Corporate office Hansalaya Building, 11th & 12th Floor 15, Barakhamba Road, New Delhi – 110001 Ph: 011 – 23310121 / 23 / 24 25, Fax: 23313303 Email: [email protected] [email protected] Dalmia Bharat Limited Website: www.dalmiabl.com Annual report 2014-15 Corporate information Board of Directors Bankers Pradip Kumar Khaitan – Chairman State Bank of India Jai Hari Dalmia – Managing Director Axis Bank Punjab National Bank Yadu Hari Dalmia– Managing Director Corporation Bank Gautam Dalmia Oriental Bank of Commerce Puneet Yadu Dalmia Deutsche Bank N. Gopalaswamy Honk Kong and Shanghai Banking Corporation Virendra Singh Jain Registered Office Sudha Pillai Dalmia Bharat Limited Jayesh Doshi – Whole Time Director & Dalmiapuram - 621651 Group Chief Financial Officer Dist Tiruchirapalli Tamil Nadu Management Team Gautam Dalmia Corporate Office Puneet Yadu Dalmia Hansalaya Building, Mahendra Singhi 11th & 12th Floors 15, Barakhamba Road T. Venkatesan New Delhi – 110001 Jayesh Doshi Registrar and Share Transfer Company Secretary Agent Nidhi Bisaria Karvy Computershare Private Limited Karvy Selenium Tower B, Plot 31-32 Auditors Gachibowli, Financial District, S.S. Kothari Metha & Co. Nanakramguda, Hyderabad – 500 032 Contents Overview by the management 02 Directors’ Report 53 Forward-looking statement In this annual report, we have disclosed forward-looking information to enable investors to comprehend our prospects and take informed investment Pillars of company’s success 08 Report on Corporate Governance 57 decisions. This report and other statements – written and oral – that we periodically make, contain forward-looking statements that set out anticipated Corporate identity 32 Standalone financial statement 71 results based on the management’s plans and assumptions. We have tried wherever possible to identify such statements by using words such as ‘anticipates’, ‘estimates’, ‘expects’, ‘projects’, ‘intends’, ‘plans’, ‘believes’ and words of similar substance in connection with any discussion on future Performance highlights 34 Consolidated financial statement 102 performance. We cannot guarantee that these forward-looking statements will be realised, although we believe we have been prudent in assumptions. The Management discussion and analysis 36 Annexure forming part of Directors’ Report 155 achievement of results is subject to risks, ncertainties and even inaccurate assumptions. Should known or unknown risks or uncertainties materialise, or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated or projected. We undertake no obligation to publicly update any forwardlooking statements, whether as a result of new information, future events or otherwise. A PRODUCT [email protected] At Dalmia Bharat, it is about our passion. To do things at the right time in the best possible manner. At the lowest possible cost, resulting in improved margins. And in the most sustainable way. Passion is the cause. Growth is the result. Segment: Overview by the management “Your Company is focused towards sustainable business growth’’ Puneet Yadu Dalmia and Gautam Dalmia, Directors of Dalmia Bharat Limited, discuss the Company’s strategic direction 02 Dalmia Bharat Limited Dear shareholders, We increased our stake in OCL India our carbon footprint. We are among Limited, a leading cement player in Eastern three Indian Cement Sustainability The Indian economy is perched at an India, during the year under review. Initiative members, a platform of 25 global inflection point. cement companies, to promote best We brought our multi-year capital Encouraging macro-economic global practices within the industry. We expenditure programme to a temporary indicators, a stable government and the harnessed people capabilities through an end and will progressively monetise implementation of prudent monetary empowerment-driven workplace, helping investments, maximise surpluses and policies have created a foundation for unleash their potential. We invested in strengthen our Balance Sheet. economic recovery. rural community engagement initiatives Inflation has moderated, helping India’s Positioning around the locations of our manufacturing central bank initiate rate cuts. The We are attractively placed to make this presence, strengthening the country’s rural Government has strengthened policy happen. fabric. reforms to enhance business ease, attract We enjoy adequate operating leverage We take this opportunity to thank all our investment, grow infrastructure and following recent capacity additions. employees, our prime assets, for their position India as a global manufacturing continuous dedication and commitment. hub. The capital invested in enhancing units and We would also like to thank all our vendors, capacities was efficiently deployed, which business associates, partners, lenders and Proactive can potentially reinforce our long-term stakeholders for their continued faith Dalmia Bharat invested proactively in sectoral outperformance. and support. We also sincerely thank our capability building to achieve scalability We enhanced operating efficiencies and Board of Directors for their invaluable and integration coupled with cost optimized costs, our variable costs for 2014- contribution in the area of governance. optimization and inclusiveness. 