Your Directors have pleasure in presenting the 3rd Annual Report on thebusiness and operations of your Company together with the Audited Statement of Accountsfor the financial year ended 31st March 2016.
Your Companys performance for the financial year ended 31st March2016 is summarized below:
| || || || ||(Rs. in Crore) |
|Particulars ||Standalone ||Consolidated |
| ||Year Ended 31.03.2016 ||Year Ended 31.03.2015 ||Year Ended 31.03.2016 ||Year Ended 31.03.2015 |
|Revenue from operations (Gross) ||7091.04 ||8145.23 ||8043.91 ||8989.26 |
|Less: Excise Duty on sales ||673.90 ||741.35 ||756.84 ||792.85 |
|Revenue from Operations (Net) ||6417.14 ||7403.88 ||7287.06 ||8196.40 |
|Profit before other Income Finance Cost Depreciation Exceptional Items Tax & Amortization (EBIDTA) ||800.72 ||712.89 ||857.88 ||741.30 |
|Add: Other Income ||24.81 ||22.62 ||25.19 ||28.29 |
|Less: Finance Costs ||470.78 ||447.24 ||494.58 ||474.97 |
|Less: Depreciation / Amortization ||295.34 ||291.91 ||315.15 ||312.75 |
|Profit /(Loss)Before Tax & Exceptional Items ||59.41 ||(3.65) ||73.34 ||(18.14) |
|Add: Exceptional Items Gain/(Loss) ||(44.96) ||15.97 ||(44.21) ||16.69 |
|Profit/(Loss) Before Tax ||14.45 ||12.32 ||29.12 ||(1.45) |
|Less: Tax Expenses ||(0.14) ||- ||1.55 ||4.50 |
|Net Profit /(loss) after Tax ||14.59 ||12.32 ||27.57 ||(5.95) |
|Share in Profit / (Loss) of Associate ||- ||- ||(0.92) ||- |
|Minority Interest ||- ||- ||(1.22) ||(2.09) |
|Net Profit / (Loss) (After Adjustment for Associate & Minority Interest) ||14.59 ||12.32 ||25.43 ||(8.04) |
|Add / Less: || || || || |
|Add: As per last year account ||12.18 ||- ||(38.16) ||- |
|Less: Depreciation adjusted to Retained Earnings ||- ||0.14 ||- ||0.70 |
|Add: On merger of Subsidiaries ||- ||- ||0.88 ||- |
|Less: Loss on acquisition of Subsidiaries (Net) ||- ||- ||- ||29.42 |
|Add: Debenture Redemption Reserve written back ||- ||- ||- ||- |
|Net surplus/(deficit) in statement of Profit & Loss ||26.77 ||12.18 ||(11.85) ||(38.16) |
During financial year ended 31st March 2016 the Gross Revenue fromoperations of your Company on standalone basis was Rs.7091 Crore as compared to Rs.8145Crore during previous financial year 2014-15. Total Income from Operations (net) for thefinancial year ended 31st March 2016 is Rs.6417 Crore. EBIDTA for thefinancial year ended 31st March 2016 stood at Rs.801 Crore.
Further during financial year ended 31st March 2016 consolidated totalIncome from Operations (net) and EBIDTA stood at Rs.7287 Crore and Rs.858 Crorerespectively. The consolidated Profit after Tax stood at Rs.28 Crore as compared to theloss of Rs.6 Crore during the previous financial year.
Despite reduction in the production and sales volume the Company is able to achievesubstantial improvement in the EBIDTA margins. EBIDTA % margin has increased to 12.32% infinancial year 2015-16. Improvement in EBIDTA margin was on account of the various stepstaken up by the Company including the change in the product mix by increasing volume ofhigh margin products. In addition to this Profit after Tax has improved by 25% withreported profit of Rs.15 Crore in FY 2015-16 as against Rs.12 Crore in FY 2014-15. IndianStainless steel industry continues to suffer from surge in imports forcing capacities toremain idle. Import prices are significantly lower than domestic prices especially fromcountries like China and Korea. Measures such as Anti Dumping have failed to guard thedomestic industry from unwarranted imports because of wide spread circumvention ofanti-dumping duties. We anticipate Stainless steel demand to grow steadily in tune withthe GDP growth however infrastructure spending would be instrumental to drive stainlesssteel demand in coming time.
Your Company has been able to sustain its performance in financial year 2015-16 despitethe adverse global position of stainless steel industry. Your Company has sold 622682 MTstainless steel products during the financial year 2015 -16. There was a reduction insales in comparison to previous year however the focus to increase the share in valueadded products and cost reduction initiatives resulted in higher EBIDTA margins.
Your Company continued to focus on value added products and successfully stabilised itsproductions for wider plates bright bars & rounds etc. During past one year yourCompany has focused on to develop and produce various new and special steel gradesmajority import substitutes to meet countrys requirements in Defence and Strategicsectors. Your Company is quite hopeful to increase its shares in these critical sectorswith help of Govt. new schemes like "Make in India". During the year also theCompany was awarded with various awards on account of excellent performance inmanufacturing sector. The National "PAR EXCELLENCE AWARD" was given to yourCompany in Quality circle front by NCQC(National Convention on Quality Circles). TheCompany is very much focussed on its systems and processes and improving it to furtherlevel every year. During the year FICCI has also awarded your Company "QUALITYSYSTEMS EXCELLENCE AWARD FOR MANUFACTURING FOR 2015". Your Company has acclaimedCOMMENDATION CERTIFICATE" for its continuous energy saving initiatives.
