Post on 17-Mar-2020
Sagar Cements Annual Report 2009-2010 3
INDEX
Board of Directors 4
Notice 5
Directors’ Report and its Annexure 9
Report on Corporate Governance 18
Sagar Cements Auditors’ Report 30
Balance Sheet 33
Profit & Loss Account 34
Cash Flow Statement 35
Schedules forming part of Balance Sheet and Profit and Loss Account 36
Balance Sheet Abstract 50
Sagar Power Board of Directors 51
Sagar Power Notice 52
Directors’ Report 53
Auditors’ Report 56
Balance Sheet 59
Profit and Loss Account 60
Cash Flow Statement 61
Schedules Forming part of Balance Sheet and Profit and Loss Account 62
Balance Sheet Abstract 70
Consolidated Auditors’ Report 71
Consolidated Balance Sheet 72
Consolidated Profit and Loss Account 73
Consolidated Cash Flow Statement 74
Schedules to the Consolidated Balance Sheet and Profit and Loss Account 75
Sagar Cements Annual Report 2009-20104
BOARD OF DIRECTORS
BOARD OF DIRECTORS
Shri O.Swaminatha Reddy Chairman – Independent & Non Executive
Shri S.Veera Reddy Managing Director
Dr. S.Anand Reddy Joint Managing Director
Shri S.Sreekanth Reddy Executive Director
Shri K.Thanu Pillai Independent & Non Executive
Shri Gilbert Noel Claude Natta Non-Executive
Shri Werner C.R.Poot Non Executive
Shri P.Rajeswara Rao APIDC Nominee
Shri V.V.S.Ravindra IDBI Nominee and Independent
COMPANY SECRETARY
Shri R.Soundararajan
SENIOR MANAGEMENT TEAM
Corporate Office:
Shri M.S.A.Narayana Rao Group President
Shri M.V.Subba Rao Senior Vice President
Shri K.Ganesh Vice President – Projects
Shri P.Venkat Reddy Vice President - Finance
Shri P.S.Prasad Vice President – Marketing
Shri O.Anji Reddy Chief General Manager
(Electrical & Installations)
Site:
Shri N.Krishna Reddy Senior Vice President – Works
Shri K.V.Ramana Chief General Manager - Mines
Shri S.Venkateswarlu Chief General Manager – P & QC
Shri A.K.Nagesh General Manager (Mech. & Development)
AUDITORS
M/s. P.Srinivasan & Co.,
Chartered Accountants
2-2-18/8/5, C-31, Near Ahobhila Mutt, DD Colony
Hyderabad – 500 013
COST AUDITORS
M/s.Narasimha Murthy & Co.,
Cost Accountants
104, Pavani Estates, Y.V.Rao Mansion, Himayathnagar
Hyderabad – 500 029
BANKERS
State Bank of Hyderabad
State Bank of India
Punjab National Bank
IDBI Bank Limited
REGISTERED OFFICE
8-2-472/B/2, Road No.1, Banjara Hills
Hyderabad-500 034. Tel: 040 – 23351571
Fax: 040 - 23356573
PLANT
Mattampally, Via Huzurnagar, Nalgonda District,
Andhra Pradesh 508 204. Tel: 08683 – 247039
Sagar Cements Annual Report 2009-2010 5
NOTICE
SAGAR CEMENTS LIMITED
NOTICE
Notice is hereby given that the 29th Annual General Meeting of the Members of the Company will be held at 4.00 p.m. on
Monday, the 20th September, 2010 at Hotel Golkonda, Masab Tank, Hyderabad-500 028, to transact the following business:
1. To receive, consider and adopt the Audited Profit and Loss Account for the year ended 31st March, 2010 and the Balance
Sheet as on that date together with the Reports of the Board of Directors and Auditors thereon;
2. To declare dividend;
3. To appoint a Director in place of Shri S.Sreekanth Reddy, who retires by rotation and being eligible, offers himself for re-
appointment.
4. To appoint a Director in place of Shri Werner C.R. Poot, who retires by rotation and being eligible, offers himself for re-
appointment.
5. To appoint Auditors for the company to hold office from the conclusion of the Annual General Meeting till the conclusion
of the next Annual General Meeting and to fix their remuneration.
Special Business
6. To consider and, if thought fit, to pass, with or without modification, the following resolution as an Ordinary Resolution.
“Resolved that Shri Gilbert Noel Claude Natta be and is hereby appointed as a Director of the Company liable to retire
by rotation.”
Notes:
1. A Member entitled to attend and vote at the Meeting is entitled to appoint a Proxy to attend and vote instead of himself/
herself and the proxy to be so appointed need not be a Member of the Company. However, proxies in order to be
effective must be lodged with the company at its Registered Office not less than 48 hours before the commencement of
the Meeting.
2. The details required to be given under Clause 49 of the Listing Agreement with the Stock Exchanges in respect of Item
No.3, 4 and 6 along with the Explanatory Statement pursuant to Sec.173 in respect of the special business in Item No.6
are given in the annexure, which forms part of this Notice.
3. Register of Members and the Share Transfer Books of the company will remain closed during the period from 10.09.2010
to 20.09.2010 (both days inclusive).
4. Members holding shares in physical form are requested to inform the Company or its Registrars about the change, if any,
in their addresses.
5. Pursuant to Section 205A of the Companies Act, 1956, all unclaimed/unpaid dividends up to the financial year ended 31st
March, 1995 have been transferred to the General Revenue Account of the Central Government. Shareholders, who have
not yet en-cashed their dividend warrants for the said period, are requested to forward their claims in the prescribed Form
No.II under the Companies Unpaid Dividend (Transfer to General Revenue Account of the Central Government) Rules,
1978 to:
Office of the Registrar of Companies
Kendriya Sadan
Sultan Bazaar
Koti
Hyderabad
Sagar Cements Annual Report 2009-20106
6. Consequent upon the amendment to Section 205A of the Act and the introduction of Section 205C by the Companies
(Amendment) Act, 1999, the un-claimed dividends for the financial year ended 31st March, 1996 onwards and up to the
financial year ended 31st March, 2001 were duly transferred to the Investors Education and Protection Fund set up by the
Government of India.
7. Members who have not yet encashed their dividend warrants in respect of the dividend declared subsequently as detailed
below are requested to make their claims to the Company.
Year Nature of Dividend
2004-05 Final Dividend
2005-06 Final Dividend
2006-07 Interim and later confirmed as Final
2007-08 Interim and Final
2008-09 Final
8. Dividend for the year 2009-10, if declared at the meeting, will be paid to those members whose names appear on the
Company’s Register of Members on 20th September, 2010.
9. Section 109A of the Companies Act, 1956 provides for Nomination by the shareholders of the Company in the
prescribed Form No.2B and the shareholders are requested to avail this facility.
By Order of the Board
R.Soundararajan
Company Secretary
31st July, 2010
Registered Office:
8-2-472/B/2, Road No.1
Banjara Hills,
Hyderabad – 500 034, A.P.
Sagar Cements Annual Report 2009-2010 7
Annexure to the Notice of the 29th Annual General Meeting
(Explanatory Statement U/s. 173 (2) of the Companies Act, 1956)
Item No.6 of the Notice
Shri Gilbert Noel Claude Natta was appointed as an additional director of the Company on 17th September, 2009. In
accordance with Section 260 of the Companies Act, 1956 he will be holding the said office till the ensuing Annual General
Meeting. Notice proposing his re-appointment as director has been received under Section 257 of the Companies Act, 1956.
Shri Gilbert Noel Claude Natta obtained his Scientific baccalauréat in 1966 and MBA ESSEC in 1971. He served in French
Military during the period from 1971 to 1973 as Supply Officer. During the period from 1973 to 1988 he served as a banker
with Banque Indosuez, a part of Suez Group and held his assignments in South Africa, Saudi Arabia, Holland and France. He has
vast experience in Commercial and Merchant Banking areas and held positions in France as Deputy Director of Strategy and
Budget and Head of Risks for Asia and Australasia. He joined Vicat in 1988 as Deputy Finance Director.
He was appointed as Development Director for the Vicat group in 1991 and he is now on the Board of its subsidiaries in Turkey,
Mauritania, Egypt, Kazakhstan and India, which include Vicat Sagar Cement Private Limited, a company promoted jointly by
Sagar Cements Limited and Parficim SAS, a wholly owned subsidiary of Vicat S.A.
The Board of Directors recommend the resolution to appoint Shri Gilbert Noel Claude Natta as director of the Company for
approval of the members.
As the resolution relates to the appointment of Shri Gilbert Noel Claude Natta as director, to that extent and to the extent of
his association with Vicat S.A., which is holding 10,00,000 Equity Shares in the company through its subsidiary Parficim S.A.S.,
he may be deemed to be interested in the resolution.
Sagar Cements Annual Report 2009-20108
Annexure to the Notice of the 29th Annual General Meeting
(Pursuant to Clause 49 of the Listing Agreement)
Details of Directors seeking re-appointment at the Annual General Meeting
Name of the Director
Date of birth
Experience in specific
functional areas
Qualification
Directorships in other
Companies in India
Membership of Audit /
Shareholders / Investors
Grievances Committees
of other Public Limited
Companies
No. of shares held in
Sagar Cements Limited
Inter-se relationship with
other Directors of the
Company
Shri S.Sreekanth Reddy
27-08-1971
Cement Technologist
B.E. (I & P) and PG Diploma in
cement technology
Sagarsoft (India) Ltd.
Sagar Power Ltd.
Vicat Sagar Cement Pvt. Ltd.
Vijaynagar Sugar Pvt. Ltd.
Sree Venkateshwara Winery &
Distillery Pvt. Ltd.
Amareswari Cements Ltd.
Sagar Priya Housing and
Industrial Enterprises Ltd.
Nil
601400
Related to Shri S.Veera Reddy,
Managing Director and
Dr.S.Anand Reddy,
Joint Managing Director
Shri Werner C.R.Poot
13-01-1971
Chemical Engineering
Engineer
AVH Resources India
Pvt.Ltd.
Oriental Quarries and Mines
Pvt.Ltd.
Nil
Nil
None
Shri Gilbert Noel Claude
Natta
24-12-1948
Banking & Finance
ESSEC PARIS
Bharathi Cement Corporation
Ltd.,
Vicat Sagar Cement Pvt.Ltd.
Nil
Nil
None
By Order of the Board
R.Soundararajan
Company Secretary
31st July, 2010
Registered Office:
8-2-472/B/2, Road No.1
Banjara Hills,
Hyderabad – 500 034, A.P.
Sagar Cements Annual Report 2009-2010 9
DIRECTORS’ REPORT
Dear Members
Your Directors are pleased to present their Twenty Ninth Report together with the audited accounts of the Company for the
year ended 31st March, 2010.
As you are aware, during the later part of the previous year, your Company had completed a major expansion of its plant’s
capacity from 0.297 mtpa to 2.35 mtpa and your Directors are pleased to inform you that the production from the said
expanded facility has since stabilized.
Financial Results
Rs. in lakhs
2008-092009-10Description
Dividend
Your Board has recommended for declaration at the forthcoming Annual General Meeting, a dividend @ Rs.2.50 per share
(25%) on the 15002300 Equity Shares of Rs.10/- each for the year ended 31st March, 2010.
Operations review
The total income of your Company grew by 58% to Rs.48636 lakhs during the year under report as compared to Rs.30738
lakhs in the previous year. Operating Profit grew by 44.4 % to Rs.8646 lakhs. Profit after Tax was higher at Rs.1912 lakhs as
DIRECTORS’ REPORT
Net Sales 47957 30654
Other income 679 84
Total Income 48636 30738
Profit before Depreciation, Financial Charges and Tax 8646 5986
Less : Depreciation 2769 1872
Financial Charges 2895 5664 1590 3462
Profit before Tax 2982 2524
Less : Net Provision for Tax 1070 878
Profit After Tax 1912 1646
Add : Profit brought forward 6127 5327
Profit available for appropriation 8039 6973
Appropriations proposed
Dividend @ 25 % (Rs.2.50 per equity share) 375 385
Dividend Tax 49 61
Transfer to General Reserve 500 400
Balance carried to Balance Sheet 7115 6127
Total 8039 6973
Basic and Diluted Earning Per Share 12.75 11.48
Sagar Cements Annual Report 2009-201010
Cement (MTs)Clinker (MTs)Particulars
2009-10 2008-09 2009-10 2008-09
Production 1430000 737710 1120351 431250
Sales 350133 307152 1130636 415835
Sale of Traded Cement - - 204191 225650
compared to Rs.1646 lakhs in the previous year, registering a growth of 16%. Earnings per share for the year were also higher
at Rs.12.75 as against Rs.11.48 in the previous year.
The performance of your company in terms of production and sale of cement / clinker is given below:
The increase in the production was on account of the expanded capacity having become fully operational during the year under
review, which enabled your company to record a sharp rise in sales. The year also saw a marginal increase of Rs.63/- and Rs.126/-
in the average net sales realisation per tonne of clinker and packed cement respectively.
Share Capital
There was no change in the capital structure of your Company during the year under report.
Future Outlook
The long-term prospects for the cement industry as a whole look bright as the cement consumption, driven by higher off-take
by all user segments, is expected to remain robust. However, the capacity additions, which are taking place across the industry
and the entry of global cement companies, both through organic and inorganic routes, have intensified the competition within
the industry offering little scope for any significant improvement in the realization in the near term. This, coupled with increasing
inputs costs, may put the margins under pressure.
While the growth in the cement consumption is generally expected to overcome any possible conflict arising due to excess supply
and attendant set backs, your Company, on its part, is confident of maintaining its growth amidst aggressive competition by
improving its market share through innovative strategies and by cutting costs and improving efficiency in all areas of its
operations.
Subsidiary Company
Documents and Information pursuant to Sec.212 of the Companies Act, 1956 in respect of Sagar Power Limited, the subsidiary
of your Company, have been provided as attachment to the Balance Sheet, together with the consolidated financial statements.
The performance of this subsidiary would have been much better, but for the fact that one of the two units belonging to this
subsidiary continued to be almost non-operational for the second year in succession due to stoppage of flow of water in the
relevant canal caused by on-going construction of an aqua-duct across the said canal. With a view to focusing more on the core
area of your Company namely the cement business, your Company is divesting its stake in this subsidiary.
Joint Venture
As you are aware, your Company and Parficim S.A.S., a wholly owned subsidiary of Vicat S.A. of France have jointly promoted
Vicat Sagar Cement Private Limited as a special purpose vehicle, to set up a 5.5 mtpa capacity cement plant along with a captive
power unit of 60MW capacity in Gulbarga District of Karanataka State. Sagar Cements and the Vicat Group have so far invested
a sum of Rs.410 million and Rs.1196 million respectively in the project. This project is implemented in two phases, each phase
with a capacity of 2.75 mtpa. The acquisition of land in respect of first phase is nearing completion. This phase, for which
financial closure is expected to be achieved soon, is being planned, barring unforeseen circumstances, to go on stream by 2012.
Sagar Cements Annual Report 2009-2010 11
Corporate Governance
Your Company has complied with all the mandatory provisions relating to Corporate Governance as prescribed under Clause
49 of the Listing Agreement with the Stock Exchanges. A separate report detailing such compliance together with the
mandatory Certificate obtained from the Statutory Auditors in connection therewith is included as part of the Annual Report.
Internal Control Systems
Your Company has adequate internal control systems in all important areas of its operations and effectiveness of these systems
is periodically reviewed for possible improvement in them.
Insurance
All the properties of the Company have been adequately insured.
Particulars of Employees
Particulars of employees required to be furnished in this Report pursuant to Sec.217 (2A) of the Companies Act, 1956 are given
in the annexure.
Industrial Relations
Your Company continues to enjoy cordial relationship with all its personnel at the Plant, Office and on the field.
Conservation of Energy, Technology absorption and Foreign Exchange Earnings and Outgo:
The particulars required under Sec.217 (1) (e) of the Companies Act, 1956 have been provided in the annexure, which forms
part of the Report.
Pollution Control
Your company is committed to keep the pollution at its plant within the acceptable norms and as part of this commitment, it
has installed an ESP system at the plant.
Directors
In compliance with Sec.256 of the Companies Act, 1956, Shri S.Sreekanth Reddy and Shri Werner C.R.Poot will be retiring by
rotation at the ensuing Annual General Meeting and these retiring directors, being eligible, are proposed for re-appointment. Shri
Gilbert Noel Claude Natta, who was appointed as additional directors on the Board on 17th September 2009, will be holding
his office up to the ensuing Annual General Meeting in accordance with Sec.260 of the Companies Act, 1956 and a notice
proposing his re-appointment U/s.257 of the said Act has been received from a member of the Company. Your Board
recommends the re-appointment of all the above mentioned directors at the ensuing Annual General Meeting.
Sub Committees of the Board
The Board has Audit Committee, Remuneration Committee, Investment Committee and Investors’ Grievances Committee,
the composition and details of which have been given in the Report on the Corporate Governance forming part of the Annual
Report.
Sagar Cements Annual Report 2009-201012
Auditors
Messrs. P.Srinivasan & Co., Chartered Accountants, the present Auditors of your Company will be holding their office up to the
ensuing Annual General Meeting. Shareholders are requested to appoint Auditors to the Company to hold office from the
conclusion of its ensuing Annual General Meeting until the conclusion of its next Annual General Meeting. Your Board has accepted
the recommendation of its Audit Committee to re-appoint the retiring auditors, who, being eligible for re-appointment, have
since consented to the proposed re-appointment and confirmed that the said re-appointment would be within the limits
specified in Sub Section (1B) of Section 224 of the Companies Act, 1956.
Directors’ Responsibility Statement
Pursuant to Section 217 (2AA) of the Companies Act, 1956, we state:
(i) that in the preparation of the annual accounts, the applicable accounting standards had been followed along with
proper explanation relating to material developments;
(ii) that the directors had selected such accounting policies and applied them consistently and made judgment and
estimates that are reasonable and prudent 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 the period;
(iii) 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, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
(iv) that the directors had prepared the annual accounts on a going concern basis.
Public Deposits
Your Company had not accepted any Deposits from the public under Section 58A of the Companies Act, 1956 during the year
2009-10.
Management Discussion and Analysis Report
In accordance with Clause 49 of the Listing Agreement with the Stock Exchanges, the Management Discussion and Analysis
Report is given in the Annexure, to form part of the Annual Report.
Acknowledgement
Your Directors wish to place on record their appreciation of the valuable co-operation extended to the Company by its bankers
and various authorities of the State and Central Government. They thank the Distributors, Dealers, Consignment Agents,
suppliers and other business associates of your Company for their continued support. Your Board also takes this opportunity
to place on record its appreciation of the contributions made by the employees at all levels and last but not least, of the
continued confidence reposed by you in the Management.
For and on behalf of the Board of Directors
Hyderabad O.Swaminatha Reddy
31st July, 2010 Chairman
Sagar Cements Annual Report 2009-2010 13
Annexure 1
Management Discussion and Analysis
Global Scenario
Irrespective of the economic policy followed by the individual countries for their development, the need for housing and
continued thrust on the investments in infrastructure development are expected to drive the global demand for cement in the
next two decades at least.
National Scenario
The cement industry in India is one of the basic infrastructure industries, contributing in a significant way to the Indian economy
in terms of employment generation, tax revenues, and industrial growth. The per capita consumption of cement is considered
as an important indicator of the country’s economic development, since it is used in almost every sector of the economy. This
industry, with more than 140 large and 365 mini plants is the second largest in the world. Aided by a strong capacity base, it
produces several varieties of cement such as Ordinary Portland Cement (OPC), Portland Pozzolana Cement (PPC), Portland
Blast Furnace Slag Cement (PBFS), Oil Well Cement, Rapid Hardening Portland Cement, Sulphate Resisting Portland Cement,
White Cement, etc. which meet with the global standards.
The robust growth phase being witnessed in the cement is expected to continue over the medium term, given the revival in the
housing markets, continued Government spending on the rural sector, and the gradual increase in the number of infrastructure
projects being executed by the private sector. This, coupled with the investment norms including the investor-friendly guidelines
for Foreign Direct Investment (FDI) into the cement industry, is paving the way for entry of more multinational cement majors
apart from luring global private equity firms and fund managers towards this industry. However, in the short-term, the cement
industry faces a number of challenges in the form of subdued market conditions, increasing input costs, and the inability of cement
prices to keep pace with the rising costs leading to reduction in margins.
