Your Directors have the pleasure in presenting the 69th Annual Report
together with the Audited Financial Statements for the year ended 31st March
2023. 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
The financial year 2022-23 presented challenges worldwide including, economy, layoffs,
war and environmental crisis. Barely had the pandemic receded, and the war in Ukraine
broke out in February 2022. The prices of commodities, food, energy, and fertiliser rose
sharply. As inflation rates accelerated, central banks responded with monetary policy
tightening to contain inflation. Many developing countries faced severe economic stress as
the combination of higher import prices, weaker currencies, the rising cost of living and
a stronger dollar adversely impacted them.
During the second half of 2022, there was some relief for the governments and
households. Commodity prices peaked and then declined. However, prices of some commodities
remain well above their pre-pandemic levels. As 2023 rolled in, China opened up rather
swiftly, reversing its Zero-COVID policy. The Eurozone economies could narrowly avoid a
recession due to the unexpectedly warm winter in the region which otherwise would have
dented household's disposable income significantly due to significant increase in energy
prices. As the inflation rate declined in the US, policy rates are set to rise more slowly
and there are faint hopes of the US avoiding a recession altogether, barring any
unexpected financial system stress.
The global economy grew by 3.4 per cent in Calender Year (CY) 2022 and is expected to
grow at 2.8 per cent in CY 2023, before rising slowly and settling at 3.0 per cent - the
lowest medium- term forecast in decades owing primarily due to the coordinated global
monetary policy tightening coupled with the continuing geopolitical tensions. Advanced
economies are expected to see an especially pronounced growth slowdown, from 2.7 per cent
in CY 2022 to 1.3 per cent in 2023. The slowdown is concentrated in advanced economies,
especially the Euro area and the United Kingdom, where growth is expected to fall to 0.7
per cent and -0.4 per cent respectively in 2023 before rebounding to 1.8 and 2.0 per cent
in 2024.
On the other hand, the Indian economy has strongly rebounded on the back of a sustained
recovery in domestic demand, government impetus to infrastructure spending, and export
growth, further spurred by global economy as well as the 'China Plus One' sourcing
strategy of many global players. India became the world's fifth- largest economy, measured
in current dollars. Though the economy was expected to grow at
7 per cent for the year ending March 2023, the growth is expected to close at about 6
per cent. The World Bank has revised its FY 2023-24 GDP forecast to 6.3 per cent from 6.6
per cent (December 2022). The annual rate of inflation is below 6 per cent and as per the
World bank it is expected to average out at 5.2 per cent for the FY 2023-24
The export of goods and services in the first nine months of the financial year
(April-December) was up by 16 per cent compared to the same period in 2021-22. The
fundamentals of the Indian economy are sound as it enters its Amrit Kaal, the 25 year
journey towards its centenary as a modern, independent nation. Policies pursued carefully
and consciously have ensured that the recovery is robust and sustainable.
Company Performance
Revenues
During the year, the standalone revenues grew by 13 per cent and the consolidated
revenues by 40 per cent driven by better performance across all the businesses. The
Company began its financial year after the Russia-Ukraine war broke out in February 2022
which created more challenging situations like inflation, raw materials availability,
supply chain disruptions, foreign currency rate fluctuations, higher cost of capital,
geopolitical tensions, and expectation of a global recession. Economies across the world,
including India, were facing inflationary pressure. 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. There was no significant impact on Russian operations despite having to
operate under very volatile and difficult situation. Seeing the challenges to sell more
outside Russia, the Russian subsidiary focused more on serving the domestic market and
increased the domestic share to ~59 per cent, which used to be ~41 per cent earlier. The
Company anticipated the impact of the war on recent acquisitions in Europe and took
precautionary measures in advance and throttled in implementation of its integration
projects as planned. During the first half of the financial year, there were increase in
COVID cases once again but thanks to widely held vaccination drives, the impact was
minimised. The provision of oxygen concentrators, the establishment of quarantine
facilities and rolling out of COVID care policy provided support to and improved
confidence of the workforce. Towards the second half of the year, sustained recovery in
domestic demand, government impetus to infrastructure spending, export growth, softening
in commodity prices, easing in material shortages, production cutbacks by China due to
environmental concerns and the 'China Plus One' sourcing strategy of global players, led
to strong rebound in business performance. Some segments also witnessed a higher share of
exports with incremental growth coming from export customers wanting to de-risk their
supply chains. All three businesses registered high double-digit growth in revenues. For
Abrasives segment, the growth also included additional sales from Rhodius and Awuko. On
one hand, the increase in inflation helped the Electrominerals business to clock better
margins, but the Abrasives segment was impacted on other hand. The Ceramics business
continued to perform better in terms of revenues and margins due to strong demand of
value-added products, better realisation and a favourable product mix.
The subsidiaries also have shown significant growth over the last year. Among overseas
subsidiaries, Volzhsky Abrasive Works, Russia, CUMI America, CUMI (Australia) Pty Limited
(CAPL) and Foskor Zirconia (Pty) Limited, South Africa registered double digit growth.
CUMI Middle East (CME), United Arab Emirates and CUMI Abrasives and Ceramics Company
Limited, China (CACCL) have de-grown owing to the conscious decision to minimise
operations considering the sustainable continuance in these regions with the current model
of operations. The subsidiaries which were acquired during last FY also contributed to
additional sales. On the other hand, domestic subsidiaries including Sterling Abrasives
Limited, Net Access India Limited and PLUSS Advanced Technologies Limited (PLUSS) have
also grown over last year. Southern Energy Development Corporation Limited (SEDCO) which
was severely impacted by the gas price increase owing to the geopolitical crisis was able
to grow only marginally and had to report a loss for the year.
The Abrasives segment registered growth of 59 per cent at a consolidated level which
includes sales of Rs.6192 million from Rhodius and Awuko and at standalone level, sales
grew in single digit despite external challenges. The Electrominerals segment grew 25 per
cent at consolidated level and 13 per cent at standalone level on the back of high demand
for minerals and supply shortages, supported by growth in volumes and realisation. Higher
productivity and prudent cost control helped significant growth at standalone level. The
Ceramics segment grew by 26 per cent at standalone level and 29 per cent at consolidated
level. The demand outlook for key domestic core industries remained strong for ceramics
and refractories. The demand for Technical Ceramics, driven by technology transformations
in the Auto industry and the interest towards clean energy has driven growth.
The following table summarises the standalone and consolidated revenues - both segment
and geography wise:
|
(Rs. Million) |
|
2022-23 |
2021-22 |
Growth |
|
% share |
Amount |
% share |
Amount |
% |
Standalone |
|
|
|
|
|
Abrasives |
45 |
11069 |
48 |
10516 |
5 |
Ceramics |
34 |
8342 |
30 |
6612 |
26 |
Electrominerals |
28 |
7020 |
28 |
6207 |
13 |
Eliminations |
(7) |
(1699) |
(6) |
(1419) |
(20) |
Total |
100 |
24732 |
100 |
21916 |
13 |
India |
74 |
18400 |
77 |
16773 |
10 |
Rest of the world |
26 |
6332 |
23 |
5143 |
23 |
Total |
100 |
24732 |
100 |
21916 |
13 |
|
|
|
|
(Rs. Million) |
|
2022-23 |
2021 - 22 |
Growth |
|
% share |
Amount |
% share , |
Amount |
% |
Consolidated |
|
|
|
|
|
Abrasives |
44 |
20353 |
39 |
12830 |
59 |
Ceramics |
22 |
10273 |
24 |
7980 |
29 |
Electrominerals |
36 |
16338 |
40 |
13120 |
25 |
Power |
1 |
259 |
1 |
245 |
6 |
IT services |
1 |
585 |
1 |
453 |
29 |
Others |
1 |
542 |
1 |
190 |
185 |
Eliminations |
(5) |
(2340) |
(6) |
(1922) |
(22) |
Total |
100 |
46010 |
100 |
32896 |
40 |
India |
44 |
20321 |
55 |
18232 |
11 |
Rest of the world |
56 |
25689 |
45 |
14664 |
75 |
Total |
100 |
46010 |
100 |
32896 |
40 |
The Company's consolidated revenues from India grew by 11 per cent and from rest of the
world increased by 75 per cent cent mainly due to acquisition of new entities.
