AFFLUENCE

ADHUNIK CEMENT LIMITED

REPORT OF THE BOARD OF DIRECTORS

For the year ended March 31, 2017

Your Directors have pleasure in presenting the Annual Report together with the Audited Financial Statement of the Company for the financial year ended March 31, 2017.

OPERATIONS AND BUSINESS PERFORMANCE

The revenue growth is almost flat during the year. The Company has recorded a revenue of Rs.409.88crores (Previous year Rs. 455.61crores). Your Company reported EBITDA of Rs. 58.41Crores in FY17 against EBITDA of Rs. 23.46Crore in FY16.

Increase in EBIDTA is mainly due to decrease in the consumption of stores and spares, decrease in power and fuel expenses, freight and forwarding charges etc.

The volume growth in North East Cement market was 1% in FY-2016-17 over FY-2015-16 and is projected to grow at 5% in FY 2017-18 primarily fuelled by Central Government funded projects. The total cement consumption is projected at an annualized figure of 7000 KMT for FY 2017-18. Dalmia as a brand has started creating a pull from the consumers and has also started commanding a premium in some markets over competition. Dalmia Cement Bharat Limited - North East (DCBL NE) have registered 2% market share growth in FY 2016-17 with an exit Market Share of 20% and is targeting to maintain the same Market Share of 20% for FY 2017-18.

FY 2017-18 shall experience some interesting developments for DCBL NE with the alignment of the sales force towards managing the micro level diversity of the various market requirements and cultures through the Cluster way of working therefore aspiring for a Price Leadership among NE players and more focus on conversions at the Individual House Builder levels. A stable Government at the State and Centre shall also ensure expedition of various Infrastructural Projects in the region to fruition facilitating the stated growth aspirations

The performance of the Company during the last three years is:

DIVIDEND

In view of the losses during the year under review, your Directors did not recommend any dividend for the financial year 2016-17 and did not propose to transfer any amount to Reserves.CHANGES IN BUSINESS

There have been no changes in business carried on by the Company.

SCHEME OF ARRNAGEMENT AND AMALGAMATION

The Scheme of Arrangement between the Company, Adhunik MSP Cement (Assam) Limited, the subsidiary company and Dalmia Cement (Bharat) Limited, the holding company, is pending for final disposal by the jurisdictional National Company Law Tribunal (NCLT), Guwahati. The Scheme will become effective once the approval is obtained for the Holding Company and the copy of order is filed with the Registrar of Companies.

SUBSIDIARIES

The Company has one subsidiary namely Adhunik MSP Cement (Assam) Limited.Alsthom Industries Limited became step down subsidiary of the Company with effect from December 20, 2016 and ceased to be step down subsidiary on March 30, 2016. A statement containing the salient feature of the financial statement of its subsidiary, as required under section 129(3) of the Companies Act, 2013, in form AOC-1 is attached as Annexure-I

CONSOLIDATED FINANCIAL STATEMENTS

In compliance with section 129 and the Accounting Standard 21 on Consolidated Financial Statements, this Annual Report also includes Consolidated Financial Statements for the financial year 2016-17.

EXTRACT OF ANNUAL RETURN

In compliance with sub-section (3) of section 92 of the Companies Act 2013, the extract of the annual return is attached in Form MGT-9 and forms part of this report as Annexure– II.

MEETINGS OF BOARD OF DIRECTORS

During the financial year under review, the Board of Directors met for four times on May 12, 2016, August 3, 2016, October 21, 2016and February 1, 2017.DIRECTORS AND KEY MANAGERIAL PERSONNEL

As at March 31, 2017, the Board comprises of seven Directors of whom two are independent Directors, one Whole Time Director, three non-executive Directors and one woman Director

Shri  PhonSyih and Smt. Manisha Bansal, Directors are liable to retire by rotation at the ensuing Annual General Meeting and are eligible for re-appointment.

Pursuant to the provisions of section 149 of the Companies, Act, 2013, Independent Directors namely, Shri. R Vaidyanathan and Shri. PrakashBajirao Kulkarni have submitted the declaration of independence, as required pursuant to section 149(7) of the Companies Act, 2013 stating that they meet the criteria of independence as provided in sub section (6).

AUDIT COMMITTEE

As on March 31, 2017, the Audit Committee comprised of three members, Mr. T. Venkatesan, as its Chairman, Mr. P.B. Kulkarni and Mr. R. Vaidyanathan, as its members. Mr.Vaidyanathan and Mr.P.B. Kulkarni are independent Board members. The Committee met three times during the year on May 12, 2016, October 21, 2016and February 1, 2017.

STATUTORY AUDITORS

M/s. S R Batliboi& Co LLP, Chartered Accountants, Gurgaon, the existing Statutory Auditors were appointed as Statutory Auditors of the Company at the Annual General Meeting held on August 23, 2014 for a balance period of four years. They have pursuant to section 141 of the Companies Act, 2013, furnished a certificate regarding their eligibility as Statutory Auditors of the Company and that their appointment is within the ambit of section 139 of the Companies Act, 2013.

The Audit Committee and the Board of Directors have recommended for ratification of appointment of M/s. S R Batliboi& Co LLP, Chartered Accountants as the Auditors of the Company for Audit of Accounts for the year to end on March 31, 2018.

The Members are requested to ratify the appointment of M/s. S R Batliboi& Co LLP as Auditors from the conclusion of the ensuing Annual General Meeting till the conclusion of the next following Annual General Meeting to be held for FY 2017-18.