Sagar Cements – Financial Highlights
2009-102008-09Particulars
Total Income (in lakhs) 30738 48636 58
Profit before Interest, Depreciation & Tax 5985 8646 44
Profit before Tax 2524 2982 18
Profit after Tax 1646 1912 16
EPS (Rs./Share) 11.48 12.75 11
% of growth
The operating income of your Company for the year grew by 58% to Rs.48636 lakhs as compared to Rs.30738 lakhs in the
previous year. Operating Profit grew by 44.4% to Rs.8646 lakhs. Profit after Tax was higher at Rs.1912 lakhs as compared to
Rs.1646 lakhs in the previous year, registering a growth of 16%. Earnings per share for the year were also higher at Rs.12.75
as against Rs.11.48 in the previous year.
Annexure
Sagar Cements Annual Report 2009-201014
Performance in production, sales and other areas
The year 2009-10 saw Sagar Cements stabilizing its production process from the capacity expanded in the later part of the
previous year. Though the production and dispatches during the year under analysis were on the higher side in absolute terms
as compared to the previous year, yet, the Company was constrained to restrict its cement production to around 52 % of its
expanded capacity of 2.35 MTPA due to the subdued market conditions, frequent bandhs organized as part of the Telengana
agitation and the un-precedented floods, which severely affected the transportation of goods in and around Andhra Pradesh,
a major market for the Company.
Cement (MTs)Clinker (MTs)Product
Year 2009-10 2008-09 2009-10 2008-09
Production 1430000 737710 1120351 431250
Sales 350133 307152 1130636 415835
Sale of Traded Cement - 204191 225650
In the year 2008-09, Sagar Cements entered into a Joint Venture with Vicat S.A. a cement major and the flagship company of
the globally known Vicat Group of France, to set up a green field cement plant of 5.5 million tonne capacity with a captive power
plant of 60 MW capacity at Chatrasala Village of Chincholi Taluk in Gulbarga District of Karnataka State. A separate entity under
the name ‘Vicat Sagar Cement Private Limited’ has been formed for the purpose, in the equity capital of which Sagar and Vicat
Group will be ultimately holding 49% and 51% respectively. This project is implemented in two stages, with each stage having
a capacity of 2.75 mtpa. Acquisition of land in respect of first stage is nearing completion and the financial closure is expected
to be achieved shortly. Barring unforeseen circumstances, this stage is expected to go on stream by the year 2012. Sagar
Cements and the Vicat Group have so far invested a sum of Rs.410 million and Rs.1196 million respectively in the project.
Opportunities and threats
Main drivers for the growth in demand for cement being road and housing projects, the increased spending by the Government
in these areas and the revival of the real estate sector would ensure no let up in the demand for cement, not withstanding the
substantial additions to capacity witnessed in the industry. This augurs well for Sagar Cements, which, with its expanded
capacity, is well placed to grab the opportunities available in the above scenario.
However, rising costs of coal, power and fuel and transportation remain a cause of worry. While there are no problems with
respect to the availability of limestone to meet the expanded capacity, concerns however do exist with regard to non-availability
of adequate quantity of coal, forcing the Company to take recourse to imported coal at a high cost.
Logistics is another area of concern for the Company. Distribution cost being a significant component of the cost structure.
Sagar Cement is working towards strengthening its distribution network to bring it down. As part of this strategy, the company
will be exploring ways to increase its bulk sales. A proposal to provide a railway siding near the Company’s plant is under
implementation, the completion of which will go a long way in reducing the transportation cost.
The Indian cement industry with its huge potential continues to attract the entry of more global cement majors and encourages
the strengthening of production bases by existing companies. This may lead to a substantial part of the cement capacity being
controlled by a few players. Sagar Cements proposes to meet some of the challenges posed by this development by further
improving its brand image, greater expenditure on advertising, strengthening its distribution networks as well as by customer-
focused initiatives.
Outlook
The growth traction in the cement industry is strongly related to the overall economic strength of the country. The massive
budget outlay earmarked by the Central and State Governments for infrastructure development is expected to absorb
Sagar Cements Annual Report 2009-2010 15
increasing cement capacities. Sagar Cements is operationally strong and poised to benefit from such a demand positive situation
and will continue to focus on maintaining good plant performance and optimizing efficiencies. Sagar will be focusing on
penetration into more districts of A.P., to increase its market share in the said State and explore its OPA Market especially in
North Eastern States where there is a huge deficit in the supply of cement, and with this strategy, Sagar Cement is confident of
achieving a higher capacity utilization.
Risk Management
External risks and concerns:
High transportation and energy cost.
More than 50 % of the inputs are controlled by the Government leaving little scope for the industry to have control over them.
Non-availability of quality coal in sufficient quantity.
Newer entrants to the industry and consequent capacity addition.
Global economic slowdown.
Internal risks
The Company attaches utmost importance to the assessment of internal risks and the management thereof in all its dealings.
Company is constantly on the look out for identifying opportunities to enhance the enterprise value and keeping the need to
minimize the risks associated with such efforts, every proposal of significant nature is screened and evaluated for the risks
involved and then approved at different levels in the organization before implementation.
With a view to overcoming the risk of dependence upon any particular marketing segment or region, the Company carries an
aggressive advertisement campaign in the visual media to reach a wider section of its ultimate consumers and the feed back
received is quite encouraging. As the cement industry is witnessing rapid additions to its capacity, in order to mitigate the risk
associated with it, Sagar Cements is looking for growth opportunities in other Asian and African countries where infrastructure
spending is set to get a boost.
The Company has adequate system to manage the financial risks of its operations. The system is implemented through
imposition of checks and balances on extending credit to the customers, internal audit, which is periodically carried out through
an external audit firm, proper appraisal of major capital expenditure, adherence to the budget covering all areas of its operations
and by insurance coverage for the company’s facilities.
As far as the management of legal risks, the Company has adequate system to keep track of due compliance with applicable laws
and whenever the Company foresees any legal risk in the issue involved, it seeks the benefit of wisdom of eminent lawyers in the
areas concerned before acting upon the issue.
Internal Control System and its adequacy
The Board of Directors is fully satisfied with the adequacy of the internal control system in force in all major areas of operations
of the Company, which has recently implemented an ERP to further strengthen the system. The effectiveness of the System
is reviewed periodically for its further improvement.
Material developments in Human Resources / Industrial Relations, including number of employees:
As the Company considers Man Power as one of its most important assets, developing functional competencies of its human
resources continues to be one of its key focus areas. Accordingly, need based training in relevant areas is arranged at different
levels and senior managers are also encouraged to attend seminars and conferences of the professional bodies as part of updating
their skills. The Company continues to enjoy excellent industrial relations. As of date, the Company has 380 employees on its
rolls.
Sagar Cements Annual Report 2009-201016
Cautionary Statement
The views and statements expressed or implied in this Management Discussions and Analysis are based on available information,
assessments and judgments. They are subject to alteration. The Company’s actual performance may differ due to national or
international ramification, Governmental Regulations and policies, tax laws and other unforeseen factors over which the
Company has no control.
Annexure 2
Particulars of Employees as required under Section 217(2A) of the Companies Act, 1956
Name of the Employee
Designation
Age
Remuneration received (Rs.)
Nature of employment
Nature of duties
Qualification
Experience (years)
Date of Commencement of
Employment
Last Employment held
Managing Director
74 years
12041771
Contractual
General Management
-
50
13-07-1991
Nil
Shri S. Veera Reddy
Joint Managing Director
46 years
11464802
Contractual
General Management
M.B.B.S.
19
21.11.1992
Nil
Dr.S.Anand Reddy
Executive Director
38 years
9626739
Contractual
General Management
B.E. (I & P)P.G.
Dip. In Cement
Technology
14
26.6.2003
Nil
Shri S.Sreekanth Reddy
Group President
65 years
2400000
Contractual
General Management
B.E. Hons.
(Mechanical)
45
29.01.2009
President (Works),
NCL Industries
Limited
Shri M.S.A.Narayana Rao
Shri S.Veera Reddy, Dr.S.Anand Reddy and Shri S.Sreekanth Reddy are related to each other.
Sagar Cements Annual Report 2009-2010 17
ANNEXURE – 3
(Forming part of the Directors’ Report)
FORM A
[Pursuant to Rule 2 of the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988]
Form of disclosure of particulars with respect to conservation of energy
Particulars01.04.2008 to
31.03.2009
01.04.2009 to
31.03.2010
1. Electricity
a) Purchased Units 1333.75 lakhs 701.12 lakhs
Total Amount 4514.05 lakhs 2366.62 lakhs
Rate / Unit (Rs.) 3 . 3 8 3.38
b) Own Generation (Units) 1.36 lakhs 0.76 lakhs
Unit / Ltr. of Diesel Oil 3.40 units 3.24 units
Rate / Unit (Rs.) 10.12 per unit 10.78 per unit
2. Coal ( C & D Grade used as fuel in Kiln)
Quantity 312046 MT 179541 MT
Total Cost (Rs.) 9313.00 lakhs 5160.63 lakhs
Average Rate (Rs.) 2 9 8 4 . 5 0 2874.35
A. Power & Fuel Consumption
Products - OPC - 1120351 431250
Electricity (in KWH) 140 100.09 110.01
Coal (MT) (For Clinker) 0.28 0.218 0.243
Particulars 01.04.2008 to
31.03.2009
01.04.2009 to
31.03.2010Standards
B. Consumption per unit of production
FORM B
[See Rule 2]
[Pursuant to Rule 2 of the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988]
Form for disclosure of particulars with respect to Technology Absorption, Research and Development
1. Research and Development
Collaborates with the National Council for Cement and Building Materials for R & D activities.
2. Technology absorption, adaptation and innovation:
The company successfully commissioned a project in the year 2008-09 to add an additional 1.75 MTPA cement capacity,
employing the vertical roller mill technology and IKN pendulum cooler. FLSmidth Automation’s QCX / Robolab system
has been installed at the plant and Sagar Cements is one of the first few Indian companies to have implemented this system.
This ensures the best quality in lab operations to facilitate high product quality and would optimize overall plant operation.
Foreign Exchange Earnings and Outgo:
Earnings : Nil
Outgo : Rs.310 lakhs
Sagar Cements Annual Report 2009-201018
Report on Corporate Governance
1. Company’s philosophy on code of governance:
Sagar Cements believes that adherence to good corporate practice leads to transparency in its operations and improvement
in the quality of its relations with all its stakeholders.
2. Board of Directors:
Composition:
The Board of Directors has an optimum combination of Executive and Non-Executive Directors and its composition is in
conformity with Clause 49 of the Listing Agreement entered into with the Stock Exchanges. All the Directors have made
the requisite disclosures regarding directorships and Committee positions held by them in other Companies.
Following was the composition of the Board as on 31st March, 2010:
Sl. No. Name of the Director Category of Directorship
1 Shri O.Swaminatha Reddy, Chairman Independent & Non-Executive
2 Shri S.Veera Reddy, Managing Director Non-Independent & Executive
3 Dr. S.Anand Reddy, Joint Managing Director Non-Independent & Executive
4 Shri S.Sreekanth Reddy, Executive Director Non-Independent & Executive
5 Shri K.Thanu Pillai Independent & Non-Executive
6 Shri Gilbert Noel Claude Natta Non-Independent & Non-Executive
7 Shri Werner C.R.Poot Non-Independent & Non-Executive
8 Shri V.V.S.Ravindra (IDBI Nominee) Independent & Non-Executive
9 Shri P.Rajeswara Rao (APIDC Nominee) Non-Executive & Non-Independent
Meetings held:
The Board had met six times during the financial year 2009-10 and held its meetings on 25-05-2009, 16-06-2009,
23-07-2009, 17-09-2009, 23-10-2009 and 21-01-2010.
Board Procedure:
Board Meetings are convened taking into consideration the business requirements, statutory and regulatory compliance. The
Agenda, backed by adequate background information, is made available in advance to all the members of the Board, to enable
them to take informed decisions on the matters covered in the agenda for the respective meetings.
Code of Conduct:
The Company has adopted a Code of Conduct for all its Directors and Senior Executives and the same is available on the
Company’s website, www.sagarcements.in.
Sagar Cements Annual Report 2009-2010 19
Attendance of Directors and their other directorships:
Attendance of directors at the Board Meetings held during the financial year 2009-10 and at the last Annual General Meeting as
also the number of their directorships and Committee Memberships as on 31st March, 2010 are given below:
Sl.
No.Name of the Director
No. of membership of
Audit and the
Shareholders Grievances
Committees of Public
Limited Companies
No of membership of
the Boards of Public
Limited CompaniesWhether
attended the
last AGM
No. of
Board
Meetings
attended As
Member
As
Chairman
As
Member
As
Chairman
1 Shri O.Swaminatha Reddy 6 Yes 5 4 - 5
2 Shri S.Veera Reddy 6 Yes 6 - - 1
3 Dr.S.Anand Reddy 5 Yes 5 - 2 -
4 Shri S.Sreekanth Reddy 6 Yes 4 1 - -
5 Shri K.Thanu Pillai 5 Yes 11 1 4 -
6 Shri Werner C.R.Poot 6 Yes 1 - - -
7 Shri V.V.S.Ravindra 6 Yes 1 - 1 -
8 Shri P.Rajeswara Rao 6 Yes 4 - 1 1
9 Shri Gilbert Noel Claude Natta 3 NA 2 - - -
(w.e.f. 17.9.2009)
Note: Only Public Limited Companies, their Audit Committees and Investors’ Grievance Committees have been considered for
the above purpose.
Shareholding of Non-Executive Directors:
As on 31st March 2010, none of the Non-Executive Directors was holding any shares in the Company in his personal capacity.
3. Audit Committee:
Composition as on 31st March, 2010:
Name of the Director Status in the Committee
Shri O.Swaminatha Reddy Chairman
Shri K.Thanu Pillai Member
Shri V.V.S.Ravindra (w.e.f. 23-07-2009) Member
Shri P.Rajeswara Rao Member
Sagar Cements Annual Report 2009-201020
Shri O.Swaminatha Reddy, a Chartered Accountant, is a Financial Consultant. Shri K.Thanu Pillai, M.B.A.,CAIIB, has retired
from State Bank of Hyderabad as its Managing Director. Shri V.V.S. Ravindra and Shri P.Rajeswara Rao, are the nominee directors
of IDBI and APIDC respectively. The composition of the Committee is in conformity with Clause 49(ii) (A) of the Listing
Agreement. The Chairman of the Committee was present at the last Annual General Meeting.
Terms of reference:
Terms of reference of the Audit Committee include all the items listed in Clause 49(ii) (D) of the Listing Agreement.
Meetings held:
The Audit Committee, which had met four times during 2009-10, held its meetings on 16-06-2009, 23-07-2009,
23-10-2009 and on 21-01-2010 in the said year.
Attendance at the meetings of the Audit Committee:
Name of the Director No. of meetings attended
Shri O.Swaminatha Reddy 4
Shri K. Thanu Pillai 3
Shri V.V.S.Ravindra 3
Shri P.Rajeswara Rao 4
4. Remuneration Committee:
Pursuant to Schedule XIII to the Companies Act, 1956 read with Clause 49 of the Listing Agreement, the Board has
constituted a Remuneration Committee with the terms of reference as mentioned in the said Clause.
Composition of the Committee:
Name of the Director Status
Shri K.Thanu Pillai Chairman
Shri O.Swaminatha Reddy Member
Shri P.Rajewar Rao Member
During the year 2009-10, the Committee did not hold any meetings. The Chairman of the Committee attended the last Annual
General Meeting.
Remuneration policy:
Remuneration to Non-Executive Directors:
Non-Executive Directors are not in receipt of any remuneration other than the sitting fee of Rs.10,000/- for each meeting of the
Board and Committees thereof attended by each of them.
Sagar Cements Annual Report 2009-2010 21
Sitting fees payable to the nominee directors are paid directly to the institutions they represent. Details of sitting fees paid to the
non-executive directors during the year 2009-10 are given below:
Sl. No. Name of the Director Sitting Fee (Rs)
1 Shri O.Swaminatha Reddy 100000
2 Shri K.Thanu Pillai 80000
3 Shri P.Rajeswara Rao (APIDC Nominee) 100000
4 Sri Gilbert Noel Claude Natta (w.e.f. 17.9.2009) 30000
5 Shri V.V.S.Ravindra (IDBI Nominee) 90000
6 Shri Werner C.R.Poot 60000
Total 460000
Remuneration to the Executive Directors (Managing Director and Whole time Directors):
The Company pays remuneration to its Managing Director and other Whole time Directors by way of salary and perquisites,
which are fixed components and by way of commission, a variable component. Remuneration is paid in accordance with the
approval accorded by the shareholders under the applicable provisions of the Companies Act, 1956.
Details of remuneration paid / payable to the Executive (Whole-time) Directors for the financial year 2009-10:
Name of the Director TotalCategory Salary & Perquisites Commission
Shri S.Veera Reddy Managing Director 7116509 4925262 12041771
Dr.S.Anand Reddy Whole-time Director 6539540 4925262 11464802
Shri S.Sreekanth Reddy Whole-time Director 4701477 4925262 9626739
Total 18357526 14775786 33133312
5. Shareholders’ / Investors’ Grievances Committee:
The Investors Grievances Committee of the Board, constituted in accordance with Clause 49 of the Listing Agreement,
has the following directors as its members:
Shri P.Rajeswara Rao Chairman
Dr.S.Anand Reddy Member
Shri R.Soundararajan, Company Secretary, is the compliance officer for the above purpose. Based on the information obtained
from the Company’s Registrars, the Company had received 75 complaints from the investors during the year 2009-10 and
all these complaints, being routine in nature, were redressed in the normal course by the Registrars. There were no complaints
pending as on 31st March, 2010. In view of these and also of the fact that all requests for transfer of shares held in physical forms
were swiftly approved by the officials of the Company in terms of the authorization given to them by the Board, the need for
convening a meeting of the Grievances Committee was not felt during the year 2009-10.
Sagar Cements Annual Report 2009-201022
6. Investment Committee:
With a view to evaluating investment opportunities available to the Company from time to time, your Board has
constituted an Investment Committee, which has the following directors as its members:
Shri O.Swaminatha Reddy Chairman
Shri S.Veera Reddy Member
Shri K.Thanu Pillai Member
7. General Body Meetings:
The details of the time, venue and the date of the last three Annual General Meetings of the Company are given below:
AGM VenueDate Time
28th AGM 17th September, 2009 3.30 p.m. Hotel Golkonda, Masab Tank,
27th AGM 24th September, 2008 4.00 p.m. Hyderabad - 500028
26th AGM 24th September, 2007 12.00 Noon
Details of Special Resolutions passed in the above said Annual General Meetings are given below:
No Special Resolutions were passed at the 28th Annual General Meeting.
At the 27th AGM held on 24th September, 2008, one Special Resolution for re-appointment of Shri S.Sreekanth Reddy as
Executive (Whole-time) Director and two Special Resolutions for enhancement in the remuneration payable to Shri S.Veera
Reddy, Managing Director and Dr.S.Anand Reddy, Joint Managing Director, were passed.
At the 26th AGM held on 24th September, 2007, three Special Resolutions were passed, viz., one resolution for re-
appointment of Dr.S.Anand Reddy as the Executive Director and two resolutions for increasing the remuneration payable
to Shri S.Veera Reddy, M.D. and Shri S.Sreekanth Reddy, Whole time Director.
In addition to the above, the Company held an extraordinary general meeting on 23rd July, 2008, whereat the shareholders
passed a special resolution according their consent U/s. 81(1A) of the Companies Act, 1956 to issue 10,00,000 equity
shares of Rs.10/- each on a preferential basis to M/s. Vicat S.A. and or to any of its subsidiaries or affiliates, at a premium
of Rs.690/- per share.
Details of Resolutions passed at the previous AGM through Postal Ballot:
No Resolution was passed through Postal Ballot at the last (28th) Annual General Meeting.
8. Disclosures:
i. Related Party Transactions:
Full disclosures of related party transactions as per the Accounting Standard 18 issued by the ICAI are given under
note No.8 of Schedule 22 to the Annual Accounts. Most of these transactions were entered into with the
Company’s subsidiary Sagar Power Ltd., (for purchase of power), and its other associate companies namely
Amereswari Cements Ltd., (for sale of clinker and purchase of cement), Panchavati Polyfibres Ltd., (for purchase of
packing bags) and Vicat Sagar Cement Pvt.Ltd., (towards investment in JV project). These transactions, intended to
further the interest of the Company, were entered into after due negotiation based, inter-alia, on business expediency,
company’s own interest and legal requirements.
Sagar Cements Annual Report 2009-2010 23
There were no materially significant transactions with Directors, their relatives or the Management that may have
potential conflict with the interests of the Company at large. The Register of Contracts maintained under Sec.301
of the Companies Act, 1956, containing transactions in which Directors are deemed to be interested, is placed before
each meeting of the Board. All related party transactions are also reviewed by the Audit Committee of the Board.
ii. Statutory compliance, Penalties and Strictures:
There was no instance of non-compliance by the Company on any matter relating to capital market during the last
three years or any penalties imposed or strictures passed on the Company by the Stock Exchanges, SEBI or other
statutory authorities relating to capital market during the said period.
iii. Compliance with Mandatory requirements and adoption of Non-Mandatory requirements:
The Company has implemented the mandatory requirements of Clause 49 of the Listing Agreement.
