Your directors are pleased to present the 33rd Annual Report and the Audited Statementof Accounts for the financial year ended March 31 2016.
| || || |
|Particulars || |
| ||March 31 2016 ||March 31 2015 |
|Gross Revenue ||1312406.77 ||1173501.72 |
|Profit /Loss Before Depreciation and Tax ||(247410.20) ||(31655.01) |
|Depreciation &Amortisation ||109974.44 ||93839.85 |
|Profit /Loss Before Tax ||(357384.64) ||(125494.86) |
|Provision for Deferred Tax ||(73447.93) ||(112.06) |
|Profit /Loss After Tax ||(283936.71) ||(125382.80) |
|Profit /Loss brought forward from Previous Year ||(124270.06) ||1112.74 |
|Profits/Loss available for appropriation ||(408206.77) ||(124270.06) |
In view of the loss incurred during the year the Board does not consider it expedientto recommend any dividend.
STATE OF COMPANY'S AFFAIRS
During the year your Company has achieved the Gross sales of Rs 13124 Crores incomparison of previous year's level of Rs 11735 Crores.
Enormous increase in finance cost continuous slump in the steel industry and delay instabilizing the expansion of Phase-3 of the Company has impacted the business and are theprimary reasons for the losses incurred by the Company during the fY 2015-16.
The Company has been facing severe stress in its debt servicing from past few years.This is due to several reasons and circumstances faced by the company which led to addingon stress on cash flows and consequently on debt servicing. The problems got aggravated inlast two financial years when there has been sharp surge in imports of steel in Indiawhich led to substantial fall in domestic steel prices impacting the margins and cashflows significantly. Further Joint Lender's Forum(JLF) has already been formed under theRBI Guidelines and JLF meetings are being conducted regularly to arrive at a long termviable solution for the company. The cash losses incurred by the company in last two yearsare as under:
|Particulars ||Loss After Tax ||Cash Loss |
|FY 2015-16 ||(2839.37) ||(2474.10) |
|FY 2014-15 ||(1253.83) ||(316.55) |
The company has achieved the Export Turnover of Rs 1198.33 crores in comparisonof previous year's level of Rs 1536 crores. The export turnover during the FY2015-16 is lower due to submerged demand in international market. There has beenvolatility and sluggish demand in the international market due to oversupply of steel bythe China and Russia.
With a firm commitment and through sustained efforts your company continues tomaintain good rapport with Global Customers. Our quality products and timely delivery havefound wide acceptance in the highly competitive international market.
Our products are being exported across the globe.
COMPLETION OF BALANCE CAPEX FACILITIES:
Your company is under implementation of completion of balance capex facilities likeCoal Washery & Raw Material Handling System Downstream Facilities Boilers Coke DryQuenching HSM Extension and Reheating Furnace. These facilities are expected to becompleted in FY 2017.
The banks have sanctioned Rs 905 Crores for completion of said balance facilities.
The Working Capital facilities available to the company for its Sahibabad Khopoli andOrissa Plants amounts to Rs 12280 crore (Fund Based limit of Rs 5651 crores and NonFund Based limit of Rs 6629 crores).The enhanced working capital for the year 2015-16 hasnot been sanctioned by the banks.
ISSUE AND REDEMPTION OF PREFERENCE SHARES
The Company has made an allotment of 200000 12% Redeemable Cumulative PreferenceShares of Rs 100 each in November 2015 and redeemed 712587 10% RedeemableCumulative Preference shares of Rs 100 each as per the terms of the Issue out ofthe proceeds of the fresh issue of shares.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Changes in the composition of the Board of Directors and other Key Managerial Personnel
Smt. Promila Bhardwajas an Additional Independent Director and Mr. Vipin Anand asNominee Director of Life Insurance Corporation of India (LIC) were inducted in the Boardin its meeting held on 30th May 2016.
Smt. Sunita Sharma and Smt. Promila Bhardwaj were ceased to be directors of theCompany. The Board placed on record its appreciation of the valuable contribution andguidance provided by them.
Currently the Board of Directors of the Company consists of 16 directors out of whichEight are Independent directors Three are Nominee directors Four are Executive directorsand One is Non-executive Chairman.
