Dear Members,
Your directors have great pleasure in presenting the 13th
Integrated Annual Report of RHI Magnesita India Limited ("the Company" or
"RHIM" or "RHIM India") along with the audited standalone &
consolidated financial statements of the Company for the financial year ("FY")
ended 31 March 2023 (herein after known as "period under review").
1. FINANCIAL RESULTS
The highlights of the standalone and consolidated financial performance
of the Company are as under:
(Amount in Rs Lacs)
Particulars |
Standalone |
Consolidated |
|
2022-23 |
2021-22 |
2022-23* |
2021-22 |
Revenue from operations |
248,836.87 |
199,493.59 |
272,626.65 |
199,937.33 |
Total expenditure before finance cost, depreciation and
amortization |
212,318.55 |
160,818.03 |
236,639.21 |
161,131.84 |
Operating Profit |
36,518.32 |
38,675.56 |
35,987.44 |
38,805.49 |
Add: Other income |
1,303.98 |
515.68 |
1,487.62 |
543.14 |
Profit before finance cost, depreciation, amortization,
exceptional items and taxes |
37,822.30 |
39,191.24 |
37,475.06 |
39,348.63 |
Less: Finance Costs |
2,060.72 |
217.89 |
3,946.74 |
217.89 |
Profit before depreciation, amortization, exceptional items
and taxes |
35,761.58 |
38,973.35 |
33,528.32 |
39,130.74 |
Less: Depreciation and Amortization Expenses |
4,177.88 |
3,363.48 |
7,090.06 |
3,382.52 |
Profit before exceptional items and tax |
31,583.70 |
35,609.87 |
26,438.26 |
35,748.22 |
Less: Exceptional Item |
(66,068.22) |
- |
(66,068.22) |
- |
(Loss)/Profit before taxes |
(34,484.52) |
35,609.87 |
(39,629.96) |
35,748.22 |
Less: Total Tax Expense |
8,194.47 |
8,817.55 |
6,935.26 |
8,847.78 |
(Loss)/Profit for the year (A) |
(42,678.99) |
26,792.32 |
(46,565.22) |
26,900.44 |
Total other comprehensive (Loss) (B) |
(41.05) |
(100.60) |
(19.26) |
(101.36) |
Total comprehensive (Loss)/Income for the year (C=A + B) |
(42,720.04) |
26,691.72 |
(46,584.48) |
26,799.08 |
Less: Share of Profit of Non-Controlling Interest |
- |
- |
45.50 |
- |
Total Comprehensive (Loss)/Income attributable to the
Company/ the Company alongwith its subsidiaries |
- |
- |
(46,629.98) |
26,799.08 |
Retained Earnings: Balance brought forward from the previous
year |
84,485.19 |
62,298.05 |
84,620.90 |
62,326.40 |
Add: (Loss)/Profit for the year attributable to the Company/
the Company alongwith its subsidiaries |
(42,678.99) |
26,792.32 |
(46,610.54) |
26,900.44 |
Add: Other Comprehensive (Loss)/Income attributable to the
Company/ the Company alongwith its subsidiaries recognized in Retained Earnings |
(41.05) |
(100.60) |
(19.44) |
(101.36) |
Less: Transaction costs (stamp duty) on issue of shares, net
of tax |
- |
479.67 |
- |
479.67 |
Balance which the Board have apportioned as under to: |
|
|
|
|
Dividend on Ordinary Shares |
4,024.91 |
4,024.91 |
4,024.91 |
4,024.91 |
Total Appropriations |
4,024.91 |
4,024.91 |
4,024.91 |
4,024.91 |
Retained Earnings: Balance to be carried forward |
37,740.24 |
84,485.19 |
33,966.01 |
84,620.90 |
*The Company consolidated its financial statements with RHI Magnesita
India Refractories Limited (formerly known as Dalmia OCL Limited) and RHI Magnesita Seven
Refractories Limited (formerly known as Dalmia Seven Refractories Limited) for the first
time. The financial information of these companies has been considered in the consolidated
financial statements with effect from 5 January 2023 ("date of acquisition") to
31 March 2023 while financial information of Intermetal Engineers (India) Private Limited
has been considered for the entire financial year.
2. FINANCIAL PERFORMANCE
On Standalone basis, the revenue from operations has been increased
from Rs 199,493.59 Lacs to Rs 248,836.87 Lacs during the current financial year 2022-23
registering the growth of 24.73% as compared to the previous FY 2021-22. Further, during
the current financial year 2022-23, the profit before tax (PBT) on revenue decreased from
Rs 35,609.87 Lacs to Rs (34,484.52) Lacs. Similarly, the profit after tax (PAT) on revenue
decreased from Rs 26,792.32 Lacs to Rs (42,678.99) Lacs.
On consolidated basis, the revenue from operations has been increased
from Rs 199,937.33 Lacs to Rs 272,626.65 Lacs during the current financial year 2022-23
registering the growth approx. 36.35% as compared to the previous financial year. Further,
during the current financial year 2022-23, the profit before tax (PBT) on revenue
decreased from Rs 35,748.22 Lacs to Rs (39,629.96) Lacs. Similarly, the profit after tax
(PAT) on revenue decreased from Rs 26,900.44 Lacs to Rs (46,565.22) Lacs.
During the year ended 31 March 2023, PBT has been declined primarily
due to impairment loss of investment and goodwill amounting to Rs 66,068.22 lacs. For more
details, please refer note no. 28 of the standalone and consolidated financial statements
of the Company.
3. MANAGEMENT DISCUSSION AND ANALYSIS
RHI Magnesita India is the leading manufacturer and supplier of
high-grade refractory products, systems and solutions which are critical for
high-temperature processes exceeding 1,200?C in a wide range of industries, including
steel, cement, nonferrous metals and glass. This includes Magnesia and Alumina based
bricks and mixes for large industrial customers as well as specialty refractory products
like Isostatic products and Slide Gates. The Company takes pride in its position as the
market leader for refractories in India and has gained a strong reputation globally for
its high-quality products.
RHI Magnesita India Limited organization structure was established as a
result of the integration of three erstwhile Indian subsidiaries of the global RHI
Magnesita group (RHI Magnesita N.V. and its subsidiaries) RHI Clasil Private
Limited, RHI India Private Limited and Orient Refractories Limited in 2021. The
integration synergized, simplified and consolidated the strengths of the three companies
to serve its customers more efficiently as one combined entity. As a result of the merger,
the Company emerged as the largest manufacturer of refractory products in India - a
"one-stop-solution" for all refractory products and solutions for the Indian
market, with capabilities ranging from innovation and research and development
("R&D") to production of refractories, product marketing and sales,
installation, services, monitoring and recycling.
RHIM products and services are categorized into two operating divisions
based on the customer industries they serve: a division for the supply of products and
services to the steel industry (the "Steel Division") and a division for the
supply of products and services to the cement and lime, non-ferrous metals, chemicals,
energy industries, glass and other industries (the "Industrial Division").
Steel Division:
In fiscal 2023, the Steel Division accounted for about 88% of RHIM's
revenue from operations. RHIM offers a broad range of refractory products within its Steel
Division, enabling the Company to provide comprehensive solutions to meet the refractory
requirements of steel manufacturers. Refractory management service contracts are a
significant component of the Steel Division's revenue, accounting for about 44% in fiscal
2023.
Industrial Division:
Demand for refractories in the non-steel industries operates on a
longer replacement cycle, with cement and lime customers typically carrying out annual
maintenance to replace rotary kiln refractories, while customers in the non-ferrous metals
and glass industries may only need to replace refractory lined equipment every ten years.
In order to reduce dependency on imports to serve this segment and to increase the
Company's revenue share in this segment, RHIM completed the acquisition of the Indian
refractory business of Dalmia Bharat Refractories Limited ("DBRL"), housing
refractories business of Dalmia Bharat Group recently (details given elsewhere in this
report) which has a well- diversified product and end-industry mix.
