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Company Information

Home » Market » Company Information

Ambuja Cements Ltd.

May 30, 12:37
241.60 +1.45 (+ 0.60 %)
 
VOLUME : 37441
Prev. Close 240.15
Open Price 243.00
TODAY'S LOW / HIGH
237.40
 
 
 
243.00
Bid PRICE (QTY.) 240.85 (25)
Offer PRICE (Qty.) 241.05 (14)
52 WK LOW / HIGH
191.00
 
 
 
282.00
May 30, 12:29
241.50 +1.25 (+ 0.52 %)
 
VOLUME : 1362464
Prev. Close 240.25
Open Price 240.00
TODAY'S LOW / HIGH
237.30
 
 
 
242.65
Bid PRICE (QTY.) 241.30 (115)
Offer PRICE (Qty.) 241.50 (613)
52 WK LOW / HIGH
191.00
 
 
 
281.70
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Market Cap. ( ₹ ) 47953.33 Cr. P/BV 2.45 Book Value ( ₹ ) 98.43
52 Week High/Low ( ₹ ) 282/191 FV/ML 2/1 P/E(X) 42.77
Bookclosure 24/03/2017 EPS ( ₹ ) 5.65 Div Yield (%) 1.16
DIRECTOR'S REPORT
You can view full text of the latest Director's Report for the company.
Year End :2016-12 

The implementation of IND AS in 2017 will be a major change process and the company is well

Amount in Rs, crore

Standalone

Consolidated

Current Year 31-12-2016

Previous Year 31-12-2015

Current Year 31-12-2016

Previous Year 31-12-2015*

Sales (Net of excise duty)

9160.40

9,368.30

20,093.95

9,388.00

Profit before Interest and Depreciation

2258.92

1,889.66

3,598.73

1,895.48

Less: Finance costs

71.48

91.79

140.54

92.47

Gross profit

2,187.44

1,797.87

3,458.19

1,803.01

Less: Depreciation and Amortisation Expense

850.13

625.66

1,463.18

629.76

Profit before Tax

1,337.31

1,172.21

1,995.01

1,173.25

Less: Tax Expense

367.22

364.65

576.00

365.37

Profit after Tax but before Minority Interest

970.09

807.56

1,419.01

807.88

Add: Share of Profit in Associates

-

-

8.79

-

Less: Minority Interest

-

-

306.67

-

Profit for the year

970.09

807.56

1,121.13

807.88

Add: Balance as per the last Financial Statements

1,833.87

1,655.93

2,117.13

1,941.15

Add: Addition pursuant to Amalgamation of HIPL

41.19

-

229.60

-

Transfer from general reserve (net)

850.00

-

834.98

-

Less: Adjustment for Depreciation and Amortization

2591.85

106.63

2,591.85

108.91

Profit available for appropriation

1,103.30

2,356.86

1,710.99

2,640.12

Appropriations:

Dividend on Equity Shares (including interim)

678.35

434.53

678.35

434.53

Corporate Dividend Tax

95.77

88.46

128.43

88.46

Intercompany elimination of Dividend pursuant to scheme of Amalgamation of HIPL with the company

74.69

_

131.02

_

Balance carried forward to Balance Sheet

403.87

1,833.87

1,035.23

2,117.13

*Figures are not comparable with corresponding figures of current year as they do not include consolidated numbers of AGO Limited.

positioned to ensure a seamless transition on the back of early completion of impact assessment.

4. Dividend

The company has a very robust track record of rewarding its shareholders with a generous dividend payout (both interim & final). Continuing with this practice, the company paid an interim dividend of Rs, 1.60 per share (80%) during the year 2016. In the light of the overall improved financial performance including Profit After Tax for the full year as compared to the year 2015, the Directors have recommended a final dividend of Rs, 1.20 per share (60%). Thus, the aggregate dividend for the year 2016 is Rs, 2.80 per share (140%) and the payout (net) will be Rs,733.43 crore, including dividend distribution tax of Rs, 95.77 crore.

This represents a payout ratio of 76%.

5. Market developments

The market offers huge potential for development in the housing infrastructure and construction segments, to provide impetus to cement market growth. A good monsoon, after two consecutive droughts, also augured well for cement demand, especially for the rural sector. The overall national cement demand grew with double digits in the first quarter of 2016 but moderated in the closing months of the year due to demonetisation.

The company’s cement sales in 2016 declined by 2% to 21.1 million tonnes, as compared to 2015. Our focus is on the retail segment, with retail sales more than 85%, thereby ensuring broad customer base and higher realisation.

The company - with a strong network of 8,500 dealers & 40,000 retailers, enjoys a strong brand equity Index (BEI 5) and is the preferred brand for individual house builders.

Dividend distribution policy

Regulation 43A of the SEBI Listing Regulations (“LODR”), requires that the top 500 listed companies based on the market capitalization to formulate Dividend Distribution Policy. In compliance of the said requirement, the company has formulated its Dividend Distribution Policy, the details of which are available on the company’s website at: http://ambujacement.com/Upload/PDF/ dividend-distribution-policy.pdf.

Logistics

Logistics continued to focus on safety, service, operational efficiencies, and cost optimisation through various initiatives.

Outbound logistics cost was lower in the first half of the year compared to 2015, mainly due to stable rail and fuel charges, coupled with operational performance improvements coming from higher direct dispatches and lead management. However, the second half affected costs and efficiencies due to a steep increase in fuel prices and a heavy monsoon. Demonetisation was an opportunity to lead drivers and transporters to imbibe cashless transactions without affecting logistics operations. In spite of all the challenges our overall distribution costs reduced marginally over 2015 levels, mainly mitigated by collaborative efforts between Sales and Logistics to focus on operational levers and cost drivers.

To improve forecasting and least cost to serve compliance, Sales and Operations Planning (S&OP) was implemented. Under the Logistics turntable initiatives, saving opportunities were identified and benefit accrued.

Commercial transformation Customer discovery

2016 was indeed a challenging year for the cement industry as multiple brands vied for brand attention. While some companies resorted to price reduction, others provided various value propositions.

Ambuja chose a relatively simple, albeit time-consuming but enriching path, to get close to the consumer - by understanding the needs, designing solutions and then helping to fulfil it.

Our in-house engagement programs and knowledge initiatives were well received. Several onsite service interventions were offered for the individual house builder and good knowledge initiatives shared through our Ambuja Knowledge Centre (AKC) network.

Under the guidance of LafargeHolcim, various commercial transformational activities have commenced. Offering a better value proposition to customers, improved construction practices and providing a transformational framework, to meet evolving cement demand in sync with the various initiatives kick-started by the Government.

Customer excellence

With demonetisation, an action plan was drawn where finance, sales and technical field officers along with community workers of the Ambuja Cement Foundation and bank officials initiated awareness camps with dealers, Authorised Retail Stockists (ARS) and retailers connected with our commercial network to showcase various cashless options. Next, the company launched the ‘Go Cashless’ campaign - where network partners were assisted in opening current accounts and tie-ups with major banks leading to the installation of POS machines to facilitate transactions.

Our branding team conceived a digital campaign on social media as well as on radio, focused on promoting various cashless options.

A combination of these initiatives helped the company reach out to over one lakh partners (dealers, retailers, contractors and masons) across India in a short span of 50 days.

Sustainable construction practices

Building a greener tomorrow

Water is an important aspect of construction.

In the Indian context, with most regions facing inadequate water supply, it is indeed a challenge as constructing even a three-bedroom house consumes around 50,000 litres of water.

Realising and understanding this issue, engineers from Ambuja’s technical services team designed two innovative solutions for the roof - a customised modular curing sheet covering the slab on the roof during construction that would save at least 12000 litres; and fitting a rainwater harvesting system on the roof, making it a permanent source of storing potable water.