The Vizag Plant produces High Carbon Ferro Chrome (HCFC) with annual capacity of 40000tons per annum. Vizag Unit uses Chrome Ore supplied from captive Sukinda Mines andtransfers the output to Hisar Plant. Due to low demand of High Carbon Ferro Chrome theVizag Unit operated one furnace of 16MVA capacity out of 2 Nos. furnaces during theF.Y.2015-16. The Vizag Unit run the plant till September 12 2015 and shut down theplants all operation w.e.f. September 13 2015 onwards due to workers problem. TheUnit could produce 9974 tons of HCFC during the year 2015-16 due to shut down ofoperation as compared to 28587 tons during the last year 2014-15. Further the VizagDivision could despatch 11825 ton of HCFC to Hisar plant during the year 2015-16 ascompared to 28646 ton during 2014-15.
In terms of the Composite Scheme of Arrangement among the Company Jindal StainlessLimited Jindal United Steel Limited and Jindal Coke Limited and their respectiveShareholders and Creditors sanctioned by the Honble High Court of Punjab and Haryanaat Chandigarh vide its Order dated September 21 2015 as modified by its order datedOctober 12 2015 ("Scheme") the Demerged Undertakings inter alia includingthe business undertaking comprising of the Mining Division consisting of the chromitemines located in Village Kaliapani and forest block number 27 Sukinda Tehesil JajpurDistrict Odisha in respect of which Jindal Stainless Limited ("JSL") hadleasehold rights ("Chromite Mine") was demerged and vested with the Company. Interms of the High Court Order the Chromite Mine are deemed to have been demerged andvested with the Company with effect from the Appointed Date 1 i.e. close of business hoursbefore midnight of March 31 2014 the actual transfer of the Chromite Mine will takeplace in compliance with the applicable laws after the receipt of all necessaryregulatory approvals. Thus post Section I and Section II of the Scheme becoming effectiveupon filing of the court order with the Registrar of Companies on November 1 2015 whilethe equipments related to the Chromite Mine were transferred and vested with the Companythe Chromite Mine still continue to remain with JSL pending receipt of necessaryregulatory approvals.
Dividend and Transfer to Reserves
The Board considering the Companys performance and financial position for theyear under review has not recommended any dividend on equity shares of the Company forthe financial year ended 31st March 2016. Accordingly no amount is proposedto be transferred to the reserves of the Company.
As on 31st March 2015 paid up share capital of the Company was Rs.500000divided into 250000 equity shares of Rs.2/- each. In terms of the Scheme the saidcapital of Rs.500000/- have been extinguished and cancelled. Pursuant to the Scheme231185445 equity shares of Rs.2/- each were allotted to the equity shareholders ofJindal Stainless Limited on 25th November 2015. The Equity Shares of theCompany were listed on the BSE Limited and National Stock Exchange of India Limited andpermitted for trading with effect from 28th January 2016.
Consequent upon allotment the paid up share capital of the Company stand atRs.462370890 divided into 231185445 equity shares of Rs.2/- each.
On 30th March 2016 the Company had allotted 125000000 (Twelve CroreFifty Lakhs) Compulsory Convertible Warrants ("CCW") having the face value ofRs.2/- each to JSL Limited and Jindal Infrastructure and UtilitiesLimited members of the promoter group for an aggregate amount of Rs.25 Crore(Rupees Twenty Five Crore). As per terms of the issue CCW are convertible in Equityshares of the Company at any time after 5 months and before 18 months from the date ofallotment i.e. between 30th August 2016 and 30th September 2017.The price of the Equity shares to be issued upon conversion of the CCW shall be determinedas per formula prescribed by SEBI in the SEBI (Issue of Capital and DisclosureRequirements) Regulations 2009 ("ICDR Regulations"). The holders of the CCWwill become entitled on 30th August 2016 to apply for Equity Sharestherefore relevant date is 31st July 2016. Since the relevant date i.e. 31stJuly 2016 fell on Sunday and 30th July 2016 was weekend 29th July2016 has been reckoned as the relevant date. Based on above Regulation considering 29thJuly 2016 as the relevant date price of the equity shares for conversion of aboveCCW has been worked out to Rs.52.64 of face value of Rs. 2/- per share and accordingly4749240 equity shares in aggregate i.e. 2374620 equity shares each will be issued andallotted to JSL Limited and Jindal Infrastructure and Utilities Limited as per terms ofthe issue of CCW.
Management Discussion and Analysis Report
Management Discussion and Analysis Report as required under the Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015("SEBI LODR") forms part of this Annual Report.
Employees Stock Option Scheme
Since the Company has not issued any stock options the requirement of disclosure underRegulation 14 of Securities and Exchange Board of India (Share Based Employee Benefits)Regulations 2014 is not applicable to the Company.
During the year Companys IT & SAP Department played a crucial role inCompanys restructuring exercise and successfully realigned the Organizationstructures and business processes accordingly. Process simplification and improvements inthe processes was the focus area; wherein various complex processes were simplified andautomated. Auto email and workfl ows were developed for Procurement approvals and Plantmaintenance processes resulting in better and real time communication hence control. ITApplication Development Center was established under Go-Digital initiativewhere various business critical applications were developed and deployed by in-house team.Development of Training Management Portal SARATRHI Online PerformanceManagement System (PMS) for Non managerial staff Vehicle Imaging and Integration with SAPProcesses were a few important deliverables for the year. An integrated SAP ERP systemthrough real-time transactions processing is assisting management in making informeddecisions through real time MIS. The IT team has also been successful in providing secureand non-disruptive IT services to the Company throughout the year.