The Company has historically catered to its customers in and outside
India through its own facilities, with certain additional customers outside India catered
to through facilities operated by the larger RHI Magnesita Group. The revenue streams
comprise (i) sales in India of products made by the Company, (ii) sales outside India of
products made by the Company, (iii) sales in India of imported products made by other
entities of the global RHI Magnesita group, and (iv) services provided by the Company to
the larger RHI Magnesita Group. RHIM has a strong focus on R&D with a world-class
R&D centre operational in Bhiwadi which benefits from the global R&D and technical
expertise and experience of its parent company. As the customers' requirements and
specifications can vary across their facilities, the RHIM R&D is focused on
customization of products and services as per customer need, with ongoing innovation and
refinement.
As on date, the Company owned and operated 9 (nine) production
facilities in India (including its subsidiaries), with an aggregate refractory production
capacity of 537 KTPA (approx). These advanced manufacturing facilities are strategically
located in Bhiwadi (Rajasthan), Visakhapatnam (Andhra Pradesh), Rajgangpur (Odisha),
Khambhalia (Gujarat), Dalmiapuram (Tamil Nadu), Jamshedpur (Jharkhand), Bhilai
(Chhattisgarh), Katni (Madhya Pradesh) and Cuttack (Odisha). Additionally, RHIM through
its subsidiary Intermetal Engineers (India) Private Limited, operates a plant in Mumbai
that manufactures metallurgical equipment.
The Company is committed to sustainable manufacturing practices,
aligning with the global RHI Magnesita group's approach. With a focus on reducing the
environmental impact of its operations, the global RHI Magnesita group strives for net-
zero emissions, invests in new technologies, increases recycling, improves energy
efficiency, switches to greener fuels, and utilizes green electricity. RHIM aims to
leverage the Group's investments in these areas and further develop processes that reduce
CO2 emissions in refractory production.
Strengths
RHIM demonstrates several key strengths that establish the
Company as a trusted leader in the refractory industry and position
it to seize opportunities in the rapidly growing Indian market:
a. Trusted brand and strong operational platform postmerger: RHIM
benefits from the esteemed brand reputation, industry relationships, and technical
expertise of the global RHI Magnesita group, the global leader in refractories with a
remarkable 189-year track record and a presence in over 125 countries. Leveraging the
resources of the global RHI Magnesita group, RHIM has established a robust operational
platform that enables efficient and effective service delivery to customers.
b. Leading player in the fast-growing Indian refractory market:
Following the integration of three Indian subsidiaries of the global RHI Magnesita group,
and subsequent acquisition of two leading refractory companies in India recently, RHIM has
solidified its position as a leading manufacturer and supplier of high- grade refractory
products and solutions in India. With an expanded manufacturing capacity and a diverse
customer base spanning industries such as steel, cement and lime, non-ferrous metals, and
glass, RHIM is well-positioned to capitalize on the substantial growth opportunities
within the Indian refractory market.
c. Comprehensive portfolio of products and heat management solutions:
RHIM's business model sets it apart with a wide range of refractory products and services
catering to major customer industries in India. Unlike competitors who specialize in
specific product ranges or customer segments, RHIM offers a comprehensive
"one-stop-solution" for refractory products and solutions. The Company's
capabilities extend from innovation and Research and Development (R&D) to raw material
recycling, production, marketing, installation, and monitoring. This comprehensive
portfolio enables RHIM to capture various touchpoints in the refractory value chain and
foster longterm customer relationships.
d. Strong R&D capabilities: R&D is a key focus for RHIM as it
strives to develop optimized and tailored products and solutions to meet the diverse
requirements of its customers. Leveraging the global R&D expertise and technical
experience of the global RHI Magnesita group, RHIM's R&D activities are primarily
conducted at its dedicated center in Bhiwadi, Rajasthan. These efforts encompass the
customization of refractory products and the exploration of innovative technologies.
Through ongoing R&D initiatives, RHIM aims to enhance customer satisfaction, drive
product quality improvements, and maintain a competitive edge in the market.
e. Extensive manufacturing capacity with a focus on sustainability: The
9 (nine) refractory manufacturing facilities strategically placed across the key steel and
cement producing markets in India, RHIM now has the widest refractory production footprint
in the country.
The facilities boast state-of-the-art machinery and employ modern
automation technologies to ensure the production of high-quality refractories. The Company
also demonstrates its commitment to sustainable manufacturing practices, aligning with the
global RHI Magnesita group's vision of achieving net-zero emissions. By investing in new
technologies, increasing recycling efforts, improving energy efficiency, and adopting
environmentally friendly practices, RHIM aims to reduce its environmental impact while
maintaining operational excellence.
In conclusion, RHIM's strengths in brand reputation, operational
platform, market positioning, product portfolio, R&D capabilities, and manufacturing
capacity solidify its position as a trusted leader in the refractory industry. With a
strong foothold in the fast-growing Indian market and a commitment to innovation and
sustainability.
Strategic Initiatives
a. Deriving synergies from the Acquisitions: RHIM aims to leverage the
acquisitions of Indian refractory business of DBRL and the refractory business of Hi-Tech
Chemicals (details given elsewhere in this report) to create longterm value for its
stakeholders. By combining the acquired businesses' local expertise with the support of
the global RHI Magnesita group, RHIM seeks to optimize manufacturing operations, reduce
import-related expenses, and expand its product range. Cross-selling and upselling
opportunities will be pursued to enhance market share in both domestic and export markets.
b. Expanding and upgrading manufacturing capacities:
The Company plans to improve its local manufacturing capabilities to
efficiently meet the growing demand from existing and new customers. This involves
achieving operations excellence, productivity and performance improvement of the
manufacturing capacities at existing facilities and newly acquired plants. Automation
initiatives are underway to improve efficiency, and facility-specific upgrades will be
implemented based on ongoing assessments. The goal is to streamline production processes
and align manufacturing practices with those of the global RHI Magnesita group.
c. Leveraging existing R&D capabilities: RHIM India will continue
to focus on Research and Development to customize products and meet customer requirements
effectively. The Company will continue to leverage the R&D capabilities of the global
RHI Magnesita group to facilitate technology transfers and develop high-grade products in
India. With growing demand from the Steel customers for green steel production, RHIM would
increase its attention towards increasing its share of production and sale of recycling as
well as develop more carbon efficient products locally.
d. Growing the solutions contract business: The Company aims to expand
its solutions contract business, focusing on increasing the proportion of revenue derived
from services.
The Company plans to provide a comprehensive range of refractory
products and services as a "one-stop-solution" to various industries. Through
targeted marketing and business development activities, RHIM aims to deepen collaboration
between the technical marketing team and the sales team to showcase the full range of
capabilities to potential customers for transitioning to full line solution contracts.
e. New business development: With the recent acquisitions,
opportunities in some of the less leveraged industry segments have opened up. This
includes Iron Making and Direct Reduced Iron (DRI). A dedicated sales and technical
experts' team is being built from the existing resources to focus on developing the
Company's business in these promising segments.
By implementing these strategic initiatives, RHIM intends to strengthen
its position as a leading player in the Indian refractory market, seize growth
opportunities, and deliver long-term value to its stakeholders.
Opportunities & Threats
RHI Magnesita India possesses several compelling opportunities for
growth:
a. Strong global presence: The Company holds a prominent position in
its sector both domestically and globally, establishing a robust global presence that
enhances its competitive advantage.
b. Diversified product portfolio: RHIM India, particularly after the
integration of the Indian refractory business of DBRL and the refractory business of
Hi-Tech Chemicals, boasts a diverse range of products, enabling it to cater effectively to
a wide array of end applications. This versatility enhances the company's ability to meet
the specific needs of various industries.
c. Favourable domestic industry growth: Overall the user industries in
the domestic market, such as steel and cement, are experiencing substantial growth. This
positive trend creates a conducive environment for RHIM to capitalize on the increasing
demand for refractory products, positioning the Company for expanded market share and
enhanced profitability.
d. Synergies from inorganic expansion: The Company has pursued
inorganic expansion initiatives, which are anticipated to yield synergistic benefits. By
leveraging strategic acquisitions and partnerships, RHIM can drive overall growth and
unlock new business development opportunities.