In 2016,75 million litres of water were saved at construction sites and 14 million litres through installing rainwater harvesting systems across 519 towns.

6. Cost developments

The company maintained significant focus on cost optimisation during the year through various initiatives it optimised, on both variable as well as fixed costs. The company also benefited through favourable fuel prices during the initial quarters. Internal cost optimisation measures coupled with such favourable external factors, helped to offset the cost increase resulting from increasing diesel prices, railway freight, prices of some raw materials as well as an increase on account of inflation. As a result, the company’s total cost per tonne remained flat when compared to the previous year.

Major Cost Movements

i) Cost of major raw materials reduced by 5% over the previous year on per tonne basis. Despite an increase in Fly Ash prices by 6%, the company was able to consume gypsum at 10% lower cost than the previous year and further mitigated through cost reduction from using alternative raw materials.

ii) Power and fuel costs account for approximately 22% of the total expenses.

The company’s initiatives to optimise fuel mix as well as higher usage of captive power helped restrict the power and fuel costs to 12% lower level as compared to previous year on per tonne basis. Fuel Cost for the kiln reduced by 16% while the same for captive power plants reduced by 14%, mainly due to higher use of pet coke in both areas and other low cost fuels. Usage of alternate fuels also accounted for 5% of total thermal energy consumption in 2016.

Although the cost of grid power increased by 4% on per unit basis, increased use of captive power which was 13% cheaper than previous year, helped to reduced the overall electricity cost by 7%. The company consumed 70% of the total power requirement from captive sources, including increased usage of the Waste Heat Recovery System.

iii) Freight and forwarding cost constituted 29% of total expenses.

On per tonne basis, cost increase was restricted to just 1% due to the positive impact of various logistic optimisation efforts despite 5% increase in diesel cost over the previous year.

iv) Other expenses which constitute 23% of the total expenses were restricted to an increase of just 1% over 2015. This was possible on account of reductions in the cost of packing bags which came down by 9% over the previous year, on the back of decrease in PP granule prices. Further, the fixed cost optimisation programme also contributed in keeping fixed cost in check.

Cost mitigation measures / efficiency improvement initiatives:

i) Keeping in line with the company's philosophy of sustainable operations,

a focus on production of fly ash based PPC was maintained and a lot of initiatives were taken up to enhance fly ash consumption in PPC.

ii) The company has worked on fuel flexibility to mitigate risk associated with the dynamic fuel market and developing the ability to switch to the most economical fuel mix. The company has increased the focus on usage of low cost fuels like petcoke. iii A new E-mill was commissioned at Darlaghat for petcoke grinding which helped in increasing petcoke consumption in Suli kiln, iv) A limestone feeding system in the boiler was initiated, to increase petcoke consumption and maintain SOx emission limit in the captive power plant at Rabriyawas and Bhatapara. The company commissioned a carbon black bulk unloading system to increase carbon black usage and improve housekeeping.

Capacity expansion during the year. Getting better at being the best.

7. Expansion projects and new investments

The company focused on consolidation and optimisation of its existing capacities in all the three regions. Capital investments kept flowing in during the year, to ensure the highest standards of safety in order to meet the company policies of‘Zero Harm’, clean and energy efficient infrastructure, cost efficiency, environment-friendly material handling systems, process optimisation and sustainability initiatives.

Achievements at a glance

i) A Waste Liquid Feeding System at Bhatapara was commissioned to utilise alternate fuel in the plant and reduce traditional fuel consumption.

ii) In June, 2016, legal case pertaining to 99 HA of mining land at Darlaghat has been decided in favour of the company, pursuant to which taking possession of the said mining land is in progress. As a result, the company has been able to successfully secure and increase its limestone resources.

iii) In order to strengthen logistics capability and extend its reach to customers, a new railway siding project is in progress at the Rabriyawas unit in Rajasthan. Purchase of land is in progress for line laying.

iv) A brown-field expansion project of master packer and auto wagon loading was commissioned at Sankrail, West Bengal. New packer and auto loaders will add an additional 1.8 million tonnes dispatch capacity.

Upcoming Capacities and Investments

i) A new coal block, at Gare-Palma in the state of Chhattisgarh was acquired in 2015 through e-auctions conducted by the Government of India. The block has an extractable reserve of 50 million tonnes and will secure the long term requirement of fuel. Land Acquisition and various clearances are in progress and the mining operation is expected to commence in the year 2018.

ii) In order to secure longterm limestone requirement of the Bhatapara plant, a new mining lease, at Maldi Mopar Mines was allotted. Environmental clearance and other required approvals for the mining lease were acquired. To operationalise this limestone mine, two projects are in progress:

- Commencement of limestone mining operations with infrastructure.

- Installation of limestone transportation system.

Detailed engineering and equipment orders for both projects have been completed and delivery of a limestone crushing system is in progress.

iii) Clinkerisation capacity addition of 1.7 million tonnes by setting up green field clinkerisation plant at Marwar Mundwa, Nagaur district in Rajasthan has now been undertaken.

The company will commence, in 2017, the site development, infrastructure, engineering, tendering and contracting of the project. While the majority of the mining and plant land is already in possession and the rest is under an advanced stage of acquisition.

iv) The company also acquired a new mining lease at Loadhva mines in order to secure longterm limestone requirement of Ambujangar Plant. Environmental clearance and other required approvals for the mining lease have been secured.

v) The company is taking up various projects to comply with new Environmental Regulations issued by Ministry of Environment and Forest related to Dust Emission, SOx & NOx emissions.

8. Outlook

We expect good cement growth in 2017, supported by the Government's continued focus on housing and infrastructure development, and going forward remonetisation should result in growth normalising during the first quarter of the year. The announcement of interest subsidy schemes and an interest rate cut, the recent announcement in the union budget for infrastructure development, including the award of infrastructure status to affordable housing and the increased budget allocation for roads, railways and irrigation will all be key drivers for cement demand.

With continuing operational excellence programs, combined with its segmented marketing and value added special cements products and building solutions, the company is well placed to benefit from the plans being initiated by the Government.

9. Risks and areas of concern

The organisation has a comprehensive framework for risk management covering financial, business and sustainability-related risks through the Business Risk Management (BRM) process.

Risk Management Policy has been formally framed to identify and assess the key risk areas, monitor and report compliance and effectiveness of the policy and procedure in line with the new regulatory requirements. A Risk Management Committee under the chairmanship of Mr. Rajendra Chitale, Independent Director, has also been constituted to oversee the risk management process in the company.

The BRM exercise at Ambuja is a bi-annual event to analyze the company’s overall risk exposure and supports management in strategic decision-making process. Therefore, it is an integral part of management reporting cycle. Well-defined risk management mechanism covering trend analysis, risk exposure, potential impact and risk mitigation process has been laid down by the company. The overall risk exposure is assessed from both top-down and bottom-up, which is then consolidated to get a bird’s eye view.

We have been able to improve upon our risk exposure due to the combined efforts of all functions, supported with tight monitoring of action plans and their implementation.

Based on a detailed review, the following key risks have been identified:

Ensuring Raw Material Security

Sustainability is well reflected in the organisation's Vision, Values, Policies and Strategies.

However, to remain sustainable, concerns continue around raw material availability such as limestone, which is a basic input for manufacturing cement and securing additional reserves are critical for future growth of the company. The company is keeping watch on all limestone auctions across India and participating in relevant blocks which are close to our operations.

Reinitiating Demand

The cement demand growth has moderated from an average of around 6-7% in the previous years to the present 5%. Currently the demand-suppiy situation in the cement industry is skewed, with the latter being significantly higher by over 90 million tonnes. However, the gap is expected to narrow down due to the Government push on infrastructure and housing sectors, which will help in enhancing cement consumption. The speedy remonetisation by the Government will also help revamp cement demand growth.

