1. The Directors present the 79th Annual Report and audited statementsof accounts of the Company for the year ended March 31 2017.
2. Financial Results: Financial Highlights:
|Description ||2016-17 ||2015-16 ||% increase/ (decrease) |
| || ||(Rs. in Crores) || |
|Revenue from operations and other income ||2725.46 ||2752.55 ||(1.01) |
|Profit/(loss) before tax ||6.43 ||2.14 || |
|Less : Tax Expense ||(0.97) ||0.52 || |
|Deferred Tax charge / (credit) || || || |
|Profit/(Loss) for the period before Tax adjustments pertaining to earlier years ||7.40 ||1.62 || |
|Less: Tax adjustments due to reversal of MAT || || || |
|Entitlement / Deferred Tax credits taken in earlier years || || || |
|i) MAT Entitlement lapsing ||15.53 ||- || |
|ii) Deferred Tax charge due to lapsing of business loss ||33.68 ||- || |
|Profit/(loss) for the period ||(41.81) ||1.62 || |
|Net worth (excluding revaluation reserve) ||424.88 ||466.70 || |
|Ratios: || || || |
|Earnings per Share ||Rs. (2.96) ||Rs. 0.11 || |
3.1 The turnover was marginally lower by 1% at Rs.2725 Cr. as compared to Rs.2753Cr in the previous year on account of effect of demonetization in the month of November2016 and fierce competition arising from surplus capacity in the Steel Sector. The steephike in raw material prices was partly compensated by raising sale price of steel productsduring part of the year under review. Various productivity improvement and cost reductionmeasures helped the Company to maintain its margin on sale of steel products. The turnoverof Industrial Machinery Division was however higher at Rs.169 Cr as compared to Rs.133 Crin the previous year on account of execution of available orders on hand at thecommencement of the year. Interest cost however went up on account of requirement ofadditional working capital. 3.2 The performance of the Company is elaborated in theManagement Discussion & Analysis annexed to this report.
The Directors do not recommend any dividend on equity/ preference shares in view of thenet loss for the year under report.
5. Transfers to Reserves:
In view of inadequate profits for the year under review no amount has been transferredto the Reserves.
6. Transfer of Alloy Steel business:
6.1 As reported in the previous years Company had signed a Business TransferAgreement on March 14 2015 for transfer of its alloy steel business to Mukand AlloySteels Pvt. Ltd. a subsidiary of the Company. This agreement did not come into effect forwant of certain consents / approvals. Your Board has reviewed the proposal and hasconsidered the restructuring in a meeting held on 12th January 2017. It has approved ascheme of arrangement and amalgamation amongst the Company Mukand Vijayanagar SteelLimited (MVSL) and Mukand Alloy Steels Private Limited (MASPL) and their respectiveshareholders and creditors under the provisions of Sections 230 to 232 and otherapplicable provisions of the Companies Act 2013 for transfer of its Alloy Steel Rolling& Finishing business. The Appointed Date under the Scheme is 1st January 2017. TheScheme is subject to the approval of shareholders creditors and other competentstatutory/regulatory authorities. An application for seeking approval to the scheme hasbeen filed with National Company Law Tribunal (NCLT).
6.2 On receipt of requisite approvals and implementation of the above SchemeCompany proposes to induct Sumitomo Corporation Japan (SC) as a Joint Venture Partner forthe alloy steel rolling and finishing business. Upon such investment Company shall hold51% and Sumitomo shall hold 49% in MASPL. In this regard Company Sumitomo and MASPL haveexecuted a Share Subscription and Shareholders Agreement (SSHA) on March 30 2017.The closing under the SSHA is subject to the necessary approvals from the relevantstatutory and regulatory authorities and subject to the fulfilment of various conditionsprecedent.
6.3 The Scheme and the Joint Venture agreement are expected to provide focusedattention on the Alloy Steel Rolling & Finishing business resulting in improvedefficiency in operations retirement of Companys debt improved cash flows andenhanced value for the Company and its Stakeholders.
7. Transfer of Industrial Machinery Division:
Your Board at its meeting held on 27th March 2017 considered and approved a scheme ofarrangement and amalgamation amongst the Company Whiteleaf Heavy Machinery Pvt. Ltd. andTechnosys Industrial Machinery Pvt. Ltd. and their respective shareholders and creditorsunder the provisions of Sections 230 to 232 and other applicable provisions of theCompanies Act 2013 for transfer of Industrial Machinery Division. The Appointed Dateunder the Scheme is 1st January 2017. The Scheme is subject to the approval of theshareholders creditors and other competent statutory/regulatory authorities.
