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Inducto Steel Ltd.

BSE: 532001 Sector: Others
NSE: N.A. ISIN Code: INE146H01018
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OPEN 24.25
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VOLUME 612
52-Week high 35.65
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P/E
Mkt Cap.(Rs cr) 10
Buy Price 0.00
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Sell Price 25.35
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OPEN 24.25
CLOSE 25.50
VOLUME 612
52-Week high 35.65
52-Week low 22.55
P/E
Mkt Cap.(Rs cr) 10
Buy Price 0.00
Buy Qty 0.00
Sell Price 25.35
Sell Qty 30.00

Inducto Steel Ltd. (INDUCTOSTEEL) - Director Report

Company director report

[(Disclosure under Section 134(3) of the Companies Act 2013)

{Read With Companies (Accounts) Rules 2014}]

Dear Shareholders

Your Directors are presenting the 28th Annual Report of your Company and theAudited Financial Statements for the year ended 31st March 2016.

FINANCIAL RESULTS:

(Amount in lacs)

PARTICULARS 2015-16 2014-15
Total Income 16473.77 22681.41
Total Expenses 16317.35 22202.71
Profit / (Loss) before tax 156.43 478.70
Less: Tax Expense 52.60 154.79
Less: Deferred Tax (0.60) (0.37)
Profit / (Loss) after tax 104.42 324.29

HIGHLIGHTS OF COMPANY’S PERFORMANCE :

During the year under consideration Total Revenue were Rs. 16473.77 Lacs as againstRs. 22681.41 Lacs in the preceding financial year and Profit after Tax was Rs. 104.42Lacs as against Rs. 324.29 Lacs in the preceding financial year.

The company has not been able to perform well during the year due to various factorslike fluctuations in the exchange rate of US Dollar vis--vis Indian Rupee and steepdecrease in prices of Iron and steel products and volatile market conditions prevalent inthe steel sector throughout the year. All these factors affected the Profit MarginSeverally. The decrease in Total Sales Revenues is mainly due to per unit (MTs) pricesremaining low during the year as compared to the preceding year. However inspite of suchadverse factors the company could achieve sustained sales performance and also couldachieve positive profits during the year. The management is of the view that in thecoming years the ship breaking industry as well as Iron and Steel sector will be stableand with expected boost in the economy the requirement of iron and steel will increasewhich will help the company to move towards its sustained path of growth.

DIVIDEND :

To consolidate the future position of the Company and support the fund requirementsyour Board of Directors regret their inability to recommend any dividend for the year.

RESERVES :

The whole profit after tax has been transferred to P&L surplus. There is no amountthat has been proposed to be carried to any other reserves.

LOANS GUARANTEE & INVESTMENTS :

The particulars of loans guarantees and investments have been disclosed in thefinancial statements.

DEPOSITS :

The Company has never accepted any deposit from the public falling within the ambit ofSection 73 of the Companies Act 2013 and the Companies (Acceptance of Deposits) Rules2014 or under Chapter V of the Act.

RELATED PARTY TRANSACTIONS :

All contract(s)/ arrangement(s)/ transaction(s) entered into by the Company with itsrelated parties during the year under review were

• in "ordinary course of business" of the Company

• on "an arm’s length basis" and

• not "material" as per the provisions of Section 188(1) of the Actread with Companies (Meetings of Board and its Powers) Rules 2014 and Regulation 23 ofthe SEBI Listing Regulations.

Accordingly Form AOC-2 prescribed under the provisions of Section 134(3)(h) of the Actand Rule 8 of the Companies (Accounts) Rules 2014 for disclosure of details of RelatedParty Transactions which are "not at arm’s length basis" and also whichare "material and at arm’s length basis" is not provided as an annexure ofthe Directors’ Report.

However all Related Party Transactions entered into during the year under review andas on March 31 2016 were approved by the Audit Committee of the Board and Board fromtime to time and the same are disclosed in Note 2.30 of the Financial Statements of theCompany for the year under review as per the applicable provisions of the Act and theSEBI Listing Regulations.

Further pursuant to the provisions of the Act and the SEBI Listing Regulations Boardhas on recommendation of its Audit Committee adopted a Policy on Related PartyTransactions and the said policy is available on the website of the Company i.e. www.hariyanagroup.com.

INTERNAL FINANCIAL CONTROLS :

The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations.

