TO THE MEMBERS
Your Directors have pleasure in presenting the 13th Annual Report of the Company andthe Annual Accounts for the year ended 31st March 2017.
Gallantt Ispat Limited ("Your Company" or "The Company") is aleading Iron and Steel manufacturing Company in Eastern Uttar Pradesh. The Company has itsRegistered Office at Kolkata and Factory at Gorakhpur Uttar Pradesh.
| || |
| ||2017 ||2016 ||2017 ||2016 |
|Financial Results || || || || |
|Income from operation ||42470.61 ||53475.85 ||42470.61 ||57964.76 |
|Other Operating Income ||37.24 ||20.36 ||43.80 ||118.90 |
|Finance Cost ||423.53 ||761.72 ||423.53 ||845.10 |
|Depreciation (including amortization) ||1240.86 ||1390.50 ||1240.86 ||1394.51 |
|Profit Before Tax ||4605.17 ||3098.67 ||4610.47 ||3178.86 |
|Tax Expenses (including Deferred Tax) ||180.46 ||239.67 ||182.28 ||264.50 |
|Profit After Tax ||4424.71 ||2859.00 ||4428.19 ||2914.36 |
PERFORMANCE AND OPERATIONAL REVIEW AND STATE OF THE COMPANY'S AFFAIRS
During the year Revenue from Operations stood at ' 42470.61 Lacs. Decrease in salesvolume was only due to the low demand specifically during the period starting fromDemonetisation of Currency Notes. Standalone and Consolidated Net Profit stood at '4424.71 Lacs and ' 4428.19 Lacs respectively. Earnings per Share (EPS) stood at ' 15.67(standalone) and ' 20.34 (consolidated) for the Financial Year ended March 31 2017. Thereis no change in the nature of the business of the Company. Disclosure of financialstatement of subsidiaries and associate company has been provided in the prescribed formatas a part of this Report. There were no significant and material orders passed byregulators or courts or tribunals impacting the going concern status and Company'soperations in future. Factory had been working efficiently during the year. Safetymeasures and processes have been installed and improved upon at the plants and work sites.
There are no material changes or commitments affecting the financial position of theCompany which have occurred between the end of the financial year and the date of thisReport.
Yours Directors are pleased to report a good performance of the Company in terms ofboth financial and operational performance.
During the year your Directors recommended a Dividend of Re. 0.50 (Paise Fifty only)per Equity Share on 28236072 Equity Shares of ' 10 /- each i.e. 5% on each Equity Shareof the company total outgo on account of dividend shall be '14118036 subject to tax.
The paid up Equity Share Capital as at March 31 2017 stood at 2823.61 Lacs. Duringthe year under review the company has not issued shares with differential voting rightsnor has granted any stock options or sweat equity. As on March 31 2017 none of theDirectors of the company hold instruments convertible into equity shares of the Company.
DIRECTORS' RESPONSIBILITY STATEMENT
In terms of Section 134 (5) of the Companies Act 2013 the directors would like tostate that:
a. In the preparation of the annual accounts the applicable accounting standards havebeen followed.
b. The directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that were reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit or loss of the Company for the year under review.
c. The directors have 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. The directors have prepared the annual accounts on a going concern basis.
e. The directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.
f. The directors had devised proper system to ensure compliance with the provisions ofall applicable laws and that such system were adequate and operating effectively.
FINANCE AND ACCOUNTS
As mandated by the Ministry of Corporate Affairs IND AS is applicable to the Companyfrom the Financial Year commencing from April 01 2017 to your Company. The estimates andjudgments relating to the Financial Statements are made on a prudent basis so as toreflect in a true and fair manner the form and substance of transactions and reasonablypresent the Company's state of affairs profits and cash flows for the year ended March31 2017.
CHANGE IN THE NATURE OF BUSINESS IF ANY
There is no change in the nature of the business of the Company.
The Equity Shares in the Company are in dematerialized form and is listed with BombayStock Exchange Limited and National Stock Exchange of India Limited. The Listing Fee hasbeen paid to the Stock Exchanges for the year 2017-18. The ISIN No. of the Company isINE528K01011
During the year under review the Rating agency Brickwork Ratings India Private Limitedhas assigned BBB-rating for the Company's Fund Based Working Capital facilities (longterm) and BWR A3 for Non-Fund based working capital facilities (short term).
During the year the Company has not accepted any deposits from public under Chapter Vof the Companies Act 2013.
AUDITORS & AUDITORS' REPORT
M/s. Anoop Agarwal & Co. Chartered Accountants statutory auditors of the Companywas reappointed as the Auditors of the Company at the previous Annual General Meeting. Asper the provisions of Section 139 of the Companies Act 2013 Statutory Auditors of theCompany hold office until the conclusion of the 5 years.