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, operate plants efficiently while reducing the overall
cost of operations. Capital expenditure, across all geographies were directed at capacity
expansions, 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:
|
|
|
|
|
Rs. Million) |
|
As % of Sales |
2022-23 |
As % of Sales |
2021-22 |
Increase % |
Sales |
|
24732 |
|
21916 |
13 |
Other Operating Income |
|
367 |
|
236 |
55 |
Revenue from Operations |
|
25099 |
|
22152 |
13 |
Other Income |
|
319 |
|
420 |
24 |
Total Income |
|
25418 |
|
22572 |
13 |
Expenses |
|
|
|
|
|
Cost of material consumed |
40 |
9991 |
41 |
8925 |
12 |
Purchase of stock in trade |
3 |
718 |
3 |
736 |
(2) |
Movement of Inventory |
0 |
(27) |
(2) |
(346) |
(92) |
|
|
|
|
|
(Rs. Million) |
|
As % of Sales |
2022-23 |
As % of Sales |
2021-22 |
Increase % |
Employee benefits expense |
10 |
2369 |
10 |
2149 |
10 |
Finance Cost |
1 |
150 |
0 |
10 |
1400 |
Depreciation and amortisation |
3 |
745 |
3 |
650 |
15 |
Power & Fuel |
9 |
2295 |
10 |
2104 |
9 |
Other expenses |
21 |
5110 |
22 |
4889 |
5 |
Total Expenses |
86 |
21351 |
87 |
19117 |
12 |
Profit before tax and exceptional Item |
16 |
4067 |
16 |
3455 |
18 |
Exceptional item |
1 |
249 |
- |
- |
- |
Profit before tax |
17 |
4316 |
16 |
3455 |
25 |
Profit after tax |
13 |
3309 |
12 |
2545 |
30 |
Total Comprehensive Income |
13 |
3236 |
11 |
2517 |
29 |
Standalone profit before tax stood at Rs.4316 million as compared to Rs.3455 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, Zircon Sand amongst others. The sourcing is a
prudent mix of indigenous and imported materials. Aided by judicious sourcing and
optimising throughput in production, material consumption continued to marginally improve
during the year. Significant improvement in specific material and energy consumption was
recorded across businesses. Also, approximately 1.5 MWp of solar systems were commissioned
across the Company.
Power and fuel cost increased by 9 per cent from Rs.2104 million in the preceding year
to Rs.2295 million during the current year.
Employee benefits expense increased from Rs.2149 million in the preceding year to
Rs.2369 million during the current year.
Profit before finance cost, exceptional item and tax margin expanded in all segments
except Abrasive segment due to increase in revenue, more favourable cost structures and
better realisation in some segments. Abrasive segment includes the results of newly
acquired entities and hence lower margins.
Finance costs were at Rs.150 million compared to Rs.10 million in the previous year.
Total Comprehensive Income increased from Rs.2517 million to Rs.3236 million.
The consolidated profit before tax and exceptional item (before share of Associate
& Joint ventures) entity-wise is represented below:
|
|
(Rs. Million) |
|
2022-23 |
2021-22 |
CUMI Standalone |
4067 |
3455 |
Subsidiaries including step down subsidiaries: |
|
|
Indian |
|
|
Net Access India Limited |
45 |
33 |
Southern Energy Development Corporation Limited |
(47) |
92 |
Sterling Abrasives Limited |
220 |
164 |
PLUSS Advanced Technologies Limited |
(179) |
(126) |
Foreign |
|
|
CUMI (Australia) Pty Limited |
282 |
191 |
CUMI International Limited |
103 |
247 |
Volzhsky Abrasive Works |
2046 |
1381 |
Foskor Zirconia (Pty) Limited |
104 |
76 |
CUMI America Inc. |
174 |
3 |
CUMI Middle East FZE |
(10) |
1 |
CUMI Abrasives & Ceramics Company Limited |
(47) |
(15) |
CUMI Europe s.r.o. |
1 |
- |
CUMI Awuko Abrasives GmbH |
(457) |
(196) |
Rhodius Abrasives GmbH |
(398) |
(5) |
Total of Subsidiaries |
1837 |
1846 |
Inter Company Eliminations |
(727) |
(739) |
Consolidated profit before tax and share of profit from Associate
and Joint ventures |
5177 |
4562 |
Consolidated profit after tax attributable to owners |
4140 |
3334 |
On a consolidated basis, the profit before tax and exceptional item (before share of
profit from Associate and Joint Ventures) increased to Rs.5177 million from Rs.4562
million. Profit after tax and non-controlling interests has increased to Rs.4140 million
from Rs.3334 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:
|
|
(Rs. Million) |
Financial position |
Standalone |
Consolidated |
|
31.03.2023 |
31.03.2022 |
% change |
31.03.2023 |
31.03.2022 |
% change |
Net Fixed assets (including goodwill and Right of use assets) |
5322 |
4527 |
18 |
16142 |
10638 |
52 |
Investments - Non-current |
10475 |
9685 |
8 |
1612 |
1378 |
17 |
Other Assets |
|
|
|
|
|
|
- Inventories |
3795 |
4002 |
(5) |
8989 |
6909 |
30 |
- Trade receivables |
3897 |
3309 |
18 |
6274 |
4848 |
29 |
- Cash and cash equivalents |
99 |
158 |
(37) |
3964 |
3475 |
14 |
- Other assets |
796 |
1017 |
(22) |
2263 |
5980 |
(62) |
Total assets |
24384 |
22698 |
7 |
39244 |
33228 |
18 |
Liabilities (Other than loans) |
3279 |
3661 |
(10) |
7458 |
6609 |
13 |
Net assets |
21105 |
19037 |
11 |
31786 |
26619 |
19 |
Sources of funding: |
|
|
|
|
|
|
Total equity attributable to owner |
20065 |
17407 |
15 |
28206 |
23638 |
19 |
Non - Controlling interest |
- |
- |
- |
1279 |
859 |
49 |
Loan outstanding: |
|
|
|
|
|
|
- Long term borrowings |
- |
|
|
429 |
78 |
451 |
- Short term borrowings (including current maturities of long time
borrowings) |
1040 |
1630 |
(36) |
1872 |
2044 |
(8) |
Total loans |
1040 |
1630 |
(36) |
2301 |
2122 |
8 |
|
21105 |
19037 |
11 |
31786 |
26619 |
19 |
Loans (net of cash and cash equivalents) |
941 |
1472 |
(36) |
(1663) |
(1353) |
23 |
On a consolidated basis, the total equity attributable to owners as on 31st
March 2023 was Rs.28206 million. There was an increase (net of dividend) to the extent of
Rs.4568 million. Non-controlling interest was at Rs.1279 million.
Liabilities (other than loans) was Rs.7458 million. The loans outstanding increased to
Rs.2301 million from Rs.2122 million. Net fixed assets (including goodwill and Right of
use assets) increased to Rs.16142 million during the current year from Rs.10638 million in
the last 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:
|
|
(Rs. Million) |
Cash flow |
Standalone |
Consolidated |
|
2022-23 |
Rs.2021-22 |
2022-23 |
|2021-22 |
Cash flow from Operations |
4395 |
2821 |
5927 |
3771 |
Taxes paid |
(955) |
(840) |
(1625) |
(1326) |
Cash flow from operating activities |
3440 |
1981 |
4302 |
2445 |
Capital Expenditure (Net of disposal) |
(1564) |
(812) |
(3006) |
(1631) |
Cash flow from other investing activities |
(558) |
(4672) |
434 |
(2971) |
Cash flow from investing activities |
(2122) |
(5484) |
(2572) |
(4602) |
Cash flow from financing activities |
(1377) |
1113 |
(1334) |
894 |
Net increase/(Decrease) in Cash & Cash equivalents |
(59) |
(2390) |
396 |
(1263) |
Net Cash and Cash equivalents at the beginning of the year |
158 |
2548 |
3475 |
4783 |
Effect of exchange rate changes on the balances of cash and cash
equivalents held in foreign currencies |
- |
- |
93 |
(45) |
Cash and Cash equivalents at the end of the year |
99 |
158 |
3964 |
3475 |
On a standalone basis, net cash generation from operations was Rs.3440 million in FY
2022-23 compared to previous year's Rs.1981 million. Net cash outflow on account of
investing activities was Rs.2122 million majorly towards capital expenditure. Net cash
outflow on account of financing activities was Rs.1377 million which is attributable
primarily to repayment of borrowings. The net decrease in cash and cash equivalents was
Rs.59 million against the net decrease of Rs.2390 million in FY 2021-22.