The Company faces certain significant threats that require careful
consideration:
a. Competition from global players: The Company operates in a highly
competitive market and faces competition from other established global refractory players.
Maintaining market share and profitability may be challenging in the face of aggressive
competition, requiring the Company to continuously innovate and differentiate itself.
b. Integration Challenges with Recent Acquisitions: The
successful integration of recent acquisitions is crucial for RHIM
India's growth and operational efficiency. Any difficulties in integrating these
acquisitions could impede the realization of synergies and potentially hinder overall
performance.
c. Unfavourable macroeconomic and policy changes:
The business environment is subject to macroeconomic fluctuations and
changes in policies that can impact the refractory industry. Unforeseen economic
downturns, shifts in government regulations, or geopolitical instability could pose risks
and disrupt business operations.
d. Volatility in raw material prices: RHIM relies on raw materials like
magnesite and alumina, the prices of which can be volatile. Fluctuations in raw material
prices can impact the Company's cost structure, profitability, and pricing
competitiveness.
RHIM proactively monitors and strategizes to mitigate risks and
maintain a competitive edge in the refractory market.
End User Industry: Overview and Outlook
Refractory products play a critical role in modern industrial high-
temperature manufacturing processes, enabling equipment and fixtures such as steel ladles
and furnaces, cement rotary kilns, copper converters, and glass furnaces to withstand
extreme thermal, mechanical, and chemical stress, ensuring efficient and reliable
operations.
Though, refractory products manufactured by RHIM find primary
application in high-temperature manufacturing processes within industries such as iron and
steel, non-ferrous metals, cement, glass, petrochemicals, energy etc., the demand for
refractories is very closely linked to the production of steel and cement.
About 8-10 kg of refractories is used to manufacture one tonne of steel
and nearly 0.3-0.6 kg is used for producing one tonne of cement.
In India, refractory consumption in the steel and cement industries has
increased with consistent and robust growth in production due to the Make-in-India
initiative. Also, the government's support for products through Atmanirbhar Bharat has
boosted production across various industries. Demand for refractories from Steel industry
constitutes 70% during the FY 2022-23 as per a CRISIL research. Steel industry is going to
remain the key user, with its share increasing 1-2% in fiscal 2028 over fiscal 2022. The
share of refractories across end-use industries will not move very differently in fiscal
2028 over fiscals 2022-23. Since steel production will grow at a robust pace in both the
domestic and international markets, more refractories will be needed.
Steel Industry Overview Global Steel Industry
The global steel market reached a value of US$ 907 billion in calendar
year ("CY") 2022. The market is predicted to reach a value of US$ 1,077 billion
(Source: IMARC) by CY 2028, exhibiting a growth rate (CAGR) of 2.8% during 2023-28. The
world crude steel production reached 1,885 million tonnes (mt) in CY 2022 (Source: World
Steel).
China remained world's largest crude steel producer (1,018 mt) followed
by India (125.3 mt), Japan (89.2 mt) and the US (80.5 mt), based on rankings released by
the World Steel Association in CY 2022. Per capita finished steel consumption in CY 2022
was 221.8 kg for world and 645.8 kg for China. China has been a leader in this industry
for quite a long time now, but India has the potential to emerge as a leading global
leader with the right strategy and action plan.
Indian steel industry
India is currently the world's second largest producer of crude steel.
The country produced 125.3 million tonnes of crude steel in CY 2022 as against 118.2
million tonnes the previous year. This was mainly fueled by demand from the manufacturing
and construction sectors. The government's support through the Production Linked Incentive
("PLI") scheme, which has a budget of US$ 847 million, is encouraging planned
capacity expansion and the construction of specialty steel capacity. Capacity for domestic
crude steel expanded from 142.24 million tonnes per annum (MTPA) in 2018 to 157.58 MTPA in
2022. CRISIL MI&A Research expects net capacity addition of 57-60 MT in next 5-6
years, owing to healthy profitability and debt reduction in the past two fiscals. The
share of large players is expected to rise to 67% in fiscal year 2028 from 62% in fiscal
year 2022, driven by increased capex on healthy profitability and strong revenue. Ramp-up
of acquired assets will also help expand capacities. Production of total finished steel
stood at 118.71 MT showing a growth of 6.0% over the year. India was a net exporter of
total finished steel. The financial year saw a rally in prices because of higher exports.
To improve domestic supply and correct prices, the government imposed an export duty of
15% on steel products in May 2022. Resultantly, exports fell ~50% on-year over
April-November 2022. In addition to lower prices, high raw material prices put pressure on
margins. In mid-November 2022, the government rolled back the duty.
Multiple factors like the government's PLI scheme, the ongoing
consolidation of the steel industry, implementation of the PM Gati Shakti Yojna. PM Awas
Yojana, emergence of the EV market in automobile segment, and the larger infrastructure
push by the government through National Infrastructure Pipeline etc. would propel the
steel industry growth. The crude steel production is estimated to grow at a CAGR of
6-6.5%.
Indian Cement Industry Overview
In the medium term, capex towards key infrastructure projects such as
construction of the remaining stretch of the 25,000 KM (approx.) under the Bharatmala
Pariyojana, the government's target to double the existing metro length, increase the
number of airports from 140 to 220 by 2025, and implementation of five river-linking
projects will drive healthy cement demand growth in the infrastructure segment. Hence,
infrastructure and rural housing (given continued concretization of kutcha houses) will be
the key growth drivers.
CRISIL MI&A Research expects cement production to clock a CAGR of
6-7% over fiscal years 2023-28 against a CAGR of 5-6% from over fiscal years 2018-22.
Therefore, with the incitement of government's vision to make India a $5 trillion economy
in the next 5 years, the spending on better infrastructure will require more cement
production. Furthermore, demand from urban and rural housing, additional capacity plans by
large players, PLI implementation, and other schemes will support the increase of cement
production in India.
Refractory Industry Overview Global Refractory Industry
The global refractory industry is estimated to have been worth US$
22-23 billion in 2022. Significant investment has been made in the construction of
residential and commercial structures because of increasing urbanization and
industrialization, particularly in emerging economies such as China and India. Expansion
of the automotive sector in emerging countries has been aided by that country's increasing
need for transport and ongoing road and rail construction. The iron, steel and cement
sectors has also grown as a result. With increase in construction activities, demand for
the glass industry increased, which eventually had driven the demand for the refractory
industry.
Globally, the refractories market size is likely to attain a CAGR of
3.4% by value and is projected to reach US$ 27.4 billion by the end of 2025. Some of the
key driving factors for refractories and a boost for refractory product suppliers lie
mainly in the evergrowing demand from the iron and steel industry.
Indian Refractory Industry
As per previous market trends, the demand growth for refractories
fluctuated from fiscal years 2018-22. Demand for refractories grew at 19% on-year in
fiscal year 2020 to approximately 1.4 million tonnes. However, the domestic demand for
refractories declined during the pandemic due to difficulty in imports of finished
products and challenges in procurement of raw materials. At present, India's total
refractory market is estimated at Rs. 15,000 crore in fiscal year 2022 as per market
estimates. Demand for the domestic refractory industry is at approximately 1.5 million
tonnes, with a growth rate of approximately 15% on- year in fiscal year 2022. This is due
to an increase in the imports of refractories and greater consumption of indigenous
production by end-use industries. The sudden hike in the demand growth rate clearly
indicates that the industry has overcome the COVID-19 pandemic-era challenges and that
businesses have returned to pre-COVID-19 performance.
