The Members of Aditya Ispat Limited
Your Directors take pleasure in presenting the Twenty Fifth Annual Report on theaffairs of the Company for the financial year ended 31st March 2016 togetherwith the Audited Financial Statements and Report of the Auditors thereon.
1. FINANCIAL RESULTS:
The overall performance of the Company for the financial year 2015-16 is summarized asunder:
| || ||(Rs. in Lakhs) |
|S.No. Particulars ||2015-2016 ||2014-2015 |
|1. Sales (Gross) ||3149.52 ||3423.51 |
|Less : Excise Duty ||178.29 ||168.21 |
|Sales (Net) ||2971.23 ||3255.30 |
|2. Other Income ||5.25 ||4.80 |
|Total Revenue ||2976.48 ||3260.10 |
|3. Gross Profit before Interest || || |
|Depreciation & taxation ||176.77 ||165.96 |
|4. Interest/Financial Charges ||91.85 ||89.34 |
|5. Depreciation ||37.77 ||30.24 |
|6. Profit before tax ||47.15 ||46.38 |
|Less: Provision for current tax ||8.54 ||8.95 |
|Less : Provision for Deferred Tax ||6.44 ||4.99 |
|Net Profit (loss) after tax ||32.17 ||32.44 |
|Add: Balance from previous year ||193.83 ||164.67 |
|Less: Adjustment on account of Schedule II of the Companies Act 2013 ||- ||3.28 |
|7. Surplus carried to Balance Sheet ||226.00 ||193.83 |
2. DIVIDEND & TRANSFER TO RESERVE:
The Board has not recommended any dividend during the year under considerationto augment resources for future growth of the company and it has also not transferred anyamount to reserves.
3. OPERATIONS AND THE STATE OF AFFAIR OF THE COMPANY
During the year 2015-16 the Company has posted a gross turnover of Rs. 3149.52 lakhslower by 8.70 % over last year (Rs. 3423.51 lakhs in the F.Y. 2014-15) due tocorrection in realization on account of lower input cost and downward trend of prices.However the Company has earned a net profit of Rs.47.45 lakhs before tax compared toprevious years profit of Rs 46.38 Lakhs. There is an improvement in profitabilitydue to optimization of cost of productions.
4. FUTURE OUTLOOK:
During the year global steel demand stood at 1.5 billion tonnes a decline ofapproximately 2.5% compared to the previous year. The global steel prices were at thelowest level since last decade. The Indian steel industry is the third largest producer ofcrude steel only behind China and Japan. In India the growth in production was driven bycapacity expansion from approximately 80 million tonnes in Financial Year 2010-11 to 110million tonnes in Financial Year 2014-15 a CAGR growth of 8%. During Financial Year2015-16 the total steel demand stood at 80 million tonnes growing at 4.5% over theprevious year.
During the year India continued to witness significant level of imports whileinitiatives like the safeguard duty and minimum import price have provided some relief topredatory pricing being followed by the exporting countries.
The world steel market continues to suffer from weakness in the manufacturing sectorand inadequate investments in the developed countries. The growth in developed countriesis expected to be modest owing to factors such as low productivity unfavorabledemographic trend uncertainties in the political landscape and slowdown in activities onaccount of the ongoing financial crisis. In addition to this the Chinese economy hasdepressed the manufacturing sector particularly related to metal products. Exports fromother developing and developed countries have declined due to insignificant demand inChina.
However Indias prospects seem bright with the Government of India taking severalpolicy measures to support manufacturing infrastructure and foreign investment. As perWorld Steel Association (WSA) steel demand in the emerging and developing economies(excluding China) is expected to grow by 1.8% and 4.8% respectively in 2016.
5. MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis as required by the Listing Regulation is annexedherein by reference and forms an integral part of this Annual Report.
6. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Company has in place an established internal control system designed to ensureproper recording of financial and operational information compliance of various internalcontrols and other regulatory and statutory compliances. Self certification exercise isalso conducted by which senior management certifies effectiveness of the internal controlsystem of the Company. Internal Audit is conducted throughout the organization byqualified outside Internal Auditors. Findings of the Internal Audit report are reviewed bythe top management and by the Audit Committee of the Board and proper follow up action areensured wherever required. The Statutory Auditors have evaluated the system of theinternal controls of the Company and have reported that the same are adequate andcommensurate with the size of the Company and nature of its business.