On a consolidated basis, net cash generation from operations was Rs.4302 million in FY
2022-23. Net cash outflow on account of investing activities was Rs.2572 million. Net cash
outflow on account of financing activities was Rs.1334 million. The net increase in cash
and cash equivalents was Rs.396 million against a net decrease of Rs.1263 million in FY
2021-22.
Key Financial Ratios (on a standalone basis)
Parameter |
2022-23 |
2021-22 |
Favourable/ (Adverse) in % |
Comments |
R O C E (%) |
21.2 |
18.2 |
17 |
Better returns & effective utilisation of capital employed |
Debt Equity (times) |
0.05 |
0.09 |
45 |
Due to repayment of current borrowings. |
PBT (%) to Sales* |
16.4 |
15.8 |
4 |
Increase due to better profitability. |
Asset turnover (times) |
1.8 |
1.5 |
21 |
Optimal utilisation. |
Receivable turnover (days) |
53 |
54 |
2 |
Effective control of Receivables |
Inventory turnover (days) |
58 |
58 |
- |
At the same level |
Interest Coverage Ratio (times) |
33.0 |
422.5 |
(92) |
This is due to the increase in Finance costs consequent to utilisation
of borrowings during the current year. |
Current Ratio (times) |
2.0 |
1.6 |
24 |
Due to repayment of current borrowings. |
Operating Profit Margin (%)* |
15.2 |
13.9 |
9 |
Increased efficiency. |
Net Profit Margin (%) |
13.4 |
11.6 |
15 |
Better profitability due to product mix and market growth |
Return on Net Worth (%) |
17.7 |
15.5 |
14 |
Increase due to higher profits |
*excluding exceptional income/expenses (Net)
SHARE CAPITAL
The paid-up equity share capital as on 31st March 2023 was Rs.189.94
million. The capital increased during the year by Rs.0.08 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 Rs.2/- per equity
share of Rs.1/- each. It may be recalled that in February 2023, an interim dividend at the
rate of Rs.1.50/- per equity share of Rs.1/- each was declared and paid in March 2023.
This aggregates to a total dividend of Rs.3.50/- per equity share of Rs.1/- each for the
year. The Company's Dividend Policy is available at https://www.cumi-murugappa.com/wp-content/uploads/2019/02/
dividend-distribution-policv.pdf. The dividend paid as well as being recommended for
the year ended 31st March 2023 is in line with this policy.
TRANSFER TO RESERVES
An amount of Rs.500 million has been transferred to the General Reserve of the Company
as on 31st March 2023.
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 basically hard synthetic minerals
coated on to 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 more than sixty years 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, it has built world class facilities with
strong processes, which gives it a cutting edge.
In the FY 2022-23, the business invested in expanding its conversion facilities at
Sriperumbudur for the Coated operations.
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 that are exhibited by a very experienced team of
application engineers across the globe.
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 ten manufacturing plants located across India, Russia and Thailand.
The marketing entities in North America, Middle East, China 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 increase in disposable income.
The global Abrasives market got impacted heavily in Q1 and Q2 of FY 2022-23 due to
heavy cost inflation after every economy and industry got affected because of
Russia-Ukraine war. Europe and to a lesser extent US saw a heavy impact on Industrial
production due to the inflationary conditions.
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 2021-22.
Cement production and Steel consumption both realised growth in Q3, after remaining
subdued in previous months - positive signs for construction, infrastructure, and SMEs.
Entry of several Paint Manufacturers in the Abrasives segment relying on cheap imported
products from China impacted CUMI as well as other India based manufacturers.
Likewise, the war in Ukraine and the resulting impact in Europe led to a slowdown in
some sectors like Handicrafts and Hand tools which have high dependence on exports.
Sales Overview
The Abrasives business on a standalone basis recorded revenues of Rs.11069 million
compared to Rs.10516 million in the previous year.
The first 2 quarters were focused on managing the cost pressure and ensuring selective
price increases to manage the margins. The precision Abrasives business was able to
register double-digit growth due to the demand from the Auto sector.
However, severe competition from cheap imported players led to muted demand in the
standard range of products.
Business had initiated several projects in cost control pursuing new methodologies like
design-to-value, Packaging cost improvements, Process efficiencies and Automation projects
using Digital and IOT techniques.
The business continued to make steady progress in building distribution leadership, a
key strategic pillar for the Company's growth. During the year, the business appointed new
channel partners and expanded its dealer network across India. The Company continued with
online digital marketing initiatives with the physical market promotion activities,
commencing from Q4. Retail development activities, promotional "influencer"
campaigns, end user-based email campaigns across geographies were conducted for better
market penetration and several new digital initiatives were introduced which are expected
to give a sustainable competitive advantage, better and faster connect with the end user
communities. New products continued to be developed and introduced in the market meeting
the needs of customers.
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 FY 2022-23 was to complete the line balancing with
respect to both upstream and downstream processes. Based on it, the conversion capacities
and capabilities were enhanced. Coated business faced relentless pressure in terms of cost
push, increased lead time for raw materials throughout the year. To negate the above,
manufacturing lines were operated at higher productivity levels through line speed
increase in the continuous process of jumbo making for selective run of the mill products.
Major investments had been made in the backward integration process by enhancing the
capabilities of cloth processing. To respond quickly to the market, a new pilot plant
investment was done with the start of art facilities.
Bonded Abrasives adapted a different methodology known as QRM (Quick Response to
Manufacturing ) for its Make-to-order line segments to reduce in factory lead time which
enabled the business to serve the B2B markets at faster phase. This learning was
horizontally deployed across all line segments in vitrified and organic abrasives
products.
Focus on mass market for FY 2022-23 was taken differently in challenging the cycle time
of manufacturing products by adapting the TPM 8 pillar approach and certain capacities
added with the start of art facilities focusing more on cycle time reduction.
To Build on quality consistency, major investments made in Ball mill, double compaction
presses, high-profile CNC machines, high-intensity mixers and ovens to match the global
standards of the products the Company manufacture for both precision and channel business.
To strengthen our in-house manufacturing capabilities, a highly technological machine
was designed and commissioned for Super Abrasives manufacturing across the entire
manufacturing and conversion processes.
To accelerate the cost savings, major projects were identified and implemented for
yield improvements, energy savings and consumables. As a part of the fuel cost push, few
units transitioned to alternative fuels as well resulting in more effective kiln
utilisation which supported negating the cost push.
The elements of industry 4.0 have been imbibed in the day-to-day operations to leverage
the gains of IOT and data analytics. Several digital initiatives are being pursued to
remain competitive. Similarly, to be the best in class in manufacturing of Abrasives,
various LSS (Lean Six Sigma) projects were in place across all functions which supported
the quality, variable cost reduction programs, understanding of the customer needs and
aligning the process and products to suit their needs. Horizontal deployment of such steps
is likely to further the competitive advantage in the changing landscape.
Benchmarked targets were taken across all units towards sustainability, like
implementation of Roof top solar, transition from liquid fuel to gaseous fuels, waste
reduction projects, RECD (Retrofit Emission Control Devices) for all our DG sets across
units, revamping of effluent treatment plants for effectiveness in treatments, automated
operations and improvement in manpower productivity.
Key Financial Summary |
|
|
(Rs. in million) |
Particulars |
Standalone |
Consolidated |
|
|
2022-23 |
2021-22 |
Change (%) |
2022-23 |
2021-22 |
Change (%) |
Revenue |
11069 |
10516 |
5 |
20353 |
12830 |
59 |
Segment results (PBIT) |
1512 |
1627 |
(7) |
1047 |
1563 |
(33) |
Capital employed |
3697 |
3787 |
(2) |
13503 |
11439 |
18 |
Share to total revenue of CUMI (%) (without eliminations) |
45 |
48 |
|
44 |
39 |
|
Share to segment results (PBIT) of CUMI (%) |
36 |
47 |
|
19 |
34 |
|
Ceramics Business Profile
The Ceramics business comprises of the Industrial Ceramics and the Refractories product
groups.
Industrial Ceramics
Industrial Ceramics business offers advanced Ceramics in Alumina, Zirconia, Zirconia
Toughened Alumina and Silicon Carbide products addressing wear and corrosion protection,
electrical insulation, thermal protection and ballistic protection applications. The key
user industries for Ceramics business are Power Generation and Distribution, Mining &
Ore processing, Cement, Ferrous and Non-Ferrous Industries, Automotive, Battery, Glass,
Paper, Food Grain handling, Petrochemicals and Ceramic Tiles.