Cement Import

Currently, there is no customs duty on cement import, which is an area of concern as this provides encouragement for import of cement which impacts domestic industry and adds to the demand and supply mismatch.

Taxation and Administrative Burden

High taxes and administrative burden continues to remain a major concern for the cement industry; along with steel, the two form an

10. Human Resources

Human Resources function plays a pivotal role in realising business objectives by leading organisational change, fostering innovation and effectively mobilizing talent to sustain the organisation's competitive edge. At Ambuja, the HR function has made a paradigm shift from being a support function to a core and strategic business partner. The HR function is constantly evolving and transforming as it embraces the philosophy that people are the foremost factor in the success of an organisation. Our people strategy, systems and processes are aimed at making the company an employer of choice. It has been our endeavor to design progressive HR policies and other welfare measures that would enhance all aspects of the ‘employment experience’. important raw material for the infrastructure and real estate sectors. However, steel falls under the category of‘Goods of Special Importance’, and attracts a lower tax rate @ 4%, whereas cement does not and this makes cement subject to higher tax in comparison to other building materials. The solution to this issue lies in the rolling out of a uniform tax regime through the implementation of the Goods and Services Tax (GST).

The government has taken strides towards getting Cabinet approval of the GST Bill that is slated to play a critical role in the next level of growth and truly realise the full extent of the country’s potential.

Demonetisation Impact of Q4 2016

The current phase of remonetisation has resulted in the slackening of demonetisation effect and hence is expected to result in growth normalisation in the first quarter. Rapid adoption of cashless payment methods in the last quarter of 2016 helped to mitigate the effects of demonetisation and deliver a strong performance.

The above efforts have led to a significant increase in manpower productivity as compared to 2015. Core manufacturing productivity improvement went up by 16% and the overall productivity improvement went up by 9%.

Some of the highlights of the new initiatives taken in 2016 are:

(i) Culture Building - Aligning ‘I Can’, our core philosophy with LH CRISP Values and ‘ACE’ Behaviour

At Ambuja, we all believe and practice the spirit of‘I Can' as our core philosophy.

As culture building is a continuous process, several awareness workshops were conducted across Ambuja to familiarise all our employees to LH values - ‘CRISP’ (Customers, Results,

Integrity, Sustainability, People) and behaviour -ACE (Agility & Simplicity, Collaboration & Trust, Empowerment, Accountability & Transparency) which have a strong connection to the ‘I Can’ philosophy. Consistent communication helped create a common understanding of our values and core philosophy in terms of living these values and making it a way of life.

(ii) Enhancing Employee Engagement and Fostering a Participative Culture

Ambuja Cement continues to build a culture of merit and appreciation under our Rewards and Recognition (R&R) program. In 2016 we had 509 employee nominations under various categories of awards and there were 365 employees from across locations and functions rewarded under the program.

In another new initiative, Focussed Group Discussions (FGD) were used across various locations to determine the level of employee engagement, to collect employees' perceptions on various organisational/ work related matters and to draw a meaningful action plan to address a few opportunity areas that would help our organisation on the path of improving/ enhancing employee engagement. A team of internal facilitators of varied functional expertise helped create an open and participative culture promoting employee engagement.

(iii) Sustainable Talent for Enhanced Performance (STEP)

To inculcate a coaching culture, Ambuja - STEP II was launched in 2015 with 60 participants who underwent an enriching and fulfilling journey of mastering the art of coaching and equipping themselves with essential leadership skills and competencies. The program, which concluded in 2016, focused on initiatives that resulted not just in honing skills but in enhanced performance and higher engagement.

While the second batch has a fresh pool of 'People Coaches’, it has also ensured that the certified People Coaches from the first batch get an opportunity to apply their learning skills and experience with our employees across the organisation.

(iv) Performance Management System (PMS) The new PMS launched in 2016 had even more focus on team objective setting and periodic reviews. Frequent individual dialogues and interactions between managers and employees were encouraged. These discussions helped in better alignment with the company objectives, clarifying business direction and actively contributing in individual target achievements. The new PMS has been designed to completely involve managers and employees to raise levels of performance through collective ownership and responsibility.

(v) HR Transformation

HR Transformation journey continued in 2016 with the setting up of the new shared services centre, Onelndia BSC. ACL adopted the shared services centre model and high transactional HR processes were moved to Onelndia BSC.

This will help focus on strategic areas thereby improving the overall working efficiency and providing solutions on a real time basis. Employees experienced a self-service culture enabled through enhanced/ new technologies for various employee related services.

A big step towards digital transformation is also underway in the form of the ‘Workday’ system, which is a cloud based global HR system, initiated by LafargeHolcim. ‘Workday’ would greatly support effective talent management through an online real-time master data source.

11. Health and Safety

Health and Safety continues to be the overarching value for Ambuja and is top priority for all of us. We are steadily progressing towards our goal of Zero Harm. After a successful run of 13 months without onsite fatality, there were two unfortunate on-site fatalities that occurred after October 2016. We Care - our Health and Safety Excellence Journey continues to drive H&S improvements since 2014 and its impact on the ground is visible. We focussed on participation, involvement and engagement of our people. More emphasis was given on sensitising people on safe behaviour, training, capability building on risk assessment and reward & recognition schemes to encourage teams as well as individuals for their contribution in H&S improvements.

The leadership team developed an effective Health & Safety Improvement Plan (HSIP) for 2016, including six strategic objectives, along with one Fatality Prevention control.

For a safer workplace, it is imperative to build on Health and Safety competencies of people. As part of the competency building initiative, Hazard Identification and Risk Assessment (HIRA) workshops were conducted for senior management team. This training helped recognise hazards associated with tasks, recognise risks, and their likelihood and consequence. Later, this workshop was extended to more than 900 line managers across plants and offices. Of the 64 Health and Safety team members who underwent NEBOSH Training, 27 participated in IOSH training. NEBOSH & IOSH are internationally recognised certification programs which will help Health and Safety professionals to effectively provide solutions to deal with Health and Safety aspects in day to day functioning. Around 9000 front line employees were trained through tool box talks on Do’s and Don’ts for critical operations such as working at height, vehicle & traffic safety, electrical safety and lockout procedure.

Vehicle and Traffic Safety (V&TS) has been a matter of concern for us. With a renewed focus towards on ground implementation, ‘Logistics Safety Vision - 2020’ has been prepared along with a road map and milestones. Initiatives such as GPS Installations, Defensive Driving Course (DDO), NO DDO NO LOAD policy and e-Passport were implemented in 2016. Around 44,000 drivers are covered under No DDC No LOAD Policy. Over 400 drivers were awarded Safety Hero and on-the-spot awards and over 1000 sales force employees trained in Defensive Driving courses with on road practical assessment. Workshops were conducted for over 6200 personnel of Warehouses and Branches. In 2016, the Model Warehouses project was kick-started to convert 50 Warehouses.

Our senior leadership team has taken the lead and owns one warehouse for each member.

So far, over 2500 warehouse workers were sensitised through tool box talks. More than 1000 school children from nearby communities were also sensitised through the Road Safety awareness program.

We Care - an umbrella initiative which covers all stakeholders - has played a seminal role in transforming Ambuja Cement’s operations as well as attitudes towards safety. The We Care initiative has led the way in training and capability building, and has been spearheading the company’s efforts to achieve the goal of Zero Harm.

All the manufacturing units of the company are certified as per OHSAS18001 World Standard.

