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Gujarat NRE Coke Ltd.

BSE: 512579 Sector: Metals & Mining
NSE: GUJNRECOKE ISIN Code: INE110D01013
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VOLUME 206492
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Mkt Cap.(Rs cr) 259
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OPEN 1.60
CLOSE 1.56
VOLUME 206492
52-Week high 3.50
52-Week low 1.36
P/E
Mkt Cap.(Rs cr) 259
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Gujarat NRE Coke Ltd. (GUJNRECOKE) - Director Report

Company director report

To

The Members

Your Directors have pleasure in presenting the 29th Annual Report and the AuditedFinancial Results on the business and operations of your Company for the financial yearended on March 31 2016.

FINANCIAL RESULTS/HIGHLIGHTS

(Rs. in crores)

2015-16 2014-15
Total Income (including other income) 804.74 471.81
Total Expenditure 1624.54 519.86
Profit/(Loss) before Interest Depreciation and Tax (819.80) (48.05)
Less: (1) Finance Cost 270.69 317.91
(2) Depreciation 64.94 61.87
Profit/(Loss) before Tax and Exceptional Items (1155.43) (427.83)
Exceptional Items - -
Less: Provision for Taxation (372.32) (138.80)
Extraordinary Items 22.42 32.71
Profit/(Loss) after Tax (805.53) (321.74)
Add: Amount brought forward - -
Amount available for appropriation (805.53) (321.74)
Balance carried to Balance Sheet (805.53) (321.74)

REVIEW OF OPERATIONS

During the year under review the Total Income from Operations (including other income)was Rs. 804.74 crores as compared to Rs. 471.81 crores in the previous year. The Companyposted a net loss after tax of Rs. 805.53 crores as compared to the net loss of Rs.321.74 crores during the previous year.

DIVIDEND

The Board did not recommend any dividend due to loss incurred by the company during theyear under review.

ISSUE OF EQUITY SHARES

The Company had allotted equity shares of Rs. 10/- each during the year under review asper the following details:-

Date of Allotment No. of shares Particulars
8th April 2015 1177004 Issued to Lenders at a premium of Rs. 1.01 per share upon conversion of debts
16th December 2015 60000000 Issued to Promoter Group Entities at a premium of Rs. 0.72 per share upon conversion of warrants
24th December 2015 213877070 Issued to Lenders at a premium of Rs. 1.03 per share upon conversion of debts
6th February 2016 252815066 Issued to Lenders at a premium of Rs. 1.03 per share upon conversion of debts
31st March 2016 33185000 Issued to ICICI Bank at par per share upon conversion of liability towards corporate guarantee
2nd April 2016 25000000 Issued to Promoter Group Entities at a premium of Rs. 2/- per share upon conversion of warrants
23rd May 2016 304042725 Issued pursuant to amalgamation of NRE Metcoke Limited and Bajrang Bali Coke Industries Limited with the Company

NON-CONVERTIBLE DEBENTURES

During the year under review the company redeemed Non-Convertible Secured RedeemableDebentures (NCDs) amounting Rs. 9.25 crores as per the terms of issue of these debentures.The NCDs outstanding at the end of the year under review amounted to Rs. 412.51 crores.

LISTING

Both the Equity Shares and "B" Equity Shares of your Company are listed atthe National Stock Exchange of India Limited (NSE) and BSE Limited (BSE). TheNon-convertible Debentures of the company (including Debentures issued under QIP) arelisted at BSE Limited. The Foreign Currency Convertible Bonds (FCCBs) are listed atSingapore Exchange Limited (SGX).

BUSINESS PLANS

The domestic metallurgical coke industry in the year 2015-16 has been operating atabout 25% capacity utilisation. The industry is reeling under a crisis caused by hugedumping from China at a price lower than the cost of production of met coke in India.Moreover steel was also similarly plagued with dumping and low domestic consumptionhence required less met coke. Thus the demand of met coke remained low in the year2015-16.

