Bihar Sponge Iron Ltd.
|BSE: 500058||Sector: Metals & Mining|
|NSE: BIHARSPONG||ISIN Code: INE819C01011|
|BSE LIVE 15:15 | 05 Dec||2.70||
|NSE LIVE 05:30 | 01 Jan||Stock Is Not Traded.|
Bihar Sponge Iron Ltd. (BIHARSPONG) - Director Report
Company director report
To the Members
The Directors have pleasure in presenting the 33nd Annual Report of theCompany along with audited accounts for the year ended 31st March 2015.
During the year under review there was no production of sponge iron due to Plant beingshut from 9th August 2013 on account of sudden stoppage of coal supply byCentral Coalfields Limited Ranchi a Unit of Coal India Limited against our long termFuel Supply Agreement. The reason for stoppage of coal supply was that Ministry of Coalhad allocated a Captive Coal Mine - Macherkunda Coal Block in the year 2008 and as perterms & conditions the Mine was to be operative by February 2013. The Mine could notbe developed due to various reasons beyond our control i.e. depending upon the Govt.ofIndia for clearance. The Coal Block was later cancelled on 20th November 2012by Ministry of Coal Govt.of India. The Company challenged this by filing a Writ PetitionNo. W.P.(C) 1660 in the year 2013 in the Honble Jharkhand High Court.
Further all Coal Blocks were also cancelled by Honble Supreme Court of Indiavide its Order dated 25th September 2014 and our Macherkunda Coal Block wasalso amongst these Coal Blocks. Since the Policy about renewal of Fuel Supply Agreement(FSA) after de-allocation of Captive Coal Blocks was not clear hence they stopped thecoal supply. Later on in a Special Meeting of Standing Linkage Committee (Long Term) heldon 3rd December 2014 under the Chairmanship of Additional Secretary (Coal)Ministry of Coal decided that all EUP which were already having long term linkage shouldget coal from the respective Coal companies. Accordingly we approached the Chairman-CCLRanchi and he advised to withdraw our Writ Petition No. W.P.(C) No.1660 of 2013. Hefurther suggested that once the said writ petition is withdrawn CCL would proceed in thematter for renewal of Fuel Supply Agreement. The Company has made an interlocutoryapplication for withdrawal of the said writ petition before Honble Jharkhand HighCourt. We hope that the matter would be resolved with the withdrawal of the said WritPetition by the said High Court.
IRON ORE MINE:
The Company was allotted Ghatkuri Iron Ore Mine in April 2007 in the State ofJharkhand with 406.40 hectares of land and consisting of reserves estimated at 35.65million tons. However the Geological Survey was conducted by Department of GeologyMinistry of Mines Govt. of Jharkhand and report was released in February 2012 whereinthey have assessed the Ore reserve to be about 11.00 Million Tons. The Company hasrequested for the allocation for an additional Iron Ore Mine to compensate the differencein allocated quantity and for revised geological reserves. The draft Mining Plan preparedby MECON was submitted with Ministry of Mines on 3rd September 2012 based onthe revised reserves of 11.00 million tons.
The Indian Bureau of Mines Ministry of Mines Govt. of India vide its letter dated06-02-2014 have communicated the mining plan is not approved. The Company expects a totalcapital investment of around Rs.45.00 Crores for the development and anticipates thecommencement of production of iron ore by 2016.
As already reported the Macherkunda Coal Block allocated to the Company for captivemining of coal has been de-allocated by the Ministry of Coal Government of India. TheGovernment of India has filed a number of transfer petitions in the Honble SupremeCourt for transfer of the coal block cases which were pending in various high courts. TheSupreme Court has expressed its view that all coal block allocations on and after 2003 areillegal. The Supreme Court has vide its order dated 25th September 2014 hascancelled allocation of all but 4 coal blocks allocated from 2003. The Macherkunda CoalBlock was among the all cancelled coal blocks.The Company has made an application toMinistry of Coal Govt. of India for return of Bank Guarantee of Rs. 2.81 cr. Vide itsletter dated 15th October 2014.