Necessary certificate has been obtained from the Auditors as per Section 139(1) of theCompanies Act 2013.
The notes on accounts referred to the Auditors' Report are self-explanatory andtherefore do not call for any further explanation.
The Auditors' Report is annexed hereto and forms part of the Annual Report. TheAuditors' report does not contain any qualifications reservations or adverse remarks.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The information required under section 134(3) (m) of the Companies Act 2013 read withRule 8(3) of the Companies (Accounts) Rules 2014 is annexed as Annexure-I to thisDirectors' report.
DISCLOSURE REGARDING ISSUE OF SWEAT EQUITY SHARES AND EQUITY SHARES WITH DIFFERENTIALRIGHTS
The Company has not issued any Sweat Equity Shares or Equity Shares with DifferentialRights during the financial year.
The Company has submitted the Cost Audit Report and Cost Compliance Report for the year2015-16 duly certified by a Cost Accountant to the Central Government within the due date.M/s. U. Tiwari & Associates Cost Accountants were appointed with the approval of theCentral Government to carry out the cost audit in respect of the Company for the financialyear 2016-17. Based on the recommendation of the Audit Committee M/s. U. Tiwari &Associates Cost Accountants being eligible have also been appointed by the Board as theCost Auditors for the financial year 2017-18.
All the insurable interests of your Company including inventories buildings plant andmachinery and liabilities under legislative enactments are adequately insured.
INTERNAL COMPLAINT REGARDING SEXUAL HARRASSMENT
There were no cases of sexual harassment of woman at work place. Also there are noinstances of child labour/ forced labour/ involuntary labour and discriminatory employmentduring the year.
Details of Audit Committee Nomination & Remuneration Committee Stakeholders'Relationship Committee and Corporate Social Responsibility Committee have been disclosedunder Corporate Governance Report.
DETAILS OF RECOMMENDATIONS OF AUDIT COMMITTEE WHICH WERE NOT ACCEPTED BY THE BOARDALONG WITH REASONS
The same is not applicable as the Audit Committee's recommendations were accepted andimplemented by the Board.
PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other details as required under section197(12) read with Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is annexed herewith as Annexure-II to this report.
A statement comprising the names of top 10 employees in terms of remuneration drawn isgiven in this report.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186
The particulars of loans guarantees and investments u/s 186 of the Companies Act 2013is annexed herewith as Annexure-III.
CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION & ANALYSIS REPORT
As per SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 aManagement Discussion and Analysis report is part of the Annual Report is annexed herewithas Annexure-IV.
A report on Corporate Governance together with the Auditors' Certificate regarding thecompliance of conditions of Corporate Governance is part of the Annual Report.
MARKET AND FUTURE PROSPECTS
Please refer to Management Discussion & Analysis Report which forms part of theAnnual Report.
DETAILS OF POLICIES
(i) Nomination and Remuneration Policy
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. The Company's Remuneration Policy is available on the Company's websitewww.gallantt.com and the same is attached herewith as Annexure - V.
(ii) Corporate Social Responsibility Policy (CSR)
The Board has on the recommendation of the CSR Committee approved the CSR Policy. TheCompany's CSR Policy is available on the Company's website www.gallantt.com and the sameis also attached herewith as Annexure-VI.
Annual Report on CSR as required under Rule 8 of the Companies (Corporate SocialResponsibility
Policy) Rules 2014 is also attached herewith as Annexure-VII.
(iii) Risk Management Policy
Business Risk Evaluation and Management is an ongoing process within the Organization.Pursuant to Section 134(3)(n) of the Companies Act 2013 the Board has framed a RiskManagement Policy for the Company. The Company has in place a mechanism to identifyassess monitor and mitigate various risks to key business objectives. Major risksidentified by the business and functions are systematically addressed through mitigatingactions on a continuing basis. At present the company has not identified any element ofrisk which may threaten the business (or) existence of the company.
(iv) Whistle Blower Policy - Vigil Mechanism
Your Company has formulated a Vigil Mechanism Policy with a view to provide a mechanismfor employees and directors of the Company to approach the Chairman of the Audit Committeeto ensure adequate safeguards against victimisation. This policy would help to create anenvironment wherein individuals feel free and secure to raise an alarm whenever anyfraudulent activity takes place or is likely to take place. It will also ensure thatcomplainant(s) are protected from retribution whether within or outside the organization.The Board has elected Mr. Nitesh Kumar Company Secretary as the Whistle Officer under thevigil mechanism policy.
The details of establishment of the Vigil Mechanism Policy is displayed on the websiteof the Company www.gallantt.com under the following weblink: http://goo.gl/p2FWPY
Mr. Anurag Fatehpuria Practising Company Secretary having office address at 23/1Sita Nath Bose Lane Salkia Howrah Pin-711101 has been appointed as Secretarial Auditorsof the Company for the FY ended 31.03.2017. The Secretarial audit report received from theSecretarial Auditors is annexed to this report marked as Annexure - VIII and forms part ofthis report.
