remuneration payable to Cost Auditors has to be placed
before the Members at a general meeting for ratification. Hence, a resolution for the same
forms parTof the Notice convening the AGM.
Secretarial Auditors
In terms of the provisions of Section 204 of the Act read with the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, M/s. BNP &
Associates, Company Secretaries, Mumbai were the Secretarial Auditors for conducting a
secretarial audiTof your Company for the financial year ended 31st March, 2020.
The reporTof the Secretarial Auditors is attached as Annexure VIII. The Secretarial
Audit Report does not contain any qualification, reservation or adverse remark.
M/s. BNP & Associates, Company Secretaries, Mumbai have been Secretarial Auditors
of your Company since 2015-16. With a view to rotate the Secretarial Auditors, your
Company's Board of Directors, at the meeting held on 20th May, 2020, have
appointed Makarand M. Joshi & Company, Company Secretaries, Mumbai ("MMJC")
as the Secretarial Auditors. MMJCis a leading firm of practicing Company Secretaries
rendering comprehensive professional services which include statutory compliance services
under the Act; Listing Regulations; Foreign Exchange Management Act, among others.
The Board of Directors wish to place on record their appreciation for the services
provided by M/s. BNP & Associates as Secretarial Auditors.
Compliance with Secretarial Standards
Your Company is in compliance with the Secretarial Standards specified by the Institute
of Company Secretaries of India.
EXTRACTOF ANNUAL RETURN
In terms of the provisions of Section 92 (3) of the Act read with the Companies
(Management and Administration) Rules, 2014, an extracTof the Annual Return of your
Company for the financial year ended 31st March, 2020 is given in Annexure
IX to this Report.
OTHER DISCLOSURES
– No material changes and commitments were affecting the financial position of
your Company between the end of the financial year and the date of this Report;
– Your Company has not issued any shares with differential voting rights;
– There was no revision in the financial statements;
_ There has been no change in the nature of your Company;
– Your Company has not issued any sweat equity
Disclosures as per the Sexual HarassmenTof Women at Workplace (Prevention, Prohibition
and Redressal) Act, 2013 ("POSH Act"):
Your Company has adopted zero tolerance for sexual harassment at workplace and has
formulated a policy on prevention, prohibition and redressal of sexual harassment at
workplace, in line with the provisions of the POSH Act and the rules framed thereunder,
for prevention and redressal of complaints of sexual harassment at workplace. Your Company
has complied with provisions relating to the constitution of Internal Committee under the
POSH Act. During the year under review, your Company received two complaints of sexual
harassment, of which one complaint has been resolved. One complaint is pending as on 31st
March, 2020 as the investigation could not be completed due to the lockdown imposed as a
resulTof the outbreak of COVID-19.
CAUTIONARY STATEMENT
Statements in the Directors' Report and the Management Discussion and Analysis
describing your Company's objectives, projections, estimates, expectations or predictions
and plans for navigating the COVID-19 impacTon your Company's performance, its employees,
customers and other stakeholders may be "forward-looking statements" within the
meaning of applicable securities laws and regulations. Actual results could differ
materially from those expressed or implied. Important factors that could make a difference
to your Company's operations include global and Indian demand-supply conditions, finished
goods prices, feed of stock availability and prices, cyclical demand and pricing in your
Company's principal markets, changes in Government regulations,. tax regimes,
economicdevelopments within India and the countries within which your Company conducts
business, risks related to an economicdownturn or recession in India, the efforts of
government and other measures seeking to contain the spread of COVID-19 and other factors
such as litigation and labour negotiations. Your Company is noTobliged to publicly amend,
modify or revise any forward-looking statements, on the basis of any subsequent
development, information or events, or otherwise.