Regarding non-mandatory requirements, the Company has constituted a Remuneration Committee pursuant to
Clause 49 of the Listing Agreement read with Schedule XIII to the Companies Act, 1956, to recommend a suitable
remuneration payable to the Board members. Other non-mandatory requirements will be taken up for implementation
in due course.
9. Means of Communication:
Quarterly results:
As part of compliance with Clause 41 of the Listing Agreement, the Company furnishes its quarterly financial results to the
Stock Exchanges where its shares have been listed, followed by publication in the newspaper in accordance with the said
Clause.
Newspapers in which the results were published:
Details of newspapers in which quarterly results relating to the Financial Year 2009-10 were published are given below:
Quarter ended Date of Publication Name of the news papers carrying the publication
30th June, 2009 24.07.2009 Financial Express and Andhra Prabha
30th September, 2009 24.10.2009 “
31st December, 2009 22.01.2010 “
31st March, 2010 20.05.2010 “
Website where displayed:
The Financial Results and Shareholding pattern of the Company for the first three quarters during the year 2009-10 were
posted on the SEBI EDIFAR website (www.sebiedifar.nic.in). These particulars and particulars for the subsequent quarter are
also now available on the website of NSE and BSE as part of corporate filing made by the Company.
Presentation made to Institutional Investors and Financial Analysts:
Excepting the occasions when the Company had to respond in a general way to the queries now and then received from
investors / analysts regarding the affairs of the company, there were no specific presentations made to any of them during the
year 2009-10. Copies of the press-release, as and when issued by the Company, were simultaneously made available to the
Stock Exchanges.
Management Discussion and Analysis Report:
The Annual Report of the Company contains the Management Discussion and Analysis.
Sagar Cements Annual Report 2009-201024
10. General Shareholder information:
a. Annual General Meeting:
Date & Time : 4.00 p.m. on Monday, the 20th September, 2010
Venue : Hotel Golkonda, Masab Tank, Hyderabad - 500028
b. Financial Year: 1st April to 31st March
c. Book Closure Dates: From 10th September, 2010 to 20th September, 2010 (both days inclusive))
d. Dividend payment date:
Board of Directors have recommended a dividend @ Rs.2.50 (25%) per share on the 15002300 equity shares of the
Company for the year 2009-10 and the same will be paid to the shareholders within 30 days of its declaration at the
ensuing Annual General Meeting..
e. Listing on Stock Exchanges:
Company’s shares have been listed on the National Stock Exchange of India Ltd. (NSE), and Bombay Stock Exchange
Ltd. (BSE) There are no dues against listing fee payable to these Exchanges.
f. Stock and ISIN Codes for the Company’s shares:
ISIN Code and Codes for the Company’s shares on the above said Exchanges are as below:
Name of the Stock Exchange Scrip Code
National Stock Exchange SAGCEM
Bombay Stock Exchange 502090
ISIN INE229C01013
g. Market price details:
High and Low prices for the Company’s shares during the Financial Year 2009-10 as traded on the Bombay Stock
Exchange Limited and National Stock Exchange of India are given below:
Month NSE
High Low Average
Closing PriceHigh Low Average
Closing Price
Apr-09 182.50 141.00 163.46 174.70 141.50 165.28
May-09 219.90 150.25 183.21 214.00 158.30 183.04
Jun-09 271.75 210.05 230.64 268.90 207.70 230.75
Jul-09 268.95 188.15 221.42 249.90 191.10 218.75
Aug-09 259.00 212.00 230.24 248.50 220.05 230.57
Sep-09 228.00 200.00 212.19 228.75 199.05 212.65
Oct-09 207.60 175.00 193.52 202.05 185.05 194.40
Nov-09 189.50 166.00 175.07 182.90 169.20 174.18
Dec-09 203.90 165.60 172.49 185.05 167.60 171.71
Jan-10 225.00 169.05 192.32 208.20 174.35 193.08
Feb-10 194.50 165.00 174.78 183.00 166.00 174.58
Mar-10 200.10 169.00 179.05 192.85 169.70 178.80
BSE
Sagar Cements Annual Report 2009-2010 25
h. Sagar Cements’ Shares Price movements during the year 2009-10 as compared with SENSEX and
NIFTY are depicted below:
i. Registrar and Share Transfer Agents:
Karvy Computershare (P) Limited
Plot No.17-24, Vittalrao Nagar
Madhapur,Hyderabad – 500081
Tel:91 40 23420815-22
Fax: 91 40 23420814
Email: jayaramanvk@karvy.com
Website: karvycomputershare.com
j. Share Transfer System:
All proposals for transfer of shares held in physical form are scrutinized by the Company’s Share Transfer Agents
and, subject to the same being found to be in order, are approved jointly by the Joint Managing Director and the
Company Secretary, who, for administrative convenience and speedy approvals, have been delegated with the
necessary authority for the purpose by the Board of Directors.
Sagar Cements Annual Report 2009-201026
k. Distribution of shareholding as on 31st March, 2010:
Frequency Distribution of shares held as on 31st March, 2010
Shares %
50 and less 53865 0.36 1877 20.45
51 to 100 523514 3.49 5312 57.86
101 to 200 151933 1.01 826 9.00
201 to 300 81652 0.54 290 3.16
301 to 500 177212 1.18 386 4.20
501 to 1000 204446 1.36 248 2.70
1001 to 5000 377753 2.52 178 1.94
5001 to 10000 179456 1.20 25 0.27
10001 to 20000 208609 1.39 14 0.15
20001 to 50000 184977 1.23 7 0.08
50001 to 100000 0 0.00 0 0.00
More than 100000 12858883 85.72 17 0.19
Total 15002300 100.00 9180 100.00
Shares %Category
Shareholding pattern as on 31st March, 2010
Shares %
Promoters - Individuals 9 5380110 35.86
Promoters - Bodies Corporate 3 1244785 8.30
Mutual Funds 5 1189353 7.93
FIs and Banks 4 4150 0.03
Foreign Corporate Bodies 1 1000000 6.66
Domestic Corporate Bodies 256 4367718 29.11
Public - Individuals holding more than 10000 shares 12 213882 1.43
Public - Individuals holding 10000 and less shares 8852 1582126 10.55
Non-Resident Indians 38 20176 0.13
Total 9180 15002300 100.00
HoldersCategory
Sagar Cements Annual Report 2009-2010 27
l) Dematerialization of Shares and liquidity:
Trading in the shares of the Company has to be in the electronic form only. The Company has subsisting agreements
with NSDL and CDSL for the purpose. The ISIN number for the company’s shares is – INE229C01013. Shares
representing 83% of the share capital were kept in dematerialized form as on 31st March, 2010 as detailed below:
Total
In Demat FormIn physical form
With NSDL With CDSL
Shares % Shares % Shares % Shares %
2544848 17 11261916 75 1195536 8 15002300 100
m. Details of outstanding GDR / ADR / Warrants or any other convertible instruments:
There are no outstanding GDR / ADR / Warrants or any other convertible instruments.
n. Plant Location:
Mattampally
Via: Huzurnagar
Nalgonda District
Andhra Pradesh – 508204
o. Address for investors related correspondence:
Company Secretary
Sagar Cements Limited
Registered Office:
8-2-472/B/2, Road No.1, Banjara Hills
Hyderabad – 500034
Tel. 040 – 23351571
Fax: 040 – 23356573
Email: soundar@sagarcements.in
Sagar Cements Annual Report 2009-201028
DECLARATION
I, S.Veera Reddy, Managing Director of Sagar Cements Limited, hereby declare that all the members of its
Board of Directors and its senior management personnel have affirmed their compliance with the Code of
Conduct for the year ended 31st March, 2010.
Hyderabad S.Veera Reddy
21st July, 2010 Managing Director
Sagar Cements Annual Report 2009-2010 29
CERTIFICATE
To
The Members
Sagar Cements Limited
Hyderabad
We have examined the compliance of conditions of Corporate Governance by Sagar Cements Limited, for the year ended 31st
March, 2010, as stipulated in Clause 49 of the Listing Agreement of the said company with Stock Exchange.
The compliance of the conditions of Corporate Governance is the responsibility of the management. Our examination was
limited to procedures and implementation thereof, adopted by the company for ensuring the compliance of the conditions of
Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the company.
In our opinion and to the best of the information and according to the explanation given to us, we certify that the company has
complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement.
We state that no investor grievances are pending for a period exceeding one month against the company as per the records
maintained by the Investors Grievance Committee.
We further state that such compliance is neither an assurance as to the future viability of the company nor the efficiency or
effectiveness with which the management has conducted the affairs of the company.
For P.Srinivasan & Co.,
Chartered Accountants
Hyderabad K.Ranganathan
21st July, 2010 Partner
M.No.10842
Sagar Cements Annual Report 2009-201030
AUDITORS’ REPORT
To
The Members
Sagar Cements Limited
Hyderabad
We have audited the attached Balance Sheet of Sagar Cements Limited as at 31st March, 2010 and the Profit and Loss Account
for the year ended on that date annexed thereto and the Cash Flow Statement for the year ended on that date. These financial
statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conduct our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
1. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government of India in terms of Sub-
Section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified
in paragraphs 4 and 5 of the said Order.
2. Further to our comments in the Annexure referred to in paragraph 1 above, we report that:
a. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary
for the purpose of our audit;
b. In our opinion, proper books of accounts as required by law have been kept by the company so far as appears from
our examination of those books;
c. The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with
the books of accounts;
d. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply
with the accounting standards referred to in Sub-Section (3C) of Section 211 of the Companies Act, 1956;
e. On the basis of written representations received from the Directors as on 31st March, 2010 and taken on record by
the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2010 from being
appointed as a director in terms of Clause (g) of Sub Section (1) of Section 274 of the Companies Act, 1956;
f. In our opinion and to the best of our information and according to the explanations given to us, the said accounts give
the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in
conformity with the accounting principles generally accepted in India:
i. in case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010;
ii. in the case of the Profit and Loss Account, of the Profit for the year ended on that date; and
iii. in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.
For P.Srinivasan & Co.,
Chartered Accountants
Hyderabad K.Ranganathan
18th May, 2010 Partner
M.No.10842
SAGAR CEMENT AUDITORS’ REPORT
Sagar Cements Annual Report 2009-2010 31
ANNEXURE TO THE AUDITORS’ REPORT
Annexure referred to in paragraph 1 of our Report
1. The company has maintained proper records showing full particulars including quantitative details and situation of fixed
assets.
2. Some of the fixed assets were physically verified during the year by the management in accordance with a programme of
verification, which in our opinion provides for physical verification of all the fixed assets at reasonable intervals. According
to the information and explanations given to us, no material discrepancies were noticed on such verification.
3. As per information and explanation given by the management during the year, the company has not disposed off a
substantial part of its fixed assets and going concern assumption of the company is not affected.
4. As explained to us, inventories were physically verified during the year by the management at reasonable intervals.
5. In our opinion and according to the information and explanations given to us, the procedures of physical verification of
inventories followed by the management were reasonable and adequate in relation to the size of the company and the
nature of its business.
6. In our opinion and according to the information and explanations given to us, the company has maintained proper records
of its inventories and no material discrepancies were noticed on physical verification.
7. According to the information and explanations given to us, the company has not granted or taken any loans, secured or
unsecured to / from companies, firms or other parties covered in the Register maintained under Section 301 of the
Companies Act, 1956.
8. As the company has not granted or taken loans to / from companies, firms or other parties listed in the register maintained
under Section 301 of the Companies Act, 1956, the clause relating to rate of interest and other terms and conditions of
loans given or taken by the company, secured or unsecured, which are prima facie prejudicial to the interest of the company
is not applicable to the company.
9. As the company has not taken loans from / granted to companies, firms or other parties listed in the register maintained
under Section 301 of the Companies Act, 1956, the clause relating to the regular payment of principal amount and interest
is not applicable to the company.
10. As the company has not taken loans from or granted to companies, firms or other parties listed in the register maintained
under Section 301 of the Companies Act, 1956, the clause relating to steps taken for recovery / payment of the principal
and interest on overdue amount of more than one lakh, is not applicable to the company.
11. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures
commensurate with the size of the company and the nature of its business with regard to purchases of inventory, fixed
assets and with regard to the sale of goods. During the course of our audit, no major weakness has been noticed in the
internal control.
12. a) Based on the audit procedures applied by us and according to the information and explanations provided by the
management, we are of the opinion that the transactions that need to be entered into the register maintained under
Section 301 of the Companies Act, 1956 have been so entered.
(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of
such contracts or arrangements and exceeding the value of Rupees five lakhs in respect of any party during the year,
have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.
Sagar Cements Annual Report 2009-201032
13. The company has not accepted deposits from the public during the year.
14. In our opinion, the internal audit functions carried out during the year by a firm of Chartered Accountants appointed by the
management have been commensurate with the size of the Company and the nature of its business.
15. In our opinion and according to the information and explanations given to us, the company has made and maintained
accounts and records prescribed by the Central Government under Section 209 (1) (d) of the Companies Act, 1956.
However, we have not carried out any detailed examination of such records.
16. According to the records of the company, the company is regular in depositing with appropriate authorities undisputed
statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income-
Tax, Sales Tax, Wealth-Tax, Customs Duty, Excise Duty, Cess and any other statutory dues applicable to it.
17. The company has no accumulated losses and it has not incurred any cash losses during the financial year covered by our
audit and the immediately preceding financial year.
18. In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment
of dues to financial institutions, banks or debenture holders.
19. The company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other
securities.
20. The company is not a chit fund or nidhi or mutual fund / society and hence the provisions of Clause 4 (xiii) of the Companies
(Auditor’s Report) Order, 2003 are not applicable to the company.
21. The company is not dealing in or trading in shares, securities, debentures and other investments and hence the provisions
of Clause 4 (xiv) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the company.
22. As the company has not given any guarantee for loans taken by others from banks or financial institutions, hence the
provisions of Clause 4 (xv) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the company.
23. In our opinion, the term loans taken by the company have been applied for the purpose for which they were raised.
24. According to the information and explanations given to us and on an over all examination of the balance sheet of the
company, we report that no funds raised on short term basis have been used for long term investment. No long term funds
have been used for short term assets.
25. According to the information and explanations given to us, the company has not made preferential allotment of shares to
parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.
26. According to the information and explanations given to us, during the period covered by our audit report, the company has
not issued any debentures.
27. During the year, the company has not raised monies by public issue.
28. According to the information and explanations given to us and the books and records examined by us, no fraud on or by
the company has been noticed or reported during the year.
For P.Srinivasan & Co.,
Chartered Accountants
Hyderabad K.Ranganathan
18th May, 2010 Partner
M.No.10842
Sagar Cements Annual Report 2009-2010 33
SAGAR CEMENTS LIMITED
BALANCE SHEET AS AT 31ST MARCH, 2010
In Rs.
Particulars As on 31-03-09As on 31-03-10Schedules
As per our report of even date attached
For and on behalf of For and on behalf of the Board
P.Srinivasan & Co., S.Veera Reddy Dr.S.Anand Reddy
Chartered Accountants Managing Director Joint Managing Director
K.Ranganathan S.Sreekanth Reddy R.Soundararajan
Partner Executive Director Company Secretary
Hyderabad
18th May, 2010
Sources of Funds
Shareholder’s Funds
Share Capital 1 150023000 150023000
Reserves and Surplus 2 1920967576 1772198694
2070990576 1922221694
Loan Funds
Secured Loans 3 2218235259 2408569375
Creditors for Capital Goods 55651746 123088375
2273887005 2531657750
Deferred Income Tax Liability 303588877 202085650
Total 4648466458 4655965094
Application of Funds
Fixed Assets 4
Gross Block 4480731083 4343135291
Less : Depreciation 905373153 628488107
Net Block 3575357930 3714647184
Capital Work-in Progress 101253319 77709675
Investments 5 408867550 177989300
Current Assets, Loans and Advances
Inventories 6 488614772 425331984
Sundry Debtors 7 411879456 249294641
Cash and Bank Balances 8 26731560 112203882
Loans and Advances 9 439647483 474215198
1366873271 1261045705
Less : Current Liabilities and Provisions
Liabilities 10 709310544 501513396
Provisions 11 94575068 73913374
803885612 575426770
Net Current Assets 562987659 685618935
Total 4648466458 4655965094
Accounting Policies and Notes on Accounts 22
BALANCE SHEET
Sagar Cements Annual Report 2009-201034
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2010
In Rs.
Particulars As on 31-03-09As on 31-03-10Schedules
As per our report of even date attached
For and on behalf of For and on behalf of the Board
P.Srinivasan & Co., S.Veera Reddy Dr.S.Anand Reddy
Chartered Accountants Managing Director Joint Managing Director
K.Ranganathan S.Sreekanth Reddy R.Soundararajan
Partner Executive Director Company Secretary
Hyderabad
18th May, 2010
Income
Income From Operations 12 5230025899 3342733929
Less : Excise Duty 434291956 277281816
Net Income 4795733943 3065452113
Other Income 13 67878108 8371720
Total 4863612051 3073823833
Expenditure
Raw Materials Consumed 14 418397172 191759097
Manufacturing Expenses 15 1533080047 827954935
Salaries and Wages 16 138248166 103189122
Purchase of Cement 464505645 643718392
Value Added Tax and Other Taxes 17 560689378 365218708
Administration and Other Expenses 18 89688756 78473127
Adjustment for Stocks 19 (21043366) (52186470)
Selling and Distribution Expenses 20 815454082 317142377
Interest and Financial Charges 21 289507311 158988253
Depreciation 4 276885046 187224994
Total 4565412237 2821482535
Profit Before Tax 298199814 252341298
Provision for:
Less: Fringe Benefit Tax 0 1430947
Less: Current Tax 50695216 28600447
Add: Provision for Income Tax Earlier Years 489607 3995701
Add: Minimum Alternate Tax Credit eligible for Set Off 44744233 25243113
Less: Deferred Tax/(Asset) Liability 101503227 86982125
Profit After Tax 191235211 164566593
Balance brought forward from Previous Year 612688130 532700165
Profit available for Appropriation 803923341 697266758
Appropriations:
Proposed Dividend 37505750 38505750
Corporate Dividend Tax 4960579 6072878
Transfer to General Reserve 50000000 40000000
Balance carried to Balance Sheet 711457012 612688130
Total 803923341 697266758
Basic and Diluted Earning Per Share 12.75 11.48
Accounting Policies and Notes on Accounts 22
PROFIT & LOSS ACCOUNT
Sagar Cements Annual Report 2009-2010 35
A. Cash Flow from operating activities:
Net Profit 2982.00 2523.41
Adjustments for
Depreciation 2768.85 1872.25
Interest and Finance charges 2895.07 1589.88
Loss on sale of assets 0.00 5663.92 (0.17) 3461.96
Operating Profit before working capital changes 8645.92 5985.37
Adjustments for
(Increase) /Decrease in Inventories (632.83) (3502.83)
Increase /(Decrease) in Trade creditors 2056.04 2752.42
(Increase) / Decrease in Receivables (1625.85) (1954.12)
(Increase) / Decrease in Advances 907.19 (1043.52)
Increase / (Decrease) in working capital borrowings 2546.76 3251.31 2778.39 (969.66)
Cash generated from operations 11897.23 5015.71
B Cash Flow from Investing Activities
Sale of Fixed Assets 0.00 12.97
Purchase of Fixed Assets (1611.39) (9424.52)
Investment (2308.78) (1500.00)
Net cash used in investing activities (3920.17) (10911.55)
C Cash flow from Financing Activities
Receipt of term loan 158.66 1398.46
Interest and Finance charges (2873.14) (1482.95)
Increase in capital creditors (674.37) (156.68)
Receipt of share application money 0.00 7490.77
Dividend paid (375.06) (150.02)
Repayment of Term Loans (4608.76) (505.29)
Income Tax paid (459.11) (262.89)
Net cash used in financing activities (8831.78) 6331.40
Net increase in cash and cash equivalent (854.72) 435.56
Cash and Cash equivalent at the beginning of the year 1122.04 686.48
Cash and Cash equivalent at the end of the year 267.32 (854.72) 1122.04 435.56
SAGAR CEMENTS LIMITED
CASH FLOW STATEMENT AS AT 31ST MARCH, 2010Rs. in Lakhs
Particulars As At 31.03.2009As At 31.03.2010
As per our report of even date attached
For and on behalf of For and on behalf of the Board
P.Srinivasan & Co., S.Veera Reddy Dr.S.Anand Reddy
Chartered Accountants Managing Director Joint Managing Director
K.Ranganathan S.Sreekanth Reddy R.Soundararajan
Partner Executive Director Company Secretary
Hyderabad
18th May, 2010
CASH FLOW STATEMENT
Sagar Cements Annual Report 2009-201036
SCHEDULES In Rs.