Consolidated Financial Statements
In accordance with the Companies Act 2013 SEBI LODR and Accounting Standard (AS) 21 on Consolidated Financial Statements read with AS-23 on Accounting forinvestments in Associates and AS-27 on Financial Reporting of interests in Joint Venturesthe Audited Consolidated Financial Statements are provided in the Annual Report.
Subsidiary Companies / Joint Ventures / Associate Companies
As per the terms of the Scheme six domestic subsidiary companies of Jindal StainlessLimited namely JSL Lifestyle Limited Jindal Stainless Steelway Limited JSL ArchitectureLimited Green Delhi BQS Limited JSL Media Limited and JSL Logistics Limited weretransferred to the Company through slump sale. Pursuant to the Scheme of Amalgamationamong JSL Lifestyle Limited and JSL Architecture Limited JSL Architecture Limited wasamalgamated with JSL Lifestyle Limited with effect from 1st April 2014 theappointed date.
Consequent thereto as on 31st March 2016 the Company had the aforementioned fivedirect and step down subsidiaries namely (i) JSL Lifestyle Limited (ii) Jindal StainlessSteelway Limited (iii) Green Delhi BQS Limited (iv) JSL Media Limited and (v) JSLLogistics Limited. As on 31st March 2016 the Company did not have any jointventure or associate company. However on 3rd July 2016 the Company has beenallotted 168284309 Equity Shares of Rs.2 each offered by Jindal Stainless Limited at aprice of Rs.21.76 (including premium of Rs.19.76 per share) per share for an aggregateamount of Rs.3661866570/- being the amount due and payable by Jindal Stainless Limitedto the Company as on the Appointed Date 1 i.e. close of business hours before midnight of31st March 2014 in terms of the provisions of Section II of the Scheme.Consequent upon the above said acquisition the Company holds 42.13% shareholding ofJindal Stainless Limited and therefore it has become Associate Company of the Company.During the year under review the Company acquired 50% shareholding in Jindal StainlessCorporate Management Services Pvt. Ltd. (JSCMS) making it an associate to the Company interms of Section 2(6) of the Companies Act 2013.
The Financial Statements of Subsidiary Companies are kept open for inspection by theshareholders at the Registered Office of the Company during business hours on all daysexcept Saturdays and Sundays and public holidays up to the date of Annual General Meeting(AGM) as required under Section 136 of the Companies Act 2013. The members if theydesire may write to Company Secretary at O.P. Jindal Marg Hisar 125005 (Haryana)to obtain the copy of the annual report of the subsidiary companies. The FinancialStatements including the Consolidated Financial Statements and all other documentsrequired to be attached with this Report have been uploaded on the website of your Companyviz. www.jshlstainless.com.
A statement containing the salient features of the financial statement of thesubsidiaries and associate companies in the prescribed Form AOC - 1 is attached alongwithfinancial statement. The statement also provides the details of performance financialposition of each of the subsidiary company. Your Company has framed a policy fordetermining "Material Subsidiary" in terms of Regulation 16(c) of SEBI LODR. ThePolicy for determining material subsidiaries as approved may be accessed on theCompanys website at the link:http://www.jshlstainless.com/pdf/Policy%20for%20determining%20 material%20subsidiaries.pdf
Directors & Key Managerial Personnel
Post last AGM held on 30th December 2015 Ms. Ishani Chattopadhyay and Mr.T.S. Bhattacharya have ceased to be Directors w.e.f. 14th May 2016 and 12thAugust 2016 respectively. The Board places on record its sincere appreciation forthe valuable contributions made by them during their tenure.
The Board of Directors has appointed Mrs. Deepika Jindal Mr. Girish Sharma asAdditional Directors w.e.f. 1st May 2016; Mr. Arunendra Kumar and Mr. N.C.Mathur as Additional Directors w.e.f. 16th May 2016 and 5th August2016 respectively. In terms of Section 161 of the Companies Act 2013 they will holdoffice up to the date of this AGM. The Company has received notices from members proposingtheir candidature for appointment as Directors. Accordingly the requisite resolutions forthe appointments of the aforesaid Directors will be placed before the shareholders fortheir approval. Mr. Abhyuday Jindal who retires by rotation at the ensuing Annual GeneralMeeting under the provisions of the Companies Act 2013 and being eligible offers himselffor reappointment. Brief resumes of the abovementioned Directors nature of theirexpertise in specific functional areas details of Directorship in other companiesmembership / chairmanship of committees of the board and other details as stipulatedunder Regulation 36(3) of SEBI LODR and Secretarial Standard - 2 issued by the Instituteof Company Secretaries of India are given in the Notice forming part of the AnnualReport.
All Independent Directors have given declaration to the Company that they meet thecriteria of independence as provided in Section 149(6) of the Companies Act 2013.
The Company has also devised a Policy on Familiarization Programme for IndependentDirectors which aims to familiarize the Independent Directors with the Company nature ofthe industry in which the Company operates business operations of the Company etc. Thesaid Policy can be accessed on the Companys website at the link:http://jshlstainless.com/pdf/Policy%20on%20familiarisation%20programme%20for%20independent%20directors-%20JSHL.pdf
An annual performance evaluation of all Directors the Committees of Directors and theBoard as a whole for the year under review was carried out. For the purpose of carryingout performance evaluation assessment questionnaires were circulated to all Directors andtheir feedback was obtained and recorded.
