The Members Modern Steels Limited
Your Directors hereby present their 42 nd Annual Report and audited accounts of theCompany for the year ended 31st March 2016.
|FINANCIAL HIGHLIGHTS || ||Rs in Lacs |
| ||Year Ended 31.03.2016 ||Year Ended 31.03.2015 |
|Gross Sales ||30270 ||35660 |
|Excise Duty ||3345 ||3904 |
|Net Sales & Income ||26925 ||31756 |
|from Operations Operating Profit ||1528 ||1246 |
|Finance Cost ||2713 ||2503 |
|Cash Profit/(Loss) ||(1185) ||(1257) |
|Depreciation & Amortisation ||539 ||583 |
|Profit/(Loss) before Tax ||(1724) ||(1840) |
|Profit/(Loss) after Tax ||(3357) ||(1216) |
The year under review continued to be challenging the Company was able to achieveGross Sales of Rs 302.70 Crores as compared to Rs 356.60 Crores in the previous year. Theoperating profit of the Company for the year stood at Rs15.28 Crores as against T12.46Crores previous year. The shortage of Working Capital resulted into low capacityutilization and the lower volumes. The Company was able to improve Operating Profitbecause of reduction in the scrap and other input cost coupled with cost saving driveundertaken by the Company during the year.
Due to the continuous losses the deferred assets/liabilities have been taken as Nil.The Networth of the Company as on 31st December 2015 was negative therefore the Companymade a reference to the Board for Industrial & Financial Reconstruction under Section15 of Sick Industrial Companies (Special Provisions) Act 1985.
Due to the difficult financial position and the losses suffered by the Company theDirectors have not recommended any dividend for the year.
PRODUCT AND MARKET DEVELOPMENT
The initiatives that the Company has undertaken for value addition is showing positiveresults and being pursued further. The Auto Components Division is also catering to thenew component requirements of OEMs.
STATUS OF COMPANYS ACCOUNTS WITH LENDERS
Members will recall that in the last fiscal the Company has submitted its proposal foradditional financial assistance to the lenders. During the year the lenders conducted theTEV study of the Company and assessed the need based working capital requirements of theCompany. Due to inadvertent delay in sanctioning financial assistance by the Lenders thefinancial system of the Company got in difficulties and pushed the Company into difficultposition of NPA.
The Company is in discussions with the Lenders to find out a workable solution to meetthe present financial difficulties of the Company.
KAIZEN & TS 16949 ACCREDITATION
Your Company's manufacturing facilities continue to maintain the prestigious TS 16949certification by DNV Netherlands a leading international Certification Company.
During the year the Company continued implementation of Kaizen and 5Sprojects to come up to the expectations of major global OEMs.
The outstanding exempted deposits at the end of the year under review amount toRs 661Lacs (Previous year Rs 662 Lacs). There are no overdue deposits.
CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSIONS & ANALYSIS
A separate report on Corporate Governance and Management Discussions & Analysis isattached herewith and forms part of this report.
Dr. Lalit K Bansal Independent and Non Executive Director of the Company resigned fromthe Board of Directors of the Company w.e.f. 13th February 2016 due to hispreoccupations. The Board placed on record its appreciations for the services rendered byDr. Lalit K Bansal.
Mr. P.L. Talwar Whole Time Director of the Company resigned from the Board ofDirectors of the Company w.e.f. 13th February 2016 due to his preoccupations. The Boardplaced on record its appreciations for the services rendered by Mr. P.L. Talwar.
Mr. R.K. Sinha Director (Operations) shall retire by rotation at the ensuing AnnualGeneral Meeting and being eligible offers himself for re-appointment.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received the necessary declaration from each Independent Director inaccordance with Section 149 (7) of the Companies Act 2013 that they meet the criteria ofindependence as laid out in Sub Section (6) of Section 149 of the Companies Act 2013 andSEBI (Listing Obligation and Disclosure Requirement) Regulations 2015.
BOARD DIVERSITY AND REMUNERATION POLICY
The Company has a policy for formation of the Board to have Executive Directors andIndependent Directors of diverse background to maintain the independence of the Board. Ason 31st March 2016the Board consists of 7 membersthree are Executive/Whole TimeDirectors three Independent Directors and One Bank Nominee Director.
We affirm that the remuneration paid to the Directors is as per the terms approved bythe Nomination & Remuneration Committee of the Company.