Particulars As on 31-03-09As on 31-03-10
Schedule 1
Share Capital
Authorized
2,00,00,000 Equity shares 200000000 200000000
20,00,000 Preference Shares 20000000 20000000
Total 220000000 220000000
Issued, Subscribed and Paid up
1,50,02,300 Equity shares of Rs.10/- each 150023000 150023000
Total 150023000 150023000
*400 Equity shares of Rs.10/- each were issued for consideration other than cash
Schedule 2
Reserves and Surplus
Capital Reserve 3498687 3498687
General Reserve
Balance as per last account 105705766 65705766
Add: Amount Transferred from Profit & Loss A/c. 50000000 40000000
155705766 105705766
Share Premium 1050306111 1050306111
Surplus as per Profit and Loss Account
Balance as per last account 612688130 532700166
Add : Amount Transferred from Profit & Loss A/c. 98768882 79987964
Total 711457012 612688130
Grand Total 1920967576 1772198694
Schedule 3
Secured Loans
Term Loans
Andhra Pradesh State Financial Corporation 45053316 82635381
State Bank Of India 335886115 425886118
State Bank Of Hyderabad 371509224 471510884
IDBI Bank 750000015 950000019
L & T Finance Ltd. 42506377 61923609
Vehicle Loans From Banks 7913404 5922844
Total 1552868451 1997878855
Cash Credit From
State Bank of Hyderabad 249089821 202341521
Punjab National Bank 83652456 26390687
State Bank of India 204031432 98907117
IDBI Bank Ltd 79941545 83051195
Bill Discounting 48651554 0
665366808 410690520
Total 2218235259 2408569375
SCHEDULES FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT
Sagar Cements Annual Report 2009-2010 37
Sch
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21
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43
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44
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6628488107
3714647184
97
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46
2
Sagar Cements Annual Report 2009-201038
SCHEDULES In Rs.
Particulars As on 31-03-09As on 31-03-10
Schedule 5
Investments (Unquoted)
26,000 Equity Shares of Rs.10/- each in Panchavati Polyfibres Ltd. Fully paid-up at cost 260000 260000
500 Equity Shares of Rs. 10/- each in PCL Fianancial Services Ltd. (Formerly
Sagar Priya Investment and Finance Ltd.) 5000 5 0 0 0
27,72,430 Equity Shares of Rs. 10/- each in SagarPower Limited 27724300 27724300
3,40,87,825 Equity shares of Rs. 10/- each in VICAT Sagar Cement Private Limited 380878250 150000000
Total 408867550 177989300
Schedule 6
Inventories
Stores and Spares 157241688 117967772
Raw Materials 12919846 25391740
Coal 171641340 131050933
Packing Materials 11087705 8942454
Goods In Transit 56513299 83811555
Work in Progress 68489755 29846561
Finished Goods 10721139 28320969
Total 488614772 425331984
Schedule 7
Sundry Debtors
Debtors Over Six Months 38832348 14686067
Other Debtors 373047108 234608574
Total 411879456 249294641
Schedule 8
Cash and Bank Balances
Cash on Hand 1717581 1465647
Current Account 13253604 57575810
Deposit Account 11760375 53162425
Total 26731560 112203882
Schedule 9
Loans and Advances
Advances recoverable in cash or in kind or for value
to be received (Unsecured and considered good)
Advance to Suppliers 114727520 245272656
Balances with Excise Authorities 23880144 70366650
Balances with Income Tax Authorities 120738036 62733071
Incentives receivable under AP Industrial Policy 40007391 0
Claims Receivable 14458853 0
Advance to Others 45591193 24826537
Deposits to Others 69392670 64547173
Prepaid Expenses 10851676 6469111
Total 439647483 474215198
Sagar Cements Annual Report 2009-2010 39
In Rs.
Particulars As on 31-03-09As on 31-03-10
Schedule 10
Current Liabilities
Sundry Creditors
For Materials 271373532 196089161
For Stores & Spares 70774672 28225248
For Expenses 81464796 70091262
For Other Liabilities 68921986 72117102
Interest Accrued But not Due 15620697 13427520
Deposits/Advances from Selling Agents, Stockists and Others 201154861 121563103
Total 709310544 501513396
Schedule 11
Provisions
Proposed Dividend 37505750 37505750
Corporate Dividend Tax 6374102 6374102
Taxation 50695216 28600447
Fringe Benefit Tax 0 1433075
Total 94575068 73913374
Schedule 12
Income From Operations
Sale of Cement 3685651084 1556834246
Sale of Cement - Second Sale 727815117 924834578
Sale of Clinker 816559698 861065105
Total 5230025899 3342733929
Schedule 13
Other Income
Dividend (From Subsidiary Company) 8317290 2798430
Interest Received 3216545 4560470
Incentives under AP industrial policy 40007391 0
Others 16336882 1012820
Total 67878108 8371720
Schedule 14
Raw Materials Consumed
Limestone 204992465 99081207
Laterite 60742178 27503168
Iron Ore 51281743 31878493
Gypsum 99248650 32651898
Dolamite 0 292661
Fly ash 2132136 351670
Total 418397172 191759097
Sagar Cements Annual Report 2009-201040
In Rs.
Particulars As on 31-03-09As on 31-03-10
Schedule 15
Manufacturing Expenses
Consumption of Stores and Spares 83845612 42645936
Fuel Expenses
Coal 931300549 516062944
Power 451405288 231601858
Total 1382705837 747664802
Repairs and Maintenance
Buildings 974670 862757
Plant and Machinery 55848704 31662898
Vehicles 1645161 1663564
Others 8060063 3454978
Total 66528598 37644197
Grand Total 1533080047 827954935
Schedule 16
Salaries and Wages
Salaries, Wages, Allowances, Amenities, Bonus and Ex-gratia 121186022 92161514
Contribution to Provident Fund and other Funds 7100400 5373930
Staff and Workmen Welfare Expenses 9961744 5653678
Total 138248166 103189122
Schedule 17
Taxes
Value Added Tax 559705480 362146566
Entry Tax 806400 88743
Service Tax 177498 2983399
Total 560689378 365218708
Sagar Cements Annual Report 2009-2010 41
In Rs.
Particulars As on 31-03-09As on 31-03-10
Schedule 18
Administration and Other Expenses
Administrative Expenses
Director’s Remuneration and Perquisites 33133312 26940900
Printing and Stationery 2030566 1460999
Legal and Professional Charges 5572445 8481606
Insurance 9863036 5812871
Director’s Traveling Expenses 1942667 2090481
Traveling Expenses and Conveyance 7787215 7992992
Total 60329241 52779849
Auditor’s Remuneration
Statutory Auditors
Audit Fees 150000 150000
Tax Audit Fees 50000 50000
Certification Work 50000 68500
Reimbursement of Expenses 5000 10709
Total 255000 279209
Administration and Other Expenses
Cost Auditors
Audit Fees 75000 75000
Reimbursement of Expenses 7765 0
Total 82765 75000
Other Expenses
Rent 2977456 2055100
Rates, Taxes and Licenses 3853820 4205403
Miscellaneous Expenses 8866308 9666468
Loss on Sale of Asset 0 103286
Postage & Telephones 3948318 2797274
Office Maintenance 4130778 2639725
Wealth Tax 95070 89832
Testing Fees 389877 653813
Security Services 4760123 3128168
Total 29021750 25339069
Grand Total 89688756 78473127
Sagar Cements Annual Report 2009-201042
In Rs.
Particulars As on 31-03-09As on 31-03-10
Schedule 19
Adjustment for Stocks
Work-in-Process
Opening Stock 29846561 4223884
Less : Closing Stock 68489755 29846561
Total (38643194) (25622677)
Finished Goods
Opening Stock 28320967 1757174
Less : Closing Stock 10721139 28320967
Total 17599828 (26563793)
Grand Total (21043366) (52186470)
Schedule 20
Selling and Distribution Expenses
Consumption of Packing Materials 124986505 48630252
Transportation Charges 491861759 205436682
Advertisement Expenses 37664473 25565259
Selling Expenses 160941345 37510184
Total 815454082 317142377
Schedule 21
Interest and Financial Charges
Interest on Term Loans 201261793 103850773
Interest on Working Capital 62804532 38128768
Other Financial Charges 25440986 17008712
Total 289507311 158988253
Sagar Cements Annual Report 2009-2010 43
Schedule 22
NOTES FORMING PART OF ACCOUNTS
1. SIGNIFICANT ACCOUNTING POLICIES
a) Accounting Assumptions:
The financial statements are prepared under the historical cost convention on the basis of a going concern on an
accrual basis and they comply with the mandatory accounting standards referred to in Section 211 (3C) of the
Companies Act, 1956.
b) Fixed Assets:
Fixed assets are accounted at cost of acquisition inclusive of inward freight, duties, taxes, incidentals related to
acquisition and pre-operational expenditure till commissioning of the asset. Capital work-in-progress comprises
outstanding advances paid to acquire fixed assets, and the cost of fixed assets that are not yet ready for their intended
use at the balance sheet date.
c) Revenue recognition:
Sales are recognized on dispatch of goods to customers and it includes excise duty and Value Added Tax on sale.
d) Foreign currency transactions:
Income and expenses in foreign currencies are converted at exchange rate prevailing on the date of transaction.
Foreign currency monetary assets and liabilities are translated at the exchange rate prevailing on the Balance sheet
date. Exchange differences on translation of monetary items for purchase of machinery are included in the cost of
such assets.
e) Investments:
Long term investments, including investments in subsidiary company, are stated at cost. Provision is made where
there is a permanent fall in valuation of Long term investments.
f) Depreciation:
Depreciation has been provided as per the rates given in Schedule XIV to the Companies Act, 1956. Depreciation
is charged on Plant & Machinery at straight-line method and on all other assets at written down value method.
g) Inventories:
Inventories including work-in-progress are valued at lower of cost or market value. The cost is calculated on weighted
average method. Cost comprises expenditure incurred in the normal course of business in bringing such inventories to
its location and includes, where applicable, appropriate overheads based on normal level of activity.
Stocks in transit are valued at cost.
h) Employee Benefits:
Short term benefits:
Short term employee benefits are charged off at the undiscounted amount in the year in which the related services
are rendered.
Long term benefits:
Payments to the defined contribution retirement benefit schemes are charged as an expense as they fall due.
Under defined benefit scheme, Company provides for gratuity, a defined benefit retirement plan (the “Gratuity Plan”)
covering eligible employees. In accordance with the Payment of Gratuity Act, 1972, the Gratuity Plan provides a
lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an
amount based on the respective employee’s salary and the tenure of employment. The company has taken master
policy with Life Insurance Corporation of India under group gratuity scheme. Liabilities with regard to the Gratuity
Sagar Cements Annual Report 2009-201044
Plan are determined by actuarial valuation as of the balance sheet date, based upon which, the Company contributes
all the ascertained liabilities to the Life Insurance Corporation of India.
The leave encashment payable to the employees is provided based on the actuarial valuation carried out in accordance
with the revised AS 15.
i) Deferred Taxation:
Deferred Tax, resulting from timing differences between book and tax profits, is accounted for under the liability
method, at the current rate of tax.
j) Government grants receivable under Industrial Investment Promotion Policy 2005 – 10 of Government of Andhra
Pradesh are accounted based on verification and recommendation of the competent authority as per the policy of
Government and in accordance with Accounting Standards 9 and 12.
2. CONTINGENT LIABILITIES
a) Estimated amount of contracts to be executed on capital account and not provided for Rs.857.45 Lakhs (Previous
Year: Rs.3785 Lakhs).
b) Demand raised by APTRANSCO towards voltage surcharge and grid supporting charges is Rs.1,73,50,747/- and the
company paid Rs.1,08,02,441/- under protest. The said demand is contested by the company with Division Bench
of High Court of Andhra Pradesh.
c) Bank Guarantees: Rs.90 Lakhs (Previous year: Rs.72.36 lakhs).
d) Letter of Credit: Rs. Nil. (Previous year: Rs.NIL Lakhs).
e) There is a demand from Sales Tax authorities for a sum of Rs.31,00,933 /- in respect of Input Tax Credit on Coal
Consumption availed by the company from April, 2005 to December, 2005, claiming that the company is not eligible
for the said credit. (Paid under protest in the year 2006 Rs.15,50,466/-). The said demand is contested by the
company.
f) Demand raised by Sales Tax authorities for a sum of Rs.8,08,656/- in respect of input tax credit availed on closing
stock of coal held on 31st March, 2005 and filed writ petition before the High Court of Andhra Pradesh on payment
of 50% of the disputed tax amount i.e. Rs.4,04,328/-. (Paid under protest in the year 2007 is Rs.4,04,328/-).
g) During the year 2009-10, demand raised by Sales Tax Authorities for a sum of Rs.1,09,40,297/- in respect of tax on
sale of fixed assets. We have paid an amount of Rs.27,35,074/- and contested before the State Appellate Tribunal.
h) Show cause notices were issued by the Central Excise Authorities for an amount of Rs.19.44 lakh, pertaining to various
issues under Central Excise and Service Tax Act and for an amount of Rs.203.44 lakhs for availment of service tax
credit. The company has replied to the show cause notices and the matter is pending before the Department for
adjudication.
3. SECURED LOANS
a) The term loans from the Banks and Financial Institutions are secured by the fixed assets i.e., Land, Buildings, Plant &
Machinery, Mining Equipment owned by or belonging to the borrower company both proposed and future, and by
second charge on the current assets of the company and are guaranteed by Shri S.Veera Reddy, Managing Director,
Dr.S.Anand Reddy, Joint Managing Director and Shri S.Sreekanth Reddy, Executive Director.
b) Cash Credit from State Bank of Hyderabad, Punjab National Bank, State Bank of India and IDBI Bank Ltd., are secured
by hypothecation of raw materials, goods-in-process, finished goods, stores and spares and receivables, present and
future, and by second charge on fixed assets of the company and are guaranteed by Shri S.Veera Reddy, Managing
Director, Dr.S.Anand Reddy, Joint Managing Director and Shri S.Sreekanth Reddy, Executive Director.
c) Loan from L&T Finance Limited is secured by the mortgage of specific assets purchased from that loan and further
secured by personal guarantees of Dr.S.Anand Reddy, Joint Managing Director and Shri S.Sreekanth Reddy Executive
Director.
d) Vehicle loans from bank are secured by the mortgage of specific vehicle purchased from that loan and further secured
by personal guarantees of Dr.S.Anand Reddy, Joint Managing Director and Shri S.Sreekanth Reddy Executive Director.
Sagar Cements Annual Report 2009-2010 45
4. Earnings per Share (EPS) In Rs.
Description Year ended
31st March 2009
Profit after tax 191235211 164566593
Weighted average number of shares 15002300 14336050
Earnings per share 12.75 11.48
Year ended
31st March 2010
5. a) As per Andhra Pradesh State Industrial Policy 2005-10, Company has made an application to the General Manager,
District Industries Centre, Nalgonda, Andhra Pradesh for claiming the incentives on Value Added Tax and power
consumption. General Manager, DIC, Nalgonda has verified and recommended an amount of Rs.400.07 lakhs during
the year to the State Level Committee. This amount has been considered as income during the current year and
shown in Schedule 13 ‘Other Income’.
b) Other income includes Rs.1.45 crores receivable from insurance company.
6. The disclosures required under Accounting Standard 15 “Employee Benefits” notified in the Companies (Accounting
Standards) Rules, 2006 are given below:
a) Reconciliation of opening & closing balance of Defined benefit obligation
Description Year ended 31st March 2009
Gratuity Leave
encashment
(Un-funded)
Gratuity Leave
encashment
(Un-funded)
Defined benefit obligation at the beginning of the Year 12996505 3291166 11310300 2333349
Current service cost 3088574 953488 1686205 957817
Interest cost 1039720 263293 904824 186668
Actuarial (gain) / loss (330502) 2095288 (540391) 1222335
Benefits paid (709218) (2358581) (364433) (1409003)
Defined benefit obligation at the year end 16085079 4244654 12996505 3291166
Year ended 31st March 2010
Fair value of plan assets at the beginning of the Year 11514791 - 7312912 -
Expected return on plan assets 1158566 - 792408 -
Actuarial gain / (loss) (66534) - (1261) -
Employer contribution 2729718 - 3775165 -
Benefits paid (709218) - (364433) -
Fair value of plan asset at the year end 14627323 - 11514791 -
b) Reconciliation of opening and closing balances of fair value of plan assets
In Rs.
Sagar Cements Annual Report 2009-201046
c) Reconciliation of fair value of assets and obligations
Description Year ended 31st March 2009
Gratuity Leave
encashment
(Un-funded)
Gratuity Leave
encashment
(Un-funded)
Fair value of plan assets as at 31st March 2010 14627323 - 11514791 -
Present value of obligations as at 31st March 2010 16085079 4244654 12996505 3291166
Amount recognized in the Balance sheet (1457756) 4244654 (1481714) 3291166
Year ended 31st March 2010
Current service cost 3088574 953488 1686205 957817
Interest cost 1039720 263293 904824 186668
Expected return on plan assets (1158566) - (792408) -
Actuarial gain / (loss) (263968) 2095288 (539130) 1222335
Net cost 2705760 3312069 1259491 2366820
d) Expenses recognized during the year
In Rs.
e) Investment details
100% invested in LIC Group gratuity (cash accumulation policy)
f) Actuarial assumptions
Mortality table (LIC) 1994-96 (ultimate)
Discounting rate - 8%
Expected rate of return on plan asset – 9.25%
Expected average remaining working lives of employees–18 Yrs
Rate of escalation in salary – 4%
7. PARTICULARS OF MANAGERIAL REMUNERATION
Particulars As at 31.03.2009
Salary 11400000 8720833
Other Perks 6957526 7416317
Commission on Profits 14775786 10803750
TOTAL 33133312 26940900
Calculation of Profit U/s. 198 of the Companies Act, 1956
Profit as per Profit and Loss Account 298199814 252341298
Add: Directors Remuneration 33133312 26940900
Depreciation as provided in the books of accounts 276885046 187224994
Loss on Sale of Fixed Assets 0 103286
TOTAL 608218172 466610478
Less: Depreciation U/s. 350 of the Companies Act. 1956 276885046 187224994
Profit U/s. 198 read with Section 349 of the Companies Act, 1956 331333126 279385484
As at 31.03.2010
In Rs.
Sagar Cements Annual Report 2009-2010 47
8. As required by Accounting Standards AS 18, the related parties disclosure issued by the Institute of Chartered Accountants
of India is as follows:
a) List of related parties and relationships
S.No. CountryName of the CompanyNature of Relationship
1 Subsidiary Companies M/s. Sagar Power Ltd. India
2 Associate Company M/s.Vicat Sagar Cement Pvt. Ltd. India
3 Transactions with Companies a) M/s.Panchavati Polyfibres Ltd.
in which Directors are b) M/s.Amareswari Cements Ltd.
interested c) M/s.Sagarpriya Housing and Industrial Enterprises Ltd. India
d) M/s.Golkonda Hospitality Services and Resorts Ltd.
e) M/s.BSCPL Infrastructure Ltd.
4 Directors interested in a) Sri O.Swaminatha Reddy, Chairman
individual capacity b) Sri S.Veera Reddy, Managing Director
c) Dr. S.Anand Reddy, Joint Managing Director
d) Sri S.Sreekanth Reddy, Executive Director
e) Sri K.Thanu Pillai, Director
f) Sri Werner C.R.Poot, Director
g) Sri P.Rajeswara Rao, APIDC Nominee
h) Sri Gilbert Noel Claude Natta, Director
b) Related Party TransactionsRs. in Lakhs
DescriptionSubsidiary
CompaniesAssociate
Company
Company in
which Directors
are interested
Directors in
individual
capacity are
interested
Total
Purchase of power 622.57 - - - 622.57
Purchase of goods - - 6065.49 - 6065.49
Sale of goods 1.05 - 4268.44 - 4269.49
Dividend Received 83.17 - 0.39 - 83.56
Dividend Paid 23.29 56.90 80.19
Remuneration to Directors - - - 331.33 331.33
Sitting fees - - - 4.70 4.70
Investment in Associate Company - 2308.78 - - 2308.78
Sagar Cements Annual Report 2009-201048
9. ADDITIONAL INFORMATION PURSUANT TO THE PROVISIONS OF PARAGRAPH 3,4C AND 4 D OF
PART II OF SCHEDULE VI OF THE COMPANIES ACT, 1956 (AS CERTIFIED BY THE MANAGEMENT)
Description Year ended 31st March 2009
Quantity
MTs
Value
Rs.