15 being lower than the previous year. Your sincerely, We brought a distinctive passion to We mobilised capital at one of the lowest capacity creation. We grew our capacity costs, our capital cost per tonne (including from 1.2 MnT to 24 MnT, all in less than acquisition) being attractively competitive a decade, possibly one of the fastest compared to the cement industry’s Gautam Dalmia capacity additions by any cement Group in replacement cost, an adequate buffer of Director India, graduating us to one of the top five long-term competitiveness. cement Groups in India. We strengthened our inclusive We widened our market presence from two relevance through environment-friendly Puneet Yadu Dalmia states to 18 states. manufacturing practices, which reduced Director Dalmia Bharat invested proactively in capability building to achieve scalability and integration coupled with cost optimization and inclusiveness. Annual Report 2014-15 03 At Dalmia Bharat, we have a number of people to thank. All those who exclaimed, ‘What good will this lead to?’ All those who sagely advised, ‘Times are difficult. Lie low.’ All those who pronounced, ‘No, this is not how our industry does it’. All those whose first reaction to our lateral ideas was ‘Impossible!’ 04 Dalmia Bharat Limited The result is a differentiated outcome. We are one of top five cement Groups in India We are one of the market leaders in each region we serve We have continuously optimised our operating efficiencies Annual Report 2014-15 05 What makes Dalmia Bharat different? Strategy We made strategic acquisitions. We focused on attractive zonal markets. We made cost optimisation our mantra. We reinforced our branding strategy. We ensured prudent capital deployment. Belgaum Plant, Karnataka 06 Dalmia Bharat Limited Pursued a zonal (South and East) approach Positioned as a premium brand Created niche cement markets around customized applications. Accelerated capacity expansion to prepare for an impending rebound in cement demand. Dalmia Bharat. A 24 MnT cement Group Annual Report 2014-15 07 Pillars of our success. 08 Dalmia Bharat Limited Growth Scale through Profitability through Sustainability through Passion reflected through capacity continuous a distinctive brand a sensitive community in clear strategic creation enhancement of positioning engagement. vision operational efficiencies Annual Report 2014-15 09 CAPACITY CREATION Challenging economic scenario. Attractive opportunity. Focused capacity building. Recovery-ready. Belgaum Plant, Karnataka 10 Dalmia Bharat Limited Overview against a prevailing average of $140 per tonne for In a business where scale strengthens brand integrated cement plants. and viability, there is a need to expand with the The acquisitions did more than just increase the objective to enhance competitiveness. Company’s capacity; they widened the Company’s Dalmia Bharat accelerated capacity creation zonal dispersal. Until 2010, 80% of Dalmia Bharat’s during the challenging times with the objective to installed capacity was located in South India; as be recovery-ready when the market revived. on 31 March 2015, this significant zonal exposure had been moderated to 48% as the Company The Company made a significant break from extended its presence to Eastern India (52% of tradition; even as it was present for 70 years capacity). in South India, it extended its presence to the relatively overlooked (and under-penetrated) East In the space of just three years, Dalmia Bharat India (including North East India) in the last few altered its personality. From a South India years. company with a negligible presence in East India, the Company is now optimally diversified Review between Eastern and Southern India. The Dalmia Bharat invested in aggressive capacity Company enhanced its Eastern India presence expansion (organic and inorganic) across the last (including North East) to an aggregate 12.5 MnT decade, one of the highest capacity accretions in FY2014-15, now serving all the states in Eastern by any cement Group in India. The Company’s India (including North East). capacity of 1.2 MnT in 2006 grew to 24 MnT in Through the acquisition route, the Company 2014-15. Of the incremental capacity