DIRECTORS AND KEY MANAGERIAL PERSONNEL :

A) Changes in Directors and Key Managerial Personnel (KMP)

Directors :

Pursuant to Section 152 of the Act and the Company’s Articles of Association Mrs.Sweety Reniwal Director retires by rotation and being eligible offers herself forre-appointment at the forthcoming Annual General Meeting.

During the year under review none of the Directors of the Company resigned from theirrespective Directorships in the Company. Further there was no appointment of any Directoron Board of the Company.

All Independent Directors have given declarations that they meet the criteria ofIndependence as laid down under Section 149(6) of the Act and the Listing Regulations.

Key Managerial Personnel ("KMP"):

Board of Directors at its meeting held on 12th February 2016 appointed Ms.Radha Sharma as a Company Secretary of the Company.

The aforesaid appointment was based on the recommendation of the Nomination andRemuneration Committee of the Board ("NRC").

Further the list of the present Directors and KMP forms part of this Annual Reportunder the section Corporate Information.

PERFORMANCE EVALUATION OF THE BOARD :

Pursuant to the provisions of the Act and Listing Regulations the Board has carriedout an annual evaluation of its own performance performance of the Directors individuallyas well as the evaluation of the working of its Committees.

The Nomination and Remuneration Committee has defined the evaluation criteriaprocedure and time schedule for the Performance Evaluation process for the Board itsCommittees and individual Directors including the Chairman of the Company.

For evaluating the Board as a whole views were sought from the Directors on variousaspects of the Board’s functioning such as degree of fulfillment of keyresponsibilities Board Structure and composition establishment delineation ofresponsibilities to various committees effectiveness of Board processes information andfunctioning Board culture and dynamics quality of relationship between the Board and themanagement.

Similarly views from the Directors were also sought on performance of individualDirectors covering various aspects such as attendance and contribution at theBoard/Committee Meetings and guidance/support to the management outside Board/CommitteeMeetings. In addition the Chairman was also evaluated on key aspects of his roleincluding setting the strategic agenda of the Board encouraging active engagement by allBoard members and promoting effective relationships and open communication communicatingeffectively with all stakeholders and motivating and providing guidance to the ExecutiveDirector.

Areas on which the Committees of the Board were assessed included degree of fulfilmentof key responsibilities adequacy of Committee composition effectiveness of meetingsCommittee dynamics and quality of relationship of the Committee with the Board and theManagement.

The performance evaluation of the Independent Directors was carried out by the entireBoard. The performance evaluation of the Chairman and the Non Independent Directors wascarried out by the Independent Directors who also reviewed the performance of the Board asa whole. The Nomination & Remuneration Committee also reviewed the performance of theBoard its Committees and of individual Directors.

The Chairman of the Board provided feedback to the Directors as appropriate.Significant highlights learning with respect to the evaluation were discussed at theBoard Meeting.

BOARD MEETINGS :

During the year 11 (Eleven) Board Meetings and 7 (Seven) Audit Committee Meetings wereheld. The details of the composition of the Board and its Committees and of the Meetingsheld and attendance of the Directors at such Meetings are provided in the CorporateGovernance Report.

EXTRACT OF ANNUAL RETURN :

In accordance with Section 134(3)(a) and as provided under sub-section (3) of Section92 of the Companies Act 2013 an extract of the annual return in prescribed form MGT– 9 is appended as Annexure- 1 to the Board’s Report.

CORPORATE GOVERNANCE :

A separate section on Corporate Governance forming part of the Directors’ Reportand a Certificate from the Company Auditors is included in the Annual Report. Annexure– 2 is attached herewith.

AUDITORS :

STATUTORY AUDITORS :

M/s. P. D. Goplani & Associates Chartered Accountants Mumbai having ICAI FirmRegistration No. 118023W being eligible offer themselves for re-appointment. Ifre-appointed it will be within the prescribed limits specified in Section 139 of theCompanies Act 2013. Members are requested to appoint the auditors and to fix theirremuneration.

The Statutory Auditors in the Statutory Auditors’ Report dated May 16 2016 havecommented that provision for gratuity and long term employee benefits as per AS-15 has notbeen made. In this regards the company would like to clarify that since none of theemployees of the Company were in continuous service of more than five years andaccordingly making provision of Gratuity does not arise. However if payment on account ofgratuity arises due to happening of any incidents as provided under the applicableprovisions of the law the same will be accounted as and when incurred and the paymentunder the Pension Act is not applicable to the Company.