Due to the loss incurred during the year the Company has applied to the CentralGovernment for the approval of managerial remuneration and Central Government has grantedapproval for payment of Managerial Remuneration.
Clarification has been sought from the Central Government vide letter dated 05.05.2016and 13.06.2016 for payment of leave encashment provident fund and car perquisites tomanagerial personnel. Reply from the Central Government is still awaited.
Independent Directors' Declarations
All Independent directors have given declarations that they meet the criteria ofindependence as laid down under section 149 of the Companies Act 2013 which has beenrelied on by the Company and placed at the Board meeting.
Retirement by rotation
In terms of Section 152 of the Companies Act 2013 Mr. Brij Bhushan Singal and Mr. P.K. Aggarwal Directors would retire by rotation at the forthcoming AGM and is eligible forre-appointment. Mr. Brij Bhushan Singal and Mr. P. K. Aggarwal Directors of the Companyhave offered themselves for the reappointment.
Further as per the requirement of Companies Act 2013 and Listing Agreement thefollowing policies of the Company are attached herewith marked as Annexure 'A' and Annexure'B'.
a) Policy for selection of Directors and determining Directors independence; and
b) Remuneration Policy for Directors Key Managerial Personnel and other employees.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Pursuant to the provision of Section 135 of the Companies Act 2013 read with CSR Rulesthe Company has constituted a CSR Committee consisting of three Directors of which one isIndependent Director. The composition terms of reference etc. of the CSR Committee arelaid out in the Corporate Governance Report which forms part of this Annual Report.
The CSR policy of the Company has been uploaded on the Company's websitewww.bhushansteel.com.
In pursuance of the provisions of the Companies Act 2013 and CSR Policy of the Companyit is required to spend two percent of the average net profits of the Company for thethree immediately preceding financial years. The average net profits for three financialyears were Rs 54.38 Cr. and the Company was required to spent 2% i.e. Rs 1.09 Cr.on CSR activities. However the Company has incurred losses amounting to Rs 2838.99 Cr.during the financial year 2015-16. And it is facing uphill task in meeting its financialObligations. Hence the Company is unable to spend any funds on CSR Activities for the timebeing. The Company will incur the sum on CSR activities as soon as financial position ofthe Company improved.
The Responsibility Statement of the Corporate Social Responsibility (CSR) Committee ofthe Board of Directors of the Company is reproduced below:
'The implementation and monitoring of Corporate Social Responsibility (CSR) Policy isin compliance with CSR objectives and policy of the Company.'
The Company is committed to maintain the highest standards of corporate governance andadhere to the corporate governance requirements set out by SEBI. The Company has alsoimplemented several best corporate governance practices as prevalent globally. The reporton Corporate Governance as stipulated under the Listing Agreement forms an integral partof this Report and presented in a separate section as Annexure 'C'. The requisitecertificate from the Auditors of the Company confirming compliances with the conditions ofcorporate governance is part of the report on Corporate Governance.
MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT
Management's Discussion and Analysis Report for the year under review as stipulatedunder regulation 34(2) of SEBI Listing Obligations and Disclosure Requirements)Regulations 2015 is presented in a separate section as Annexure 'D' forming partof the Report.
CONSOLIDATED FINANCIAL STATEMENT
In accordance with the Companies Act 2013 ("the Act") and AccountingStandard (AS) - 21 on Consolidated Financial Statements read with AS - 23 on Accountingfor Investments in Associates and AS - 27 on Financial Reporting of Interests in JointVentures the audited consolidated financial statement is provided in the Report.
SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
The Consolidated Financial Statements presented by the Company include financialresults of all its subsidiaries joint ventures and associates. The Audited FinancialStatements of the Subsidiary Companies have been reviewed by the Audit Committee and theBoard.
A policy for determining material subsidiaries is displayed on the website of theCompany - www.bhushansteel.com.
