Impex Ferro Tech Ltd.
|BSE: 532614||Sector: Metals & Mining|
|NSE: IMPEXFERRO||ISIN Code: INE691G01015|
|BSE 15:40 | 23 Feb||1.16||
|NSE 14:47 | 23 Feb||1.15||
|Mkt Cap.(Rs cr)||10|
|Mkt Cap.(Rs cr)||10.20|
Impex Ferro Tech Ltd. (IMPEXFERRO) - Director Report
Company director report
The Directors are pleased to present the 21st Annual Report of the Company togetherwith Audited Accounts for the Financial Year ended 31st March 2016.
(Rs in Lacs)
FINANCIAL AND OPERATIONAL REVIEW
During the year under review the Company has achieved Net Sales/Income from operationof Rs 27195.85 lacs as against Rs 50580.19 lacs in previous year registering a declineof 46.23%. The Company incurred a loss of Rs 8137.19 lacs as against Rs 6143.64 lacs inthe previous year. The decline in Sales and increase in losses are mainly attributed todepressed market for ferro alloys impacting the net realisation and margin. Slower growthin several sectors of the economy resulted into weaker domestic demand. On the other handrising inflation in the country resulted in increase in the cost of raw materials andother overheads which could not be passed on to the consumers.
TRANSFER TO RESERVE
Since the Company has incurred loss during the year no amount has been transferred toreserves.
In view of the losses incurred by the Company the Directors of the Company do notrecommend any dividend for the financial year 2015-16.
The Board met Twelve (12) times during the year the details of which are given in theCorporate Governance Report that forms part of this Annual Report. The intervening gapbetween the Meetings was within the period prescribed under the Companies Act 2013 andthe SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
CHANGES IN SHARE CAPITAL
To accommodate the allotment of Equity Shares consequent to Preferenti al Issue theCompany has increased the Authorised Share Capital from Rs 825000000 to Rs950000000. The Capital Clause of the Memorandum of Association of the Company wasaccordingly amended.
The Board of Directors in their meeting held on December 26 2015 allotted 6335000Equity Shares of Rs 10/- each at a premium of Rs 10/- per share on preferential basis toan entity belonging to Promoter group in terms of the approval received from theShareholders in the previous Annual General Meeting held on September 28 2015.
In accordance with the provisions of the Companies Act 2013 Mr. Suresh Kumar Patni(DIN: 00032674) retires by rotation and being eligible offers himself forre-appointment.
During the year Mr. Ankit Patni (DIN: 00034907) Non-Executive Promoter Director of theCompany has resigned from the directorship of the Company with effect from August 222015.
During the year Mr. Ramesh Seemakurti (DIN: 00096163) Non-Executive Director of theCompany has resigned from the directorship of the Company with effect from November 142015.
Appointment / Re-appointment
Pursuant to the provisions of section 161 of the Companies Act 2013 read with therelevant provisions in the Articles of Association Mr. Ankit Patni (DIN: 00034907) wasappointed as an Additional Director (Non-Executive Promoter) by the Board of Directors ofthe Company with effect from September 30 2015 to hold office up to the date of ensuingAnnual General Meeting. The Company has received a notice in writing from a memberproposing his candidature for the office of Non-Executive Promoter Director.
Pursuant to the provisions of section 196 197 198 of the Companies Act 2013 readwith Schedule V Mr. SatiRs sh Kumar Singh (DIN: 005295625) Executive Director whosetenure was expired on August 23 2015 was re-appointed for a further period of three (3)years from August 24 2015 to August 23 2018.
DIRECTOR S RESPONSIBILITY STATEMENT
Based on the framework of Internal Financial Controls maintained by the Company workperformed by the Internal Statutory Cost and Secretarial Auditors and external agenciesthe reviews performed by Management and the relevant Board Committees the Board with theconcurrence of the Audit Committee is of the opinion that the CompanyRs s InternalFinancial Controls were adequate and effective as on 31st March 2016.
