Your Directors have the pleasure in presenting the 70th
Annual Report together with the Audited Financial Statements for the year ended 31st
March 2024. The Management Discussion & Analysis Report which is required to be
furnished as per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
(hereinafter referred to as the Listing Regulations) has been included in this Report to
avoid duplication and overlap.
ECONOMIC OVERVIEW & COMPANY PERFORMANCE
Economic Overview
Geopolitical implications of the Russia-Ukraine crisis, conflict in
Middle East and Red Sea disruptions continued to prevail during the year and impact global
supply chain. This led to high uncertainty and volatility across economies globally. The
prices of commodities, food, energy and fertilisers which rose sharply during FY23,
softened a bit after central banks responded with monetary policy tightening to contain
inflation. During FY24, global growth proved resilient, with inflation declining faster
than anticipated. Economic growth was divergent across countries, with strong growth in
the United States (US) and emerging markets which was offset by a slowdown in most
European countries, mainly Germany. Recent economic indicators point to some moderation of
growth and global trade remaining subdued. Further, the Red Sea crisis has increased
shipping costs sharply and lengthened delivery times, disrupting production schedules and
rising price pressures.
Global Gross Domestic Product (GDP) growth is projected to ease from
3.1% in 2023 to 2.9% in 2024, before recovering to 3.0% in 2025. Annual GDP growth (2.5%
in 2023) in the US is supported by household spending and strong labour market conditions
but is expected to moderate to 2.1% in 2024 and 1.7% in 2025. Euro area GDP growth is
projected to be 0.6% in 2024 and 1.3% in 2025, with activity held back by tighter monetary
policy in the near term and adverse effects of the energy price shock. Growth in China is
expected to ease from 5.2% in 2023 to 4.7% in 2024 and 4.2% in 2025, despite additional
policy stimulus, reflecting subdued consumer demand, high debt, and a weak property
market. The emerging-market economies continued to grow at a solid pace, despite tighter
financial conditions, reflecting the benefits of improved macroeconomic policy frameworks,
and strong investment in infrastructure in many countries. India and Indonesia are both
expected to expand steadily over the next two years, helped by strong investment growth,
with GDP rising by more than 6% % and 5% per annum respectively (source - OECD, Economic
Outlook, Feb 2024).
Global inflation, a key concern over the past two years, is showing
signs of easing. Global headline inflation fell from 8.1% in 2022 to an estimated 5.7% in
2023 and is projected to decline to 3.9% in 2024. However, food price inflation remains a
critical issue, exacerbating food insecurity and poverty, particularly in developing
countries.
The Indian economy registered sustained growth on the back of
increasing domestic demand, government impetus to infrastructure spending and export
growth, also enhanced by the continuing 'China Plus One' sourcing strategy of global
players. The Indian economy witnessed a great year, closing 2023 with a GDP of US$ 3.73
trillion, and a projected GDP growth rate of 6.3 % against the global average of 2.9 %. As
India is geared to become a US$ 5 trillion economy by 2027, the calendar year 2023 saw
decent manufacturing sector growth, supported by strong growth in the steel, cement, and
automobile manufacturing sectors. The infrastructure and real estate sectors have
performed well while the construction sector recorded decent growth. The manufacturing
sector has an estimated potential to grow into a US$ 1 trillion industry by 2025-26,
driven by the government's 'Make in India' initiative, which is further aided by multiple
industry-promoting schemes such as the Production-Linked Incentive (PLI) scheme.
Company Performance
Revenues
During the year, the standalone revenues grew by 4.9% and the
consolidated revenues by 0.6%. One of the key reasons for flat growth at consolidated
level is the weakening Rouble against INR at VAW, our Russian subsidiary representing
19.4% of consolidated CUMI. VAW's revenue in Rouble FY23 was converted into INR at 1.23 in
FY23 against 0.92 in FY24. At constant exchange rate of FY23, overall growth of CUMI would
have been 7.0% instead of 0.6%.
The Company began its financial year with a solid start in all three
business segments. On one side there were positive signs of improvement across economies
with inflation coming down, re-opening of China, easing of supply chain disruptions, and
stronger than expected aggregate demand, while on the other side some economies were
struggling with aggressive interest rate hikes, geo-political tensions, and recessionary
trends. Despite these challenges, the Company's performance yet again speaks about strong
demand for its quality products/ solutions, manufacturing and research capabilities, and
timely execution in domestic and overseas markets.
For the Abrasives segment, consolidated revenues grew by 2.7% at ^20910
million compared to last year. Standalone Abrasives was at ^11503 million and grew by 3.9%
compared to last year. Industrial and precision segments had good growth. Retail segment
was below last year and was impacted due to low priced imports from China and competition
from new entrants. Sales for Russian subsidiary, Volzhsky Abrasive Works grew
significantly in local currency but resulted in de-growth when converted into INR. CUMI
America performed well, while the domestic subsidiary, Sterling Abrasives had marginal
growth. The German subsidiaries Rhodius and Awuko were able to deliver a single digit
growth when converted to INR compared
to last year despite softening in demand in parts of Europe and
aggressive price competition in the market.
Electrominerals, on a consolidated basis for FY24, had sales of ^15447
million compared to ^16338 million during last year. Standalone Electrominerals was at
^7411 million, and it grew by 5.6% compared to last year. Volume growth in Aluminas and
Silicon Carbide has been good, but price realisations were impacted due to low-priced
imports. Sales of the Russian subsidiary, Volzhsky Abrasive Works grew significantly in
local currency on account of product mix, exchange rate, and increase in price and volume.
However, when converted to INR, it shows a lower performance because of weaker Rouble in
FY24 against FY23. Foskor Zirconia, South Africa had lower sales volumes compared to last
year. This is majorly on account of postponement of offtake by their major customers and
price pressure from Chinese suppliers.
Consolidated Ceramics for FY24 grew by 4.8% to ^10767 million, whereas
standalone Ceramics grew by 5.6% to ^8813 million compared to ^8342 million during last
year. Refractory, Wear Ceramics and Metallised Cylinders' businesses combined grew in
double digits but with de-growth in Engineered Ceramics business, overall standalone
segment resulted in a 5.6% growth. Subsidiaries in Australia and America registered very
good growth.
Standalone business, which grew by 4.9% to ^25932 million in FY24, was
majorly driven by growth from Electrominerals segment at 5.6%, Ceramics segment at 5.6%
and Abrasives segment at 3.9%.
The subsidiaries in other segments including PLUSS Advanced
Technologies Limited (PLUSS) and Southern Energy Development Corporation Limited (SEDCO)
grew in double digit compared to last year, while Net Access India Limited de-grew
marginally.
The following table summarises the standalone and consolidated revenues
- both segment and geography wise:
(^ Million)
|
2023-24 |
2022-23 |
Growth |
|
% share |
Amount |
% share |
Amount |
% |
Standalone |
|
|
|
|
|
Abrasives |
44 |
11503 |
45 |
11069 |
4 |
Ceramics |
34 |
8813 |
34 |
8342 |
6 |
Electrominerals |
29 |
7411 |
28 |
7020 |
6 |
Eliminations |
(7) |
(1795) |
(7) |
(1699) |
(6) |
Total |
100 |
25932 |
100 |
24732 |
5 |
India |
76 |
19687 |
74 |
18400 |
7 |
Rest of the world |
24 |
6245 |
26 |
6332 |
(1) |
Total |
100 |
25932 |
100 |
24732 |
5 |
|
2023-24 |
2022 - 23 |
Growth |
|
% share |
1 Amount 1 |
1% share 1 Amount |
% |
|
Consolidated |
|
|
|
|
|
Abrasives |
45 |
20910 |
44 |
20353 |
3 |
Ceramics |
23 |
10767 |
22 |
10273 |
5 |
Electrominerals |
33 |
15447 |
36 |
16338 |
(5) |
Power |
1 |
327 |
1 |
259 |
26 |
IT services |
1 |
573 |
1 |
585 |
(2) |
Others |
1 |
617 |
1 |
542 |
14 |
Eliminations |
(5) |
(2359) |
(5) |
(2340) |
1 |
Total |
100 |
46282 |
100 |
46010 |
1 |
India |
46 |
21427 |
44 |
20321 |
5 |
Rest of the world |
54 |
24855 |
56 |
25689 |
(3) |
Total |
100 |
46282 |
100 |
46010 |
1 |
The Company's consolidated revenues from India grew by 5% and from rest
of the world de-grew by 3% due to Rouble depreciation.
Manufacturing
The manufacturing team played a vital role in focused production
planning and order execution to create a faster growth momentum. The core product segments
continued to run at full capacity. Continued focus on Total Productive Maintenance (TPM)
helped the Company improve the quality of its products and operate plants efficiently
while reducing the overall cost of operations. Capital expenditure across all geographies
was directed at capacity expansion, facilities for new products, quality enhancement, line
balancing, and general infrastructure.
Earnings & Profitability
The Company's standalone financial results are summarised in the table
below:
(^ Million)
|
As % of Sales |
2023-24 |
As % of Sales |
2022-23 |
Increase
% |
Sales |
|
25932 |
|
24732 |
5 |
Other Operating Income |
|
400 |
|
367 |
9 |
Revenue from Operations |
|
26332 |
|
25099 |
5 |
Other Income |
|
454 |
|
319 |
43 |
Total Income |
|
26786 |
|
25418 |
5 |
Expenses |
|
|
|
|
|
Cost of material consumed |
40 |
10299 |
40 |
9991 |
3 |
Purchase of stock in trade |
4 |
911 |
3 |
718 |
27 |
Movement of Inventory |
0 |
35 |
(0) |
(27) |
(229) |
|
As % of Sales |
2023-24 |
As % of Sales |
2022-23 |
Increase % |
Employee benefits |
10 |
2584 |
10 |
2369 |
9 |
expense |
|
|
|
|
|
Finance Cost |
0 |
42 |
1 |
150 |
(72) |
Depreciation and
amortisation |
3 |
726 |
3 |
745 |
(2) |
Power & Fuel |
9 |
2307 |
9 |
2295 |
1 |
Other expenses |
20 |
5251 |
21 |
5110 |
3 |
Total Expenses |
85 |
22155 |
86 |
21351 |
4 |
Profit before tax and exceptional item |
18 |
4631 |
16 |
4067 |
14 |
Exceptional item |
- |
- |
1 |
249 |
|
Profit before tax |
18 |
4631 |
17 |
4316 |
7 |
Profit after tax |
14 |
3504 |
13 |
3309 |
6 |
Total Comprehensive
Income |
13 |
3399 |
13 |
3236 |
5 |
Standalone profit before tax stood at ^4631 million as compared to
^4316 million during the previous year.
The Company uses a variety of raw materials for its products - Bonds,
Cotton Yarn, Grains, Calcined Alumina, Tabular Alumina, Brown fused Alumina, White fused
Alumina, Silicon Carbide, Mullite, Pet Coke, Bauxite, and Zircon Sand amongst others. The
sourcing is a prudent mix of indigenous and imported materials. Aided by judicious
sourcing and optimising throughout in production, material consumption continued to
improve during the year marginally. Significant improvement in specific material and
energy consumption was recorded across businesses. Also, 1.8 MWp of solar system was
commissioned at Edappally location.
Power and fuel cost increased by 0.5%from ^2295 million in the
preceding year to ^2307 million during the current year.
Employee benefits expense increased from ^2369 million in the preceding
year to ^2584 million during the current year.
Except for the Electrominerals segment, the Profit before finance cost,
exceptional items and tax expanded in all segments due to an increase in revenue, more
favourable cost structures and better realisation in some segments. The Electrominerals
segment was impacted due to the pricing pressures in the market.
Finance costs were at ^42 million compared to ^150 million in the
previous year. Total Comprehensive Income increased from ^3236 million to ^3399 million.
The consolidated profit before tax and exceptional item (before share
of Associate & Joint ventures) entity-wise is represented below:
(^ Million)
|
2023-24 |
2022-23 |
CUMI Standalone |
4631 |
4067 |
Subsidiaries including step down subsidiaries: |
|
|
Indian |
|
|
Net Access India Limited |
45 |
45 |
Southern Energy Development Corporation Limited |
(94) |
(47) |
Sterling Abrasives Limited |
195 |
220 |
PLUSS Advanced Technologies Limited |
(187) |
(179) |
Foreign |
|
|
CUMI (Australia) Pty Limited |
378 |
282 |
CUMI International Limited |
256 |
103 |
Volzhsky Abrasive Works |
1965 |
2046 |
Foskor Zirconia (Pty) Limited |
(102) |
104 |
CUMI America Inc. |
247 |
174 |
CUMI Middle East FZE |
(13) |
(10) |
CUMI Abrasives & Ceramics Company Limited |
(18) |
(47) |
CUMI Europe s.r.o. |
0 |
1 |
CUMI Awuko Abrasives GmbH |
(298) |
(457) |
Rhodius Abrasives GmbH# Total of Subsidiaries |
(155)
2219 |
(398)
1837 |
Inter Company Eliminations |
(786) |
(727) |
Consolidated profit before tax and share of profit from
Associate and Joint ventures |
6064 |
5177 |
Consolidated profit after tax attributable to owners |
4613 |
4140 |
# Consolidated
On a consolidated basis, the profit before tax and exceptional item
(before share of profit from Associate and Joint Ventures) increased to ^6064 million from
^5177 million. Profit after tax and non-controlling interests has increased to ^4613
million from ^4140 million. The performance of the subsidiaries is detailed separately in
this Report.