Policy on Directors Appointment and Remuneration Policy
Pursuant to the provisions of Section 178 of the Companies Act 2013 and Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 the Board of Directors has approved the (i) Policies for nomination and selection ofIndependent Directors and Non-Executive Non-Independent Directors and (ii) RemunerationPolicy on the Recommendation of the Nomination and Remuneration Committee of the Company.The said Policies may be accessed on the Companys website at the link: www.jshlstainless.com/pdf/Remuneration%20Policy.pdf
The Company has not accepted any deposit from the public. Hence no information isrequired to be appended to this report.
Particulars Regarding the Conservation of Energy Technology Absorption ForeignExchange Earnings and Outgo
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3) (m) of the Companies Act 2013 readwith Rule 8 of The Companies (Accounts) Rules 2014 is annexed herewith as Annexure I forming part of this Report.
Particulars of Employees
In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 astatement showing the names and other particulars of the employees drawing remuneration inexcess of the limits set out in the said rules are provided in the Annual Report whichforms part of this Report. Disclosures relating to remuneration and other details asrequired under Section 197(12) of the Act read with Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 are provided in theAnnual Report which forms part of this Report. Having regard to the provisions of thefirst proviso to Section 136(1) of the Act the Annual Report excluding the aforesaidinformation is being sent to the members of the Company. The said information is availablefor inspection at the Registered Office of the Company during working hours and any memberinterested in obtaining such information may write to the Company Secretary and the samewill be furnished on request.
Statutory Auditors and Auditors Report
M/s. Lodha & Co. and M/s. S.S. Kothari Mehta & Co. Joint Statutory Auditors ofthe Company were appointed by the Shareholders at the 2nd Annual GeneralMeeting of the Company held on 30th December 2015 for a period of fiveconsecutive years i.e. until the conclusion of the 7th Annual General Meeting of theCompany. Pursuant to the provisions of Section 139 of the Companies Act 2013 the matterrelating to the appointment of the aforesaid Joint Statutory Auditors shall be placed forratification by members at the ensuing Annual General Meeting of the Company. The Notes onfinancial statement referred to in the Auditors Report are self-explanatory and donot call for any further comments. The Auditors Report does not contain anyqualification reservation or adverse remark.
In accordance with the provisions of Section 148 of the Companies Act 2013 read withCompanies (Cost Records and Audit) Rules 2014 as amended from time to time your Companyis required to get its cost accounting records audited by a Cost Auditor and hasaccordingly appointed M/s Kabra & Associates Cost Accountants for this purpose forFY 2016-17. The remuneration of the Cost Auditors shall be placed for ratification bymembers in terms of Section 148 of the Companies Act 2013 read with Rule 14 of theCompanies (Audit and Auditors) Rules 2014.
The Board has appointed M/s Vinod Kothari & Co. Practicing Company Secretary toconduct Secretarial Audit for the financial year 2016-17. The Secretarial Audit Report forthe financial year ended March 31 2016 is annexed herewith marked as Annexure II to this Report. The Secretarial Audit Report does not contain any qualificationreservation or adverse remark.
Corporate Social Responsibility
The Board of Directors of the Company in their meeting held on 2ndNovember 2015 constituted the Corporate Social Responsibility Committee of Directors. TheCorporate Social Responsibility Committee has formulated and recommended to the Board aCorporate Social Responsibility Policy ("CSR Policy") indicating the focus areasof Companys CSR activities.
In line with the CSR philosophy and the focus areas the Company has plannedinterventions in the fields of education & vocational training integrated healthcare women empowerment social projects rural infrastructure development environmentsustainability sports preservation of art and culture business of human rights anddisaster management. Being the initial year the Company is in the process of exploringthe areas / locations for CSR activities for welfare of society. As a socially responsibleCorporate your Company is committed to increase its CSR impact and spend over the comingyears with its aim of playing a larger role in Indias sustainable development byembedding wider economic social and environmental objectives.
The Disclosure as per Rule 9 of the Companies (Corporate Social Responsibility Policy)Rules 2014 is annexed to this Report at Annexure- III. The CSR Policy can beaccessed on the Companys website at the link:http://jshlstainless.com/pdf/JSHL%20CSR%20 Policy.pdf.
Internal Financial Controls
The Company has in place adequate internal financial controls with reference tofinancial statements. During the year such controls were tested and no reportablematerial weakness in the design or operation was observed.
Sexual Harassment Policy
The Company has in place a policy on prevention of sexual harassment at workplace inaccordance with the provisions of Prevention Prohibition and Redressal of SexualHarassment of Women at Workplace Act 2013. The policy aims at prevention of harassment ofemployees and lays down the guidelines for identification reporting and prevention ofsexual harassment. There is an Internal Complaints Committee (ICC) which is responsiblefor redressal of complaints related to sexual harassment and follows the guidelinesprovided in the policy.
During the year ended 31st March 2016 no complaints were received pertaining tosexual harassment.
The Audit Committee comprises of the following four Directors out of which three areIndependent Directors:
|Sl. No. ||Name ||Status ||Category |
|1 ||Mr. Girish Sharma ||Chairman ||Independent Director |
|2 ||Mr. Kanwaljit Singh Thind ||Member ||Independent Director |
|3 ||Mr. Ashok Kumar Gupta ||Member ||Whole Time Director |
|4 ||Mr. Arunendra Kumar * ||Member ||Independent Director |
* Mr. Arunendra Kumar has been inducted in the Audit Committee w.e.f. 5th August2016 All the recommendations made by the Audit Committee during the financial year 2015-16were accepted by the Board.