At Ambuja, we look forward to adopting innovative technology to enhance the experience of our customers, business partners and employees. With this philosophy and direction, the company embarked on a path in 2016 that made it stand apart from its peers in the industry. Besides having the best-in-class information technology set up, the company has taken the lead in new areas and paved a path for others to follow:

12. Leveraging technology to drive business value

- Providing intelligent analytics for Safety at work, as the safety of our employees, contractors and vendors has always been a top priority at Ambuja.

- Integrated Security Systems:

At manufacturing facilities, we have autonomous safety and security systems like OCTV, turnstile, biometric and smartcard access control and attendance systems. These systems are controlled individually, report and serve specific business needs.

As a first, at Magdalla, we conducted a successful proof of concept of integrating CCTV, Attendance & Access Control Systems and Public announcement systems.

- Journey Risk Management:

We have been using GPS technologies for quite some time now for monitoring vehicle tracking and safety parameters. These systems generate a huge amount of data.

As of now, we leverage information on speeding, harsh braking, sudden acceleration and sudden manoeuvres. In 2016,

Ambuja took the initiative to identify potential risk points on our dispatch routes using intelligent analytics on the GPS data. This has helped us to enhance the truck driver’s safety on the road by educating them about accident prone points, ahead of the scheduled trips.

- Retailer POS (Point Of Sales):

In our constant endeavour to serve our customers better, Ambuja rolled out a mobile application for retailers to help them interact with the distributers. The mobile application enables retailers to place orders on distributers and get the order acknowledgements. The distributers can view these orders and respond. This will result in seamless co-ordination between primary and secondary channels. Additionally, it records the stocks at the Retailer counters. The stock visibility enables us to do better market planning.

13. Sustainability and environment

The company’s journey with sustainability is giving encouraging results year after year, with improved performance on several parameters of governance, environment protection as well as social responsiveness. This would have not been possible without sustained efforts over the years and a variety of initiatives together with systems and processes in place to keep pace with the long term objective to be a sustainable company. Today when we map the initiatives against the Sustainable Development Goals (SDGs) and targets therein, Ambuja has interventions to address almost all 17 Goals and as many as 125 of the 169 sub goals or targets in its core business and CSR activities. We are committed to continue with our sustainability journey and meeting the remaining targets.

To endorse the principles of United Nations’ Global Compact (UNGC), Ambuja became the Life Member of Global Compact Network India (GCNI) in 2016.

Make the Earth a Better Place

As part of our product stewardship, the year saw the completion of Life Cycle Assessment (LCA) of Portland Pozzolana Cement (PPC) produced at our Suli plant, Darlaghat facility as per ISO 14040 and IS014044 requirements. The ‘Cradle to Grave' approach was adopted and the system boundary and geographical scope included: materials (sourcing), upstream transport (inbound), manufacturing process, downstream transport (outbound), use and disposal. LCA outcomes were taken ahead to develop Environment Product Declaration (EPD) and scenario analysis in accordance with the Product Category Rules (POR- UN CPC 3744) for cement.

Ambuja had earlier signed the declaration of India Business and Biodiversity Initiative (IBBI) which is an initiative of Confederation of Indian Industry (Oil) - India’s largest industry association. In 2016, the company voluntarily reported against the IBBI Declaration Commitments (comprehensive). This reporting covered our biodiversity mapping, relevance of biodiversity and ecosystem services in various phases of our value chain (own operations, suppliers, use phase, end-of-life, transport), training and awareness activities for biodiversity protection, risks, opportunities and impacts etc. This year, the company has been active in Leader for Nature (LfN) initiative of International Union for Conservation of Nature (IUCN) and partnerships with Cll and other organisations in India for biodiversity related policy development, biodiversity assessment and reporting guidelines. The company invited IUCN experts for field training to create biodiversity champions in the Biodiversity Indicator and Reporting System (BIRS).

Ambuja continued its ‘Water Positive’journey contributing further to conserve water resources. Since 2012, we are assessing and targeting not only the intensity of our water consumption but also how we can augment water recharges through community structures. Up from the water positive index of ‘2’ we are well on our way of becoming 5 times water positive. More importantly, almost all the units are now water positive on their own. Considering the growing scarcity of water witnessed in several regions of the country, the company commits to continue ‘Water Positive’ efforts with the same vigour and enthusiasm.

The year also saw the company defining new targets for forthcoming years (2020 & 2030) to align with the Sustainable Development targets defined by LafargeHolcim at group level, termed as The 2030 Plan - Building for Tomorrow’ in the thrust areas of climate change, circular economy, water & nature, and people & community.

All our plants have continued online reporting of ambient air quality and process emissions on real-time basis on websites of regulatory authorities for transparency and public information.

Recognition for Sustainability efforts

The company’s sustainability performance has been recognised by external assessments and awards, the company was once again recognised at the prestigious Cll Sustainability Award 2016, in one of the highest award categories -'Outstanding Accomplishment in Corporate Excellence’. This is the sixth time in a row Ambuja has attained this award in its various categories. In the Oil Sustainability Plus rating of the NSE listed companies; we received the ‘Gold’ rating.

Partnering for Sustainability

In the sphere of our collaboration with various stakeholders for the cause of environment protection and sustainability; we played an active member of the Cement Sustainability Initiative (CSI) India of World Business Council for Sustainable Development (WBCSD) for implementation of the India specific ‘Low Carbon Technology Road Map for Cement Industry’.

Cll and FICCI remained the other industry associations we partnered with in the current year as well. Besides policy dialogue, we participated in a number of training and awareness programmes conducted by these agencies on environment, health and safety and sustainability topics such as emissions control and monitoring, biodiversity management, water management and environment product declaration to enhance the capability of managers for environmentally responsible operations.

Sustainability Reporting

Ambuja Cement shared its 9th Annual Corporate Sustainability Development Report on triple bottom line performance for the year

2015 following Global Reporting Initiative (GRI) G4 (Comprehensive) guidelines with Assurance’ by an independent certifying agency as per AA1000 assurance standard. We have responded to the Metal and Mining Sector Supplement of the GRI while reporting on our Sustainability performance to our stakeholders. The company has also been issuing a Business Responsibility Report (BRR) as a part of its Annual Report since 2012. The process also entailed a detailed Materiality Review with our internal as well as external stakeholders.

Other Reporting and Disclosures

The company participated and further improved its performance from the previous year in the Dow Jones Sustainability Index (DJSI) [Emerging Markets Index] in the Construction Materials industry. This exercise provided us an opportunity to benchmark ourselves with the leading global companies in this sector. Ambuja also continued its good performance in Carbon Disclosure Project (CDP) and received ‘B’ rating in the newly changed methodology of CDP. We are voluntarily reporting under CDP since 2010.

True Value Journey

Ambuja Cement continued its focus for creating a positive impact on the environment and society through environmental and social activities and strive to increase its ‘True Value’ [Social & Environment Profit and loss Assessment-to value our externalities] year on year. This valuation of social, environmental and economic performance, which was initiated in 2012, has helped us to focus on our social and environment performance. In fact, in 2016, a net positive contribution of more than Rs, 1050 crore to the environment and society was evaluated as compared to that of Rs, 750 crore in 2012 which was, however, lower than Rs, 1250 crore in 2014. Major contributors to this increase include: co-processing of wastes generated by other industries, increased water credits, reduced water usage at our plants, and activities related to agro-based livelihood.

14. Corporate Social Responsibility (CSR)

Since its inception, the company has been striving to become a neighbour of choice.

The company considers the community as an important stakeholder and has been investing in its wellbeing with a belief that people around us should prosper at the same pace as the business does. The company has meticulously taken up social development as a core responsibility, long before the mandate brought in by The Companies Act, 2013. Ambuja Cement established Ambuja Cement Foundation (ACF) as its CSR arm in 1993 to carry out its community engagement.