ANNUAL EVALUATION OF BOARD COMMITTEES AND INDIVIDUAL DIRECTORS
During the financial year formal annual evaluation of the Board its committees andindividual Directors was carried out pursuant to the Board Performance Evaluation Policyof the Company.
The performance of the Board and committees was evaluated after seeking inputs from allthe Directors on the basis of the criteria such as Board/ committee constitutionsfrequency of meetings effectiveness of processes etc. The performance of individualDirectors (including Independent Directors) was evaluated by the Board and Nomination& Remuneration committee (excluding the Director being evaluated) after seeking inputsfrom all Directors on the basis of the criteria such as thought contribution businessinsights and applied knowledge.
A separate meeting of Independent Directors was also held to review the performance ofManaging Director performance of the Board as a whole and performance of the Chairpersonof the Company taking into account the views of Executive Directors and Non-ExecutiveDirectors.
Your Company follows a structured orientation and familiarization programme throughvarious reports/ codes/internal policies for all the Directors with a view to update themon the Company's policies and procedures on a regular basis.
Periodic presentations are made at the Board Meetings on business and performance longterm strategy initiatives and risks involved.
The details of familiarisation programme have been posted in the website of the Companywww.gallantt. com under the weblink: http://goo.gl/GyAOqd.
CODE OF CONDUCT
Your Company has adopted a Code of Conduct for members of the Board (incorporatingduties of Independent Directors) and the Senior Management. The Code aims at ensuringconsistent standards of conduct and ethical business practices across the Company. YourCompany has received confirmations from all concerned regarding their adherence to thesaid Code.
Pursuant to Regulation 17(5) of the Securities & Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 Mr. C. P. Agrawal Chairman& Managing Director and Mr. Mayank Agrawal Chief Executive Officer confirmedcompliance with the Code by all members of the Board and the Senior Management.
The full text of the Code is hosted on the Company's website www.gallantt.com under theweblink: http:// goo.gl/8Tdjfh.
CODE OF CONDUCT FOR PROHIBITION OF INSIDER TRADING
Your Company has adopted a Code of Conduct as per Securities and Exchange Board ofIndia (SEBI) (Prohibition of Insider Trading) Regulations 2015.
All Directors Designated Employees who could have access to the Unpublished PriceSensitive Information of the Company are governed by the Code. During the year underreview there has been due compliance with SEBI (Prohibition of Insider Trading)Regulations 2015. Gallantt Ispat Limited - Code for Fair Disclosure' are available on theCompany's website www.gallantt.com under the weblink: http://goo.gl/CjgTCR.
NUMBER OF MEETINGS OF BOARD AND AUDIT COMMITTEE HELD DURING THE YEAR 2016-2017
Ten (10) meetings of the Board of Directors of the Company were conducted during thefinancial year and Nine (9) meetings of the Audit Committee of the Board of Directors wereconducted during the financial year. The details of board/committee/shareholders meetingsare provided under the Corporate Governance Report which forms part of the Annual Report.
The Audit committee of the Company as on the date of this report is constituted offollowing Directors:
|Names ||Designation ||Category |
|Mr. Piyush Kankrania ||Chairman ||Independent |
|Mr. Jyotirindra Nath Dey ||Member ||Independent |
|Mr. Rajesh Kumar Jain* ||Member ||Independent |
|Mr. Tarun Kumar Gupta** ||Member ||Independent |
*Mr. Rajesh Kumar Jain has tendered resignation from the Directorship of the Companyeffective from October 13 2016 and consequently relinquished as a member of the auditCommittee of the Company.
** Mr. Tarun Kumar Gupta has been appointed as an Additional Director and member of theAudit Committee effective from Match 18 2017.
REPORT ON PERFORMANCE AND FINANCIAL POSITION OF SUBSIDIARIES ASSOCIATES AND JOINTVENTURE COMPANIES
Pursuant to the provisions of Section 129(3) of the Act a statement containingperformance & salient features of the financial statements of Company's subsidiariesand associate Companies in Form AOC-1 is attached as Annexure-IX.
The policies to ensure uniform accounting treatment are prescribed to the subsidiariesof your Company. The accounts of the subsidiary companies and associate Company areaudited and certified by their respective Statutory Auditors for consolidation.
