DIRECTORS' REPORT

To,

The Members

The Directors of your Company are pleased to present the Seventy Sixth Annual Report together with the Audited Accounts of the Company for the 15 months period ended 30th June, 2015.

1. PLANTS AND OPERATIONS

During the period under review, Company's both the plants viz, Durga Cement Works (DCW) and Visakha Cement Works (VCW) commenced commercial operations with effect from 1st December, 2014. However, due to some pending minor balance works, the plants could not operate in full swing during the period. CPP (30MW) project works were under progress and nearing completion.

2. SHARE CAPITAL

The paid up equity share capital as at 30th June, 2015 is Rs. 293,52 lacs. During the period under review, your Company has not issued any shares with differential rights, sweat equity shares and equity shares under employees stock option scheme. Your Company has not bought back its own shares during the period under review.

3. DIVIDEND

In view of the absence of sufficient net profit during the period under review, the Directors regret their inability to recommend any dividend.

4. DIRECTORATE AND KEY MANAGERIAL PERSONNEL

During the period under report the following changes took place in the Board of the Company:

1. As already reported in the 75th Annual Report for the Financial Year 2013-14, Shri Sujit Kumar Mandal, appointed as Managing Director of the Company with effect from 11th August, 2014 and his appointment was approved by the members in the 75th Annual General Meeting held on 30th September, 2014.

During the period under review, in view of the restrictions on the maximum number of Directorships under the Companies Act, 2013, Shri Manoj Gaur resigned as Director / Chairman of the Company w.e.f 9th August, 2014. The Board places on record its appreciation for the valuable contribution and leadership provided by Shri Manoj Gaur in revival and rehabilitation of the plants of the Company. Shri K.N. Bhandari, Independent Director has been elected as Chairman of the Company w.e.f 11th August, 2014.

2. Shri Harish K. Vaid and Shri V.K Jain, Directors would retire by rotation at the ensuing Annual General Meeting and, being eligible, they offer themselves for re-appointment.

3. During the period under report, the Board Meet 6 times, the details whereof are given in Report on Corporate Governance. The meetings of Board of Directors were held on 26th May, 2014, 11th August, 2014, 30th September, 2014, 12th November, 2014, 11th February, 2015 and 13th May, 2015.

4. All Independent Directors have given declaration that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

5. Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the Committees constituted by it. The manner in which the formal annual evaluation has been carried out has been explained in the Report on Corporate Governance.

6. Pursuant to the provisions of Section 203 of the Companies Act, 2013 read with Rule 8 & Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors has confirmed and noted Shri Sujit

Kumar Mandal, Managing Director & CEO, Shri A.K. Agrawal, CFO and Shri G. Tirupati Rao, General Manager (Legal) & Company Secretary as Key Managerial Personnel of the Company.

The Board has on the recommendation of the Nomination & Remuneration Committee adopted a policy for selection and appointment of Directors, Senior Management and their remuneration. Brief features of the said Policy are:

a) Nomination and Remuneration Committee shall formulate the criteria for determining qualifications, positive attributes and independence of Director;

b) Nomination and Remuneration Committee shall identity persons who are qualified to become Director and persons who may be appointed in Key Managerial and Senior Management Position;

c) While selecting Independent Directors, the Nomination and Remuneration Committee shall identity persons of integrity who possess relevant expertise and experience required for the position;

d) Non-executive/Independent Director may receive remuneration by way of sitting fees for attending meetings of Board or Committee 5 thereof, as amount as may be approved by the Board of Directors within the limits prescribed under the Companies Act, 2013 and the rules made thereunder, provided that the amount of such fees shall not exceed Rs. One lac per meeting of the Board or Committee or such amount as may be prescribed by the Central Government from time to time. The sitting fee for Independent Directors and Women Directors shall not be less than the sitting fee payable to other Directors;

e) An Independent Director shall not be entitled to any stock option of the Company;

f) Other employees of the Company shall be paid remuneration as per the Company's HR policies. The breakup of the pay scale and quantum of perquisites including employer's contribution to PF, pension scheme, medical expenses, etc. shall be as per the Company's HR Policy.

The Company shall reimburse actual expenditure incurred by the Directors in the  performance of their duties as per the rules and policies of the Company.