The CSR Committee comprises of the following three Directors out of which one isIndependent Director:
|Sl. No. ||Name ||Status ||Category |
|1 ||Mrs. Deepika Jindal ||Chairperson ||Non- Executive Director |
|2 ||Mr. Ashok Kumar Gupta ||Member ||Whole Time Director |
|3 ||Mr. Kanwaljit Singh ||Member ||Independent Director |
Stock Exchanges where the shares are listed
|National Stock Exchange of India Limited ||BSE Limited |
|Exchange Plaza 5th Floor Plot No. C/1 ||Phiroze Jeejeebhoy |
|G Block Bandra-Kurla Complex ||Towers Dalal Street |
|Bandra (E) Mumbai 400 051 ||Mumbai 400 001 |
The annual listing fee was paid to both the stock exchanges. No shares of the Companywere delisted during the financial year 2015-16.
Extract of Annual Return
The details forming part of the extract of the Annual Return in form MGT 9 is annexedherewith as Annexure 'IV'
Number of Board Meetings
The Board of Directors met fifteen times during the financial year ended on 31st March2016. The details of Board Meetings and the attendance of the Directors are provided inthe Corporate Governance Report forming part of this Annual Report.
Whistle Blower Policy / Vigil Mechanism
Pursuant to the provisions of Section 177(9) read with Companies (Meetings of Board andits Powers) Rules 2014 of the Companies Act 2013 and Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 the Company hasa Vigil Mechanism namely Whistle Blower Policy for directors employees and businesspartners to report genuine concerns about unethical behavior actual or suspected fraud orviolation of the Companys code of conduct or ethics policy. The Whistle BlowerPolicy can be accessed on the Companys website at the link: http://jshlstainless.com/pdf/Whistle%20Blower%20Policy-JSHL.pdf
Particulars of loans guarantees or investments by the Company under section 186
The particulars of loans guarantees or investments by the Company under section 186are stated in Notes to Accounts forming part of this Annual Report.
Contracts or Arrangements with Related Parties
Particulars of contracts or arrangements entered into by the Company with the relatedparties referred to in Section 188(1) of the Companies Act 2013 in prescribed formAOC-2 is attached as Annexure V to this Report.
All related party transactions that were entered and executed during the year underreview were at arms length basis. As per the provisions of Section 188 of theCompanies Act 2013 and Rules made thereunder read with Regulation 23 of SEBI LODR yourCompany had obtained prior approval of the Audit Committee under omnibus approval routeand / or under specific agenda before entering into such transactions. Your Directors drawattention of the members to Note 42 to the financial statement which sets out relatedparty disclosures. The Policy on materiality of related party transactions and dealingwith related party transactions as approved by the Board may be accessed on theCompanys website at the link:http://www.jshlstainless.com/pdf/Policy%20for%20determining%20 material%20subsidiaries.pdfIn terms of Regulation 23 of SEBI LODR all transactions with related parties which areof material in nature are subject to the approval of the Members of the Company. Therequisite resolution in order to comply with the aforesaid requirements as detailed atItem Nos. 9 & 10 of the Notice and relevant Explanatory Statement is commended for themembers approval.
The Company has laid down procedures to inform Board members about the risk assessmentand minimization procedures. These procedures are periodically reviewed to ensure thatexecutive management controls risk through means of a properly defined framework. TheCompany has also devised a Risk Management Policy for identification of elements of risksand procedures for reporting the same to the Board.
The change in the nature of business if any
There has been no change in the nature of Companys business during the financialyear ended on 31st March 2016.
Material Changes and Commitments if any affecting the financial position of theCompany
During the quarter ended 30th June 2016 the Company has achieved totalincome of Rs.1497 Crore with EBIDTA of Rs. 238 Crore. The Company has earned net profit ofRs.49 Crore during this period.
Any significant and material orders passed by the regulators or courts or tribunalsimpacting the going concern status and companys operations in future
During the financial year there were no such significant material orders passed by theregulators or courts or tribunals impacting the going concern status and companysoperations in future.
Directors Responsibility Statement
Pursuant to the requirement under Section 134(3)(c) of the Companies Act 2013 withrespect to Directors Responsibility Statement it is hereby confirmed that: (a) inthe preparation of the annual accounts the applicable accounting standards have beenfollowed along with proper explanation relating to material departures;
(b) the directors have 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 as at 31st March 2016 and of the profitand loss of the Company for the year ended on that date;
(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) the directors have prepared the annual accounts of the Company on a goingconcern basis.
(e) The directors have laid down internal financial controls to be followed by theCompany and such internal financial controls are adequate and were operating effectively.
(f) The directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and such systems were adequate and operating effectively.
A separate section on Corporate Governance forms part of this Annual Report and acertificate from the practicing Company Secretary regarding compliance of conditions ofCorporate Governance as required under Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 form part of this AnnualReport.