The operations are carried out through manufacturing/service facilities located in
India, Australia and the US. 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, US, 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,
Equipment & Services, 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 to solve customer problems through on-site wear
audits, superior design and simulation, on-site installation services, enhances equipment
performance, productivity and life. Prototype remote monitoring system enabling the
Company/its customers to forecast maintenance/ changeover of equipment is under testing.
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 US, Japan and India.
CUMI 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 also been entering adjacencies and transformational spaces in Advanced
Ceramics & Materials. The new facility for Sintered Silicon Carbide established in FY
2021-22 is fully operational and serves applications in Chemical Industry, Defence and
others.
New forming capabilities - Hydraulic press for near-net forming, Isostatic Press for
larger diameter and longer parts, Ceramic 3D Printing capabilities - 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, 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 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.
In line with our long-term strategic objectives, we have built significant capabilities
in Carbon Fiber Reinforced Composites (CFRP). They are ideal materials for applications
such as drones due to their high strength-to-weight ratio, durability, and resistance to
fatigue. During the year, the Company acquired certification of EN 9100-2018 (Equivalent
to AS 9100D of the Society of Automotive Engineers (SAE) and the JISQ 9100 of the Japanese
Aerospace Quality Group). The business added a new dust-free facility for manufacturing
structural parts for drones, and aerospace applications.
Industry Scenario
Industrial Ceramics
A strong resurgence in the Mining and Mineral Processing Industry, especially in
Australia, was seen in FY 2022-23 resulting in significant demand for Wear Protection
Materials and Services. The outlook for Core segments like Steel, Cement, and Power Plants
remained strong throughout the year.
Further, the Solid Oxide Fuel Cells and Hydrogen market remained buoyant during the
year due to the increased focus on sustainability and policy-driven push by countries like
US, Korea and India for Green Hydrogen. This has resulted in the Engineered Ceramics
vertical doing very well during the year. The other key Industries that Engineered
Ceramics caters to - mobility, both Electric and ICE based - remained very strong during
the year.
The Metallised Ceramics vertical supplies predominantly to the Power Distribution
segment. With a capacity of 2.1 million cylinders per year, the division plans to
strengthen its position as a leading global player, working closely with the global
players.
Refractories
The demand for thermal protection of critical assets in core segments like steel,
glass, chemical processing, carbon black, cement remained strong throughout the year, post
pandemic.
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 is experiencing considerable inorganic consolidation.
The business also made significant progress in the global market in line with our
strategic intent to go global. We have expanded into key markets in Europe, the Americas
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
fertilizer plants due to increased production of specialty crop nutrients. The demand
resulted in significant growth in acid resistant liners and carbon products. Besides the
domestic market, we made significant gains in Middle East and African markets.
The description of the Mega trends as explained in the previous section will also drive
demand for 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 the addition of about 19GW capacity over the next two to three
years. There is a significant traction in the demand for offshore windmills.
Sales Overview
Revenues of the Ceramics business increased by 26 per cent on standalone basis from
Rs.6612 million to Rs.8342 million on the back of good orders from repair and maintenance
and higher offtake by customers for Metallised Cylinders and Solid Oxide Fuel Cells
(SOFC). Selective price increases were taken for majority of the products to mitigate cost
push.
Industrial Ceramics
Metallised Cylinders, Engineered Ceramics and Wear Materials business focused on robust
growth servicing key customers, adding new market and customers catering to the changing
demand patterns in an agile manner. Focused efforts were made in targeting newer markets
and partnering with global customers to garner long-term sustainable business has helped
in making forays into new geographies and applications. The Engineered Ceramics
vertical registered strong growth driven by the SOFC, Hydrogen and Mobility segments,
where focused efforts were taken to grow the volumes of existing products and develop new
variants in an agile and collaborative manner. The Wear Ceramics vertical also registered
strong growth, with all market segments - especially, Mining & Mineral Processing -
doing very well.
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 the Chemical industries. The business made significant gains in
Anti-Corrosive, FRP and Composites during the year. During the year, we developed a range
of construction chemicals, and a monolithic acid-resistant coating to reduce usage of
acid-proof bricks in select applications. Enhanced capabilities in CFRP also helped cater
to new applications in the drone industry.
Demand for advanced composites will significantly increase due to the Indian
Governments' policy of "Atma Nirbhar Bharat". The business is developing
capabilities in new forming techniques in composites.
Offshore windmill installations will drive the need for larger structural parts in FRP.
Increased usage of electro-refining and electro-winning will drive the requirement for
Polymer Concrete Cells. The business has a focused development platform in place to cater
to changing needs of the customer and industry.
Manufacturing
Industrial Ceramics & Refractories
The focus of the business was to drive volume growth by debottlenecking capacities and
adding key balancing equipment.
The Wear Ceramics vertical carried out a major redesign of the furnace loading pattern,
to unlock additional capacities. The Engineered Ceramics vertical focused on adding a new
state-of-the-art Hydraulic press with the capability of near-net forming to meet the
growing demands of Structural Ceramics. The Metallised Ceramics vertical focused on
converting some of the batch processes - like Glaze firing - to faster continuous
processes, thereby increasing capacities significantly. In addition, several initiatives
were driven on the shopfloor with the objective of reducing defects and improving
efficiencies, which helped greatly in tiding over the cost increases of some of the input
materials and utilities.
During the year, the business commissioned an energy efficient fiber lined high
temperature kiln that increased the capacity of fired products by 1200 MT. Significant
capability and improvement in efficiency precision grinding was built through
commissioning of Wendt India's dual carriage grinding machine for grinding of large
refractory blocks for glass industry.
Plant 1 of Super Refractories was certified by CII for significant achievement in the
practice of TPM.
The business also kicked off the practice of Quick Response Manufacturing to improve
lead time, and asset turnover.
Key Financial Summary |
|
|
(Rs. in million) |
Particulars |
Standalone |
Consolidated |
|
|
2022-23 |
2021-22 |
Change (%) |
2022-23 |
2021-22 |
Change (%) |
Revenue |
8342 |
6612 |
26 |
10274 |
7980 |
29 |
Segment results (PBIT) |
2048 |
1315 |
56 |
2507 |
1593 |
57 |
Capital employed |
4236 |
3666 |
16 |
5918 |
5029 |
18 |
Share to total revenue of CUMI (%) (without eliminations) |
34 |
30 |
|
22 |
24 |
|
Share to segment results (PBIT) of CUMI (%) |
49 |
38 |
|
46 |
34 |
|
Electrominerals Business Profile
The Minerals business of the Company spans India, Russia and South Africa with eight
manufacturing facilities covering product groups - Fused Alumina (comprising Brown and its
variants and White Fused Alumina), Silicon Carbide (crude, macro and fine), Monoclinic
Zirconia, Calcia Stabilised Zirconia and Alumina Zirconia. The Company also manufactures a
range of 'specialties' like Semi Friable Alumina, Surface and thermally treated grains,
Solgel derived Alumina called as Azure S, Specialty Alumina and Ceramic fine powders for
niche markets. To enhance its operational competencies, the business operates its own
Bauxite mines and a 12 MW Hydel power plant to insulate the operations from fluctuations
in power tariffs.
The business continues to focus on aggressive growth in the domestic and export market
while catering to the requirements from 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. For this, the business ensures 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 special products for refractory application, competitive solgel alumina and
monocrystalline alumina, etc., are well received by the customers. 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 focus 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 new and 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 during the year and the products are being
adapted/functionalised for selective applications. The trials for developing high purity
SiC have given encouraging results.
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 year 2022-23 opened many opportunities for the business and the business also
commenced its sustainability journey to become more responsible to the society in terms of
bringing better environmental controls and carbon footprint reduction. During the year,
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 has
also initiated a new project for generating green energy by tying up with a Solar Power
producer for the installation and commissioning of a 1.8MVA project at its campus in
Edappally.
The business has seen an ever-increasing demand for its minerals due to the revival of
Auto, Construction and Steel sector. The focus of the Government in infrastructure
spending and continued growth of Steel industry has pushed the demand for Abrasives and
Refractory products in the domestic market. The ongoing war between Russia and Ukraine
imposed certain challenges with some customers from Europe insisting on supply of
non-Russian Originated materials. While there was consistent demand for applications like
Diesel Particulate Filters (DPF) and Semi-Conductors, the business could not cater to them
fully due to restrictions imposed on the usage of feed material available from Russian
subsidiary.