COMPANIES WHICH HAVE BECOME OR CEASED TO BE COMPANY'S SUBSIDIARIES JOINT VENTURES ORASSOCIATE COMPANIES DURING THE YEAR
Companies which have become or ceased to be
Company's subsidiaries joint ventures or associate Companies during the year:
|Sl. No. ||Name ||Status ||Date |
|1 ||Shree Surabhi Wheat Products Private Limited ||Ceased to be Subsidiary of the Company ||29.09.2016 |
|2 ||Shree Surabhi Flour Mills Private Limited ||Ceased to be Subsidiary of the Company ||29.09.2016 |
|3 ||Shikharji Rolling Mills Private Limited ||Subsidiary of the Company ||18.03.2017 |
|4 ||Shikharji Steel & Agro Products Private Limited ||Subsidiary of the Company ||18.03.2017 |
|5 ||Bhavika Steel Agencies Private Limited ||Subsidiary of the Company ||18.03.2017 |
|6 ||Shrinu Agro Private Limited ||Subsidiary of the Company ||18.03.2017 |
|7 ||Shrinu Steel Works Private Limited ||Subsidiary of the Company ||18.03.2017 |
|8 ||Gyanika Flour Mills Private Limited ||Subsidiary of the Company ||18.03.2017 |
|9 ||Satlaj Ispat Private Limited ||Subsidiary of the Company ||18.03.2017 |
|10 ||Satlaj Flour Mills Private Limited ||Subsidiary of the Company ||18.03.2017 |
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE
There are no significant material orders passed by the Regulators or Courts or Tribunalwhich would impact the going concern status of the Company and its future operations.However Members attention is drawn to the statement on contingent liabilitiescommitments in the notes forming part of the Financial Statements.
DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM
The Company has formulated a Whistle Blower Policy to establish a vigil mechanism forDirectors and employees of the Company to report concerns about unethical behavior actualor suspected fraud or violation of the Company's code of conduct or ethics policy. TheWhistle Blower Policy is available on the website of the Company.
CORPORATE SOCIAL RESPONSIBILITY
The Company has constituted a Corporate Social Responsibility Committee and has frameda Corporate Social Responsibility Policy and identified Healthcare Children's educationas some of the key areas. The Company will continue to support social projects that areconsistent with the policy.
Corporate Social Responsibility Committee of the Company is constituted of:
Mr. Jyotirindra Nath Dey Chairman
Mr. Chandra Prakash Agrawal and
Mr. Prem Prakash Agrawal
KEY MANAGERIAL PERSONNEL
The following are the whole-time key managerial personnel of the Company:
|Sl. No. Name ||Designation |
|1 Mr. Chandra Prakash Agrawal ||Chairman and Managing Director |
|2 Mr. Prem Prakash Agrawal ||Whole-time Director |
|3 Mr. Santosh Kumar Agrawal ||Whole-time Director |
|4 Mr. Nitin M Kandoi ||Whole-time Director |
|5 Mr. Mayank Agrawal ||Chief Executive Director |
|6 Mr. Amit Jalan ||Chief Financial Officer |
|7 Mr. Nitesh Kumar ||Company Secretary |
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the Accounting Standard AS-21 on Consolidated Financial Statementsread with the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 theConsolidated Audited Financial Statements and Consolidated Cash Flow Statement for theyear ended March 31 2017 are provided in the Annual Report.
Pursuant to Section 136 of the Act the financial statements of the subsidiary andAssociate Companies are kept for inspection by the shareholders at the Registered Officeof the Company. The Company shall provide free of cost the copy of the financialstatements of its subsidiary and Associate companies to the shareholders upon theirrequest. The statements are also available on the website of the Company www.gallantt.com.
EXTRACT OF ANNUAL RETURN
Pursuant to the provisions of section 92(3) of the Act the details forming part of theextract of the Annual Return in Form MGT-9 is annexed herewith as Annexure-X.
Risk management is embedded in your Company's operating framework. Your Companybelieves that managing risks helps in maximizing returns. The Company's approach toaddressing business risks is comprehensive and includes periodic review of such risks anda framework for mitigating controls and reporting mechanism of such risks. The riskmanagement framework is reviewed periodically by the Board and the Audit Committee. Someof the risks that the Company is exposed to are:
The Company's policy is to actively manage its foreign exchange risk within theframework laid down by the Company's forex policy approved by the Board. Given theinterest rate fluctuations the Company has adopted a prudent and conservative riskmitigation strategy to minimize financial and interest cost risks.
Commodity price risks
The Company is exposed to the risk of price fluctuations of raw materials as well asfinished goods. The Company proactively manages these risks through inventory managementand proactive vendor development practices. The Company's reputation for quality productdifferentiation and service coupled with the existence of powerful brand image with arobust marketing network mitigates the impact of price risk on finished goods.
The Company is exposed to risks attached to various statutes laws and regulations. TheCompany is mitigating these risks through regular review of legal compliances carried outthrough internal as well as external Secretarial Audits.