Your Directors would like to express their gratitude for the valuable assistance andco-operation received from shareholders banks government authorities customers andvendors. Your Directors also wish to place on record their appreciation for the committedservices of all the employees of the Company.
| ||For and on behalf of the Board of Directors |
|Place: New Delhi ||Ratan Jindal |
|Date: 12th August 2016 ||Chairman |
Annexure I to Directors Report
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGOPURSUANT TO PROVISIONS OF SECTION 134 OF THE COMPANIES ACT 2013 READ WITH THE COMPANIES(ACCOUNTS) RULES 2014. (A) CONSERVATION OF ENERGY
(a) The steps taken or impact on conservation of energy
- Preheating Furnace in Annealing and pickling lines tuned to use of dual fuel tooptimize fuel consumption in various grades.
- Running of DG Sets on FO Fuel to optimize power cost.
- Further optimization of compressed air use and redesign of pipe line for the same.
- Optimization of rolling companion in hot Steckle mill & cold rolling mills toreduce energy consumption.
- Procurement of Energy efficient LED lights to replace conventional lights.
- Optimization of Water pumps.
(b) The steps taken by the Company for utilising alternate sources of energy
- Modification in preheating furnace burner system to switch the same on cheaper fuelfor some of the steel grades.
- Solar Energy plant to be installed in steps to cater emergency supply.
(c) The capital investment on energy conservation equipments
- Invest in modification of duel fuel burner at AP2 and AP1 line was Rs 95 Lakh.
- Investment of Rs.2.5 Lakh in pump optimization.
(B) TECHNOLOGY ABSORPTION
(i) The efforts made towards technology absorption; and the benefits derived likeproduct improvement cost reduction product development or import substitutionDevelopment of new products to diversify product mix:
1) Wider Width Plates (Width>1600mm)
There is an increased demand of wider width plates among Atomic energy sector pipemanufacturing chemical & process industries to avoid the number of weld joints in theend products thus minimizing the cost improving safety of the product. The Indian marketsof such products have been matured and demand is growing stronger day by day in stainlesssteel as well. To cater this demand the Company has developed wider plates in associationwith Jindal Steel & Power Limited (JSPL). The basic casting has done in JindalStainless Limited (JSL) Jajpur followed by rolling annealing at JSPL Angul and rest ofthe processes like pickling passivation ultrasonic testing other testings &dispatch from JSHL Hisar.
2) Alloy Steel (Grade 15CDV6)
Alloy 15CDV6 is a chromium-molybdenum-vanadium heat treatable steel which combinesoutstanding yield strength with good toughness & weldability. It can be readily weldedwith very little loss of properties during welding without the further need of heattreatment. This alloy finds many applications in the aerospace & motor sportsindustries. The Company has developed this grade with low inclusions level & stringentrequirements of ultrasonic soundness for defence sector.
- Enhancement in cold rollability of X2CrNi12/ EN 1.4003 grade by modification inannealing cycle.
- Reduction in grinding loss in ferritic grades
- Rolling of slabs in warm condition in As-cast condition to reduce the cost of fuel aswell as improvement in material yield by elimination of slab grinding.
Development of customized & value added products:
- Improvement of surface luster in Grade 430 with introduction of 2BB ExtraBright finish for Washing Machine Drum application.
- Replacement & Stabilization of Grade 441-2B finish for Submersible Pump towardscost benefit.
- Development of Grade 304 - Hardened finish for Submersible Pump & Grade 430-2Bfinish for Bus Body application to get rid of dependency from import.
- Stabilization of grade EN1.4116-2B at Kangaroo for Knife & Scissors for domesticmanufacturer for better quality & durability.
- Development of Grade JT through BA route for Pipe & Tube segment a big leap toavoid much hazardous metal polishing activity.
- Development of pattern finishes like Box Finish Lenin etc towards better society inBuilding & Construction business & Approval of various tempers of Grade 301L byAlstom for Metro application with much important Indigenization.
- Improvement of hardness of 430Mint for better blanking quality & cost reduction.
- Quality improvement of for critical grades for Auto applications.
- Served grade 304/L with lower hardness to USA market offering better customizedsolution.
- Improvement in productivity of 300Series & 409L in HRAP stage towards costreduction.
- Quality Improvement of Grade IRSM44-97 for Railways.
(ii) in case of imported technology (imported during the last three years reckoned fromthe beginning of the financial year)
- Laser Welding Machine from T.H.E. of Switzerland installed in SPD. This ensuresGlobally First for supplying Laser weld buildup Coils for double edge razor blades. OurCoil Wt increased to 120kgs up from 80 kgs ensuring higher productivity and seamlessoperations during Razor Blade Mfg.
- We have commissioned an Imported Slitting Line for CR Products. This has enabledus to tap ever growing SS CRAP market. This also means our Customers getting customisedslits as per their specific needs.
- The Company is in process of installation of Horizontal BA Lines to provide SS CRCoils for Utensils mfg. The process is cost effective and environmental friendly as iteliminates pickling process employed for conventional SS CRAP products.