As per CRISIL research, Indian refractory industry demand to grow at
5.5-6% CAGR in the medium term from fiscal years 2022-28. The increased production of
end-use industries of refractories will positively impact demand. Refractories' demand is
estimated to reach approximately 2.1 million tonnes in fiscal year 2028. The growth in
demand will be backed by India's vision of becoming a US$ 5 trillion economy by fiscal
year 2027-28 and a US$ 7 trillion economy by 2030. This is boosting the infrastructure,
building and construction and automotive industries, which are the key consumers of the
end users of refractories. These industries have started increasing capacities and
production to cope with demand as elaborated above.
Outlook
As evident from the above, the refractory industry is poised to grow
well over the foreseeable future, on the back of various end sectors such as steel, cement
and glass, among others. Factors such as the government's vision to reach a US$ 7 trillion
economy by fiscal year 2030 along with 300 million tonnes of steel production by 2030 and
Atmanirbhar Bharat initiatives, are spurring economic and infrastructure development in
India. This bodes well for demand for refractory products.
To cater to the expected rise in demand, RHIM is complementing its
organic growth with inorganic growth initiatives. The recent acquisitions by the Company
not only expand the Company's production capacity but also diversify its product
portfolio, thereby enabling it to cater to more end applications.
The Indian refractory business of DBRL which was transferred to RHI
Magnesita India Refractories Limited (formerly known as Dalmia OCL Limited), operates with
a well-established production footprint in west and south India, positioning the Company
strategically to serve these regions effectively. With a strong industrial product
offering, it enhances the go-to- market portfolio by providing comprehensive solutions
across all segments and industries. The Company anticipates synergistic benefits from
cross-selling opportunities, allowing it to leverage its well-established product
offerings to drive revenue growth. Moreover, RHI Magnesita India Refractories Limited aims
to optimize its cost structure by leveraging fixed cost optimization, resource bundling,
and economies of scale, resulting in an improved cost baseline and enhanced profitability.
The acquisition of the refractory business of Hi-Tech Chemicals enables
RHIM to augment its flow control production capacities in India, incorporating
market-standard low-pressure technologies. This strategic move not only expands RHIM's
product offerings but also creates significant synergies through cross-selling
opportunities. Additionally, RHIM expects to achieve cost synergies by optimizing
production processes in collaboration with the Bhiwadi plant.
As the synergies from two recently acquired business start contributing
to the overall growth and performance of RHIM, the Company will leverage their operational
strengths, expand product portfolios, and capitalize on cross-selling opportunities to
achieve economies of scale and drive profitability.
By capitalizing on its strong global presence, diversified product
portfolio, localization of imported products, favourable domestic industry growth, and
anticipated synergies from inorganic expansion, RHI Magnesita India Limited is
well-positioned to continue to grow and strengthen its position as the driving force of
the Indian refractory industry.
4. DIVIDEND
Based on the Company's performance and other non-financial factors,
your directors are pleased to recommend final dividend of Rs 2.50/- (250%) per equity
share having face value of
Rs 1.00/- each for the FY 2022-23. The payment of final dividend is
subject to the approval of the members at their ensuing Annual General Meeting ('AGM').
The recommended dividend shall be paid to those shareholders whose name would appear in
the Register of Members as on the record date (i.e., 14 September 2023). The dividend
distribution will result in cash outgo of on Rs 5,162.53/- Lacs.
In view of the changes made under the Income Tax Act, 1961 by the
Finance Act, 2020, dividend paid or distributed by the Company shall be taxable in the
hands of the shareholders. The Company shall, accordingly, make the payment of dividend
after deduction of tax at source.
The dividend pay-out is in accordance with the Company's dividend
distribution policy and the policy is available on the weblink
www.rhimagnesitaindia.com/investors/corporate- governance/policies
5. RESERVES
The Board of Directors has decided to retain the entire amount of
profits in the statement of profit and loss. For complete details on movement in reserves
and surplus during FY 2022-23, please refer the statement of changes in equity and note
9(b) of standalone financial statements for the period under review.
6. ACQUISITIONS AND TAKEOVERS
During the period under review, the Company has made the following
acquisitions/takeovers:
A. Acquisition of the refractory business of Hi-Tech Chemicals Limited
situated at Jamshedpur, Jharkhand
On 18 October 2022, the Board of Directors of the Company approved the
acquisition of the refractory business of HiTech Chemicals Limited by way of a slump sale
on a going concern basis for a cash consideration of Rs 62,100 Lacs (approx.) through the
Business Transfer Agreement (BTA) executed on 18 October 2022.
On 31 January 2023, the Company has completed the acquisition of the
refractory business of Hi-Tech Chemicals Limited for a revised cash consideration of Rs
87,937.65 Lacs. For more details, please refer note no. 40 of the financial statements.
The acquired business primarily engaged in manufacturing and suppling
refractors, isostatically pressed ceramics, slide gate plates and other allied products
and has manufacturing facility in Jamshedpur, Jharkhand.
B. Acquisition of Indian refractories business of Dalmia Bharat
Refractories Limited
On 19 November 2022, the Company entered into a Share Swap Agreement
('SSA') with Dalmia Bharat Refractories Limited ("DBRL"), housing refractories
business of Dalmia Bharat Group, for acquiring 82,483,642 equity shares, each fully paid
up, having a face value of Rs 10/- each, representing 100% of the equity share capital of
RHI Magnesita India Refractories Limited (formerly known as Dalmia OCL Limited)
("hereinafter referred as RHIM
Refractories"), at a consideration of Rs 1,708 Crores (approx.) to
be paid through issue of and in exchange for 27,000,000 fresh equity shares of Rs 1/- each
of RHI Magnesita India Limited at a premium of Rs 631.5029/- i.e. @ Rs 632.5029/- per
share through preferential allotment alongwith net debt of Rs 443 Crores (approx.) held by
RHIM Refractories, subject to closing adjustments.
On 5 January 2023, the Company completed the acquisition of 100%
shareholding in RHIM Refractories in terms of SSA. The Company has discharged the
consideration by way of issuance and allotment of 27,000,000 fresh equity shares of the
Company to DBRL at an issue price Rs. 632.5029 per share as per BTA in accordance with
Securities and Exchange Board of India (Issue of Share Capital and Disclosure
Requirements), Regulation, 2018 ("SEBI ICDR Regulations"). Further, these shares
were recorded at a transaction price of Rs. 877.20 which was prevailing at an acquisition
date (i.e. 5 January 2023) as per Indian Accounting Standards ( Ind AS) 103.
By virtue of above said SSA, DBRL has also transferred its 51%
shareholding of RHI Magnesita Seven Refractories Limited (formerly known as Dalmia Seven
Refractories Limited) ("hereinafter referred as RHIM Seven") to RHIM
Refractories. RHIM Seven was a joint venture between DBRL and Seven Refractories GmbH,
Vienna.
On 24 July 2023, RHIM Refractories has acquired from Seven Refractories
GmbH, Vienna balance 49% equity shares having face value of Rs 10/- each of RHIM Seven for
consideration amounting to Rs 6,184.75 Lacs in terms of the provisions of Share Purchase
Agreement dated 21 April 2023, including amendments thereof read with Share Transfer
Agreement dated 17 July 2023.
RHIM Refractories owns (A) four plants situated at (a) Dalmiapuram,
Tamil Nadu (b) Khambalia, Gujarat (c) Bhilai, Chhattisgarh and (d) Rajgangpur, Orissa and
(B) three mines situated at (a) Bauxite mines at Pilidhar, Devbhumi, Dwarka, Gujarat, (b)
Quartzite mines at
Chiraipani,Patrapalli, Raigarh, Chhattisgarh and (c) Quartzite mines at
Bhikampali, Kapilapur via Panchagon, Jharsuguda, Odisha. As on date, RHIM Refractories is
in the process of transferring abovesaid mines in its name. Further RHIM Seven has one
plant situated at Katni, Madhya Pradesh.
