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Deepti Alloy Steel Ltd.

BSE: 539455 Sector: Metals & Mining
NSE: N.A. ISIN Code: INE360S01012
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P/E 46.49
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OPEN 26.50
CLOSE 26.55
VOLUME 1000
52-Week high 27.55
52-Week low 17.50
P/E 46.49
Mkt Cap.(Rs cr) 10
Buy Price 26.50
Buy Qty 25.00
Sell Price 0.00
Sell Qty 0.00

Deepti Alloy Steel Ltd. (DEEPTIALLOY) - Director Report

Company director report

To

The Shareholders

The Directors have the pleasure of presenting the 24th Annual Report of yourCompany with the Audited Financial Statements of the Company for the year ended March 312016.

Financial Results (Rs. In lakhs)

Particulars

Standalone

Consolidated

2015-16 2014-15 2015-16 2014-15
Revenue from Operations 42.02 19.89 3323.60 -
Other Income 2.26 - 64.08 -
Total Revenue 44.28 19.89 3387.68 -
Less: Total Expenses 44.09 13.37 3355.89 -
Operating Profits before Exception item Depreciation Interest and Tax 0.19 6.52 31.79 -
Less: Depreciation 3.94 3.94 4.33 -
Interest 0.27 0.52 0.29
Profit / (Loss) Before Tax (4.02) 2.06 27.17 -
Less : Exceptional Items 4.22 - 4.21 -
Less: Current Tax

-

0.64 9.68

-

Less : Deferred Tax

-

-

0.10

-

Profit / (Loss) after Tax (8.24) 1.42 13.18

Review of Business Operation

On standalone basis revenue from operations for FY 2015-16 was Rs. 42.02 Lakhscompared to the Revenue from operations of Rs. 19.89 Lakhs of previous year which showsuptrend about 111% over the previous year. However the Company has incurred Loss beforetax for the financial year 2015-16 of Rs. 4.02 Lakhs as against profit before tax of Rs.2.06 Lakhs of previous year making Net Loss after Tax for the financial year 2015-16 ofRs. 8.24 Lakhs as against Net Profit after tax of Rs. 1.42 Lakhs of Previous year.

On consolidated basis revenue from operations for FY 2015-16 was Rs. 3323.60 Lakhs.The Profit before tax of the Company for the financial year 2015-16 stood at Rs. 27.17Lakhs making Net Profit after Tax for the financial year 2015-16 of Rs. 13.18 Lakhs.

Dividend

To conserve resources for future prospect and growth of the Company your Directorsregret to declare Dividend for the Financial Year 2015-16 (Previous year - Nil).

Net Profit Transfer to Reserve

The Company has not transferred any amount to any reserves of the Company and carrystandalone loss / consolidated profit to the result and surplus account.

Subsidiary Companies

During the year the Company has made investments of Rs. 3070500/- (Rs. Thirty LakhsSeventy thousand and five hundreds only) in M/s. Shankheshwer Infraproject Private Limitedby acquiring 10000 Equity Shares of Rs. 10/- each (100% stake) at price of Rs. 307.05/-per Equity Share and making M/s. Shankheshwer Infraproject Private Limited as wholly ownedSubsidiary of the Company.

Pursuant to provisions of section 129(3) of the Act a statement containing salientfeatures of the financial statements of the Company's subsidiaries in Form AOC-1 asattached as an "Annexure - A" to this report. Further pursuant tothe provisions of section 136 of the Act the financial statements of the Companyconsolidated financial statements along with relevant documents and separate auditedaccounts in respect of subsidiaries are available on the website of the Company.

Performance of Subsidiary Companies:

Due to acquisition of 100% of M/s. Shankheshwer Infraproject Private Limited it becamewholly-owned subsidiary of the Company. During the Financial Year 2015-16 it has earned atotal revenue of Rs. 334339523/- in comparison of Rs. 288769021/- for the FinancialYear 2014-15 moving upward by 15.78%.

