Expanded clinker and cement Strongly grinding unit at Simhapuri Positioned

Newly commissioned 30,000 TPA Upcoming Doors factory in boards plant at Simhapuri Malkapur, Hyderabad

NCL INDUSTRIES LIMITED Annual Report 2017-18 Contents

Overview Governance Financial Statements

02 Our Business Profile 10 Notice 36 Secretarial Audit Report

03 Products and Plant Locations 15 Directors’ Report 52 Independent Auditors Report

04 A Word from the Managing Director 20 Report On Corporate Governance 58 Balance Sheet

05 2018 Highlights 31 Management Discussion and Analysis 60 Statement of Profit & Loss Report 06 How We performed 64 Cash Flow Statement

08 Corporate Information 66 Notes

101 Attendance Slip & Proxy Form

Disclaimer Statements in this report that describe the Company’s objectives, projections, estimates, expectations or predictions of the future may be ‘forward-looking statements’ within the meaning of the applicable securities laws and regulations. The Company cautions that such statements involve risks and uncertainty and that actual results could differ materially from those expressed or implied. Important factors that could cause differences include raw materials’ cost or availability, cyclical demand and pricing in the Company’s principal markets, changes in government regulations, economic developments within the countries in which the Company conducts business, and other factors relating to the Company’s operations, such as litigation, labour negotiations and fiscal regimes. Our Founder | Our Inspiration | Our Guide

Mr. K. RAMACHANDRA RAJU (22-07-1934 - 28-06-2008)

“We strive to make you proud of the company you started” 2 NCL Industries Limited Annual Report 2018

Our Business Profile

NCL Industries Limited derives over 80% of its revenues from the cement business operating mainly in south India with an installed capacity of 2.70 million tons per annum. The rest of Cement Cement Bonded Particle the sales come from The company markets cement under Boards segments like cement the brand name Nagarjuna which is Bison Panel is a cement bonded available in various grades of ordinary particle board made out of 62% bonded particle Portland and pozzolana portland cement & 28% wood. Due to adoption board, ready mix cement. In addition, the company of a special manufacturing process, concrete and hydro also manufactures a special cement the panel acquires the strength & for supply to Indian Railways for durability of cement & the workability power. The company’s concrete sleepers. To strengthen of wood. Bison Panels are extensively strong brand equity, backward integration, company has used for several interior and exterior premium positioning a cement grade limestone mining applications such as roof sarking of in north coastal AP lease for an area comprising of more the modern airports in India. Bison than 210 hectares. NCL is one the Panels are fire, termite and moisture and low cost capacity major cement supplier for Polavaram resistant. expansion are key Irrigation project triggers for the Hydro Power Ready Mix Concrete Energy Division has two hydro power company’s future The company has Four plants projects - the first is at the head growth. The company for making RMC in Hyderabad & regulator of Srisailam Right Main is poised to benefit Visakhapatnam. These plants are Canal and the second hydel project equipped with adequate number of is on Right Bank High Level Canal from the upcoming transit mixers. of Tungabhadra dam, both together demand revival in producing 40-50 million units of south, increased thrust green power per annum on low cost housing Readymade Doors and infrastructure NCL Industries has collaborated with segments. AGT, a global manufacturer with advanced technology in building materials based in Turkey. NCL is setting up a two lakh square feet factory in Malkapur, Hyderabad, to produce ready made doors of 1000 Nos per shift 3 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS

Products and Plant Locations

Cement Telangana & Andhra Pradesh

Boards Telangana & Himachal Pradesh

Readymix Concrete Telangana & Andhra Pradesh

Energy Andhra Pradesh & Karnataka

CEMENT CEMENT BONDED PARTICLE BOARD Ordinary Portland Cement Plain, Laminated, Designer Boards & Planks Portland Pozzolona Cement Unit - 1: Simhapuri, Telangana 53-S Grade Cement Unit - 2: Paonta Sahib, Himachal Pradesh Unit - 3: Simhapuri, Telangana Unit - 1: Simhapuri, Telangana Unit - 2: Kondapalli, Andhra Pradesh Capacity: 90,000 Tons