Accordingly pursuant to section 134(5) of the Companies Act 2013 the Board ofDirectors to the best of their knowledge and ability confirm:
a) that in the preparation of the annual accounts the applicable Accounting Standardshave been followed along with proper explanation relating to material departures;
b) that we have selected such accounting policies and applied them consistently andmade judgements and estimates that are 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 and loss of the Company for that period;
c) that proper and sufficient care has been taken 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) that the annual accounts have been prepared on a "going concern" basis;
e) that proper internal financial controls were laid down and that such internalfinancial controls are adequate and were operating effectively; and
f) that proper systems to ensure compliance with the provisions of all applicable lawswere in place and that such systems were adequate and operating effectively.
The CompanyRs s credit rating for Long-Term debts/facilities is Rs DRs and Short-Termfacilities is Rs A4 (A Four)Rs rated by ICRA Limited.
SALE OF INVESTMENT
The Company entered into a Joint Venture with Ankit Metal & Power Ltd. and formedSKP Mining Pvt. Ltd. on January 16 2015. Since the purpose for which Joint Venture wasformed could not be materialized the Company decided to exit from the same and thusdisposed off its holding in the Company on June 30 2015.
DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES
Consequent upon the sale of investment in SKP Mining Pvt. Ltd. the Joint Venture withSKP Mining Pvt. Ltd. no more exists. EXTRACT OF ANNUAL RETURN
The details of the extract of the Annual Return in Form MGT 9 is annexed herewith andforms part of this Report as Annexure-I.
The Company has not accepted any deposits within the meaning of secti on 73 of theCompanies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014.
The properties and insurable assets and interests of the Company like building plantand machinery and stocks among others are adequately insured.
At the 19th Annual General Meeting (AGM) of the Company held on September 27 2014M/s. R. Kothari & Company (FRN: 307069E) Chartered Accountants were appointed asStatutory Auditor of the Company to hold office for a term of five (5) years from theconclusion of 19th AGM (subject to ratification of such appointment by the members atevery AGM) till the conclusion of the 24th AGM of the Company. Accordingly theappointment of M/s. R. Kothari & Company (FRN: 307069E) Chartered Accountants asStatutory Auditor of the Company is placed for ratification by the members. The Companyhas received a confirmation from M/s. R. Kothari & Company Chartered Accountants tothis effect that their appointment if ratified would be within the limits prescribedunder section 139 of the Companies Act 2013 and the rules framed thereunder and inaccordance with section 141 of the Companies Act 2013. They have also confirmed that theyhold a valid peer review certificate as prescribed under Regulation 33(d) of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015. The Audit Committeeand the Board of Directors of the Company recommend ratification of their appointment fromthe conclusion of this AGM upto the conclusion of the 24th AGM of the Company.
STATUTORY AUDITOR OBSERVATION
There are no qualifications or adverse remarks in the AuditorRs s Report which requireany clarification/explanation. The notes to accounts referred to in the AuditorRs s Reportare self-explanatory and therefore do not call for any further comments/explanations.
In terms of secti on 148 of the Companies Act 2013 read with rule 14 of the Companies(Audit and Auditors) Rules 2014 on the recommendation of Audit Committee the Board ofDirectors has re-appointed M/s. A.J.S. & Associates Cost Accountants (FRN 000106) asCost Auditor of the Company at a remuneration of Rs 35000/- plus applicable taxes andreimbursement of out of pocket expenses incurred by them to conduct an audit of the costaccounting records maintained by the Company for the current financial year beginning fromApril 1 2016 and ending on March 31 2017.
As required under section 148 of the Companies Act 2013 read with rule 14 of theCompanies (Audit and Auditors) Rules 2014 the remuneration payable to Cost Auditor isbeing placed at the ensuing Annual General Meeting for ratification by the members.