The net profit of M/s. Shankheshwer Infraproject Private Limited stood at Rs.2113035/- for the Financial Year 2015-16 as against net profit of Rs. 1980534/- forthe Financial Year 2014-15 moving upward by 6.69%.

Information of Board of Directors and Its Meetings:

a. Composition and Category of Directors on date of this report is:

Name of Directors Category of Directorship No. of other Directorship* No. of Committee Membership / Chairmanship in other Companies No. of Board Meetings attended during 2015-16 Attendance at the AGM held on 30-092015
Mr. Parikshit Mahatama* Whole-time Director (Professional) 19 1 N. A.
Mrs. Sangitaben Jain Non-Executive Director (Professional) 4 M - 6 1 N.A.
Mr. Rakesh Ajmera Independent Director (Professional) 3 C - 2 10 Yes
Mr. Narayansinh Chauhan Independent Director (Professional) 2 M - 3 C - 3 1 N.A.
Mr. Rameshchandra Agrawal# Managing Director Nil 10 Yes
Mrs. Manju Agrawal# Director Nil - 10 Yes
Mr. Manish Bhadviya# Independent Director (Professional) 3 10 Yes

* Excluding Directorship held in the Company.

# Mr. Rameshchandra Agrawal Mrs. Manju Agrawal and Mr. Manish Bhadviya resigned fromthe Board w.e.f. March 15 2016.

The Board of Directors of the Company consists of four (4) Directors as on March 312016 one (1) of whom is Whole-time Director one (1) is Non-Executive Director and two(2) are Non-Executive Independent Directors. All the Directors of the Company areProfessional Directors. Further Mrs. Sangitaben N. Jain a NonExecutive Director of theCompany is designated as Woman Director for the Company in terms of second proviso to theSection 149 (1) of the Companies Act 2013. The Composition of Board fulfils theregulatory requirements.

Board Meetings

Regular meetings of the Board are held at least once in a quarter. Additional Boardmeetings are convened to discuss and decide on various business policies strategies andother businesses.

During the year under review Board of Directors of the Company met 10 times viz April22 2015 May 30 2015 August 1 2015 August 14 2015 August 25 2015 September 042015 November 3 2015 February 11 2016 February 24 2016 and March 11 2016. The gapbetween two consecutive meetings was not more than one hundred and twenty days as providedin section 173 of the Act.

The Independent Directors of the Company has met one time on March 11 2016 interalia to evaluate the performance of Non-Independent Directors Board as a whole andperformance of Chairman of the Company.

Information of Committee and Its Meetings

Your Company has formed following Committees of the Board in accordance with CompaniesAct 2013:

a. Audit Committee

Meetings Composition and Attendance:

The Audit Committee met five times during the financial year 2015-16 on May 30 2015August 14 2015 September 04 2015 November 03 2015 and February 11 2016.

The Audit Committee comprises of three Directors and two of them are IndependentDirectors. The composition of the Audit Committee as on March 31 2016 and details of theattendance of the members of the committee at the meetings of the Committee are as under:

Name of the Director Category Designation No. of Meetings Attended
Mr. Rakesh Ajmera Independent Director Chairman 5
Mr. Narayansinh Chauhan# Independent Director Member N. A.
Mr. Parikshit Mahatama# Whole-time Director Member N. A.
Mr. Manish Bhadviya* Independent Director Member 5
Mr. Rameshchandra Agrawal* Managing Director Member 5

# w.e.f. March 11 2016. * up to March 11 2016.

The Statutory Auditors of the Company are invited in the meeting of the Committeewherever required. Company Secretary of the Company is acting as a secretary to theCommittee.

b. Stakeholders' Grievances and Relationship Committee

Composition

The Stakeholder's Grievances & Relationship Committee comprises of three members ason March 31 2016. Mr. Rakesh Ajmera as the Chairman of the Committee Mr. NarayansinhChauhan and Mr. Parikshit Mahatma as members. Company Secretary of the Company is actingas a secretary to the Committee.