7. CHANGE IN THE NATURE OF BUSINESS
During the year under consideration there has been no change in the nature of thebusiness of the Company.
8. MATERIAL CHANGES BETWEEN THE DATE OF THE BOARD REPORT AND END OF FINANCIALYEAR.
There have been no material changes and commitments if any affecting the financialposition of the Company which have occurred between the end of the financial year of theCompany to which the financial statements relate and the date of the report.
9. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATIONS IN FUTURE:
During the year under review there has been no such significant and material orderspassed by the regulators or courts or tribunals impacting the going concern status andCompanys operations in future.
10. DIRECTORS RESPONSIBILITY STATEMENT:
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutory andsecretarial auditors and external consultants including audit of internal financialcontrols over financial reporting by the statutory auditors and the reviews performed bymanagement and the relevant board committees including the audit committee the board isof the opinion that the Companys internal financial controls were adequate andeffective during the Financial Year 2015-16.
Accordingly pursuant to Section 134(3)(c) and 134(5) of the Companies Act 2013 theboard of directors to the best of their knowledge and ability confirm:
i. That the accounting standards to the extent applicable to the Company have beenfollowed in the preparation of the annual accounts and there are no material departures;
ii. That the Directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at the end of thefinancial year and of the profit of the Company for that period;
iii. That proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of your company and for preventing and detecting fraud and otherirregularities;
iv. That the annual financial statements have been prepared on a going concern basis;
v. That proper internal financial controls were laid down and that such internalfinancial controls were adequate and were operating effectively;
vi. That proper systems to ensure compliance with the provisions of all applicable lawswere in place and that such systems were adequate and were operating effectively.
11. LISTING AGREEMENT
During the year SEBI notified the Listing Regulations and the same were effective fromDecember 1 2015. In terms of the Listing Regulations all listed entities were requiredto enter into a new listing agreement with the stock exchanges. In compliance with therequirement we have executed the listing agreement with the BSE Limited.
12. STATUTORY AUDITORS AND AUDIT REPORT:
M/s. Dagliya & Co Chartered Accountants Secunderabad were appointed as Auditorsof the Company for tenure of three years i.e. till the conclusion of the 26thAnnual General Meeting of the Company. However this appointment is subject toratification by members at every Annual General Meeting held after appointment duringtheir tenure of office. The Auditors have confirmed their eligibility and qualificationunder Section 141 of Companies Act 2013 and therefore their ratification for appointmentas Statutory Auditors for the year 2016-17 is being sought from the Members of the Companyat the ensuing AGM. As regards the comments in the Auditors Report the relevantnotes in the Accounts are self explanatory and may be treated as information/ explanationsubmitted by the Board as contemplated under provisions of the Companies Act 2013.
13. COST AUDITORS:
Pursuant to the provisions of Section 148 of the Companies Act 2013 and Companies(Cost Records and Audit) Amendment Rules 2014 the Company was not covered for the costaudit and consequently the company had not appointed Cost Auditor for the financial year2015-16
14. SECRETARIAL AUDIT:
In compliance with the provisions of Section 204 and other applicable provisions ofCompanies Act 2013 a secretarial audit was conducted during the year by SecretarialAuditors M/s A J Sharma & Associates. The Secretarial Auditors Report isattached as annexure and form part of this report. There are no qualifications orobservations or remarks made by the Secretarial Auditors in their Audit Report.
15. AUDIT COMMITTEE:
The Audit Committee of the board of directors of the Company consists of Mr SanjaySolanki (Chairman) Mr Swamy S B Das and Mr H M Dugar. The Committee has adopted a Charterfor its functioning. The primary objective of the Committee is to monitor and provideeffective supervision of the Managements financial reporting process to ensureaccurate and timely disclosures with the highest levels of transparency integrity andquality of financial reporting. The Committee met four times during the year the detailsof which are given in the Corporate Governance Report that forms part of this AnnualReport. During the year there were no instances where the Board had not accepted therecommendations of the Audit Committee.
