The Members of Aditya Ispat Limited Hyderabad
Your Directors take pleasure in presenting the Twenty Sixth Annual Report on theaffairs of the Company for the financial year ended 31st March 2017 togetherwith the Audited Financial Statements and Report of the Auditors thereon.
1. FINANCIAL RESULTS:
The overall performance of the Company for the financial year 2016-17 is summarized asunder:
| || || ||( Rs. in Lakhs) |
|S.No. ||Particulars ||2016-2017 ||2015-2016 |
|1. ||Sales ( Gross) ||3880.69 ||3149.52 |
| ||Less : Excise Duty ||219.38 ||178.29 |
| ||Sales ( Net) ||3661.31 ||2971.23 |
|2. ||Other Income ||5.20 ||5.25 |
| ||Total Revenue ||3666.51 ||2976.48 |
|3. ||Profit before Interest Depreciation & taxation ||217.73 ||176.77 |
|4. ||Interest/Financial Charges ||116.57 ||91.85 |
|5. ||Depreciation ||39.88 ||37.77 |
|6. ||Profit before tax ||61.28 ||47.15 |
| ||Less: Provision for current tax ||17.06 ||8.54 |
| ||Less : Provision for Deferred Tax ||2.23 ||6.44 |
| ||Net Profit(loss) after tax ||41.99 ||32.17 |
| ||Add: Balance from previous year ||226.00 ||193.83 |
| ||Surplus carried to Balance Sheet ||267.99 ||226.00 |
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 AFFAIRS OF THE COMPANY
During the year 2016-17 the Company has posted a gross turnover of Rs. 3880.69 lakhshigher by 23.21 % over last year (Rs. 3149.52 lakhs in the F.Y. 2015-16) due tocorrection in realization. The Company has earned a net profit of Rs.61.28 lakhs beforetax compared to previous year's profit of Rs 47.15 Lakhs on account of lower input cost.There is an improvement in profitability due to increment in sale volume and optimizationof cost of productions.
4. FUTURE OUTLOOK:
Global steel markets recovered during Financial Year 2016-17 registering better thanestimated production & demand growth. During the year the global steel demand grew by1% to 1.52 billion tonnes on the back of stronger than expected demand growth in China.The crude steel production was 1.63 billion tonnes up by 0.8% compared to the previousyear.
The global capacity utilization ratio remained around 70% in spite of proactivemeasures being undertaken in China and Europe. For instance Chinese Government intends toreduce steel production capacity by 100-150 million tonnes by 2020 and has also announcedmerger of two major Chinese steel producers in the previous year.
Regulatory measures announced by the Indian Government during the year have continuedto aid domestic steel prices. The Indian steel industry has increased its capacity in therecent years though the demand growth has remained muted. This has resulted in financialstress in the balance sheet of the steel players. The domestic crude steel capacity roseto 122 million tonnes an increase of 11% year-onyear while the production of finishedsteel was around 101 million tonnes. The Financial Year 2016-17 saw a modest consumptiongrowth of 3% due to low growth in construction sector and impact of demonetisation and asharp decline in imports as domestic supply rebounded to the extent that India became anet exporter of steel after a gap of three years.
As per the World Steel Association (WSA') global steel demand is expected togrow at 1.3% in 2017 to 1.54 billion tonnes and a further 0.9% in 2018 to 1.55 billiontonnes. Recovery in developed economies and accelerating growth in emerging and developingmarkets especially Russia Brazil and India is expected to aid demand growth and keepinventory levels low which in turn is expected to support global steel prices. Howeverlow level of capacity reduction than targeted by nations and continued oversupply in rawmaterials especially iron ore are likely to weigh down on the prices in the absence ofeffective trade measures and/ or increase in steel demand.