5 MW POWER PLANT / STEEL PLANT
The Company from the existing power plant generates 5 MW Power based on dolo char beingproduced in the manufacturing of sponge iron. Since the Company is not able to consume thetotal dolo char the Company has entered into an agreement with G.S. Phambutor Pvt.Limited (GSP) to install a 5 MW Power Plant. Whenever the existing power plant goes underregular maintenance the Company has to generate power from DG Set which is highlyuneconomical. During such time the Company will take the power from GSP and for the restof the period GSP will consume the power in induction furnace to produce pencil ingot. The5 MW power plant is at commissioning stage. Once the sponge iron plant starts itsoperations to said power plant will be commissioned and steps for setting up inductionfurnace will initiated. DIVIDEND
In view of the loss incurred by the Company no dividend has been proposed for thefinancial year ended 31st March 2015
During the year under review your Company did not accept any deposits within themeaning of provisions of Chapter V - Acceptance of Deposits by Companies of the CompaniesAct 2013 read with the Companies (Acceptance of Deposits) Rules 2014.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186.
The Company has not given any loans guarantees or made any investments under Section186 of Companies Act 2013 during the financial year 2014-15.
INTERNAL CONTROL SYSTEM
The Company has a well placed proper and adequate internal control system whichensures that all assets are safeguarded and protected and that the transactions areauthorised recorded and reported correctly. The Companys internal control systemcomprises audit and supplemented by internal audit checks from the Internal AuditorM/s.Sarat Jain & Co. The Internal Auditors independently evaluate the adequacy ofinternal controls and concurrently audit the majority of the transactions in value terms.Independence of the audit and compliance is ensured by direct reporting of InternalAuditors to the Audit Committee of the Board.
NOMINATION AND REMUNERATION POLICY OF THE COMPANY The Board of the Company in itsmeeting held on 12th May 2015 has approved and adopted the CompanysNomination and Remuneration policy. Any member interested in hard copy of the said policymay inspect the same at the Registered Office of the Company or write to the CompanySecretary for a copy. The same is also disclosed in the Companys website
WHISTLE BLOWER POLICY:
Pursuant to Section 177(9) of the Companies Act 2013 read with Rule 7 of the Companies(Meetings of Board and its Powers) Rules 2014 and Clause 49 of the Listing Agreement theBoard of director of the Company in its meeting held on 6th February 2015 hasapproved and adopted vigilance mechanism - Whistle Blower Policy. This Policy inter-aliaprovides a direct access to the Chairman of the Audit Committee. Your Company herebyaffirms that no Director/ employee has been denied access to the Chairman of the AuditCommittee and that no complaints were received during the year. The said policy isavailable in the Company website www.bsil.org. in. Anymember interested in hard copy of the said policy may inspect the same at the RegisteredOffice of the Company or write to the Company Secretary for a copy.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES.
All transactions entered by the Company with Related Parties were in the OrdinaryCourse of Business and at Arms Length pricing basis. The Audit Committee grantedomnibus approval for the transactions (which are repetitive in nature) and the same wasreviewed by the Audit Committee and the Board of Directors.
There were no materially significant transactions with Related Parties during thefinancial year 2014-15 which were in conflict with the interest of the Company. Suitabledisclosures as required under AS-18 have been made in the Notes to the financialstatements.
The Board had approved policies on Related Party Transactions. The policies have beenuploaded on the Companys website: www.bsil.org.in.Any member interested in hard copy of the said policy may inspect the same at theRegistered Office of the Company or write to the Company Secretary for a copy.
The particulars of contract and arrangements entered into by the Company with relatedparties referred to in sub-section (1) of section 188 of the Companies Act 2013 read withclause 49 of the Listing Agreement is disclosed separately in Form No. AOC -2 asAnnexure-D and forms part of this report.
EXTRACT OF THE ANNUAL RETURN
The extract of the Annual Return for 2014-15 in Form No. MGT - 9 is given separately asAnnexure - E which form part of the Boards report.
The Board of Directors of the Company have appointed M/s. R Singhal& AssociatesCompany Secretaries (PCS Registration No. 10699) as the Secretarial Auditor of the Companyin relation to the financial year 2014-15 in terms of Section 204 of the Companies Act2013. The Secretarial Audit Report for financial year 2014-15 done is separately annexedas Annexure-F with this report and is available on the Companys website
The observation in secretarial audit report are self explanatory and therfore do notcall for any further explanation. Further due to shutdown of the plant and suspension ofoperation from 09.08.2013 various dues could not be paid on due dates. Necessary steps arebeing taken to re-start the Company and payment of all such dues shall be made afterre-start of operation of the Company.
Disclosures required u/s 197(12) of the Companies Act 2013 read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rule 2014 relating toratio of the remunration of each director to the median employee's remuneration and otherdetails shall be provided on request in accordance with the provisions of Section 136 ofthe Act. The relevant information could not be provided as the plant is under shut and theoperations has been suspended from 09.08.2013 thereby the salary wages and allowances ofthe employees is unascertained.