Meeting(s) and attendance

During the year under review four meetings were held on May 30 2015 August 14 2015November 03 2015 and February 11 2016. Details of attendance of each member of theCommittee are as under:

Name of the Director Category Designation No. of Meetings Attended
Mr. Rakesh Ajmera Independent Director Chairman 4
Mr. Narayansinh Chauhan# Independent Director Member N. A.
Mr. Parikshit Mahatama# Whole-time Director Member N. A.
Mr. Manish Bhadviya* Independent Director Member 4
Mr. Rameshchandra Agrawal* Managing Director Member 4

# w.e.f. March 11 2016. * up to March 11 2016.

Complaint

During the year the Company had not received any complaints from the Shareholders.There was no complaint pending as on March 31 2016.

c. Nomination and Remuneration Committee

Composition

The Remuneration Committee comprises of three Non-executive directors two of them areIndependent Director viz. Mr. Rakesh Ajmera - Chairman Mr. Narayansinh Chauhan and Mrs.Sangitaben Jain as members.

Meeting and Attendance

During the period under review three Nomination and Remuneration Committee meetingswere held respectively on August 01 2015 September 04 2015 and March 11 2016. Detailsof attendance of each member of the Committee are as under:

Name of the Director Category Designation No. of Meetings Attended
Mr. Rakesh Kumar Ajmera Independent Director Chairman 3
Mr. Narayansinh Chauhan# Independent Director Member N. A.
Mrs. Sangitaben lain# Non - Executive Director Member N. A.
Mr. Manish Bhadviya* Independent Director Chairman 3
Mrs. Manju Agrawal* Executive Director Member 3

# w.e.f. March 11 2016. * up to March 11 2016.

Appointment Re-appointment and Resignation of Directors

During the year in terms of Section 149 & 152 of the Companies Act 2013 theBoard of Directors in their Meeting held on March 11 2016 has appointed Mr. NarayansinhChauhan as an Non-Executive Independent Director and Mrs. Sangitaben Jain as Non-ExecutiveDirector of the Company. Further pursuant to provisions of Section 161 of the CompaniesAct 2013 Mr. Narayansinh Chauhan and Mrs. Sangitaben Jain holds office up to the date ofensuing Annual General Meeting of the Company. The Board of Directors of the Companyrecommended their Appointment on the Board of the Company and resolution to that effecthas been proposed in the Notice convening the 24th Annual General Meeting ofMembers of the Company.

Further Mr. Parikshit Mahatma was appointed as Whole-time Director of the Company tohold office for a period up to March 10 2021. Pursuant to Section 196 of the CompaniesAct 2013 the appointment of Wholetime Director requires the approval of members in theGeneral Meeting and hence on the recommendation of the Board the resolution to that effecthas been proposed for the approval of his appointment as a Whole - Time Director of theCompany has been proposed in the Notice convening the 24th Annual GeneralMeeting of Members of the Company.

Mr. Ramesh Agrawal Managing Director Mrs. Manju Agrawal and Mr. Manish BhadviyaDirectors of the Company had resigned from the Board of the Company w.e.f. March 15 2016.The Board places on record their appreciations for their efforts in the success of theCompany.

None of the Directors of the Company is disqualified for being appointed as Director asspecified in Section 164 (2) of the Companies Act 2013.

Details of the Directors seeking Appointment in this Annual General Meeting is providedelsewhere in the 24th Annual Report:

Declaration by Independent Directors

The Company has received necessary declaration from each Independent Director underSection 149(7) of the Companies Act 2013 to the effect that they meet the criteria ofindependence laid down in Section 149(6) of the Companies Act 2013. The Terms andConditions for Appointment of Independent Directors and Code for Appointment ofIndependent Directors are incorporated on the website of the Company atwww.deeptialloysteel.com.

Details of Key Managerial Personnel

Mr. Parikshit Mahatama Whole-time Director is the Key Managerial Personnel("KMP"] as per the provisions of the Companies Act 2013. He has been appointedas such by the Board of Directors w.e.f. March 11 2016.

Further Ms. Riddhi N. Shah is acting as a Company Secretary of the Company and Mr.Darshil A Hiranandani is acting as the Chief Financial Officer of the Company.