Capacity: 2.70 Million Tons Markets: Andhra Pradesh, Telangana State, HYDRO POWER PROJECTS Tamil Nadu, Karnataka, Pondicherry. Unit - 1: Pothireddypadu, Andhra Pradesh Unit - 2: Hospet, Karnakata

Installed capacity: 15.75 MW READY MIX CONCRETE Unit - 1: Autonagar, Visakhapatnam, Andhra Pradesh Unit - 2: Patancheru, Hyderabad, Telangana State DOORS DIVISION Unit - 3: Rampally, Hyderabad, Telangana State Malkapur, Telangana State Unit - 4: Vellanki, Visakhapatnam, Andhra Pradesh 4 NCL Industries Limited Annual Report 2018

A Word from the Managing Director

Dear Shareholders

I am delighted to report several significant developments since my last communication in the Annual Report for FY 2017. All the expansion projects that we embarked upon have been successfully implemented. A new project for manufacture of high end doors has been taken up. FY 2018 recorded the highest ever turnover in your company’s history.

The total revenue of Rs. 1,340 Crores represented a growth of over 15% compared to the previous year. Profit Before Tax (Rs. 74 Crores) recorded a 20.7% rise over the previous year (Rs. 62 crores), However, as explained in the Directors’ Report, higher provision for tax including deferred tax resulted in a fall in the Profit After Tax (PAT) from Rs. 55 crores to Rs.49 Crores.

Successful conclusion of the Equity issue through the QIP route and repayment of a substantial part of the loans from the issue proceeds helped your company to strengthen its financials. These developments have placed your company on a firm platform. We are The focus during now poised to consolidate the gains and prepare for further growth. The focus during the current year will be to broaden and deepen the current year will our customer base, strengthen human resources, and greater be to broaden and operational efficiencies. Our able team of executives are sparing no efforts in achieving these objectives. “deepen our customer On the CSR front, it is a matter of immense satisfaction that the base, strengthen Junior College established by your company is shaping up very well. This college will help to realise the aspirations of the youth in the human resources, and vicinity of the plant to get quality education after the high school greater operational stage. efficiencies. Overall, the year that has gone by has been eventful and exciting. I look forward to coming with more good reports in my next communication. Thank you,

K Ravi ” Managing Director 5 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS

2018 Highlights

Revenue Profit Before Tax Cement Sales

`1,33,999 lakhs `7,437 lakhs `1.82 Million Ton (FY 17 ` 1,16,902 lakhs ) (FY17 ` 6,161 lakhs ) (FY17 1.53 Million Ton )

+ 14.62% + 21.71% + 19.13%

Qualified Institutional Placement (QIP) Product Diversification During the year under review, your company has successfully Readymade Doors raised an amount of Rs. 202 crores by way of Qualified NCL Industries has collaborated with AGT, Institutional Placement (QIP). Out of the proceeds of the a global manufacturer with advanced QIP issue, an amount of Rs.165 Crores has been utilized for technology in wood industry, based in redemption of the Non Convertible Debentures (NCDs’) and Turkey. NCL is setting up a two lakh square the balance amount was spent towards capital expenditure of feet factory in Malkapur, Hyderabad, with ongoing projects. capacity to produce 1000 doors per shift. Production is scheduled to start in 2018-19. Financial Performance Topline growth was primarily aided by growth in cement production and sales. Profit Before Tax (Rs. 74.37 Crores) recorded a 20.7% rise over the previous year (Rs. 61.61 crores), However, higher provision for tax including deferred tax resulted in a fall in the profit after tax (PAT) from Rs. 54.69 crores to Rs.49.11 Crores.

Cement Division Commercial Production at the expanded clinker and cement grinding capacity commenced from 7th March, 2018.

