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Bihar Sponge Iron Ltd.

BSE: 500058 Sector: Metals & Mining
NSE: BIHARSPONG ISIN Code: INE819C01011
BSE LIVE 13:57 | 18 Aug 1.66 -0.03
(-1.78%)
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OPEN 1.76
PREVIOUS CLOSE 1.69
VOLUME 2182
52-Week high 3.13
52-Week low 1.65
P/E
Mkt Cap.(Rs cr) 15
Buy Price 1.66
Buy Qty 1468.00
Sell Price 1.77
Sell Qty 500.00
OPEN 1.76
CLOSE 1.69
VOLUME 2182
52-Week high 3.13
52-Week low 1.65
P/E
Mkt Cap.(Rs cr) 15
Buy Price 1.66
Buy Qty 1468.00
Sell Price 1.77
Sell Qty 500.00

Bihar Sponge Iron Ltd. (BIHARSPONG) - Director Report

Company director report

To the Members

The Directors have pleasure in presenting the 34th Annual Report of theCompany along with audited accounts for the year ended 31st March 2016.

(Rs. Lacs)
Financial Parameters 2015-16 2014-15
Sales (Net of Excise Duty) 3.48 -
Other Income 231.22 208.66
Loss before Interest Depreciation & Exceptional Items 135.84 121.26
Interest & Finance Charges 13.45 51.93
Depreciation 437.77 446.70
Loss for the year before Exceptional Items 587.06 619.89
Exceptional Items expenditure /(income) - 116.25
Provision for Tax - -
Loss for the year carried to Balance Sheet 587.06 736.14

OPERATIONS :

During the year under review there was no production of sponge iron as the Plant hasbeen under shut since 9th August 2013 on account of sudden stoppage of coalsupply by Central Coalfields Limited (CCL) Ranchi a Unit of Coal India Limited againstlong term Fuel Supply Agreement. The Company challenged this by filing a Writ Petition No.W. P. (C) 1660 in the year 2013 in the Hon'ble Jharkhand High Court. The CCL Ranchiadvised to withdraw our Writ Petition No. W.P.(C) No.1660 of 2013. It was furthersuggested that once the said writ petition is withdrawn CCL would proceed in the matterfor renewal of Fuel Supply Agreement. The Company has made an interlocutor application forwithdrawal of the Writ Petition pending before the Hon'ble High Court of Jharkhand Ranchifor execution of Fuel Supply Agreement with CCL. The matter was disposed of on 24-04-2015by the said Hon'ble High Court.

The Company is also perusing with Jharkhand State Mineral Development Corporation Ltd.(JSMDC) for supply of coal. JSMDC has vide letter bearing No. 1194 dated 15thOctober 2014 approved the supply of 30000 ton of Coal per month from Sikni Coal Mine tothe Company. It was further informed by the JSMDC vide letter bearing No. 1088 dated 20thJuly 2015 has reduced the supply to 10000 ton of Coal per month initially the supply ofwhich is still awaited. Representations have been and are being made to variousauthorities under Ministry of Coal Government of India Coal India Limited and CentralCoalfields Limited for availing coal to operate the plant. In July 2015 a presentationwas made in the Hon'ble Prime Minister's office to look into the matter and draw attentionto the plight of 26 years old Sponge Iron Plant.

Ministry of Coal Government of India vide Notificaiton No.23011/51/2015-CPD dated04-06-2015 has circulated Draft Paper for Auction of Coal linkages for non-regulatedsectors however a policy on coal is awaited. Due to non-availability of required quantityof coal at viable price the Company has been deprived to enter into the FSA with the CCLfor supply of coal and resume its operations.

The steel market is facing a very challenging phase. The market rate of sponge iron isfluctuating between Rs.10500/- to Rs.11500/- PMT approx. which is comparatively very lowto all time. In the meantime some of the sponge iron manufacturing units have startedusing imported coal for higher productivity. Company is also awaiting the Government ofIndia's policy on coal to sponge iron industry. The Company is also exploring viability indifferent combinations and aspects to restart the plant as and when the recession insponge iron market comes to an end and the economy in production of sponge iron is visiblelike optimum combination of using local coal and/or imported coal whether to operate twosmall klins with capacity of 100 MT per day each or one big klin with capacity of 500MTper day to restart the plant by the Company or on contract basis to diversify thebusiness activity in the areas of manufacturing of electrode gasses etc.

The Company will move a revised Modified Draft Rehabilitation Scheme for theconsideration of BIFR once the position of steel market is sound. The Company isconsidering to re-start the operations of the Company and evaluating all the optionsavailable under present circumstances.

IRON ORE MINE

The Company was allotted Ghatkuri Iron Ore Mine in April 2007 in the State ofJharkhand with 406.40 hectares of land having estimated reserves of 35.65 million tons.However the Department of Geology Ministry of Mines Government of Jharkhand hasconducted the survey and assessed the reserve to be about 11.00 Million tons in its reportof February 2012.

The Terms of Reference (ToR) for Ghatkuri Iron Ore Mine was to expire on 13thMay 2016 and therefore the company has made an online application for extension of ToRfor one year (i.e. 13th May 2017) on MOEFCC'S Portal.