Mr. Niraj Jain Company Secretary of the Company has resigned from the office w.e.f.July 06 2015. Nomination and Remuneration Policy

In terms of the provisions of the Companies Act 2013 the Company has devised a policyon Nomination and Remuneration of Directors Key Managerial Personnel and SeniorManagement and the said policy has been incorporated on the website of the Company i.e.www.deeptialloysteel.com.

Policy on Appointment of Directors Key Managerial Personnel and Senior ManagementPersonnel:

The policy is formulated to identify and ascertain the integrity qualificationexpertise and experience of the person for appointment as Director KMP and SeniorManagement personnel and recommend to the Board for his / her appointment.

Policy on remuneration of Director KMP and Senior Management Personnel:

The Company follows mixed of fixed pay benefits and performance based variable pay.The Company pays remuneration by way of salary. The remuneration paid by the Company iswithin the salary scale approved by the Board and Shareholders.

Board Evaluation

The board of directors has carried out an annual evaluation of its own performanceboard committees and individual directors pursuant to the provisions of the Act.

The performance of the board was evaluated by the board after seeking inputs from allthe directors on the basis of the criteria such as the board composition and structureeffectiveness of board processes information and functioning etc.

The performance of the committees was evaluated by the board after seeking inputs fromthe committee members on the basis of the criteria such as the composition of committeeseffectiveness of committee meetings etc.

The board and the nomination and remuneration committee reviewed the performance of theindividual directors on the basis of the criteria such as the contribution of theindividual director to the board and committee meetings like preparedness on the issues tobe discussed meaningful and constructive contribution and inputs in meetings etc. Inaddition the chairman was also evaluated on the key aspects of his role.

Separate meeting of independent directors was held to evaluate the performance ofnon-independent directors performance of the board as a whole and performance of thechairman taking into account the views of executive directors and non-executivedirectors. The same was discussed in the board meeting that followed the meeting of theindependent directors at which the performance of the board its committees andindividual directors was also discussed. Performance evaluation of independent directorswas done by the entire board excluding the independent director being evaluated.

The Board of Directors expressed their satisfaction with the evaluation process.

Public Deposit

The company has not accepted any deposits from the public. Hence the directives issuedby the Reserve Bank of India & the Provision of Section 73 to 76 of the Company Act2013 or any other relevant provisions of the Act and the Rules there under are notapplicable.

Particulars of Loans Guarantees Investments & Security

Details of Loans Guarantees Investments and Security covered under the provisions ofSection 186 of the Companies Act 2013 are given in the notes to the Financial Statement.

During the year Company has made an investment of Rs. 3070500/- (Rs. Thirty LakhsSeventy thousand and five hundreds only) for buying all the Equity Shares of M/s.Shankheshwer Infraproject Private Limited i.e. 10000 Equity Shares of Rs. 10/- each atprice of Rs. 307.05/- per Equity Share and making M/s. Shankheshwer Infraproject PrivateLimited as wholly owned Subsidiary. However the Company has not granted any Loanprovided Guarantee or Securities.

Contracts or Arrangements with Related Parties

All transactions to be entered by the Company with related parties will be in theordinary course of business and on an arm's length basis. However the Company has notentered into any related party transaction as provided in Section 188 of the CompaniesAct 2013 with the related party. Hence Disclosure as required under Section 188 of theCompanies Act 2013 is not applicable to the Company.

Extract of Annual Return

Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of theCompanies Act 2013 read with Rule 12 of Companies (Management and Administration) Rules2014 the extract of the Annual Return as at March 31 2016 in Form MGT-9 forms part ofthis Annual Report as "Annexure - B".

Particular of Employees

The Company has not paid any remuneration to any Director of the Company. Hencedetails in terms of subsection 12 of Section 197 of the Companies Act 2013 read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014are not applicable to the Company.