8. Joint Venture with Sumitomo Corporation Japan:
Mukand Sumi Metal Processing Limited (MSMPL) is a subsidiary formed under joint venturewith Sumitomo Corporation Japan to carry on the business of cold finished bars and wires.During the year under review revenue from operations was Rs.477.37 Cr as compared to Rs.541.77 Cr in the previous year due to sluggish demand in the seamless pipe sector andlower exports to Turkey.
However profit after tax was at Rs.8.77 Cr as compared to Rs.4.18 Cr in the previousyear due to lower input prices.
9. Finance: 9.1 Share Capital:
The paid up equity share capital as on March 31 2017 was Rs. 141.41 Cr. During theyear under review the Company has neither issued shares with differential voting rightsnor has granted stock options/ sweat equity.
9.2 Material Changes & Commitments:
There have been no material changes and commitments affecting the financial positionof the Company which have occurred between the end of the financial year of the Companyand the date of this report.
9.3 Fixed Deposits:
The Company can accept Fixed Deposits upto 35% of aggregate of the paid up sharecapital free reserves and securities premium account in terms of Companies (Acceptance ofDeposits) Rules 2014 only from its members. Deposits accepted during the year amounted toRs.69.67 Cr re-paid during the year amounted to Rs.41.93 Cr and matured & unclaimeddeposits as at the end of the year were Rs.1.34 Cr. There has been no default in repaymentof deposits or payment of interest thereon during the year. There are no deposits whichare not in compliance with the requirements of Chapter V of the Companies Act 2013.
10. Corporate Social Responsibility (CSR)
10.1 The Company has constituted a CSR Committee of the Board of Directorscomprising of Niraj Bajaj Rajesh V. Shah Suketu V. Shah and Dhirajlal S. Mehta pursuantto Section 135 of the Companies Act 2013. As per the relevant provisions of the CompaniesAct 2013 the Company is not required to incur any expenditure in pursuance of the CSRPolicy in view of the aggregate losses during three immediately preceding financial years.However the Company has carried out following activities under CSR.
10.2 By the Company: At Steel Plant Ginigera:
The Company participates in the celebrations held in the local schools on Republic DayChildrens Day and Independence Day. The Company supports the Schools around thePlant by providing full time teachers. During the year it also supported a GovernmentCollege by providing benches for students. The Company also ensures regular supply ofdrinking water to the Ginigera village and conducts free health/eye check-up camps for thebenefit of the villagers in and around the Companys plant. During the year itcontributed towards procurement of drinking water pipeline and pipe welding works for alength of about 8 KMs. It contributes towards cultural/festivals/flag day celebrations andother developmental works at Villages in and around Companys Plant. It alsosponsored a Sports person for participation in the Vth Asian Beach Games atVietnam.
At Steel Plant Dighe Thane:
The Company with active support from Janakidevi Bajaj Gram Vikas Sanstha (JBGVS)continues its effort in promoting education of the girl child in Shahapur Taluka of Thanedistrict as part of its CSR programme. The villagers school authorities children andparents have acknowledged Companys and JBGVSs contribution through letters andwords over the last 2 years. During the year the material and academic support was givento around 10000 girls and boys studying in 44 schools in the form of text booksnotebooks footwear compass box and sports items. The Company also conducted extracoaching classes in mathematics for girl students studying in classes 7
8 and 9. Currently the Company conducts 30 coaching classes across the taluka. TheCompany also provided benches and fans to several schools and built a toilet facility forboys and girls. The Company also started vocational training in the basics of tailoringand trains girls who have passed Class 10 to become financiallyindependent by setting uptheir own tailoring units.
10.3 By the Bajaj Group:
In addition to the activities carried out by the Company the Bajaj Group is involvedin a number of CSR projects through various trusts and group companies in the areas ofrural development education health care economic and environmental development socialand urban development protection of culture employment enhancing vocation skills andlivelihood enhancement particularly for women homes/hostels for women education fordifferently abled children and measures for benefit of armed forces veterans. The groupalso manages schools colleges hospitals and a nursing college. It helps NGOsCharitable Bodies and Trusts operating at various locations. One of the trusts also givesawards for outstanding contribution for constructive work for application of sciencetechnology and upliftment and welfare of women and children along Gandhian lines. Ruraland community development activities are also conducted in the villages.
11. Statutory disclosures:
The statutory disclosures in accordance with section 134 read with Rule 8 of Companies(Accounts) Rules 2014 Section 178 Section 197 read with Rule 5 of Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 and Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 (SEBI LODR 2015).
11.1 Management Discussion and Analysis:
As required under Regulation 34(2) read with Schedule V of SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 (SEBI LODR 2015) the Management Discussionand Analysis is enclosed as a part of this report - Annexure-1.