Remuneration of other employees shall be reviewed/decided on an annual basis or earlier

if deemed necessary, based on performance appraisal of individual employees taking into account several factors such as job profile, qualifications, seniority, experience, commitment including time commitment, performance and their roles and duties in the organization.

g) The age, term of appointment and retirement of Managing Director/Whole-time Director shall be determined in accordance with the provisions of Companies Act, 2013 read with Rules made thereunder;

h) Managing Director/Whole-time Director and Key Managerial Personnel shall be paid the remuneration within the overall limit prescribed under the Companies Act, 2013 and the Rules made thereunder as recommended by the Nomination and Remuneration Committee subject to the approval of the Board;

i) The Company shall provide suitable training to Independent Directors to familiarize them with the Company, their roles, rights, responsibilities in the Company, nature of the Industry in which the company operates, business model of the Company etc;

5. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All Related Party Transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. During the period, the Company had not entered into any contract/ arrangement/transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transaction.

The policy on materiality of Related Party Transactions and dealing with Related Party Transactions as approved by the Board may be accessed on the Company's website at www.andhracements.com  

The details of Related Party Transactions as required under Accounting Standard - 18 are provided in the accompanying financial statements forming part of this Annual Report. Form AOC- 2 pursuant to Section 134 (3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is set out as "Annexure-A" to this Report.

6. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant and material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

7. AUDITORS

7.1 Statutory Auditors

As the members are aware in accordance with the provisions of Section 139 of the Companies Act, 2013 and the Rules made thereunder, M/s. Chaturvedi & Parterns, Chartered Accountants (Firm Registration No. 307068E), were appointed as Statutory Auditors of the Company in the last Annual General Meeting (AGM) for a period of Five consecutive years till the conclusion of Eightieth AGM of the Company to be held in the year 2019. The appointment of Statutory Auditors has to be ratified at every AGM. The Statutory Auditors, being eligible, offer themselves for re-appointment. The Company has obtained a written consent and a certificate from the Statutory Auditors to the effect that their reappointment, if made, would be in accordance with the conditions as may be prescribed and they fulfill the criteria laid down in Section 141 of the Companies Act, 2013.

Based on the recommendations of the Audit Committee, the Board has recommended the ratification of appointment of M/s. Chaturvedi & Parterns, Chartered Accountants as Statutory Auditors of the Company to hold office till the conclusion of the Eightieth Annual General Meeting to be held in the year 2019, subject to ratification of their appointment in every AGM.

7.2 Cost Auditors

Since the production at both the plants of the Company had commenced with effect from 1st December, 2014, Cost Auditor was not required to be appointed to conduct the Cost Audit for the 15 months period ended 30th June, 2015. However, for the financial year 2015-16, the Company is required to appoint Cost Auditors as per the provisions of the Companies Act, 2013 and Companies (Cost Records and Audit) Rules, 2014.

For the Financial Year 2015-16, the Board of Directors of the Company have on the recommendation of Audit Committee, appointed M/s. J.K. Kabra & Associates, Cost Auditors of the Company for auditing the Cost Records relating to the product 'Cement' and the Resolution for ratification of their remuneration has been included in the Notice for ensuing Annual General Meeting.

7.3 Secretarial Audit

Secretarial Audit Report for the financial period ended 30th June, 2015, issued by M/S. Savita Jyoti Associates, Company Secretaries, in form MR-3 forms part of this report and marked as "Annexure-B".

The said report does not contain any qualification or observation requiring explanation or comments from Board under section 134(3)(f)(ii) of the Companies Act, 2013.

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board on the recommendations of the Audit Committee, has appointed M/s. Savita Jyoti Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company for the financial year ended 31st March, 2016.

7.4 Internal Auditor

The Board on the recommendations of the Audit Committee, has appointed M/s. Lodha & Co., Chartedred Accountans, as internal Auditors of the Company for the financial year 2015-16.

8. EXTRACT OF ANNUAL RETURN

Pursuant to the provisions of section 134(3)(a) of the Companies Act, 2013, Extract of the Annual Return for the 15 months period ended 30th June, 2015 made under provisions of Section 92(3) of the Act is attached as "Annexure-C" which forms part of this Report.

9. PARTICULARS OF LOANS, GUARANTEES AND

INVESTMENTS

During the period under review, there were no Loans, Guarantees and Investments made/given as per the provisions of Section 186 of the Companies Act, 2013.