For the last 24 years, ACF has been closely working with the communities and currently reaches out over 1.8 million people across all our manufacturing sites. As a proactive initiative, far earlier than the company starts commissioning its plant, ACF begins with the need assessment amongst the affected people for the prospective project. ACF’s main focus areas are: Water Resource Management, Livelihoods (agriculture-and skill-based), Health & Sanitation, Women Empowerment and Education.

All development initiatives endeavour to magnify impact through building longterm partnerships with State and local government bodies, agencies, as well as community-based organisations and PRIs, with stringent monitoring and evaluation.

The one thing that never runs dry are our ideas for water conservation.

ACF took a holistic approach to achieve all-year-round water for farmers, families and communities by building infrastructure for mass water harvesting, mobilising and collectivising farmers, and promoting drinking water solutions to ensure sufficient drinking water.

ACF’s water resource management model focuses on three areas - Water Harvesting (check dams, interlinking rivers, watershed development, etc.), Drinking Water (roof rain water harvesting structures, pond deepening, in-village distribution system, water quality surveillance, etc.) and Water Use Efficiency (Water User Association, participatory irrigation management, promotion of micro irrigation).

Cumulative Achievements

375 check dams 6080 RRWHS 78 Km canal linkage

51.97 MCM water storage capacity created

ACF, through the adoption of a participative approach and customised solutions, has been catering to different challenges in varied geographies. The program began in Gujarat to address salinity gradually expanded to other locations, striving to give back more water than is being utilised. In Rabriyawas, located in the heart of the Thar Desert of Rajasthan, frequent famines brought huge agricultural losses, often causing mass migration in the area. ACF, through a mix of traditional knowledge and technological methods has focused on building/renovating traditional water reservoirs and structures to recharge groundwater and harvest surface water. On the other hand, Kodinar in Gujarat is a cyclic drought prone area, with constant ingress of saline water in inland groundwater and coastal agricultural land. Currently, we have permanently reversed the trend of salinity on over 15600 hectares of agricultural land in 83 villages of Gir-Somnath district.

In the hilly terrain of Himachal Pradesh, in partnership with NABARD, ACF continues implementing 'watershed management’ to conserve water and improve quality of livestock and land, while in Maharashtra, where the issue is high surface runoff, the Foundation focuses on groundwater recharge.

The community is now engaged in more productive activities - women utilise saved time for other income generating activities, and every girl is going to school. Improved drinking water quality has improved the health status of the local people.

The efforts also won us the FICCICSR Award in December 2016.

Building Prosperity by Promoting Livelihoods

Optimising Agricultural Potential AGF’s agro-based livelihood program works with a holistic approach by promoting end-to-end solutions. The program fundamentally aims at bridging existing gap in traditional farm practices and recommended practices. ACF’s multi-pronged approach in agro based livelihood has reached over one lakh farmers till date.

AGF focused on extensive training to farmers on a regular basis on varied topics. Each region has its unique features and hence the programme developed into a dynamic whole. In Kodinar, Gujarat and Rabariyawas, Rajasthan, clean and usable water has enabled farmers to grow more than one crop in their fields, directly impacting livelihoods. The use of micro-irrigation methodologies like drip and sprinkler in place of flood irrigation has not only ensured optimum utilisation of water in the fields, but has also increased the yield in the area.

According to the geographical suitability, programmes like organic farming in Punjab & SRI (System of Rice Intensification) in Ohhattisgarh and West Bengal has led to better rice production. SRI is a methodology to give better yield of rice with limited water use. It has given positive results in Bhatapara, Sankrail & Farakka and has till date reached out to over 10,200 farmers. Better Cotton Initiative (BCD has been an important initiative in AOF’s agro-based livelihood program. BCI is a global initiative for sustainable cotton production. The project has shown significant growth from 2500 farmers in 2010 to more than 44000 farmers, which is the highest among BCI implementing agencies in India. In 2016, BCI farmers recorded a significant 22% increase in their net income. ACF’s sustained efforts towards educating farmers and creating a better value chain to increase farm profits has gained us recognition at a global platform.

In 2016, Ambuja Cement Foundation was elected as a member in BCI’s Global Council and will now be playing an instrumental role in setting strategic direction for achieving better cotton and empowering farmers.

ACF has also been focusing on building collective bargaining power of farmers by formation of farmer producer organisations (FPOs). Currently,

11 FPOs have already been formed who are collectively procuring inputs at a lower cost and providing it at a reasonable price to the local farmers in remote areas. FPOs are also gradually shifting to build market supply linkages. For example, the FPO in Chirawa has collaborated with Big Basket to collectively supply vegetables.

Giving the rural youth what they need: Skills ACF has been focusing on developing the vocational skills of our rural youth to prepare them for the professional world and to handle the challenges at work. ACF is doing this through its Skill and Entrepreneurship Development Institutes (SEDI). ACF has established 17 SEDIs in 10 states and has trained over 30,000 rural youth successfully in 12 sectors placing 74% of them in various industries. ACF has also supported SEDI graduates in starting their own business and 2915 enterprises have been formed till date.

SEDI has introduced courses like welding, electrical, security guard, mobile phone repairing, etc. Another aspect that SEDI has been focusing on is to develop skills of physically challenged youth in the community. Till date, SEDI has trained 160 physically challenged youth, with large numbers now gainfully employed.

We Don’t Have a Single Main Priority.

We Have Three: Health, Safety and Sanitation

As health and safety is an overarching value for Ambuja Cement, it is important that we create safety awareness in our neighbouring community too. We aim to develop a healthy and thriving community around all our sites and are working sincerely in this direction.

Ambuja Cement is aligned to the national agenda of promoting sanitation and is mobilising communities to work to build clean and healthy villages. ACF facilitated the formation of Village Development Committees (VDCs) who spearhead the cause of sanitation. Through the Community Led Total Sanitation (CLTS), ACF is ensuring an active involvement of the community in achieving better sanitation practices. The aim is to bring about behavioural changes in the community more than mere construction and repair of toilets.

The two Federations from Chandrapur (Maharashtra) and Kodinar (Gujarat) with 490 SHGs and over 6100 members are driving communities to adopt hygienic practices.

In 2016, ACF supported 6107 households for toilet construction. ACF has covered over 12,000 households and 176 schools under its sanitation initiative.

Stakeholder Engagement for Continuous Improvement

We cater to the opinion shapers: our stakeholders.

Ambuja has created platforms to facilitate open discussion with its stakeholders where we plan projects and review the development initiatives. These forums bring us the opportunity to discuss stakeholders’ concerns and develop a proactive plan of action for enhanced business sustainability.

The Community Advisory Panels (CAP) functional at all sites, consist of opinion leaders from community and members from Ambuja Cements, meet regularly to formally discuss upon the concerns of the community in relation to the units and Ambuja’s initiatives to address the same. These CAPs have now become mature and reciprocal.

The Community Engagement Plans (CEP) are prepared annually by ACF in close consultation with the community and the relevant plant teams based on the concerns raised in the CAPs and other stakeholder meetings.

Annual Report on CSR Activities and Expenditure

The annual report on CSR activities and expenditure as required under Section 134 and 135 of the Companies Act, 2013 read with Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 and Rule 9 of the Companies (Accounts) Rules, 2014 is given as Annexure I to this Report.

(I) Extract of Annual Return:

15. Disclosures under the Companies Act, 2013 and listing regulations

The details forming part of the extract of the annual return in Form MGT-9 is given as Annexure II to this Report

(II) Number of Board Meetings:

The Board of Directors met 6 (six) times in the year 2016. The details of the board meetings and the attendance of the Directors are provided in the Corporate Governance Report.