SECRETARIAL AUDIT REPORT
In terms of section 204 of the Companies Act 2013 and rules made there under CSAbhijeet Jain of M/s. A J & Associates Practicing Company Secretary have beenappointed as Secretarial Auditor of the Company. The report of the Secretarial Auditor in FormMR-3 is enclosed as Annexure-II to this report.
SECRETARIAL AUDITOR OBSERVATION
The Secretarial Auditor has the following observations in Form MR-3 enclosed asAnnexure II.
(i) Form MGT-14 for Appointment of Internal Auditor u/s 138 for the year 2015-16 is yetto be filed
(ii) It was noted that the Company has complied the Secretarial Standards issued by theICSI to a great extent; however the stricter implementation of the Secretarial Standardsis yet to be observed by the Company.
(iii) There has been some instances where the Forms were filed with some delay therebypaying the additional fees. Some forms are yet to be filed.
Our Comments are as under:
(i) Owing to technical glitches at MCA Portal throughout the last year the filingswere failing at many times. This led to confusion at our end and the Form was not filedsteps will be taken to file the same.
(ii) The Secretarial Standards were issued in the last year we are trying our levelbest to implement these in entirety in the near future.
In terms of section 138 of the Companies Act 2013 read with rule 13 of the Companies(Accounts) Rules 2014 on the recommendation of Audit Committee the Board of Directorshas appointed M/s. N R & Associates Cost Accountants (FRN : 102903) as InternalAuditor of the Company for the financial year 2016-17 at a remuneration fixed by the Boardof Directors of the Company in consultation with the Auditors.
INTERNAL FINANCIAL CONTROL SYSTEM
The Companies Act 2013 has mandated the Company to have a formal framework of InternalFinancial Controls (IFC) and has also laid down specific responsibilities on the BoardAudit Committee Independent Directors and Statutory Auditors with regard to IFC.
The financial control system and framework is required to ensure:
The orderly and efficient conduct of its business
Safeguarding of its assets
The prevention and detection of frauds and errors
The accuracy and completeness of the accounting records and
The timely preparation of reliable financial information.
The Board reviews the effectiveness of controls documented as part of Internal Affairsand Financial Control (IAFC) framework and take necessary corrective actions whereweaknesses are identified as a result of such reviews. This review covers entity levelcontrols fraud risk controls and information technology environment.
The Policies and procedure adopted by the Company ensures the orderly and efficientconduct of its business and adherence to the CompanyRs s policies prevention anddetection of frauds and errors accuracy and completeness of the records and the timelypreparation of reliable financial information. Based on this evaluation no significantevents had come to notice during the year that have materially affected or are reasonablylikely to materially affect our IFC. The management has also come to the conclusion thatthe IFC and other financial reporting was effective during the year and is adequateconsidering the business operations of the Company.
The Statutory Auditor of the Company has audited the IFC over Financial Reporting andtheir Audit Report is annexed as Annexure-B to the Independent AuditorsRs Report underFinancial Statements.
DETAILS RELATING TO REMUNERATION OF DIRECTORS KEY MANAGERIAL PERSONNEL AND EMPLOYEES
Disclosure pertaining to remuneration and other details as required under section134(3)(q) 197(12) of the Companies Act 2013 read with rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 forms part of theBoardRs s Report as Annexure-III.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO
A statement giving details of Conservation of Energy Technology Absorption and ForeignExchange Earning and Outgo as required under section 134(3)(m) of the Companies Act 2013read with rule 8 of the Companies (Accounts) Rules 2014 is annexed to this report as Annexure-IV.
DECLARATION ON COMPLIANCE WITH CODE OF CONDUCT
The Board has formulated a Code of Conduct for the Board Members and Senior Managementof the Company which has been posted on the website of the Company.
It is hereby affirmed that all the Directors and Senior Management Personnel havecomplied with the Code and a confirmation to that effect has been obtained from theDirectors and the Senior Management.