16. STAKE HOLDERS RELATIONSHIP COMMITTEE
The Company has a Stake Holders Relationship Committee for reviewingShareholders/Investors complaints.
The present members of this Committee are Mr Swamy S B Das (Chairman) Mr H M Dugar andMr Sanjay Solanki. The detail of number and dates of meetings held attendance of theDirectors and remunerations paid to them are given separately in the attached CorporateGovernance Report.
17. CORPORATE SOCIAL RESPONSIBILITY:
The Company is not required to constitute a Corporate Social Responsibility Committeeas it does not fall within purview of Section 135(1) of the Companies Act 2013 and henceit is not required to formulate policy on corporate social responsibility.
18. NOMINATION AND REMUNERATION COMMITTEE:
The Nomination and Remuneration Committee works with the Board to determine theappropriate characteristics skills and experience for the Board as a whole and itsindividual members with the objective of having a Board with diverse backgrounds andexperience in business government education and public service. Characteristics expectedof all Directors include independence integrity high personal and professional ethicssound business judgment ability to participate constructively in deliberations andwillingness to exercise authority in a collective manner. The policy on appointment andremoval of Directors and determining Directors independence is posted on the websiteof the Company www.adityaispat.com.
19. BOARD EVALUATION:
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board has carried out an annualperformance evaluation of its own performance the Directors individually as well as theevaluation of the working of its Audit Nomination and Remuneration and other Committees.The manner in which the evaluation has been carried out has been posted on the website ofthe Company www.adityaispat.com. The Independent Directors are regularly updated onindustry & market trends plant process and operational performance of the Companyetc through presentations in this regard and periodic plant visits. They are alsoperiodically kept aware of the latest developments in the Corporate Governance theirduties as Directors and relevant laws.
20. DIRECTORS :
Mrs. Usha Chachan retires by rotation at the forthcoming Annual General Meeting andbeing eligible offers herself for re-appointment.
Brief particulars and expertise of the director and her other directorships andcommittee memberships have been given in the annexure to the Notice of the Annual GeneralMeeting in accordance with the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
21. INDEPENDENT DIRECTORS DECLARATION:
Mr Swamy S B Das Mr H M Dugar and Mr Sanjay Solanki are Independent Directors of theBoard of the Company. The Company has received declarations from all the IndependentDirectors of the Company confirming that they meet the criteria of Independence asprescribed both under the Companies Act 2013 and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.
22. FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS
All new Independent Directors (IDs) inducted into the Board are given an orientation.Presentations are made by Executive Directors (EDs) and Senior Management giving anoverview of our operations to familiarise the new IDs with the Companys businessoperations. The new IDs are given an orientation on our products Board constitution andprocedures matters reserved for the Board and our major risks and risk managementstrategy. The Policy on the Companys Familiarisation Programme for IDs can beaccessed at Companys website at www.adityaispat.com
23. PARTICULARS OF EMPLOYEES AND KEY MANAGERIAL PERSONNEL (KMP)
The following three persons are the Key Managerial Personnel of the Company as per theprovisions of Section 203 of the Companies Act 2013.
a) Mr. Satya Bhagwan Chachan Managing Director
b) Mrs. Alphonsa Domingo Chief Financial Officer
c) Mr. Mahendra.N.Soni Company Secretary
During the year there has been no change in the Key Managerial Personnel.
Pursuant to Section 197(12) of the Companies Act 2013 read with Rule 5 of Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the remuneration andother details of Key Managerial Personnel and other Employees for the year ended March2016 are annexed to this report.
24. PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS:
The particulars of loans guarantees and investments covered under the provisions ofSection 186 of the Companies Act 2013 have been disclosed in the notes to financialstatements.
25. TRANSACTION WITH RELATED PARTIES:
All related party transactions that were entered into during the financial year were onarms length basis and were in the ordinary course of business. There are nomaterially significant related party transactions made by the Company with PromotersDirectors Key Managerial Personnel or other designated persons which may have a potentialconflict with the interest of Company at large. All related party transactions are placedbefore the Audit Committee and given in the notes annexed to and forming part of thisFinancial Statement. The approved policy on Related Party Transactions is also availableon the website of the Company www.adityaispat.com
Your Directors draw attention to the members to Note No.2.31 to the Financial Statementwhich sets out related party transactions.