Financial Position
An overview of the Company's financial position - on a standalone and
consolidated basis is given below: (^ Million)
Financial position |
Standalone |
Consolidated |
|
31.03.2024 1 |
31.03.2023 |
% change 1 |
31.03.2024 |
1 31.03.2023 |
% change |
Net Fixed assets (including goodwill and Right of use assets) |
5741 |
5322 |
8 |
16391 |
16142 |
2 |
Investments - Non-current |
10393 |
10475 |
(1) |
1716 |
1612 |
6 |
Other Assets |
|
|
|
|
|
|
- Inventories |
3612 |
3795 |
(5) |
8502 |
8989 |
(5) |
- Trade receivables |
3786 |
3897 |
(3) |
6790 |
6274 |
8 |
- Cash and cash equivalents |
1726 |
99 |
1640 |
5549 |
3964 |
40 |
- Other assets |
662 |
796 |
(17) |
2571 |
2263 |
14 |
Total assets |
25920 |
24384 |
6 |
41519 |
39244 |
6 |
Liabilities (Other than loans) |
2945 |
3279 |
(10) |
7742 |
7458 |
4 |
Net assets |
22975 |
21105 |
9 |
33777 |
31786 |
6 |
Sources of funding: |
|
|
|
|
|
|
Total equity attributable to owner |
22975 |
20065 |
15 |
31257 |
28206 |
11 |
Non - Controlling interest |
- |
- |
- |
1393 |
1279 |
9 |
Loan outstanding: |
|
|
|
|
|
|
- Long term borrowings |
- |
- |
- |
275 |
429 |
(36) |
- Short term borrowings (including current maturities of long
time borrowings) |
- |
1040 |
(100) |
852 |
1872 |
(54) |
Total loans |
- |
1040 |
(100) |
1127 |
2301 |
(51) |
|
22975 |
21105 |
9 |
33777 |
31786 |
6 |
Loans (net of cash and cash equivalents) |
(1726) |
941 |
(283) |
(4422) |
(1663) |
166 |
On a consolidated basis, the total equity attributable to owners as on
31st March 2024 was ^31257 million. There was an increase (net of dividend) to
the extent of ^3051 million. Non-controlling interest was at ^1393 million and Liabilities
(other than loans) was at ^7742 million.
The loans outstanding decreased to ^1127 million from ^2301 million.
Net fixed assets (including goodwill and Right of use assets) increased to ^16391 million
during the current year from ^16142 million in the previous financial year.
Cash Flow
The Company's cash flow is healthy. The following table summarises the
Company's standalone and consolidated cash flows for the current and previous year: (^
Million)
Cash flow |
Standalone |
Consolidated |
|
2023-24 |
2022-23 |
2023-24 |
2022-23 |
Cash flow from Operations |
5114 |
4395 |
8112 |
5927 |
Taxes paid |
(1106) |
(955) |
(2097) |
(1625) |
Cash flow from operating activities |
4008 |
3440 |
6015 |
4302 |
Capital Expenditure (Net of disposal) |
(1226) |
(1564) |
(2343) |
(3006) |
Cash flow from other investing activities |
456 |
(558) |
478 |
434 |
Cash flow from investing activities |
(770) |
(2122) |
(1865) |
(2572) |
Cash flow from financing activities |
(1611) |
(1377) |
(2140) |
(1334) |
Net increase/(Decrease) in Cash & Cash equivalents |
1627 |
(59) |
2010 |
396 |
Net Cash and Cash equivalents at the beginning of the year |
99 |
158 |
3964 |
3475 |
Effect of exchange rate changes on the balances of cash and
cash equivalents held in foreign currencies |
- |
- |
(425) |
93 |
Cash and Cash equivalents at the end of the year |
1726 |
99 |
5549 |
3964 |
On a standalone basis, net cash generation from operations was ^4008
million in FY 2023-24 compared to previous year's ^3440 million. Net cash outflow on
account of investing activities was ^770 million majorly towards capital expenditure. Net
cash
outflow on account of financing activities was ^1611 million which is
attributable primarily to repayment of borrowings. The net increase in cash and cash
equivalents was ^1627 million against the net decrease of ^59 million in FY 2022-23.
Key Financial Ratios (on a standalone basis)
Parameter |
2023-24 |
2022-23 |
Favourable/ (Adverse) in % |
Comments |
R O C E (%) |
20.4 |
21.2 |
(4) |
Reduction is due to inclusion of exceptional income in last
year |
Debt Equity (times) |
- |
0.05 |
100 |
Due to repayment of entire current borrowings. |
PBT (%) to Sales* |
17.9 |
16.4 |
9 |
Increase due to better profitability. |
Asset turnover (times) |
1.76 |
1.84 |
(4) |
There is no significant movement |
Receivable turnover (days) |
54 |
53 |
(2) |
At the same level |
Inventory turnover (days) |
52 |
58 |
10 |
Improved due to effective inventory management |
Interest Coverage Ratio (times) |
130.1 |
33.0 |
294 |
Significant reduction in Finance costs consequent to
repayment of borrowings during the current year resulting in better coverage for the year |
Current Ratio (times) |
3.4 |
2.0 |
70 |
Due to repayment of entire current borrowings. |
Operating Profit Margin (%)* |
16.1 |
15.2 |
6 |
Increased efficiency and product mix |
Net Profit Margin (%) |
13.5 |
13.4 |
1 |
Stable margin |
Return on Net Worth (%) |
16.3 |
17.7 |
(8) |
Reduction is due to inclusion of exceptional income in last
year |
*excluding exceptional income/expenses (Net)
SHARE CAPITAL
The paid-up equity share capital as on 31st March 2024 was
^190.26 million. The capital increased during the year by ^0.32 million, consequent to
allotment of shares upon exercise of Stock Options by employees under the Company's
Employee Stock Option Plan 2016.
DIVIDEND
Considering the past dividend payout ratio and the current year's
operating profit, the Board has considered it appropriate to recommend a final dividend of
^2.50/- per equity share of ^1/- each. It may be recalled that in January 2024, an interim
dividend at the rate of ^1.50/- per equity share of ^1/- each was declared and paid in
February 2024. This aggregates to a total dividend of ^4.00/- per equity share of ^1/-
each for the year. The Company's Dividend Policy is available at https://
www.cumi-murueappa.com/wp-content/uploads/2019/02/ dividend-distribution-policv.pdf. The
dividend paid as well as being recommended for the year ended 31st March 2024
is in line with this policy.
TRANSFER TO RESERVES
An amount of ^500 million has been transferred to the General Reserve
of the Company as on 31st March 2024.
PERFORMANCE OF BUSINESS SEGMENTS
The business profile, market developments, and current year performance
are elaborated in the following sections:
Abrasives Business Profile
This SBU is in the business of engineering surfaces. It manufactures
and distributes rigid and flexible abrasives and adjacent products that are used in the
generation of precision, functional, or enduring surfaces. The key product segments are
Bonded Abrasives, Coated Abrasives, Metal Working Fluid, Super Abrasives and allied
products.
Rigid or Bonded Abrasives products grind, clean, scour, abrade or
remove solid material through a rubbing action. Bonded Abrasives are made using Glass
Bonds (vitrified), Rubber Bonds or Phenolic Resin Bonds. Coated Abrasives are hard
synthetic minerals coated onto paper, fibre, cloth, or film and finally formed into
different shapes, sizes and types according to application needs. Abrasive materials and
abrasive products are utilised in several end user industries such as Automobiles, Auto
Ancillary, Metalworking, Building and Construction, woodworking, Railways, Aerospace and
General Engineering.
This business has over seven decades of experience in abrasives
manufacturing, application engineering and distribution. Strong Research & Development
backed by application engineering and supported by multi-generation channel partners are
the strengths of this business. Over the years, the Company has a cutting edge in this
business as it has built world class facilities with strong processes.
The competitive advantage of the business comes from its raw materials
sourced from the Electrominerals business of the Company and from the best suppliers
within India and across
the world. These inputs are then formulated, and the products are
designed based on a deep understanding of the end-use applications and supplied through
robust distribution and retail networks.
Cost competitiveness is the overarching strategy for the business while
ensuring that the supply requirements and changing needs of the market are met in full.
The business has eleven manufacturing plants located across India,
Russia, and Germany.
Earlier, the Company acquired the assets of AWUKO Abrasives Wandmacher
Gmbh & Co. KG (AWUKO) in FY22. Awuko is a market leader in leather and wood
applications, and it has sufficient capacity for Coated Abrasives. This helped CUMI to
gain access to Coated Abrasives capacity in Europe with a global distribution base and an
experienced process and application engineering team. During same year CUMI acquired
Rhodius Abrasives and took control of the company effective from 1st April
2022. Rhodius manufactures best quality cutting and grinding discs globally. They lead in
product innovation and quality with unique professional segment product suite. They have a
proprietary production process setting industry benchmark. They have a strong legacy of
seven decades of successful business serving more than 100 countries.
The marketing entities in North America, Middle East, France, South
America, South Korea, Netherlands, and distributors across the globe provide strong market
reach in India and over 55 markets globally.
Industry Scenario
The Indian market has been continuously witnessing a shift from manual
grinding methods to mechanised processes, ushering in opportunities for new products in
the Coated Abrasives segment. The Bonded Abrasives segment constitutes a key consumable in
the Construction and Transportation industries, which has demonstrated high growth in the
past decade due to rapid urbanisation and an increase in disposable income.
After a muted Q2, industrial activity in India increased in Q3 and
positive trends were seen in Automotive sales - Passenger Vehicles (PV) and Tractors,
compared to FY 2022-23. Cement production and Steel consumption both realised growth in
Q3, after remaining subdued in previous months - positive signs for construction,
infrastructure, and SMEs. However, owing to substantial slowdown in global economies,
export linked businesses such as hand tool manufacturing, handicrafts, steel tube
manufacturing, tractor exports continue to languish leading to lower production and thus
lower consumption of abrasives.
Entry of several Paint Manufacturers in the abrasives segment relying
on cheap imported products from China impacted the Company as well as other India based
manufacturers.
Sales Overview
The Abrasives business on a standalone basis recorded revenues of
^11503 million compared to ^11069 million in the
previous year and on a consolidated level recorded revenue of ^20910
million as compared to ^20353 million in FY23.
The growth in automotive industry contributed to the growth in
Precision as well as Industrial Abrasives business. The Industrial Abrasives business grew
faster than the market through customer share gain and entirely high-volume growth in some
select product groups like Thin Wheels and Flaps & Mops. Very highly competitive
intensity continued in the Retail business, and this led to volume stress in this
vertical.
The business had better price realisation compared to last year. Better
product mix and better operational efficiencies helped the business to have better
margins. The cost optimisation projects which were initiated in FY23 related to
design-to-value, packaging cost improvements, process efficiencies, and automation
continued to deliver value in FY24.
The business continued to make steady progress in building distribution
leadership, a key strategic pillar for the Company's growth. The appointment of new
channel partners and expansion of dealer network across India helped the business.
Substantial ground steps were taken to reign in counterfeit sales. Industrial business has
focused on tracking derived demand, customer conversion, and sub-dealer motivation
programs. With the continued efforts to re-invest and reinforce, brand rationalisation
exercises have been undertaken.
New products continued to be developed and introduced in the market
meeting the needs of customers. Process led innovation and stage gate methodology were
implemented to enhance the success rate of new product launches. The business has invested
substantially in upskilling the team to enable the team to navigate the changes and to
deliver the results.
Manufacturing
The segment continued its focus on products made with high performance
grains by working in co-ordination with the Electrominerals business. This helped to build
a competitive advantage by developing and establishing a new range of products.
The focus on Coated Abrasives for FY24 was to improve the cost
competitiveness to meet the relentless pressure in market pricing due to entry of
non-abrasive players with cheaper imported products. While there was a drop in input
prices, the availability and lead time took a hit due to various geo-political issues.
Investments were made in an in-house cloth processing facility to improve quality and
reduce lead time. Investments were also made in conversion and automation on the shop
floor.
Bonded Abrasives continued with expansion of the QRM methodology (Quick
Response to Manufacturing) for its Make- to-order line segments which helped in reducing
factory lead time. A pilot level plant for manufacturing Super-Abrasives was also
operational from the second half of the year and products are getting acceptance in the
market. Investments were made in automated presses in the Thin Wheel line and in-house
testing and quality control equipment to improve quality and consistency. The emphasis was
also on enhancing safety at the workplace and enhancing Environment Social Governance
(ESG) performance. Liquid fuel to Piped Natural Gas- (PNG) initiatives were also completed
at Bonded facility in Hosur, Tamil Nadu.
The business successfully obtained from the Organisation for the Safety
of Abrasives, Germany, the right to use "oSa" certification for specified Thin
Wheel products produced in factories at Maraimalai Nagar and Uttarakhand after a stringent
evaluation
process. Learnings from the same is also being adopted in other
specific product lines.