PREVENTION OF INSIDER TRADING
The Company already had a structured Code of Conduct for Prevention of Insider Tradingwith a view to regulate trading in securities by the Directors and designated employees ofthe Company. The Code has been further streamlined to keep parity with the new CompaniesAct 2013 and SEBI (Prohibition of Insider Trading) Regulations 2015 and be named as RsCode of Conduct for Regulating Monitoring and Reporting of Trading by InsidersRs which isalso displayed on the website of the Company www.impexferrotech.com.
The Code requires pre-clearance for dealing in the CompanyRs s shares and prohibits thepurchase or sale of CompanyRs s shares by the Directors and the designated employees whilein possession of unpublished price sensitive information in relati on to the Company andduring the period when the Trading Window is closed. The Board is responsible forimplementation of the Code.
All the Directors and designated employees who hold any shares in the Company haveconfirmed compliance with the Code.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS/COURTS/TRIBUNALS
There are no significant material orders passed by the Regulators/Courts/Tribunalswhich would impact the going concern status of the Company and its future operations.
MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THEREPORT
The Company has become a sick industrial company as per section 3(o) of the SickIndustrial Companies (Special Provisions) Act 1985 as the accumulated losses of theCompany at the end of Financial Year 31.03.2016 exceeded its entire net worth as perAudited Financial Statement as on 31.03.2016. The Company will make necessary reference tothe Board for Industrial and Financial Reconstruction (BIFR) under section 15 of the SickIndustrial Companies (Special Provisions) Act 1985.
As per Companies (Indian Accounti ng Standard) (Ind AS) every Listed Companyand their holding and subsidiary companies (other than banking companies insurancecompanies and non-banking financial companies) are required to comply with Ind AS in thepreparation of their financial statements for accounting periods beginning on or afterApril 2016 with the comparatives for the periods ending March 2016. The Company is notfalling under the criteria from April 2016 as the Net worth of the Company is below Rs500 Crores. Accordingly the Company will adopt the said Ind AS with effect from April 12017. The Company has devised a suitable implementation plan for adoption of Ind AS.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The Company has not given any loans or guarantees covered under the provisions ofsection 186 of the Companies Act 2013. The details of the investments made by Company aregiven in the notes to the Financial Statements.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All contracts/arrangements/transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and on armRs s lengthbasis. During the year the Company had not entered into any contract/arrangement/transaction with related parties which could be considered material inaccordance with the policy of the Company on materiality of related party transactionsbetween the Company and the Directors the management or the relatives except for thosedisclosed in the financial statements.
Accordingly particulars of contracts or arrangements entered into by the Company withrelated parti es referred to in section 188(1) of the Companies Act 2013 in FormAOC-2 (Annexure V) is NIL.
POLICY ON DIRECTORSRs APPOINTMENT AND REMUNERATION
The Board has on the recommendation of the Nomination and Remuneration Committee frameda policy for selection and appointment of Directors Key Managerial Personnel and theirremuneration. A note on Remuneration Policy has been made a part of the CorporateGovernance Report.
RISK MANAGEMENT POLICY
The Company has a defined Risk Management framework to identify assess monitor andmitigate various risks to key business objectives. Major risks identified by thebusinesses and functions are systematically addressed through mitigating actions on acontinuing basis.
The Risk Management Policy provides for identification of risk its assessment andprocedures to minimize risk. The policy is periodically reviewed to ensure that theexecutive management controls the risk as per decided policy.
POLICY ON PREVENTION OF SEXUAL HARASSMENT
The Company has adopted policy on Prevention of Sexual Harassment of Women at Workplacein accordance with The Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013.
During the financial year ended 31st March 2016 the Company has not received anyComplaints pertaining to Sexual Harassment.
STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS UNDER SECTION 149(6)
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as laid down under section 149(6)of the Companies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 with the Stock Exchanges.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
The Company proactively keeps its Directors informed of the activities of the Companyits management and operations and provides an overall industry perspective as well asissues being faced by the industry. The familiarisation programmes policy and details offamiliarisation programme provided to the Directors of the Company is available on theCompanyRs s website www.impexferrotech.com.