7. DETAILS OF SUBSIDIARY COMPANIES
As on 31 March 2023, the Company has two subsidiaries i.e. Intermetal
Engineers (India) Private Limited ("Intermetal") and RHIM Refractories (together
called as "subsidiaries") and one step down subsidiary namely RHIM Seven.
RHIM Refractories became wholly owned subsidiary of the Company with
effect from 5 January 2023. Post closure of FY ended 31 March 2023, RHIM Refractories has
also become the material subsidiary in terms of the provisions of Securities Exchange
Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015
('Listing Regulations'), as may be applicable.
On 5 January 2023, RHIM Refractories holds 51% of paid- up share
capital of RHIM Seven, consequently, RHIM Seven becomes the step-down subsidiary of the
Company. Further after acquisition of balance 49% of paid-up share capital of RHIM Seven
on 24 July 2023, RHIM Seven becomes 100% wholly owned subsidiary of RHIM Refractories.
The Company does not have any associate or joint venture within the
meaning of Section 2(6) of the Companies Act, 2013 ("Act"). During the period
under review, there has been no material change in the nature of business of the
subsidiaries.
The financial statements of the Company including consolidated
financial statements along with relevant documents are available on the website of the
Company i.e. https://www.rhimagnesitaindia.
com/investors/financials-reports/subsidiary-annual-reports.
Financial Performance of Subsidiaries Company
The highlights of financial performance of the subsidiaries for FY
2022-23 are as follows:
(Amount in Rs Lacs)
Sr. no. |
Particulars |
Intermetal |
RHIM Refractories* |
RHIM Seven* |
1 |
Revenue from operation |
533.61 |
20,738.13 |
2,835.60 |
2 |
Profit before tax/(loss) |
239.80 |
(71,634.66) |
347.87 |
3 |
Profit after tax/(loss) |
178.86 |
(70,227.01) |
259.94 |
* [from 5 January 2023 to 31 March 2023.]
In accordance with Section 129(3) of the Act, a statement containing
salient features of financial statements of subsidiaries in Form No. AOC-1 is attached to
this report as ANNEXURE-I.
8. SHARE CAPITAL STRUCTURE OF THE COMPANY
The share capital structure of the Company as on 31 March 2023, is
given below:
Authorized Share Capital |
|
Issued, Subscribed and Paid-up Share Capital |
Rs 187,996,331.00/- constituting of
187,996,331 equity shares of Rs 1/- each. |
During the period under review, the members of the Company at their 1st
Extra Ordinary General Meeting ("EGM") held on 21 December 2022, approved the
issuance of 27,000,000 equity shares having face value of Rs 1/- each at an issue price of
Rs 632.5029/- each amounting to Rs 1,708 Crores to DBRL on preferential basis for
consideration other than cash. Subsequent to above, the Board of Directors at their
meeting held on 5 January 2023 allotted abovesaid equity shares to DBRL. As per the
Securities and Exchange Board of India (Issue of Share Capital and Disclosure Requirement)
Regulation,2018 ("SEBI ICDR Regulations") the said equity shares are subject to
lock-in up to 31 August 2023.
Furthermore, post end of FY 2022-23, the share capital of the Company
was changed in the following phases:
A. The members of the Company in their 2nd EGM held on 13 March 2023
approved the issuance of securities including equity shares having face value of Rs 1/-
each through qualified institutional placement for an amount not exceeding Rs 1,500
Crores. Pursuant to the aforesaid approval of members of the Company, the Fund-Raising
Committee of the Board at their meeting held on 6 April 2023 allotted 15,715,034 equity
shares of Rs 1/- each at an issue price of Rs 572.70/- each to 57 qualified institutional
buyers aggregating to Rs 900 Crores (approx.) .
B. The members of the Company through postal ballot on 1 June 2023 has
approved the issuance of 2,790,061 equity shares having face value of Rs 1/- each at an
issue price of Rs 716.83/- each to Dutch US Holding B.V. one of the promoter of the
Company on preferential basis for an aggregate amounting Rs 200 Crores (approx.).
Considering the approval of members of the Company, the Fund-Raising Committee of the
Board at their meeting held on 21 June 2023, has allotted 2,790,061 equity shares of Rs
1/- each at an issue price of Rs 716.83/- each to Dutch US Holding B.V aggregating Rs 200
Crores (approx.). As per the SEBI ICDR Regulations the said issued equity shares are
subject to lock-in up to 31 March 2025, further prior shareholding of 79,877,771 equity
shares of Dutch US Holding B.V. are also locked-in up to 31 December 2023.
Consequent to aforesaid allotments, the revised share capital structure
of the Company as on date is follows:
Particulars |
Change in Share capital post end of FY 2022-23 |
Issued, Subscribed and Paid-up Share Capital as on 1 April
2023 |
Rs 187,996,331.00/- constituting of 187,996,331 equity shares
of Rs 1/- each. |
Add: Issue & allotment of shares on 6 April 2023 |
Rs 15,715,034.00 /- constituting of 15,715,034 equity shares
of Rs 1/- each. |
Add: Issue & allotment of shares on 21 June 2023 |
Rs 2,790,061.00/- constituting of 2,790,061 equity shares of
Rs 1/- each. |
Issued, Subscribed and Paid-up Share Capital as on date |
Rs 206,501,426.00/- constituting of 206,501,426 equity shares
of Rs 1/- each. |
9. CHANGE OF REGISTERED OFFICE OF THE COMPANY
With effect from 1 April 2022, the registered office of the Company has
been shifted to Unit No.705, 7th Floor, Lodha Supremus, Kanjurmarg Village Road,
Kanjurmarg (East), Mumbai-400042.
10. INCREASE OF BORROWING LIMIT AND POWER TO CREATE CHARGE ON THE
ASSETS OF THE COMPANY
The members of the Company in their 2nd EGM held on 13 March 2023 have
accorded their approval pursuant to Section 180 (1) (c) and 180 (1) (a) of the Companies
Act, 2013, to increase the borrowing power of the Board and power to create charge on
assets of the Company to secure the borrowing upto Rs 5,000 Crores respectively.
11. PARTICULARS OF LOAN, GUARANTEE AND INVESTMENT
The members of the Company in their 1st EGM held on 21 December 2022
have accorded their approval as per Section 186 of the Companies Act, 2013 to increase the
limits applicable for making investment / extending loan and giving guarantee or
providing security in connection with loans to persons / bodies
corporate upto Rs 2,500 Crores.
A. Loan & Guarantees:
During the period under review, no loans and advance has been given by
the Company or provide security in respect of the loan to any firms/ companies in which
directors of the Company are interested.
B. Investments:
On 5 January 2023, the Company had acquired 82,483,642 equity shares of
RHIM Refractories having face value of Rs 10/- each at an issue price of Rs 207/- in terms
of the SSA dated 19 November 2022.
Further, on 8 May 2023, the Company has subscribed 16,975,051 equity
shares of RHIM Refractories having face value of Rs 10/- each at an issue price of Rs
207/- aggregating amounting to Rs 351 Crores (approx.) on right basis.
Details of loans, guarantees and investments as per Section 186 of the
Act, have been disclosed in the financial statements.
12. UTILISATION OF FUNDS
In view of acquisitions and takeover undertaken by the Company during
the period under review, as discussed elsewhere in this report, the Company has raised the
funds by
(A) Issue of shares through qualified institutional placement of Rs 900
Crores (approx.)
The entire funds raised through qualified institutional placement has
been utilized during the quarter ended 30 June 2023 for repayment/ prepayment in full or
in part of certain outstanding borrowings availed by the Company, investment in one of its
Subsidiary i.e. RHIM Refractories and general corporate purposes.
(B) Issue of shares through Preferential allotment of Rs 200 Crores
(approx.)