(III) Changes in Share Capital:

During the year under review, the company allotted 58,44,17,928 equity shares of the face value of Rs,2 each under the Scheme of Amalgamation with Holcim India Pvt. Ltd. (HIPL) to the shareholders of HIPL. At the same time, 150,670,120 equity shares which were held by HIPL were cancelled as cross holding in terms of the said Scheme.

As a result of the allotment of new equity shares and cancellation of cross holding, the equity share capital has increased from Rs,3,103,794,842 divided into 1,551,897,421 equity shares of Rs,2 each to Rs,3,971,290,458 divided into 1,985,645,229 equity shares of Rs,2 each. All the equity shares forming part of the share capital ranks pari-passu in all respect.

(IV) Composition of Audit Committee:

The Board has constituted the Audit Committee which comprises of Mr. Rajendra Chitale as the Chairman and Mr. Nasser Munjee, Dr. Omkar Goswami and Mr. Martin Kriegner as members. More details on the committee are given in the Corporate Governance Report.

(V) Related Party Transactions:

In line with the requirements of the Companies Act, 2013 and Listing Regulations, the company has formulated a Policy on Related Party Transactions which is also available on the website of the company at http://ambujacement.com/Upload/PDF/policy_ on_determining_materiality_of_rpt_28_oct_201 5_revised.pdf.

All the related party transactions are entered on arm’s length basis, in the ordinary course of business and are in compliance with the applicable provisions of the Act and the Listing Regulations. There are no materially significant related party transactions made by the company with Promoters, Directors or Key Managerial Personnel etc. which may have potential conflict with the interest of the company at large or which warrants the approval of the shareholders. All Related Party Transactions are presented to the Audit Committee and the Board. Omnibus approval is obtained for the transactions which are repetitive in nature. A statement of all related party transactions is presented before the Audit Committee on a quarterly basis, specifying the nature, value and terms and conditions of the transactions. The statement is supported by the certificate from the MD & CEO and the CFO. All related party transactions are subject to half yearly independent review by a reputed accounting firm to establish compliance with the requirements of Arms’ Length Pricing.

In accordance with Section 134(3)(h) of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014, the particulars of contract or arrangement entered into by the company with related parties referred to in Section 188(1) in Form AOO-2 is attached as Annexure III.

(VI) Policy on Sexual Harassment of Women at Workplace:

The company has zero tolerance towards sexual harassment at the workplace and towards this end, has adopted a policy in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act - 2013 and the Rules thereunder. All employees (permanent, contractual, temporary, trainees) are covered under the said policy. An Internal Complaints Committee has also been set up to redress complaints received on sexual harassment.

16. Corporate Governance

The company has complied with the corporate governance requirements under the Companies Act, 2013, and as stipulated under the Listing Regulations. A separate section on corporate

During the financial year under review, the company has not received any complaints of sexual harassment from any of the women employees of the company.

governance along with a certificate from the auditors confirming compliance is annexed and forms part of this Annual Report.

17. Internal audits and controls

The company has an adequate system of internal controls in place with reference to the Financial Statements. The Management of the company is responsible for ensuring that Internal Financial Controls (IFC) has been laid down in the company and that controls are adequate and operating effectively.

The company’s internal controls system is founded on values of integrity and operational excellence. It supports the vision of the company, “To be the most sustainable and competitive company in our industry”. The foundation of internal control system lies in the corporate strategies, risk management framework and policies and procedures. The company has a robust internal control framework, commensurate with the size, scale and complexity of its operations. The framework has been designed to provide reasonable assurance related to financial and operational information, compliance with applicable laws and safeguarding assets of the company.

To maintain its objectivity and independence, the in-house Internal Audit department functionally reports to the Chairman of the Audit Committee. The scope and authority of the Internal Audit function is defined in the Internal Audit Charter, approved by the Audit Committee. The Internal Audit team develops a ‘Risk Based' annual audit plan, approved by the Audit Committee, which also monitors compliance to the plan.

The Internal Audit team monitors and evaluates the efficacy and adequacy of internal control system in the company, its compliance with operating system, accounting procedures and policies at all the locations of the company. Significant audit observations and corrective actions thereon are presented to the Audit Committee. The Audit Committee reviews the reports submitted by Internal Audit. Over the years, formal and independent evaluation of internal controls and initiatives for remediation of deficiencies by in house Internal Audit department has resulted in a robust framework for Internal Controls. The Internal Audit department assesses opportunities for improvement in the business processes designed to add value to the organisation and follows up on the implementation of corrective actions and improvements in the business processes after review by the Audit Committee.

This formalised system of internal control and risk management framework facilitate effective compliance of the Listing Regulations, u/s138 of Companies Act, 2013 and relevant statute applicable to the LafargeHolcim group.

It is a matter of pride that the Internal Audit Department of Ambuja Cements Ltd has been awarded the ‘IIA Excellence Award for Application of Internal Audit Technology’. This award is to recognise and encourage excellence in internal audit by corporate in-house internal audit departments. The Institute of Internal Auditors (IIA) is the highest governing body for internal audit professionals, with its global headquarters in Florida, USA.

18. Managing the risks of fraud, corruption and unethical business practices

I. Vigil Mechanism/ Whistle Blower Policy

Fraud and corruption-free work culture has been the core of the company. In view of the potential risk of fraud, corruption and unethical behaviour consequent to rapid growth and geographical spread of operations, which could adversely impact the company’s business operations, performance and reputation, the company has put an even greater emphasis to address these risks. To meet this objective, a comprehensive Ethical View Reporting Policy akin to Vigil Mechanism or the Whistleblower policy has been laid down. In terms of the said Policy, all the reported incidents are reviewed and if required, investigated in an impartial manner and appropriate actions are taken to uphold the highest professional, ethical and governance standards. The Policy also provides for the requisite checks & balances and safeguards to ensure that no employee is victimised or harassed for reporting and bringing up such incidents.

More details about this Policy are given in the Corporate Governance Report, which forms part of this Annual Report. The Ethical View Reporting Policy is available on the company website: www.ambujacement.com

II. Code of Conduct

The company has laid down a robust Code of Business Conduct and Ethics, which is based on the principles of ethics, integrity and transparency. More details about the Code is given in the Corporate Governance Report.

III. Anti Bribery and Corruption Directives (ABCD)

In furtherance to the company’s philosophy of conducting business in an honest, transparent and ethical manner, the Board has laid down ABCD’ as part of the company’s Code of Business Conduct and Ethics. As a company, we take a zero-tolerance approach to bribery and corruption and are committed to act professionally and fairly in all our business dealings.

To spread awareness about the company’s commitment to conduct business professionally, fairly and free from bribery and corruption, employee training and awareness workshops were conducted across the organisation during 2016. As part of continuous education on ‘ABCD’ to the employees, a mandatory on-line training through a web-based application tool was also undertaken by approximately 2,000 relevant employees.

The above policies and its implementation are closely monitored by the Audit and Compliance Committees of Directors and periodically reviewed by the Board.

19. Board of Directors and key managerial personnel

I. Retirement By Rotation

In accordance with the provisions of Section 152 and Article 147 of the Articles of Association of the Company, Mr. B. L.Taparia (DIN 00016551) and Mr. Ajay Kapur (DIN 03096416) will retire by rotation at the ensuing Annual General Meeting of the company and being eligible, have offered themselves for re-appointment. The Board recommends their re-appointment.

Further details about the above directors are given in the Corporate Governance Report as well as in the Notice of the ensuing Annual General Meeting being sent to the shareholders along with the Annual Report.

II. Attributes, qualifications & independence of Directors and their appointment

The Nomination & Remuneration Committee of Directors have approved a Policy for Selection, Appointment and Remuneration of Directors which inter-alia requires that the Directors shall be of high integrity with relevant expertise and experience so as to have a diverse Board. The Policy also lays down the positive attributes/ criteria while recommending the candidature for the appointment as Director.