The details as required under section 197(12) of the Companies Act 2013 read withRule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) 2014 isnot applicable as there is no such employee in the Company employed throughout thefinancial year with salary above Rs. 102 Lakhs p.a. or employed part of the financial yearwith average salary above Rs. 8.5 Lakhs per month.

Further there is no employee employed throughout Financial year or part thereof wasin receipt of remuneration of in aggregate is in excess of that drawn by the ManagingDirector or Whole time Director or Manager and holds by himself or along with his spouseand dependent children not less than Two percent (2%) of the Equity Shares of theCompany.

Energy Conservation Technology Absorption and Foreign Exchange Earnings and Outgo

The details of conservation of energy technology absorption etc. as required to begiven under section 134(3)(m) of the Companies Act 2013 read with the Companies (Accounts)Rules 2014 is not given as the Company has not taken any major step to conserve theenergy etc.

Further there was no foreign exchange earnings and outgo during the financial year2014-15 (Previous Year - Nil).

Material Changes and commitment affecting financial position of the Company

There are no material changes and commitments affecting the financial position of theCompany which has occurred between the end of financial year of the Company i.e. March 312016 and the date of Director's Report i.e. July 09 2016.

Sexual Harassment of women at workplace

There were no incidences of sexual harassment reported during the year under review interms of the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and there are only 2 Women employees (Both areholding the position in the Top Management Level) and therefore there was no need toconstitute an Internal Complaints Committee (ICC).

Corporate Governance

Your Company strives to incorporate the appropriate standards for corporate governance.However pursuant to Regulation 15(2) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Company is not required to mandatorily comply with theprovisions of certain regulations of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 and therefore the Company has not provided a separatereport on Corporate Governance although few of the information are provided in thisreport of Directors under relevant heading.

Management Discussion and Analysis

Management Discussion and Analysis for the year under review as stipulated underRegulations 27(2) of the SEBI (LODR) 2015 is presented in a separate section formingpart of this Annual Report.

Auditors

Statutory Auditor & their report

M/s. Ladha & Co. Chartered Accountant Ahmedabad (FRN 136083W) who were appointedas the statutory auditors of the Company for a period of five years from the conclusion of23rd AGM till conclusion of the 28th AGM to be held in the year 2020has shown their unwillingness and tendered their resignation as Statutory Auditors of theCompany.

To fill up the Casual Vacancy arised due to resignation of M/s. Ladha &Associates the Board of Directors have appointed M/s. Marmik G Shah & Associates asthe Statutory Auditors of the Company for the F.Y. 201516 in their meeting held on May 162016. Further the Board of Directors recommends ratification of appointment of M/s.Marmik G Shah & Associates from the members as provided under Section 139(8) of theCompanies Act 2013.

The Auditors' Report on the accounts of the Company for the accounting year ended March31 2016 contains the following qualifications:

1. We would like to draw attention to the fact that we have been appointed as auditorsof the Company after March 31 2016 accordingly we were unable to satisfy ourselves byalternative means concerning the cash held at March 31 2016 and March 31 2015 which arestated in the Balance Sheet at Rs. 109731/- and Rs. 191880/- respectively.

2. In addition the introduction of a new computerized accounting system has resultedin data corruption and resulted in numerous errors in accounts receivable/payable. As ofthe date of our audit report Management was still in the process of rectifying the systemdeficiencies and correcting the errors. We were unable to confirm or verify by alternativemeans accounts receivable/payable included in the Balance Sheet as at March 31 2016.

As a result of these matters we were unable to determine whether any adjustments mighthave been found necessary in respect of recorded or unrecorded transactions and accountsreceivable/payable in the Balance Sheet and the corresponding elements making up theStatement of Profit and Loss and Cash Flow statement.

3. We have not been able to verify the transactional documents relating the sale offixed assets further the account with HDFC bank has been ceased by the commercial taxdepartment account statement of the same has not been available therefore we are unableto determine whether any adjustments might have been found necessary in respect ofrecorded or unrecorded transaction with respect to such transaction.

4. The Company has not adopted the method of depreciation as specified in Schedule IIof Companies Act 2013 and continued the method of depreciation as per the previousprovisions of Companies Act 1956.