During the quarter ended 30 June 2023, no amount was utilized by the
Company for the funds raised through preferential allotment as trading approval on the
shares allotted under preferential allotment was received on 08 August 2023.
Post which the Company initiated the utilization of funds for the
defined objects i.e. (a) Repayment / pre-payment, in full or in part, of certain
outstanding borrowings availed by the Company (b) Investment into one of the subsidiaries,
i.e. RHIM Refractories and (c) General corporate purposes
There has not been any deviation in the utilization of proceeds of
qualified institutional placement and preferential issue from the objects as approved by
the shareholders of the Company.
13. STATE OF COMPANY'S AFFAIRS
Details on the state of affairs of the Company has been covered under
the Management Discussion and Analysis Report for the year under review, as stipulated
under Regulation 34 of Listing Regulations.
14. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
The Board is ultimately responsible for maintaining effective corporate
governance, which includes the company's risk management approach, the Company's system of
internal controls, and the Company's internal audit approach. The Board reviews the
effectiveness of the system of internal financial, operational, and compliance controls,
and the risk management framework. The Board examines whether the system of internal
controls operates effectively throughout the year and will make recommendations when
appropriate.
The Company has an adequate internal control system in place and also
has reasonable assurance on authorizing, recording, and reporting transactions of its
operations. The Company has a well-placed, proper, and adequate internal controls
environment, commensurate with the size, scale, and complexities of its operations. The
Company had already developed and implemented a framework for ensuring internal controls
over financial reporting. This framework includes entity- level policies, processes, and
operating-level standard operating procedures.
Internal control systems are an integral part of your Company's
corporate governance structure. These have been designed to provide reasonable assurance
with regard to inter-alia
(a) recording and providing reliable financial and operational
information;
(b) complying with the applicable statutes;
(c) safeguarding assets from unauthorized use;
(d) executing transactions with proper authorization and ensuring
compliance with corporate policies;
(e) prevention and detection of frauds/errors and
(f) continuous updating of IT systems.
The Company's management has assessed the effectiveness of the
Company's internal control over financial reporting as of 31 March 2023.
The Audit Committee reviewed the reports submitted by the Management,
Internal Auditors, and Statutory Auditors. Based on their evaluation (as defined in
Section 177 of the Companies Act, 2013 and Regulation 18 of Listing Regulations), the
Committee has concluded that, as of 31 March 2023, the Company's internal financial
controls were adequate and operating effectively.
15. HUMAN RESOURCES
For RHIM, employees are its most valuable asset and the Company is
committed to the wellbeing and development of its employees. Your Company believes in
enhancement of competencies of its employees. Employees are facilitated to participate in
various training programs, equal emphasis is given on technical & soft skills.
numerous opportunities have been created for the employees to develop.
During recent years, Company's main focus of in-house trainings was on
interpersonal skills, behavioral attributes, customer focused culture, lean implementation
and 6's at shop floor. The dedicated learning and development programmes enhance the right
skill sets and relevant knowledge to employees to achieve operational and futuristic
benefits. The Company endeavors to keep the employee's motivation high by providing
congenial & respectful work atmosphere and rewarding/remunerating effectively. 100%
safety of our employees is one of the important operative targets for RHIM. Various
initiatives have been launched to engage employees.
Celebrating festivals and achievements on various occasions is part of
RHIM culture. Various activities and programs have been conducted within the organization
to create fair and equitable work culture leading to cordial relations between the
management and the employees of the Company.
16. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
During the year under review, all contracts / arrangements /
transactions entered by the Company with related parties were in ordinary course of
business and on an arm's length basis, the
Company has not entered into any contracts /arrangements / transactions
with related parties which could be considered material in accordance with the Company's
policy on materiality of related party transactions.
The Board of Directors of the Company has approved the criteria for
making the omnibus approval by the Audit Committee within the framework of the policy on
related party transactions. Prior omnibus approval is obtained for related party
transactions which are of repetitive nature and proposed to be entered in the ordinary
course of business and at arm's length during the financial year. All related party
transactions are placed before the Audit Committee for review and approval.
Accordingly, the disclosure of related party transactions as required
under Section 134(3)(h) of the Companies Act, 2013 in Form AOC - 2 is not applicable to
your Company.
The Company has obtained approval of shareholders, by way of postal
ballot for material related party transaction(s) with M/s. RHI Magnesita GmbH, for an
amount of Rs 100,000 Lacs, for the FY 2021-22 and onwards with yearly increase of 30%
every year in the value of such transactions up to the FY 2025-26.
The policy on materiality of related party transactions and dealing
with related party transactions can be accessed on the Company's website at the link:
www.rhimagnesitaindia.com/ investors/corporate-governance/policies
Members can also refer note 36 of the financial statements, which set
out related party disclosures.
17. CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES
The Company has been carrying out various Corporate Social
Responsibility (CSR) activities. These activities are carried out in terms of Section 135
read with Schedule VII of the Act and the Companies (Corporate Social Responsibility
Policy) Rules, 2014, as amended from time-to-time.
The Company during the FY 2021-22 voluntarily applied for adjudication
of offence in respect of delay in spending the unspent CSR expenditure of Rs 135.40 Lacs
for the year ended 31 March 2021. A penalty was imposed by the Registrar of Companies,
Maharashtra on the Company and its Key Managerial Personnels (KMPs) vide its order dated
31 March 2023 and the same was duly paid. The Company has no outstanding amount due in
respect of CSR for any of the previous year including current FY 2022-23.
The brief outline of the CSR policy of the Company and the initiatives
undertaken by the Company on CSR activities during the year under review are set out in
ANNEXURE-II of this report in the format prescribed in the Companies (Corporate Social
Responsibility Policy) Rules, 2014, as amended from time to time.
For other details regarding the CSR Committee, please refer to the
Corporate Governance Report, which forms a part of this report. The CSR policy is also
available on the Company's website at the link: https://www.rhimagnesitaindia.com/
investors/corporate-governance/policies
18. RISK MANAGEMENT
The Company has an established risk management approach with the
provisions of the Companies Act, 2013, and other applicable provisions with the objective
of identifying, assessing, and controlling uncertainties and risks that could impact the
delivery of RHIM's strategy. The risk management approach combines top-down, bottom-up,
and deep-dive risk assessments. The top-down risk assessment is performed by the
management and reviewed by the Audit Committee, Risk Management Committee and the Board of
Directors. The bottom-up risk assessment is based on each of the operational sites, which
maintain ongoing risk management activity linked to the ISO risk management practices.
Deep-dive risk assessments are performed for areas of emerging or prevailing risks, which,
in 2022, included capex, plant operations, fraud management, and sustainability, including
energy-related risks and opportunities.
Risk management policies and systems are reviewed regularly to reflect
changes in market conditions and the Company's activities. The Company, through its
training and management standards and procedures, aims to maintain a disciplined and
constructive control environment.
The risk assessment process includes five steps, which are consistently
repeated throughout the year to ensure a continuous risk assessment.
Occupational Safety and Health are considered an integral part of our
operations. All statutory legal regulations were compiled as per government norms. The
workplace risk assessment of hazards is done after every six months and is reviewed after
three months in all the operational plants and extended to the customer sites also. The
safety audits were conducted at regular intervals by internal and external agencies. The
stage 1 audit for all three standards (ISO 9001, 14001 & 45001) was successfully
completed for the Visakhapatnam Unit. The employee involvement in reporting the unsafe
conditions and near misses has been excellent. The Global key performance indicators
(KPIs) of preventive rate have been successfully achieved. The participation of employees
in 6S activities has tremendously changed the work culture and the award of the 6S trophy
every month has increased the competitiveness in perfect maintenance of a safe workplace.
19. DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr. Parmod Sagar (DIN: 06500871) was reappointed as Managing Director
and Chief Executive Officer of the Company for a period of five years w.e.f. 4 March 2023
to 3 March 2028. Proposal for reappointment of Mr. Parmod Sagar along with revision in his
remuneration was placed before the members post receipt of necessary recommendation from
Nomination and Remuneration Committee and Board of Directors in their meeting held on 10
August 2022 and the same was approved by the members in their Annual General Meeting dated
26 September 2022.
Ms. Vijaya Gupta took over as Chief Financial Officer, with effect from
27 May 2022 in place of Mr. Sanjeev Bhardwaj, who has been assigned new roles and
responsibilities within the organization. Ms. Vijaya Gupta is having thirty years of work
experience and she is rank holder Chartered Accountant and has completed Special
Management Program from IIM(C).
Ms. Ticiana Kobel (DIN: 09850411), w.e.f. 5 January 2023, was appointed
as non-independent & non-executive additional director of the Company by the Board of
Directors at their meeting held on 5 January 2023. In terms of Listing Regulations and
Act, her appointment was regularized by the shareholders of the Company at their 2nd EGM
held on 13 March 2023 and her office will be liable to retire by rotation.
In accordance with the provisions of the Act and Articles of
Association of the Company, Mr. Erwin Jankovits (DIN: 07089589) retires by rotation at the
ensuing AGM and being eligible, offers himself for re-appointment. A resolution seeking
shareholders' approval for his re-appointment alongwith other required details forms part
of the Notice of the AGM.
Mr. RVS Rudraraju (DIN: 00425640) tendered his resignation from
Directorship of the Company with effect from closure of business hours on 13 February
2023. The Board accepted the resignation and put on record its sincere appreciation for
the contributions made by Mr. RVS Rudraraju during his association with the Company as a
Director.
Pursuant to the provisions of Section 149 of the Act, the Independent
Directors have submitted declarations that each of them meets the criteria of independence
as provided in Section 149(6) of the Act along with rules framed thereunder and Regulation
16 of the Listing Regulations. There has been no change in the circumstances affecting
their status as Independent Directors of the Company.
The Independent Directors have also submitted the declarations that
they have registered their names in the independent directors' data bank.
No Independent Director was appointed during the period under review.
During the period under review, the Non-Executive Directors of the
Company had no pecuniary relationship or transactions with the Company, other than receipt
of sitting fees and reimbursement of expenses, if any.
Pursuant to the provisions of Section 203 of the Act, Mr.
Parmod Sagar, Managing Director and Chief Executive Officer, Mr.
Sanjeev Bhardwaj, Chief Financial Officer (upto 27 May 2022), Ms. Vijaya Gupta (w.e.f. 27
May 2022) and Mr. Sanjay Kumar, Company Secretary were KMPs of the Company as on 31 March
2023.
During the year, Mr. RVS Rudraraju Whole Time Director ceased to
be the KMP of the Company with effect from 13 February 2023.
20. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
The Company has devised the policy on remuneration and nomination for
the selection, appointment and remuneration of the Directors and KMP and also remuneration
of other employees who have the capacity and ability to lead the Company towards achieving
sustainable development.
Salient features of the Company's policy on remuneration and nomination
are as under:
(A) Appointment of KMP and senior management is subject to the approval
of the Nomination and Remuneration Committee and Board of Directors. Remuneration of KMP
and senior management is decided by the Managing Director on the recommendation by the
Whole Time Directors/Executive Directors concerned, where applicable, broadly based on the
Remuneration Policy in respect of Whole Time Directors /Executive Directors. Total
remuneration of KMP and senior management comprises of fixed based salary, perquisites,
retirement benefit, motivation rewards, bonus and other non-monetary benefits.
(B) Non-Executive Directors are paid remuneration in the form of
sitting fees for attending the Board Meetings and committee meetings as fixed by the Board
of Directors from time to time subject to statutory provisions. While deciding the
remuneration of Managing Director and Executive Directors, the Nomination and Remuneration
Committee considers pay and employment conditions in the industry, merit and seniority of
the person. The Committee encourage the balance between fixed and variable component in
the remuneration which are based on the performance to achieve the Company's target. The
term of office and remuneration of whole time directors are subject to approval of the
Board of Directors, shareholders and the limit laid down under the Companies Act,2013 from
time to time.
The Nomination and Remuneration Policy of the Company is available on
the Company's website and can be accessed on the Company's website at the link
www.rhimagnesitaindia.com/ investors/corporate-governance/policies
21. DIRECTORS' RESPONSIBILITY STATEMENT
Based on the framework of Internal Financial Controls and compliance
systems established and maintained by the Company, the work performed by the Internal
Auditors, Statutory Auditors and Secretarial Auditors, including the Audit of Internal
Financial Controls over financial reporting by the Statutory Auditors
and the reviews performed by Management and the relevant Board Committees, including the
Audit Committee, the Board is of the opinion that the Company's internal financial
controls were adequate and effective during the FY 2022-23.
Pursuant to Section 134(5) of the Act, the Directors confirm that:
a. in preparation of the annual accounts for the financial year ended
31 March 2023, the applicable Accounting Standards have been followed and there were no
material departures;
b. they have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and prudent so as to
give a true and fair view of the state of affairs of the Company as on 31 March 2023, and
of the profit of the Company for that period;
c. they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the Act for safeguarding
the assets of the Company and for preventing and detecting fraud and other irregularities;
d. they have prepared the annual accounts on a going concern basis;
e. they have laid down internal financial controls to be followed by
the Company and that such internal financial controls are adequate and are operating
effectively; and
f. they have devised proper systems to ensure compliance with the
provisions of all applicable laws and that such systems were adequate and operating
effectively.
22. BOARD EVALUATION
The Board of Directors has carried out an annual evaluation of its own
performance, board committees, and individual directors pursuant to the provisions of the
Act and Listing Regulations. The performance of the board was evaluated by the Board of
Directors after seeking inputs from all the directors on the basis of criteria such as the
board composition and structure, effectiveness of board processes, information and
functioning, etc. The performance of the committees was evaluated by the Board after
seeking inputs from the committee members on the basis of criteria such as the composition
of committees, effectiveness of committee meetings, etc. The above criteria are broadly
based on the Guidance Note on Board Evaluation issued by the Securities and Exchange Board
of India on 5 January 2017.
In a separate meeting of Independent Directors held on 13 February 2023
performance of Non-Independent Directors, the Board as a whole and Chairman of the Company
was evaluated, taking into account the views of Executive Directors and NonExecutive
Directors.
The Board and the Nomination and Remuneration Committee reviewed the
performance of individual directors on the basis of criteria such as the contribution of
the individual director to the board and committee meetings like preparedness on the
issues to be discussed, meaningful and constructive contribution and inputs in meetings,
etc.
At the Board Meeting that followed the meeting of the I ndependent
Directors and meeting of Nomination and Remuneration Committee, the performance of the
Board, its Committees, and individual directors was also discussed. Performance evaluation
of Independent Directors was done by the entire Board, excluding the Independent Director
being evaluated.
23. AUDITORS AND AUDIT REPORT
A. Statutory Auditors
At the 12th AGM of the Company held on 26 September 2022, M/s. Price
Waterhouse Chartered Accountants LLP (Firm Registration No. 012754N/N500016) were
reappointed as Statutory Auditors to hold office for a period of 5 (five) consecutive
years till the conclusion of 17th Annual General Meeting to be held in the year 2027.
The Auditor's Report for the FY 2022-23 does not contain any
qualification, reservation or adverse remark. The Auditor's Report is enclosed with the
Financial Statements in this Annual Report.
B. Secretarial Auditor
The Board has appointed M/s. Naresh Verma & Associates, Company
Secretaries, to conduct Secretarial Audit for the FY 2022-23. The Secretarial Audit Report
for the financial year ended 31 March 2023, is appended as ANNEXURE - III to this report.
The observations of the Secretarial Auditor in their report are
self-explanatory and therefore, the Directors do not have any further comments to offer on
the same.