Human resource risks
Retaining the existing talent pool and attracting new talent are major risks. TheCompany has initiated various measures including rolling out strategic talent managementsystem training and integration of learning and development activities. The Company hassystem and procedure in place which helps to identify nurture and groom managerial talentwithin the Gallantt Group to prepare them for future business leadership.
UNPAID AND UNCLAIMED AMOUNT OF DIVIDEND AND SHARE APPLICATION MONEY
Following amount of Unpaid Share Application Money and Unpaid Dividend has not beenclaimed and paid till 31.03.2017:
|Nature of Money ||Relevant Financial Year ||Bank Account Details ||Amount lying (In') |
|Share Application Money ||2010-11 ||HDFC Bank Account No. 00142300001609 ||71900.00 |
|Final Dividend for 2011 ||2010-11 ||HDFC Bank Account No. 00142300001876 ||9929.00 |
|Final Dividend for 2012 ||2011-12 ||HDFC Bank Account No. 00142300002332 ||5419.00 |
|Final Dividend for 2013 ||2012-13 ||IDBI Bank Account No. 0135103000007344 ||17307.00 |
|Final Dividend for 2014 ||2013-14 ||IDBI Bank Account No. 0135103000007900 ||3026.50 |
|Final Dividend for 2015 ||2014-15 ||IDBI Bank Account No. 0135103000008587 ||3109.00 |
|Interim Dividend 2016 ||2015-16 ||ICICI Bank Account No. 001105026007 ||3929.00 |
Unpaid dividend amounts and share application money are not available for use by theCompany. There is no amount due and outstanding to be credited to Investors' Education andProtection Fund as on 31.03.2017.
As per the provisions of Section 124 of the Companies Act 2013 the amount ofdividends remaining unclaimed for a period of seven years is to be transferred alongwithshares held in those folios to the Investor Education and Protection Fund. The Companyprovides / hosts the required details of unclaimed dividend amounts and share applicationmoney on its website and also Ministry of Corporate Affairs Website in the relevant Formevery year.
BOARD OF DIRECTORS AND SENIOR EXECUTIVE
During the year Mr. Rajesh Kumar Jain (DIN: 02113164) has tendered his resignation fromthe Directorship of the Company effective from October 13 2016 and consequent upon hisresignation from the Directorship of the Company he also relinquished as a member of theAudit Committee and Nomination and Remuneration Committee of the Board and as a Chairmanof the Stakeholders Relationship Committee of the Board. Mr. Tarun Kumar Gupta (DIN:07767894) has been appointed as an Additional Independent Director of the Company. Interms of Section 161 of the Companies Act 2013 Mr. Tarun Kumar Gupta holds office up tothe date of ensuing Annual General Meeting. The Company has received requisite notice inwriting from a member proposing his name for the office of Director. Accordingly theBoard recommends the resolution in relation to appointment of Mr. Tarun Kumar Gupta as anIndependent Director for the approval by the shareholders of the Company.
Further Mr. Tarun Kumar Gupta has been appointed as a member of the Audit Committeeand Nomination and Remuneration Committee of the Board and as a Chairman of theStakeholders Relationship Committee of the Board.
The Board of Directors comprises of Eight Directors of which four are Independent. Interms Section 152 of the Companies Act 2013 Mr. Santosh Kumar Agrawal liable to retireby rotation at the ensuing Annual General Meeting and eligible for re-election.
Mr. Jyotirindra Nath Dey Mr. Tarun Kumar Gupta Mr. Piyush Kankrania and Mrs. SangeetaUpadhyay are Independent Directors of the Company. Independent Directors are appointed forfive consecutive years and are not liable to retire by rotation in terms of Sections 149152 Schedule IV and other applicable provisions if any of the Companies Act 2013 readwith Companies (Appointment and Qualification of Directors) Rules 2014. Mrs. SangeetaUpadhyay has been appointed as Independent Woman Director. Mr. Mayank Agrawal wasappointed as a Chief Executive Officer of the Company as per the provisions of theCompanies Act 1956. His appointment has been aligned with the new provisions of theCompanies Act 2013 and he has been appointed in the same position and designation as perthe new provisions of the Companies Act 2013. Mr. Amit Jalan is Chief Financial Officerand is inter alia looking after the core finance function of the Company. Mr. Nitesh Kumaris working in the capacity of Company Secretary and Compliance Officer.
None of the Directors of your Company is disqualified under the provisions of Section164(2)(a) & (b) of the Companies Act 2013.