No Company has become Joint venture during the financial year 2015-16. A report on theperformance and the financial position of the Subsidiaries Associates and Joint ventureas per Form AOC-1 are presented in the consolidated financial statement and hence notrepeated here for the sake of brevity. Most of the Subsidiaries and Joint Venture of theCompany have not commenced operations and their contributions to the overall performanceof the Company is insignificant.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
The Company has a Board approved policy on Related Party Transactions which has beendisclosed on the website of the Company and can be viewed at www.bhushansteel.com
All Related Party Transactions that were entered into during the financial year were onan arm's length basis in the ordinary course of business and were in compliance with theapplicable provisions of the Companies Act 2013 ('the Act') and SEBI (Listing Obligationsand Disclosures Requirements) Regulations 2015 and the provisions of Section 188 of theCompanies Act 2013 are not attracted. Thus disclosure in Form AOC-2 is not required.
There were no materially significant Related Party Transactions made by the Companyduring the year that would have required Shareholder approval as per provision ofCompanies Act 2013 read with applicable rules and Regulation 23 of SEBI (ListingObligations and Disclosures Requirements) Regulations 2015.
All related Party Transactions are placed before the Audit Committee for approval.Prior Omnibus approval of the Audit Committee is obtained for the transactions which areof for seen and repetitive nature. The transactions entered into pursuant to the omnibusapproval so granted along with a statement giving details of all related partytransactions is placed before the Audit Committee from time to time..
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALIMPACTING THE GOING CONCERN STATUS OF THE COMPANY
There are no significant and/or material orders passed by the Regulators or Courts orTribunals impacting the going concern status of the Company.
Bhushan Steel follows well-established and detailed risk assessment and minimisationprocedures which are periodically reviewed by the Board. The Company has in place abusiness risk management framework for identifying risks and opportunities that may have abearing on the organization's objectives assessing them in terms of likelihood andmagnitude of impact and determining a response strategy.
The Senior Management assists the Board in its oversight of the Company's management ofkey risks including strategic and operational risks as well as the guidelines policiesand processes for monitoring and mitigating such risks under the aegis of the overallbusiness risk management framework.
INTERNAL FINANCIAL CONTROLS
The Board has laid down Internal Financial Controls within the meaning of theexplanation to Section 134 (5) (e) of the Companies Act 2013. During the year suchcontrols were tested and no reportable material weakness in the design or operation wereobserved.
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the Internal Auditors and thereviews performed by Management and the relevant Board Committees including the AuditCommittee the Board is of the opinion that the Company's internal financial controls wereadequate and effective during the financial year 2015-16.
DIRECTORS' RESPONSIBILITY STATEMENT
As required by Section 134(3) (c) of the Companies Act your directors state that:
a) in the preparation of the annual accounts for the year ended March 31 2016 theapplicable accounting standards read with requirements set out under Schedule III to theAct have been followed and there are no material departures from the same;
b) the Directors have selected such accounting policies and applied them consistentlyand madejudgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at March 31 2016 and of the loss ofthe Company for the year ended 31st March 2016;
c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d) the Directors have prepared the annual accounts on a 'going concern' basis;
e) the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and
f) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY
The Company has adopted a Whistle Blower Policy to provide a formal mechanism to theDirectors and employees to report their concerns about unethical behaviour actual orsuspected fraud or violation of the Company's Code of Conduct or ethics policy. The Policyprovides for adequate safeguards against victimization of employees who avail of themechanism and also provides for direct access to the Chairman of the Audit Committee. Itis affirmed that no personnel of the Company has been denied access to the AuditCommittee.
The Policy is displayed at Company's website -www.bhushansteel.com.
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosures Requirements) Regulations 2015 the Board has carried out an annualevaluation of its own performance the directors individually as well as the evaluation ofthe working of various committees. The Independent directors also carried out theevaluation of the Chairman and the non-independent directors the details of which arecovered in the Corporate Governance Report.
Criteria for evaluation of Directors - For the purpose of proper evaluation theDirectors of the Company have been divided into 3 (three) categories i.e. IndependentNon-independent and nonexecutive and executive directors. The criteria for evaluationincludes factors such as engagement strategic planning and vision team spirit andconsensus building effective leadership domain knowledge management qualities teamwork abilities result achievements understanding and awareness etc.