The management replies for the Audit Qualifications are as under:

1. The Directors have themselves confirmed the cash balance as on 31st March2015 and 31st March 2016.

2. The change in the accounting software has resulted in crash of the previousaccounting records and Company is in process of reconciling the balances with the variousparties.

3. Company is in process of procuring the necessary documents.

4. The Company has sold the assets during the year and there is no major impact of notfollowing Schedule II.

As per the Section 139(1) of the Companies Act 2013 M/s. Marmik G. Shah &Associates Chartered Accountants Ahmedabad [FRN: 135024W] are recommended to beappointed as the auditors of the Company to hold office for a period of five years fromthe conclusion of this 24th AGM till conclusion of the 29th AGM tobe held in the year 2021.

Secretarial Auditor & their report

Pursuant to the provisions of section 204 of the Act and The Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Company has appointed Mrs. AnkitaPatel Practicing Company Secretary Ahmedabad to carry out the Secretarial Audit for thefinancial year ended on March 31 2016. Secretarial Audit Report is attached to thisreport as "Annexure - C".

The Secretarial Auditors' Report of the Company for the Financial Year ended March 312016 contains the following qualifications:

During the period under review the Company has generally complied with the provisionsof the Act Rules and regulations mentioned above except filing of certain forms andresolutions with the registrar under Companies Act 2013 and appointment of InternalAuditor.

The management replies for the Audit Qualifications are as under:

Due to change in a Companies Act 2013 and constant updation on its various rules andregulations management was not able to judge the formalities required to be followed andhence failed to file few resolutions and its necessary forms to the Registrar of Companies- Ministry of Corporate Affairs. Further during the year under review there was no majorbusiness activities were carried out by the Company and therefore the Company has notappointed Internal Auditor. However looking at the operations of the Company duringcurrent year the Board has appointed Internal Auditor in this year.

Directors' Responsibility Statement

In terms of section 134(5) of the Act your Directors state that:

i.) in the preparation of the annual financial statements for the year ended on March31 2016 applicable accounting standards read with requirements set out under scheduleIII of the Act have been followed along with proper explanation relating to materialdepartures if any

ii.) such accounting policies have been selected and applied consistently and judgmentsand estimates made that are reasonable and prudent so as to give a true and fair view ofthe state of affairs of the company as at March 31 2016 and of the profit of the companyfor the year ended on that date

iii.) proper and sufficient care has been taken for maintenance of adequate accountingrecords in accordance with the provisions of this Act for safeguarding the assets of thecompany and for prevention and detection of fraud and other irregularities

iv.) the annual financial statements are prepared on a going concern basis

v.) proper internal financial controls are in place and that the financial controls areadequate and are operating effectively and

vi.) the systems to ensure compliance with the provisions of all applicable laws are inplace and are adequate and operating effectively.

General Disclosure

Your Directors state that the Company has made disclosures in this report for the itemsprescribed in section 134(3) of the Act and Rule 8 of The Companies (Accounts) Rules 2014to the extent the transactions took place on those items during the year.

Your Directors further state that no disclosure or reporting is required in respect ofthe following items as there were no transactions on these items during the year underreview:

1. Details of Annual Report on Corporate Social Responsibility as Company is notfalling within the criteria as prescribed u/s 135 of the Companies Act 2013

2. Issue of Equity Shares with differential rights as to dividend voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of the Company underany scheme save and ESOS.

4. Details of Contracts and arrangement with the related parties.

5. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future.

Acknowledgement

Your Directors take this opportunity to place on record the valuable co-operation andsupport extended by the banks government business associates and the shareholders fortheir continued confidence reposed in the Company and look forward to having the samesupport in all future endeavors.

Registered Office For and on behalf of Board
317 Village-Kharval Taluko-Dharampur For Deepti Alloy Steel Limited
Dist. Valsad - 396 050
Parikshit Mahatma Sangitaben Jain
Place: Valsad Whole time Director Director
Date: July 09 2016 DIN:01599675 DIN:01923253