Accordingly particulars of contracts or arrangements with related parties referred toin Section 188(1) of the Companies Act 2013 along with the justification for enteringinto such contracts or an arrangement in Form AOC-2 does not form part of the report.
26. SUBSIDIARY COMPANIES:
There are no subsidiary companies within the meaning of Section 2(87) of the CompaniesAct 2013.
27. VIGIL MECHANISM:
The vigil mechanism of the Company which also incorporates a whistle blower policy interms of the Listing Agreement comprises senior executives of the Company. Protecteddisclosures can be made by a whistle blower through an E mail or by telephone line or aletter to the chairman of the Audit Committee.
The policy on vigil mechanism and whistle blower policy may be accessed on theCompanys website at www.adityaispat.com .
28. EXTRACTS OF ANNUAL RETURN:
As provided under section 92(3) of the Act the extract of Annual Return is given inthe prescribed Form MGT-9 as annexed to this report.
29. RISK MANAGEMENT:
As a policy the Company has identified key risk concern/areas. The assessment of eachrisk area is done on quarterly basis. Following are the main concern/risk related to theCompany:
Market Related Risk: mainly demand realisation and redundancy of the product.
Production related Risk mainly availability of inputs accident or break down in theplant and rejection of material by the customers.
Human Resources Risk: includes the risk of labour unrest high employee turnover ratioand lower productivity due to dissatisfaction of employees.
Revenue Risk: adverse exchange rate movement Govt Policies and duty rates Data andRecords: data lost fire virus attack etc.
The Board and the Audit Committee takes note of Risk management of the Company in everyquarter.
The Risk Assessment is also discussed in the Management Discussion and Analysisattached to this report.
30. NUMBER OF MEETING OF THE BOARD:
During the year five Board Meetings were convened and held. The details of which aregiven in the Corporate Governance Report. The intervening gap between the Meetings waswithin the period prescribed under the Companies Act 2013.
31. CORPORATE GOVERNANCE
a) As per SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 aReport on Corporate Governance together with the Auditors certificate regarding theCompliance of conditions of Corporate Governance forms part of the Annual Report.
b) The Board of Directors of the Company has laid down a comprehensive Code of Conductfor all its Board members and senior management personnel which have also been posted onthe website of the Company.
A certificate by the Managing Director regarding compliance of the code of conduct ofthe Company is also included in the Annual report.
32. CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION FOREIGNEXCHANGE EARNINGS AND OUTGO:
Information regarding Energy Conservation Technology Absorption Foreign ExchangeEarnings and Outgo in accordance with Section 134(3)(m) of the Companies Act 2013 andforming part of the Directors Report for the year ended 31st March 2016 isannexed to this report.
33. DISCLOSURE AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013
The Company has zero tolerance towards sexual harassment at the workplace and hasadopted a policy on prevention prohibition and redressal of sexual harassment atworkplace in line with the provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the Rules thereunder.
During the year under review there were no cases filed pursuant to the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.
Directors state that no disclosure or reporting is required in respect of the followingitems as there were no transactions on these items during the year under review.
i. The company has not accepted any deposits from public and as such no amount onaccount of principal or interest on deposits from public was outstanding as on the date ofbalance sheet.
ii. There was no issue of equity shares with differential rights as to dividend votingor otherwise.
iii. There was no issue of shares (including sweat equity shares) to employees of theCompany under any scheme.
The Board takes this opportunity to express its deep gratitude for the continuedco-operation and support received from its Bankers State and Central Governments thecustomers share holders business associates and employees during the year under review.
Specific acknowledgement is also made for the confidence and understanding shown by theMembers in the Company.
| ||On behalf of the Board of Directors |
| ||Sd/- |
|Date : 13.08.2016 ||S.B CHACHAN |
|Place: Hyderabad. ||CHAIRMAN & MANAGING DIRECTOR |