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43
Annual Report 2011-12
42 Kajaria Ceramics Limited
finishes and designs. This optimism stems from certain
credible estimates which highlight the likelihood of
robust demand over the medium term.
Real estate growth:
The real estate demand in Tier-II and
III cities in India is estimated to be 354 msf of residential
space in the next three years. Also, the demand for
premium housing and housing for investment purposes is
also expected to witness a significant growth with the
networth of HNIs expected to grow from
`
45 trillion in
2010-11 to
`
235 trillion in 2015-16. As per investment
trends, a report by Kotak suggests that HNIs invest nearly
8% of wealth in the real estate segment.
Commercial segment demand:
The demand for malls
and retail space in the top seven cities in India is
expected to reach 112.57 msf in 2015 from 57 msf in
2011. During the same period, office space supply is
expected to reach 243.5 msf. This is expected to drive
demand for large-format, value-added tiles for flooring
solutions.
Social infrastructure creation:
The healthcare sector in
India is estimated to invest US$86 billion upto 2025 to
add 1.8 million beds and 700,000 doctors. India, being a
low-cost destination with an improving healthcare
scenario is emerging as an attractive destination for
medical treatment. The medical tourism in the country,
pegged at US$2.5 billion, is growing at 25% annually.
This necessitates growing alliances between hospitals
and hoteliers to create better infrastructure to cater to
the growth in the sector.
Growth drivers for the current year
Your Company expects to leverage this opportunity through
a volume-value play in the current year to enhance revenues
and margins and focus on strengthening shareholder value.
Volumes expansion:
The product volumes are expected
to expand substantially following the commissioning of a
2.30 MSM ceramic tiles capacity expansion at Soriso unit,
commencement of 3.10 MSM vitrified tile capacity from
Jaxx and 2.30 MSM ceramic tiles capacity from Vennar
complemented with continued outsourcing from
Europe/China and Gujarat.
Value enhancement:
Your Company commissioned 6
MSM of value-added vitrified tile capacity in March, 2011,
stabilising operations during the second half of the year.
Its full impact will be felt in 2012-13. Vitrified tiles
capacity of 2.30 MSM from Jaxx Vitrified is expected to
generate a premium.
During the year, your Company increased the proportion
of digital printed tiles and also manufactured matching
digital floor tiles. It introduced large format floor tiles
(150x90cm, 120x60cm, 80x80cm, 90x30cm, 60x60 cm)
and high definition digital vitrified tiles with various
designs and finishes, offering better aesthetic appeal to
customers.
Visibility:
Expanded Kajaria World distribution network
to seven-owned and 11 franchisees to market high-end
tiles apart from widening its dealer network.
Directors
Appointment:
Mr. H. Rathnakara Hegde was appointed as
an Additional Director of the Company by the Board in its
meeting held on 17th January 2012. It is proposed to
appoint him as a Director of the Company, liable to retire
by rotation, at the ensuing Annual General Meeting.
Retirement by rotation:
In accordance with Article 100
of the Articles of Association of the Company, Mr. R. K.
Bhargava and Mr. D. P. Bagchi, Directors of the Company,
will retire by rotation at the forthcoming Annual General
Meeting and being eligible, offer themselves for
reappointment.
Cessation:
Mr. R. P. Goyal passed away during the year
2011-12. He was an eminent member of the Company’s
Board of Directors. The Board extends its condolences to
his family at this hour of bereavement.
Brief resumes of the directors being appointed/re-
appointed together with other relevant details form part
of the Notice of the ensuing Annual General Meeting. The
Board recommends their appointment/ reappointment.
Auditors and their observations
M/s O P Bagla & Co., Chartered Accountants, the auditors
of the Company retire at the ensuing Annual General
Meeting and being eligible offer themselves for
reappointment. The Company has received a certificate
from the auditors to the effect of their reappointment.
The observations of the auditors are suitably explained
in the notes on accounts.
Personnel
Talent development remained a key focus during the
year. Well structured HR systems were used for talent
identification, development and retention. The
organisation continues to develop home-grown leaders
to support its growth and maintain its competitiveness
and leadership in the industry. Systematic identification
of successors to key positions enabled a proper
succession plan with their respective development plans
in place. The Company maintained cordial relations
during the year under review. The information required
to be furnished in terms of Section 217(2A) of the
Companies (Particulars of Employees) Rules, 1975, as
amended, is set out in the statement annexed hereto as
Annexure-I, forming part of the Report.
Directors’ responsibility statement
Pursuant to Section 217 (2AA) of the Companies Act 1956
as amended, Directors confirm that:
i) In the preparation of the annual accounts, the
applicable accounting standards have been followed
along with proper explanations relating to material
departures
ii) Appropriate accounting policies have been selected
and applied consistently and judgments and
estimates made are reasonable and prudent so as to
give a true and fair view of the state of affairs of the
Company as on 31st March 2012 and the profit and
cash flow of the Company for the period ended on
31st March 2012.
iii) Proper and sufficient care has been taken 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) The annual accounts have been prepared on a going
concern basis.
Corporate Governance Report
The Company complied with the Corporate Governance
requirements as stipulated under the Listing Agreement
with the stock exchanges. A separate section on corporate
governance, along with a certificate from the auditors
confirming the compliance, is annexed and forms part of
the Annual Report.
Management discussion and analysis
report
Management discussion and analysis on matters related to
the business performance, as stipulated in Clause 49 of the
Listing Agreement with stock exchanges, is given as a
separate section in the Annual Report.
Conservation of energy, technology
absorption and foreign exchange
earnings/outgo
Information required under Section 217(1)(e) of the
Companies Act, 1956, read with the Companies
(disclosure on particulars in the Report on the Board of
Directors) Rules, 1988 is given in Annexure-II and forms
part of this Report.
Acknowledgements
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 Kajaria Group. To
them goes the credit for the Company’s achievements.
Your Directors take this opportunity to express their deep
sense of gratitude to the banks/ financial institutions,
Central and state governments, customers, vendors and
the society at large for their continued support.
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
Place: New Delhi
Ashok Kajaria
Date: 27th April 2012
Chairman and Managing Director