However the year 2016-17 started with a positive note bringing back hope of revivalin the met coke industry of the country. China has infused the much needed creditfacilities in its own commodities market. Increased infrastructure and constructionactivity in China has resulted in increase in steel demand. Government measures in Indialike imposition of MIP and safeguard duty on steel as well as huge spending ininfrastructure is increasing steel consumption and production resulting in increase inmet coke demand in the country. The industry expects the increased price to sustain over alonger period. Also the investigation for imposition of anti-dumping duty on low ashmetallurgical coke from China is progressing well and the industry is hopeful of gettingthe duty imposed thereby providing the much needed relief to the domestic met cokeindustry. With external environment turning favourable the company believes that arevival in the operations and performance of the company is not far away.

SUBSIDIARIES

The Company has two Indian wholly-owned subsidiaries:

a. Manor Dealcom Pvt Ltd and

b. Huntervalley Coal Pvt Ltd

A report on the performance and financial position of each of the subsidiaries as perthe Companies Act 2013 is provided a part of the financial statement and hence notrepeated here for the sake of brevity.

AMALGAMATION

During the year under review two group Companies i.e NRE Metcoke Limited and BajrangBali Coke Industries Limited were amalgamated with the Company i.e Gujarat NRE CokeLimited pursuant to the Order passed by the Hon'ble High Court at Calcutta dated 21stJanuary 2016. The Company had filed the said Order with the Ministry of Corporate Affairson 16th March 2016. On filing of the said Order the Scheme of Amalgamation has becomeeffective w.e.f 1st April 2014 (appointed date of amalgamation).

CORPORATE GOVERNANCE

In compliance with the requirements of the Schedule V of the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 a Report on 'Corporate Governance' ason 31st March 2016 and a Report on Management Discussions and Analysis are annexed to andforms part of this Report.

Chairman & Managing Director (CEO) has certified to the Board with regard to thefinancial statements and other matters as required under Schedule V Part D of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 and the saidcertificate is also annexed to and forms a part of this Report.

DIRECTORS & KEY MANAGERIAL PERSONNEL

Confirmation of Appointment:

Mrs. Mona Jagatramka retires by rotation at the forthcoming Annual General Meeting andbeing eligible offer herself for reappointment in terms of the Articles of Association ofthe Company.

Changes in Directors and Key Managerial Personnel:

Mr. Amit Kumar Majumdar was appointed as the Independent Director of the Company on19th September 2015 due to the casual vacancy caused by the resignation of Mr. GopalPrasad Dokania w.e.f 27th August 2015. Mr. C. Narasimhan had resigned from the post ofNominee Director of the Company w.e.f 27th January 2016 and Mr. P. R. Kannan had resignedfrom the post of Chief Financial Officer (CFO) of the Company w.e.f 7th January 2016.

All the Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015.

Formal Annual Evaluation:

The Board evaluates the performance of the Board its Committees and all individualDirectors including Independent Directors every year. All the Non-executive andIndependent Directors on the Board of the Company are eminent personalities having wideexperience in the field of business industry and administration.

Their presence on the Board is advantageous and fruitful in taking business decisions.

Familiarization Programme:

Whenever new Non-executive and Independent Directors are inducted in the Board they areintroduced to our Company's culture through appropriate orientation session and they arealso introduced to our organization structure our business constitution boardprocedures our major risks and management strategy.

The details regarding familiarization programmes have been uploaded on the website ofthe Company at http://www.gujarat nre.com/Policies.html#9.

Number of Board Meetings held:

The Board of Directors of the Company duly met 7 times during the financial year2015-16. The dates of such meetings were 25th May 2015 10th August 2015 25th August2015 19th September 2015 5th October 2015 8th November 2015 and 27thJanuary 2016.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 134(5) of the Companies Act 2013 withrespect to Directors' Responsibility Statement your Directors hereby confirm and statethat -

a) in the preparation of the annual accounts for the year ended 31st March 2016 theapplicable accounting standards have been followed along with proper explanation relatingto material departures;

b) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the company at the end of the financial year and of the profitof the company for the same period;

c) the directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities;

d) they have prepared the annual accounts on a going concern basis;

e) they have laid down internal financial controls in the company that are adequate andwere operating effectively.

f) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and these are adequate and are operating effectively.