The business could very well establish the new synthetic fusion-based materials in
place of regular Brown Fused Alumina (BFA). The Okha facility in Gujarat continued
producing various grades of bauxite materials using bauxites available locally.
Transformational products like Graphene and high purity Silicon Carbides are still
evolving with testing & approval for selected applications and the business is
confident of scaling up to a commercial level from next year.
Sales Overview
The Electrominerals business on a standalone basis recorded revenue of Rs.7020 million
compared to Rs.6207 million in the previous year.
The growth in the domestic business can be attributed to the revival of domestic
Abrasives and Refractory customers, who are the biggest consumers of Electrominerals.
Business has effectively implemented price corrections to the customers across market
segments, to ward off the competition from Chinese suppliers. The business has also
maintained a stable performance of its regular business on account of the consistent and
stable performance reported by the user industries like Construction, Automobile, and
Steel segment during the year.
Global players looking to reduce sourcing dependence on China can present opportunities
for Mineral business.
The Russian subsidiary ran at near full capacity. Higher demand for Refractory grade
materials aided the growth.
The Zirconia business at Foskor Zirconia also reported favorable results during the
year.
Manufacturing
Manufacturing strategies focused mainly on improving throughput by efficient operations
supported by loss 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.
During the year, the business has received significant awards like Kerala State Energy
Conservation Award and Manufacturing Innovation award from Kerala Management Association.
The business has successfully enhanced fusion capacities, and this is expected to
augment the volume of ABV range of materials. The business has already taken initiatives
to increase its crushing and grinding capabilities for White Fused Alumina (WFA) and
modernisation of the processing facility for BFA during the year. This would further
enhance the material availability of WFA and BFA from Minerals business.
The year saw probably the highest volatility in the availability and price of critical
raw materials: Alumina, Graphite Electrode and Raw Petroleum Coke (RPC) in international
and domestic market.
Foskor Zirconia which is into production of Monoclinic Zirconia and Calcia Stabilised
Zirconia has also revived its operation with increased demand from customers. The Silicon
Carbide operations at VAW were at its full capacity.
The business has successfully produced Graphene from its new facility and established
three variants for commercial applications. The production trial of High Purity Silicon
Carbide has been conducted and the chemical and physical properties are being evaluated.
Key Financial Summary
|
|
|
(Rs. in million) |
Particulars |
Standalone |
Consolidated |
|
|
2022-23 |
2021-22 |
Change(%) |
2022-23 |
2021-22 |
(Change (%) |
Revenue |
7020 |
6207 |
13 |
16338 |
13120 |
25 |
Segment results (PBIT) |
985 |
612 |
61 |
2753 |
1942 |
42 |
Capital employed |
2536 |
2152 |
18 |
9209 |
7037 |
31 |
Share to total revenue of CUMI (%) (without eliminations) |
28 |
28 |
|
36 |
40 |
|
Share to segment results (PBIT) of CUMI (%) |
23 |
18 |
|
51 |
42 |
|
FINANCE
During the year, the Company generated Rs.3440 million cash surplus from its operations
on a standalone basis. All debts have been serviced on time. The Company's long-term
borrowings as on 31st March 2023 stands at nil while short-term borrowings was
at Rs.1040 million. The capital expenditure program of Rs.1570 million and investments in
subsidiaries of Rs.807 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 increased to Rs.2301 million. The cash and cash equivalent level (net
of borrowings) at a consolidated level stands at Rs.1663 million.
The debt-equity ratio for the Company was 0.05 at standalone and 0.08 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 Rs.150 million compared to Rs.10 million last year. The Company earned Rs.1
million by investing surplus cash available for short term.
At a consolidated level, the finance cost increased to Rs.235 million from Rs.56
million. The increase in borrowings has resulted in higher finance costs. The capital
expenditure program of Rs.3017 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 2023 and the date of this
Report.
INDIAN ACCOUNTING STANDARDS (IND AS) - IFRS CONVERGED STANDARDS
The Company, its Subsidiaries, Joint Ventures and its Associate 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 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 on 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 with the recommendation of the Audit Committee 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
This year, we have been strengthening the connection between the Human Resources
function and the business. We have partnered with businesses to deliver on building
capabilities for the future. At the beginning of the year, HR team across businesses spent
time understanding and assessing the growth plans of businesses. All these dialogues and
reflections translated into programmes to develop talent and capability across functions
and levels. The objective has been to build human assets in a way that is relevant to the
business and its growth charter. A clear example of this is the year-long induction of the
largest batch of Graduate Engineering Trainees who were selected from campuses across
India. These young graduates were then placed across Divisions in functions including
Manufacturing, Quality, R&D and Sales.
Employee Safety and Health
Safety continues to be the key area of focus for the Company. Behaviour-based safety
training both in-person as well as virtual were conducted to promote a culture of safe
working across factories. Safety awareness sessions continued on a regular basis to bring
in more awareness on safety. "Drive Zero" is an initiative to ensure Zero
accidents and Zero Harm to people working in all the manufacturing sites and area offices
of Abrasives. Eight Level approach was adopted to create a sense of ownership towards
safety and to have a structured approach for building a safe work culture. Safety
Excellence model rolled out and various activities are initiated in EMD plants like Theme
based monthly audits and Role plays. Plants received safety awards from Kerala Government
and National Safety council for the safety performance.
Capability Building
The learning and development function could cover a greater number of learning
programmes with customised development interventions across levels and wider participant
coverage.
CUMI SUPER STAR program, a specially designed programme for development of supervisory
staff Phase-2 was launched to enable the Supervisors to manage their work effectively and
in engaging with their teams to improve productivity through developmental inputs,
frameworks and techniques. 99 supervisors underwent various functional capability building
sessions on 7 Quality Control Tools, problem solving, Statistical Process Control, 4MCM,
Lean principles and mistake proofing. This was followed up with 18 Action learning
projects to implement the learning on the job. A 1-day experimental learning outbound
program was also planned for all the 99 supervisors based on behavioural competencies like
planning, time management, emotional intelligence, collaboration, communication and
customer focus. A valedictory function was organised in which all the supervisors were
certified to have successfully completed the program and top projects and participants
were recognised and rewarded. Apart from this a Customised 2 day Supervisory Development
program exclusively designed for 23 supervisors of EMD.
Based on the inputs from Graduate Engineer Trainee batches 2018 to 2021, a customised
development calendar was released exclusively, and programs were conducted on topics like
APQP, FMEA, LEAN, TPM and finance for Non-finance and session on Data analytics using
excel and power BI.
YOLO, a customised intervention for the GET batch of 2022 was launched with a 1 one
year development journey covering Campus to corporate workshop, POSH, Whistle blower, 5
lights QC tools, low cost automation, Industrial safety, design,basic machining, materials
technology and Industrial safety. GET's also underwent finishing school at Murugappa
polytechnic were learning on machines was covered.
CUMISEAD, a customised program for first time managers and individual contributors was
rolled out in the month of February, with the objective of Enhancing self-awareness,
improving interpersonal effectiveness and driving impactful results through systematic and
structured behavioural tools and techniques. The intervention started with "Manager
as Coach" workshop to help the reporting managers to coach participants throughout
the 6 month learning journey. The program has a combination of classroom training,
assignments, action learning projects and one to one coaching sessions. Currently, the
first batch of 20 employees are undergoing this intervention and module -1 has been
completed.
Customised business need based programs were conducted. 2 Batches of Data analytics
using Power BI were conducted for Abrasives division covering 65 employees across
different functions. The program was delivered in a blended mode with e-learning,
classroom and action learning projects with multiple rounds of review to help the
participants to use POWER BI Dashboards for analytics and decision-making in the internal
monthly reviews. For Industrial ceramics division a customised business specific program
on crucial conversations was conducted for 30 participants to provide inputs on high
impact conversations skills, cross cultural sensitivity and handling difficult customers.
Training need-based programs were rolled out on functional topics like 8D problem
solving, Cost Effective Automation, 6 Sigma, 7QC Tools, APQP & Design for
Manufacturing, and Behavioral programs on interpersonal skills, emotional intelligence,
negotiation skills, strategic planning and execution and design thinking for innovation.
The program on emotional intelligence was delivered as a high impact program in
partnership with PSG institute of Management.