DETAILS OF DIRECTORS OR KEY MANAGERIAL PERSONNEL WHO WERE APPOINTED OR HAVE RESIGNEDDURING THE YEAR
Mr. Rajesh Kumar Jain (DIN: 02113164) has tendered his resignation from theDirectorship of the Company effective from October 13 2016 and Mr. Tarun Kumar Gupta(DIN: 07767894) has been appointed as an Additional Independent Director of the Company.Mr. Mayank Agrawal has been working in the capacity of Chief Executive Officer of theCompany and his appointment was made as per then existing provisions of the Companies Act1956. Appointment of Mr. Mayank Agrawal was aligned with the provisions of new CompaniesAct 2013 and he has been reappointed in the same post.
All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and Regulation16 (b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
Mr. Amit Jalan had resigned from the post of Chief Financial Officer (CFO) of theCompany effective from February 03 2017. Board of Directors at their meeting held onFebruary 03 2017 appointed Mr. Anurag Kumar Khetan as a CFO of the Company. Mr. AnuragKumar Khetan after consenting to work in the capacity of CFO could not join the Companydue to his personal reasons (health related issues). Board of Directors has once againappointed Mr. Amit Jalan in the post of CFO of the Company effective from March 18 2017.
TRANSFER TO RESERVES
Your Directors propose to transfer ' 4254.78 Lacs to the General Reserve.
RELATED PARTY TRANSACTIONS
The details of Related Party Transactions during the Financial Year ending 31.03.2017being arm's length transactions have been reported in the financial statements and formspart of this report. The Audit Committee and the Board of Directors of the Company haveformulated the Policy on dealing with RPTs and a Policy on materiality of RPTs which isuploaded on the website of the Company and can be accessed through the website of theCompany www.gallantt.com under the weblink : http://goo.gl/9TdDjp
All transactions entered with Related Parties for the year under review were on arm'slength basis and in the ordinary course of business and that the provisions of Section 188of the Companies Act 2013 and the Rules made thereunder are not attracted. Thusdisclosure in form AOC-2 in terms of Section 134 of the Companies Act 2013 is notrequired. Further there are no material related party transactions during the year underreview with the Promoters Directors or Key Managerial Personnel. The Company hasdeveloped a framework through Standard Operating Procedures for the purpose ofidentification and monitoring of such Related Party Transactions.
All Related Party Transactions are placed before the Audit Committee as also to theBoard for approval. Omnibus approval was obtained on a yearly basis for transactions whichare of repetitive nature. Transactions entered into pursuant to omnibus approval areaudited by the Audit Committee and a statement giving details of all Related PartyTransactions are placed before the Audit Committee and the Board for review and approvalon a quarterly basis.
The policy on Related Party Transactions as approved by the Board of Directors has beenuploaded on the website of the Company viz. www.gallantt.com. None of the Directors hasany pecuniary relationship or transactions vis-a-vis the Company.
DISASSOCIATION OF SUBSIDIARIES AND DISPOSAL OF STAKE IN SUBSIDIARIES
Pursuant to the review and recommendation of the Audit Committee Board of Directors ofthe Company at their meeting held on September 29 2016 decided and disposed off entireshareholding held in two Subsidiary Companies viz. M/s. Shree Surabhi Wheat ProductsPrivate Limited and M/s. Shree Surabhi Flour Mills Private Limited thereby both theCompanies disassociated as Subsidiaries of the Company. Further during the year Companyhas acquired eight subsidiaries viz. Shikharji Rolling Mills Private Limited ShikharjiSteel & Agro Products Private Limited Bhavika Steel Agencies Private Limited ShrinuAgro Private Limited Shrinu Steel Works Private Limited Gyanika Flour Mills PrivateLimited Satlaj Ispat Private Limited and Satlaj Flour Mills Private Limited. Company hasacquired entire shareholding in these eight subsidiaries in line with the recommendationof the Audit Committee and approval of the Board of Directors.
SCHEME OF AMALGAMATION OF WHOLLY OWNED SUBSIDIARIES
At their meeting held on March 23 2017 Board of Directors of the Company has approvedthe Scheme of Amalgamation of Shikharji Rolling Mills Private Limited Shikharji Steel& Agro Products Private Limited Bhavika Steel Agencies Private Limited Shrinu AgroPrivate Limited Shrinu Steel Works Private Limited Gyanika Flour Mills Private LimitedSatlaj Ispat Private Limited and Satlaj Flour Mills Private Limited (together referred toas the "Transferor Companies") with the Gallantt Ispat Limited (hereinafterreferred to as the Company/ Transferee Company). Scheme of All the transferor Companiesare Wholly Owned Subsidiaries of the Company. Hence as per the provisions of Section 233of the Companies Act 2013 read with the Companies (Compromises Arrangements andAmalgamations) Rules 2016 Company has filed Scheme of Amalgamation with the Registrar ofCompanies West Bengal and Office of the Official Liquidator Calcutta High Court fortheir Observation on the same.
