Director's Report
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UltraTech Cement LtdIndustry : Cement - North India
BSE Code:532538
ISIN Demat:INE481G01011
Book Value(Rs):943.96
Div & Yield %:0.29
Market Cap (Rs Cr.):100157.69
Face Value(Rs):10
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Dear Shareholders,

Your Directors present the Seventeenth Annual Report together with the Audited Accounts of your Company for the year ended 31st March, 2017.


The year under review witnessed a marginal growth in the world economy attributable to a feeble pace of global investment, dwindling world trade, flagging productivity and high levels of debt. Conflicts and geopolitical tensions continued to weigh on economic prospects in several regions. The investment growth in many major developed and developing economies as well as many economies in transition was significantly slow. The World Bank has predicted only a moderate pick-up in global economic growth during 2017, driven mainly by improvements in emerging markets and developing economies.

India's GDP grew about 7.1%. This was primarily on the back of improving agricultural sector with good monsoons and Government's public spending program. The manufacturing and service sectors registered a weak growth. India's GDP growth is expected to remain stable during FY18. The Government's stimulus for improving overall business sentiments will be the major growth drivers. Implementation of GST will have a positive impact, going forward.

The cement industry registered the lowest volume growth during the past 15 years. Though the industry started the year on a positive note, achieving decent growth during the first six months of the year, the second half witnessed muted cement demand from the housing segment, the largest cement driver. The year saw the industry adding another 12 mtpa new capacity, taking the total installed capacity in the country to ~420 mtpa. With the new additions coupled with contraction in demand, industry capacity utilisation declined to ~65% (LY 67%). Cement prices have not shown any improvement over the last year and escalation in fuel prices has resulted in higher operating costs.

Cement demand is expected to pick-up gradually. The Government sponsored affordable housing program, interest

Rate subvention scheme on housing loans, continuing infrastructure spending, improving demand sentiments in the markets of South India and revival in rural housing demand, backed by improved cash flow, are expected to be the key factors for cement demand growth. On the flip side, demand from the urban housing and private sector capex is still not showing any signs of recovery.

Against this background, the performance of your Company during 2016-17 is as indicated:


Production and Capacity utilisation (grey Cement):



% change

Installed capacity (MTPA)




Production (MMT)




Capacity Utilisation




MTPA - Million Metric Tonnes Per Annum.

MMT- Million Metric Tonnes.

During the year, cement capacity was augmented to 66.25 MTPA, following the commissioning of the grinding unit at Patliputra in Bihar. Cement production for the year improved marginally from 47.56 million tonnes in the previous year to 47.91 million tonnes. Capacity utilisation clocked 72% on a higher capacity base.

Figures in MMT




% Change

Domestic Sales




Exports & Others




Total Sales Volume




Domestic sales volume rose marginally from 47.13 MMT to 47.62 MMT vis-a-vis a marginal dip in industry volume for the year.


(Rs. in crores)







Net Turnover















Other Income





Total Expenditure





Profit before Interest, Depreciation and Tax (PBIDT)





Less: Depreciation





Profit before Interest and Tax (PBIT)










Profit before Impairment and Tax Expenses / share in profit of Associates





Provision for diminution in value of Investment





Profit before Tax Expenses





Tax Expenses





Profit after tax





Profit attributable to Non-controlling Interest





Profit attributable to Owner of the parent





Balance brought forward from previous year





Less: Appropriations:
Re-measurement gain/loss on defined benefit plan





Transfer to General Reserve





Transfer to Debenture Redemption Reserve





Dividend on Equity Shares





Tax on Dividend





Net Balance for the year





The financial statements have been prepared in accordance with Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2015 as amended by the Companies (Indian Accounting Standards) (Amendment) Rules, 2016 and the relevant provisions of the Companies Act, 2013 ("the Act") and guidelines issued by the Securities and Exchange Board of India ("SEBI"). The date of transition to Ind AS is from 1st April, 2015. The Consolidated Financial Statements have been prepared in accordance with the provisions of the Act, read with the Companies (Accounts) Rules, 2014, applicable Indian Accounting Standards and the provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("the Listing Regulations"). These form part of the Annual Report.

