Your Directors pleased to present the 13th Annual Report of your company onthe operations and performance along with the Audited Financial Statements for the yearended on 31st March 2016.
| || ||Rs. In Lacs |
|Particulars ||March 31 2016 ||March 31 2015 |
|Total Revenues ||33819.36 ||36604.09 |
|Total Expenditure ||31439.10 ||33929.35 |
|Profit before interest depreciation extraordinary item and tax ||2380.26 ||2674.74 |
|Depreciation and Interest ||2086.86 ||3865.76 |
|Profit/(Loss) before extraordinary item and tax ||293.40 ||(1191.02) |
|Extraordinary item ||3170.24 ||4748.72 |
|Profit/(Loss) before tax ||(2876.84) ||(5939.74) |
|Tax Expense/Deferred tax ||Nil ||1644.16 |
|Net Profit/(Loss) for the year ||(2876.84) ||(7583.90) |
|Profit/(Loss) Brought forward from last year ||(12812.85)* ||(5175.09) |
|Balance Carried forward ||(15689.69) ||(12812.85)* |
* includes Rs. 54.13 lacs of transitional adjustment on depreciation.
STATE OF COMPANY'S AFFAIRS/PERFORMANCE OVERVIEW
During the year under review Net Turnover of the Company has been decreased from Rs.36604.09 lacs to Rs. 33819.36 lacs as compared to previous year's turnover. Company hasregistered a net loss of Rs. 2876.84 lacs in comparison to the loss of Rs. 7583.90 lacsduring previous year. Company had approached Hon'ble BIFR for declaring it sickundertaking pursuant to provisions of Section 3 (1) (o) of SICA. Application of thecompany has been registered in August 2015. Matter is pending before Hon'ble Bench ofBIFR. All banks have transferred their debts to ARCs and Company is in the process ofsettling debts with ARCs.
Due to high accumulated loss your Directors have not recommended dividend for thefinancial year 2015-16.
The company is engaged in manufacture of sponge iron ferro alloys MS & SS Angleand power. Company is generating power on account of waste heat recovery system resultingeconomic price. Company is having its power plant of 40 MW. Power generated is used forcaptive consumption and surplus power is sold resulting profit. There has been no changein the nature of business of the Company.
SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
The company does not have holding or subsidiary companies during the year and no othercompany has become holding/subsidiary/ joint venture/associate. The Company is anAssociate Company of M/s Shah Alloys Limited as it is holding more than 20% of the EquityShare Capital in the Company as a Promoter Company.
The Company has not accepted any public deposit during the year under review and noamount against the same was outstanding at the end of the year.
DETAILS OF LOANS GUARANTEES AND INVESTMENTS U/S 186 OF THE COMPANIES ACT 2013
During the year under review the Company has not made any inter corporate loansinvestments given any corporate guarantee to any other body corporate subsidiaryassociate or any other company.
In conformity with provision of regulation 34(2)(c) & 53(b) of SEBI (LODR)Regulations 2015 the Cash Flow Statement for the year ended 31.03.2016 is annexed hereto.The equity shares of the Company are listed on the BSE Ltd. and the National StockExchange of India Ltd. (NSE).
The Company has paid listing fees for the year 2016-17 to above stock exchanges.
DETAILS OF DIRECTORS OR KMPs APPOINTMENT OR RESIGNATION
During the year under review there is no change in the Composition of the Board orKMPs.
MEETINGS OF THE BOARD
The Board met five times during the financial year. Details of meetings are given inthe Corporate Governance Report annexed herewith and forms part of this report. Theintervening gap between the Meetings was within the period prescribed under the CompaniesAct 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declarations from each Independent Director of theCompany confirming that he/she met with the criteria of independence as laid out insub-section (6) of Section 149 of the Companies Act 2013 and under Regulation 16(1)(B) ofthe SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
A diverse Board enables efficient functioning through differences in perspective andskill and also fosters differentiated thought processes at the back of varied industrialand management expertise gender knowledge and geographical background. The Companyfollows diverse Board structure.
As per the provisions of the Companies Act 2013 and SEBI (Listing Obligation andDisclosure Requirements) Regulations 2015 the formal annual evaluation was carried outfor the Board's own performance its committee & Individual directors. The manner anddetail in which evaluation was carried out is stated in the Corporate Governance Reportwhich is annexed and forms a part of this report.
INTERNAL FINANCIAL CONTROL SYSTEM AND THEIR ADEQUACY
The details in respect of internal financial control and their adequacy are included inManagement Discussion and Analysis Report which forms part of this report.
CORPORATE GOVERNANCE REPORT
The Company is committed to observe good corporate governance practices. The report onCorporate Governance for the financial year ended March 31 2016 as per regulation 34(3)read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 forms part of this Annual Report. The requisite Certificate from thePracticing Company Secretary of the Company confirming compliance with the conditions ofCorporate Governance is annexed to this Report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
As required under Section 134 (3) (m) of the Act read with Rule 8 of The Companies(Accounts) Rules 2014 particulars relating to conservation of Energy R & DTechnology absorption and foreign Exchange earnings/outgo are separately provided in theannexure to this report as Annexure - 1.
RISK MANAGEMENT POLICY
The Company had put in place an enterprise wide risk management framework. Thisholistic approach provides the assurance that to the best of its capabilities theCompany identifies assesses and mitigates risks that could materially impact itsperformance in achieving the stated objectives. The Audit committee ensures that theCompany is taking appropriate measures to achieve prudent balance between risk and rewardin both ongoing and new business activities. The Committee reviews strategic decisions ofthe Company and on regular basis reviews the Company's portfolio of risks and considersit against the Company's Risk Appetite. The Committee also recommends changes to the RiskManagement Technique and/or associated frameworks processes and practices of the Company.