Year ended 31st March 2010
Quantity
MTs
Value
Rs.
a) Turnover
Sale of Cement (inc. 2897 MTs for self
consumption (Previous Year:3126 MTs) 1130636 3685651084 415835 1556834246
Second sale of cement 204191 727815117 225650 924834578
Sale of Clinker 350133 816559698 307152 861065105
TOTAL 5230025899 3342733929
b) i) Details of Raw Material Consumed
1. Limestone 1996932 204992465 1040564 99081207
2. Laterite (HG) 62688 60306050 28598 27317400
3. Laterite (LG) 736 436128 416 185768
4. Gypsum 63257 99248650 23002 32651898
5. Iron-ore 37482 47942785 19647 29090544
6. Iron-ore sludge 3880 3338958 4446 2787949
7. Dolamite 0 0 1010 292661
8. Fly-ash 4348 2132136 784 351670
TOTAL 418397172 191759097
ii) Details of Raw Material consumed for trial runs
1. Limestone - - 10425 1737914
2. Laterite (HG) - - 139 143106
3. Laterite (LG) - - 278 164732
4. Iron-ore - - 139 222080
iii) Cement Purchased for Sale 203657 464505645 226307 643718392
c) Capacities and Production
Licensed and Installed Capacity (TPA) 2350000 2350000
Actual Production (MTs) 1120350 431250
d) Opening and Closing Stock
Opening Stock (MTs) 16999 908
Value (Rs.) 28320967 1757174
Closing Stock (MTs) 6179 16999
Value (Rs.) 10721139 28320967
e) Value of Imports (CIF)
Capital goods 11405710 98930460
Coal, Components and Spare Parts 256615687 299925506
f) Expenditure in Foreign Currencies
On account of Traveling and other expenses (Rs.) 858757 1794625
On account of Consumables and Capital goods 30149232 54647694
Sagar Cements Annual Report 2009-2010 49
g) Value of Imported and Indigenous Raw Materials, Components, Spare Parts and other materials consumed:
10. There are no amounts due to micro and small enterprises.
11. Previous year’s figures have been regrouped, recast and reclassified wherever necessary to conform with those of the
current year.
12. Paise have been rounded to the nearest rupee.
Schedules 1 to 22 form part of the Accounts
As per our report of even date attached
For and on behalf of For and on behalf of the Board
P.Srinivasan & Co., S.Veera Reddy Dr.S.Anand Reddy
Chartered Accountants Managing Director Joint Managing Director
K.Ranganathan S.Sreekanth Reddy R.Soundararajan
Partner Executive Director Company Secretary
Hyderabad
18th May, 2010
Year ended 31.03.2009
Spare Parts and
Other materials
Value Rupees %
Raw Materials
Value Rupees %
Year ended 31.03.2010
Spare Parts and
Other materials
Value Rupees %
Raw Materials
Value Rupees %
Particulars
Imported - - 30149232 36 - - - -
Indigenous 418397172 100 53696380 64 191759097 100 42645936 100
Total 418397172 100 83845612 100 191759097 100 42645936 100
Sagar Cements Annual Report 2009-201050
BALANCE SHEET ABSTRACT
As per our report of even date attached
For and on behalf of For and on behalf of the Board
P.Srinivasan & Co., S.Veera Reddy Dr.S.Anand Reddy
Chartered Accountants Managing Director Joint Managing Director
K.Ranganathan S.Sreekanth Reddy R.Soundararajan
Partner Executive Director Company Secretary
Hyderabad
18th May, 2010
BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
(Inserted by Notification No.GSR 388 (E), dt.15.5.1995)
I. Registration Details
Registration No. : 2887 State Code : 01
Balance Sheet Date : 31 3 2010Date Month Year
II. Capital Raised during the Year (Amount in Rs.Thousands)
Public Issue : Nil Rights Issue : NilBonus Issue Nil Private Placement : 749077
III. Position of Mobilization and Deployment of Funds (Amount in Rs.Thousands)
Total Liabilities 4648466 Total Assets : 4648466
Sources of Funds
Paid-up Capital : 150023 Reserves and Surplus : 2224556
Secured Loans : 2273887 Unsecured Loans : 0
Application of Funds
Net Fixed Assets : 3676611 Investments : 408867
Net Current Assets : 562988 Miscellaneous Expenditure : -
Accumulated Losses : -
IV. Performance of Company (Amount in Rs.Thousands)
Total Turnover : 5297904 Total Expenditure : 4999704Profit / (Loss) before Tax : 298200 Profit / (Loss) after Tax : 191235Earning Per Share (Rs.) : 12.75 Dividend Rate : 25%
V. Generic Names of Principal Products of the Company
Product Description Item Code No. (ITC Code)
Cement 252300
Clinker 252310
STATEMENT REGARDING SUBSIDIARY COMAPNY
Pursuant to Section 212 (3) of the Companies Act, 1956
Name of the Subsidiary
Net aggregate amount of subsidiary’s Profit / (Loss) not
dealt within the Holding Company’s Accounts
Current Year
Rs. in Lakhs
Up to Previous Year
Rs.in Lakhs
Holding Company’s
interest in equity
shares of Rs.10/- each
fully paid
Financial Year
Sagar Power Limited 31.03.2010 2772430 (6.36) 468.67
Sagar Cements Annual Report 2009-2010 51
BOARD OF DIRECTORS
CORPORATE INFORMATION
BOARD OF DIRECTORS : Shri O.Swaminatha Reddy Chairman
Shri S.Veera Reddy Director
Shri N.Suresh Reddy Director
Shri M.Mohan Reddy Director
Shri S.Sreekanth Reddy Director
Dr.S.Anand Reddy Managing Director
Smt.S.Aruna Executive Director
AUDITORS : M/s.C.Ramachandram & Co.,
Chartered Accountants
3-6-237, Unit – 606
Lingapur La Builde Complex
Himayat Nagar
Hyderabad – 500 029
REGISTERED OFFICE : 8-2-472/B/2
Road No.1
Banjara Hills
Hyderabad – 500 034
PLANTS : 1. Guntur Branch Canal Hydel Project
Tsallagundla Adda Road
Nekarikallu Mandal
Guntur District
Pin – 522 615
2. Lock-in-Sula Hydel Project
Banumukkala Village
Banakacherla Regulator
Pamulapadu Mandal
Kurnool District
Pin – 518 422
3. Theni Wind Project
S.F.No.750/3A, 3B, 4(P)
Poomalaigundu Village
Theni Taluk and District
Tamilnadu State
Pin : 625 531
Sagar Cements Annual Report 2009-201052
NOTICE
SAGAR POWER LIMITED
Regd. Office: 8-2-472/B/2, Road No.1
Banjara Hills, Hyderabad – 500034
NOTICE
NOTICE is hereby given that the Sixteenth Annual General Meeting of the Members of the Company will be held at 3.00 p.m.
on Monday, the 20th September, 2010, at Hotel Golkonda, Masab Tank, Hyderabad-500 028, to transact the following
business:
1. To receive, consider and adopt the audited Balance Sheet as at and the audited Profit and Loss Account for the year ended
31st March, 2010 and the Reports of the Directors and Auditors thereto.
2. To declare dividend on the Cumulative Redeemable Preference Shares of the Company.
3. To declare dividend on the Equity Shares of the Company.
4. To appoint a director in the place of Shri S.Veera Reddy, who will be retiring by rotation at the Annual General Meeting and
being eligible, offering himself for re-appointment.
5. To appoint a director in the place of Shri N.Suresh Reddy, who will be retiring by rotation at the Annual General Meeting
and being eligible, offering himself for re-appointment.
6. To appoint Auditors to hold office from the conclusion of this Meeting until the conclusion of the next Annual General
Meeting and to fix their remuneration.
Notes:
(i) A Member entitled to attend and vote at the Meeting is entitled to appoint a Proxy to attend and vote on his / her behalf
and the proxy to be so appointed need not be a Member of the Company. However, proxies in order to be effective must
be lodged with the Company at its Registered Office not less than 48 hours before the commencement of the Meeting;
(ii) Members are requested to inform the Company of the change, if any, in their address.
(iii) Members / Proxy Holders are requested to bring the Attendance Slips duly filled in for being handed over at the entrance
of the venue for the meeting.
(iv) The Company had paid dividends for the years 2005-06, 2006-07, 2007-08 and 2008-09 and sent cheques / DDs to
the shareholders then entitled to the same within time. Those members who have so far not encashed their dividend
cheques may approach the Company quoting their folio numbers.
(v) Section 109A of the Companies Act, 1956 provides for Nomination by the shareholders of the Company in the
prescribed Form No.2B and the shareholders are requested to avail this facility.
By Order of the Board
For Sagar Power Limited
Hyderabad Dr.S.Anand Reddy
18th May, 2010 Managing Director
Sagar Cements Annual Report 2009-2010 53
DIRECTORS’ REPORT
Dear Members
Your Directors are pleased to present their 16th Annual Report together with the Audited Accounts of your Company for the
year ended 31st March, 2010.
PERFORMACE
The following is the summary of the Financial Results of your Company for the year ended 31st March, 2010:
Rs. in lakhs
For the year endedParticulars
DIRECTORS’ REPORT
31 March, 2010 31 March, 2009
Income
Sale of Electrical Energy 735.38 861.49
Increase / Decrease in Stock 9.08 (22.40)
Net Income 744.46 839.09
Less: Generation, Distribution, Administration and
other Miscellaneous Expenses 225.54 218.51
Gross Profit before Depreciation and
Financial Charges and Tax 518.92 620.58
Less Depreciation 97.64 196.78
Financial Charges 114.15 211.79 48.81 245.59
Profit before tax for the year 307.13 374.99
Less: Provision for Income-tax 53.24 151.75
Provision for Fringe Benefit Tax 0.00 53.24 0.84 152.59
253.89 222.40
Add: Income-tax Excess Provision written back 0.00 15.08
MAT Credit Entitlement Account 46.07 68.71
Provision for Deferred Tax (Asset) (104.27) (58.20) 24.16 107.95
Profit after tax for the year 195.69 330.35
Add: Profit brought forward from the previous year 511.03 421.86
Profit available for appropriation 706.72 752.21
APPROPRIATIONS:
Proposed dividend @ 15% on 10,00,000 CRP
Shares (At Rs.1.50 per share) 15.00 15.00
Dividend @ 30% (At Rs.3.00 per share)
on the 54,30,365 Equity Shares of the Company 162.91 162.91
Dividend Tax on the dividends proposed 30.24 30.24
Transfer to General Reserve 20.00 33.03
Transfer to Preference Share Capital Redemption Reserve Account 100.00 0
Balance Carried to Balance Sheet 378.57 511.03
Total 706.72 752.21
Sagar Cements Annual Report 2009-201054
For the year
Ended *Total
For the year EndedParticulars
* Commercial generation started from 2.6.2009
During the year, the generation of power from the Lock-In-Sula Unit of your Company was almost nil, due to stoppage of water
in the canal pending the completion of the on-going construction of an aqua-duct by the Government over the canal at the
project site. There was a marginal increase in the generation from the GBC unit as compared to its previous year’s generation.
The performance of the wind mill was satisfactory.
SHARE CAPITAL
There was no change in the Equity as well as Preference Share capital of your company during the year.
DIVIDEND
Despite the constraints continued to be faced by your Board of Directors caused by the absence of generation in one hydel unit,
your Directors, with a view not to disappoint the shareholders, have recommended a dividend @ 15% on the CRP Shares of
your Company and at 30% on the Equity Shares.
FUTURE OUTLOOK
Your Directors hope for completion of the on-going construction of the aqua-duct by the Government across the over the canal
near your LIS Unit during the current year, thereby paving the way for release of the water in the said canal to enable your Unit
to resume its generation of power to the optimum capacity without delay. Likewise, they also hope that the performance of
your GBC Unit would further improve upon during the current year.
To leverage the opportunities available in the power sector, your Board is on lookout for expanding and diversifying the
operations of your company and it is in this context that, as you are aware, your Company has already set up a wind mill power
project of 1.65 MW capacity in Theni District, in Tamil Nadu, the performance of which is satisfactory.
PARTICULARS OF EMPLOYEES
There are no employees in the Company whose particulars are required to be furnished in this Report pursuant to Sec.217 (2A)
of the Companies Act, 1956.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
The particulars required under Sec.217 (1)(e) of the Companies Act, 1956 have been provided in the annexure, which forms
part of the Report.
DIRECTORS
In compliance with Sec.256 of the Companies Act, 1956, Shri S.Veera Reddy and Shri N.Suresh Reddy will be retiring by
rotation at the ensuing Annual General Meeting and, being eligible, will be offering themselves for re-appointment.
The performance of your Company during the year in terms of power generated at its Guntur Branch Canal Unit (GBC), Lock-
in-Sula Unit (LIS) and Wind Power Unit at Theni, is given below:
Hydel Power
Lock-in-Sula
For the year ended
Guntur Branch Canal
For the year ended
31.3.10 31.3.09 31.3.10 31.3.09 31.3.10 31.3.09 31.3.10 31.3.09
Units Generated 21769632 21587370 19500 9715 21789132 21597085 3836280 -
No. of Days 236 244 1 1 - - 303 -
Average Units Generated per Day 92244 88473 19500 9715 - - 12661 -
Capacity Utilization (%) 100% 99% 0 0 55% 55% 87% -
Capacity as per DPR (Units) 21847000 21847000 17520000 17520000 39367000 39367000 4400000 -
Wind Power
Sagar Cements Annual Report 2009-2010 55
AUDIT COMMITTEE
The Audit Committee of the Board, constituted pursuant to Sec.292 (A) of the Companies Act, 1956 presently consists of the
following directors as its members:
Shri S.Veera Reddy Non-Whole time Director
Dr. S.Anand Reddy Managing Director
Shri N.Suresh Reddy Non-Whole time director
AUDITORS
Shareholders are requested to appoint the Auditors for the Company to hold office from the conclusion of the ensuing Annual
General Meeting till the conclusion of the next Annual General Meeting. Messrs.C.Ramachandram & Co., Chartered Accountants,
the present Auditors of your Company will be retiring at the ensuing Annual General Meeting and they are eligible for re-
appointment. They have also confirmed that their re-appointment, if approved by the shareholders, would be in accordance
with the limits specified in Sub Section (1B) of Section 224 of the Companies Act, 1956.
DIRECTORS’ RESPONSIBILITY STATEMENT
Pursuant to Section 217 (2AA) of the Companies Act, 1956, your Directors hereby state
(i) that in the preparation of the annual accounts, the applicable accounting standards had been followed along with
proper explanation relating to material developments;
(ii) that the directors had selected such accounting policies and applied them consistently and made judgment and
estimates that are reasonable and prudent 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 the period;
(iii) 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, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
(iv) that the directors had prepared the annual accounts on a going concern basis.
ACKNOWLEDGEMENT
We wish to place on record our appreciation of the valuable guidance and co-operation extended by the bankers to the
Company, State and Central Government Authorities. We also wish to place on record our appreciation of the support given
by the promoter and holding company, namely, Sagar Cements Limited, to the operations of your Company and also of the
contributions made by the employees at all levels of your Company and the last but not least, of the continued confidence
reposed by you in the Management.
For and on behalf of the Board
Hyderabad O.Swaminatha Reddy
18th May, 2010 Chairman
ANNEXURE
FORM B
[ See Rule 2 ]
[Pursuant to Rule 2 of the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 ]
Form for disclosure of particulars with respect to Absorption, Research and Development
1. Research and Development : Nil
2. Technology absorption, adaptation and Innovation : Nil
3. Foreign Exchange Earnings and Outgo
Earnings : Nil
Outgo : Rs.1,50,000
Sagar Cements Annual Report 2009-201056
AUDITORS’ REPORT
To
The Members
Sagar Power Limited
Hyderabad
1. We have audited the attached Balance Sheet of Sagar Power Limited as at 31st March, 2010, the Profit and Loss Account
for the year ended on that date annexed thereto and the cash flow statement for the year ended on that date. These
financial statements are the responsibility of the management of the company. Our responsibility is to express an opinion
on these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards generally accepted in India. These standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for
our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government of India in terms of
Section 227 (4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in
paragraph 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:
a. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary
for the purpose of our audit.
b. In our opinion, proper books of account as required by law have been kept by the company so far as it appears from
our examination of those books.
c. The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account.
d. In our opinion, these financial statements have been prepared in compliance with the applicable accounting standards
referred to in Section 211 (3C) of the Companies Act, 1956.
e. Based on the representations made by all the Directors of the Company as on March 31, 2010 and taken on record
by the Board of Directors of the Company and in accordance with the information and explanations as made
available, the Directors of the Company do not, prima facie, have any disqualification as referred to in Clause (g) of
Sub Section (I) to Section 274 of the Companies Act, 1956.
f. In our opinion and to the best of our information and according to the explanations given to us, the said accounts give
the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in
conformity with the accounting principles generally accepted in India:
i. in case of Balance Sheet, of the state of affairs of the Company as at 31st March, 2010;
ii. in the case of the Profit and Loss Account, of the Profit of the Company for the year ended on that date; and
iii. in the case of Cash Flow Statement, of the cash flows for the year ended on that date.
For C.Ramachandram & Co.,
Chartered Accountants
Place: Hyderabad C.Ramachandram
Date: 18.05.2010 Partner
Membership No.25834
AUDITORS’ REPORT
Sagar Cements Annual Report 2009-2010 57
ANNEXURE TO THE AUDITORS’ REPORT
1. (a) The company has maintained proper records showing full particulars including quantitative details and situation of
fixed assets.
(b) As explained to us, the fixed assets have been physically verified by the management during the year in a phased
periodical manner, which in our opinion is reasonable, having regard to size of the company and nature of its assets.
No material discrepancies were noticed on such physical verification.
(c) In our opinion, the company has not disposed off substantial part of fixed assets during the year and the going concern
status of the company is not affected.
2. (a) As explained to us, inventories have been physically verified during the year by the management. In our opinion, the
frequency of verification is reasonable.
(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification
of inventory followed by the management are reasonable and adequate in relation to the size of the company and the
nature of its business.
(c) On the basis of our examination of the inventory records in our opinion the company is maintaining proper records of
inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not
material.
3. (a) The company has not granted or taken any loans, secured or unsecured to/from companies, firms or other parties
covered in the register maintained U/s.301 of the Companies Act, 1956.
(b) The provisions of Clause (b), (c) and (d) of paragraph 4 (iii) of the Companies (Auditors Report) Order, 2003 are not
applicable to the company.
4. In our opinion and according to the information and explanations given to us, there is adequate internal control system
commensurate with the size of the company and the nature of its business with regard to purchases of inventory, fixed
assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any
continuing failure to correct major weaknesses in internal control system.
5. (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or
arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to
be maintained under that section.
(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of
contracts or arrangements and exceeding the value of Rupees five lakhs in respect of any party during the year, have
been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.
6. The company has not accepted any deposits from the public within the meaning of Sections 58 A and 58 AA or any other
relevant provisions of the Companies Act, 1956 and the Rules framed there under.
7. In our opinion, the company has an internal audit system commensurate with its size and nature of its business.
8. We have broadly reviewed the books of accounts maintained by the Company in respect of generation of power where,
pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed
under Clause (d) of sub-section (1) of Section 209 of the Act and are of the opinion that prima facie, the prescribed
accounts and records have been made and maintained. We have not, however, made a detailed examination of the records
with a view to determine whether they are accurate or complete.
Sagar Cements Annual Report 2009-201058
9. (a) According to the information and explanations given to us and the records of the Company examined by us, in our
opinion, the Company is regular in depositing the undisputed statutory dues including provident fund, employees state
insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory
dues as applicable with the appropriate authorities. There are no amounts that need to be deposited in investor
education and protection fund by the Company during the current year. At the last day of the financial year, there was
no amount outstanding in respect of any statutory due which was due for more than six months from the date they
became payable.
(b) According to the information and explanations given to us and the records of the Company examined by us, there are
no dues of sales tax, income tax, customs duty, wealth tax, service tax, excise duty and cess which have not been
deposited on account of any dispute.
10. The company has no accumulated losses as at March 31, 2010 and it has not incurred any cash losses in the financial year
ended on that date. The company had not incurred cash losses in immediately preceding financial year.
11. According to the records of the company examined by us and the information and explanation given to us, the company
has not defaulted in repayment of dues to Financial Institutions.
12. The company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and
other securities.
13. In our opinion, the company is not a chit fund or a nidhi mutual benefit fund / society. Therefore, the provisions of clause
4 (xiii) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the company.