The elements of Industry 4.0 have been imbibed in the day-to- day
operations to leverage the gains of IOT and data analytics. A pilot project for
implementing IOT was successful in one factory and the horizontal deployment of the same
across other locations is being taken up.
Key Financial Summary Million)
Particulars |
Standalone |
Consolidated |
|
2023-24 |
2022-23 |
Change(%) |
2023-24 |
2022-23 |
Change (%) |
Revenue |
11503 |
11069 |
4 |
20910 |
20353 |
3 |
Segment results (PBIT) |
1955 |
1512 |
29 |
1817 |
1047 |
74 |
Capital employed |
4424 |
3697 |
20 |
13863 |
13503 |
3 |
Share to total revenue of CUMI (%) (without eliminations) |
44 |
45 |
|
45 |
44 |
|
Share to segment results (PBIT) of CUMI (%) |
42 |
36 |
|
29 |
19 |
|
Ceramics Business Profile
The Ceramics business comprises of the Industrial Ceramics and the
Refractories product groups.
Industrial Ceramics
Industrial Ceramics business offers Advanced Ceramics & High-
Performance Materials in over 30+ unique formulations for demanding and cutting-edge
applications. The products deliver superior wear, electrical, corrosion, and ballistic
performance across a wide range of applications in Mining & Mineral Processing, Power
& Energy Systems, Mobility (Electric & ICE), Semiconductors & Electronics, and
Defence & Aerospace. The business is built on a strong foundation of technology,
advanced manufacturing, design, and application engineering.
The operations are carried out through manufacturing/service facilities
located in India, Australia, and the USA. The subsidiaries in North America, Middle East
and China also support this business in increasing market reach.
The Industrial Ceramics business based out of India is largely a global
business and majority of the sales volumes are through exports. The Company is one of the
major players in India, USA, Australia and Europe along with presence in specific product
groups in Japan and China.
The Industrial Ceramics business has three product groups - Wear
Protection Materials, Precision Engineered Ceramics, and Metallised Ceramics, for various
industrial applications.
The business offers Wear Protection products & services to extend
equipment life across a variety of industries such as Mining & Mineral Processing,
Steel, Power, Cement and Bulk material handling. The business has expanded its product
offerings and developed new applications across key industry segments
like port handling and non-ferrous industries. A solutions-based approach in solving
customer problems through on-site wear audits, superior design & simulation, on- site
installation services, enhances equipment performance, productivity, and life. A Prototype
remote monitoring system of version-1 enabling the Company/its customers to forecast
maintenance/ changeover of equipment has been tested. Version-2 with enhanced capability
has been developed and is under testing and planned to be launched commercially in FY25.
The Company is a leader in the Australian market and has executed key
projects in mining & port handling segments. The business expanded its customer base
with robust growth in America, Europe, Middle East and Japan.
Precision Engineered Ceramics are used in emerging applications with a
strong sustainability focus - such as Solid Oxide Fuel Cells, Hydrogen Electrolyzers, and
Electrical Mobility. A strong focus on agile product development and continuous process
innovation have helped the division roll out new products in collaboration with leading
global customers in the USA, Japan, and India. Capabilities have also been developed for
the manufacture of advanced components for the Semiconductor equipment industry.
The Company is a pioneer in India in the field of Metallised Ceramics
and is today a strategic supplier for Global OEMs in the field of power distribution and
also in Vacuum Electronics. With the objective of becoming a leader in Metallised Alumina
Cylinders for Vacuum Interrupters, the business has been continuously enhancing capacities
through new equipment and process innovations. The business has intensified its presence
in the mobility segment. The mobility segment is growing strongly driven by the demand
from the aftermarket
(in ICE technologies) and from the Electric Vehicle (EV) Industry.
During the year, the business also made a strong foray into the high-speed bullet train
project in India, with the supply of Advanced Ceramic Inserts.
The business has also been entering adjacencies and transformational
spaces in Advanced Ceramics & Materials. The facility for Silicon Carbide and
Non-Oxides is being further expanded to cater to the growing demands from industries such
as Defence, Chemical processing / Fluid Handling, and others.
New forming capabilities - Hydraulic press for near-net forming,
Isostatic Press for larger diameter and longer parts, enhanced capabilities in Ceramic 3D
Printing - have been added during the year, to enable manufacturing of next generation of
Ceramics for diverse applications.
Refractories
Super Refractories and Prodorite business addresses the thermal and
corrosion protection across a wide range of Industries. Deep knowledge of materials,
application engineering, and the ability to engineer shapes to meet critical operational
conditions add superior value to our customers and stakeholders.
The business has three product groups - Super Refractories,
Anti-corrosive and Composites.
Super Refractories are advanced materials that can withstand extremely
high temperatures in the range of 18500C and harsh thermal/chemical environments making
them the choice of materials for thermal protection of critical assets in applications
such as metallurgy, glass, and chemical processing. Super Refractories are made from high
purity raw materials such as alumina, zirconia, and silicon carbide.
Our strong knowledge of application engineering enables us to
understand critical customer problems, this coupled with on-site thermal audits, and
design techniques involving Finite Element Analysis (FEA), Computational Fluid Dynamics
(CFD), and Thermal imaging solves critical thermal problems for our customers.
The Company is a leading player in specialised fired refractory, both
dense and insulation bricks, intricate shaped items, Monolithics and pre-cast pre-fired
Refractories. The key user industries for Refractory business are Iron & Steel, Glass,
Carbon black, Cement, Ceramics, Petrochemicals, Thermal power plants, Non-ferrous
metallurgy, Foundry, Heat treatment furnaces etc.
Anti-corrosives
Prodorite branded Anti-corrosive material is used in highly acidic or
basic environments. The Company is a major player in this industry, serving a wide range
of Chemical process industries and other industries dealing with the treatment of
effluents. The Company's product range includes Acid resistant wall and floor tiles,
Carbon bricks, Tiles, Anti-corrosive Lining, Epoxy and PU Flooring, Screeding, PU and
Epoxy Coatings, and Waterproof construction chemicals. The Company's Polymer Concrete
Cells
(Tanks) are also used in Copper and Zinc extraction units across the
world.
The business uses a solution-based approach in helping our customer's
critical assets from harsh corrosive environments, using a combination of application
engineering, on-site corrosion audit and design & simulation knowledge to engineering
shapes that offer an optimum fit and performance.
Composites
Composites are primarily Glass or Carbon Fibre reinforced polymer
products manufactured through vacuum infusion, pultrusion, filament winding, grating, and
hand lay-up methods. The product range includes large Chemical storage tanks, Chimneys,
Flue Gas Desulphurisation (FGD) spray headers, Abrasion resistant Anti-corrosive pipes
& Gratings, Windmill nacelle covers and nose cones, Automotive and Railway body
panels, gratings, pallets, cable trays, flooring, chequered plates, roof sheets, chimney
ladders, platforms, bridges, louvers, fencing etc.
Carbon Fibre Reinforced Composites (CFRP) are advanced materials
manufactured by embedding Carbon Fibre into a Polymer matrix. These composites are valued
in applications where strength-to-weight ratios are crucial, such as in Aerospace, and
Defence segments. The dedicated dust free facility for manufacturing of structural parts
is certified for EN 9100-2018 (Equivalent to AS 9100D of the Society of Automotive
Engineers (SAE) and the JIS9100 -Japanese Aerospace Quality Group).
Industry Scenario Industrial Ceramics
The market for Wear Protection products - Mining, Mineral Processing,
Cement, Steel, and others - remained buoyant during the year in India, Australia, USA and
other key regions.
Solid Oxide Fuel Cells and Hydrogen market went through challenges due
to a slower ramp of Hydrogen, and slowdown in some regions.
The Metallised Ceramics vertical supplies predominantly to the Power
Distribution segment. The demand is expected to increase because of the push towards
renewable energy and growing electrification (mobility, industry, buildings); transport
(electric vehicles) and ageing infrastructure requiring modernisation.
Refractories
The demand for thermal protection of critical assets in core segments
like Steel, Glass, Chemical processing, Carbon Black and Cement remained strong throughout
the year.
The business executed large projects in Glass, Carbon black, Steel, and
Heat treatment industries. Mega trends of urbanisation, infrastructure development and
global rebalancing will drive the growth of refractory consumption.
However, the domestic market continues to experience considerable
inorganic consolidation.
During the year, the business made significant progress in the global
market in line with our strategic intent to go global. We
have expanded into key markets in Europe, USA, and the Middle East.
The business will continue to differentiate ourselves from the
competitors through superior value addition through application engineering and design.
Anti-Corrosive and Composites
The business saw a resurgence in demand in Chemical industries,
especially for fertiliser plants due to increased production of specialty crop nutrients.
The demand resulted in significant growth in acid resistant liners and carbon products.
During the year, the business was able to gain a significant market share in the Middle
East and Africa.
The business continue to see opportunities for corrosion protection in
non-ferrous metals like copper and zinc, where the Company's Polymer Concrete Cells (PCC)
are used in both electro-chemical refining and electro-winning processes. Sustainability
and policy-driven intervention will also lead to increased recycling of metals and
recovery of non-ferrous and noble metals from E-Waste, resulting in increased usage of the
electro-winning process.
The business also made significant gains in the supply of structural
parts in Fibre Reinforced Polymer (FRP) for windmill nacelle covers. Power generation
through wind will continue to grow with push towards cleaner sources of energy.
Significant demand for offshore windmills is also expected.
Sales Overview
Revenues of the Ceramics business at consolidated level were at ^10767
million as compared to ^10274 million in FY23. At Standalone level, it increased by 6%
from ^8342 million to ^8813 million on the back of good orders from Refractory, Wear
Ceramics, and Metallised Cylinders.
Industrial Ceramics
The Wear Protection business grew strongly driven by the demand from
Australia and USA - there was a strong focus on driving volume growth and continuous
product innovation. The global power distribution market continues to grow steadily and
the bussiness cemented its position in this market by ramping up volumes of Metallised
Cylinders for this segment. While the Solid Oxide Fuel Cells and Electrolyzer market went
through a slowdown, the division focused on derisking by ramping up volumes and
capabilities in Mobility and Defence.
Refractories
The Demand for Refractories will continue to grow strongly in the
domestic market in the core industries of Glass, Iron and Steel, Carbon black, Chemical
processing, and Heat Treatment.
Sustainability will be a key driver in process changes in the user
industries. The usage of alternate fuels like hydrogen in DRI plants, fast firing kilns in
Ceramic industry, will reshape the usage of Refractories. An example of focusing on
optimising ware to kiln furniture ratio in the ceramic industry for increasing the
quality, efficiency and capacity of kilns will drive the demand for Low Thermal Mass Kiln
Furniture systems, a key area where the business is developing strong capabilities.
Waste to energy and usage of alternate fuels like hydrogen will need
high-purity Refractories to protect key process equipment. The business is developing
products to address specific requirements of our key customers.
The business has grown significantly in export markets in key
industries of Glass, Chemical processing and Heat treatment. With focused efforts in
business development and agile customer engagement, business will continue to grow in
exports and domestic markets.
Anti-Corrosive and Composites
Demand for Anti-Corrosive and Composite products will continue to grow
strongly in the domestic market in Chemical industries. The business executed large orders
in the Middle East and Africa during the year, besides entering new segments of conductive
floor coating and industrial floor coatings with new products.
Business is continuing to invest in applications for Carbon Fiber
Composites, especially for the drone industry demand for advanced composites will
significantly increase due to the Indian Governments' policy of "Atma Nirbhar
Bharat".
The demand of copper and non-ferrous metals, copper refining will drive
the requirement for Polymer Concrete Cells and corrosion protection of Floor and
structures. Increased usage of electro-refining and electro-winning will drive the
requirement for Polymer Concrete Cells. The business has strong capabilities in design and
development to cater to changing needs of the customers.
Manufacturing
Industrial Ceramics & Refractories
The focus of the business was on volume growth in core segments and
building capacities & capabilities for emerging segments.
The Wear Ceramics vertical sustained the focus on volume growth through
debottlenecking and process innovations. The work on a new Tunnel Kiln for Engineered
Ceramics vertical progressed well during the year - preparing the division to address the
demand from emerging segments. The manufacturing lines for Metallised Cylinders were run
at high utilisations during the year to meet the growing demand. The focus on quality
improvements and reduction of rejections continued in a structured manner, helping the
business improve its cost competitiveness.
During the year, the business-initiated state-of-the-art shuttle kiln
for high alumina specialty refractories and an electric screw press for servicing orders
of high strength refractories. These will be operational in FY25.
The business also strengthened Quick Response Manufacturing to improve
lead time, and asset turnover and has seen benefits in both Refractories and Composites.