Lean Six Sigma initiative was started in the year 2020 to eliminate variations in the
existing process to improve process capability and competency of the personnel by using
problemsolving statistical methods in Abrasives business. Continuing the journey of Lean
Six Sigma, during FY 2022-23, 41 continuous improvement projects were executed across all
functions. The projects were aimed at cost saving, revenue enhancement and internal
efficiency improvement. Around 43 members from various functions were selected and coached
in green belt DMAIC process. Promotional activities like ATOM (A Theme One Month) and
gallery displays are done to ensure continuous refreshment of six sigma tools. Six sigma
project teams participated in external competitions viz. CII, NITE, ISQ TOPS etc., and
achieved 2 external awards.
Apart from this, "train the trainer" program was organised in which 30
internal experts within CUMI were identified and went through a workshop on training and
facilitation skills. 34 leaders also underwent the Awareness session on "Prevention
of Sexual Harassment".
The Catalyst, 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 mentors from catalyst to 18 Graduate Engineer Trainees.
Platform for Accelerated Career Experience (PACE) - the platform for cross-functional
experiential learning continued to engage and provide employees with an opportunity to
work on different projects of their choice. The year saw 14 new projects and the projects
are in different stages of implementation.
Knowledge Management
Knowledge Management framework was introduced, and a pilot project was initiated in EMD
for Knowledge Management. Various initiatives have been taken up among the retiring
employees as well as the serving employees to capture the knowledge available in the
organisation in a structured way. An IT platform is used to capture data, storage of data
and for easy retrieval of the data.
Employee Engagement
Employee recognition through different platforms continued to recognise employees for
their achievements. Employees who exhibited exceptional values during the year were
recognised with "Shine Awards". Total of 90 nominations received and 11
employees won the award. They were facilitated along with their families during the award
distribution ceremony.
In continuation to the Employee Engagement survey conducted in Q4 of FY 2021-22,
Focused Group Discussion was conducted across divisions and action plan implementation
were initiated based on the outcomes to improve the Engagement score.
The Employee Engagement Index was 69 per cent against the score of 60 per cent in 2018
(AON). The employees feel good that CUMI as an organisation has great reputation, they
feel a sense of belonging among teams, feel proud of their work and enables them to
demonstrate the Five Lights.
The predominant areas of improvement are compensation and benefits, performance-based
differentiation in Incentives & Increments and more opportunities for fun at work.
Based on the survey outcomes, focus group discussions were conducted for all the
employees and action plans were created to improve employee experience. Consolidation of
inputs & implementation of Action plan was initiated from November 2022 & is in
progress. Significant part of the actions have been completed and others are in progress
and on schedule to be completed.
Every quarter, we recognise and reward employees of all functions on their projects
that they have completed in the previous quarter (month/quarter) with regards to Cost
Saving - variable/fixed, First Time Right, NPI establishment, Sales topper (region wise),
Best Support to business, Best NPI/ NPD Launch and Process improvement projects. 'You made
a difference' is a quarterly recognition programme conducted in EMD to recognise the
special contributions of employees.
Achiever's Gallery was initiated to recognise employees for improvements, Kaizens,
suggestions in PQCDSM. Circle wise the shop floor teams were evaluated by an apex
cross-functional team and rated on 43 parameters.
To motivate and recognise the internal trainer and build more talent pool internally,
the Company launched a monthly best trainer recognition programme at Hosur named CUMI
Acharya. They were evaluated by the feedback ratings and number of training sessions they
have conducted.
On Teacher's day, the Company recognised 39 Internal Trainers across all functions as
CUMI Acharyas and honored them for their contribution. "Across the Wave"
initiative was launched in the month of December which is a leadership inspiration
programme.
HR Excellence
CUMI Participated in the 13th CII HR Excellence Assessment. The purpose was
to have a deeper and closer objective assessment of our HR ecosystem and to identify
opportunities for improvement and to have an outside in perspective. A team of Assessors
with Senior HR professionals from across industries visited and conducted a detailed
assessment of our HR systems and practices in December. They spent time at our factory
locations and interacted with our colleagues from shopfloor to Board room. As an outcome
of the assessment, CUMI is honored to receive the 'Significant Achievement in HR
excellence' certification from the Confederation of Indian Industry. The scores have
improved from the last participation.
This recognition is evidence of a robust ecosystem and confirmation that we are on the
right path to building a people- first future. The assessment report is a guiding note in
our journey on excellence. Action plans based on the feedback report are being reviewed.
Employee Relations
Cordial relationships have been maintained with employees and unions despite the
disruptions and volatile business conditions and the wage settlements have brought in
greater flexibility in operations, adherence to TPM practices ensuring high standards of
productivity. During the year, 3 factory units signed off wage settlement increasing
productivity target and without loss of any manhours.
Talent Acquisition & Talent Management
Hiring of fresh talent and development of future leaders continued as a strategic focus
area. The focus was to continue creating a talent pipeline in the middle management level
by hiring Graduate Engineer trainees. The Company continued its onboarding of
Graduate/Post-Graduate Engineer Trainees who have been undergoing a year long training
program.
The quality of hiring has been enhanced by introducing Thomas Personal Profile Analysis
(PPA). The capability of the HR team is constantly enhanced by undergoing training program
on PPA and getting certified on the same. Lateral hires with greater emphasis on
referrals, job boards and internal transfers lowered sourcing costs.
High Potential Talents who were identified as future leaders through multi-source
feedbacks and assessments were enrolled for different development programmes. Employees
who are identified as potential business leaders are undergoing a development programme
through Indian Institute of Management, Ahmedabad (IIMA). They have completed the program
and have been certified.
Employees who are identified as mid-level leaders were enrolled in CUMI Leadership
Programme, a customised development programme designed and executed in collaboration with
Great Lakes Institute of Management. They have completed the program and have been
certified.
High Potential employees in junior-level management are being identified through a
performance - potential matrix. The assessment will take 2-year performance data and a
potential score from Thomas General Intelligence report. The exercise is completed and the
critical talent have been identified. Individual Development Plans are being evolved in
discussion with the respective employee and reporting manager.
Performance Management System (PMS)
In order to drive the performance-oriented culture, the goal setting process of
2022-2023 and the appraisal process of 2021-2022 were completed during July 2022. Based on
the PARC review, the rewards were distributed among the qualifying employees. Rewards
include recurring salary revision, promotional reward, salary correction for critical
talent, one-time cash reward for exceptional contribution.
The incentive payout is also completed depending on the Balanced Score card (BSC). Some
of the employees were considered for promotion/salary correction during January 2023 as a
part of mid-year review process.
ACHIEVEMENTS AND AWARDS
Despite continuing to be a challenging year from an operational perspective, the
Company continued to be a proud recipient of several awards and recognitions reiterating
its commitment to excellence.
MMA (Madras Management Association) Award for Managerial Excellence 2022.
EMD was awarded the IEI Industry Excellence Award 2022.
EMD has been recognised with GOLD Award for Energy Management and Conservation
by Society of Energy Engineers & Managers (SEEM).
EMD was awarded the Kerala State Energy Conservation Award 2022 in appreciation
of the commendable achievements towards energy conservation and management in the category
of Large-Scale Energy Consumers.
Russian subsidiary, VAW awarded 'Best Managers and Organisations' in 2021.
Super Refractories won TPM Strong Commitment Award for Ranipet Factory.
Abrasives won Gold medal in the 16th CII Six Sigma National
Competition.
Abrasives was awarded Gold in CCQC 2022 award instituted by the Quality Circle
Forum of India, Madurai Chapter for six sigma project.
5th National Convention on Innovative QC Teams - NCIQCT - 2022 by
Abrasives team.
Won Bronze award in "QIT (Quality Improvement Teams) Convention"-
October 2022 by NITE - National Institute. for Transformation and Excellence by Abrasive
team.
Achieved Special Award - Deming Trophy for best use of Statistical Tools by
Abrasives team.
5th SMED Competition by ABK AOTS, Chennai, participated and won
RHODIUM AWARD by Abrasives team.
EMD - Maniyar Team won the Gold Award in ABK AoTS Competition.
EMD- Koratty MGP Team Won the Platinum Award in Quality Circle Competition
NCIQCT.
Three of our units won Safety Award this instituted by Government of Kerala and
National Safety Council.
AZ Team won the CII Kerala State Quality Circle Competition in November 2022.
The total staff on rolls of the Company (including Joint Ventures and Subsidiaries) as
on 31st March 2023 was 6015 with 3771 employees in India (previous year 5555
with 3674 employees in India).