Net Turnover:

Your Company's net turnover at ' 23,616 crores is marginally higher over the previous year mainly on account of higher sales volume. Cement prices were down from ' 4,757/t to ' 4,706/t due to surplus capacity in the sector.

Other Income:

Other income is up by 25% compared to the previous year. Your Company has reversed a provision of ' 138 crores related to the earlier years. Besides this, other income was augmented, given higher income on increase in surplus funds, deployed in secured debt instruments.

Operating Profit (PBIDT) and Margin:

PBIDT for the year at ' 5,629 crores is up by 10%. PBIDT margin rose from 22% to 24%.

Cost Highlights:

(i) Energy Cost:

The overall energy cost declined by 7% from ' 824/t during the previous year to ' 763/t, driven by increase in the usage of petcoke, industrial waste, and efficiency improvements, coupled with the benefit of lower petcoke prices during part of the year.

The use of petcoke in the kilns extended to 74% from 70% in the previous year. Your Company has also improved the efficiencies of its plant and machinery, resulting in 3% lower power consumption. Besides petcoke, your Company is also increasing the usage of industrial waste. Your Company has disposed off around 1.5 LMT of waste in the kilns, resulting in the saving of the total fuel requirement by about 2%. The increase in the share of waste heat recovery to 7% of the total power requirement of the Company led to reduced consumption of coal and petcoke.

(ii) Input material cost:

Raw materials cost remained stable at ' 467/t.

(iii) Freight and Forwarding expenses:

Logistics cost reduced from ' 1,099/t to ' 1,074/t, although diesel prices were up about 13% for the year, consequent to the reduction in the average lead distance with improved utilisation of new cement grinding capacities, rationalisation of road freight rates and increased coastal movement.

(iv) Employee costs:

Employee costs registered an increase of 5% from ' 1,343 crores in the previous year to ' 1,413 crores, on account of normal annual increments and commissioning of new plants.


Depreciation for the year at ' 1,268 crores is lower by ' 29 crores. During the previous year, your Company had componentised its property, plant and equipment. This had resulted in higher depreciation.

Finance Cost:

The finance cost at ' 571 crores is higher by ' 59 crores as compared to ' 512 crores mainly on account of provision for interest on entry tax pertaining to earlier years and lower benefit of interest subsidy due to the completion of the government grant period.

Your Company does not accept any fixed deposits from the public falling under Section 73 of the Act and the Companies (Acceptance of Deposits) Rules, 2014.

Your Company has adequate liquidity and a strong Balance Sheet. CRISIL has re-affirmed its credit rating as CRISIL AAA for Long Term and CRISIL A1+ for Short Term.

Income Tax:

The income tax expenses increased in line with increase in taxable income.

Net Profit:

Profit after tax for the year increased by 11% from ' 2,370 crores in the previous year to ' 2,628 crores.

Cash Flow Statement

(Rs. in crores)



Sources of Cash
Cash from operations



Non-operating cash flow



Proceeds from issue of share capital



Increase in borrowings



Decrease in working capital






Uses of Cash
Net capital expenditure



Increase in investment



Repayment of borrowings (net)












Increase / (Decrease) in cash & cash equivalents



Sources of Cash Cash from operations:

Cash from operations was higher compared to the previous year due to higher sales volume and lower cost of production.

Decrease in Working Capital:

To improve liquidity, your Company has tightened the working capital norms by reducing the inventory of stores and spares, improving debtors realisation and implementing appropriate payment norms for suppliers.

Uses of Cash Decrease in Borrowings:

During the year, your Company raised ' 2,878 crores of longterm debt in the form of non-convertible debentures and external commercial borrowings. Your Company has repaid long-term loan of around ' 3,089 crores in line with the repayment schedule and short-term borrowings decreased by ' 1,323 crores.