Vide its Letter bearing reference no. ROC/ LEGAL/233/2017/455 dated 04.05.2017 theoffice of Registrar of Companies West Bengal has issued its observation with thefollowing suggestions:
1. "The share capital clause of the scheme shall include the class and category ofcompany which enters into the scheme of amalgamation
i.e. Holding and a Wholly Owned Subsidiary Companies.
2. The Scheme shall include the clause related to providing "transfer ofcharges" "purchase of share held by the descending shareholders/debtorscreditors "cancellation or extinguish of shares on demerger" if applicable.
3. The Scheme shall include the clause related to providing Share Exchange Ratiobetween the Transferor Company and the Transferee Company.
4. It appears that the transferee Company M/s. Gallantt Ispat Limited is a listedCompany. Hence necessary approval/suggestion as issued by the concerned regulatoryauthorities shall be made incorporated in the said Scheme. The Scheme may also include theClause providing Compliance of Listing Agreement and SEBI Guidelines as applicable.
5. This Office has scrutinised the scheme of Amalgamation for its limited internalpurpose / in-principle approval for deciding on the matter of Amalgamation of thetransferors and transferee companies and it should not for any reason affects the interestof public.
The said suggestion has been duly incorporated in the Scheme of Amalgamation.
Further the Office of the Official Liquidator High Court Calcutta vide its letterbearing reference no. OLMisc./ Amalg./60/714/G dated 05.05.2017 has given its Observationwithout suggestions.
In accordance with the provisions of Section 233 of the Companies Act 2013 read withthe Companies (Compromises Arrangements and Amalgamations) Rules 2016 Company haveconvened and held meeting of Equity Shareholders and Unsecured Creditors of the Company onJuly 12 2017.
FINANCE AND ACCOUNTS DETAILS ON INTERNAL FINANCIAL CONTROLS RELATED TO FINANCIALSTATEMENTS
Your Company has adequate systems and processes of internal controls which arecommensurate with its size and nature of operations. They have been designed to providereasonable assurance with regard to recording and providing reliable financialinformation complying with applicable statutes safeguarding of assets authorization oftransactions and adherence to the Company's policies and practices.
Effective steps are taken by the Management to enable continuous monitoring of leadcontrol indicators and action taken towards correcting identified gaps. Respectivefunctions have been trained and equipped to enable continuous monitoring of exceptions bythemselves to reduce surprises and enable corrective action on timely and regular basis.
Your Company has a robust financial closure selfcertification mechanism wherein theline managers certify adherence to various accounting policies accounting hygiene andaccuracy of provisions and other estimates.
OUTLOOK AND EXPANSION
The recent trend in macro indicators clearly point towards improving fundamentals ofthe domestic economy. The Central Government has also shown its intent in furthering thereform momentum to revive investments and improve governance. The global commodity cycleis expected to be benign with consumption demand from the Chinese economy slowing down.Taking cues from the inflationary trend the Reserve Bank of India has already eased themonetary cycle and is expected to bring out more interest rate cuts going forward. Allthis favorable factors coupled with some of the important developmental reforms that arebeing pursued by the Central Government like the tax reform and push for infrastructurespending will set the stage for further pick-up in economic activity in 2016-17. Thisshould augur well for your Company's business across infrastructure.
Your company plans to take the performance to the next level by modernizationinstalling high tech and time saving machinery and supportive systems improving qualityof work by employee training.
The expansion plan by further investment in installation of new capacities andtechnology upgradation and modern machinery for increasing the capacity of the existingUnits are being implemented.
In terms of the sales and profitability targets for the coming years Board ofDirectors of the Company proposed to modify the plant capacity as under:
|Facility ||Unit ||Existing Capacity ||Expansion in Phase-1 ||Expansion in Phase-2 ||Post expansion Proposed Capacity |
|Sponge Iron ||MTPA ||99000 ||198000 ||148500 ||445500 |
|SMS ||MTPA ||167400 ||162600 ||165000 ||495000 |
|Rolling Mill ||MTPA ||162380 ||167620 ||165000 ||495000 |
|Power ||MW ||18 ||25 ||12.5 ||55.5 |
|Flour Mill ||MTPA ||108000 ||0 ||0 ||108000 |
Fixed Capital Cost ' 371.28 Crores.
PERSONNEL INDUSTRIAL RELATIONS AND MARKETING
The Company's HR philosophy is to establish and build a high performing organizationwhere each individual is motivated to perform to the fullest capacity: to contribute todeveloping and achieving individual excellence and departmental objectives andcontinuously improve performance to realize the full potential of our personnel.Industrial relations have remained harmonious throughout the year. DECLARATION OFINDEPENDENCE Your Company has received declarations from all the Independent Directorsconfirming that they meet the criteria of independence as prescribed under the provisionsof Companies Act 2013 read with the Schedules and Rules issued thereunder as well asSecurities & Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015.