Key Financial Summary
Particulars |
Standalone |
Consolidated |
|
2023-24 |
2022-23 |
Change (%) |
2023-24 |
2022-23 |
Change (%) |
Revenue |
8813 |
8342 |
6 |
10767 |
10274 |
5 |
Segment results (PBIT) |
2213 |
2048 |
8 |
2856 |
2507 |
14 |
Capital employed |
4237 |
4236 |
0 |
6085 |
5918 |
3 |
Share to total revenue of CUMI (%) (without eliminations) |
34 |
34 |
|
23 |
22 |
|
Share to segment results (PBIT) of CUMI (%) |
47 |
49 |
|
46 |
46 |
|
Electrominerals Business Profile
The Minerals business of the Company spans India, Russia, and South
Africa with eight manufacturing facilities including Maniyar (hydel power plant) and Okha
(Bauxite mines) covering product groups - Fused Alumina [comprising Brown Fused Alumina
(BFA) & its variants and White Fused Alumina (WFA)], Silicon Carbide (crude, macro and
fine), Monoclinic Zirconia, Calcia Stabilised Zirconia and Alumina Zirconia. The Company
also manufactures a range of 'specialties' like Surface and thermally treated grains,
Solgel derived Alumina called Azure S, Speciality Alumina and Ceramic fine powders for
niche markets. To enhance its operational competencies, the business has installed a 1.8
MW captive solar plant and operates a 12 MW Hydel power plant to insulate the operations
from fluctuations in power tariffs.
The business continues its strategy by focusing on aggressive growth in
the domestic and export market while catering to the requirements of internal customers.
With a diversified product portfolio, the Electrominerals business provides customers with
application specific products and solutions, aimed at attaining improved product
performance, value and profitability. Business ensures this through speedy execution of
projects, yield and efficiency improvement initiatives, enhanced asset utilisation and
undertakes joint product development programs with customers. New initiatives of the
business in the areas like Thermal spray powders, Zirconia variants and Monocrystalline
Alumina, etc., would pave the next growth face for the mineral products. The business also
spearheads its Research and Development through a Department of Scientific and Industrial
Research (DSIR) approved research facility located at Kochi.
While the business focuses on regular operations with sweating of
assets, value creation through process modification and improved asset utilisation, it
progressively builds its capabilities and infrastructure for catering to the emerging
transformational areas of opportunities like Graphene, High Purity Silicon Carbide,
Battery materials and related areas through tie- ups for technology and by commissioning
pilot scale plants. The Graphene facility started functioning and discussions are in
progress with Technology Institutes for Joint Product Development, and commercial sales
for selective applications. The trials for developing high purity SiC have given
encouraging results and resulted in commercial sales.
In the year 2023-24 business set its target for various sustainability
initiatives and commenced its sustainability journey to become more responsible to the
society in terms of bringing better environmental controls, carbon footprint reduction and
conservation of water. The business has engaged with the Confederation of Indian Industry
(CII) for carbon footprint measurement and reduction in line with the Company's policy.
The business in pursuit of its initiatives for carbon footprint reduction is also
exploring opportunities for sourcing green energy by tying up with Solar/Hybrid Power
producers under ISTS mechanism.
Volzhsky Abrasive Works (VAW), Russia, is the single largest silicon
carbide producer at one location globally with capacity of 90,000 tonnes per annum. VAW
also invests in process improvements regularly resulting in a clean environment.
Foskor-Zirconia in South Africa has portfolio of fused minerals into
Zirconia for Ceramics and Refractories. This also provides feedstock to manufacture the
high-performance Alumina- Zirconia Abrasive grains in the future.
Key user industries for this business are Abrasives, Refractories,
Steel, Brake linings, Nuclear energy, Wooden Laminates, Friction composites, Diesel
Particulate Filter, semi-conductor and others.
Industry Scenario
The business could see a stable demand for mineral products due to the
good performance of the domestic Auto, Construction and Steel sector, whereas the price
war with the manufacturers from China has dampened the spirit and opportunity for scaling
up of products, markets, and applications. The continued focus of the Government on
infrastructure spending and the continued growth of Steel industry has pushed the demand
for Abrasives and Refractory products in the domestic market. The ongoing regional
conflicts between countries and the red-sea challenges are imposing operational challenges
on the business for scaling up of exports to Europe.
The expansion of Crushing & Grinding facility of SiC at Koratty,
installation of a new continuous Ball Mill, Heat treatment and other infrastructures would
equip the Mineral business to increase its product variants and cost positions. The Okha
facility in Gujarat would continue to produce various grades of bauxite materials using
local resources.
The business has been adding more value-added products to its portfolio
since last few years. On similar lines, transformational products like Graphene is another
opportunity where we have been tested & approved for selected applications in
coatings, composites and energy and the business expects to scale up in the coming years.
On High Purity Silicon Carbide, the production trial has been completed.
Sales Overview
The Electrominerals business on consolidated basis recorded a revenue
of ^15447 million as compared to ^16338 million in FY23. At standalone level, business
recorded revenue of ^7411 million compared to ^7020 million in the previous year.
The growth in the business can primarily be attributed to the good
performance of domestic Abrasives and Refractory customers, who are the major consumers of
Electrominerals. This could be evident from the stable performance reported by the user
industries like Construction, Automobile, and Steel segments during the year. While sales
to internal customers registered a moderate growth, export business registered a de-growth
due to the prevailing geo-political situations and dumping by exporters from certain
geographies on account of the drop in their internal consumption. The business expects
that the earnest attempt put in by the business in terms of compliance with the
environmental compliance and reduction in carbon footprint reduction would augment the
opportunities with external and domestic customers in the coming years.
The Russian subsidiary ran at near full capacity. The business recorded
higher sales in local currency compared to last year on account of sales volume, price
realisation and mix resulted in sales growth. On full year basis, the mix towards Russia
sales volumes domestically has increased to 59% compared to 57% during last year and which
used to be around 45% before Russia-Ukraine conflict.
The Zirconia business at Foskor Zirconia reported lower sales on
account of postponement of offtake by their major customers and price pressure from Cross
border supplies.
Manufacturing
Manufacturing strategies focused mainly on improving throughout by
efficient operations supported by waste reduction through TPM initiatives and value
creation through grain treatments. Continued focus on innovation, TPM measures
enabled the business to be competitive and efficient in bettering its
performance. The focused Joint Development Programs in selected areas with customers
brought faster scaling up and co- solutions. Attempts on new product development and
speedy resolution of customer complaints would yield further results in the coming days.
During the year Kakkanad won Kerala Industrial Safety awards under
category 5, CUMI Edapally won the award for outstanding safety performance (Sreshta
Suraksha Puraskar) in the 53rd National Safety Day celebrations under the small
factories category, Boehmite plant won the same award under micro factories category,
while WFA SEZ plant won Suraksha Puraskar award under micro factories category. The
boehmite plant won the F&B safety award under toolbox talk category and CUMI Edappally
plant team won the second prize for the tabletop mock drill event in the National Safety
Day celebrations.
The investment made in grain processing and material handling in plant
1 and plant 2 have resulted in increasing material availability. This would further
enhance the critical grit availability of WFA and BFA from Minerals business. The
establishment of alternate materials for quartz and carbon would support the Silicon
Carbide business to be competitive and environmentally compliant. Business has also
embarked on a project for controlling the emissions in SiC operations in line with its
commitment to emission control and safety compliance in plant operations.
The year saw volatility in the availability and price of critical raw
materials like Alumina, and the continued dumping of materials from other jurisdictions
across product segment would be addressed through efficiency improvement, usage of
alternate materials etc.
Foskor Zirconia, which is into production of Monoclinic Zirconia and
Calcia Stabilised Zirconia had lower sales compared to last year which led to lower
utilisation. The Silicon Carbide operations at VAW were at their full capacity. Sales
volumes from all 3 segments - Silicon Carbide, Abrasives and Refractories - grew compared
to last year.
The business has started commercial sales of Graphene variant from its
facility and has identified various applications where a potential scaling up is imminent.
The production trial of High Purity Silicon Carbide has been completed and initial sales
also started with select customers.
Key Financial Summary
Particulars |
Standalone |
Consolidated |
|
2023-24 |
2022-23 |
Change (%) |
2023-24 |
2022-23 |
Change (%) |
Revenue |
7411 |
7020 |
6 |
15447 |
16338 |
(5) |
Segment results (PBIT) |
703 |
985 |
(29) |
2374 |
2753 |
(14) |
Capital employed |
2677 |
2536 |
6 |
8900 |
9209 |
(3) |
Share to total revenue of CUMI (%) (without eliminations) |
29 |
28 |
|
33 |
36 |
|
Share to segment results (PBIT) of CUMI (%) |
15 |
23 |
|
38 |
51 |
|
FINANCE
During the year, the Company generated ^4008 million cash surplus from
its operations on a standalone basis. All debts have been serviced on time. The Company
was a debt free company as on 31st March 2024. The capital expenditure program
of ^1235 million and investments in subsidiaries of ^11 million were financed from
internal accruals.
The Company continued to have a reasonable cash generation during the
year, due to prudent capital expenditure and efficient working capital management. The
debt at the consolidated level decreased to ^1127 million. The cash and cash equivalent
level (net of borrowings) at a consolidated level stands at ^4422 million.
The debt-equity ratio for the Company was nil at standalone and 0.04%
at consolidated level. The Company's Balance Sheet remains robust and it augurs well for
the growth in the prevailing conditions.
The credit ratings of the Company, 'A1+' for short-term borrowings and
'AA+ Stable' for long-term borrowings were re-affirmed by CRISIL. Over the years, the
Company has been resorting to a prudent mix of rupee and foreign currency borrowings to
finance its operations and achieve a reduction in financing costs. The finance cost at a
standalone level is at ^42 million compared to ^150 million last year. The Company earned
^11 million by investing surplus cash available for short term.
At a consolidated level, the finance cost reduced to ^183 million from
^235 million. The decrease in borrowings has resulted in lower finance costs. The capital
expenditure program of ^2353 million was financed majorly out of internal accruals.
With the Indian entity enjoying a significant natural hedge, a cautious
approach was adopted to hedge the remaining exposures. The Company adopts prudent tax
management policies.
There are no material changes and commitments, affecting the financial
position of the Company which have occurred between 31st March 2024 and the
date of this Report.
INDIAN ACCOUNTING STANDARDS (IND AS) - IFRS CONVERGED STANDARDS
The Company, its Subsidiaries, Joint Ventures and its Associates in
India adopted lnd AS with effect from 1st April 2016 pursuant to the Companies
(Indian Accounting Standard) Rules, 2015 notified by the Ministry of Corporate Affairs on
16th February 2015.
INTERNAL CONTROL
The Company has an Internal Control System commensurate with the size,
scale and complexity of its operations. The controls have been designed and categorised
based on the nature, type and risk rating so as to effectively ensure the reliability of
operations with adequate checks and balances. The Internal Audit team - external as well
as internal evaluates
the effectiveness and adequacy of internal controls, compliance with
operating systems, policies and procedures of the Company and recommends improvements, if
any. Significant audit observations and the corrective/preventive action taken or proposed
to be taken by the process owners are presented to the Audit Committee. A periodic review
of adherence to the agreed action plan is carried out. The scope of Internal Audit is
annually determined by the Audit Committee considering the inputs from the Statutory
Auditor and the Management.
Capital and revenue expenditures are monitored and controlled with
reference to approved budgets. Investment decisions are subject to detailed evaluation and
formal approval according to schedule of authority in place. A periodical review of
capital expenditure with reference to benefits forecasted is done. Physical verification
of assets is also periodically undertaken.
The Audit Committee reviews the overall functioning of Internal Audit
on a periodical basis. The Committee also discusses with the Auditors periodically their
views on the financial statements including the financial reporting system, compliance
with accounting policies & procedures, adequacy and effectiveness of the Internal
Control Systems in the Company.
During the year, the Board basis the recommendation of the Audit
Committee had re-appointed M/s. Deloitte Touche Tohmatsu India LLP as Internal Auditors of
the Company.
INTERNAL FINANCIAL CONTROLS
Internal Control is a process, effected by an entity's Board of
Directors, Management and other personnel, designed to provide reasonable assurance
regarding the achievement of objectives relating to operations, reporting and compliance -
as defined by the Committee of Sponsoring Organisations (COSO) of the Treadway Commission
(appointed by SEC, USA).
As per Section 134(5)(e) of the Companies Act, 2013, the term 'Internal
Financial Controls' (IFC) means the policies and procedures adopted by the Company for
ensuring:
(a) orderly and efficient conduct of its business including adherence
to company's policies;
(b) safeguarding of its assets;
(c) prevention and detection of frauds and errors;
(d) accuracy and completeness of the accounting records; and
(e) timely preparation of reliable financial information.
The three key components of IFC followed by the Company are:
i. Entity Level controls (ELC) that the Management relies on to
establish the appropriate "tone at top" relative to financial reporting are -
Code of Conduct, Enforcement of Delegation of Authority, Hiring and Retention practices,
Whistle blower mechanism and other approved policies and procedures.
ii. Process Level controls (PLC), to ensure that processes are
predictable, stable and consistently operating at the targeted level of performance, with
only a normal variation are classified into Manual or IT - Dependent or
Automated Controls. They are also classified as Preventive or
Detective.
iii. General IT Controls to ensure appropriate functioning of IT
applications and systems built by the Company to enable accurate and timely processing of
financial data are - User Access rights management and Logical access; Change management
controls; Password policies and practices; Patch management and License management; Backup
and Recovery of data.