Net Capital Expenditure

Your Company spent over ' 1,200 crores on its capital expenditure plans, a significant part of which was towards the balance work of the new grinding capacity commissioned during the year. Besides this, your Company also spent on capex for meeting regulatory requirements, plant upkeep and improving efficiencies.

Transfer to General Reserve

Your Company proposes to transfer an amount of ' 2,000 crores to the General Reserves.


Your Directors have recommended a dividend of ' 10 /- per equity share (' 9.50/- per equity share in the previous year) of ' 10/- each for the year ended 31st March, 2017. The dividend distribution would result in a cash outgo of ' 330 crores (including tax on dividend of ' 56 crores) compared to ' 314 crores (including tax on dividend of ' 53 crores) paid for 2015-16.

In terms of the provisions of Regulation 43A of the Listing Regulations, your Company has formulated a dividend distribution policy. The policy is given in Annexure I to this Report and is also accessible from your Company's website .


During the year, your Company commissioned cement grinding units at Nagpur, Maharashtra and at Patliputra, Bihar.

To cater to the markets of south-west Madhya Pradesh, the Board of Directors have approved the setting up of an integrated cement plant at Dhar, Madhya Pradesh with a capacity of 3.5 MTPA and at a total cost of ' 2,600 crores. The commercial production from the plant is expected to commence by Q4FY19.

The capital expenditure during the next financial year is expected to be approximately ' 2,200 crores, mainly for capacity expansion projects, regulatory requirements, plant infrastructure and routine maintenance.


The Board of Directors of your Company at its meeting on 4th July, 2016 approved a Scheme of Arrangement ("the Scheme") between Jaiprakash Associates Limited ("JAL"), Jaypee Cement Corporation Limited ("JCCL") wholly-owned subsidiary of JAL and your Company for the acquisition of identified cement plants of JAL and JCCL in the States of Madhya Pradesh, Uttar Pradesh, Himachal Pradesh, Uttarakhand and Andhra Pradesh, having a capacity of 21.20 MTPA at an enterprise value of '16,189 crores. The Scheme has been approved by the shareholders and creditors of your Company. It has also received the sanction of the Competition Commission of India, the Hon'ble National Company Law Tribunal and the SEBI. The Scheme will be made effective by the Board of Directors of your Company and those of JAL and JCCL after receiving the remaining approvals.


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 this Annual Report. The auditor's certificate on compliance with the conditions of corporate governance of the Listing Regulations is given in Annexure II to this Report.


The Nomination, Remuneration and Compensation Committee ("the NRC") allotted 13,439 equity shares of ' 10/- each of your Company upon exercise of Stock Options by the employees. During the year, 1,633 Stock Options have vested in eligible employees.

ESOS - 2013

The NRC granted 44,411 Stock Options and 15,687 Restricted Stock Units ("RSUs'') to eligible employees of your Company. During the year, 56,154 Stock Options and 57,799 RSUs have vested in eligible employees. The NRC allotted 63,090 equity shares of '10/- each of your Company upon exercise of Stock Options and RSUs by the employees.

In terms of the provisions of the SEBI (Share Based Employee Benefits) Regulations, 2014, the details of the Stock Options and RSUs granted under the above mentioned Schemes are available on your Company's website viz.

A certificate from the Statutory Auditor on the implementation of your Company's Employees Stock Option Schemes will be placed at the ensuing Annual General Meeting for inspection by the Members.


Your Company's efforts in various areas of its operations continue to receive accolades. Some of the prestigious awards conferred on your Company during the year are:

- "Gold Award" under CSR Category in the cement sector for excellent contribution under CSR : Vikram Cement Works;

- National Awards for Manufacturing Competitiveness (NAMC) 2015-16 in Building Material & Cement Sector: Aditya Cement Works;

- Golden Peacock Award for CSR: Birla White;

- Appreciation plaque by FICCI for commendable work in the field CSR: Hirmi Cement Works;

- Certificate of Merit for achieving zero accident frequency rate by National Safety Council: Ratnagiri Cement Works;

- GreenCo Gold Rating by CII: Reddipalayam Cement Works;

- Frost & Sullivan Sustainability 4.0 awards: Reddipalayam Cement Works.