11.2 Corporate Governance Report:
The Company has taken necessary steps to adhere to all the requirements of SEBI LODR2015. A report on Corporate Governance together certificateof the statutory auditorsconfirming with the compliance with the conditions of Corporate Governance as stipulatedin Regulation 34(3) read with Schedule V of SEBI LODR 2015 is included as a part of thisreport. Annexure-2.
11.3 Extract of Annual Return:
An extract of the Annual Return as prescribed under Sub-Section (3) of Section 92 ofthe Companies Act 2013 in Form MGT 9 is annexed to this report - Annexure 3.
11.4 Number of meetings of the Board and composition of Audit Committee:
During the year under review six Board Meetings of the Board of Directors of theCompany were convened and held. The relevant details including composition of the Boarddates of meetings attendance and various Committees of the Board are given in theCorporate Governance Report forming part of this report
11.5 Directors Responsibility statement:
Pursuant to Section 134 (3)(c) of the Companies Act 2013 the
Directors confirm that: i. In the preparation of the annual accounts the applicableaccounting standards have been followed; ii. Appropriate accounting policies have beenselected and applied consistently. Judgments and estimates that are reasonable and prudenthave been made so as to give a true and fair view of the state of affairs of the Companyas on
March 31 2017 and of the Loss of the Company for the year ended March 31 2017; iii.Proper and sufficientcare has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities; iv.The Annual Accounts have been prepared on a going concern basis. v. Internal financialcontrols have been laid down and followed by the Company and that such controls areadequate and are operating effectively. vi. Proper systems have been devised to ensurecompliance with the provisions of all applicable laws and that such systems are adequateand operating effectively.
11.6 Statement on declaration given by Independent Directors:
The Independent Directors of the Company have submitted their Declaration ofIndependence as required under the provisions of Section 149(7) of the Companies Act2013 stating that they meet the criteria of independence as provided in Section 149 (6) ofthe Act.
11.7 Familiarization programme for Independent Directors:
The Company has held familiarization programme for the Independent Directors by way ofpresentations on various aspects of business and deliberations held on major developmentsin legal and regulatory areas particularly regarding Companies Act 2013 and Regulation 7of SEBI LODR 2015. The website link on this is http://www.mukand.com/images/Familiarisation_Programme.pdf.
11.8 Disclosure regarding Companys policies under Companies Act 2013:Companys policies on i) Directors appointment and remuneration determining criteriafor qualification/independence ii) Remuneration for Directors Key Managerial Personneland other employees iii) Performance evaluation of the Board Committees and Directorsiv) Materiality of Related Party transactions v) Risk Management vi) DeterminingMaterial Subsidiaries and vii) Whistle Blower/ Vigil Mechanism along with details of weblink (in cases where it is prescribed) are given in Annexure-4.
11.9 Particulars of Loans Guarantees and Investments:
The particulars of loans guarantee or investments given or made by the Company underSection 186 of the Act are disclosed at Note No.34 of the financial statements.
11.10 Related Parties Transactions:
There were no Related Party Transactions (RPTs) entered into by the company during thefinancial year which attracted the provisions of Section 188 of Companies Act 2013.However there were material RPTs which got covered as material RPTs under Regulation 23of SEBI LODR 2015. During the year 2016-17 pursuant to Section 177 of the Companies Act2013 and Regulation 23 of SEBI LODR 2015 all RPTs were placed before Audit Committee forits prior / omnibus approval. The requisite disclosure in Form AOC-2 is furnished in Annexure-5.The policy on RPTs as approved by board is uploaded on the Companys website.
11.11 Conservation of Energy technology absorption imported technology ForeignExchange earnings and outgo:
Information under Section 134(3)(m) of the Companies Act 2013 read with Rule 8 of theCompanies (Accounts) Rules 2014 is provided in
11.12 Report on the subsidiaries associates and joint venture Companies. Names ofCompanies which have become or ceased to be its Subsidiaries Joint Venture or AssociateCompanies:
A report on performance and financial position of each of the subsidiaries associatesand joint venture companies included in the financial statement together with names ofcompanies which have become or ceased to be subsidiaries joint ventures or associatecompanies during the year under review are furnished in Annexure-7.
11.13 Significant and Courts:
Duringtheyearnosignificantand material orders were passed by any of the Regulators orCourts.
11.14 Details of Directors or KMP who are appointed or have resigned during the yearand Directors who are liable to retire by rotation:
Narendra J. Shah Director and Vinod S. Shah Director retire by rotation and areeligible for re-appointment. Pursuant to Section 149(4) of the Companies Act 2013 readwith Regulation 17(1) of SEBI LODR 2015 the Board has one half of its directors in thecategory of independent directors in terms of aforesaid Regulation.