The adequacy of Internal Financial Controls is ensured by:
Documentation of the risks and controls associated with the
major processes;
Validation and classification of existing controls to mitigate
risks;
Identification of improvements and upgrades to the controls;
Improving the effectiveness of controls on residuary risks
through data analytics;
Performing testing of controls by the independent Internal
Audit;
Implementation of sustainable solutions to Audit observations.
The Audit Committee periodically reviews Internal Financial Controls to
ensure that they are adequate and are operating effectively.
HUMAN RESOURCES
The Human Resources (HR) team collaborates with businesses in the
execution of their strategies by strengthening the human asset base for delivering high
performance. HR Team endeavors to design initiatives for effectiveness, impact, and
influence to build talent and capability across different functions and levels. The HR
team is not only committed to building the capabilities of human assets but also to firmly
establishing practices and processes for institution building.
Living our Values: This year, the Company spent time bringing an
awareness and common understanding about our purpose and values to employees. Through 16
workshops across 10 locations covering over 300 employees, we encouraged employees to have
honest conversations about their personal values and create an aligned understanding on
the Company's values and how to live by the same. The topics covered in the workshop
included personal values, psychological safety and deep insights into the Five Lights.
Employee Safety and Health: At CUMI safe workplace is not just a
requirement but a fundamental shared value driving our operations. The Company prioritises
the safety and well-being of all its employees.
Safety Drives across Businesses: Safety is a top priority and
considering the growing significance of EHS in running operations in a sustainable manner,
the entire organisation
structure was reviewed and a dedicated EHS function has been
established to promote the culture across the organisation.
An Ergonomic study in the Engineering Ceramic Spark plug crack testing
area, a Heat Stress study at METZ 1 Quality final inspection room and periodic Safety
Audits and Inspections were conducted at Industrial Ceramics, Hosur. In Electrominerals, a
mock drill on workplace safety violations, and a training with demo on 'Working at
heights' were conducted in Kakkanad. Training on safe operations in lifting tools &
tackles with a mock drill was also conducted. The Company has initiated an e-learning
course with assessment on the theme of safety accompanied by an e-certification for
employees at Abrasives. At Super Refractories, a 'Powered Air-Purifying Respirator' system
in dust prone areas to avoid dust exposures was implemented. The Company also participated
in the EHS Excellence award assessment conducted by CII.
Capability Building: The Company's L&D function understands the
dynamic nature of business and learning. We therefore, design and deliver interventions to
achieve robust competencies and a skilled workforce. The L&D framework is designed in
line with our strategic focus areas of our business including productivity improvement,
optimising organisation structure, people capability enhancement, talent development and
succession planning. We collaborate with business leaders and learners to improve our
framework and design contextualised learning interventions which help achieve excellence
and build capability in line with business requirements.
Your Own Learning Opportunities (YOLO) - Graduate Engineering
Trainees (GET) Programme: a campus-to-corporate programme designed to systematically and
effectively manage the transition of newly joined Graduate Engineers into the workplace.
YOLO is a year-long development journey covering role grooming, capability building,
function orientation & preparation to take on roles. During the year, 19 GETs who have
joined us are currently undergoing the programme.
CUMISEAD: a customised program for first time managers and
individual contributors. This programme was rolled out with the objective of enhancing
self-awareness, improving interpersonal effectiveness, and driving impactful results
through systematic and structured behavioral tools and techniques. The intervention
started with a "Manager as Coach" workshop to help the reporting managers coach
participants through the 6-month learning journey. The program is a combination of
classroom training, assignments, action learning projects, and one-on-one coaching
sessions. Three batches have been completed, covering 64 employees across Abrasives, Super
Refractories, Industrial Ceramics, Electrominerals businesses, and Wendt (India) Limited.
All the participants have taken an action learning project based on the learned
competencies.
Value Selling: a customised program for Sales and Marketing
employees conducted for Abrasives, Industrial Ceramics & Super Refractories.
The programme's objectives include:
learn a structured process of value selling
understand the logical framework to sell premium offerings and
solutions
build confidence to be able to sell premium
sell solutions and not mere products
present the value of craftsman automation in a structured manner
Over a 10-month period, 111 employees in the Sales & Marketing
function across Abrasives, Industrial Ceramics & Super Refractories were covered.
Participants learning implementation was reviewed by Business Heads, HR Head and Faculty.
Need Based Interventions: These individual-focused
programmes (sometimes Business Unit - specific) are designed to enhance
functional competencies and capabilities.
Training Need Identification Process: Training needs and learning
goals are collated from discussions with Business as well as the performance management
process. Accordingly, the Company's Annual Training Calendar (ATC) is developed. Training
programmes are thus customised and categorised as Behavioural, Technical & Generic
programmes. During FY 2023-24, 15 programs like Design of Experiments, Quality Function
Deployment, Cost Effective Automation, Problem- Solving Techniques, 7 QC Tools &
Problem Solving Tools, APQP & Total Cost Management in Technical/Functional and
Managerial Effectiveness, Time Management, Communication and Presentation skills,
Relationship Management, Strategic Thinking & Influencing Skills in Behavioural were
conducted.
Catalyst is a voluntary, self-directed mentoring programme where
employees directly sign up for dialogues with mentors, continued its role in people
development. During the year, we have assigned Catalyst mentors to 19 Graduate Engineer
Trainees.
Digital Initiative: In September 2023, the Company successfully
implemented a new Learning Management System (LMS) - CUMIverse. In today's rapidly
evolving digital landscape, the implementation of LMS is not just a strategic decision but
a vital necessity.
CUMIverse signifies our commitment to leveraging cutting- edge
technology to streamline learning processes, facilitate knowledge dissemination, and
empower our workforce in this digital era. CUMIverse enables us to optimize
resource utilisation, track progress, and adapt swiftly to changing business needs.
Over 30 e-learning modules in Behavioral, Technical, and Functional are
available on the platform.
The CUMIverse boasts of superior features with User-Friendly
Interface, Personalised Learning Paths Multiple Training Modes, Learner Engagement and
effective tracking mechanism.
Orgvantage: CUMI had implemented Orgvantage survey - a diagnostic
tool to understand the employee's perception on various advantage drivers namely customer
centricity, innovation, talent advantage, execution certainty, digital advantage and
speed. 876 employees of CUMI and its Joint Ventures & Subsidiaries participated. The
results are worked on to initiate actions towards building an engaged workforce.
Every quarter, the Company recognises and rewards employees across
functions for completed projects in the previous quarter. These projects include Cost
Saving, First Time Right, New Product Introduction establishment, Sales topper
(region-wise), Best support to business, Best New Product Introduction / New Product
Development Launch and Process improvement projects. 'You made a difference' is a
quarterly recognition programme conducted in Electrominerals Business to recognize special
contributions of employees.
During the year, every business celebrates days of importance including
Independence Day, Ayudha Pooja, Safety Week, Quality Month, Republic Day, and Women's Day.
Additionally, various sports activities were conducted across our
plants for our employees physical well-being. Winners and winning teams are recognised
with prizes and certificates. The Company actively promotes employee participation in
various marathon competitions. In FY 2023-24, we have sponsored three marathons with over
100 employees participating.
CUFEST: The Company's Annual Fest is both a competition and a
celebration of our quality and best practices across businesses and geographies. During
this intensely competitive and much- awaited event, teams of employees from all businesses
compete in the categories of SGA (Small Group Activity), Kaizen, CFT (Cross Functional
Team), Innovation in Product and process, and functional excellence like HR, Sales and
Marketing, Application Engineering, IT & Digital, SCM & Commercial, and Finance.
The jury consists of prominent industry experts. A total of 380 employees participated
from the Company, its Subsidiaries and associates and 201 employees emerged winners across
different categories.
Muthiah Memorial Business Excellence Award (MMBEA):
This award has been instituted in memory of the late Shri MM Muthiah,
former Managing Director who implemented many new projects, thus laying a strong
foundation for the Company's future ventures. The MMBEA recognises our Business Units'
consistent pursuit of business excellence. In the year 2023, Industrial Ceramics won in
the large business category and Murugappa Morgan Thermal Ceramics Limited won in the small
business category.
Employee Relations
Maintaining cordial employee relations is crucial for fostering a
positive work environment and maximising productivity. To prioritise this aspect in the
organisation, we have open communication, employee recognition and appreciation, conflict
resolution mechanisms, work-life balance initiatives,
training and development opportunities, fair and consistent treatment,
employee involvement and empowerment, social and recreational activities. In 2023, we
signed long term settlement in Electrominerals Division, Koratty.
Talent Acquisition & Talent Management
Hiring fresh talent and developing future leaders, especially at the
middle management level, demonstrates a forward-thinking approach to talent management and
succession planning. Implementing robust recruitment and selection processes to identify
high-potential candidates who align with the Company's values and long-term goals.
Developing a thorough onboarding process ensures a smooth transition for new hires into
the organisation. This includes orientation sessions, introductions to key stakeholders,
plant visits and providing resources and support to familiarise with their roles and
responsibilities.
Identifying high-potential employees at the Deputy Manager level is a
strategic move to nurture future leaders within the organisation. The identification has
been done through Performance-Potential Matrix. The performance data over the past two
years was considered. The potential for future growth was identified with an external tool
to access the Intelligence. The Individual Development Plan (IDP) has been completed for
all the Hi-Potential employees in collaboration with their reporting managers. It enabled
discussions on areas like career aspirations, strengths, areas for development, and long-
term goals. The quarterly review of the IDPs have also been completed. The progress on the
IDP journey is also measured by the employee's growth and progress in the current role and
identifying potential future roles for movement. This ensures a strong talent pipeline for
sustained organisational success.
Performance Management System (PMS)
To drive a performance-oriented culture within the organisation, the
comprehensive performance management and reward system has been reviewed and improved. By
completing the goal-setting process for 2023-2024 and the appraisal process for 2022-2023
in July 2023, the employees have been facilitated with clear objectives aligned with
organisational goals and they receive timely feedback on their performance. Following the
performance appraisal process, rewards are distributed among qualifying employees based on
the Performance Appraisal and Review Committee (PARC) review & recommendations. These
rewards include salary revisions, promotions, salary corrections for critical talent, and
one-time cash rewards for exceptional contributions.
The introduction of an online mid-year feedback process enhances the
performance-oriented culture by providing employees with regular feedback on their
performance. This process also promotes transparency and trust by allowing employees to
see feedback and comments online from their reporting managers and providing an option to
agree or disagree. Disagreements are addressed through facilitated discussions involving
the Reviewing Officer and HR, wherever required.
A compensation benchmark study was also done using an external agency
to ensure that remuneration structure of the Company is aligned with the market trend.
Incentive payouts have been made based on the Balanced Scorecard (BSC), which aligns
individual performance with organisational objectives and Key Performance Indicators
(KPIs).
Mid-term review also provides for remuneration review, and promotions,
ensuring that employees are recognised and rewarded for their performance and
contributions on time, further reinforcing the performance-oriented culture.
These initiatives demonstrate our commitment to fostering a culture of
performance excellence, transparency, and fairness in its reward and recognition
practices. By aligning performance management processes with organisational goals and
providing opportunities for ongoing feedback and development, the Company effectively
motivates and retains talent while driving strategic objectives.
COMMUNICATIONS
A robust and effective communication function plays a pivotal role to
align people to the organisation's purpose and build a collaborative culture. In the past
year, there has been a clear rhythm and channels to enable connection and collaboration
from the shop floor to the Board room. Each initiative has a defined frequency thus
establishing a communication rhythm to engage, build trust and alignment.
CUMI Samachar: Quarterly business update which contains highlights
and a quote from each Business Head worldwide.
Social Media Management - LinkedIn: Built a unique look, feel and
tone of voice for the digital medium. Focused on creating people- and brand-centric
messages - through micro-interviews, employee & product posts, and brand information,
re-engineered the Company's social media image and built visibility for the brand among
the target audience.
In 2023-24, we have acquired 15,636 unique visitors (individuals who
visit LinkedIn pages or profiles for the first time within a particular timeframe). The 56
posts we have published have had 184,750 unique impressions (Number of times posts were
shown to unique signed in members). This has led to 3,752 new followers being added
organically.
Communication Town Halls: Conceptualised, redesigned the Managing
Director's virtual half-yearly organisation-wide communication meetings for a global
audience. Styled as dialogues, these meetings were streamlined to be precise, sharp,
clarifying and engaging.
Synchronicity: Created a platform to reinforce the innovation
culture in the Company through strong networked teams. Synchronicity has become a
fraternity for the Technologists across the Company and its subsidiaries. Every month,
they come together to present the progress of their long-term strategy projects as well as
the learning experiments conducted. Colleagues across businesses have gotten to know each
other,
their work, achievements and build networks of extended resources to
lean on for dialogue, solutions and project support.
ACHIEVEMENTS AND AWARDS
The Company continued to be a proud recipient of several awards and
recognitions reiterating its commitment to excellence.
CUMI has been recognised as one of the Best Managed Companies by
Deloitte India.