Your Company's Research and Development ("R&D") function has been restructured and integrated into 'One R&D Cell' to consistently and more efficiently contribute to sustained growth of the business by providing top innovative and environmental friendly solutions in cement and concrete manufacturing. Continuous product development and enhancing process productivity are its forte, aimed at creating greater customer value and delight while at the same time reducing the cost of products. The One R&D Cell provides comprehensive scientific and technological support to the business while promoting sustainability initiatives and developmental goals.

The R&D activities of your Company include basic as well as applied research. The aim is fostering a better understanding and development of futuristic, low-cost, high-quality and energysaving cement and concrete types, bridging the gap between theory and practice of the Indian construction industry. Customer satisfaction, innovation and quality improvement, cost and energy reduction are the governing attributes of all R&D projects. Achieving cement process optimisation and debottlenecking, limestone deposit conservation and significant use of alternative fuels and raw materials complying with increasingly stricter environmental norms form the mandate. Towards this end, your Company has developed several new products and additives that aid in limestone conservation, energy savings. It also enhances the durability of concrete and concrete structures. Your Company continues to maximise the use of industrial by-products (slag, fly ash, waste gypsum) and alternative fuels (petcoke, solid and liquid chemical wastes) while maintaining high quality product attributes and functionality.

Your Company collaborates with the Aditya Birla Science and Technology Company Private Limited ("ABSTCPL"), which is the corporate research and development centre for the Aditya Birla Group. Current projects undertaken by ABSTCPL scientists include the use of computational or modeling methods for enhancing cement process productivity.


Your Company believes that its human capital will be the key to drive future progress and bring in differentiated growth. To facilitate this future-readiness, your Company has been focusing on effective skill building and development programs that equip its work-force take on larger and higher roles. As part of the development initiative, a number of employees were rotated from their existing roles to new roles.

Your Company is committed to strengthening its Employee Value Proposition while creating a World of Opportunities. Several initiatives to engage its employees were taken. Their effectiveness is reflected as improvement in Employee Engagement scores in 2016. Initiatives driven by your Company's Sales & Service Academy run flagship programs like FrontStep and NextStep covering the frontline sales employees and developing them for effectiveness and growth. The Technical Training Centre drove technical effectiveness and business simulation programs for various levels of managers. A career building program called StepAhead was launched in collaboration with Xavier Institute of Management (XLRI) for developing managers for higher roles. As on 31st March, 2017, your Company's employee strength stood at 14,240 employees (14,410 employees).


The safety excellence journey is a continuing process at your Company. The safety of the people working for and on behalf of your Company is an integral part of business. Your Company's Managing Director chairs the Safety Board, which reviews the safety performance of your Company on a regular basis. In addition, there are eight safety sub-committees headed by senior leaders to closely monitor various key performance indicators related to safety. During the year, more than 600,000 safety observations have been carried out to identify unsafe acts and conditions, out of which more than 90% of actions have been addressed to make our workplace safer. Corporate safety audit by cross functional teams and structural stability assessment by third parties is carried out across your Company's locations and around 95% of identified high-priority points have been completed to ensure that the structures across our Units are safe.


In terms of the provisions of Section 135 of the Act read with 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. The other Members of the Committee are Mr. G. M. Dave, Independent Director, Mr. O. P. Puranmalka, Non-Executive Director and Mr. K. K. Maheshwari, Managing Director. Dr. Pragnya Ram, Group Executive President, Corporate Communication & CSR is a permanent invitee to the Committee. Your Company also has in place a CSR Policy which is accessible on your Company's website viz. .

Your Company's CSR activities are focused on Social Empowerment & Welfare, Infrastructure Development, Sustainable Livelihood, Health Care and Education. Various activities have been initiated during the year in neighboring villages around its Units resulting in a spend of ' 54.15 crores, being more than 2% of the average net profits of the last three financial years for the purposes of CSR. Your Company has also identified projects under the Swachha Bharat Abhiyaan, work on which is being carried out in all earnest.