10. RISK MANAGEMENT

Pursuant to the requirement of Clause 49 of the Listing Agreement, the Company has formulated a Risk Management Policy. The Risk Management Policy inter-alia:

a) define framework for identification, assessment, monitoring, mitigation and reporting of risks.

b) ensures that all the current and future material risk exposures of the Company are identified, assessed, quantified, appropriately mitigated, minimized and managed i.e to ensure adequate systems for risk management.

11. CORPORATE SOCIAL RESPONSIBILITY

The provisions realting to Corporate Social Responsibility (CSR) not applicable to the Company, due to absence of required net profit/turnover.

12. MATERIAL CHANGES AND COMMITMENTS

In terms of Section 134(3) (i) of the Companies Act, 2013, except as disclosed elsewhere in this report, no material changes and commitments which could affect the Company's financial position have occurred between the end of the 15 months period and date of this report.

13. CORPORATE GOVERNANCE

Report on Corporate Governance and Management Discussion & Analysis Report, in terms of Clause 49 of the Listing Agreement are annexed and form part of this Annual Report. A certificate from the Practicing

Company Secretary confirming compliance with the conditions of Corporate Governance is also annexed.

14. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Companies Act, 2013, the Directors, based on the representation received from the operating management, certification by CEO and CFO to the Board of Directors and after due enquiry, confirm that in respect of the Audited Annual Accounts for the 15 months period ended 30th June, 2015:

a) that in the preparation of the annual accounts, the applicable accounting standards had been followed and that there were no material departures;

b) that the Directors had, in consultation with the Statutory Auditors, 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 for the 15 months period ended 30th June, 2015 and the loss of the Company for that period;

c) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) that the Directors had prepared the annual accounts on a going concern basis;

e) that the Directors had laid proper internal financial controls to be followed and that such internal financial controls were adequate and were operating effectively; and

f) that Directors had devised proper systems to ensure compliance with the provisions of all applicable laws that such systems were adequate and operating effectively.

15. WHISTLE BLOWER POLICY AND VIGIL MECHANISM

The Company has in terms of the provisions of Section 177(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meeting of Board and its Powers) Rules, 2014 and Clause 49 of the Listing Agreement, formulated Whistle Blower Policy and Vigil Mechanism for Directors and employees under which protected disclosures can be made by a whistle blower.

16. INTERNAL FINANCIAL CONTROL

The Internal Financial Controls with reference to financial statements as designed and implemented by the Company are adequate. During the year under review, no material or serious observation has been received from the Internal Auditors of the Company for insufficiency or inadequacy of such controls.

The information about internal financial controls is set out in the Management Discussion & Analysis Report which forms part of this Report.

17. DEPOSITS

The Company has not accepted or renewed any amount falling within the purview of provisions of Section 73 of the Companies Act 2013 ("the Act") read with the Companies (Acceptance of Deposit) Rules, 2014 during the year under review. Hence, the details relating to deposits as also requirement for furnishing of details of deposits which are not in compliance with Chapter V of the Act is not applicable.

However, in accordance with the Modified Rehabilitation Scheme (MS-08), the Company is settling the claims lodged by fixed deposit holders. During the period No Fixed Deposit claims were settled.

18. REDEMPTION OF PREFERENCE SHARES

A sum of Rs.1.92 lacs towards redemption of Preference Shares remains unclaimed. It has not been possible to locate the addresses of the shareholders, despite notices being published in daily newspapers. These are being paid as and when claimed. There is no liability for dividend on these shares.

19. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said Rules forms part of this Annual Report and is provided as "Annexure- D (I)" in this report.

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided as "Annexure- D (II)" to this Report.

20. PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134 of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014, is annexed herewith as "Annexure-E".

21. ACKNOWLEDGEMENT

The Board places on record its sincere appreciation and gratitude to various Departments and Undertakings of the Central Government, and State Governments, Financial Institutions, Banks and other authorities for their continued co-operation and support to the Company. The Board sincerely acknowledges the faith and confidence reposed by the Shareholders in the Company.

For and on behalf of the Board

K.N. BHANDARI

Chairman

 [DIN: 00191219]

Place : Noida

Date : 28th August, 2015