Further, as required under Section 204 of the Act and rules thereunder,
the Board has appointed M/s. Naresh Verma & Associates, Company Secretaries, to also
conduct the Secretarial Audit for the FY 2023-24.
C. Cost Auditors
The Board of Directors, on the recommendation of the Audit Committee,
has appointed M/s. K. G. Goyal & Associates, Cost Accountants, (Firm Registration No.:
00024) as Cost Auditors to audit the cost accounts of the Company for the FY 2023-24. As
required under the Act, a resolution seeking shareholders' approval for the remuneration
payable to the Cost Auditors forms part of the Notice convening the 13th AGM.
In accordance with the provisions of Section 148(1) of the Act, read
with the Companies (Cost Records & Audit) Rules, 2014, the Company has maintained cost
records.
The Cost Audit report for the FY 2021-22 was filed with the Ministry of
Corporate Affairs on 6 September 2022.
D. Internal Auditors
The Board has appointed M/s. Chaturvedi & Partners as Internal
Auditors for the FY 2022-23 under Section 138 of the Companies Act, 2013 and they have
completed the internal audit as per the scope defined by the Board. M/s. Chaturvedi &
Partners was re-appointed as Internal Auditors of the Company for FY 2023-24.
E. Reporting of fraud by auditors
During the year under review, the Auditors of the Company have not
reported any material fraud as specified under Section 143(12) of the Act to the Audit
Committee.
24. EXPORT HOUSE STATUS
The Company enjoys the status of "One Star Export House".
25. CHANGE IN THE NATURE OF BUSINESS, IF ANY
There is no change in the nature of business of your Company during the
year under review.
26. DISCLOSURES
A. Vigil Mechanism /Whistle Blower Policy
Pursuant to the provisions of Section 177(9) of the Act, read with Rule
7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Regulation 22 of the
Listing Regulations and in accordance with the requirements of Securities and Exchange
Board of India (Prohibition of Insider Trading) Regulations, 2015, the Board of Directors
had approved the Policy on Vigil Mechanism/Whistle Blower and the same has been hosted on
the website of the Company. Over the years, the Company has established a reputation for
doing business with integrity and displays zero tolerance for any form of unethical
behaviour. The mechanism under the Policy has been appropriately communicated within and
outside the organisation. This Policy inter-alia provides direct access to the Chairperson
of the Audit Committee. It is affirmed that no personnel of the Company have been denied
access to the Audit Committee.
The Company reached out to employees through physical/virtual sessions
with an aim of creating greater awareness on this subject. During the year under review,
the Company has received 5 (five) complaints under the said mechanism, the details of
which is tabulated below:
Number of complaints received during the year |
Number of complaints resolved during the year |
Number of complaints remaining unresolved/ undergoing
investigation as on 31 March 2023 |
5 |
4 |
1 |
The Whistle Blower Policy of the Company has been displayed on the Company's website at
the link: www.rhimagnesitaindia.com/ investors/corporate-governance/policies
B. Audit Committee
The composition of the Audit Committee has been given in Corporate
Governance Report. All the recommendations made by the Audit Committee were accepted by
the Board.
C. Number of Board Meeting
The Board of Directors of the Company met Eight (8) times in the year,
the details of which are provided in the Corporate Governance Report.
D. Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings & Outgo
The particulars relating to Conservation of Energy, Technology
Absorption and Foreign Exchange Earnings & Outgo, as required to be disclosed under
Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 (3) of the Companies
(Accounts) Rules, 2014 are provided in ANNEXURE - IV.
E. Annual Return
The Annual Return for the FY 2022-23 is available on Company's website
at https://www.rhimagnesitaindia. com/investors/financials-reports/annual-returns
F. Particulars of employees and related disclosures
The information required under Section 197(12) of the Companies Act,
2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 is attached as ANNEXURE - V.
G. Corporate Governance Report
The Company has been practicing the principles of good corporate
governance over the years. A separate section on corporate governance and a certificate
from the Practicing Company Secretary regarding compliance with the conditions of
corporate governance as stipulated under the Listing Regulations forms part of this Annual
Report. The Managing Director & CEO and the Chief Financial Officer of the Company
have certified to the Board on financial statements and other matters in accordance with
Regulation 17 (8) of the Listing Regulations pertaining to CEO/CFO certification for the
financial year ended 31 March 2023. Report on Corporate Governance is annexed herewith as
ANNEXURE - VI to this report.
H. Business Responsibility and Sustainability Report
In accordance with the Listing Regulations, the Business
Responsibility and Sustainability Report (BRSR) forms a part of this
Annual Report as ANNEXURE - VII describing the initiatives undertaken by the Company from
an environmental, social and governance perspective during the year under review.
I. Transfer of amounts to Investor Education and Protection Fund
Details regarding transfer of amount & shares to IEPF has been
given in Corporate Governance Report.
J. Obligation of the Company under the Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act, 2013
The Company has zero tolerance for sexual harassment at workplace and
has adopted a policy on prevention, prohibition, and redressal of sexual harassment at
workplace in line with the provisions of the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013 (POSH Act) and the Rules made
thereunder. All women associated (permanent, temporary, contractual and trainees) as well
as any women visiting the Company's office premises or women service providers are covered
under this Policy.
During the year, the Internal Complaints Committee of the Company
constituted under the POSH Act has received One (1) complaint, which was after
investigation resolved and as on 31 March 2023 no complaint was pending or unresolved.
Further, the Company reached out on rotation basis to all the employees through awareness
sessions for creating greater awareness with respect to the Company's Policy on Sexual
Harassment at workplace. During the year under review, a video-based training on POSH
awareness was rolled out to all the employees to create greater awareness on this subject.
The policy may be accessed on the Company's website at the link:
www.rhimagnesitaindia.com/investors/corporate- governance/policies
K. Compliance with the Institute of Company Secretaries of India
("ICSI") Secretarial Standards
The relevant Secretarial Standards issued by the ICSI related to the
Board Meetings and General Meeting have been complied with by the Company.
L. No disclosure or reporting is required in respect of the following
items as there were no transaction on these items during the year under review:
- Details relating to deposit and unclaimed deposits or interest
thereon.
- Issue of equity shares with differential rights as to dividend,
voting or otherwise.
- Issue of shares (including sweat equity shares) and Employee Stock
Option Scheme of the Company under any scheme.
- No significant or material orders were passed by the Regulators or
Courts or Tribunals which impact the going concern and Company's operation in future
- Details of difference between amount of valuation done at the time of
one time settlement and the valuation done while taking loan from banks or financial
institutions alongwith the reasons thereof.
- No application has been made or no proceeding is pending under the
Insolvency and Bankruptcy Code, 2016 during the year or at the end of FY 2022-23.
27. CAUTIONARY STATEMENTS
Certain statements in the "Management Discussion and
Analysis" describing the Company's views about the industry, expectations/
predictions, objectives etc., may be forward looking within the meaning of applicable laws
and regulations.
Actual results may differ materially from those expressed in the
Statement. Company's operations may inter-alia affect with the supply and demand
stipulations, input prices and their availability, changes in Government regulations,
taxes, exchange fluctuations and other factors such as Industrial relations and economic
developments etc. Investors should bear the above in mind.
28. ACKNOWLEDGEMENTS AND APPRECIATION
Your Directors place on record their deep appreciation to the
customers, shareholders, suppliers, bankers, business partners/ associates, Central &
State Governments and Governments of various countries where we have our operations for
their consistent support and encouragement to the Company. I am sure you will join our
Directors in conveying our sincere appreciation to all employees of the Company and its
subsidiaries for their hard work and commitment. Their dedication and competence have
ensured that the Company continues to be a significant and leading player in the
refractory industry.
|
On behalf of the Board of Directors |
|
Dr. Vijay Sharma |
Gurugram, 10 August 2023 |
Chairman (DIN:00880113) |
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