(iii) Expenditure incurred on Research and Development (R&D)
| ||(Rs. in Lakhs) |
| ||2015-16 ||2014-15 |
|a) Capital ||Nil ||Nil |
|b) Revenue ||153.74 ||157.94 |
|Total ||153.74 ||157.94 |
|c) Total R&D expenditure as a ||0.02% ||0.02% |
|percentage of turnover || || |
Foreign Exchange Earnings & Outgo
| ||(Rs. in Crore) |
|Foreign Exchange Earnings ||914.10 |
|Foreign Exchange Outgo ||1609.96 |
Annexure II to Directors Report
Form No. MR-3 SECRETARIAL AUDIT REPORT
FOR THE FINANCIAL YEAR ENDED MARCH 31 2016
[Pursuant to Section 204(1) of the Companies Act 2013 and Rule No. 9 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014]
Jindal Stainless (Hisar) Limited
We have conducted the secretarial audit of the compliance of applicable statutoryprovisions and adherence to good corporate practices by Jindal Stainless (Hisar) Limited(hereinafter called "the Company"). Secretarial Audit was conducted in a mannerthat provided us a reasonable basis for evaluating the corporate conducts/statutorycompliances and expressing our opinion thereon. Based on our verification of theCompanys books papers minute books forms and returns filed and other recordsmaintained by the Company (as per Annexure A1 hereinafter referred to as"Books and Papers") and also the information provided by the Company itsofficers agents and authorized representatives during the conduct of secretarial auditwe hereby report that in our opinion the Company has during the period covered by ouraudit that is to say from April 01 2015 to March 31 2016 (hereinafter referred to as"Audit Period") complied with the statutory provisions listed hereunder andalso that the Company has proper board-processes and compliance-mechanism in placeto the extent in the manner and subject to the reporting made hereinafter: We haveexamined the Books and Papers maintained by the Company for the Audit Period according tothe provisions of:
1. The Companies Act 1956 to the extent applicable. The Companies Act 2013("the Act") and the rules made thereunder including any re-enactment thereof;
2. The Securities Contracts (Regulation) Act 1956 ("SCRA") and the rulesmade thereunder;
3. The Depositories Act 1996 and the regulations and bye-laws framed thereunder;
4. Foreign Exchange Management Act 1999 and the rules and regulations made thereunderto the extent of Foreign Direct Investment;
5. The following Regulations and Guidelines prescribed under the Securities andExchange Board of India Act 1992 ("SEBI Act"):;
a. The Securities and Exchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations 2011 (SAST Regulations);
b. The Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 (to the extent applicable to the Company during the AuditPeriod);
c. Securities Exchange Board of India (Registrars to an Issue and Share TransferAgents) Regulations 1993 regarding the Companies Act and dealing with client;
d. Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations2015;
e. The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2009 ("SEBI (ICDR) Regulations 2009");
6. Laws specifically applicable to the industry to which the Company belongs asidentified by the management that is to say:
a) Mines Act 1952 read with Mines Rules 1955;
b) Mines and Minerals (Development and Regulation) Act 1957 and Mineral Conservationand Development Rules 1985;
c) Mines Vocational Training Rules 1966;
d) Metalliferous Mines Regulations 1961.
e) Mines Rescue Rules 1985;
f) Mining Leases (Modification of Terms) Rules 1956.
g) Payment of Wages Act 1936 and Payment of Wages (Mines) Rules 1956;
h) The Payment of Undisbursed Wages (Mines) Rules 1989;
i) The Iron Ore Mines Manganese Ore Mines and Chrome Ore Mines Labour Welfare FundRules 1978;
j) Iron Ore Mines Manganese Ore Mines and Chrome Ore Mines Labour Welfare Fund Act1976;
k) Orissa Minerals (Prevention of Theft Smuggling & Illegal Mining and Regulationof Possession Storage Trading and Transportation) Rules 2007 along with OMPTS AmendmentRules 2015;
l) Orissa Minor Mineral Concession Rules 2004;
m) Collection of Statistics Act 2008; We have also examined compliance with theapplicable clauses of the following: a. Secretarial Standards 1 and 2 issued by theInstitute of Company Secretaries of India; During the Audit Period the Company hascomplied with the provisions of the Act Rules Regulations Guidelines etc. mentionedabove.
1. Maintenance of secretarial records is the responsibility of the management of theCompany. Our responsibility is to express an opinion on these secretarial recordsbased on our audit;
2. We have followed the audit practices and the processes as were appropriate to obtainreasonable assurance about the correctness of the contents of the secretarial records. Theverification was done on test basis to ensure that correct facts are refl ected insecretarial records. We believe that the processes and practices we followedprovide a reasonable basis for our opinion;
3. We have not verified the correctness and appropriateness of financial records andBooks of Accounts of the Company or examined any books information or statements otherthan Books and Papers;
4. We have not examined any other specific laws except as mentioned above.
5. Wherever required we have obtained the Management Representation about thecompliance of laws rules and regulation and happening of events etc;
6. The compliance of the provisions of Corporate and other applicable laws rulesregulations standards is the responsibility of management. Our examination was limited tothe verification of procedure on test basis;
7. The Secretarial Audit report is neither an assurance as to the future viability ofthe Company nor of the efficacy or effectiveness with which the management has conductedthe affairs of the Company.
We further report that:
The Board of Directors of the Company is duly constituted with proper balance ofExecutive Directors Non-Executive Directors and Independent Directors. The changes in thecomposition of the Board of Directors that took place during the Audit Period were carriedout in compliance with the provisions of the Act.
Adequate notice is given to all directors to schedule the Board Meetings agenda anddetailed notes on agenda were sent at least seven days in advance and a system exists forseeking and obtaining further information and clarifications on the agenda items beforethe meeting and for meaningful participation at the meeting. Resolutions have beenapproved by majority while the dissenting members if any views are captured andrecorded as part of the minutes.
We further report that to ensure compliance with the labour laws industrial lawsenvironmental laws and other specific laws applicable to the Company the Company hasdeveloped compliance tool which lists the applicable Acts regulations and the compliancesto be ensured under the same along with the time limit. The compliance tool lists theofficer responsible for filling up the compliance status on a regular basis. Hence in ourview there are adequate systems and processes in the Company commensurate with the sizeand operations of the Company to monitor and ensure compliance with applicable lawsrules regulations and guidelines.