A report on CSR activities is attached as Annexure III forming part of this Report.


In the matter of your Company's wholly-owned subsidiary, Gotan Lime Stone Khanij Udyog Private Limited ("GKUPL"), the Supreme Court of India has directed the State of Rajasthan to frame and notify its policy relating to transfer of mining lease and thereafter pass appropriate order in respect of the mining lease of GKUPL. Your Company is in the process of making an application for the transfer of mines under the State Government's new policy related to transfer of mining lease.

The audited financial statements of your Company's subsidiaries and joint venture viz. Dakshin Cements Limited, Harish Cement Limited, GKUPL, Bhagwati Lime Stone Company Private Limited, UltraTech Cement Middle East Investments Limited, UltraTech Cement Lanka (Pvt.) Limited, PT UltraTech Mining Indonesia and PT UltraTech Investments Indonesia as well as related information are accessible on the website of your Company viz. and also available for inspection during business hours at the Registered Office of your Company. 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 at the Registered Office of your Company.

In accordance with the provisions of Section 129(3) of the Act, read with the Companies (Accounts) Rules, 2014, a report on the performance and financial position of each of the subsidiaries, associates and joint ventures is attached as Annexure IV to this Report.


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 the Notes to the financial statements.


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.


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 Section 197(12) of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars of employees drawing remuneration in excess of the limits set out in the aforesaid Rules, forms part of this Report. However, in line with the provisions of Section 136(1) of the Act, the Report and Accounts as set out 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 at the Registered Office of your Company.


In terms of Regulation 34(2)(f) of the Listing Regulations, a Business Responsibility Report forms part of this Annual Report.


During the financial year, your Company entered into related party transactions which were 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.

The policy on Related Party Transactions as approved by the Audit Committee and the Board is accessible on your Company's website viz. .

The details of contracts and arrangement with related parties of your Company for the financial year ended 31st March, 2017 are given in Note 38 to the financial statements of your Company.


Your Company has constituted a Risk Management Committee which is mandated to review the risk management plan / process of your Company and has adequate risk management procedures, which are based upon business environment, operational controls and compliance procedures. The major risks are assessed through a systemic procedure of risk identification and classification. Risks are prioritised according to significance and likelihood. The risk assessment is not limited to threat analysis, but also identifies potential opportunities. The Risk Management Committee oversees the risk management process.

Key Business Risks identified by your Company -

Securing primary raw material

Limestone is the primary raw material required for production of cement. Its continuous and long term availability is critical, particularly under the dynamic regulatory environment. Although your Company possesses sufficient limestone reserves, securing additional reserves is imperative to address your

Company's expansion plans and elongate the life of existing reserves. Under the new Mines and Minerals (Development & Regulation) Amendment Act, 2015 ("MMDR"), leases granted before the commencement of the Act, for captive use are extended upto a period ending on 31st March, 2030, or a period of 50 years from the date of last renewal, whichever is later. Under the said MMDR and Rules made thereunder, in future, all mining leases will be granted by way of an auction only.

Low demand and overcapacity

Over the last financial year the cement demand growth in the country has remained muted. The investments in new capacities by the industry has largely remained unutilised. It is estimated that the incremental demand in the coming years shall exceed the incremental new capacity of the industry. The Government's push on infrastructure and housing will help in increasing cement consumption and reduce the demand-supply gap.

Fuel costs

The cement manufacturing process is extremely energy intensive. During the current year your Company was able to gradually shift its consumption of coal to pet coke. However, fuel prices have been rising continuously during the year driven by the global demand supply scenario. Your Company continuously reviews its fuel mix to optimise consumption and continues exploring alternative sources.

Regulatory and Compliance

With the ever evolving regulatory framework in the country the risk of non-compliance and penalties loom large and carry reputational risks. Your Company has taken steps to automate the compliance procedures and has deployed adequate measures for periodic review mechanisms of the regulatory framework to ensure complete compliance with all statutes.