SECRETARIAL AUDITORS :

Pursuant to provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Company has appointed M/s. DilipBharadiya & Associates Company Secretaries to undertake the Secretarial Audit of theCompany. The Secretarial Audit report for the year 2015-16 forms part of the DirectorsReport as the Annexure- 3.

BRANCH AUDITORS :

M/s. Lahoti Navneet & Co. Chartered Accountants Mumbai having ICAI FirmRegistration No. 116870W were appointed as Auditors of the Mumbai division of the Companyto hold office till the conclusion of the ensuing Annual General Meeting of the Company.

The Branch Auditors in the Branch Auditors’ Report dated May 16 2016 havecommented that provision for gratuity and long term employee benefits as per AS-15 has notbeen made. In this regards the company would like to clarify that since none of theemployees of the Company were in continuos service of more than five years and accordinglymaking provision of Gratuity does not arise. However if payment on account of gratuityarises due to happening of any incidents as provided under the applicable provisions ofthe law the same will be accounted as and when incurred and the payment under the PensionAct is not applicable to the Company.

The Auditors’ Report the Secretarial Audit Report and the Branch Audit Report forthe financial year ended 31st March 2016 do not contain any qualification reservationadverse remark or disclaimer other than mentioned above.

MATERIAL CHANGES AND COMMITMENTS :

There are no material changes having taken place affecting the financial position ofthe Company from the date of closure of financial year till the signing of Accounts.

DIRECTORS’ RESPONSIBILITY STATEMENT :

Pursuant to Section 134(5) of the Companies Act 2013 the Board of Directors to thebest of their knowledge and ability confirm that:

(i) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

(ii) the directors had selected such accounting policies and applied them consistentlyand made judgments 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;

(iii) the directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the company and for preventing and detecting fraud and other irregularities;

(iv) the directors had prepared the annual accounts on a going concern basis;

(v) the directors further state that they have laid down internal financial controlsto be followed by the company and that such internal financial controls are adequate andwere operating effectively;

(vi) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION ETC. & FOREIGN EXCHANGE EARNINGS ANDOUTGOINGS :

The information as required under Section 134(3)(m) of The Companies Act 2013 readwith Rule 8(3) of The Companies (Accounts) Rules 2014 with respect to conservation ofenergy technology absorption and foreign exchange earnings is given below:

A. Conservation of energy :

(i) the steps taken or impact on conservation of energy;

The Company recognized the importance of energy conservation in decreasing thedeleterious effects of global warming and climate change. The company has implementedvarious initiatives for the conservation of energy and all efforts are made to minimizeenergy costs. Company is engaged in Ship Breaking and trading in metal scrap coalsaluminium foil & other industrial inouts. No significant power consumption is requiredin ship breaking industry as major portion in production process consist of non mechanicalprocesses. However industrial gases are used in ship dismantling activities and thecompany has taken various measures to control the consumption of fuel and energy.

(ii) the steps taken by the company for utilising alternate sources of energy;

Company is engaged in Ship Breaking and trading in metal scrap coals aluminium foil& other industrial inouts. No significant power consumption is required in shipbreaking industry as major portion in production process consist of non mechanicalprocesses. However industrial gases are used in ship dismantling activities. The Companyhas taken various measures to control the consumption of fuel and energy. Hence theCompany has not made any investment towards any alternate source of energy.

(iii) the capital investment on energy conservation equipments;

The Company is taking adequate steps to conserve energy though no such capitalinvestment has been made.

B. Technology absorption :

The Company’s operations do not require significant absorption of technology.

C. Foreign exchange earnings and Outgo :

Particulars Current Year Previous Year
In Rs. In USD In Rs. In USD
Foreign Exchange Earnings

NIL

NIL

NIL

NIL
Foreign Exchange Outgo 844829272 13360153.98 847718101 13826377.91

CORPORATE RESPONSIBILITY STATEMENT (CSR) :

In terms of section 135 and Schedule VII of the Act the Board of Directors hasconstituted a CSR Committee under the Chairmanship of Mr. Yogesh Thakkar Mrs. SweetyRajeev Reniwal and Mr. Bhushanlal Behl are the other members of the Committee.

The CSR Committee of the Board has framed a CSR Policy and uploaded it on the websiteof the Company http//www.hariyangroup.com . During the year based on these rules theamount to be spent for CSR activities was Rs. 12.85 lakhs whereas the Company has notspent any amount towards Corporate Social Responsibility. Management and CSR Committee arein the process of finding a better avenues for CSR Expenditure to be incurred in the nearfuture.