Ministry of Environment Forest and Climate Change Impact Assessment Division (MOEFCC)called a meeting on 21-02-2016. The Company has made a representation through MECON toexplain the necessity of TOR extension. MOEFCC vide letter dt. 12-04-2016 intimated thatthe proposal is deferred and be considered after carrying capacity study is completed byIndian Council of Forest Research and Education (ICFRE).

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 theentire 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 ready to be commissioned. The Company has been informed that once thesponge iron plant starts its operations the said power plant will be commissioned andsteps for setting up induction furnace will be initiated.

DIVIDEND

In view of the loss incurred by the Company no dividend has been proposed for thefinancial year ended 31st March 2016

FIXED DEPOSITS

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 2015-16.

INTERNAL CONTROL SYSTEM

The Company has adopted policies and procedures for ensuring the orderly and efficientconduct of its business including adherence to the Company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialdisclosures.

NOMINATION AND REMUNERATION POLICY OF THE COMPANY

Pursuant to Section 178 of the Companies Act 2013 and Part D of Schedule II to theSEBI (Listing Obligation and Disclosure Requirements) Regulations 2015 the Board of theCompany has approved and adopted the Company's Nomination and Remuneration policy. Membersinterested may inspect the same at the Registered Office of the Company or write to theCompany Secretary for a copy. The same is also disclosed in the Company's websitewww.bsil.org.in . Details of the Committee is provided in the corporate governance reportannexed with this report.

WHISTLE BLOWER POLICY:

In compliance of Section 177 (9) & (10) of the Companies Act 2013 and in terms ofRegulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 the company has set up a whistle blower policy which can be viewed on the Company'swebsite www.bsil.org.in . In terms of the said policy the directors and employees aregiven direct access to the Chairman of the Audit Committee to report on alleged wrongdoings. Your Company hereby affirms that no Director/ employee has been denied access tothe Chairman of the Audit Committee and that no complaints were received during the year.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES.

Transactions entered by the Company with Related Parties were in the Ordinary Course ofBusiness and at Arm's Length pricing basis. The Audit Committee granted omnibus approvalfor the transactions (which are repetitive in nature) and the same was reviewed by theAudit Committee and the Board of Directors.

The materially significant transactions with Related Parties during the financial year

2015-16 are within the limits approved by the Shareholders in 33rd AnnualGeneral Meeting of the Company. Suitable Disclosures as required under AS-18 have beenmade in the Notes to the financial statements.

The policy on Related Party Transactions has been uploaded on the Company's website:www.bsil.org.in . Member may inspect the same at the Registered Office of the Company orwrite 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 withRegulation 23 of the SEBI (Listing Obligation and Disclosure Requirements) Regulations2015 is disclosed separately in Form No. AOC -2 as Annexure - D and forms part of thisreport.

EXTRACT OF THE ANNUAL RETURN

The extract of the Annual Return for 2015-16 in Form No. MGT - 9 is given separately asAnnexure - E which form part of the Board's report.

MANAGERIAL REMUNERATION

The particulars of employees are given in Annexure - F to this report as required underSection 197 (12) of the Companies Act 2013 read with Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014.

SECRETARIAL AUDIT

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 2015-16 in terms of Section 204 of the Companies Act2013. The Secretarial Audit Report for financial year 2015-16 in Annexure - G with thisreport and is available on the Company's website www. bsil.org.in.

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 ofoperations since 09.08.2013 various dues could not be paid on due dates. Necessary stepsare being taken to re-start the company and payment of all such dues shall be made afterre-start of operation of the Company.

DIRECTORS :

A) CHANGES IN DIRECTORS AND KEY MANAGERIAL PERSONNEL

Since the last Annual General Meeting the following changes have taken place in theBoard of Directors:

In accordance with the provisions of Section 152 of the Companies Act 2013 and Article128 of the Articles of Association of the Company Mr. Jayesh Modi (DIN: 02849637) retiresby rotation and is eligible for re-appointment.

Bihar State Industrial Development Corporation (BSIDC) had withdrawn the nomination ofMr. Rahul Singh (DIN: 02692693) and has nominated Mrs. Anshuli Arya (DIN: 02753144) videthere letter no. 147/G dated 11th August 2015.

Mr. Manoj Kumar (M.No. : F6698) has resigned from the post of Company Secretary andCompliance officer w.e.f. 1st August 2015.

Ms. Shubhangi Varshney (M.No.: A43431) is appointed as a Company Secretary andCompliance Officer of the Company w.e.f. 1st February 2016.

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 25th May 2016.

C) FORMAL ANNUAL EVALUATION

Pursuant to the provisions of Section 134 of the Companies Act 2013 and Regulation 17of the SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015Independent Directors at their meeting without the participation of the Non-independentDirectors and Management considered/ evaluated the Boards' performance Performance ofthe Chairman and other Non-independent Directors.

The Board subsequently evaluated the performance of Independent Directors as per thecriteria laid down and has recommended their continuation on the Board of the company. Theworking of its Committees (Audit Nomination and Remuneration and StakeholdersRelationship Committee) and Independent Directors (without participation of the Directorbeing evaluated) were also evaluated. The criteria for performance evaluation have beendetailed in the Corporate Governance Report which is attached as Annexure- B to thisReport.

D) NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

The Board of the Company met for four times i.e. on 12th May 2015; 13th August2015; 6th November 2015 and 12th February 2016 during financial year 2015-16.

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;

(e) that the directors had laid down and implemented internal financial controls to befollowed by the company and that such internal financial controls are adequate and wereoperating effectively; and

Explanation—For 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 company's policiesthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable 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.

AUDIT COMMITTEE

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.

AUDITORS:

M/s. Thakur Vaidyanath Aiyar and Co. Chartered Accountants (Firm RegistrationNo.000038N) Auditors of the Company was appointed in 33rd Annual GeneralMeeting of the Company till the conclusion of 35th Annual General Meetingsubject to ratification by members at every annual general meeting. The Company hasreceived a letter from them to the effect that their ratification if made would be withinthe prescribed limits under Section 139 of the Companies Act 2013 and the Audit Committeeof the Company has recommended ratification of their appointment as Statutory Auditors ofthe Company.

ACCOUNTS AND AUDIT:

Notes to accounts referred to in the Auditor's Report are self-explanatory and therefore do not require call for any further explanation. However the following has not beennot been recognized as explained below:

a. Rs. 273110 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 Hon'ble High Courtof 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 to31.03.2016 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. 135747 thousands has not been provided asthe Company will make representation for waiver on re-start of the Company operations.

e. Salaries Wages Allowances Contribution to PF including interest on overdue amountas well as employee benefit expenses w.e.f. 10.08.2013 to 31.03.2016 has not been providedin view of the shut down of the plant and suspension of operation from 9thAugust 2013.

f. Interest on unpaid statutory dues such as P.F. and Family Pension Fund as per therespective acts is not ascertained.

Further due to shut down of the plant and suspension of operation from 9thAugust 2013 the various dues could not be paid on due dates. Necessary steps are beingtaken to re-start the Company and payment of such dues shall be made after re-start ofoperation of the Company.

SUBSIDIARY COMPANY

As per Section 2(87) of the Companies Act 2013 the Company does not have anysubsidiary in the financial year 2015-2016.

CORPORATE GOVERNANCE:

A separate report on Corporate Governance is attached as Annexure B to this report. TheAuditors' Certificate confirming compliance of conditions of Corporate Governance asrequired under Schedule V of the SEBI (Listing Obligation and Disclosure Requirements)Regulations 2015 is included in the said Corporate Governance Report.

MANAGEMENT DISCUSSION ANALYSIS REPORT

In terms of Regulation 34 read with Schedule V of the SEBI (Listing Obligation andDisclosure Requirements) Regulations 2015 Management Discussion and Analysis Report isannexed 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 2016-17 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.

ACKNOWLEDGEMENT:

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

Place: New Delhi S.K. Gupta R.K. Agarwal
Date: 25.05.2016 Director-Works Director
DIN: 03537417 DIN: 00298252

ANNEXUREA

TO THE DIRECTORS' REPORT STATEMENT PURSUANT TO SECTION 134 READ WITH RULE 8 OF THECOMPANIES (ACCOUNTS) RULES 2015. CONSERVATION OF ENERGY :

Current Year Previous Year
(2015-16) (2014-15)
A. POWER AND FUEL CONSUMPTION
1. ELECTRICITY
A) PURCHASED
Unit Nil Nil
Amount(Rs.) Nil Nil
Rate/Unit (Rs.) Nil Nil
B) OWN GENERATION
1. Through Diesel Generator
Unit Nil Nil
Unit per liter of HSD Nil Nil
Cost/Unit (Rs.) Nil Nil
2. Through steam turbine
Unit Nil Nil
Unit per M.T of fuel Nil Nil
Cost/Unit (Rs.) Nil Nil
3. COAL

Quantity (M.T)

Nil Nil
Cost (Rs.) Nil Nil
Average Rate (Rs./M.T) Nil Nil
B. CONSUMPTION PER M.T OF PRODUCTION (SPONGE IRON)
1. Electricity (Unit) Nil Nil
2 Furnace Oil Nil Nil
3 Coal (M.T) Nil Nil
4 Others - HSD (Liter) Nil Nil
TECHNOLOGY ABSORPTION :
(A) Research and Development.
1. Specific areas in which R & D is carried out by the Company Nil
2. Benefits derived as a result of the above R & D Does not arise
3. Future plan of action Not yet decided
4. Expenditure on R & D Nil

(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 themetallization acceptable to the user industry. Sponge Iron produced by the Company hashelped the country in saving outgo of scarce foreign exchange resources by way of importsubstitution.

TECHNOLOGY IMPORTED

(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)
(2015-16) (2014-15)
1 EARNING
Export of Goods on F.O.B OUTGO
2. EXPENDITURE
a) Interest
Import on CIF Basis Stores & Spares

 

For & on behalf of the Board

Place: New Delhi S.K. Gupta R.K. Agarwal
Date: 25.05.2016 Director-Works Director
DIN: 03537417 DIN: 00298252