The Board Diversity Policy of the company requires the Board to comprise of set of accomplished individuals, ideally representing a wide cross-section of industries, professions, occupations and functions and possessing a blend of skills, domain and functional knowledge, experience, educational qualifications, both individually and collectively.

Directors are appointed/ re-appointed with the approval of the Members for a term in accordance with the provisions of the law and the Articles of Association. The initial appointment of Managing Director & CEO is generally for a period of five years. All Directors other than Independent Directors are liable to retire by rotation unless otherwise specifically provided under the Articles of Association or under any statute. One-third of the Directors who are liable to retire by rotation, retire at every Annual General Meeting and are eligible for re-appointment.

The relevant abstract of the Policy for Selection, Appointment & Remuneration of Directors is given as Annexure IV.

III. Independent Directors declaration

The Independent Directors have submitted the Declaration of Independence, as required pursuant to Section 149 of the Companies Act, 2013 and provisions of the Listing Regulations, stating that they meet the criteria of independence as provided therein. The profile of the Independent Directors forms part of the Corporate Governance Report.

IV. Evaluation of the Board’s performance

As per provisions of the Companies Act, 2013 and Regulation 17(10) of the Listing Regulations, the evaluation process for the performance of the Board, its committees and individual Directors was carried out internally. Each Board member completed a questionnaire providing feedback on the functioning and overall level of engagement of the Board and its committees on the parameters such as the composition, execution of specific duties, quality, quantity and timeliness of flow of information, deliberations at the meeting, independence of judgement etc.

A one-on-one meeting of the individual Directors with the Chairman of the Board was also conducted as a part of self-appraisal and peer group evaluation and the engagement and impact of individual Directors were reviewed on parameters such as contribution, attendance, decision making, inter-personal relationship, action oriented, external knowledge etc.

The Directors were also asked to provide their valuable feedback and suggestions about the overall functioning of the Board and its committees and the areas of improvement for a higher degree of engagement with the Management.

The Independent Directors met on 17th December, 2016 to review performance evaluation of Non-Independent Directors and the entire Board of Directors including the Chairman, taking into account the views of Executive and Non-Executive Directors. The Independent Directors were highly satisfied with the overall functioning of the Board, its various committees and also of the performance of other

Non-executive and Executive Directors. They also appreciated the exemplary leadership role of the Board Chairman in upholding and following the highest values and standards of corporate governance.

Post review by the Independent Directors, the results were shared with the entire Board and respective committees. The Board expressed its satisfaction with the Evaluation results, which reflects the high degree of engagement of the Board and its committees with the company and its Management.

Based on the outcome of the evaluation and assessment cum feedback of the Directors, the Board and the Management have also agreed on various action points which will be implemented during the year 2017.

V. Remuneration policy

The company follows a Policy on Remuneration of Directors and Senior Management Employees. The policy is approved by the Nomination & Remuneration Committee and the Board.

The main objective of the said policy is to ensure that the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate the Directors, KMP and Senior Management employees. The remuneration involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals. The Remuneration Policy for the Directors and Senior Management employees is given in the Corporate Governance Report.

VI. Induction and familiarisation programme for Directors

The details of induction and familiarisation program for the Directors are given in the Corporate Governance Report.

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors to the best of their knowledge and ability confirm that:

20. Directors’ Responsibility

i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures;

ii) the Directors have selected such accounting policies, judgments and estimates that are reasonable and prudent and applied them consistently, so as to give a true and fair view of the state of affairs of the company as on 31st December, 2016, and of the statement of Profit and Loss and cash flow of the company for the period ended 31st December, 2016;

21. Auditors

I. Auditors and their report

M/s S R Batliboi & Associates, Chartered Accountants were appointed as the Statutory Auditors of the company at the Annual General Meeting held in October, 2003 and thereafter each year till the year 2011. Subsequently in April 2011 S. R. Batliboi & Co and in April 2013 SRBO & Co. LLP, both being the network firms of S. R. Batliboi & Associates were appointed as the statutory auditors of the company. Accordingly, the present statutory auditors, M/s SRBC & Co. LLP (along with its network firms) have completed their tenor of two terms of five consecutive years and also an additional period of 3 years as stipulated under Section 139 of the Companies Act, 2013. M/s SRBO & Co. LLP will thus be holding the office of the Statutory Auditors up to the conclusion of the forthcoming Annual General Meeting.

iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

iv) the annual accounts have been prepared on an ongoing concern basis;

v) proper internal financial controls to be followed by the company has been laid down and that such internal financial controls are adequate and were operating effectively and

vi) proper systems to ensure compliance with the provisions of all applicable laws has been devised and that such systems were adequate and operating effectively.

The company is proposing to appoint M/s. Deloitte Haskins & Sells LLP (ICAI Firm Registration No.112366W), Chartered Accountants, as Statutory Auditors for a period of 5 years commencing from the conclusion of the 34th Annual General Meeting till the conclusion of the 39th Annual General Meeting. M/s. Deloitte Haskins & Sells LLP have consented to the said appointment, and confirmed that their appointment, if made, would be within the limits mentioned under Section 141(3)(g) of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014.

The Audit Committee and the Board of Directors recommend the appointment of M/s.Deloitte Haskins & Sells LLP, Chartered Accountants as Statutory Auditors of the company from the conclusion of the 34th Annual General Meeting, till the conclusion of the 39th Annual General Meeting.

The Board places on record its appreciation for the contribution of SRBC & Co. LLP, Chartered Accountants, during their tenure as the Statutory Auditors of your company.

The Auditors’ Report to the Shareholders for the year under review does not contain any qualification

II. Cost Auditor and Cost Audit Report

Pursuant to section 148 of the Companies Act 2013, the Board of Directors on the recommendation of the Audit Committee appointed M/s P.M. Nanabhoy & Co. Cost Accountants, as the Cost Auditors of the company for the Financial Year 2017 and has recommended their remuneration to the Shareholders for their ratification at the ensuing Annual General Meeting. M/s P.M. Nanabhoy & Co. have confirmed that their appointment is within the limits of the Section 139 of the Companies Act, 2013, and have also certified that they are free from any disqualifications specified under Section 141 of the Companies Act, 2013.

22. Compliance with secretarial standards on Boardand Annual General Meetings

The company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings and Annual General Meetings.

The Audit Committee has also received a certificate from the Cost Auditor certifying their independence and arm’s length relationship with the company. Pursuant to Cost Audit (Report) Rules 2001, the Cost Audit Report for the financial year 2015, was filed with the Ministry of Corporate Affairs on 25th May 2016 vide SRN No. G04022380.

III. Secretarial Auditor and Secretarial Audit Report

The Board had appointed M/s Rathi & Associates, Company Secretaries in Whole-time Practice, to carry out Secretarial Audit under the provisions of Section 204 of the Companies Act, 2013 for the financial year 2016. The report of the Secretarial Auditor is annexed to this report as Annexure V. The report does not contain any qualification.

IV. Reporting of fraud

The Auditors of the company have not reported any fraud as specified under Section 143(12) of the Companies Act, 2013.

During the first quarter of 2016, based on certain allegations of fraud and malpractices in the conduct and operations, SEBI investigated the affairs of M/s Sharepro Services (India) Pvt. Ltd. (‘Sharepro’), who has been the Registrar and Share Transfer (R&T) Agent of the Company for a long period. The SEBI vide its Order dated March 22,2016 restrained Sharepro from conducting R&T activities and also directed all its client companies to conduct an audit of the records and systems relating to share transfer, transmission, payment of dividend etc. carried out by Sharepro on behalf of these companies.