The Electrominerals business of the Company obtained a Bronze
rating from Ecovadis for its sustainability practices, and has also received the National
Energy Management Award from Dr. Ashok Kumar, DG of the Bureau of Energy Efficiency,
Delhi.
Long-term partnership Award from SMS group for servicing OEM for
servicing OEM over the last 25 years as a reliable partner for Wear Protection in the
Steel Industry in India and Russia.
The Abrasives business received oSa certification for its
Maraimalai Nagar and Uttarakhand Plants.
Abrasives was awarded the Manufacturing Champion Award in the
Merit category for Total Cost Management.
Boehmite plant won the same award under the micro-factories
category.
WFA SEZ plant won the Suraksha puraskar award under the
micro-factories category.
Boehmite plant was awarded the F&B safety award under the
toolbox talk category.
The Ceramics business received the "Industry
Disruptor" Award from Autodesk Imagine.
CUMI Won 2nd place in 33rd National Award
for Innovative Training Practices - 2022-23 conducted by Indian Society for Training &
Development.
The total staff on rolls of the Company (including Joint Ventures and
Subsidiaries) as at 31st March 2024 was 6191 with 3806 employees in India
(previous year 6015 with 3771 employees in India).
PERFORMANCE OF SUBSIDIARIES
The Russian subsidiary recorded sales of 9716 million rouble against
8067 million rouble during the previous year. Sales grew by 20%, which includes, 15% due
to product mix, exchange rate, and price realisation and 5% because of volume increase.
The operations are running well and there has been an increase in sales volumes compared
to last year: 4% in Silicon Carbide, 15% in Abrasives and 6% in Refractories. However,
when converted to INR, it shows downward performance because of stronger Rouble during
FY23 where it was at one Rouble equivalent to ^1.23 on an average, whereas it has become
much weaker at ^0.92 in FY24. Profits increased significantly to 1612 million rouble
compared to 1239 million rouble during last year. Capacity utilisation is very good and
VAW was able to sell more in Russia.
Foskor Zirconia, South Africa, recorded a sale of ZAR 379 million
compared to ZAR 440 million in the previous year. This is majorly on account of
postponement of offtake by their major customer and price pressure. The loss after tax
stood at ZAR (17) million against ZAR 60 million in the previous year. This was because of
lower sales; intentional price drops to compete in the market and increased input costs.
In CUMI Australia, the business in Lined Equipment continued to be good
on the back of an increase in demand for mineral processing. The Company's revenues grew
from AUD 30.1 million to AUD 34.7 million registering the highest recorded revenues in the
Company. Profit after tax was AUD 4.9 million against AUD 3.6 million during last year.
Sterling Abrasives reported marginal growth in revenues at ^1410
million compared to last year's sales of ^1381 million. Profits after tax decreased to
^139 million from ^165 million. Continuing higher Agri acreage owing to good monsoon
conditions, higher reception for certain new products among end users as well as enhanced
exports helped growth in sales.
Post the conscious call of tapering down the operations in CUMI
Abrasives and Ceramics Company Limited (CACCL), the subsidiary in China, the market is
being served directly from India.
The sales of CUMI America during the year improved to USD 20 million as
against USD 18 million last year, driven by an increase in sales of both Bonded Abrasives
and Industrial Ceramics thereby improving profits. The profit after tax decreased from USD
2.16 million to USD 2.07 million.
For CUMI Middle East, sales decreased from USD 1.0 million to USD 0.4
million. Loss for the year was at USD 0.15 million against a profit of USD 0.13 million
during the previous year.
Southern Energy Development Corporation Limited (SEDCO), the gas-based
power generation subsidiary recorded a sale of ^327 million as against ^259 million last
year. The business made a loss after tax of ^122 million as compared to loss after tax of
^44 million during last year on account of the significant increase in gas prices and
other generating & transmission charges, and one-time non-operational loss of ^64
million.
Net Access India Limited, which provides IT facility management and
other allied services de-grew from ^585 million to ^573 million. The profits de-grew from
^34.4 million to ^33.9 million.
CUMI International Limited, Cyprus recorded a revenue of USD 4.9
million representing mainly dividend income as against last year's income of USD 6.1
million.
CUMI Europe s.r.o. is not in operation.
PLUSS Advanced Technologies Limited recorded a revenue of ^617 million
as against ^542 million for the previous year and loss after tax for the year was at ^128
million as against ^137 million (post acquisition) for the previous year under acquisition
accounting. Losses for the current year were reduced from ^38 million to ^31 million on an
actual basis.
CUMI Awuko Abrasives GmbH recorded sales of EUR 9.1 million sales,
which is 3% lower compared to last year and the losses at EUR 2.25 million against EUR
3.67 million during last year.
Rhodius Abrasives GmbH sales dropped by 2% to EUR 63.3 million from EUR
64.5 million during last year. Due to the softening of demand in parts of Europe, there
was a drop in volume to an extent of 8%, while price mix and price enabled a 6% gain
resulting in net drop of 2%. The loss after tax was EUR 1.5 million against loss of EUR
3.7 million during last year.
The interesting point to note here is that if we exclude PPA write off
of EUR 2.8 million, Rhodius was close to break-even operationally.
Rhodius Schleifwerkzeuge Verwaltungsgesellschaft mbH (RSV), Germany is
a subsidiary of RAG and during the year the merger of RSV with RAG was approved and
published in the commercial register in line with the German regulations. As a consequence
of this merger, RSV ceased to be a subsidiary of the Company.
ENTERPRISE VALUE ADDITION
The Company has been able to continuously add value, the summary of
which is given below: (^ Million)
Particulars |
2023-24 |
2022-23 |
2021-22 |
2020-21 |
2019-20 |
Generation of Gross Value added (excludes exceptional
items(net)) |
7963 |
7201 |
6275 |
5153 |
5044 |
Breakup on Application of Value added |
|
|
|
|
|
Payment to Employees and Directors |
2606 |
2389 |
2169 |
1982 |
1979 |
Payment to Shareholders (on payment basis) |
665 |
665 |
569 |
284 |
757 |
Payment to Government |
1123 |
1050 |
899 |
638 |
709 |
Payment to Lender |
- |
- |
- |
- |
- |
Towards replacement and expansion |
3569 |
3097 |
2638 |
2249 |
1599 |
|
7963 |
7201 |
6275 |
5153 |
5044 |
- Gross value added is Revenue Less Expenditure (excluding depreciation
+ expenditure on Employees & Directors' service + Long term interest)
- Payment to Government is Current tax + Dividend distribution tax.
- Towards replacement and expansion is Retained earnings + Depreciation
+ Deferred tax.
RISKS, CONCERNS AND THREATS
The Company has constituted a Risk Management Committee aligned with
the requirements of the Companies Act, 2013 and Listing Regulations. The details of the
Committee and its terms of reference are set out in the Corporate Governance Report
forming part of this Report.
The Company has a robust business risk management process to identify,
evaluate and mitigate risks impacting business including those which may threaten the
existence of the Company. This framework seeks to create transparency, minimise adverse
impact on the business objectives and enhance the Company's competitive advantage. This
also defines the risk management approach across the enterprise at various levels
including documentation and reporting. The framework has different risk models which help
in identifying risk trends, exposure, and potential impact analysis at a Company level as
also separately for the business segments. The Company also has developed a structured
risk management policy encompassing the risk management objectives, principles, process,
responsibility for implementation, maintenance of risk registers, review of risk
movements, risk reporting framework etc. The Risk Management Committee continued to review
the risks and mitigation plan as per the adopted Charter and Risk Management Policy. The
Enterprise Risk Management (ERM) framework which was reviewed and upgraded last year is
now automated. While the Committee continued to review the risks and mitigation plan as
per the adopted Charter and Risk
Management Policy, during the year, the development plan for the cyber
security framework for the Company was considered by the Committee. The Cyber security
framework developed last year is under review for alignment with the overall digital
strategy and roadmap identified for transformation as a part of Long term strategy. Hence,
the Company is in process of establishing a IT security framework commensurate with its
size and operations and the next few years will be working on the implementation of the
framework and its gradual extension to global entities. Besides this, the review of
geopolitical risks in the volatile global market conditions and periodic risk register
review continued.
Mr. P Padmanabhan, Chief Financial Officer has been identified by the
Board to lead the risk management function as the Chief Risk Officer of the Company from 4th
May 2024.
Risk management also forms an integral part of the Company's business
plan.
The Company operates across various technology platforms and product
verticals built over the years. Relative advantages and disadvantages of such technologies
are studied and advances are tracked. Any new technology may impact the performance of the
Company in the long run. The Company seeks to address these technology gaps through
continuous benchmarking of the existing manufacturing processes with developments in the
industry and in this connection has made arrangements with technical research institutions
and technology consultants. The Company continues to make investments in the next level
of Industry 4.0 in select modules. Industry 4.0 is the current trend of
automation and data exchange in manufacturing technologies.
The requirements of power for the Company are majorly driven by the
requirements of the Electrominerals business. The power requirement is partly met out of
own generation from the Maniyar Hydroelectric plant. The entire production of power from
Maniyar is utilised by the Electrominerals business. Apart from this, electricity is
generated at the Company's subsidiary SEDCO and consumed at all its locations in Tamil
Nadu. The rest of the requirement for electricity is managed by purchase from respective
State Electricity Boards. Utilisation of power remains one of the key factors which can
impact profitability either favourably or adversely based on the changes in the power
cost. Pending the extension of the tenure for the hydroelectric project in Kerala which is
due for renewal in 2024 as well as the pressure on the gas based electricity business in
SEDCO and as part of its strategy to build competitiveness, the Company continues to look
for opportunities to add to its captive power generation including green power in terms of
Solar. Recently, Electrominerals business has commissioned a 1.8 MWp ground mounted solar
power system at its plant in Edappally. In parallel, businesses are exploring to increase
the share of cleaner sources of energy through power purchase agreement with third
parties. In Russia, the Silicon Carbide operations which also consumes large quantities of
power sources it from local utility. In India, the Company is also exploring alternate
power sources and towards this has commenced installation of clean energy sources such as
solar for its captive consumption. Around 1.5 MWp capacity of solar systems (owned and
operated by SEDCO) at various factory locations of the Company, generated around
17,00,000+ units of electricity from cleaner sources in FY24, equivalent to saving 19,800
trees and reducing 685 Tons of CO2 emissions. Also, the Company's subsidiary, SEDCO which
was generating gas based electricity expanded its business model to service customers for
solar based electricity, thus reducing the dependence on a single source of energy.
The requirement of fuel is driven by the high-temperature processes in
the Abrasives and Ceramics businesses and any increase in the cost of fuel impacts
profitability. Hence, the Company has put in place plans and implemented energy
conservation measures to improve its competitiveness. Kindly refer Annexure D of the
Directors' Report for energy conservation measures undertaken.
The Company uses various raw materials such as Bauxite, Calcined
Alumina, Zirconia sand, Raw Pet coke, Quartz and Graphite which have high price
volatility. This is addressed through annual contracts to cover volatility due to price
fluctuations and also mitigated through programs to identify alternative sources. The
severe price discrimination in the markets caused by players in geographies outside of
India is impacting the business and there is a need for suitable policy interventions to
protect the local manufacturers.
The Company deals with multiple currencies and is thus exposed to
exchange risk on account of adverse currency movements. Foreign Exchange risk in foreign
denominated loans, imports and exports is mitigated by adopting a country-based forex
policy, periodic monitoring and use of hedging instruments. Efforts are being taken to
manage both exports and imports to ensure that at a Company level, there is a natural
hedging mechanism.
As a risk mitigation measure to address cyber security threats, the
Company does quarterly penetration assessment testing for all internally and
internet-facing applications. The security threat awareness is periodically published to
create awareness among employees and stakeholders for handling the risk proactively. The
security process is included as an important step in the IT policy of the Company. There
is a considerable amount of work undertaken on scoping of information specific to the role
defined to prevent any data or information leak, through continuous monitoring on the
business-critical IT assets. Considering in some locations the hybrid mode of work has
become the new normal, data security and protection against the risk of phishing, malware
attacks were given priority. Awareness mailers were disseminated across to mitigate risk
of such attacks and a requisite infrastructure upgrade to support the remote working
conditions in a secured manner was initiated.
As mentioned earlier, the Company has established a cybersecurity
framework as a part of its IT Strategy. We are partnering with external expertise to
assist in deployment of this framework for both IT and OT capabilities.
The Company's input materials are not commoditised and do not warrant
any specific hedging to be undertaken. With respect to output materials, adverse impact of
changes in commodity prices on user industries could impact the sales which are mitigated
by the development of alternate products, establishing a new range of applications etc.,
as detailed above. The other mitigation measures for dealing with increase in fuel costs,
non-availability of raw materials etc., have been dealt with separately in above
paragraphs.
The risks associated with COVID-19 pandemic are considerably reduced.
However, pandemic risk is now an identified risk with appropriate mitigation plans. The
priority for the Company continues to be the safety and health of all its employees and
other stakeholders with minimal disruption to operations.