PERFORMANCE OF SUBSIDIARIES
The Russian subsidiary recorded sales of RUB 8067 million against RUB 7293 million
during the previous year. The profit after tax stood at RUB 1239 million against RUB 1100
million. Growth was driven by the SiC and Refractories business. Volumes remained
encouraging throughout the year. Considering the challenges that arose because of the
Russia-Ukraine war, particularly in logistics to sell outside Russia, the business
explored the opportunities to sell more within the domestic market and increased its
volume share in Russia from level of 40-45 per cent to 55-60 per cent. There had been no
impact on the operations and the installed capacities were being utilised at the same
level as it was before the war.
Also, collections were on time. On the logistics front, arrangements were made to
Europe, India and other geographies through alternate routes. The products of VAW are not
under any sanction nor is restricted. Neither VAW as an entity nor its directors or its
employees are under any sanction.
Foskor Zirconia, South Africa, recorded a sales of ZAR 440 million compared to ZAR 354
million in the previous year with an uptick in demand for its products. The entity made a
turnaround in its performance and profit after tax stood at ZAR 60 million against ZAR 15
million in the previous year. During the year, owing to a restructuring of the balance
sheet mutually agreed between the shareholders of FZL as well as an improved financial
performance, the Company saw a turnaround. The comment of the subsidiary's Auditors on the
material uncertainty relating to going concern which was made in the previous year reports
have been dispensed with and the Company is well on path for a sustainable growth in
future.
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 21.1
million to AUD 30.1 million registering the highest recorded revenues in the Company.
Profit after tax was AUD 3.6 million against AUD 2.5 million last year.
Sterling Abrasives reported very good growth in revenues at Rs.1381 million compared to
last year's sales of Rs.1118 million. Profits after tax increased to Rs.165 million from
Rs.121 million during the last year. 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.
During the year, considering the sustainability of the business under the current
operating model in China owing to increasing travel restrictions and other challenging
business conditions, it was decided to minimise the operations in CUMI Abrasives and
Ceramics Company Limited (CACCL), the subsidiary based in China. Post the conscious call
of tapering down the operations, the market is being served directly from India.
The sales of CUMI America during the year improved significantly to USD 18 million as
against USD 12 million last year, driven by an increase in sales of both Bonded Abrasives
and Industrial Ceramics thereby improving profits. The profit after tax increased from USD
0.04 million to USD 2.16 million.
For CUMI Middle East, sales decreased from USD 2.2 million to USD 1.0 million. Loss for
the year was at USD 0.13 million against a profit of USD 0.02 million during the previous
year.
Southern Energy Development Corporation Limited (SEDCO), the gas-based power generation
subsidiary recorded a sale of Rs.259 million as against Rs.245 million last year. The
business made a loss after tax of Rs.44 million as compared to profit after tax of Rs.68
million during last year on account of the significant increase in gas prices and other
generating & transmission charges.
Net Access India Limited, which provides IT facility management and other allied
services grew from Rs.453 million to Rs.585 million. The profit grew from Rs.25 million to
Rs.34 million.
CUMI International Limited, Cyprus recorded a revenue of USD 6.1 million representing
mainly dividend income as against last year's income of USD 5.9 million. During the year,
the Company made an investment of USD 9.6 million in CIL to enable suitable funding to its
subsidiaries.
CUMI Europe s.r.o. is not in operation.
Last financial year, the Company made a strategic investment of 72 per cent in the
share capital of PLUSS Advanced Technologies Private Limited by purchasing a part of the
existing stake held by its promoters as well as entire stake held by TATA Capital Fund and
other investors and also made a direct investment in the Company. During the year, the
Company increased its investment in the Company by 0.74 per cent by acquiring additional
3724 shares. PLUSS Advanced Technologies Limited recorded a revenue for the year Rs.542
million as against Rs.190 million for the previous year (Post-acquisition from October
2021) and loss after tax for the year was at Rs.137 million as against Rs.96 million for
the previous year (Post-acquisition) under acquisition accounting. The losses for the
current year were reduced from Rs.70 million to Rs.38 million on an actual basis.
CUMI Awuko Abrasives GmbH had acquired the main assets of Awuko Abrasives Wandmacher
GmbH & Co. KG, a company under insolvency in Germany during the year 2021-22. The
operations of the Company continued to be impacted by the volatile business conditions and
the newly inducted Management is in the process of stablising the operations. Awuko
recorded a revenue of EUR 9.4 million and loss after tax was at EUR 3.7 million.
Rhodius Abrasives GmbH - During the last financial year, CUMI International Limited
incorporated an operating company in Germany to acquire the Abrasives business of Rhodius
Group. The increasing prices of raw materials and energy prices in Europe and challenging
business conditions owing to the continuing geopolitical crisis has impacted the
operations of the newly acquired subsidiary. Rhodius recorded a revenue of EUR 64.5
million and loss after tax of EUR 3.6 million.
ENTERPRISE VALUE ADDITION
The Company has been able to continuously add value, the summary of which is given
below:
|
|
|
|
|
(Rs. in million) |
Particulars |
2022-23 |
2022-22 |
2020-21 |
2019-20 |
2018-19 |
Generation of Gross Value added (excludes exceptional items (net) |
7201 |
6275 |
5153 |
5044 |
5072 |
Breakup on Application of Value added |
|
|
|
|
|
Payment to Employees and Directors |
2389 |
2169 |
1982 |
1979 |
1839 |
Payment to Shareholders (on payment basis) |
665 |
569 |
284 |
757 |
520 |
Payment to Government |
1050 |
899 |
638 |
709 |
946 |
Payment to Lender |
- |
- |
- |
- |
- |
Towards replacement and expansion |
3097 |
2638 |
2249 |
1599 |
1768 |
|
7201 |
6275 |
5153 |
5044 |
5072 |
- 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.
During the previous year, in collaboration with external advisors, the enterprise
management framework was assessed for its maturity levels and due changes to the risk
management policy and the manner of risk identification and categorisation were made.
During the year, the Company has completed the automation of the upgraded enterprise risk
management framework. The Risk Management Committee continued to review the risks and
mitigation plan as per the adopted Charter and Risk Management Policy. During the year,
dedicated focus on developing a cyber security framework for the Company was provided. The
Company is in process of establishing an 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 the global entities. Besides this, the review of
geopolitical risks in the volatile global market conditions and periodic risk register
review continued.
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 the
profitability either favourably or adversely based on the changes in the power cost. As
part of its strategy to build competitiveness, the Company continues to look for
opportunities to add to its captive power generation. 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 power systems has been commissioned at various factory
locations which has generated around 15,00,000 units of electricity from cleaner sources,
equivalent to saving 17550 trees and reducing 606 Tons of CO2 emissions. Also,
a solar powered electric vehicle charging station has been installed at one of the factory
location to encourage employees towards EV adoption. 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 single source of
energy.
The requirement of fuel is driven by the high-temperature processes in the Abrasives
and Ceramics businesses. 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 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 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 was given priority. Awareness mailers were disseminated across to mitigate risk of
such attacks and requisite infrastructure upgrade to support the remote working conditions
in a secured manner was initiated.
As mentioned earlier, the Company is in the final stages of completing the
establishment of a cybersecurity framework as a part of its IT Strategy. We have partnered
with an external expertise to assist in developing this framework after undertaking
maturity assessment for both IT and OT capabilities. The implementation of the framework
will commence in the coming years.
The Company's input materials are not commoditised and does not warrant for 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 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 cannot be ignored as the pandemic still continues in
an intermittent manner with the risk of another wave with the same or new variant still
lingers. The priority for the Company continues to be the safety and health of all its
employees and other stakeholders with minimal disruption to operations. To mitigate the
risks related to any subsequent infection waves, if any, the Company is well prepared with
its workforce of more than 95 per cent vaccinated with the first and second dose. Drives
were conducted during the year for the booster shots of the vaccines which helped minimise
the impact as and when different variants of the virus emerged.
Further, dedicated task forces for taking concerted and quick decision on matters
relating to COVID-19 have been set up under the supervision of Head-HR. The quarantine
centers to handle any sudden spurt of infections at the Company's plant location remain to
be activated any time. The Company also ensures that safety protocols and government
guidelines are being strictly followed including monitoring the same vide its compliance
management system.
Considering the declining trend of the COVID pandemic and with the situation almost
normalising across the globe, the risks associated with the same reported until last year
is not being specifically disclosed in this report. However, the Management is conscious
of the emerging variants and continues to monitor the situation and take precautionary
action. The risks across operations, human resources, IT, supply-chain etc., which were
identified and the mitigation plans to address the risks continue to be on the risk radar
of the Company.