AUDITORS AND AUDITORS' REPORT
M/s Mehra Goel & Co. Chartered Accountants and M/s. Mehrotra & MehrotraChartered Accountants Joint Statutory Auditors of the Company hold office till theconclusion of the ensuing Annual General Meeting and are eligible for re-appointment. Theyhave confirmed their eligibility to the effect that their re-appointment if made wouldbe within the prescribed limits under the Act and that they are not disqualified forre-appointment. The Notes on financial statement referred to in the Auditors' Report areself-explanatory and do not call for any further comments. The Auditors' Report containone qualification/ reservation etc which is self-explanatory and do not call for anyfurther comments.
The Board has appointed M/s Kabra & Associatesas cost auditors for conducting theaudit of cost records of the Company for the financial year 2015-16.
The Board has appointed R. K. Rai Practising Company Secretary to conduct SecretarialAudit for the financial year 2015-16. The Secretarial Audit Report for the financial yearended March 31 2016 is annexed herewith marked as Annexure 'E' to this Report. Theremarks in the Secretarial Audit Report are self-explanatory and do not call for anyfurther comments.
The CSR Committee comprises Mr. B. B. Singal (Chairman) Mr. B. B. Tandon and Mr.Nittin Johari as other members.
The Audit Committee comprises Mr. B. B. Tandon (Chairman) Mr. B. B. Singal Mr. M. V.Suryanarayana and Mr. Ashwani Kumar as other members.
Nomination and Remuneration Committee
The Nomination and Remuneration Committee comprises Mr. M.V. Suryanarayana (Chairman)Mr. B. B. Singal and Mr. B. B. Tandon as other members.
NUMBER OF MEETINGS OF THE BOARD
Five meetings of the Board of Directors were held during the year. For further detailsplease refer report on Corporate Governance presented as Annexure 'C' to thisReport.
PARTICULARS OF LOANS GIVEN INVESTMENTS MADE GUARANTEES GIVEN AND SECURITIES PROVIDED
Particulars of loans given investments made guarantee given and securities providedif any are given in the financial statement.
POLICY ON PREVENTION PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORKPLACE
The Company has zero tolerance for sexual harassment at workplace and has adopted aPolicy on Prevention Prohibition and Redressal of Sexual Harassment at the Workplace inline with the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and the Rules there under. The Policy aims to provideprotection to employees at the workplace and prevent and redress complaints of sexualharassment and for matters connected or incidental thereto with the objective ofproviding a safe working environment where employees feel secure. The Company has alsoconstituted an Internal Complaints Committee known as the Prevention of Sexual Harassment(POSH) Committee to inquire into complaints of sexual harassment and recommendappropriate action.
The Company has not received any complaint of sexual harassment during the financialyear 2015-16.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under subsection 3(m) of Section134 of the Companies Act 2013 read with Companies (Accounts) Rules 2014 are provided in Annexure'F' to this Report.
EXTRACT OF ANNUAL RETURN
Extract of Annual Return of the Company is annexed herewith as Annexure 'G' tothis Report.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
I n terms of the provisions of Section 197(12) of the Act read with Rules 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 as amendedfrom time to time a statement showing disclosures pertaining to remuneration and also thenames and other particulars of the employees drawing remuneration in excess of the limitsset out in the said rules are provided in the Annexure 'H' to this Report.
The Company has not accepted any deposits from the Public falling within the purview ofSection 73 of the Companies Act 2013 read with the Companies(Acceptance of Deposits)Rules 2014.
Your Directors would like to express their gratitude & appreciation for thevaluable guidance & support received from Government of India Government ofAustralia various State Governments particularly including States of Orissa Maharashtra& Uttar Pradesh; Banks and the financial Institutions; various stakeholders such asShareholders Debenture- holders Customers Dealers Suppliers and all the businessassociates among others. Your Directors also wish to place on record their deep sense ofappreciation & gratitude to all Company's employees for their continuous commitment& enormous personal efforts as well as their collective contribution towards thegrowth of the Company.
The Directors look forward to their continued support in future.
| ||for and on behalf of the Board of Directors |
|Place : New Delhi ||(B. B. SINGAL) |
|Dated : 06-08-2016 ||CHAIRMAN |