Competition Risks

With every new entrant the risks on sales volume, market share and profitability stands enhanced. With the foray of new entrants and also capacity expansion by the existing player's, competition in the Indian cement industry is a reality. Your Company continues to enhance brand equity through enhanced marketing activities and customer centricity. Continuous efforts are also deployed in enhancing the product portfolio and value adding services.

Financial Risks

Your Company's exposure to interest rates, foreign exchange rates and commodity prices is subject to market dynamics. The Company's policies to counter such risks are reviewed periodically and aligned with the financial market practices and regulations.


Your Company has in place adequate internal control systems commensurate with the size of its operations. Internal control systems comprising of policies and procedures are designed to ensure sound management of 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. Systems and procedures are periodically reviewed to keep pace with the growing size and complexity of your Company's operations.


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 so as to give a true and fair view of the state of affairs of your Company as at 31st March, 2017 and of the profit of your Company for the year ended on that date;

iii. proper 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.


Changes in the constitution of the Board

Mr. R. C. Bhargava and Mr. Rajiv Dube resigned as directors from the Board of your Company with effect from 20th July, 2016. The Board places on record its deep appreciation for the services rendered by Mr. Bhargava and Mr. Dube during their tenure as Members of the Board.

Mr. D. D. Rathi (DIN: 00012575) retires from office by rotation and being eligible, offers himself for re-appointment. A brief resumes of Mr. Rathi forms part of the Notice of the ensuing Annual General Meeting.

During the financial year 2016-17, Mr. K. K. Maheshwari, Managing Director and Mr. Atul Daga, Whole-time Director & Chief Financial Officer have not received any commission / remuneration from your Company's holding as well as subsidiary companies.

Meetings of the Board

The Board of Directors of your Company met 7 times during the year to deliberate on various matters. The meetings were held on 25th April, 2016, 9th June, 2016, 4th July, 2016, 19th July, 2016, 17th October, 2016, 21st January, 2017 and 14th February, 2017. Further details on the Board of Directors are provided in the Corporate Governance Report forming part of this Annual Report.

Independent Directors' Statement

Independent Directors on your Company's Board have submitted declarations of independence to the effect that they meet the criteria of independence as provided in Section 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations.

Formal Annual Evaluation

The evaluation framework for assessing the performance of Directors of your Company comprises of contributions at the meetings, strategic perspective or inputs regarding the growth and performance of your Company, among others.

Pursuant to the provisions of the Act and the Listing Regulations, the Directors have carried out the annual performance evaluation of the Board, Independent Directors, Non-executive Directors, Executive Directors, Committees and the Chairman of the Board. The manner of evaluation is provided in the Corporate Governance Report.

The details of program for familiarisation of Independent Directors of your Company are accessible on your Company's website viz.

Policy on Appointment and Remuneration of Directors and Key Managerial Personnel and Remuneration Policy

The NRC has formulated the Remuneration policy of your Company which is attached as Annexure VII to this Report.


In terms of the provisions of Section 203 of the Act, Mr. K. K. Maheshwari, Managing Director; Mr. Atul Daga, Whole-time Director & CFO and Mr. S. K. Chatterjee, Company Secretary are the Key Managerial Personnel of your Company.

audit committee

With Mr. R.C. Bhargava stepping down from your Company's Board, the Audit Committee has been re-constituted with the induction of Mr. S. B. Mathur, Mr. D. D. Rathi and Mrs. Alka Bharucha. The Committee now comprises of Mr. S. B. Mathur, Mr. G. M. Dave, Mrs. Renuka Ramnath, Mr. D. D. Rathi and Mrs. Alka Bharucha. The Committee comprises of majority of independent directors with Mr. Mathur being the Chairman. Mr. K. K. Maheshwari, Managing Director and Mr. Atul Daga, Whole-time Director & CFO are the permanent invitees. Further details relating to the Audit Committee are provided in the Corporate Governance Report forming part of this Annual Report.