AUDITORS

Pursuant to the compliance of Section 139(2) of the Companies Act 2013 M/s. N. C.Banerjee & Co. Chartered Accountants the existing Statutory Auditors of the Companyare not being proposed for re-appointment at the ensuing Annual General Meeting of theCompany as they have completed the tenure as the Statutory Auditors of the Company asspecified under the aforesaid section.

Your Directors recommend the appointment of M/s Nandy Halder & Ganguli CharteredAccountants as the Statutory Auditors of the Company at the forthcoming Annual GeneralMeeting for a period of 5 years to hold office till the conclusion of 34th Annual GeneralMeeting of the Company subject to ratification by the shareholders every year. A writtenconsent from M/s Nandy Halder & Ganguli has been received along with a certificatethat their appointment if made shall be in accordance with the conditions prescribedunder Section 141 of the Companies Act 2013 and Regulation 33(1)(d) of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.

AUDITORS' REPORT

The observations of the Auditors in their Report read with relevant notes on theaccounts as annexed are self-explanatory and need no elaboration.

COST AUDIT

The Company had reappointed M/s B Mondal & Co. Practicing Cost Accountants as CostAuditor to audit the cost records of its steel and metcoke plant(s) for the financial year2015-16.

The particulars of cost auditor/cost audit report etc. as required by General Circularno 15/2011 dated 11th April 2011 issued by Cost Audit Branch of Ministry of CorporateAffairs Government of India are given below -

a) Name & address of the Cost Auditor –

M/s. B Mondal & Associates

61/H/15 Raja Naba Krishna Street

Kolkata - 700 005.

b) Name and membership no. of the partner of the firm –Mr Baidyanath MondalMembership no - 11681.

c) Due date of filing Cost audit report with the Central Government for the year2014-15 – September 30 2015.

d) Actual date of filing of Cost audit report with the Central Government for the year2014-15 –October 27 2015.

Your Directors on recommendation of the Audit Committee have re-appointed M/s BMondal & Co. Practicing Cost Accountants to audit the cost records of the Company forfinancial year 2016-17. A resolution regarding ratification of the remuneration payable toM/s B. Mondal & Co. forms part of the Notice convening the 29th Annual General Meetingof the Company.

SECRETARIAL AUDIT

According to the provision of section 204 of the Companies Act 2013 read with Rule 9of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 theSecretarial Audit Report submitted by Mr. Samir Kumar Ghosh Company Secretary inPractice is enclosed as a part of this report as Annexure-A. The Secretarial Audit Reportdoes not contain any qualification reservation or adverse remark.

PUBLIC DEPOSITS

The Company has not accepted or renewed any Public Deposits as defined underprovisions of Chapter V of the Companies Act 2013.

PARTICULARS OF CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNINGS AND OUTGO

Information required under section 134(3)(m) of the Companies Act 2013 read with Rule8 of the Companies (Accounts) Rules 2014 is given in the Annexure-B to this report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

In terms of section 135 and Schedule VII of the Companies Act 2013 the Board ofDirectors of your Company has constituted a CSR Committee. The disclosures required to bemade as per Section 134 (3) and Rule 9 of Companies (Corporate Social ResponsibilityPolicy) Rules 2014 is enclosed as part of this report as Annexure-C. Additionally theCSR Policy has been uploaded on the website of the Company at http://www.gujaratnre.com/Policies.html#2.

AUDIT COMMITTEE

The composition of the Audit Committee of the Company is as below:

Sl. No Name of Director Category of Director Designation in Committee
1. Mr. Sisir Kumar Mukherjee Independent Director Chairman
2. Mr. Amit Kumar Majumdar Independent Director Member
3. Mr. Murari Sanaguly Independent Director Member

The Company Secretary acts as the Secretary to the Committee. There is no suchrecommendation of the Audit Committee which has not been accepted by the Board during theperiod under review.

NOMINATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee of the Company identifies the persons whoare qualified to become Directors of the Company / who may be appointed in SeniorManagement in accordance with the criteria laid down and recommend to the Board theirappointment and removal. The Committee also carries out evaluation of every Director'sperformance. The Committee has formulated the criteria for determining qualificationspositive attributes independence of the Directors and recommend to the Board a Policyrelating to the remuneration for the Directors Key Managerial Personnel and otheremployees.

RELATED PARTY TRANSACTIONS

Related party transactions that were entered during the financial year were on an arm'slength basis and were in the ordinary course of business. There were no materiallysignificant related party transactions with the Company's Promoters Directors Managementor their relatives which could have had a potential conflict with the interests of theCompany. Transactions with related parties entered by the Company in the normal course ofbusiness are periodically placed before the Audit Committee for its omnibus approval andthe particulars of contracts entered during the year as per Form AOC-2 is enclosed asAnnexure-D.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT-9 is annexedherewith as Annexure-E.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements.

EMPLOYEE STOCK OPTION SCHEME

The Company had granted 9589000 options to its Employees/Directors through fourdifferent tranches under GNCL Employee Stock Options Scheme 2007 (ESOP 2007) till the endof previous year against the approval received from shareholders to grant upto 12195302options under the said Scheme.

The Nomination and Remuneration Committee of the Board of Directors of the Companyinter alia administers and monitors the Employees' Stock Option Scheme of the Company inaccordance with the applicable SEBI Guidelines. The disclosures as stipulated underRegulation 14 of the SEBI (Share Based Employee Benefits) Regulations 2014 as on March31 2016 (cumulative position) with regard to the Employees' Stock Option Scheme (ESOS)are given in an Annexure to this Report as Annexure -F. The Company has received acertificate from the Auditors that the aforesaid Scheme has been implemented in accordancewith SEBI Guidelines and the resolution passed by the shareholders. The Certificate wouldbe placed at the meeting for inspection by the shareholders.

REMUNERATION RATIO OF THE DIRECTORS / KEY MANAGERIAL PERSONNEL (KMP) / EMPLOYEES

The prescribed particulars of Employees required under Section 134(3)(q) and Section197 read with Rule 5 of The Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is annexed herewith as Annexure G and forms part of this report.

RISK MANAGEMENT POLICY

Board of Directors have formulated and implemented a risk management policy for theCompany. The Board has been addressing various risks impacting the Company includingidentification therein of elements of risk if any which in the opinion of the Board maythreaten the existence of the company. The Board and the Audit Committee of the Companyperiodically review and evaluate the risk management system of the Company so that themanagement controls the risks through properly defined network.

DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION ANDREDRESSAL) ACT 2013

The Company has in place an Internal Complaints Committee which has been set up toredress complaints regarding sexual harassment. The following is the summary of sexualharassment complaints received and disposed off during the year:

i) No. of complaints received: nil

ii) No. of complaints disposed off: nil

PERSONNEL / INDUSTRIAL RELATIONS

The Company maintained cordial and harmonious relations at all levels at the officesand plants of the Company and its subsidiaries throughout the year under review.

APPRECIATION

We wish to acknowledge the understanding support and services of our workers staffand Executives which has largely contributed to efficient operations and management of theCompany during the year under review. We also take this opportunity to express our deepsense of gratitude to all our customers dealers suppliers bankers government officialsand all other business associates for their continuous guidance and support to the Companyand their continued confidence in its management. We also take this opportunity to expressour sincere thanks to our shareholders and debenture holders for their confidence andfaith in the company.

For and on behalf of the Board
Place: Kolkata Arun Kumar Jagatramka
Dated: 29th May 2016 Chairman & Managing Director