BUSINESS OUTLOOK AND OPPORTUNITIES
India's recovery from the pandemic was relatively quick, and growth in the upcoming
year will be supported by solid domestic demand and a pickup in capital investment.
Navigating the growth paradox amid an increasingly volatile global backdrop remains the
key challenge. The Government of India has largely continued with its focus on driving
capex by enhancing the gross budgetary support for Roadways, Railways, and Defense
sectors. The budget had a strong focus on capex and infrastructure development as well as
giving more money in the hands of the middle class and improving Agricultural income along
with job creation through skill development for the weaker section.
This should all go well for the Company. CUMI has 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 Performance of Business Segment section.
Even as India's outlook remains bright, global economic prospects for the next year
have been weighed down by the combination of a unique set of challenges expected to impart
a few downside risks. Multi-decadal high inflation numbers have compelled central banks
across the globe to tighten financial conditions. The impact of monetary tightening is
beginning to show in slowing economic activity, especially in Advanced Economies. Besides
this, adverse spillovers from the prolonged strains in supply chains and heightened
uncertainty due to geopolitical conflict have further deteriorated the global outlook.
Hence, global growth is expected to bottom out at 2.8 per cent in 2023 before rising
modestly to 3.0 per cent in 2024. Global inflation is estimated to decrease, although more
slowly than initially anticipated, from 8.7 per cent in 2022 to 7.0 per cent in 2023 and
4.9 per cent in 2024 (IMF's World Economic Outlook, April 2023).
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.
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:
|
|
|
(Rs. Million) |
Description |
As on 31.03.2022 |
Movement (Net of Deletions) |
As on 31.03.2023 |
Loans given by the Company |
- |
- |
- |
Corporate guarantee given by the Company |
5195.33 |
(4899.78) |
295.55 |
Investments made by the Company |
9684.86 |
790.36 |
10475.22 |
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 21st March 2022 duly factoring the processes and procedures
to be established to supervise the expanded list of transactions with the extended list of
Related Parties. During the year, the policy on Related Party transactions was reviewed
and revised on 29th March 2023.
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 of repetitive in nature. Omnibus approvals in
respect of transactions that cannot be foreseen or envisaged 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. Further, considering the regulatory changes in the SEBI Listing Regulations on
the enhanced monitoring of transactions with Related Parties since April 2022 (and April
2023), awareness sessions across the various subsidiaries of the Company, both domestic
and overseas was conducted to brief the requirements of the amended Listing Regulations.
Following this, the changes were effected in their reporting framework as well as in the
monitoring process at the entity level.
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 of 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 29th March 2023, the 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/themes/CUMI/pdf/policies/Policy-on-Related- Party-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 CSR activities undertaken by CUMI are rooted in the principle, "towards
prosperity in harmony with people and planet". We believe that social responsibility
is not just a corporate obligation that has to be carried out, but rather an opportunity
to make a difference. All our CSR programmes are aimed at inclusive growth and sustainable
development of the community.
The Company continues to engage in Corporate Social Responsibility (CSR) activities
directly as well as through implementation agencies registered with the Central
Government, in line with its stated CSR policy.
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 the society. During the FY 201516, 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 National Council on Vocational
Training syllabus for the rural youth drawn from socially and underprivileged sections of
the 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.
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 rural
development.
Further, during the year, the CSR activities in the healthcare sector involved grants
for conducting pediatric cardio surgery at Sri Sathya Sai Sanjeevani Hospitals besides
installation of oxygen generator at Sir Ivan Stedeford Hospital. Sri Sathya Sai Health
Education Trust established in May 1970 started Sri Sathya Sanjeevani Hospitals in 2012
primarily to address congenital heart disease free of cost to the needy children. Sir Ivan
Stedeford Hospital, a multi-speciality hospital set up in 1966 located in Ambattur,
Chennai aims at providing quality medical care through latest technology to cater to the
medical needs of the poor and needy sections of the society at an affordable cost. AMM
Foundation, an autonomous charitable trust, is engaged in philanthropic activities in the
field of education and healthcare since 1953.
The Company's focus areas for grants to implementing agencies continued to be in the
education and health sector. The grant to AMM Foundation for the 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 the past 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 was made towards coaching the students of Murugappa Youth
football academy (MYFA) by engaging BVB Febballakademie GmbH, a firm from Germany
specialised in football coaching. They conducted a camp for three days covering five
training sessions for the MYFA students.
Further, the Company had also contributed towards essential medical equipment like
Wheel chair, Stretcher Trolley, ECG equipment, BP Checkup equipment, Computers, Sugar
testing equipment and Clinical microscope for setting up at Shri Padmavathi General
hospital at Madurantakam, Chengalpattu, run by Sri Padmavathy Trust for Socio Economic
Uplift of rural communities.
MCRC is a non-Governmental voluntary research organisation working on devices and
technologies for rural application of eco-friendly technologies to combat pollution. MCRC
is recognised by Department of Scientific and Industrial Research, Government of India as
a Scientific and Industrial Research Organisation to conduct research in various areas and
is approved by the University of Madras, Chennai to offer Ph.D. programmes in the areas of
Energy, Bioenergy and Biomass for rural development. During the year, a grant was made to
MCRC for research and development on biological waste water treatment using Microbial,
Enzymes etc., for rural villages.
The local community assistance programmes undertaken at various plant locations
included Education & Child development, Health care, Youth empowerment, Women
empowerment, flood relief activities across locations, Educational sponsorships of
underprivileged children, livelyhood programs for the women, sports, recreation and
support for basic infrastructure for the public utility and schools etc.
Besides the above, the Company also actively pursued local community assistance
programmes in and around its plant and office locations anchored by its employees.
The Company's CSR policy is available on the Company's website at the following link https://www.cumi-murueappa.com/wp-
content/uploads/2021/04/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 2022-23. The
Company spent Rs.49.41 million towards CSR activities and no amounts remain unspent at the
end of the year.
As at 31st March 2023, 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 222 position as per the market
capitalisation at NSE as on 31st March 2023. The Business Responsibility and
Sustainability Report for the year ended 31st March 2023 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 perspective.
GOVERNANCE
Board of Directors and Key Managerial Personnel
As at 31st March 2023, the Board of the Company comprised eight Directors of
which majority (five) are independent.
During the year, Mr. P S Raghavan and Mr. Sujjain S Talwar were re-appointed as
Independent Directors for a second term of five years effective 9th May 2022
and their re-appointment was approved by the shareholders vide special resolution at the
68th Annual General Meeting in August 2022.
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 69th Annual General
Meeting for consideration and approval by the shareholders.
Further, during the year, Mr. N Ananthaseshan, Managing Director whose term of office
was expiring on 22nd November 2022 was re-appointed as Managing Director for a
second term from 23rd November 2022 to 31st December 2024. The Board
considered and approved his appointment on 28th October 2022 and the approval
of the shareholders had been obtained vide a postal ballot process on 7th
December 2022.
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. N Ananthaseshan, Managing Director, Mr. Sridharan
Rangarajan, Director - Finance & Strategy, 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, 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. During the year, the Remuneration Policy was amended in line with the
changes in SEBI Listing Regulations.
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 five members of which majority are
Independent Directors i.e. four members.
Mr. Sanjay Jayavarthanavelu is the Chairman and other members are Mr. Aroon Raman, Mr.
Sujjain S Talwar, Mrs. Soundara Kumar and Mr. Sridharan Rangarajan. During the year, six
Audit Committee meetings were held, the details of which are provided in the Corporate
Governance Report.
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 Rs.62,50,000/- (excluding out of pocket
expenses incurred by them in connection with the Audit and applicable taxes) for the FY
2022-23 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 2023 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. 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 2022-23 on a
remuneration of Rs.5,00,000/-. Further, they have also been appointed by the Board to
conduct the cost audit for the FY 2023-24 at a same remuneration of Rs.5,00,000/-.
The Companies Act, 2013, mandates that the remuneration payable to the Cost Auditor is
ratified by the shareholders. Accordingly, a resolution seeking the shareholders'
ratification of the remuneration payable to the Cost Auditor for the FY 2023- 24 is
included in the Notice convening the 69th 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 2022-23. 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. N Ananthaseshan, 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 2023, 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/policies-disclosure/.
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 276,500 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/wp-content/uploads/2023/07/Disclosure-under-ESOP- Regulations.pdf. 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 2023. There was no instance of one time settlement with any
Bank or Financial Institution.
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 8, 2023 |
Chairman |
|