In terms of the provisions of Section 197(12) of the Companies Act 2013 read withRules 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 non of the employee is drawing remuneration in excess of thelimits set out in the said Rules.
A) CHANGES IN DIRECTORS AND KEY MANAGERIAL PERSONNEL
Since the last Annual General Meeting the following changes have taken place in theBoard of Directors:
Mr. Satish Kumar GuptaWhole Time Director designated as Director (Works) of theCompany is re-appointed as Whole Time Director designated as Director (Works) w.e.f.13-12-2014 for a period of 3 years.
In accordance with the provisions of Section 160 of the Companies Act 2013 and Article128 of the Articles of Association of the Company Mrs. Kumkum Modi retires by rotationand are eligible for re-appointment.
Mr. G. W. Elsenheimer ceased to be the director of the Company under Section 167 of theCompanies Act 2013.
Mr. G. C. Jain has resigned as director of the Company w.e.f. 15th April 2015. Mr. R.K. Agarwal Mr. Jagan Nath Khurana and Mr. Madan Lal the independent directors of theCompany pursuant to section 149 (10) of the Companies Act 2013 shall hold the office asdirectors for a term of 5 years w.e.f.12th May 2015 12th May 2015and 14th November 2014 respectively subject to the approval of shareholders.
Mr. B. K. Goel is appointed as Chief Financial Officer of the Company w.e.f. 6thFebruary 2015.
None of the directors of the Company are disqualified under Section 164 (2) of theCompanies Act 2013. Your directors have made necessary disclosures as required undervarious provisions of the Companies Act 2013.
B) DECLARATION BY AN INDEPENDENT DIRECTORS
The Company has received declaration by all Independent Director(s) that they meet thecriteria of independence as provided in sub-section (6) of Section 149 of the CompaniesAct 2013. The declaration received from the independent directors were placed at themeeting of the Board of directors of the Company held on 12th May 2015. Anymember interested in hard copy of the said policy may inspect the same at the RegisteredOffice of the Company or write to the Company Secretary for a copy.
C) FORMAL ANNUAL EVALUATION
Pursuant to the provisions of the Companies Act 2013 and Clause 49 of the ListingAgreement Independent Directors at their meeting without the participation of theNon-independent Directors and Management considered/ evaluated the Boardsperformance Performance of the Chairman and other Non-independent Directors
The Board subsequently evaluated its own performance the working of its Committees(Audit Nomination and Remuneration and Stakeholders Relationship Committee) andIndependent Directors (without participation of the relevant Director).The criteria forperformance evaluation have been detailed in theCorporate Governance Report which isattached as Annexure- B to this Report.
D) NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS
The Board of the Company met for the four times i.e. on 29th May 2014 19thSeptember 2014 14th November 2014 and 6th February 2015during financial year 2014-15
E) DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to Section 134(5) of the Companies Act 2013 the Directors of your Companydeclare as under:
(a) that in the preparation of the annual accounts the applicable accounting standardhad been followed along with proper explanation relating to material departures;
(b) 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 at the end of thefinancial year and of the profit and loss of the company for that period.
(c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;
(d) that the directors had prepared the annual accounts on a going concern basis; and
(e) that the directors in the case of a listed company had laid down internalfinancial controls to be followed by the company and that such internal financial controlsare adequate and were operating effectively.
ExplanationFor the purposes of this clause the term "internal financialcontrols" means the policies and procedures adopted by the company for ensuring theorderly and efficient conduct of its business including adherence to companyspolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information;
(f) That the directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
The composition of an Audit Committee is disclosed in the corporate governance reportannexed with this report and forms part of it. Further there has not been any instancewhere the Board had not accepted any recommendation of the Audit Committee.
M/s. Thakur Vaidyanath Aiyar and Co. Chartered Accountants (Firm RegistrationNo.000038N) Auditors of the Company retire at the conclusion of the ensuing AnnualGeneral Meeting and being eligible offer themselves for re-appointment. The Company hasreceived a letter from them to the effect that their re-appointment if made would bewithin the prescribed limits under Section 139 of the Companies Act 2013 and the AuditCommittee of the Company has recommended their appointment as statutory Auditors for twoconsecutive years starting from the conclusion of 33rd AGM to the conclusion of 35th AGMof the Company.