23. Registrar and share transfer agent

Accordingly, the Assurance Audit of records and systems of Sharepro carried out by M/s Rathi & Associates, Practicing Company Secretaries, at the behest the company did not reveal any irregularity or violations with respect to transfer of securities or payment of dividend during the audit period from 2006 to 2015.

Subsequently, in pursuance of the advisory issued by SEBI and in order to protect the interest of the shareholders, the company appointed M/s Link Intime India Private Ltd as the new R&T Agent w.e.f. 1st July, 2016.

24. Significant and material orders passed by the courts or regulators

Order Passed by the Competition Commission of India (CCI)

Acting on the complaint filed by Builders Association of India (BAD, the Competition Commission of India (CCI) held the Cement Manufacturers Association (CMA) and its member-cement companies, including the company, guilty of violating provisions of the Competition Act and imposed a penalty of Rs,1163.91 crore. On Appeal, the Competition Appellate Tribunal (COMPAT) remanded the matter back to CCI for fresh hearing vide Order dated 11th December, 2015.

OCI heard the matter afresh and vide its Order dated 31st August, 2016 once again held OMA and its member-cement companies including the company guilty and imposed the same amount of penalty as levied in its previous Order. The company immediately filed an appeal before the COMPAT and the obtained a stay against the operation of the said Order, subject to deposit of 10% penalty amount which was forthwith complied by the company.

Other than the aforesaid, there have been no significant and material orders passed by the courts or regulators or tribunals impacting the going concern status and company’s operations. However, members’ attention is drawn to the statement on contingent liabilities and commitments in the notes forming part of the Financial Statements.

Particulars of loans, guarantees given and investments made during the year as required under Section 186 of the Companies Act, 2013 and Schedule V of the Securities and Exchange Board of India (Listing Obligation and Disclosure Requirement) Regulations, 2015 are provided in Notes 12,29 and 45 of the Standalone Financial Statements.

25. Particulars of loans, guarantees or investments

Treasury operations

During the year, the company’s treasury operations continued to focus on cash forecasting and deployment of excess funds on the back of effective portfolio management of funds within a well-defined risk management framework.

All investment decisions in deployment of temporary surplus liquidity continued to be guided primarily by the tenets of safety of Principal and liquidity. Despite Interest Rates coming down in calendar year 2016, a proactive management of portfolio helped improve treasury yield performance.

During the year, the investment portfolio mix was continuously rebalanced in line with the evolving interest rate environment.

26. Transfer of unclaimed dividend and unclaimed shares

The details relating to Unclaimed Dividend and Unclaimed shares forms part of the Corporate Governance Report.

27. Energy, technology and foreign exchange

Information on conservation of energy, technology absorption, foreign exchange earnings and out go, is required to be given pursuant to provision of Section 134 of the

Companies Act, 2013, read with the Companies (Accounts) Rules, 2014 is annexed hereto marked Annexure VI and forms part of this report.

There were 5183 permanent employees of the company as of 31st December, 2016.

28. Particulars of employees

The disclosure pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed to this report at Annexure VII.

Further, a statement showing the names and other particulars of employees drawing remuneration in excess of the limits as set out in the Rules 5(2) and 5(3) of the aforesaid Rules forms part of this report. However, in terms of first proviso to Section 136(1) of the Act, the Annual Report and Accounts are being sent to the members and others entitled thereto, excluding the aforesaid information. The said information is available for inspection by the members at the Registered Office of the company during business hours on working days up to the date of the ensuing Annual General Meeting. If any member is interested in obtaining a copy thereof, such member may write to the Company Secretary, whereupon a copy would be sent. Further, the details are also available on the company’s website: www.ambujacement.com/investors

29. Subsidiaries and joint ventures

The company has 6 subsidiaries and 2 joint ventures as on 31st December, 2016. During the year, one non-functional subsidiary viz. Kakinada Cements Ltd. was dissolved and the name of the company has been struck off from the Registrar of Companies, Gujarat under the easy exit scheme.

As reported elsewhere, with the effectiveness of the Scheme of Amalgamation with Holcim

India Pvt. Ltd., ACC Limited (along with its subsidiaries), has become the subsidiary of the company w.e.f. 12th August, 2016.

The Policy for determining Material Subsidiaries, adopted by the Board, pursuant to Regulation 16 of the Listing Regulations can be accessed on the company's website at: www.ambujacement.com/investors

As stipulated by Regulation 33 of the Listing Regulations, the Consolidated Financial Statements have been prepared by the company in accordance with the applicable Accounting Standards. The audited Consolidated Financial Statements together with Auditors’ Report form part of the Annual Report.

30. Consolidated financial statements

Pursuant to Section 129(3) of the Companies Act, 2013, a statement containing the salient features of the financial statements of each of the subsidiary and joint venture in the prescribed Form AOC-1 is annexed to this report at Annexure VIII.

Pursuant to Section 136 of the Companies Act, 2013, the financial statements of the subsidiary and joint venture companies are kept for inspection by the shareholders at the Registered Office of the company. The company shall provide free of cost, the copy of the financial statements of its subsidiary and joint venture companies to the shareholders upon their request. The statements are also available on the website of the company www.ambujacement.com/investors.

The consolidated net profit of the company and its subsidiaries amounted to Rs, 1,121.13 crore for 2016 as compared to Rs, 807.88 orore for 2015.

31. Equal opportunity employer

The company has always provided a congenial atmosphere for work to all employees that is free from discrimination and harassment including sexual harassment. It has provided

32. Other disclosures

No disclosure or reporting is made in respect of the following items as there were no transactions during the year under review:

- Details relating to deposits covered under Chapter V of the Act.

- Issue of equity shares with differential rights as to dividend, voting or otherwise.

equal opportunities of employment to all without regard to their caste, religion, colour, marital status and sex.

- Issue of shares to the employees of the company under any scheme (sweat equity or stock options).

- The company does not have any scheme or provision of money for the purchase of its own shares by employees or by trustees for the benefit of employees.

- Neither the Managing Director nor the whole-time Directors of the company receive any remuneration or commission from any of its subsidiaries.

- No material fraud has been reported by the

33. Awards and accolades

The company’s efforts towards building a sustainable company were well recognised at major award ceremonies. We won the prestigious Cll Sustainability Award for ‘Outstanding Accomplishment’, under the category of Corporate Excellence.

Our Bhatapara and Chandrapur units have also bagged awards in the domains of Environment Management & CSR.

34. Cautionary statement

Statements in the Directors’ Report and the Management Discussion and Analysis describing the company’s objectives, expectations or predictions, may be forward looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the company’s

Auditors to the Audit Committee or the Board.

- There was no revision in the financial statements.

- There was no change in the nature of business.

We have also been conferred with the FICCI CSR Award for our initiatives under the water resource management program. These awards recognise India's most sustainable companies for their outstanding achievements and commitment to shaping a future that is more sustainable and inclusive. For a complete list of the awards that Ambuja won in 2016, please refer to the initial part of the Annual Report.

operations include: global and domestic demand and supply conditions affecting selling prices, new capacity additions, availability of critical materials and their cost, changes in government policies and tax laws, economic development of the country, and other factors which are material to the business operations of the company.

35. Acknowledgements

The Directors take this opportunity to express their deep sense of gratitude to the Banks, Central and State Governments and their Departments, and the Local Authorities, for their continued guidance and support.

We would also like to place on record our sincere appreciation for the commitment, dedication and hard work put in by every member of the Ambuja family. To them goes the credit for the company’s achievements. And to you, our Shareholders, we are deeply grateful for the confidence and faith that you have always reposed in us.

For and on behalf of the Board of Ambuja Cements Limited

N. S. Sekhsaria

Chairman & Principal Founder Mumbai

20th February, 2017