11.15 Performance evaluation of the Board:
Pursuant to the provisions of the Companies Act 2013 and SEBI LODR 2015 the Board hascarried out an annual performance evaluation of its own performance the Directorsindividually as well as the evaluation of the working of Audit Nomination &Remuneration Stakeholders Relationship and Corporate Social ResponsibilityCommittees of the Board. The Independent Directors met separately on 13th February2017 to discuss the following: i) review the performance of non-independent directors andthe
Board as a whole; ii) review the performance of the Chairperson of the Company takinginto account the views of executive directors and non-executive directors; iii) assess thequality quantity and timeliness of flow of information between the Company Management andthe Board that is necessary for the Board to effectively and reasonably perform theirduties.
All Independent Directors were present at the Meeting and discussed the above andexpressed their satisfaction.
11.16 Details in respect of Internal Financial Controls with reference to financialstatements:
Adequate systems for internal controls provide assurances on the efficiency ofoperations security of assets statutory compliance appropriate authorization reportingand recording transactions. The scope of the audit activity is broadly guided by theannual audit plan approved by the top management and audit committee. The Internal Auditorprepares regular reports on the review of the systems and procedures and monitors theactions to be taken.
11.17 Details relating to Remuneration of Directors Key Managerial Personnel andemployees:
The information required under Section 197 (read with Rule 5 of Companies Appointmentand Remuneration of Managerial personnel) Rules 2014 in respect of employees of theCompany and Directors is furnished in Annexure-8. As per provisions of Section 136(1) ofthe said Act these particulars will be made available to a shareholder on request.
The aforesaid annexure includes information relating to relationship between Directorsinter se.
11.18 Safety Health and Environment:
The Company pays utmost importance towards safety and health of employees byimplementing policies procedures and conducting various awareness programmes among theemployees. It conducts many promotional activities among its work force on safetyadherence and developing the community on national and international events related toHealth Safety and Environment. All functional Departments work in cohesion to a commongoal that includes efficiency in energy and in utilizing natural resources with minimal orno damage to the environment.
11.19 Consolidated Financial Statements (CFS):
The CFS is prepared by the Company pursuant to Section 129(3) of the Companies Act2013 in accordance with the requirements of Accounting Standard AS-21 read with AS-23 onAccounting for Investments in Associates and AS-27 on Financial Reporting of Interests inJoint Ventures. Segment-wise disclosure of revenues results assets and liabilities onthe basis of segments are separately given in a tabular form in the Consolidated FinancialStatements (Refer Page No. 89).
11.20 During the year under review no case was reported to the Committee formedunder "Prevention Prohibition and Redressal of Sexual Harassment of Women atWorkplace Act 2013".
12.1 Messrs Haribhakti & Co. LLP Chartered Accountants Mumbai (FirmRegistration No.103523W) were appointed as Auditors of the Company from the conclusion of76th Annual General Meeting held on August 13 2014 until the conclusion of 81stAnnual General Meeting to be held in Calendar Year 2019. This appointment is subject toratification by the Members at each Annual General Meeting. Messrs
Haribhakti & Co. LLP are eligible for re-appointment for Financial Year 2017-18.
12.2 The Company has appointed Ms. Sangita Kulkarni as Cost Auditor to carry outthe audit of cost records relating to Steel Plants and Industrial Machinery Division ofthe Company for the Financial Year 2016-17.
The Cost Audit Report for the Financial Year 2015-16wasfiledwith the Ministry ofCorporate Affairs on 3rd September 2016 before the due date.
12.3 Pursuant to the provisions of Section 204 of the Companies Act 2013 theCompany has appointed M/s. Anant B. Khamankar (Membership No. FCS:3198) a PracticingCompany Secretary to undertake the Secretarial Audit of the Company and their Report is inAnnexure-9.
13. Auditors Report:
The observations made in the auditors report read together with the relevantnotes thereon are self-explanatory and hence do not call for any comments under Section134(3)(f) of the Companies Act 2013.
The Board of Directors thanks the Banks Financial Institutions Central and StateGovernment Authorities Shareholders Customers Suppliers Employees and BusinessAssociates for their continued cooperation and support to the Company.
|On behalf of the Board of Directors || |
|Niraj Bajaj ||Rajesh V. Shah |
|Chairman & Managing Director ||Co-Chairman & Managing Director |
|DIN: 00028261 ||DIN: 00033371 |
|Mumbai May 24 2017 || |