AUDIT COMMITTEE :

The details pertaining to composition of Audit Committee are included in the CorporateGovernance Report which forms part of this report.

NOMINATION AND REMUNERATION COMMITTEE :

The Company has constituted a Nomination and Remuneration Committee pursuant to Section178(1) of the Companies Act 2013 and has defined the policy on Director’sappointment and payment of remuneration including criteria for determining qualificationspositive attributes independence of a Director. The Committee shall function inaccordance with the terms and reference of the policy. Policy of the Company is enclosedherewith as Annexure- 4.

VIGIL MECHANISM :

The Company has adopted a Whistle Blower Policy establishing vigil mechanism toprovide a formal mechanism to the Directors and employees to report their concerns aboutunethical behaviour actual or suspected fraud or violation of the Company’s Code ofConduct or ethics policy. The Policy provides for adequate safeguards againstvictimization of employees who avail of the mechanism and also provides for direct accessto the Chairman of the Audit Committee. It is affirmed that no personnel of the Companyhas been denied access to the Audit Committee. The policy of vigil mechanism is availableon the Company’s website.

STAKEHOLDER’S RELATIONSHIP COMMITTEE :

The details pertaining to composition of the Committee is included in the CorporateGovernance Report which forms part of this report. The role of the Committee is explainedin detail in the Corporate Governance Report enclosed herewith.

PERFORMANCE OF EMPLOYEES :

A) The information required under Section 197 of the Act read with rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are givenbelow:

a. Details of the ratio of the remuneration of each director to the medianemployee’s

remuneration and other details as required pursuant to Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014

The Company has not paid any remuneration to the Directors of the Company and hence theinformation is not furnished.

b. The percentage increase in remuneration of each Director Chief Executive OfficerChief Financial Officer Company Secretary in the financial year:

No remuneration is paid to any Director of the Company. Further appointment of CompanySecretary was done at the Board Meeting held on 12th February 2016 which isfor part year and hence the information pertaining to percentage increase in remunerationcannot be provided.

c. The percentage increase in the median remuneration of employees in the financialyear:

The Company has not paid any remuneration to the Directors of the Company and hence theinformation cannot be furnished.

d. The number of permanent employees on the rolls of Company: 06 (Six)

e. The explanation on the relationship between average increase in remuneration andCompany performance:

There is no increase in the remuneration of Employees. Hence information cannot befurnished.

f. Comparison of the remuneration of the key managerial personnel against theperformance of the Company:

Appointment of key managerial personnel was done on 12th February 2016.Since this information is for part of the year the same is not comparable.

g. Variations in the market capitalisation of the Company price earnings ratio as atthe closing date of the current financial year and previous financial year:

Particulars March 31 2016 March 31 2015

% Change

Market Capitalisation 122526247 92195980 32.90
Price Earnings Ratio 11.73 2.84 313.10

h. Percentage increase over decrease in the market quotations of the shares of theCompany in comparison to the rate at which the Company came out with the last publicoffer:

During the financial year under review the Company has not come out with any publicoffer.

i. Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration:

There is no increase in salaries of employees other than the managerial personnel inthe last financial year. Further no remuneration is paid to the managerial personnel socomparison cannot be made j. Comparison of each remuneration of the key managerialpersonnel against the performance of the Company:

Appointment of key managerial personnel was done on 12th February 2016.Since this information is for part of the year the same is not comparable. k. The keyparameters for any variable component of remuneration availed by the directors: Noremuneration is paid to any Director of the Company. l. The key parameters for anyvariable component of remuneration availed by the directors:

Not applicable m. Affirmation that the remuneration is as per the remunerationpolicy of the Company:

No remuneration is being paid to key managerial personnel.

B) Details of the every employee of the Company as required pursuant to 5(2) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014

The Company has no such employee drawing remuneration more than mentioned under Rule5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014.

DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES :

The Company does not have Subsidiary/Joint Ventures/Associate Companies.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT :

Management Discussion and Analysis Report for the financial year under review is setout in a separate section forming part of this Report.