We further report that during the Audit Period the Company has not incurred anyspecific event/ action that can have a major bearing on the companys affairs inpursuance of the above referred laws rules regulations guidelines standards etc.except as follows:
(i) Allotment of shares pursuant to scheme of arrangement
During the Audit Period the Company has allotted 231185445 equity shares in theratio of 1:1 to the equity shareholders of Jindal Stainless Limited pursuant to thecomposite scheme of arrangement between the company Jindal Stainless Limited Jindal CokeLimited and Jindal United Steel Limited and the said shares were listed on BSE and NSEw.e.f. January 28 2016.
(ii) Allotment of Compulsorily Convertible Warrants (CCWs) on preferential basis
During the Audit period the Company has allotted Compulsorily Convertible Warrantsamounting to Rs. 25 Crore to JSL Limited and Jindal Infrastrucutre and Utilities Limited.
(iii) Increase in borrowing limits under section 180(1)(c)
During the Audit Period the company has ratified the special resolution passed by theshareholders in their Extra Ordinary General meeting on October 23 2015 vide postalballot dated March 9 2016 authorizing the Board of Directors to borrow money theaggregate outstanding of which should not exceed Rs. 20000 crores at any given time.
(iv) Creation of security on the properties of the company under section 180(1)(a) Duringthe Audit Period special resolution in terms of section 180 (1) (a) was passed on March09 2016 to enable the company to create mortgage/charge/hypothecation etc. on theproperties/ assets of the Company as per details as provided in the resolution.
|Place : Kolkata ||For M/s. Vinod Kothari and Company |
|Date : 19.05.2016 ||Company Secretaries in Practice |
| ||Arun Kumar Maitra |
| ||Partner |
| ||Membership No: A3010 |
| ||CP No.: 14490 |
Annexure III to Directors Report
ANNUAL REPORT ON CORPORATE SOCIAL RESPONSIBILITY
1. A brief outline of the companys CSR policy including overview of projects orprograms proposed to be undertaken and a reference to the web- link to the CSR policy andprojects or programs.
A brief outline of the Companys CSR Policy is given in the DirectorsReport. Web-link: http://jshlstainless.com/pdf/JSHL%20CSR%20Policy.pdf
2. The composition of the CSR Committee:
Mrs. Deepika Jindal - Chairperson of the Committee Mr. Ashok Kumar Gupta - Member Mr.Kanwaljit Singh Thind - Member
3. Average net profit * of the company for last three financial years: Rs.828.20 Lakhs
4. Prescribed CSR Expenditure (two percent of the amount as in item 3 above): Rs.16.56Lakhs
5. Details of CSR spent during the financial year. a. Total amount to be spent for thefinancial year: Rs. 16.56 Lakhs b. Amount unspent if any: Rs. 16.56 Lakhs c. Manner inwhich the amount spent during the financial year is detailed below.
|CSR project or activity identified ||Sector in which the project is covered ||Projects or programs Local area or other Specify the state and district where projects or programs was undertaken ||Amount outlay (budget) project or programs wise ||Amount spent on the project or programs Sub heads: (1) Direct expenditure on projects or programs (2) Overheads: ||Cumulative expenditure upto the reporting period ||Amount spent: Direct or through implementing agency |
| || ||NIL || || || || |
6. CSR Committee has been constituted and CSR Policy has been formulated. However theexpenditure has not been made but the explanation has been given by the directors of theCompany.
7. CSR Committee hereby confirms that the implementation and monitoring of the CSRPolicy is in compliance with CSR objectives and the Policy of the Company.
* For the purpose of Section 135 average net profit has been calculated inaccordance with the provisions of section 198 of the Companies Act 2013
Annexure "V" to Directors Report
Form No. AOC-2
(Pursuant to Clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) ofthe Companies (Accounts) Rules 2014) Form for disclosure of particulars ofcontracts/arrangements entered into by the company with related parties referred to insub-section (1) of Section 188 of the Companies Act 2013 including certain armslength transactions under third proviso thereto
1. DETAILS OF CONTRACTS OR ARRANGEMENTS OR TRANSACTIONS NOT AT ARMS LENGTH BASIS:
|(a) Name(s) of the related party and nature of relationship || |
|(b) Nature of contracts/ arrangements/ transactions || |
|(c) Duration of the contracts / arrangements/transactions || |
| ||NIL |
|(d) Salient terms of the contracts or arrangements or transactions including the value if any ||(All contracts or arrangements or transactions with related parties are at arms length basis). |
|(e) Justification for entering into such contracts or arrangements or transactions || |
|(f) Date(s) of approval by the Board || |
|(g) Amount paid as advances if any || |
|(h) Date on which the special resolution was passed in general meeting as required under first proviso to Section 188 || |
2. DETAILS OF MATERIAL CONTRACTS OR ARRANGEMENT OR TRANSACTIONS AT ARMS LENGTHBASIS:
|(a) Name(s) of the related party and nature of relationship || |
|(b) Nature of contracts/ arrangements/ transactions || |
|(c) Duration of the contracts/ arrangements/ transactions || |
|(d) Salient terms of the contracts or arrangements or transactions including the value if any ||NIL |
|(e ) Date(s) of approval by the Board if any || |
|(g) Amount paid as advances if any || |