14. In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly,
the provisions of Clause 4(xiv) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the company.
15. In our opinion and according to the information and explanations given to us the company has not given any guarantee for
loans taken by others from banks or financial institutions during the year.
16. In our opinion, the term loans have been applied for the purpose for which they were raised.
17. According to the information and explanations given to us and on an overall examination of the balance sheet of the
company, we report that no funds raised on short term basis have been used for long term investment.
18. The company has not made any preferential allotment of shares to parties and companies covered in the register
maintained under Section 301 of the Act during the year.
19. The company has not issued any debentures during the year.
20. The company has not raised any money by way of public issue during the year.
21. In our opinion and according to the information and explanations given to us, no fraud on or by the company has been
noticed or reported during the year, that causes the financial statements to be materially misstated.
For C.Ramachandram & Co.,
Chartered Accountants
Place: Hyderabad C.Ramachandram
Date: 18.05.2010 Partner
Membership No.25834
Sagar Cements Annual Report 2009-2010 59
SAGAR POWER LIMITED
(SUBSIDIARY OF SAGAR CEMENTS LIMITED)
BALANCE SHEET AS AT 31ST MARCH, 2010 In Rs.
Particulars As At 31st March, 2009Schedules
As per our report of even date attached
For and on behalf of For and on behalf of the Board
C.Ramachandram & Co., Dr.S.Anand Reddy
Chartered Accountants Managing Director
C.Ramachandram S.Aruna
Partner Executive Director
Place : Hyderabad
Date : 18.05.2010
I. SOURCES OF FUNDS
1. Shareholder’s Funds:
a) Share Capital A 64303650 64303650
b) Reserves and Surplus B 90553352 91798305
2. Loan Funds:
Secured Loans C 78000000 101500000
TOTAL 232857002 257601955
II. APPLICATION OF FUNDS
1. Fixed Assets: D
a) Gross Block 491020295 382045182
b) Less: Depreciation 284430907 274667208
c) Net Block 206589388 107377974
Add: Capital Work In Progress 1900598 104965144
208489986 212343118
2. Current Assets, Loans and
Advances: E
a) Inventories 4518276 4202031
b) Sundry Debtors 6596638 2617099
c) Cash and Bank Balances 4284113 2501000
d) Loans and Advances 33684917 31581807
49083944 40901937
Less: Current Liabilities and
Provisions F 57589818 38943554
Net Current Assets (8505874) 1958383
3. Deferred Tax Asset 32872890 43300454
TOTAL 232857002 257601955
Notes on Accounts J
BALANCE SHEET
As At 31st March, 2010
Sagar Cements Annual Report 2009-201060
SAGAR POWER LIMITED
(SUBSIDIARY OF SAGAR CEMENTS LIMITED)
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2010 In Rs.
Particulars For the Year
ended
31.03.2009
For the Year
ended
31.03.2010
Schedules
As per our report of even date attached
For and on behalf of For and on behalf of the Board
C.Ramachandram & Co., Dr.S.Anand Reddy
Chartered Accountants Managing Director
C.Ramachandram S.Aruna
Partner Executive Director
Place : Hyderabad
Date : 18.05.2010
I. INCOME
Sale of Electrical Energy - Hydel 60825525 86149428
Sale of Electrical Energy - Wind 12713070 0
Increase/Decrease in Stock G 908034 (2239956)
TOTAL 74446629 83909472
II. EXPENDITURE
Generation, Distribution, Administration and Other Expenses H 22554111 21851147
Financial Charges I 11415291 4880517
Depreciation D 9763699 19677865
TOTAL 43733101 46409529
Profit Before Tax 30713528 37499943
Less: Provision for Income Tax (MAT) 5219764 15175851
Less: Income Tax relates to earlier years 103490 0
Less: Provision for Fringe Benefit Tax (FBT) 0 83647
Add: MAT Credit eligible for set-off 4607029 6870808
Add: Income Tax Excess Provision 0 1507922
Less: Provision for Deferred Tax Asset/Liability 10427564 2415959
Profit After Tax 19569739 33035134
Profit Brought Forward from Previous Year 51102519 42185590
Profit available for Appropriation 70672258 75220724
APPROPRIATIONS:
Proposed Dividend on Preference Shares 1500000 1500000
Provision for Dividend on Equity Shares 16291095 16291095
Dividend Tax @ 16.995% 3023597 3023597
Transfer to General Reserve 2000000 3303513
Transfer to Preference Share Capital Redemption Reserve Account 10000000 0
Balance Carried to Balance Sheet 37857566 51102519
TOTAL 70672258 75220724
Annualized Earnings Per Share - Basic and Diluted 3.33 5.81
PROFIT & LOSS ACCOUNT
Sagar Cements Annual Report 2009-2010 61
A. Cash Flow from Operating Activities
Net Profit Before Tax & Extra-Ordinary Items 30713528 37499943
Adjustments for
Depreciation 9763699 19677865
Interest 11415291 4880517
Profit/Loss on Sale of Fixed Assets 21998 0
21200988 24558382
Operating Profit Before Working Capital Changes 51914516 62058325
Adjustments for
Inventories (316245) 1133779
Trade and Other Receivables (6082649) 5668647
Trade Payables 29484868 (2391625)
23085974 4410801
Cash Generated from Operations 75000490 66469126
Direct Taxes paid 13803671 9922803
Net Cash Flow from Operating Activities 61196819 56546323
B. Cash Flow from Investing Activities
Purchase of Fixed Assets (6032565) (109325149)
Sale of Fixed Assets 100000 0
(5932565) (109325149)
Net Cash used in Investing Activities (5932565) (109325149)
C. Cash Flow from Financing Activities
Long Term Borrowings 0 100000000
Interest paid (12221539) (4074267)
Dividend paid on Equity & CRPS (17759602) (6923195)
Repayment of Term Borrowings (23500000) (36000000)
Net Cash used from Financing Activities (53481141) 53002538
Net increase in Cash and Cash equivalent 1783113 223712
Cash and Cash equivalent as at 01.04.2009 2501000 2277288
Cash and Cash equivalent as at 31.03.2010 4284113 2501000
SAGAR POWER LIMITED
CASH FLOW STATEMENT AS AT 31ST MARCH, 2010In Rs.
Particulars As At 31.03.2009As At 31.03.2010
As per our report of even date attached
For and on behalf of For and on behalf of the Board
C.Ramachandram & Co., Dr.S.Anand Reddy
Chartered Accountants Managing Director
C.Ramachandram S.Aruna
Partner Executive Director
Place : Hyderabad
Date : 18.05.2010
CASH FLOW STATEMENT
Sagar Cements Annual Report 2009-201062
SCHEDULES FORMING PART OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT
SAGAR POWER LIMITED
SCHEDULES FORMING PART OF BALANCE SHEET AS AT 31ST MARCH, 2010
In Rs.
Particulars As At
31.03.2009
As At
31.03.2010
Schedules
SCHEDULE - A
SHARE CAPITAL
AUTHORISED:
8000000 Equity Shares of Rs.10/- each 80000000 80000000
4000000 Cumulative Redeemable Preference Shares of Rs.10/- each 40000000 40000000
ISSUED, SUBSCRIBED AND PAID-UP:
5430365 Equity Shares of Rs.10/- each Fully Paid-up 54303650 54303650
1000000 15% Cumulative Redeemable Preference Shares of Rs.10/- each 10000000 10000000
TOTAL 64303650 64303650
SCHEDULE - B
RESERVES & SURPLUS
Preference Share Capital Redemption Reserve Account 40000000 30000000
General Reserve 12695786 10695786
Profit & Loss Account 37857566 51102519
TOTAL 90553352 91798305
SCHEDULE - C
SECURED LOANS
Axis Bank Limited (UTI Bank) 0 7500000
IDBI Bank Limited 78000000 94000000
TOTAL 78000000 101500000
Sagar Cements Annual Report 2009-2010 63
Sch
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- D
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82
2
Sl.
No
.
Sagar Cements Annual Report 2009-201064
In Rs.
Particulars As At 31st March, 2009
CURRENT ASSETS, LOANS & ADVANCES
A. CURRENT ASSETS:
Inventories:
(As Certified by the Management)
Delivered Energy 908034 0
Stores and Spares 3610242 4202031
4518276 4202031
Sundry Debtors:
(Unsecured and Considered Good)
Outstanding for more than Six Months 0 0
Other Debts 6596638 2617099
6596638 2617099
Cash and Bank Balances:
a) Cash on Hand 126363 117368
b) Balance with Scheduled Banks
-in Current Accounts 4157750 2383632
4284113 2501000
B. LOANS AND ADVANCES:
(Unsecured and Considered Good)
Advances recoverable in Cash or in kind
or for value to be received 26036838 21900757
Advance Income Tax 3000000 9000000
Advance FBT 0 40000
MAT Entitlement Account 4607029 0
Deposits 41050 641050
33684917 31581807
TOTAL 49083944 40901937
SCHEDULE - F
CURRENT LIABILITIES & PROVISIONS
CURRENT LIABILITIES:
Creditors for Expenses 620020 869018
Creditors for Others 309243 721487
Advance Received against supply of Power 30146110 0
Interest Accrued but not due - IDBI 0 806250
31075373 2396755
PROVISIONS:
Provision for Income Tax 8219247 18283094
Provision for Dividend 18295198 18263705
26514445 36546799
TOTAL 57589818 38943554
(Dues to Small Scale Industries - Nil)
As At 31st March, 2010
SCHEDULE - E
Sagar Cements Annual Report 2009-2010 65
SAGAR POWER LIMITED
SCHEDULES FORMING PART OF PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31ST MARCH, 2010
In Rs.
Particulars For the Year
ended
31.03.2009
For the Year
ended
31.03.2010
SCHEDULE - G
INCREASE/DECREASE IN STOCK:
Closing Stock 908034 0
Less: Opening Stock 0 2239956
TOTAL 908034 (2239956)
SCHEDULE – H
GENERATION, DISTRIBUTION, ADMINISTRATION AND OTHER EXPENSES:
Wheeling Charges 1230684 1722991
Banking Charges 182658 598598
Royalty on Water 480000 474961
Electricity Charges - Self 638459 116091
Salaries, Wages and Other Benefits 6524618 5586345
Staff Welfare Expenses 567344 440359
Travelling and Conveyance 1036512 524858
Printing and Stationery 48064 56384
Communication Expenses 92749 182740
Rent 296460 252060
Rates and Taxes 54920 242125
Legal and Consultancy Charges 197609 315424
Insurance 320979 289860
Directors’ Remuneration 1785000 1640000
Auditors’ Remuneration 82725 82725
Advertisement 20780 10000
Vehicle Running Expenses 203619 377736
Office Maintenance 59347 138262
Repairs and Maintenance 8133572 8292355
General Expenses 576014 507273
Loss on Sale of Fixed Assets 21998 0
TOTAL 22554111 21851147
SCHEDULE – I
FINANCIAL CHARGES:
Interest on Term Loans 10522533 4780436
Interest on Others 861932 77561
Bank Charges 30826 22520
TOTAL 11415291 4880517
Sagar Cements Annual Report 2009-201066
Schedule J
NOTES ON ACCOUNTS
1. SIGNIFICANT ACCOUNTING POLICIES
a) ACCOUNTING CONVENTION
The Company follows the Mercantile System of Accounting. The Accounts are prepared on Historical Cost basis and
as a going concern. Accounting policies not specifically referred to otherwise are consistent with the generally
accepted Accounting Standards.
b) FIXED ASSETS
Fixed Assets are stated at cost less depreciation.
c) DEPRECIATION
Depreciation on Fixed Assets has been provided on a pro-rata basis at the rates and in the manner prescribed under
Schedule XIV of the Companies Act, 1956, on Straight Line Method.
d) INVENTORY VALUATION
i) Banked Energy with APTRANSCO is valued at lower of cost or Net Realizable Value. Banked Energy with TNEB
is valued at Net Realizable Value.
ii) Stores & Spares are valued at cost.
e) EMPLOYEE RETIREMENT BENEFITS
Company’s contributions to the Provident Fund are charged to the Profit and Loss Account. Provision for other
retirement benefits i.e., gratuity and leave encashment is being made as per actuarial valuation certificate obtained in
this regard on year to year basis.
f) TAXES ON INCOME
Current Tax is determined based on the amount of tax payable in respect of taxable income for the period. Deferred
tax is recognized on timing differences between the taxable income and accounting income that originate in one period
and are capable of reversal in one or more subsequent periods. Deferred Tax Asset and liabilities have been computed
on the timing differences applying enacted Tax rates.
2 CONTINGENT LIABILITIES
a) As against the wheeling charges @ 2% of the quantity of energy wheeled as provided in the amended and restated
Power Wheeling and Purchase Agreement dated 1st August, 1998 between the company and Andhra Pradesh State
Electricity Board [now Transmission Corporation of Andhra Pradesh (APTRANSCO)], the Andhra Pradesh Electricity
Regulatory Commission (APERC) vide its Order dt.24.3.2002 determined that effective from 1st April, 2002, the
private power generators shall pay the wheeling charges @ 28.40% in kind and 50 paise in cash for of the energy
wheeled. The company had disputed the said Order of the Andhra Pradesh Electricity Regulatory Commission
before the High Court of Andhra Pradesh and the High Court vide its Judgment dated 18th April, 2003 set aside the
order of APERC. APTRANSCO has filed a special leave petition in the Supreme Court of India against the Order of
the High Court. The Supreme Court declined to grant a stay on the order of High Court but has allowed leave for
appeal to be heard in due course. Later, APTRANSCO charged the wheeling charges @ 6.40% in kind and 45 paise
in cash per unit of the energy wheeled with effect from 1st April, 2004 and 5.78% in kind and 46 paise in cash per unit
of the energy wheeled with effect from 1st April, 2005 and claimed the same from Sagar Cements Limited, who is
the energy consumer for the company. SPL has disputed the said order also before the High Court of Andhra
Pradesh. The Contingent Liability computed on the basis of imputed cost in respect of the above as claimed by
APTRANSCO till March 31st, 2010 was Rs.350.31 lakhs (As on March 31st, 2009 – Rs.350.31 lakhs).
b) The Government of Andhra Pradesh has inserted Section 3 B in Andhra Pradesh Electricity Duty Act, 1939, by which
every person or a generating company who generates energy and uses for his / its own purpose shall pay a duty
calculated @ 25 paise a unit of the energy consumed, excluding energy consumed in the auxiliaries as against 6 paise
per unit. The Chief Electrical Inspector has issued a letter dated 8th October, 2004 stating that the Company has
to pay the Electricity Duty with effect from 17th July, 2003, at the revised rate in respect of the energy consumed,
excluding energy consumed in the auxiliaries and the same is being disputed. The contingent liability on account of the
above till 31st March, 2010 was Rs.462.90 lakhs (As on March 31, 2009 – Rs.411.99 lakhs).
Sagar Cements Annual Report 2009-2010 67
c) The Government of Andhra Pradesh has issued G.O.No.39, dt.02.04.2002 for payment of Royalty on consumptive
use of water. Accordingly, the irrigation and CAD Department issued a notice on 20.05.2005 vide Letter No.F/H/
222M claiming an additional amount of Rs.37,45,402/- towards Royalty on usage of water from April, 2002 to
December, 2004. The Company has contested the said order before the High Court of Andhra Pradesh. The
Contingent Liability pertaining to the period from April, 2002 to December, 2004 on account of the above as claimed
by the Government works out to Rs.37,45,402/-. The Contingent Liability for the subsequent period is not
ascertainable as the related data regarding gallons of water “Used” is not ascertainable by the Company.
3 The Term Loan from IDBI Bank Limited is secured by a First Charge on all the movable and immovable assets, present and
future of the company. The loan is secured by the personal guarantees of Dr.S.Anand Reddy, Managing Director and Shri
S.Sreekanth Reddy, Director.
4 The Company has adopted the Accounting Standard - 22 “Accounting for Taxes on Income” issued by the Institute of
Chartered Accountants of India with effect from 1st April, 2002. Deferred Tax Asset (net of Deferred Tax Liability) as
computed under Accounting Standard-22 as on 31st March, 2010 amounted to Rs.3,28,72,890/- (Previous Year
Rs.4,33,00,454/-). The Deferred Tax Asset / Liability represents the difference between the Depreciation and 43B
adjustments (being expenses allowed on payment basis under the Income Tax Act, 1961).
b) Table showing changes in the Fair value of Plan Assets:
5 The disclosures required under Accounting Standard “Employee Benefits” notified in the Companies (Accounting Standards)
Rules, 2006 are given below:
a) Table showing Changes in Present Value of Obligations:
Present Value of Obligation as at the beginning of the year 881821 784242 127366 101250
Acquisition adjustment - - - -
Interest cost 70546 62739 10189 8100
Past Service Cost - - - -
Current Service Cost 203604 97579 82177 26116
Curtailment Cost / (Credit) - - - -
Settlement Cost / (Credit) - - - -
Benefits paid - (60332) (206517) (138223)
Actuarial (gain) / loss on obligations (70546) (2407) 196328 130123
Present Value of Obligation as at the end of the year 1085425 881821 209543 127366
In Rs.
ParticularsGratuity
2009-10
Gratuity
2008-09
Leave
encashment
2008-09
Leave
encashment
2009-10
Value of Plan Assets at the beginning of the year 688482 537244 - -
Acquisition Adjustments - - - -
Expected Return on Plan Assets 61963 52615 - -
Contributions 296431 162411 - -
Benefits paid - (60332) - -
Actuarial Gain / (loss) on Plan Assets 147 (3456) - -
Value of Plan Assets at the end of the year 1047023 688482 - -
Sagar Cements Annual Report 2009-201068
In Rs.
ParticularsGratuity
2009-10
Gratuity
2008-09
Leave
encashment
2008-09
Leave
encashment
2009-10
Actuarial gain (loss) for the year - Obligation 70546 2407 (196328) (130123)
Actuarial gain (loss) for the year -Plan Assets 147 (3456) - -
Total (gain) / (loss) for the year (70693) 1049 196328 130123
Actuarial (gain) / loss recognized in the year (70693) 1049 196328 130123
Unrecognized actuarial (gains) / losses at the end of year - - - -
d) Expense Recognized in the Statement of Profit and Loss
Current Service Cost 203604 97579 82177 26116
Past Service Cost - - - -
Interest Cost 70546 62739 10189 8100
Expected Return on Plan Assets (61963) (52615) - -
Curtailment Cost / (Credit) - - - -
Settlement Cost / (Credit) - - - -
Net Actuarial Gain / (Loss) recognized in the year (70693) 1049 196328 130123
Expenses Recognized in the statement of Profit & Loss 141494 108752 288694 164339
c) Actuarial Gain / Loss Recognized
e) Investment details:
100% invested in LIC Group Gratuity (cash accumulation policy)
f) Actuarial assumptions
Mortality table (LIC) 1994-96 (ultimate)
Discounting rate - 8%
Expected rate of return on plan asset – 9.25%
Expected average remaining working lives of employees–18 Yrs
Rate of escalation in salary – 4%
6. As required by Accounting Standards AS 18, the related parties disclosure issued by the Institute of Chartered Accountants
of India is as follows:
a) List of related parties and relationships
S.No. CountryName of the CompanyNature of Relationship
1 Holding Company M/s. Sagar Cements Ltd. India
2 Transactions with Companies a) M/s.Panchavati Polyfibres Ltd.,
in which Directors are interested b) M/s.Sagar Cements Ltd. India
3 Directors interested in a) Sri O.Swaminatha Reddy, Chairman
individual capacity b) Sri S.Veera Reddy, Director
c) Dr. S.Anand Reddy, Managing Director
d) Smt. S.Aruna, Executive Director
e) Sri S.Sreekanth Reddy, Director
f) Sri N.Suresh Reddy, Director
g) Sri M.Mohan Reddy, Director
Sagar Cements Annual Report 2009-2010 69
b) Related Party Transactions Rs. in Lakhs
DescriptionHolding
Company
Company inwhich Directors
are interested
Directors inindividual capacity
are interestedTotal
Sale of power 594.26 - - 594.26Purchase of goods - 1.57 - 1.57Others - 3.22 - 3.22Dividend Paid 83.17 - 62.23 145.40Remuneration to Directors - - 17.85 17.85Sitting fees - - 0.07 0.07
9. Additional information pursuant to the provisions of Paragraph 3, 4C and 4 D of Part II of Schedule VI of the
Companies Act, 1956
Particulars 2008-09
Quantity
MTs
Value
Rs.