AWARD AND RECOGNITIONS
During the previous years Company we have received following awards andreconciliation:
1. Uttar Pradesh "Udyami Samman - 2011" has been awarded by Zee Media Housewhich was presented by Shriprakash Jaiswal Hon'ble Coal Minister Central Government.
2. Awarded "Best Performing Company -2013 in Uttar Pradesh" by Sahara SamayMedia House presented by Shri Akhilesh Yadav Hon'ble Chief Minister of U.P.
During the year Company has not received any award.
MATERIAL CHANGES AND COMMITMENTS
There have been no material changes and commitments affecting the financial position ofthe Company since the close of financial year i.e. since 31st March 2017 till the date ofthis Report. Further it is hereby confirmed that there has been no change in the natureof business of the Company. However after approval of the Scheme of Amalgamation as aboveall the assets and liabilities of the Transferor Companies shall be transferred to theCompany.
Significant and material orders passed by the regulators / courts / tribunals impactingthe going concern status and the Company's operations in future
As such there is no significant and material order by the regulator/court/tribunalsimpacting the going concern status and the Company's operation in future.
a) Your Company has not issued equity shares with differential rights as to dividendvoting or otherwise; and
b) Your Company does not have any ESOP scheme for its employees/Directors.
CHANGE IN SHARE CAPITAL
During the year under report there is no change in Share Capital.
INTERNAL FINANCIAL CONTROLS
Your Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting are operating effectively based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol. Your Company had laid down guidelines policies procedures and structure forappropriate internal financial controls across the Company. These control processes enableand ensure the orderly and efficient conduct of company's business including safeguardingof assets prevention and detection of frauds and errors the accuracy and completeness ofthe accounting records and timely preparation & disclosure of financial statements.Review and control mechanisms are built in to ensure that such control systems areadequate and operating effectively. The Audit Committee evaluated the internal financialcontrols based on the following criteria:
1. Systems have been laid to ensure that all transactions are executed in accordancewith management's general and specific authorisation. There are well-laid manuals for suchgeneral or specific authorisation.
2. Systems and procedures exist to ensure that all transactions are recorded asnecessary to permit preparation of financial statements in conformity with generallyaccepted accounting principles or any other criteria applicable to such statements and tomaintain accountability for aspects and the timely preparation of reliable financialinformation.
3. Access to assets is permitted only in accordance with management's general andspecific authorisation. No assets of the Company are allowed to be used for personalpurposes except in accordance with terms of employment or except as specificallypermitted.
4. The existing assets of the Company are verified/ checked at reasonable intervals andappropriate action is taken with respect to any differences if any.
5. Proper systems are in place for prevention and detection of frauds and errors andfor ensuring adherence to the Company's policies.
A report on the internal financial controls under clause (i) of sub-section 3 ofSection 143 of the Companies Act 2013 issued by M/s. Anoop Agarwal & CompanyChartered Accountants Statutory Auditors of the Company is attached with theirIndependent Auditor's report and the same is self-explanatory.
PARTICULARS OF LOANS/ADVANCES/ INVESTMENTS AS REQUIRED UNDER SCHEDULE V OF THE LISTINGREGULATIONS
The details of related party disclosures with respect to loans/advances/investments atthe year end and maximum outstanding amount thereof during the year as required under PartA of Schedule V of the Listing Regulations have been provided in the notes to theFinancial Statements of the Company.
There have been no frauds reported by the Auditors of the Company to the AuditCommittee or the Board of Directors under sub-section (12) of section 143 of the CompaniesAct 2013 during the financial year
CORPORATE SOCIAL RESPONSIBILITY (CSR)
As a part of its initiative under the "Corporate Social Responsibility" (CSR)drive the Company has undertaken projects in the area of Health Education and ruraldevelopment eradicating hunger promoting health care and education. These projects arein accordance with Schedule VII of the Companies Act 2013 and the Company's CSR policy.The Report on CSR activities as required under the Companies (Corporate SocialResponsibility Policy) Rules 2014 is annexed and forms an integral part of this Report.
ENVIRONMENT AND SAFETY
The Company is conscious of the importance of environmentally clean and safeoperations. The Company's policy requires conduct of operations in such a manner so as toensure safety of all concerned compliances of environmental regulations and preservationof natural resources.
The Board appreciates the commitment and dedication of its employees across all thelevels who have contributed to the growth and sustained success of the Company. We wouldlike to thank all our customers vendors bankers and other business associates for theircontinued support and encouragement during the year. We also thank the Government ofIndia Government of Uttar Pradesh and all Other Government Agencies for their supportduring the year and look forward to the same in the future.
| ||On behalf of the Board |
|Place: Kolkata ||C. P. Agrawal |
|Date: August 01 2017 ||Chairman |