ACKNOWLEDGEMENT
Your Directors express their deep sense of gratitude to the banks, financial
institutions, stakeholders, business associates, Central and State Governments for their
support, and look forward to their continued assistance in the future. We thank our
employees for their contribution to your Company's performance. We applaud them for their
superior levels of competence, dedication, and commitment to your Company.
|
For and on behalf of the Board |
|
Kumar Mangalam Birla |
|
Chairman |
|
(DIN: 00012813) |
| Kolkata, 20th May, 2020 |
|
Annexure I
DIVIDEND DISTRIBUTION POLICY
1.0 Introduction
1.1 As per the SEBI (Listing Obligations and Disclosure Requirements) Regulations,
2015, as amended, the Company is required to formulate and disclose its Dividend
Distribution Policy. Accordingly, the Board of Directors of the Company (‘the Board')
has approved this Dividend Distribution Policy.
1.2 The objective of this policy is to provide clarity to stakeholders on the dividend
distribution framework to be adopted by the Company. The Board of Directors shall
recommend dividend in compliance with this policy, the provisions of the Companies Act,
2013 and Rules made thereunder and other applicable legal provisions.
2.0 T arget Dividend Payout
2.1 Dividend will be declared ouTof the current year's Profit after Tax of the Company.
2.2 Onl y in exceptional circumstances including but not limited to loss after tax in
any particular financial year, the may consider utilising retained earnings for
declaration of dividends, subject to applicable legal provisions.
2.3 Other Comprehensive Income' (as per applicable Accounting Standards) which mainly
comprises of unrealized gains / losses, will not be considered for the purpose of
declaration of dividend.
2.4 The Board will endeavor to achieve a dividend payout ratio (gross of dividend
distribution tax) in the range of 15% to 25% of the Standalone Profit after Tax, neTof
dividend payout to preference shareholders, if any.
3.0 F actors to be considered for Dividend Payout
The Board will consider various internal and external factors, including but not
limited to the following before making any recommendation for dividend:
- Stability of earnings
- Cash flow position from operations
- Future capital expenditure, inorganicgrowth plans and reinvestmenTopportunities
- Industry outlook and stage of business cycle for underlying businesses
- Leverage profile and capital adequacy metrics
- Overall economic/ regulatory environment
- Contingent liabilities
- Past dividend trends
- Buyback of shares or any such alternate profit distribution measure
- Any other contingency plans
4.0 General
Ret ained earnings will be used for the Company's growth plans, working capital
requirements, debt repayments and other contingencies.
5.0 Review
This policy would be subject to revision / amendmenTon a periodicbasis, as may be
necessary.
6.0 Disclosure
This policy (as amended from time to time) will be available on the Company's website
and in the annual report.
Annexure II
AUDITORS' CERTIFICATE ON CORPORATE GOVERNANCE
To the Members of
UltraTech Cement Limited
We have examined the compliance of conditions of Corporate Governance by UltraTech
Cement Limited (the ‘Company'), for the year ended 31st March, 2020, as
per the relevant provisions of the Securities and Exchange Board of India (Listing
Obligations and Disclosure Requirements) Regulations, 2015 as amended (‘Listing
Regulations').
The compliance of conditions of Corporate Governance is the responsibility of the
management. This responsibility includes the design, implementation and maintenance of
internal control and procedures to ensure the compliance with the conditions of the
Corporate Governance stipulated in Listing Regulations.
Our responsibility is limited to examining the procedures and implementation thereof,
adopted by the Company for ensuring compliance with the conditions of Corporate
Governance. It is neither an audit nor an expression of opinion on the financial
statements of the Company.
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. 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.
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.
Based on our examination of the relevant records and according to the information and
explanations given to us, we certify that the Company has complied with the conditions of
Corporate Governance as stipulated in the above mentioned Listing Regulations.
We further 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 Khimji Kunverji & Co LLP |
| (formerly Khimji Kunverji & Co) |
| Chartered Accountants |
| Firm's Registration No: 105146W/W100621 |
| Ketan Vikamsey |
| Partner |
| Membership No: 044000 |
| ICAI UDIN: 20044000AAAAAE1359 |
| Mumbai |
| 20th May, 2020 |