India's prospects continue to remain bright inspite of imports and surplus capacity.Proactive policy measures by the Government are expected to address most of theseconcerns. For instance a Steel Price Monitoring Committee was formed by the Governmentwith an aim to monitor price rationalization analyse price fluctuations and advise allconcerned regarding any irrational price behavior of steel commodity. As per WSA steeldemand in India is expected to grow at 6-7% per annum in the next two years compared to4% 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 COMPANY'S 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 andcompany's 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 Company's internal financial controls were adequate and effectiveduring the financial year 2016-17.
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 theaccounting standards to the extent applicable to the Company have been followed in thepreparation of the annual accounts and there are no material departures; ii. That theDirectors had selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at the end of the financial year and of theprofit of the Company for that period; iii. That proper and sufficient care has been takenfor the maintenance of adequate accounting records in accordance with the provisions ofthe Companies Act 2013 for safeguarding the assets of your company and for preventing anddetecting fraud and other irregularities; iv. That the annual financial statements havebeen prepared on a going concern basis; v. That proper internal financial controls werelaid down and that such internal financial controls were adequate and were operatingeffectively; vi. That proper systems to ensure compliance with the provisions of allapplicable laws were in place and that such systems were adequate and were operatingeffectively.
11. STATUTORY AUDITORS AND AUDIT REPORT:
In terms of the provisions of the Companies Act 2013 (Act') statutory auditorsneed to be rotated on completion of two consecutive terms of five years each. For those ofthe companies that have firms audit their accounts for more than ten years as of April 12014 the Act provided such companies a transition period of three years to comply withthe provisions of the Act. The current statutory auditors M/s. Dagliya & CoChartered Accountants completed two consecutive terms as of April 1 2014 and hence theCompany availed the benefit of the transition period which came to an end on March 312017. Accordingly the Company would need to appoint a new audit firm to audit its booksof account for the year ending March 31 2018 and onwards.
The Management under the guidance of the Audit Committee initiated the process ofselection of auditors and had detailed interactions with certain eligible audit firms andassessed them against a defined eligibility and evaluation criteria. The Audit Committeeof the Board has decided to appoint M/s. DCM & Co. Chartered Accountants as thestatutory auditors of the Company for a period of five years commencing from theconclusion of the ensuing 26th Annual General Meeting scheduled to be held on 25thSeptember 2017 through the conclusion of 31st Annual General Meeting of theCompany to be held in the year 2022.
The Board at its meeting held on 14th August 2017 considered therecommendations/decision of the Audit Committee with respect to the appointment of M/s.DCM & Co. Chartered Accountants as the statutory auditor. Based on due considerationthe Board recommends for your approval the appointment of M/s. DCM & Co.as thestatutory auditor of the Company.
The Board seeks your support in approving the appointment of M/s. DCM & Co. as thenew statutory auditor of the Company.
M/s. Dagliya & Co Chartered Accountants are the auditors of the Company and willhold office until the conclusion of the ensuing AGM. On your behalf and on our own behalfwe place on record our sincere appreciation for the services rendered by M/s. Dagliya& Co during its long association with the Company.
As regards the comments in the Auditors' Report the relevant notes in the Accounts areself explanatory and may be treated as information/ explanation submitted by the Board ascontemplated under provisions of the Companies Act 2013.
12. 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 year2016-17.
13. 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 Auditor's Report is attached asannexure and form part of this report. There are no qualifications or observations orremarks made by the Secretarial Auditors in their Audit Report.
14. 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 Management's financial reporting process to ensure accurateand timely disclosures with the highest levels of transparency integrity and quality offinancial reporting. The Committee met four times during the year the details of whichare given in the Corporate Governance Report that forms part of this Annual Report. Duringthe year there were no instances where the Board had not accepted the recommendations ofthe Audit Committee.
15. STAKE HOLDERS' RELATIONSHIP COMMITTEE
The Company has a Stake Holder's Relationship Committee for reviewingShareholders/Investors complaints. The present members of this Committee are Mr Swamy S BDas (Chairman) Mr H M Dugar and Mr Sanjay Solanki. The detail of number and dates ofmeetings held attendance of the Directors and remunerations paid to them are givenseparately in the attached Corporate Governance Report.