The COVID-19 pandemic is on a decline and globally the situation has
returned to almost normalcy. Hence the risks associated with the same reported until 2022
is not being specifically disclosed in this Report. However, the risks across operations,
human resources, IT, supply-chain etc., which were identified earlier and which could
potentially impact in the event of an emerging variant or any subsequent pandemic and the
mitigation plans continue to be on the risk radar of the Company.
BUSINESS OUTLOOK AND OPPORTUNITIES
Robust high-frequency indicators of the Indian economy underpin the
strong growth momentum and are expected to be in an expansionary zone in the coming years.
The government's sustained emphasis on capex and improving external situations will
bolster the economic momentum. Also, the government has focused on sectors that can
capitalise on India's competitive advantage in resources and skills, tap into local-market
opportunities, and help the country climb higher on the manufacturing value chain
globally. The Production Linked Incentive (PLI) scheme, tax incentives, the ease of
effecting business reforms, the national infrastructure program, and the national
logistics plan had been announced with the intent to boost manufacturing, improve
logistics to reduce costs and save resources, and gain from positive externalities.
Notwithstanding the same, the Company continues to explore and identify alternate and new
opportunities for its various product segments across all its businesses in sectors
including Clean energy, Semi-conductors, Defence, Digital, etc., to drive growth.
The Company continued its focus on growth from core businesses,
expansion through acquisitions, and working on emerging areas like Clean energy, Electric
mobility, Semi- conductors, and Advanced manufacturing. The key strategies have been
outlined in the Performance of Business Segment section.
FIXED DEPOSITS
The Company has not accepted any deposits from the public falling
within the ambit of Section 73 of the Companies Act,
2013 read with Companies (Acceptance of Deposits) Rules,
2014 and no amount of principal or interest was outstanding as on the
Balance Sheet date.
LOANS AND INVESTMENTS
The particulars of loans, guarantees and investments covered under
Section 186 of the Companies Act, 2013 are given below:
(^ Million)
Description |
As on 31.03.2023 |
Movement (Net of Deletions) |
As on 31.03.2024 |
Corporate guarantee given by the Company |
295.55 |
2.88 |
298.43 |
Investments made by the Company |
10475.22 |
(81.70) |
10393.52 |
RELATED PARTY TRANSACTIONS
The Company as per the requirements of the Companies Act, 2013 and
Regulation 23 of the Listing Regulations has a Policy for dealing with Related Parties.
The Securities and Exchange Board of India vide the SEBI (Listing Obligations and
Disclosure Requirements) (Sixth Amendment) Regulations, 2021 notified on 9th
November 2021 has significantly amended the monitoring framework for dealing with Related
Parties by listed entities.
Consequentially, the Company has amended its existing policy on dealing
with Related Parties on 29th March 2023 duly factoring the processes and
procedures to be established to supervise the expanded list of transactions with the
extended list of Related Parties.
In line with its policy, all Related Party transactions both under the
Companies Act, 2013 as well as the Listing Regulations are placed before the Audit
Committee for its review and approval. Prior approval of the Committee is obtained on a
quarterly basis for transactions that are foreseen and are repetitive in nature. Omnibus
approvals in respect of transactions that cannot be foreseen are also obtained as
permitted under the applicable laws and the thresholds are periodically reviewed. The list
of Related Parties is reviewed and updated periodically as per the prevailing regulatory
conditions. Considering the enhanced regulatory purview of monitoring the related party
transactions at the subsidiary level, compliance awareness sessions continue to be
conducted across the organisation including the subsidiaries as well as establishment of a
reporting framework by the subsidiary companies, both overseas and domestic.
The details of transactions proposed to be entered into with Related
Parties are placed before the Audit Committee for approval on an annual basis before the
commencement of the financial year. Thereafter, a statement containing the nature and
value of the transactions entered into by the Company with Related Parties is presented
for quarterly review by the Committee. Further, revised estimates or changes, if any to
the proposed transactions for the remaining period are also placed for approval by the
Committee on a quarterly basis. Besides, the Related Party transactions entered during the
year are also reviewed by the Board on an annual basis.
During the Audit Committee meeting held on 25th March 2024,
the estimated transactions of the subsidiary companies with their Related Parties as well
as those envisaged with the Related parties of the Company were placed before the Audit
Committee of the Company. The approval of estimates and revisions to this list of
transactions is planned in the same manner as done for the parent company (detailed
above).
All transactions with Related Parties under the Companies Act, 2013,
entered during the financial year were in the ordinary course of business at arm's length
and hence, no particulars are required to be entered in the Form AOC-2. Further, all
transactions entered into with Related Parties during the year even at arm's length basis
in the ordinary course did not exceed the thresholds prescribed under the Companies
(Meetings of Board and its Powers) Rules, 2014 or Listing Regulations or the Company's
Policy in this regard and hence, no disclosure was required to be made in Form AOC-2.
Accordingly, there are no contracts or arrangements entered into with Related Parties
during the year to be disclosed under Sections 188(1) and 134(3) of the Companies Act,
2013 in Form AOC- 2. The form is enclosed as Annexure E to this report.
There are no materially significant Related Party transactions made by
the Company with its Promoters, Directors, Key Managerial Personnel or their relatives
which may have a potential conflict with the interest of the Company at large.
The Company's policy on dealing with Related Parties as approved by the
Board is available on the Company's website at the following link
https://www.cumi-murugappa.com/wp-content/
uploads/2023/05/Policv-on-Related-Partv-Transactions.pdf. None of the Directors and KMPs
had any pecuniary relationship or transaction with the Company other than those relating
to remuneration in their capacity as Directors/Executives and corporate action
entitlements in their capacity as shareholders of the Company.
CORPORATE SOCIAL RESPONSIBILITY
All Corporate Social Responsibility (CSR) activities undertaken by the
Company are rooted in the principle, "towards prosperity in harmony with people and
planet". The Company believes that social responsibility is not just a corporate
obligation that has to be carried out, but rather an opportunity to make a difference. All
the CSR programmes are aimed at inclusive growth and sustainable development of the
community.
The Company continues to engage in Corporate Social Responsibility
activities directly as well as through implementation agencies registered with the Central
Government, in line with its stated CSR policy.
The economic growth of India has gained considerable momentum in the
last two decades and the manufacturing sectors have shown a great deal of buoyancy.
However, despite the vast young population, there is a huge mismatch between the skill
requirement for the industries and available skilled manpower. The huge number of people
entering industrial employment every year and their low preparedness vis-a-vis the growing
demand for skill is a concern to be addressed and in this area, the Company has
established its direct CSR programme for skill development of the youth from
underprivileged sections of the community.
The Company had set up the CUMI Centre for Skill Development (CCSD) in
the year 2012 at Hosur, to build a skill bank of a technically competent and
industry-ready workforce from the less privileged sections of society. During the FY 2015-
16, the Company replicated this model in Edapally, Cochin. During the FY 2018-19, the
Company along with its Joint Venture - Murugappa Morgan Thermal Ceramics Limited
replicated this model in Ranipet, Tamil Nadu. CCSD provides specialised training based on
the National Council on Vocational Training syllabus for rural youth drawn from socially
and underprivileged sections of society. Three-year training is imparted with a
stipendiary payment and free boarding facilities, thus enabling the enrolled students to
earn while they learn. The job-oriented skill training enhances their employability and
aids in uplifting their socio-economic status. The technically trained students can be
employed by any industrial entity once they complete the training programme. The Company
continues to harness the
potential of CCSD centres so far established. The Company takes pride
in informing that few students have earned accolades at national/regional level for their
par excellence performance in academic and technical areas. However, during the year no
fresh intake of students in CCSD, Ranipet was made owing to subdued response due to the
nature of courses offered there.
In addition to the CCSD, the Company has also been contributing to the
cause of health and education by making grants to AMM Foundation. Further, during the
year, grants were also made to Shri A M M Murugappa Chettiar Research Centre (MCRC) for
research in environmental studies.
During the year, the CSR activities through agencies in the healthcare
sector, Education and Environment study which involved grants for:
Health
The Company continued its support in conducting pediatric cardio
surgeries at Sri Sathya Sai Sanjeevani Hospitals. Sri Sathya Sai Health Education Trust
established in May 1970 started Sri Sathya Sanjeevani Hospitals in 2012 primarily to
address congenital heart disease by providing free medical support including surgery to
needy children from economically weaker sections. The year saw a substantial increase in
the number of surgeries performed by the sponsorship of the Company.
Support to G.Kuppuswamy Naidu Memorial Hospital Trust, Coimbatore: The
Trust had been set up in 1948 and in the year 1952 established not for profit hospital.
The Oncology department is well established and caters to the needs of treating nearly
6-70 children under the pediatric oncology department. This is provided free of cost for
children between the ages of 0 to 18 years from less privileged sections of society. The
support of the Company was used for the benefit of 25 children.
Education(AMM Foundation)
The grant to AMM Foundation towards education sector was through
contributions to Vellayan Chettiar Higher Secondary School, Tiruvottiyur (VCHSS) - which
has been making a difference in the field of education for over 50 years. The school runs
with the vision - to provide Quality Education with good virtues, for the underprivileged
and marginalised communities around Tiruvottiyur. As part of Skill development, a CSR
Spend is made towards coaching the students of Murugappa Youth Football Academy (MYFA) by
engaging BVB Febballakademie GmbH, a firm from Germany specialised in football coaching.
The objective of MYFA is to:
provide quality grassroot level football coaching to children
from economically disadvantaged communities.
To impart life skills like honesty, discipline, leadership,
teamwork, respect etc. through the medium of football and sport.
Environment
Shri AMM Murugappa Chettiar Research Centre (MCRC), Chennai is a
non-Governmental voluntary,non-profit research organisation, established in 1973 and
registered under the Societies Registration Act of 1860. MCRC is recognised by the
Department of Scientific and Industrial Research (DSIR), Government of India, as an
independent Scientific and Industrial Research Organisation (SIRO). MCRC was a Technology
Resource Centre for Council for Advancement of People's Action and Rural Technology
(CAPART), Government of India and continues to strive for Excellence in Rural Development
under Department of Science and Technology (DST) Core Support Programme.
MCRC strives to develop sustainable solutions using appropriate science
and technology interventions with key focus areas of Food, Energy and Environment for the
Development (FEED) of rural India. To realise this goal, the Centre has been working on
research programmes that focus on minimisation of chemicals and water use in agriculture,
effective utilisation of bioresources including microbials and creating wealth from waste
for development of eco-friendly products.
During the year, the Company supported MCRC for Research and
Development on Impact of Climate Change on Biodiversity. The project objectives are:
Climate change studies through marine research in Lakshadweep.
Climate change studies through marine ecosystem research in
Andaman islands.
Cultivation and conservation of Traditional rice varieties.
Apart from the above, the Company had undertaken local community
assistance programmes at various plant locations which included Education & Child
development, Health care, Youth empowerment, Women empowerment, Educational sponsorships
of underprivileged children, livelihood programs for women, sports, recreation, and
support for basic infrastructure for the public utility and schools, etc.
The Company's CSR policy is available on the Company's website at the
following link https://www.cumi-murueappa.com/wp-
content/uploads/2024/02/CSR-Policy-2021.pdf Annual report on the CSR activities in the
prescribed format is annexed hereto as Annexure B and forms part of this Report.
The Company in line with the Companies Act, 2013, formulated an annual
action plan, which was approved by the Board of Directors, in pursuance of the CSR Policy
of the Company, based on which spending on CSR activities were undertaken for FY 2023-24.
The Company spent ^63.38 million towards CSR activities and no amounts remain unspent at
the end of the year.
As at 31st March 2024, the CSR spend made directly and
through implementing agencies has been utilised in full and hence, the Company is in
compliance with the provisions of Section 135 of the Act and the rules referred therein.
BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORTING
The Company's ethical and responsible behaviour complements its
corporate culture. Being a public listed company, the Company recognises that its
accountability is not limited only to its shareholders from a financial perspective but
also to the larger society in which it operates. In November 2018, the Ministry of
Corporate Affairs (MCA) constituted a Committee on Business Responsibility Reporting
("the Committee") to finalise business responsibility reporting formats for
listed and unlisted companies, based on the framework of the National Guidelines on
Responsible Business Conduct (NGRBC). Through its report, the Committee recommended that
Business Responsibility Reporting (BRR) be upgraded to Business Responsibility and
Sustainability Reporting (BRSR) where disclosures are based on ESG parameters, compelling
organisations to holistically engage with stakeholders and go beyond regulatory
compliances in terms of business measures and their reporting. SEBI, vide its circular
dated May 10, 2021, made BRSR mandatory for the top 1,000 listed companies (by market
capitalisation) from fiscal 2023, while disclosure was voluntary for fiscal year 2022. The
Company is ranked 254 position as per the market capitalisation at NSE as on 31st
March 2024. The Business Responsibility and Sustainability Report for the year ended 31st
March 2024 in terms of Regulation 34(2) of the Listing Regulations is annexed to this
Report as Annexure C and this report describes the initiatives undertaken under the
Environment/Social/ Governance aspects.
GOVERNANCE
Board of Directors and Key Managerial Personnel
As at 31st March 2024, the Board of the Company comprised
7(Seven) Directors of which majority 5 (Five) are independent.