2009-10
Quantity
MTs
Value
Rs.
a) Capacity – Installed Capacity Hydel Power
(As certified by the Management and relied
upon by the Auditors, being a technical matter) 8.3 MW - 8.3 MW -
b) Actual Generation - Both 25625 - 21591 -
c) Turnover – Hydel Power 20848 60825525 29497 86149428
d) Turnover- Wind Power 3750 12713070 0 0
e) Opening Stock of Delivered Energy 0 0 8414 2239956
f) Closing Stock of Banked Energy 751 908034 0 0
g) Self Consumption 276 0 508 0
h) Consumption of Stores and Spares (100% indigenous) - 4567106 - 4506792
i) Value of Imports (CIF) Nil Nil Nil Nil
j) Expenditure in Foreign Currency Nil 150000 Nil Nil
k) Earnings in Foreign Exchange Nil Nil Nil Nil
As per our report of even date attachedFor and on behalf of For and on behalf of the Board
C.Ramachandram & Co., Dr.S.Anand ReddyChartered Accountants Managing Director
C.Ramachandram S.ArunaPartner Executive Director
Place : Hyderabad Date : 18.05.2010
10. Previous year’s figures have been regrouped, recast and reclassified wherever necessary to conform with those of the
current year.
11. Paise have been rounded off to the nearest rupee.
Schedules A to J form part of the Accounts
7. Directors’ Remuneration In Rs.
To Whole-time Director
Salary 1020000 980000
Perquisites 765000 660000
Total 1785000 1640000
For Statutory Audit 60000 60000
For Tax Audit 15000 15000
Total 75000 75000
8. Auditors’ Remuneration In Rs.
Nature of fee 2008-092009-10
Particulars 2008-092009-10
Sagar Cements Annual Report 2009-201070
BALANCE SHEET ABSTRACT
BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
(Inserted by Notification No.GSR 388 (E), dt.15.5.1995)
I Registration Details
Registration No. : 17761 State Code : 1
Balance Sheet Date : 31 3 2010
Date Month Year
I I Capital Raised during the Year (Amount in Rs.Thousands)
Public Issue : Nil Rights Issue : Nil
Bonus Issue : Nil Private Placement : Nil
III Position of Mobilisation and Deployment of Funds (Amount in Rs.Thousands)
Total Liabilities : 232857 Total Assets : 232857
Sources of Funds:
Paid-up Capital : 64304 Reserves & Surplus : 90553
Secured Loans : 78000 Unsecured Loans : 0
Application of Funds:
Net Fixed Assets : 208490 Investments : Nil
Net Current Assets : (8506) Misc. Expenditure : 0
Accumulated Losses : Nil Deferred Tax Asset : 32873
IV Performance of Company (Amount in Rs.Thousands)
Total Turnover : 74447 Total Expenditure : 43733
Pofit Before Tax : 30714 Profit After Tax : 19570
Earning Per Share (Rs.) : 3.33 Dividend Rate on ES : 30%
Dividend Rate on CRPS : 15%
V Generic Names of Principal Products of the Company
Item Code No. (ITC Code) : Not Applicable
Product Description : POWER
Sagar Cements Annual Report 2009-2010 71
CONSOLIDATED FINANCIAL ACCOUNTS OF
SAGAR CEMENTS LIMITED
AUDITORS’ REPORT ON CONSOLIDATED STATEMENTS
To
The Board of Directors
Sagar Cements Limited
Hyderabad
We have audited the attached Consolidated Balance Sheet of Sagar Cements Limited and its Subsidiary (Sagar Power Limited)
as at 31st March, 2010, the consolidated Profit and Loss Account and the consolidated Cash Flow Statement for the year ended
on that date. These financial statements are the responsibility of the company’s management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conduct our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements.
An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the
over all financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
We did not audit the financial statements of the subsidiary, whose financial statements reflect total assets of Rs.23.28 crores as
at 31st March, 2010 and total revenues of Rs.7.35 crores for the year then ended. These financial statements have been audited
by other auditors whose reports have been furnished to us, and our opinion, in so far as it relates to the amounts included in
respect of the subsidiary, is based solely on the reports of the other auditors.
We report that the consolidated financial statements have been prepared by the company in accordance with the requirements
of Accounting Standard (AS) 21, Consolidated Financial Statements, issued by the Institute of Chartered Accountants of India,
and on the basis of the separate audited financial statements of Sagar Power Limited included in the consolidated financial
statements.
On the basis of the information and explanations given to us and on the consideration of the separate audit report on individual
audited financial statements of the company and its subsidiary, in our opinion, the consolidated financial statements give a true
and fair view in conformity with the accounting principles generally accepted in India:
i) In the case of consolidated Balance Sheet, of the consolidated state of affairs of the group as at 31st March, 2010;
ii) In the case of consolidated Profit and Loss Account, of the consolidated results of operations of the group for the
year ended on that date; and
iii) In the case of the consolidated Cash Flow Statement, of the consolidated cash flows of the group for the year ended
on that date.
For P.Srinivasan & Co.,
Chartered Accountants
Hyderabad K.Ranganathan
May 18, 2010 Partner
M.No.10842
CONSOLIDATED AUDITORS’ REPORT
Sagar Cements Annual Report 2009-201072
SAGAR CEMENTS LIMITED
CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2010
In Rs.
Particulars As on 31-03-09As on 31-03-10Schedules
As per our report of even date attached
For and on behalf of For and on behalf of the Board
P.Srinivasan & Co., S.Veera Reddy Dr.S.Anand Reddy
Chartered Accountants Managing Director Joint Managing Director
K.Ranganathan S.Sreekanth Reddy R.Soundararajan
Partner Executive Director Company Secretary
Hyderabad
18th May, 2010
Sources of Funds
Shareholder’s Funds
Share Capital 1 160023000 160023000
Reserves and Surplus 2 1977788797 1838984471
Minority Interest 60311482 51591881
2198123279 2050599352
Loan Funds
Secured Loans 3 2296235259 2510069375
Creditors for Capital Goods 55651746 123088375
2351887005 2633157750
Deferred Income Tax Liability 270715987 158785196
Total 4820726271 4842542298
Application of Funds
Fixed Assets 4
Gross Block 4971751378 4725180473
Less : Depreciation 1189804060 903155315
Net Block 3781947318 3822025158
Capital Work-in Progress 103153918 182674821
Investments 5 381143250 150265000
Current Assets, Loans and Advances
Inventories 6 493133048 429534015
Sundry Debtors 7 418476094 249294641
Cash and Bank Balances 8 31015673 114704882
Loans and Advances 9 443186290 505797006
1385811105 1299330544
Less : Current Liabilities and Provisions
Liabilities 10 710239807 501293052
Provisions 11 121089513 110460173
831329320 611753225
Net Current Assets 554481785 687577319
Total 4820726271 4842542298
Accounting Policies & Notes on Accounts 22
CONSOLIDATED BALANCE SHEET
Sagar Cements Annual Report 2009-2010 73
CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2010
In Rs.
Particulars As on 31-03-09As on 31-03-10Schedules
As per our report of even date attachedFor and on behalf of For and on behalf of the Board
P.Srinivasan & Co., S.Veera Reddy Dr.S.Anand ReddyChartered Accountants Managing Director Joint Managing Director
K.Ranganathan S.Sreekanth Reddy R.SoundararajanPartner Executive Director Company Secretary
Hyderabad18th May, 2010
Income
Income From Operations 12 5242738969 3342733929
Less : Excise Duty 434291956 277281816
Net Income 4808447013 3065452113
Other Income 13 59560818 5599290
Total 4868007831 3071051403
Expenditure
Raw Materials Consumed 14 418397172 191759097
Manufacturing Expenses 15 1483123514 753388239
Salaries and Wages 16 145340128 109215826
Purchase of Cement 464505645 643718392
Value Added Tax and Other Taxes 17 560689378 365218708
Administration and Other Expenses 18 94261133 82704838
Adjustment for Stocks 19 (21951400) (49946514)
Selling and Distribution Expenses 20 815474862 317152377
Interest and Financial Charges 21 300922602 163868770
Depreciation 4 286648745 206902859
Total 4547411779 2783982592
Profit Before Tax 320596052 287068811
Provision for:
Less: Fringe Benefit Tax 0 1514594
Less: Current Tax 55914980 43776298
Add: Provision for Income Tax Earlier Years 386115 5503623
Add : Minimum Alternate Tax Credit eligible for set off 49351262 32113921
Less: Deferred Tax/(Asset) Liability 111930791 84566166
Profit After Tax 202487658 194829297
Less: Minority Interest 8719601 4364460
Profit attributable to company 193768057 190464837
Balance brought forward from Previous Year 638778122 557010118
Profit available for Appropriation 832546179 747474955
Appropriations:
Proposed Dividend 46979555 56296845
Corporate Dividend Tax 7984176 9096475
Transfer to General Reserve 62000000 43303513
Balance carried to Balance Sheet 715582448 638778122
Total 832546179 747474955
Basic and Diluted Earning Per Share 12.92 13.29
Accounting Policies & Notes on Accounts 22
CONSOLIDATED PROFIT & LOSS ACCOUNT
Sagar Cements Annual Report 2009-201074
A. Cash Flow from operating activities:
Net Profit 3205.96 2870.69
Adjustments for
Depreciation 2866.48 2069.03
Interest and Finance charges 3009.23 1638.69
Loss on sale of assets 0.00 5875.71 (0.17) 3707.55
Operating Profit before working capital changes 9081.67 6578.24
Adjustments for
(Increase) /Decrease in inventories (635.99) (3491.49)
Increase /(Decrease) in Trade creditors 2075.60 2875.45
(Increase) / Decrease in Receivables (1691.81) (1954.12)
(Increase) / Decrease in Advances 1233.68 (1356.51)
Increase / (Decrease) in working capital borrowings 2546.76 3528.24 2778.39 (1148.28)
Cash generated from operations 12609.91 5429.96
B Cash Flow from Investing Activities
Sale of Fixed Assets 0.00 12.97
Purchase of Fixed Assets (1670.50) (10517.77)
Investment (2308.78) (1500.00)
Net cash used in investing activities (3979.28) (12004.80)
C Cash flow from Financing Activities
Receipt of term loan 158.66 2313.48
Interest and Finance charges (2995.36) (1523.69)
Increase in capital creditors (674.37) (156.68)
Receipt of share application money 0.00 7490.76
Dividend paid (469.48) (191.53)
Repayment of Term Loans (4843.76) (780.32)
Income Tax paid (643.22) (139.39)
Net cash used in financing activities (9467.53) 7012.63
Net increase in cash and cash equivalent (836.90) 437.79
Cash and Cash equivalent at the beginning of the year 1147.05 709.26
Cash and Cash equivalent at the end of the year 310.15 (836.90) 1147.05 437.79
SAGAR CEMENTS LIMITED
CONSOLIDATED CASH FLOW STATEMENT AS AT 31ST MARCH, 2010Rs. in Lakhs
Particulars As At 31.03.2009As At 31.03.2010
As per our report of even date attached
For and on behalf of For and on behalf of the Board
P.Srinivasan & Co., S.Veera Reddy Dr.S.Anand Reddy
Chartered Accountants Managing Director Joint Managing Director
K.Ranganathan S.Sreekanth Reddy R.Soundararajan
Partner Executive Director Company Secretary
Hyderabad
18th May, 2010
CONSOLIDATED CASH FLOW STATEMENT
Sagar Cements Annual Report 2009-2010 75
SCHEDULES In Rs.
Particulars As on 31-03-09As on 31-03-10
Schedule 1
Share Capital
Authorized
2,00,00,000 Equity shares 200000000 200000000
40,00,000 Preference Shares of Rs. 10/- each 40000000 40000000
20,00,000 Preference Shares 20000000 20000000
Total 260000000 260000000
Issued, Subscribed and Paid up
1,50,02,300 Equity shares of Rs.10/- each 150023000 150023000
10,00,000 15 % Cumulative Redeemable Preference shares of Rs.10/- each 10000000 10000000
Total 160023000 160023000
*400 Equity shares of Rs.10/- each were issued for consideration other than cash
Schedule 2
Reserves and Surplus
Capital Reserve 3498687 3498687
Pref. Share Capital Redemption reserve Account 40000000 30000000
General Reserve
Balance as per last account 116401551 73098038
Add: Amount Transferred from Profit and Loss A/c. 52000000 43303513
168401551 116401551
Share Premium 1050306111 1050306111
Surplus as per Profit and Loss Account
Balance as per last account 638778122 557010118
Add : Amount Transferred from Profit and Loss A/c. 76804326 81768004
Total 715582448 638778122
Grand Total 1977788797 1838984471
Schedule 3
Secured Loans
Term Loans
Andhra Pradesh State Financial Corporation 45053316 82635381
State Bank Of India 335886115 425886118
State Bank Of Hyderabad 371509224 471510884
IDBI Bank 828000015 1044000019
Axis Bank Limited (UTI Bank) 0 7500000
L & T Finance Ltd. 42506377 61923609
Vehicle Loans From Banks 7913404 5922844
Total 1630868451 2099378855
Cash Credit From
State Bank of Hyderabad 249089821 202341521
Punjab National Bank 83652456 26390687
State Bank of India 204031432 98907117
IDBI Bank Ltd 79941545 83051195
Bill Discounting 48651554 0
Total 665366808 410690520
Grand Total 2296235259 2510069375
SCHEDULES TO THE CONSOLIDATED BALANCE SHEET AND PROFIT AND LOSS ACCOUNT
Sagar Cements Annual Report 2009-201076
Sch
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ule
5
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Sl.
No
.
Sagar Cements Annual Report 2009-2010 77
SCHEDULES In Rs.
Particulars As on 31-03-09As on 31-03-10
Schedule 5
Investments (Unquoted)
26,000 Equity Shares of Rs.10/- each in Panchavati Polyfibres Ltd., Fully paid-up at cost 260000 260000
500 Equity Shares of Rs. 10/- each in PCL Fianancial Services Ltd. (Formerly
Sagar Priya Investment and Finance Ltd.) 5000 5 0 0 0
3,40,87,825 Equity shares of Rs.10/- each in VICAT Sagar Cement Private Limited 380878250 150000000
Total 381143250 150265000
Schedule 6
Inventories
Stores and Spares 160851930 122169803
Raw Materials 12919846 25391740
Coal 171641340 131050933
Packing Materials 11087705 8942454
Goods In Transit 56513299 83811555
Work in Progress 68489755 29846561
Finished Goods 11629173 28320969
Total 493133048 429534015
Schedule 7
Sundry Debtors
Debtors Over Six Months 38832348 14686067
Other Debtors 379643746 234608574
Total 418476094 249294641
Schedule 8
Cash and Bank Balances
Cash on Hand 1843944 1583015
Current Account 17411354 59959442
Deposit Account 11760375 53162425
Total 31015673 114704882
Schedule 9
Loans and Advances
Advances recoverable in cash or in kind or for value to be received
(Unsecured and considered good)
Advance to Suppliers 110618248 245272656
Balances with Excise Authorities 23880144 70366650
Balances with Income Tax Authorities 128345065 71773071
Incentives receivable under AP Industrial Policy 40007391 0
Claims receivable 14458853 0
Advance to Others 45591193 46727294
Deposits to Others 69433720 65188223
Prepaid Expenses 10851676 6469112
Total 443186290 505797006
Sagar Cements Annual Report 2009-201078
In Rs.
Particulars As on 31-03-09As on 31-03-10
Schedule 10
Current Liabilities
Sundry Creditors
For Materials 271373533 196089161
For Stores & Spares 70774672 28225248
For Expenses 82084816 68343181
For Other Liabilities 69231229 72838589
Interest Accrued But not Due 15620697 14233770
Deposits/Advances from Selling Agents, Stockists and Others 201154860 121563103
Total 710239807 501293052
Schedule 11
Provisions
Proposed Dividend 55800948 55769455
Corporate Dividend Tax 9397699 6374102
Taxation 55890866 46883541
Fringe Benefit Tax 0 1433075
Total 121089513 110460173
Schedule 12
Income From Operations
Sale of Cement 3685651084 1556834246
Sale of Cement - Second Sale 727815117 924834578
Sale of Clinker 816559698 861065105
Sale of Electrical Energy - Wind 12713070 0
Total 5242738969 3342733929
Schedule 13
Other Income
Dividend (From Subsidiary Company) 0 0
Interest Received 3216545 4560470
Incentives under AP Industrial Policy 40007391 0
Others 16336882 1038820
Total 59560818 5599290
Schedule 14
Raw Materials Consumed
Limestone 204992465 99081207
Laterite 60742178 27503168
Iron Ore 51281743 31878493
Gypsum 99248650 32651898
Dolamite 0 292661
Fly ash 2132136 351670
Total 418397172 191759097
Sagar Cements Annual Report 2009-2010 79
In Rs.
Particulars As on 31-03-09As on 31-03-10
Schedule 15
Manufacturing Expenses
Consumption of Stores and Spares 83845612 42645936
Fuel Expenses
Coal 931300549 516062944
Power 393111564 148365071
Total 1324412113 664428015
Repairs and Maintenance
Buildings 974670 862757
Plant and Machinery 55848704 31662898
Vehicles 1848780 2041300
Others 16193635 11747333
Total 74865789 46314288
Grand Total 1483123514 753388239
Schedule 16
Salaries and Wages
Salaries, Wages, Allowances, Amenities, Bonus and Ex-gratia 127710640 97747859
Contribution to Provident Fund and other Funds 7100400 5373930
Staff and Workmen Welfare Expenses 10529088 6094037
Total 145340128 109215826
Schedule 17
Taxes
Value Added Tax 559705480 362146566
Entry Tax 806400 88743
Service Tax 177498 2983399
Total 560689378 365218708
Sagar Cements Annual Report 2009-201080
In Rs.
Particulars As on 31-03-09As on 31-03-10
Schedule 18
Administration and Other Expenses
Administrative Expenses
Director’s Remuneration and Perquisites 34918313 28580901
Printing and Stationery 2078629 1517383
Legal and Professional Charges 5770054 8797030
Insurance 10184015 6102731
Director’s Traveling Expenses 1942667 2090481
Traveling Expenses and Conveyance 8823727 8517849
Total 63717405 55606375
Auditor’s Remuneration
Statutory Auditors
Audit Fees 232725 232725
Tax Audit Fees 50000 50000
Certification Work 50000 68500
Reimbursement of Expenses 5000 10709
Total 337725 361934
Administration and Other Expenses
Cost Auditors
Audit Fees 75000 75000
Reimbursement of Expenses 7765 0
Total 82765 75000
Other Expenses
Rent 3273916 2307160
Rates, Taxes and Licenses 3908740 4447528
Miscellaneous Expenses 9442322 10173741
Loss on Sale of Asset 21998 103286
Postage & Telephones 4041067 2980014
Office Maintenance 4190125 2777987
Wealth Tax 95070 89832
Testing Fees 389877 653813
Security Services 4760123 3128168
Total 30123238 26661529
Grand Total 94261133 82704838
Sagar Cements Annual Report 2009-2010 81
In Rs.
Particulars As on 31-03-09As on 31-03-10
Schedule 19
Adjustment for Stocks
Work-in-Process
Opening Stock 29846561 4223884
Less : Closing Stock 68489755 29846561
Total (38643194) (25622677)
Finished Goods
Opening Stock 28320967 3997130
Less : Closing Stock 11629173 28320967
Total 16691794 (24323837)
Grand Total (21951400) (49946514)
Schedule 20
Selling and Distribution Expenses
Consumption of Packing Materials 124986505 48630252
Transportation Charges 491861759 205436682
Advertisement Expenses 37685253 25575259
Selling Expenses 160941345 37510184
Total 815474862 317152377
Schedule 21
Interest and Financial Charges
Interest on Term Loans 211784326 108631209
Interest on Working Capital 62804532 38128768
Other Financial Charges 26333744 17108793
Total 300922602 163868770
Sagar Cements Annual Report 2009-201082
Schedule 22
NOTES FORMING PART OF ACCOUNTS
1. SIGNIFICANT ACCOUNTING POLICIES
a) Accounting Assumptions:
The financial statements are prepared under the historical cost convention on the basis of a going concern on an
accrual basis and they comply with the mandatory accounting standards referred to in Section 211 (3C) of the
Companies Act, 1956.
b) Fixed Assets:
Fixed assets are accounted at cost of acquisition inclusive of inward freight, duties, taxes, incidentals related to
acquisition and pre-operational expenditure till commissioning of the asset. Capital work-in-progress comprises
outstanding advances paid to acquire fixed assets, and the cost of fixed assets that are not yet ready for their intended
use at the balance sheet date.
c) Revenue recognition:
Sales are recognized on dispatch of goods to customers and it includes excise duty and Value Added Tax on sale.
d) Foreign currency transactions:
Income and expenses in foreign currencies are converted at exchange rate prevailing on the date of transaction.