COST AUDIT :

As per Section 148 of the Act the Company is required to have the audit of its costrecords conducted by a Cost Accountant in practice. The Board of Directors of the Companyhas approved the appointment of Mr. Sonu Sobhraj Kewlani Partnership firm M/s Kewlani& Associates having Registration No.101593 as the cost auditors of the Company toconduct cost audits pertaining to relevant products prescribed under the Companies (CostRecords and Audit) Rules 2014 as amended from time to time for the year ending March 312017 at a remuneration of Rs.38500/- p.a. and have vast experience in the field of costaudit and have conducted the audit of the cost records of the Company for the past severalyears under the provisions of the erstwhile Companies Act 1956.

RISK MANAGEMENT :

The Board of the Company has formed a Risk Management Committee in accordance with theprovisions of the Act and Regulation 17 (9) of the Listing Regulations. The policy frameimplement and monitor the risk management plan for the Company. The Committee isresponsible for reviewing the risk management plan and ensuring its effectiveness. Theaudit committee has additional oversight in the area of financial risks and controls.Policy to manage risk is also placed on the website of the Company. During the year riskanalysis and assessment was conducted and the details of the same are covered in theManagement Discussion and Analysis Report of the Company.

FAMILIARIZATION PROGRAMME :

Pursuant to Regulation 25 of the SEBI (Listing Obligation and Disclosure Requirement)Regulations 2015 the Company has formulated a programme for familiarizing theIndependent Directors with the Company their roles rights responsibilities in theCompany nature of the industry in which the Company operates business model of theCompany etc. through various initiatives. Details of the Familiarization Programme of theIndependent Directors are available on the website of the Company.

SEXUAL HARASSMENT OF WOMEN AT WORKPLACE :

The Company has adopted a policy on Prevention Prohibition and Redressal of SexualHarassment at the Workplace in line with the provisions of the Sexual Harassment of Womenat Workplace Prevention Prohibition and Redressal) Act 2013 and the Rules thereunderwhich is available on the website of the Company. The Policy aims to provide protection toemployees at the work place and prevent and redress complaints of sexual harassment andfor matters connected or incidental thereto with the objective of providing a safeworking environment where employees feel secure. Your Directors state that during theyear under review there were no cases filed pursuant to the Sexual Harassment of Women atWorkplace (Prevention and Prohibition and Redressal) Act 2013.

DETAILS OF VARIOUS PLANTS :

During the financial year 2015-16 ship breaking unit at Alang Ship Breaking Yard andTrading Unit have not been able to perform well during the year due to various factorslike fluctuations in the exchange rate of US Dollar vis--vis Indian Rupee and steepdecrease in prices of Iron and steel products and volatile market conditions. However thecompany has been able to improve profitability from ship breaking activities for thefinancial year 2015-16 due to its cautious approach. The management is of the view thatin the coming years the ship breaking industry will be stable and with expected boost inthe economy the requirement of iron and steel will increase which will help the company tomove towards its sustained path of growth.

Overall since the prices of iron and Steel having been reasonably stabilized and theinventory levels of the company and its market position both the segments of the companyviz. Ship Breaking and Trading are expected to see major increase in terms of GrossRevenues and Net profit Margins in the coming year.

The company is hopeful that in the coming period the company will continue its shipbreaking and trading activities and take it to the level of extended growth and willcontribute more to the overall growth of the business of the company and your directorssee a very positive and bright future prospects ahead for the company looking to theprevailing upward trend in the Iron and Steel sector in India and internationally.

The Company is hopeful that with the stabilizing the price for the old ship in theinternational market and also sale prices of companies products in the domestic market;the company will be able to improve the turnover and also the profitability in the comingyear.

The company has also entered into partnership with "M/s. Shree BalajiAssociates" (with 5% share). The firm is engaged in the business of trading in iron& steel coal and real estate. The company’s share of profit from the firm is Rs.8.31 Lacs for the year ended on March 31 2016.

The company has also entered into partnership with "M/s. Calvin DivineEnterprise" (with 20% share) for redevelopment and construction activities. The firmhas acquired 4500 yards at Anderi –Kurla Road Andheri Mumbai. The project isexpected to commence soon.

ACKNOWLEDGEMENT :

Your Directors wish to place on record their appreciation for the co-operation extendedby all the employees Bankers Financial Institutions various State and CentralGovernment authorities and stakeholders.

For and on Behalf of the Board of Directors

Sd/- Sd/-
Rajeev Shantisarup Reniwal Sweety Reniwal Place: Mumbai
Managing Director Director Date: August 25 2016
(DIN 00034264) (DIN 00041853)