Mr. M M Murugappan, Director retires by rotation at the forthcoming
Annual General Meeting and being eligible has offered himself for re-appointment. A
proposal for his re-appointment is included in the Notice convening the 70th Annual
General Meeting for consideration and approval by the shareholders.
Further, during the year, Mr. N Ananthaseshan, Managing Director took
an early retirement and stepped down from the Board of the Company at the close of
business hours of 2nd August 2023. Mr. Sridharan Rangarajan who was Whole Time
Director - Finance and Strategy took over as the Managing Director of the Company from 3rd
August 2023.
The Company has received declarations from all its Independent
Directors confirming that they meet the criteria of independence prescribed both under the
Companies Act, 2013 and the Listing Regulations. In the opinion of the Board, all the
Directors appointed/re-appointed during the year are persons with integrity, expertise and
possess relevant experience in their respective fields.
All the Independent Directors of the Company have registered their
names in the Independent Director's Databank as required under the Companies Act, 2013 and
the Rules referred therein. The Independent Directors are also required to take up an
online proficiency self-assessment test within two years from the date of inclusion of
their name in the Independent Directors' databank with an exemption provided to Directors
fulfilling the criteria prescribed under the Act and the Rules referred therein. The
completion of the online proficiency self-assessment test is exempted for most of the
Directors. Some of the Independent Directors including those required to do so have
completed the self-assessment. Mr. P S Raghavan and Mrs. Soundara Kumar (though being
exempt) have completed their proficiency self- assessment within the timelines.
As on the date of this Report, Mr. Sridharan Rangarajan, Managing
Director, Mr. P Padmanabhan, Chief Financial Officer and Ms. Rekha Surendhiran, Company
Secretary are the Key Managerial Personnel of the Company as per Section 203 of the
Companies Act, 2013.
Board Meetings
During the year, 8 (Eight) Board Meetings were held, the details of
which are given in the Corporate Governance Report.
Board Evaluation
Pursuant to the provisions of the Companies Act, 2013 and the Listing
Regulations, the Board carried out an annual performance evaluation of its own
performance, the Directors individually as well as the evaluation of the working of its
various Committees as per the evaluation framework adopted by the Board on the
recommendation of the Nomination and Remuneration Committee. Structured assessment forms
were used in the overall Board evaluation comprising various aspects of the Board's
functioning in terms of structure, its meetings, strategy, governance and other dynamics
of its functioning besides the financial reporting process, internal controls and risk
management. The evaluation of the Committees was based on their terms of reference fixed
by the Board besides the dynamics of their functioning in terms of meeting frequency,
effectiveness of contribution etc.
Separate questionnaires were used to evaluate the performance of
individual Directors on parameters such as their level of engagement and contribution,
objective judgement etc., The Managing Director's evaluation was based on leadership
qualities, strategic planning, communication, engagement with the Board etc.
The Chairman was also evaluated based on the key aspects of his role.
The performance evaluation of the Independent Directors was carried out by the entire
Board. The performance evaluation of the Chairman, the Board as a whole and the Non-
Independent Directors was carried out by the Independent Directors at their separate
meeting held during the year.
The Board evaluation process continues to be conducted in a paperless
mode.
Policy on Appointment and Remuneration of Directors
Pursuant to Section 178(3) of the Companies Act, 2013, the Nomination
and Remuneration Committee of the Board has formulated the criteria for Board nominations
as well as the policy on remuneration for Directors and employees of the Company.
The criteria for Board nominations lays down the qualification norms in
terms of personal traits, experience, background and standards for independence besides
the positive attributes required for a person to be inducted into the Board of the
Company. Criteria for induction into Senior Management positions have also been laid down.
The Remuneration policy provides the framework for remunerating the
members of the Board, Key Managerial Personnel and other employees of the Company. This
Policy is guided by the principles and objectives enumerated in Section 178(4) of the
Companies Act, 2013 and reflects the remuneration philosophy and principles of the
Murugappa Group to ensure reasonableness and sufficiency of remuneration to attract,
retain and motivate competent resources, a clear relationship of remuneration to
performance and a balance between rewarding short and long-term performance of the
Company. The policy lays down broad guidelines for payment of remuneration to Executive
and Non-Executive Directors within the limits approved by the shareholders. Further
details are available in the Corporate Governance Report.
The Board Nomination criteria and the Remuneration policy are available
on the website of the Company at https://www.cumi- murueappa.com/policies-disclosure/.
Composition of Audit Committee
The Audit Committee of the Board comprises 4 (Four) members and all the
members are Independent Directors. Mr. Sanjay Jayavarthanavelu is the Chairman and other
members are Mr. Aroon Raman, Mr. Sujjain S Talwar, and Mrs. Soundara Kumar. During the
year, five (5) Audit Committee meetings were held, the details of which are provided in
the Corporate Governance Report. Mr. Sridharan Rangarajan who was part of the Committee,
voluntarily stepped down from the same after taking charge as the Managing Director of the
Company.
Statutory Auditors
In line with the requirements of the Companies Act, 2013, the Company,
with the approval of the shareholders at the Annual General Meeting held on 1st
August 2022, re-appointed M/s. Price Waterhouse Chartered Accountants LLP (Reg. No. FRN
012754N/N500016) (PWC) as the Statutory Auditors of the Company to hold office from the
conclusion of 68th Annual General Meeting until the conclusion of the 73rd
Annual General Meeting (AGM) on a remuneration of ^75,00,000/- (excluding out of pocket
expenses incurred by them in connection with the Audit and applicable taxes) for the FY
2023-24 and the remuneration decided by the Board for the subsequent years based on the
recommendation of the Audit Committee.
As required under Regulation 33 of the Listing Regulations, the
Auditors have confirmed that they hold a valid certificate issued by the Peer Review Board
of the Institute of Chartered Accountants of India.
The Report given by M/s. Price Waterhouse Chartered Accountants LLP on
the Financial Statements of the Company for the year ended 31st March 2024 is
provided in the financial section of the Annual Report.
There are no qualifications, reservations, adverse remarks or
disclaimers given by the Auditors in their report. The auditors have commented on the
availability of the audit trail to which the Company's response is as follows:
The Company's ERP RVW6X which is the key accounting software for
maintaining books of account has feature of recording audit trail at transaction and
database level. The transactional level log was available as a part of initial deployment.
With new audit requirement, table level audit trail was activated during the year to track
changes at the database level and was made available from 6th November 2023.
During the year under review, the Auditors have not reported any matter
under Section 143(12) of the Companies Act, 2013, and hence there are no details to be
disclosed under Section 134(3)(ca) of the Act.
Cost Auditors
Pursuant to Section 148 of the Companies Act, 2013, read with Companies
(Cost Records and Audit) Rules, 2014 and amendments thereof, the Company is required to
maintain cost accounting records in respect of products of the Company covered under CETA
categories like Organic and Inorganic chemicals, Electrical or Electronic machinery,
Steel, Plastic and Polymers, Ores and Mineral products, other Machinery, Base Metals etc.
Further, the cost accounting records maintained by the Company are required to be audited.
The Board, on the recommendation of the Audit Committee, had appointed
M/s. S Mahadevan & Co. (Firm No. 000007), Cost Accountants, Chennai to audit the cost
accounting records maintained by the Company under the said Rules for the FY 2023-24 on a
remuneration of ^5,00,000/-. Further, they have also been appointed by the Board to
conduct the cost audit for the FY 2024-25 at a same remuneration of '5,00,000/- excluding
out of pocket expenses incurred in connection excluding the out of pocket expenses &
applicable taxes .
The Companies Act, 2013, mandates that the remuneration payable to the
Cost Auditor is to be ratified by the shareholders. Accordingly, a resolution seeking the
shareholders' ratification of the remuneration payable to the Cost Auditor for the FY
2024-25 is included in the Notice convening the 70th Annual General Meeting.
Secretarial Audit
M/s. R Sridharan & Associates, Practising Company Secretaries,
Chennai was appointed as the Secretarial Auditor to undertake
the Secretarial Audit of the Company for the FY 2023-24. The report of
the Secretarial Auditor is annexed to and forms part of this Report as Annexure F. There
are no qualifications, reservations, adverse remarks or disclaimers given by the
Secretarial Auditor in the Report.
In terms of Regulation 24A of the Listing Regulations, there is no
material unlisted subsidiary incorporated in India. Material unlisted subsidiary for the
purpose of this Regulation is a subsidiary whose income/net worth exceeds 10 per cent of
the consolidated income/net worth respectively of the Company and its subsidiaries in the
immediately preceding accounting year. Hence, there is no requirement for a Secretarial
audit to be conducted for any of the Company's subsidiaries in India.
Compliance Management
The compliance management system, KOMRISK tracks compliances across the
various factories and offices of the Company. This tool has a comprehensive coverage of
the various applicable laws including auto updation based on the regulatory changes from
time to time.
Corporate Governance
In terms of Regulation 34(3) read with Schedule V of the Listing
Regulations, a separate section on Corporate Governance including the certificate from a
Practising Company Secretary confirming compliance is annexed to and forms an integral
part of this Report.
CEO/CFO Certificate
Mr. Sridharan Rangarajan, Managing Director and Mr. P Padmanabhan,
Chief Financial Officer have submitted a certificate to the Board on the integrity of the
Financial Statements and other matters as required under Regulation 17(8) of the Listing
Regulations.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the provisions contained in Section 134(3)(c) of the
Companies Act, 2013, the Board to the best of its knowledge and belief and according to
the information and explanations obtained by it confirms that:
in the preparation of the annual accounts, for the financial
year ended 31st March 2024, applicable accounting standards have been followed
and no material departures have been made from the same;
the accounting policies mentioned in Note 3 of the Notes to the
Financial Statements have been selected and applied consistently and judgments and
estimates that are reasonable and prudent have been made so as to give a true and fair
view of the state of affairs of the Company at the end of the financial year and of the
profit of the Company for that period;
proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the Companies Act,
2013 for safeguarding the assets of the Company for preventing and
detecting fraud and other irregularities;
the annual accounts have been prepared on a going concern basis;
that internal financial controls to be followed by the Company
have been laid down and that such internal financial controls are adequate and operating
effectively;
proper systems have been devised to ensure compliance with the
provisions of all applicable laws and that such systems are adequate and operating
effectively.
ANNUAL RETURN
The Annual Return in Form MGT-7 is available at
https://www.cumi-murueappa.com/annual-return/.
SECRETARIAL STANDARDS
The Company is in compliance with the Secretarial Standards on Meetings
of the Board of Directors (SS-1) and Secretarial Standards on General Meetings (SS-2).
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS & OUTGO
The information on Energy Conservation, Technology Absorption,
Expenditure incurred on Research & Development and forex earnings/outgo as required
under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies
(Accounts) Rules, 2014 is annexed to and forms part of this Report as Annexure D.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant and material orders passed by the regulators
or courts or tribunals impacting the going concern status of the Company and its future
operations.
PARTICULARS OF EMPLOYEES
The information on employees and other details required to be disclosed
under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014 is annexed to and forms part of this Report as Annexure A.
Under the Company's Employee Stock Option Scheme 2007 (ESOP Scheme
2007), no Option grants have been made since February 2012 and all Options granted under
the Scheme have been vested and accordingly exercised or lapsed. The Employee Stock Option
Plan 2016 (ESOP Plan 2016) was implemented
in February 2017 with the approval of the shareholders and currently
governs the grant of options to employees. During the year, eligible employees were
granted in aggregate 225,000 options under the ESOP Plan 2016. The disclosures with
respect to options granted under the ESOP Scheme 2007 and ESOP Plan 2016 are contained in
the Corporate Governance Report. Further, the disclosures relating to Stock Options as per
Securities and Exchange Board of India (Share Based Employees Benefits) Regulations, 2014
as repealed at present and superseded by Securities and Exchange Board of India (Share
Based Employee Benefits and Sweat Equity) Regulations, 2021 read with the circular issued
by SEBI on 16th June 2015 have been provided on the Company's website and is
available in the link https://www.cumi-murugappa.com/policies-disclosure/. Both ESOP
Scheme 2007 and ESOP Plan 2016 are in compliance with the Securities and Exchange Board of
India (Share Based Employees Benefits) Regulations, 2014 as repealed at present and
superseded by Securities and Exchange Board of India (Share Based Employee Benefits and
Sweat Equity) Regulations, 2021.
OTHER CONFIRMATIONS
No application under the Insolvency and Bankruptcy Code, 2016 (IBC) was
made on the Company during the year. Further, no proceeding under the IBC was initiated or
is pending as at 31st March 2024. There was no instance of one time settlement
with any Bank or Financial Institution.
The Company has complied with provisions relating to the constitution
of the Internal Complaints Committee (ICC) under the Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act, 2013.
ACKNOWLEDGEMENT
The Board gratefully acknowledges the co-operation received from
various stakeholders of the Company viz., customers, investors, channel partners,
advisors, suppliers, government authorities, banks and other business associates during
the year. The Board also places on record its sincere appreciation of all the employees of
the Company for their commitment and continued contribution to the Company.
|
On behalf of the Board |
Chennai |
M M Murugappan |
May 3, 2024 |
Chairman |
|