The report of the Statutory Auditors is self-explanatory and does not contain any qualification or adverse remark requiring clarification from the Directors.

During the year under review, the Statutory Auditors have not reported any matter pursuant to Section 143 (12) of the Companies Act 2013

COST AUDITORS & COST AUDIT REPORT

Pursuant to section 148 of the Companies Act, 2013, the Board of Directors on recommendation of the Audit Committee appointed M/s. HMVN & Associates, Cost Accountants, Delhi as Cost Auditors of the Company for its Cement and power operations for the financial year 2016-17 and the shareholders at the last Annual General meeting, had ratified their remuneration.

The Cost Audit Report for the financial year 2015-16 has been filed with the Ministry of Corporate Affairs on August 24, 2016 vide SRN G09812033, within the allowed time frame. The Cost Audit Report for the financial year ended March 31, 2017 will be filed within time.

The Board of Directors, on recommendation of the Audit Committee, has appointed M/s. HMVN & Associates for audit of cost records of the Company for the financial year to end on March 31, 2018 subject to ratification of their remuneration by the Shareholders.  M/s. HMVN & Associates have confirmed that their appointment is within the limits and also certified that they are free from any disqualifications. The Audit Committee has also received a certificate from the Cost Auditors certifying their independence and arms’s length relationship with the Company.The Shareholders are requested to ratify the remuneration of Cost Auditors.

SECRETARIAL AUDITORS

The Board had appointed M/s. Harish Khurana & Associates, Company Secretaries in Whole Time Practice, to carry out Secretarial Audit under the provisions of section 204 of the Companies Act, 2013 for the financial year 2016-17. The report of Secretarial Auditor is annexed to this report as Annexure-III.

PARTICULARS OF LOANS, GUARANTEES & INVESTMENT

The particulars of loans given by the company are furnished in note no 11 of the standalone financial statements the said loan were proposed to be utilised for short term working capital and general corporate purposes by recipient companies.During the year under review the Company has not made any investments and given any guarantee in favour of anybody corporate body.

RELATED PARTY TRANSACTIONS

During the year there were no material contracts or arrangements with related parties referred to in section 188(1) of the Companies Act, 2013. Hence Form AOC-2 is not being attached to this Report.

CONSOLIDATED FINANCIAL STATEMENTS

In compliance with section 129 and the Accounting Standard 21 on Consolidated Financial Statements, this Annual Report also includes Consolidated Financial Statements for the financial year 2016-17.

PUBLIC DEPOSITS

The Company has not invited or accepted any fixed deposits from the public.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of the provisions of Section 134(3)(c) read with section 134(5) of the Companies Act, 2013 your Directors state that:

i)              In the preparation of the Annual Accounts for the year ended March 31, 2017, the applicable Accounting Standards have been followed;

ii)             They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2017;

iii)            They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv)           They have prepared the annual accounts on going concern basis.

v)            They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

NOMINATION AND REMUNERATION COMMITTEE

As on 31st March, 2017, the Nomination and Remuneration Committee comprised of Mr. R. Vaidyanathan, as its Chairman Mr. P.B. Kulkarni and Mr. Ajit Menon, as its members. Mr. Vaidyanathan and Mr. Kulkarni are independent Board members. At the recommendation of the Nomination and Remuneration Committee the Board of Directors had formulated a Nomination and Remuneration Policy on Directors’ appointment and remuneration including criteria for determining qualifications, positive attributes, independence and other matters provided under section 178(3) of the Companies Act, 2013. The highlights of this policy forms part of this report as Annexure-IV.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The details of energy conservation and technology absorption undertaken by the Company and the foreign exchange earnings and outgo, if any along with the information in accordance with the provisions of Section 134 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014 annexed as Annexure-V and forms part of this report.

PARTICULARS OF EMPLOYEES

During the year under review, there was no employee in the Company who was in receipt of remuneration in excess of the limits prescribed under the provisions of Section 197 of the Companies Act, 2013, read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

HUMAN RESOURCES

HR practices of your Company aim to enhance the capability of the organization through creating performance and result driven culture, employee value proposition and supporting operations through effective systems and processes. The Company continued to invest in creating progressive human resources practices to create value for its customers, stakeholders and investors.

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition &Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.  The Committee has not received any complaint of sexual harassment during the year 2016-17.

HEALTH, SAFETY AND ENVIRONMENT

Health and safety of employees and clean environment receive utmost priority at all locations of your Company. It has implemented EHS System and provided safe working environment at its plant. Use of personal protective equipment by employees has become compulsory and training programs on Health, Safety and Occupational Health are being conducted on a continuous basis. Our endeavour is to make all our plantssafe plants and keep all its employees healthy. Your Company has a philosophy that ‘Clean & Green’ is more profitable.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS:

Based on the adherence to framework of internal financial controls and compliance system followed by the ultimate holding company and work performed by Statutory Auditors, the Board is of the opinion that the Company’s internal financial controls were adequate and effective during the period ended on 31-3-2017.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION , PROHIBITION AND REDRESSAL) ACT 2013.

The Ultimate Holding Company of the Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition Prohibition&Redressal) Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

ACKNOWLEDGEMENT

Your Directors take this opportunity to express their sincere gratitude and appreciation for the assistances, co-operation and contributions rendered by the Investors, Banks, Government Authorities, Vendors, Members, Business Associates, Shareholders, Employees and other persons who are  associated with your Company.

For and on behalf of the Board of Directors