The composition and terms of reference of the Audit Committee has been furnished in theCorporate Governance Report forming part of this Annual Report. There has been no instancewhere the Board has not accepted the recommendations of the Audit Committee.
NOMINATION AND REMUNERATION COMMITTEE
The compositi on and terms of reference of the Nominati on and Remuneration Committeehas been furnished in the Corporate Governance Report forming part of this Annual Report.
STAKEHOLDERSRs RELATIONSHIP COMMITTEE
The composition and terms of reference of Stakeholders Relationship Committee has beenfurnished in the Corporate Governance Report forming part of this Annual Report.
CORPORATE SOCIAL RESPONSIBILTY (CSR)
In line with the provisions of the Companies Act 2013 the Company has framed itsCorporate Social Responsibility (CSR) policy for the development of programmes andprojects for the benefit of weaker sections of the society and the same has been approvedby the CSR Committee and the Board of Directors of the Company. The Company has not spentany amount in CSR activities since the Company has incurred losses during the last 3 yearseroding the entire net worth.
VIGIL MECHANISM POLICY
In terms of secti on 177 of the Companies Act 2013 rules framed thereunder andRegulati on 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 the Company has a vigil mechanism in place for the Directors and Employees of theCompany through which genuine concerns regarding various issues relati ng to inappropriatefunctioning of the organization can be communicated. For this purpose the Board has aVigil Mechanism Policy and the same has been uploaded on the website of the Company i.e.
The Board has carried out an annual evaluation of its own performance the Directorsindividually as well as the evaluation of the functioning of various Committees. TheIndependent Directors also carried out the evaluation of the Chairman and the NonIndependent Directors the details of which are covered in the Corporate GovernanceReport.
The Company is committed to maintain the highest standards of Corporate Governance andadhere to the Corporate Governance requirements set out in Regulation 34(3) read withSchedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015. The Report on Corporate Governance as stipulated under the above Regulation forms anintegral part of this Annual Report.
MANAGEMENT DISCUSSION AND ANALYSIS
ManagementRs s Discussion and Analysis for the year under review as stipulated underRegulation 34(3) read with Schedule V of the SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015 is presented in a separate section forming part of thisAnnual Report.
As required by Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations& Disclosure Requirements) Regulations 2015 the CEO/CFO certification has beensubmitted to the Board and forms an integral part of this Annual Report.
AWARDS & ACHIEVEMENTS
During the year under review the Company was awarded for Export Excellence by EEPCINDIA for highest exporter in the product group Thrust Markets of Thrust Products in thelarge enterprise category for the outstanding contribution to Engineering Exports duringyear 2015-16 in Ferro Alloy Segment (Eastern Region).
GREEN INITIATIVES IN CORPORATE GOVERNANCE
Ministry of Corporate Affairs has permitted Companies to send electronic copies ofAnnual Report notices etc. to the e-mail IDs of shareholders. The Company hasaccordingly arranged to send the soft copies of these documents to the e-mail IDs ofshareholders wherever applicable. In case any shareholder would like to receive physicalcopies of these documents the same shall be forwarded upon receipt of written request.
The Directors wish to extend their thanks and appreciation for the valuable andcontinued support received from the Shareholders CompanyRs s Bankers Central and StateGovernment Authorities Stock Exchange(s) Depository Participants (DPRs s) and all otherBusiness Associates for the growth of the organization.
The Directors also wish to place on record their deep appreciation to all the employeesfor their commitment and continued contribution to the Company.
ANNEXURE FORMING PART OF THE DIRECTORSRs REPORT
The Annexures referred to in this Report and other information which are required to bedisclosed are annexed herewith and forms part of the Directors Report:
I Extract of the Annual Return (Form MGT-9)
II Secretarial Audit Report (Form MR 3)
III Particulars of Employees
IV Prescribed particulars of Conservation of Energy Technology Absorption and ForeignExchange Earnings and Outgo
V Particulars of Contract or Arrangements with Related Parties (Form AOC 2)