Your Company has in place a vigil mechanism for Directors and employees to report instances and concerns about unethical behaviour, actual or suspected fraud or violation of your Company's Code of Conduct. Adequate safeguards are provided against victimisation to those who avail the mechanism and direct access to the Chairman of the Audit Committee in exceptional cases is provided to them.

The vigil mechanism is accessible on your Company's website viz.


The Competition Commission of India ("CCI") vide its order dated 31st August, 2016, imposed a penalty on eleven companies, including your Company. The CCI order is pursuant to the directions issued by the Competition Appellate Tribunal ("COMPAT") vide its order dated 11th December, 2015 setting aside the original CCI order dated 20th June, 2012 and remitting the matter to CCI for fresh adjudication of the issue and passing a fresh order. Your Company filed an appeal against the CCI Order before COMPAT. COMPAT has granted stay on the CCI order on condition that your Company deposit 10% of the penalty, amounting to ' 117.56 crores, which has since been deposited.

In a separate matter, the CCI vide its order dated 19th January, 2017 has imposed a penalty of ' 68.30 crores on your Company pursuant to a reference filed by the Government of Haryana. Your Company has filed an appeal against the said CCI order before COMPAT. COMPAT has granted stay on the said CCI order. Your Company, backed by a legal opinion, continues to believe that it has a good case and accordingly no provision has been made in the accounts on account of these two matters.


Statutory Auditors

Pursuant to 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) and M/s. Khimji Kunverji & Co., Chartered Accountants, Mumbai (Registration No: 105146W) had been appointed as Joint Statutory Auditors of your Company for a term of five years until the conclusion of the 20th Annual General Meeting ("AGM") and 21st AGM respectively. In terms of the provisions of the Act, your ratification to their appointment as Joint Statutory Auditors of your Company is being sought at the ensuing AGM and forms part of the Notice convening the said meeting. The Joint Statutory Auditors have confirmed that they are not disqualified to act as Auditors and are eligible to hold office as Auditors of your Company.

The observation 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

In terms of the provisions of Section 148 of the Act read with the Companies (Cost Records and Audit) Amendment 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., Cost Accountants, Ahmedabad, as Cost Auditors, to conduct the cost audit of your Company for the financial year ending 31st March, 2018 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. Accordingly, a resolution seeking your ratification for the remuneration payable to the Cost Auditors forms part of the Notice of the ensuing AGM.

Secretarial Auditor

In terms of the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has appointed M/s. BNP & Associates, Company Secretaries, Mumbai as Secretarial Auditor for conducting the Secretarial Audit of your Company for the financial year ended 31st March, 2017. The report of the Secretarial Auditor is attached as Annexure VIII. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.


In terms of the provisions of Section 92 (3) of the Act read with the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return of your Company for the financial year ended 31st March, 2017 is given in Annexure IX to this Report.


Your Company is committed to providing a safe and conducive work environment to all of its employees and associates.

Your Company has in place a Policy on Prevention of Sexual Harassment at Workplace, which is applicable to all employees of your Company, as per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 ("Prevention of Sexual Harassment of Women at Workplace Act").

Your Company ensures organisation wide dissemination of the Policy by conducting regular sessions throughout the year.

During the financial year 2016-17, your Company did not receive any complaints under Prevention of Sexual Harassment of Women at Workplace Act.


- There were no material changes and commitments affecting the financial position of your Company between end of the financial year and the date of this Report.

- Your Company has not issued any shares with differential voting.

- There was no revision in the financial statements.

- Your Company has not issued any sweat equity shares.


Statements in the Directors' Report and the Management Discussion and Analysis describing the Company's objectives, projections, estimates, expectations or predictions 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 stock availability and prices, cyclical demand and pricing in your Company's principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries within which your Company conducts business and other factors such as litigation and labour negotiations. Your Company is not obliged to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent development, information or events or otherwise.


Your Directors express their deep sense of gratitude to the banks, financial institutions, stakeholders, business associates, Central and State Governments for their co-operation and support and look forward to their continued support in 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
Mumbai, 24th April, 2017 (DIN: 00012813)


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