During the year four Board Meetings were convened and held the details of which aregiven in the Corporate Governance Report.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant of requirements under Section 134(3) (c) of the Companies Act 2013 withrespect to Directors Responsibility Statement it is hereby confirmed that:
i) in the preparation of the annual financial statements for the year ended 31st March2016 the applicable accounting standards have been followed along with proper explanationrelating to material departures if any;
ii) 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 loss ofthe Company for the year ended on that date;
iii) the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
iv) the Directors have prepared the annual financial statements for the year ended 31stMarch 2016 on a going concern basis;
v) the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively;
vi) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
RELATED PARTY TRANSACTIONS
All contracts or arrangements entered into by the Company with Related Parties havebeen done at arm's length and are in the ordinary course of business.
Pursuant to Section 134 of the Companies Act 2013 read with Rule 8(2) of the Companies(Accounts) Rules 2014 the particulars of such transactions are provided in Form AOC-2which is annexed herewith as Annexure "A" to this report. Related Partydisclosures as per AS-18 have been provided in the Notes to the financial statement.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE 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 read withRule 8 of the Companies (Accounts) Rules 2014 is annexed herewith as Annexure"B".
The Company recognises that risk is an integral and unavoidable component of businessand is committed to managing the risk in a proactive and efficient manner.
The Company has formulated Risk Management Policy to identify and then managethreats/risks that could have impact on the goals and objectives of the Company.
INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY
MSL has aligned its current systems of internal financial control with the requirementof Companies Act 2013.
MSLs internal controls are commensurate with its size and nature of itsoperations. These have been designed to provide reasonable assurance with regard torecording and providing reliable financial and operational information complying withapplicable statues safeguarding assets from unauthorized use executing transactions withproper authorisation and ensuring compliance of corporate policies.
The management assessed the effectiveness of the Company's internal control overfinancial reporting (as defined in Clause 17 of SEBI Regulations 2015) as of31s'March2016. The assessment involved self review and external audit.
Aaryaa & Associates the Statutory Auditors of MSL has audited the financialstatements including in this annual report and has issued an attestation report on ourinternal control over financial reporting (as defined in Section 143).
The Audit Committee reviews reports submitted by the management and audit reportssubmitted by internal auditors and Statutory Auditors. Suggestions for improvement areconsidered and the Audit Committee follows up on corrective action.
Based on its evaluations (as defined in Section 177 of Companies Act 2013 and Clause18 of SEBI Regulations 2015) the Audit Committee has concluded that as of 31s1 March2016 the internal financial controls were adequate and operating effectively.
At the Annual General Meeting held on 29th September 2014 M/s. Aaryaa &Associates Chartered Accountants were appointed as Statutory Auditors of the Company tohold office till the conclusion of the Annual General Meeting to be held in the year 2019.In terms of the provisions of Section 139 of the
Companies Act 2013 the appointment of the Auditor shall be placed for ratification atevery Annual General Meeting.
Accordingly the appointment of M/s. Aaryaa & Associates Chartered Accountants asStatutory Auditors of the Company will be placed for ratification by shareholders. In thisregard the Company has received a Certificate from the Auditors to the effect that iftheir appointment is ratified it would be in accordance with the provisions of Section141 of the Companies Act 2013.
The Board of Directors have approved the appointment and remuneration of M/s. V. Kumar& Associates as Cost Auditors of the Company to conduct the cost audit for the year2016-17 on the recommendations of the Audit Committee subject to the ratification of theremuneration by the shareholders.
The Board has appointed M/s. Sharma Sarin & Associates Company Secretaries toconduct Secretarial Audit for the financial year 2015-16. The Secretarial Audit Report inForm MR-3 for the financial year ended 31st March 2016 is annexed herewith as Annexure"C" to this report.
The Notes on financial statements referred to in the Auditors Report areself-explanatory and do not call for any further comments. The Auditors Report doesnot contain any qualification reservation or adverse remark.
The Company is having motivated work force. Harmonious employee relations prevailedthroughout the year. Your Directors place on record their appreciation for all employeesfor their hard work and dedication.
EXTRACT OF ANNUAL RETURN
The extract of the Annual Return of the Company in Form MGT-9 is annexed herewith asAnnexure "D" to this report.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Particulars of Loans guarantees and investments covered under Section 186 of theCompanies Act 2013 form part of the notes to the financial statements provided in theAnnual Report.
MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING FINANCIAL POSITION OF THE COMPANY
There are no adverse material changes or commitments occurring after 31st March 2016which may affect the financial position of the Company.
SIGNIFICANT AND MATERIAL ORDERS
There are no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and Companys operations in future.
The Directors would like to express their sincere appreciation of the co-operationreceived from the Bankers.
The Directors also wish to place on record its appreciation for the commitmentdisplayed by all employees at all levels during the year.
The Directors also take this opportunity to express its deep gratitude for thecontinued co-operation and support received from its valued stakeholders.
| ||For & on behalf of the Board |
|Place: Chandigarh ||Amarjit Goyal |
|Dated: 28th May 2016 ||Chairman & Whole Time Director |