Foreign currency monetary assets and liabilities are translated at the exchange rate prevailing on the Balance sheet
date. Exchange differences on translation of monetary items for purchase of machinery are included in the cost of
such assets.
e) Investments:
Long term investments, including investments in subsidiary company, are stated at cost. Provision is made where
there is a permanent fall in valuation of Long term investments.
f) Depreciation:
Depreciation has been provided as per the rates given in Schedule XIV to the Companies Act, 1956. Depreciation
is charged on Plant & Machinery at straight-line method and on all other assets at written down value method.
g) Inventories:
Inventories including work-in-progress are valued at lower of cost or market value. The cost is calculated on weighted
average method. Cost comprises expenditure incurred in the normal course of business in bringing such inventories to
its location and includes, where applicable, appropriate overheads based on normal level of activity.
Stocks in transit are valued at cost.
h) Employee Benefits:
Short term benefits:
Short term employee benefits are charged off at the undiscounted amount in the year in which the related services
is rendered.
Long term benefits:
Payments to the defined contribution retirement benefit schemes are charged as an expense as they fall due.
Under defined benefit scheme, Company provides for gratuity, a defined benefit retirement plan (the “Gratuity Plan”)
covering eligible employees. In accordance with the Payment of Gratuity Act, 1972, the Gratuity Plan provides a
lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an
amount based on the respective employee’s salary and the tenure of employment. The company has taken master
policy with Life Insurance Corporation of India under group gratuity scheme. Liabilities with regard to the Gratuity
Plan are determined by actuarial valuation as of the balance sheet date, based upon which, the Company contributes
all the ascertained liabilities to the Life Insurance Corporation of India.
The leave encashment payable to the employees is provided based on the actuarial valuation carried out in accordance
with the revised AS 15.
Sagar Cements Annual Report 2009-2010 83
i) Deferred Taxation:
Deferred Tax, resulting from timing differences between book and tax profits, is accounted for under the liability
method, at the current rate of tax.
j) Government grants receivable under Industrial Investment Promotion Policy 2005 – 10 of Government of Andhra
Pradesh are accounted based on verification and recommendation of the competent authority as per the policy of
Government and in accordance with Accounting Standards 9 and 12.
2. CONTINGENT LIABILITIES
a) Estimated amount of contracts to be executed on capital account and not provided for Rs.857.45 Lakhs (Previous
Year: Rs.3785 Lakhs).
b) Demand raised by APTRANSCO towards voltage surcharge and grid supporting charges is Rs.1,73,50,747/- and the
company paid Rs.1,08,02,441/- under protest. The said demand is contested by the company with Division Bench
of High Court of Andhra Pradesh.
c) Bank Guarantees: Rs.90 Lakhs (Previous year: Rs.72.36 lakhs).
d) Letter of Credit: Rs. Nil. (Previous year: Rs.NIL Lakhs).
e) There is a demand from Sales Tax authorities for a sum of Rs.31,00,933 /- in respect of Input Tax Credit on Coal
Consumption availed by the company from April, 2005 to December, 2005, claiming that the company is not eligible
for the said credit. (Paid under protest in the year 2006 Rs.15,50,466/-). The said demand is contested by the
company.
f) Demand raised by Sales Tax authorities for a sum of Rs.8,08,656/- in respect of input tax credit availed on closing
stock of coal held on 31st March, 2005 and filed writ petition before the High Court of Andhra Pradesh on payment
of 50% of the disputed tax amount i.e. Rs.4,04,328/-. (Paid under protest in the year 2007 is Rs. 4,04,328/-).
g) During the year 2009-10, demand raised by Sales Tax Authorities for a sum of Rs.1,09,40,297/- in respect of tax on
sale of fixed assets. We have paid an amount of Rs.27,35,074/- and contested before the State Appellate Tribunal.
h) Show cause notices were issued by the Central Excise Authorities for an amount of Rs.19.44 lakh, pertaining to
various issues under Central Excise and Service Tax Act and for an amount of Rs.203.44 lakhs for availment of service
tax credit. The company has replied to the show cause notices and the matter is pending before the Department for
adjudication.
i) As against the wheeling charges @ 2% of the quantity of energy wheeled as provided in the amended and restated
Power Wheeling and Purchase Agreement dated 1st August, 1998 between the company and Andhra Pradesh State
Electricity Board [now Transmission Corporation of Andhra Pradesh (APTRANSCO) ], the Andhra Pradesh Electricity
Regulatory Commission (APERC) vide its Order dt.24.3.2002 determined that effective from 1st April, 2002, the
private power generators shall pay the wheeling charges @ 28.40% in kind and 50 paise in cash for of the energy
wheeled. The company had disputed the said Order of the Andhra Pradesh Electricity Regulatory Commission
before the High Court of Andhra Pradesh and the High Court vide its Judgment dated 18th April, 2003 set aside the
order of APERC. APTRANSCO has filed a special leave petition in the Supreme Court of India against the Order of
the High Court. The Supreme Court declined to grant a stay on the order of High Court but has allowed leave for
appeal to be heard in due course. Later, APTRANSCO charged the wheeling charges @ 6.40% in kind and 45 paise
in cash per unit of the energy wheeled with effect from 1st April, 2004 and 5.78% in kind and 46 paise in cash per unit
of the energy wheeled with effect from 1st April, 2005 and claimed the same from Sagar Cements Limited, who is the
energy consumer for the company. SPL has disputed the said order also before the High Court of Andhra Pradesh.
The Contingent Liability computed on the basis of imputed cost in respect of the above as claimed by APTRANSCO
till March 31st, 2010 was Rs.350.31 lakhs (As on March 31st, 2009 – Rs.350.31 lakhs).
j) The Government of Andhra Pradesh has inserted Section 3 B in Andhra Pradesh Electricity Duty Act, 1939, by which
every person or a generating company who generates energy and uses for his / its own purpose shall pay a duty
calculated @ 25 paise a unit of the energy consumed, excluding energy consumed in the auxiliaries as against 6 paise
per unit. The Chief Electrical Inspector has issued a letter dated 8th October, 2004 stating that the Company has to
pay the Electricity Duty with effect from 17th July, 2003, at the revised rate in respect of the energy consumed,
Sagar Cements Annual Report 2009-201084
excluding energy consumed in the auxiliaries and the same is being disputed. The contingent liability on account of the
above till 31st March, 2010 was Rs.462.90 lakhs (As on March 31, 2009 – Rs.411.99 lakhs).
k) The Government of Andhra Pradesh has issued G.O.No.39, dt.02.04.2002 for payment of Royalty on consumptive
use of water. Accordingly, the irrigation and CAD Department issued a notice on 20.05.2005 vide Letter No.F/H/
222M claiming an additional amount of Rs.37,45,402/- towards Royalty on usage of water from April, 2002 to
December, 2004. The Company has contested the said order before the High Court of Andhra Pradesh. The
Contingent Liability pertaining to the period from April, 2002 to December, 2004 on account of the above as
claimed by the Government works out to Rs.37,45,402/-. The Contingent Liability for the subsequent period is not
ascertainable as the related data regarding gallons of water “Used” is not ascertainable by the Company.
3. SECURED LOANS
a) The term loans from the Banks and Financial Institutions is secured by the fixed assets i.e., Land, Buildings, Plant &
Machinery, Mining Equipment owned by or belonging to the borrower company both proposed and future, and by
second charge on the current assets of the company and are guaranteed by Shri S.Veera Reddy, Managing Director,
Dr.S.Anand Reddy, Joint Managing Director and Shri S.Sreekanth Reddy, Executive Director.
b) Cash Credit from State Bank of Hyderabad, Punjab National Bank, State Bank of India and IDBI Bank Ltd., are
secured by hypothecation of raw materials, goods-in-process, finished goods, stores and spares and receivables,
present and future, and by second charge on fixed assets of the company and are guaranteed by Shri S.Veera Reddy,
Managing Director, Dr.S.Anand Reddy, Joint Managing Director and Shri S.Sreekanth Reddy, Executive Director.
c) Loan from L&T Finance Limited is secured by the mortgage of specific assets purchased from that loan and further
secured by personal guarantees of Dr.S.Anand Reddy, Joint Managing Director and Shri S.Sreekanth Reddy Executive
Director.
d) Vehicle loans from bank are secured by the mortgage of specific vehicle purchased from that loan and further secured
by personal guarantees of Dr.S.Anand Reddy, Joint Managing Director and Shri S.Sreekanth Reddy Executive Director.
e) The Term Loan from IDBI Bank Limited is secured by a First Charge on all the movable and immovable assets,
present and future of the company. The loan is secured by the personal guarantees of Dr.S.Anand Reddy, Managing
Director and Shri S.Sreekanth Reddy, Director.
4. Earnings per Share (EPS)
In Rs.
Description Year ended
31st March 2009
Profit attributable to company 193768057 190464837
Weighted average number of shares 15002300 14336050
Earnings per share 12.92 13.29
Year ended
31st March 2010
5. a) As per Andhra Pradesh State Industrial Policy 2005-10, Company has made an application to the General Manager,
District Industries Centre, Nalgonda, Andhra Pradesh for claiming the incentives on Value Added Tax and power
consumption. General Manager, DIC, Nalgonda has verified and recommended an amount of Rs.400.07 lakhs during
the year to the State Level Committee. This amount has been considered as income during the current year and
shown in Schedule 13 ‘Other Income’.
b) Other income includes Rs.1.45 crores receivable from insurance company.
Sagar Cements Annual Report 2009-2010 85
6. The disclosures required under Accounting Standard 15 “Employee Benefits” notified in the Companies (Accounting
Standards) Rules, 2006 are given below:
a) Reconciliation of opening & closing balance of Defined benefit obligation
Description Year ended 31st March 2009
Gratuity Leave
encashment
(Un-funded)
Gratuity Leave
encashment
(Un-funded)
Defined benefit obligation at the beginning of the Year 12996505 3291166 11310300 2333349
Current service cost 3088574 953488 1686205 957817
Interest cost 1039720 263293 904824 186668
Actuarial (gain) / loss (330502) 2095288 (540391) 1222335
Benefits paid (709218) (2358581) (364433) (1409003)
Defined benefit obligation at the year end 16085079 4244654 12996505 3291166
Year ended 31st March 2010
Fair value of plan assets at the beginning of the Year 11514791 - 7312912 -
Expected return on plan assets 1158566 - 792408 -
Actuarial gain / (loss) (66534) - (1261) -
Employer contribution 2729718 - 3775165 -
Benefits paid (709218) - (364433) -
Fair value of plan asset at the year end 14627323 - 11514791 -
b) Reconciliation of opening and closing balances of fair value of plan assets
In Rs.
Fair value of plan assets as at 31st March, 2010 14627323 - 11514791 -
Present value of obligations as at 31st March, 2010 16085079 4244654 12996505 3291166
Amount recognized in the Balance sheet (1457756) 4244654 (1481714) 3291166
c) Reconciliation of fair value of assets and obligations
Current service cost 3088574 953488 1686205 957817
Interest cost 1039720 263293 904824 186668
Expected return on plan assets (1158566) - (792408) -
Actuarial gain / (loss) (263968) 2095288 (539130) 1222335
Net cost 2705760 3312069 1259491 2366820
d) Expenses recognized during the year
e) Investment details
100% invested in LIC Group gratuity (cash accumulation policy)
f) Actuarial assumptionsMortality table (LIC) 1994-96 (ultimate)Discounting rate - 8%Expected rate of return on plan asset – 9.25%Expected average remaining working lives of employees–18 YrsRate of escalation in salary – 4%
Sagar Cements Annual Report 2009-201086
Particulars As at 31.03.2009
Salary 11400000 8720833
Other Perks 6957526 7416317
Commission on Profits 14775786 10803750
TOTAL 33133312 26940900
Calculation of Profit U/s.198 of the Companies Act, 1956
Profit as per Profit and Loss Account 298199814 252341298
Add: Directors Remuneration 33133312 26940900
Depreciation as provided in the books of accounts 276885046 187224994
Loss on Sale of Fixed Assets 0 103286
TOTAL 608218172 466610478
Less: Depreciation U/s. 350 of the Companies Act. 1956 276885046 187224994
Profit U/s.198 read with Section 349 of the Companies Act, 1956 331333126 279385484
As at 31.03.2010
In Rs.7. PARTICULARS OF MANAGERIAL REMUNERATION
8. As required by Accounting Standards AS 18, the related parties disclosure issued by the Institute of Chartered Accountants
of India is as follows:
a) List of related parties and relationships
S.No. CountryName of the CompanyNature of Relationship
1 Subsidiary Companies M/s. Sagar Power Ltd. India
2 Associate Company M/s.Vicat Sagar Cement Pvt. Ltd. India
3 Transactions with Companies a) M/s.Panchavati Polyfibres Ltd.
in which Directors are b) M/s.Amareswari Cements Ltd.
interested c) M/s.Sagarpriya Housing and Industrial Enterprises Ltd. India
d) M/s.Golkonda Hospitality Services and Resorts Ltd.
e) M/s.BSCPL Infrastructure Ltd.
4 Directors interested in a) Sri O.Swaminatha Reddy, Chairman
individual capacity b) Sri S.Veera Reddy, Managing Director
c) Dr. S.Anand Reddy, Joint Managing Director
d) Sri S.Sreekanth Reddy, Executive Director
e) Smt. S.Aruna, Executive Director, Sagar Power Ltd.
f) Shri N.Suresh Reddy, Director, Sagar Power Ltd.
g) Shri M.Mohan Reddy, Director, Sagar Power Ltd.
h) Sri K.Thanu Pillai, Director
i) Sri Werner C.R.Poot, Director
j) Sri P.Rajeswara Rao, APIDC Nominee
k) Sri Gilbert Noel Claude Natta, Director
b) Related Party Transactions Rs. in Lakhs
DescriptionSubsidiary
CompaniesAssociate
Company
Company in
which Directors
are interested
Directors in
individual capacity
are interested
Total
Purchase of power 622.57 - - - 622.57
Purchase of goods - - 6065.49 - 6065.49
Sale of goods 1.05 - 4268.44 - 4269.49
Dividend Received 83.17 - 0.39 - 83.56
Dividend Paid 23.29 56.90 80.19
Remuneration to Directors - - - 331.33 331.33
Sitting fees - - - 4.70 4.70
Investment in Associate Company - 2308.78 - - 2308.78
Sagar Cements Annual Report 2009-2010 87
9. ADDITIONAL INFORMATION PURSUANT TO THE PROVISIONS OF PARAGRAPH 3,4C AND 4 D OF
PART II OF SCHEDULE VI OF THE COMPANIES ACT, 1956(AS CERTIFIED BY THE MANAGEMENT)
Description Year ended 31st March 2009
Quantity
MTs
Value
Rs.
Year ended 31st March 2010
Quantity
MTs
Value
Rs.
a) Turnover
Sale of Cement (inc. 2897 MTs for self
consumption (Previous Year:3126 MTs) 1130636 3685651084 415835 1556834246
Second sale of cement 204191 727815117 225650 924834578
Sale of Clinker 350133 816559698 307152 861065105
TOTAL 5230025899 3342733929
b) i) Details of Raw Material Consumed
1. Limestone 1996932 204992465 1040564 99081207
2. Laterite (HG) 62688 60306050 28598 27317400
3. Laterite (LG) 736 436128 416 185768
4. Gypsum 63257 99248650 23002 32651898
5. Iron-ore 37482 47942785 19647 29090544
6. Iron-ore sludge 3880 3338958 4446 2787949
7. Dolamite 0 0 1010 292661
8. Fly-ash 4348 2132136 784 351670
TOTAL 418397172 191759097
ii) Details of Raw Material consumed for trial runs
1. Limestone - - 10425 1737914
2. Laterite (HG) - - 139 143106
3. Laterite (LG) - - 278 164732
4. Iron-ore - - 139 222080
iii) Cement Purchased for Sale 203657 464505645 226307 643718392
c) Capacities and Production
Licensed and Installed Capacity (TPA) 2350000 2350000
Actual Production (MTs) 1120350 431250
d) Opening and Closing Stock
Opening Stock (MTs) 16999 908
Value (Rs.) 28320967 1757174
Closing Stock (MTs) 6179 16999
Value (Rs.) 10721139 28320967
e) Value of Imports (CIF)
Capital goods 11405710 98930460
Coal, Components and Spare Parts 256615687 299925506
f) Expenditure in Foreign Currencies
On account of Traveling and other expenses (Rs.) 858757 1794625
On account of Consumables and Capital goods 30149232 54647694
Sagar Cements Annual Report 2009-201088
g) Value of Imported and Indigenous Raw Materials, Components, Spare Parts and other materials consumed:
10. There are no amounts due to micro and small enterprises.
11. Previous year’s figures have been regrouped, recast and reclassified wherever necessary to conform with those of the
current year.
12. Paise have been rounded to the nearest rupee.
Schedules 1 to 22 form part of the Accounts
As per our report of even date attached
For and on behalf of For and on behalf of the Board
P.Srinivasan & Co., S.Veera Reddy Dr.S.Anand Reddy
Chartered Accountants Managing Director Joint Managing Director
K.Ranganathan S.Sreekanth Reddy R.Soundararajan
Partner Executive Director Company Secretary
Hyderabad
18th May, 2010
Year ended 31.03.2009
Value Rupees %Value Rupees %
Year ended 31.03.2010
Value Rupees %Value Rupees %
Imported - - 30149232 36 - - - -
Indigenous 418397172 100 53696380 64 191759097 100 42645936 100
Total 418397172 100 83845612 100 191759097 100 42645936 100
Spare Parts and
Other materialsRaw MaterialsSpare Parts and
Other materialsRaw MaterialsParticulars
h) Additional information pursuant to the provisions of Paragraph 3, 4C and 4 D of Part II of Schedule VI of the Companies
Act, 1956
Particulars 2008-09
Quantity
(Kwh)Rupees
2009-10
Quantity
(Kwh)Rupees
a) Capacity – Installed Capacity Hydel Power
(As certified by the Management and relied upon
by the Auditors, being a technical matter) 8.3 MW - 8.3 MW -
b) Actual Generation - Both 25625 - 21591 -
c) Turnover - Hydel Power 20848 60825525 29497 86149428
d) Turnover - Wind Power 3750 12713070 0 0
e) Opening Stock of Delivered Energy 0 0 8414 2239956
f) Closing Stock of Banked Energy 751 908034 0 0
g) Self Consumption 276 0 508 0
h) Consumption of Stores and Spares (100% indigenous) - 4567106 - 4506792
i) Value of Imports (CIF) Nil Nil Nil Nil
j) Expenditure in Foreign Currency Nil Nil Nil Nil
k) Earnings in Foreign Exchange Nil Nil Nil Nil
Sagar Cements Annual Report 2009-2010 89
SAGAR CEMENTS LIMITED
Regd. Office: 8-2-472/B/2, Road No.1, Banjara Hills, Hyderabad-500 034
TWENTY NINTH ANNUAL GENERAL MEETING
ADMISSION SLIP
I certify that I am a registered shareholder / proxy for the registered shareholder of the Company. I hereby record my presence
at the Twenty Ninth Annual General Meeting of the Company to be held at Hotel Golkonda, Masab Tank, Hyderabad-500 028,
on Monday, the 20th September, 2010 at 4.00 p.m.
Name of the Member (IN BLOCK LETTERS) ________________________________________
Name of the Proxy (IN BLOCK LETTERS) ________________________________________
(To be filled in if the proxy attends instead of the Member)
Registered Folio No. : ______________
No. of Shares : ______________
Signature of the Shareholder / Proxy
NOTE: Please bring this attendance slip with you, duly filled in and hand over the same at the entrance of the Meeting Hall.
SAGAR CEMENTS LIMITED
Regd. Office: 8-2-472/B/2, Road No.1, Banjara Hills, Hyderabad-500 034
TWENTY NINTH ANNUAL GENERAL MEETING
PROXY FORM
I/We _________________________________ of _____________________________ being a Member / Members of
Sagar Cements Limited, hereby appoint _________________________ of ___________________________________
or failing him / her ___________________________ of _____________________________________ as my / our proxy
to vote for me / us on my / our behalf at the Twenty Nintth Annual General Meeting of the Company to be held on Monday,
the 20th September, 2010 at 4.00 p.m. at Hotel Golkonda, Masab Tank, Hyderabad-500 028 and at any adjournment
thereof.
Signed this _____________ day of ______________________ 2010
Registered Folio No. : ______________
No. of Shares : ______________
Signature of the Shareholder
N.B.: A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote instead of
himself / herself and the proxy so appointed need not be a Member of the Company. The Proxy in order to be
effective must be received by the Company at its Registered Office not less than 48 hours before the commencement
of the meeting.
Please affix
Re.1/-
Revenue
Stamp