ACCOUNTS AND AUDIT:
Notes to accounts referred to in the Auditors Report are self-explanatory andthere fore do not call for any further explanation. However the following has not beenrecognized as explained below:
a. Rs. 232381 thousand against currency fluctuation of foreign currency loan has notbeen recognized as the Company has filed Letters Patent Appellate Jurisdiction (LPA)before the Divisional Bench of High Court of Jharkhand Ranchi and it is hopeful that thedecision will be in favour of the Company.
b. Rs. 21528 thousands recovered by South Eastern Coal Fields Ltd as penalty onaccount of short lifting of coal quantity in terms of Fuel Supply Agreement as the matterhas been disputed by the Company under writ petition filed before the Honble HighCourt of Chhattisgarh. It is hopeful that the Company would get the order in its favour.
c. Interest on unsecured loan taken from Promoters and other parties from 10.08.2013 to31.03.2015 has not been taken on accounts as the Company has applied to the lenders forthe waiver of the interest on unsecured loan.
d. Interest on Soft Loan taken from the Government of Jharkhand under the IndustrialRehabilitation Scheme 2003 amounting to Rs. 81331 thousands has not been provided as theCompany will make representation for waiver on re-start of the Company operation.
e. Salaries Wages Allowances Contribution to PF including interest on overdue amountas well as employee benefit expenses w.e.f. 10.08.2013 to 31.03.2015 has not been providedin view of the shut down of the plant and suspension of operation from 9thAugust 2013.
Further due to shut down of the plant and suspension of operation from 9thAugust 2013 various dues could not be paid on due dates. Necessary steps are being takento re-start the Company and payment of such dues shall be made after re-start of operationof the Company.
Chandil Power Limited has become a subsidiary company of the Company pursuant toSection 4 (1) (a) of the Companies Act 1956 and Section 2(87) of the Companies Act 2013and in accordance with the general circular No. 2/2011 dated 8 February 2011 issued bythe Ministry of Corporate Affairs Government of India the balance sheet profit and lossaccount and other documents as required to be attached with balance sheet are not attachedwith the balance sheet of the Company. The same will be made available to any member ofthe Company who may be interested in obtaining the same. The Annual accounts and relateddocuments of the subsidiary company will also be kept open for inspection at theregistered office of the Company. Further the consolidation of accounts is not required asChandil Power has become subsidiary by virtue of control on of composition of Board ofDirectors of Chandil Power Limited and the Company do not hold any shares in Chandil PowerLimited.Chandil Power Limited ceased to be subsidiary of the Company w.e.f. 29thSeptember 2014.
A separate report on Corporate Governance is attached as Annexure B to this report. TheAuditors Certificate confirming compliance of conditions of Corporate Governance andCEO/CFO Certificate as required under Clause 41 of the Listing Agreement is included inthe said Corporate Governance Report.
MANAGEMENT DISCUSSION ANALYSIS REPORT
In terms of Clause 49 of the Listing Agreement with the Stock Exchange ManagementDiscussion and Analysis Report is annexed as Annexure - C and form part of this report.
LISTING IN STOCK EXCHANGE:
The equity shares of the Company continues to be listed in the Bombay Stock Exchangeand listing fee for the Financial Year 2015-16 has been paid.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO:
Information pursuant to Section 134 of the Companies Act 2013 and rules made thereunder a statement giving the required information relating to energy conservationtechnology absorption foreign exchange earnings and outgo is annexed hereto as Annexure-Aand form part of this report.
Your Directors take this opportunity to place on record their sincere thanks to allstakeholders various departments of Central Government the Government of Bihar andJharkhand Financial Institutions and Banks for their valuable assistance. Your Directorsequally acknowledge the trust reposed by you in the Company. The Directors also wish toplace on record their appreciation for the all round support and co-operation receivedfrom the employees at all levels.
For & on behalf of the Board
TO THE DIRECTORS REPORT STATEMENT PURSUANT TO SECTION 186 OF THE COMPANIES ACT2013.
CONSERVATION OF ENERGY :
(B) Technology absorption adaptation & innovation.
1. Efforts in brief made towards technology absorption adaptation &innovation: Technology transfer is complete.
2. Benefits derived as a result of above efforts:The company achieves the metallizationacceptable to the user industry. Sponge Iron produced by the Company has helped thecountry in saving outgo of scarce foreign exchange resources by way of importsubstitution.
(a) Lurgi SL/RN process for the direct reduction of Iron Ore in a rotary kiln.
(b) Year of import : 1986-89 (plant construction period)
(c) Has the technology been fully absorbed? Yes
(d) If not fully absorbed areas where this has not been taken place reasons
Thereof and future plans of action N.A
FOREIGN EXCHANGE EARNINGS & OUTGO: (Rs. Lacs)