Boards Division: Production at the newly set up, 30,000 TPA capacity third boards plant commenced from 2nd December, 2017

Ready Mix Concrete New Ready Mix Concrete unit at Visakhapatnam, commenced its commercial operations from 14th December, 2017. 6 NCL Industries Limited Annual Report 2018

How We performed

REVENUE EBIDTA PBT (` Lakhs) (` Lakhs) (` Lakhs) 133999 116902 7437

6686 99748 14013 6161

12263

11786

79643

61220 7501

1233 3310

FY14 FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18 FY15 FY16 FY17 FY18

(3766)

PAT EPS DIVIDEND (` Lakhs) (`) (%)

5467 5307 25 25* 4911 14.90

14.56

12.51* 20

890 2.55

NIL NIL FY14 FY14 FY15 FY16 FY17 FY18 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18

(11.68)

(4080) *Increased Equity Capital *Proposed Dividend 7 OVERVIEW GOVERNANCE FINANCIAL STATEMENTS

MARKET CAP DEBT EQUITY RATIO CEMENT PRODUCTION (` Lakhs) No. of Times (LAKH MTs)

98630* 18.20

1.55 72749 15.16 1.13

12.77 1.25

10.72 1.09 34528 9.06

0.49 15686

7389

FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18

*increased Equity Capital

CEMENT SALES BOARDS PRODUCTION BOARDS SALES (LAKH MTs) (THOUSAND MTs) (THOUSAND MTs)

18.24 61.79 61.15 63.61 60.28 57.44 60.66 52.57 60.36 15.31 57.56

12.65 52.09 10.69

9.07

FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18 8 NCL Industries Limited Annual Report 2018

Milestones to Smile About Corporate 1979: Late Shri K Ramachandra Raju – first generation Information entrepreneur established Nagarjuna Cements Ltd- the company and commenced business. BOARD OF DIRECTORS COST AUDITORS 1982: S R and ASSOCIATES Mr. R. Anand F 26, Raghavaratna Towers IPO of 11,10,000 equity shares. Chairman (Independent) Chirag Ali Lane , Abids Hyderabad 500001, Telangana 1984: Kamlesh Gandhi Commercial production of cement at 66,000 tonnes Independent Director SECRETARIAL AUDITORS started. AJ SHARMA & ASSOCIATES Dr.R.Kalidas Company Secretaries 1985: Independent Director 5-8-352, No. 17, Raghava Declared 20% dividend (12% interim + 8% Final) Ratna Towers, Chirag Ali Lane, Abids, Lt.Gen. T.A.D’Cunha (Retd) Hyderabad - 500 001. 1987: Independent Director Changed the name from Nagarjuna Cements Ltd to NCL Industries Ltd. V.S.Raju FACTORIES Independent Director CEMENT DIVISION 1989: Simhapuri, Mattampally Mandal V.V.Goradia Suryapet Dist. Merger of Klayman Porcelains Ltd and Issue of shares at 2:5 to KPL shareholders. Commencement of Non-Executive Director Telangana State cement production after expansion to 1,98,000 TPA. Pincode - 508204 K Madhu 1990: Non-Executive Director Kadimpothavaram Village Rights – cum – Public issue of equity shares. Kondapalli, P.N Raju Krishna District, A.P. 1992: Non-Executive Director Pincode – 521228 Issued shares on right basis 1:5 at Par Commencement of Ceramic Unit – using natural gas Ashven Datla BOARDS DIVISION for first time in the country. Non-Executive Director Simhapuri, Mattampally Mandal Suryapet Dist. 1993: Mrs. Roopa Bhupatiraju Telangana State Commercial production of Cement Bonded Particle Non-Executive Director Pincode - 508204 Boards in technical collaboration with Bison Werke, Germany. K.Ravi Bhatanwali Village, Managing Director 1996: Paonta Sahib, Sirmour District, Prefab division executes orders worth Rs.2148 Lacs. N.G,V.S.G Prasad Himachal Pradesh Executive Director & CFO Pincode – 173025 1997: Introduction of Laminated Cement Bonded Particle K.Gautam ENERGY DIVISION Boards – first time in the world. Executive Director UNIT - I 1998: COMPANY SECRETARY Pothireddypadu, Head Regulator, Chabolu Village, ISO certification for Boards division & Cement Mr. T. Arun Kumar Division. Ceramic division hived off under the scheme Pothulapadu Post of arrangement to Vijay Porcelain Products Ltd. AUDITORS Nandikotkur TQ, VENUGOPAL & CHENOY Kurnool District, 2003: Chartered Accountants Andhra Pradesh Commenced cement production with expanded 4-1-889/16/2, Tilak Road, Pincode - 518 402 capacity of 2,97,000 TPA. Hyderabad - 500 001, Telangana