16. 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.
17. 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 website ofthe Company www.adityaispat.com.
18. 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.
19. DIRECTORS :
Mr.S.K.Kabra retires by rotation at the forthcoming Annual General Meeting and beingeligible offers himself for re-appointment.
Brief particulars and expertise of the director and his 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.
20. 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.
21. 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 Company's 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 Company's Familiarisation Programme for IDs can be accessed atCompany's website at www.adityaispat.com
22. 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 March2017 are annexed to this report.
23. PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS:
The particulars of loans guarantees and investments covered under the provisions ofSection 186 of the Companies Act 2013. The company has neither granted any loan nor madeany investment nor given any guarantee or security to parties covered under theprovisions of section 185 and 186 of Companies Act 2013. It is not applicable to thecompany.
24. 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 no materiallysignificant related party transactions made by the Company with Promoters Directors KeyManagerial Personnel or other designated persons which may have a potential conflict withthe interest of Company at large. All related party transactions are placed before theAudit Committee and given in the notes annexed to and forming part of this FinancialStatement. The approved policy on Related Party Transactions is also available on thewebsite of the Company www.adityaispat.com Your Directors draw attention to the members toNote No.2.31 to the Financial Statement which 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.
25. SUBSIDIARY COMPANIES:
There are no subsidiary companies within the meaning of Section 2(87) of the CompaniesAct 2013.
26. 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 theCompany's website at www.adityaispat.com .
27. 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.
28. 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.
29. NUMBER OF MEETING OF THE BOARD:
During the year four 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.
30. CORPORATE GOVERNANCE a) As per SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a Management Discussion & Analysis a Report onCorporate Governance together with the Auditors' certificate regarding the Compliance ofconditions of Corporate Governance forms part of the Annual Report. b) The Board ofDirectors of the Company has laid down a comprehensive Code of Conduct for all its Boardmembers and senior management personnel which have also been posted on the website of theCompany.
A certificate by the Managing Director regarding compliance of the code of conduct ofthe Company is also included in the Annual report.
31. 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 2017 isannexed to this report.
32. 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.
33. Human Resources Management & Industrial Relations
From its foundation Aditya Ispat limited employment philosophy and practices have beenbased on the recognition that its people are the primary source of its competitiveness.
The company consistently abides by human resources policy that is found on a set offollowing principles: equality of opportunity continuing personal development fairnessmutual trust and teamwork. These principles are in turn underpinned by the five AdityaIspat core Values of Pioneering Integrity Excellence Unity and Responsibility. TheCompany also believes as a matter of principle that diversity within its workforcegreatly enhances its overall capabilities. The Company is an equal opportunity employerand it does not discriminate on the basis of race caste religion colour ancestrygender marital status sexual orientation age nationality ethnic origin or disability.All decisions relating to promotion compensation and any other forms of reward andrecognition are based entirely on performance and merits.
The Company's ambition is to be a modern employer offering employees long-termprospects for a meaningful professional career. This is why the Company's collectivelabour agreement focuses on four aspects: health & vitality career development &skills employee productivity and employment conditions.
During the year the Company focused on improvement in areas related to diversity &inclusion and training & development. Many initiatives were undertaken to bring abouta change in the mindset of the workforce regarding these aspects.
Employees are very important stakeholders for the Company and the Management team is incontinuous engagement through the year to ensure seamless and transparent communication onall important issues that relates to the employees and the future of the company.
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. Thecompany has not accepted any deposits from public and as such no amount on account ofprincipal or interest on deposits from public was outstanding as on the date of balancesheet. ii. There was no issue of equity shares with differential rights as to dividendvoting or otherwise. iii. There was no issue of shares (including sweat equity shares) toemployees of the Company 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 : 14-08-2017 ||S.B CHACHAN |
|Place: Hyderabad. ||CHAIRMAN & MANAGING DIRECTOR |