VIGIL MECHANISM POLICY
The Company had implemented a vigil mechanism whereby employees directors and otherstakeholders can report matters such as generic grievances corruption misconduct fraudmisappropriation of assets and non-compliance of code of conduct to the Company. Thepolicy safeguards the whistle blowers to report concerns or grievances and also provides adirect access to the Chairman of the Audit Committee. During the year under review none ofthe personnel has been denied access to the Chairman of Audit Committee.
CORPORATE SOCIAL RESPONSIBILITY
Company is loss making unit and hence provisions related to CSR is presently notapplicable.
DIRECTORS' RESPONSIBILITY STATEMENT
In Compliance with Section 134(5) of the Companies Act 2013 the Board of Directors tothe best of their knowledge and hereby confirm the following:
a) In the preparation of the annual accounts for the financial year ended 31stMarch 2016 as far as possible and to the extent if any accounting standards mentionedby the auditors in their report as not complied with all other applicable accountingstandards have been followed along with proper explanation relating to material departure;
b) 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 andprofit and loss account of the Company for that period;
c) The Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and for preventingand detecting fraud and other irregularities;
d) The Directors had prepared the annual accounts on a going concern basis; and
e) The directors in the case of a listed company had laid down internal financialcontrols to be followed by the company and that such internal financial controls areadequate and were operating effectively.
f) The Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
The policy of the Company on Director's appointment and remuneration includingcriteria for determining qualifications independence and other matters as provided undersubsection (3) of Section 178 of the Companies Act 2013 is available on the Company'swebsite at www.salsteel.co.in
DISCLOSURE UNDER SECTION 22 OF THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013
There were no complaints pending for the redressal at the beginning of the year and nocomplaints received during the financial year. PARTICULARS OF THE EMPLOYEES
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Companies Act2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are annexed to this Report as Annexure-2. Particulars of employees remuneration as required under section 197(12) of theCompanies Act 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are not attached with this report sincethere was no employee who was in receipt of remuneration in excess of aggregate of Rs.6000000 during the year if employed throughout the financial year or Rs. 5 lacs permonth in the aggregate if employed for part of the year.
DETAILS OF RELATED PARTIES TRANSACTIONS PURUSANT TO SECTION 188(1) OF THE COMPANIESACT 2013
During the financial year all transactions entered into with the Related Parties asdefined under Companies Act 2013 were in the ordinary course of business and on an arm'slength basis and as such did not attract provisions of Section 188 (1) of Companies Act2013. The Company has formulated policy on related party transactions. Particular ofrelated party transactions in prescribed Form AOC- 2 is attached at Annexure - 3.Approvals from the Audit Committee are obtained even for transactions which are inordinary course of business and repetitive in nature. Further on quarterly basisdisclosures are made to the Audit Committee and to the Board. Details of related partytransactions are given in the notes to financial statements.
Members at its 12th Annual General Meeting held on September 24 2015approved the appointment of M/s. Talati & Talati Chartered Accountants as statutoryauditors for the period as per provisions of the Act subject to ratification in everyAnnual General Meeting. Company has received letter of consent and confirmation undersection 141(1) the Companies Act 2013 for their appointment hence the Board has nowproposed to ratify the appointment of Statutory Auditors from conclusion of 13thAnnual General Meeting to next Annual General Meeting to be held in 2017. NecessaryResolution for their appointment as the Statutory Auditors and fixing their remunerationis proposed to be passed at the Annual General Meeting.
Pursuant to the provisions of Section 148 of the Companies Act 2013 and the Rules madethere under M/s. Ashish Bhavsar & Associates Cost Accountants were appointed forauditing cost accounting records of the Company for the year ending 31st March2016.
The Company has appointed an Independent firm of Chartered Accountants to act as anInternal Auditor as per suggestion of auditors and recommendation of the Audit Committeein order to strengthen the internal control system for the Company.
Pursuant to the provisions of Section 204 of the Companies Act 2013 read with rulesmade thereunder the Board of Directors has appointed M/s Kamlesh Shah & Co.Practicing Company Secretaries as Secretarial Auditor to conduct Secretarial Audit of theCompany for the Financial Year 2015-16. The report submitted by the Secretarial Auditor inForm MR-3 is attached to this report as Annexure - 4. The remark of secretarialauditor is self explanatory in nature.
BOARD'S RESPONSE ON THE REMARKS MADE BY STATUTORY AUDITORS
The Directors submit their explanations to then various observations made by theAuditors in their report for the year 2015-16. Para nos. of Auditors' Report and reply areas under:
Basis for Qualified Opinion - Para 1
Company has paid the capital advances in earlier years for total amounting Rs.94122080 which are currently shown under long term loans and advances to the suppliersfor the supply of customized equipments based on our specific design and requirements. Themachines are manufactured and ready for dispatch but Company does not have further fundsto pay balance amount to lift the machines. However the Management is trying to recoversuch advances from the suppliers fully subject to provisions made in the books of accountsof Rs. 16932523. At present amount of loss is not quantifiable.
Annexure A to the Independent Auditors' Report - Para vii a
Payments of Statutory dues were marginally delayed on account of slowrecovery/collection. However the same has been paid.
Annexure A to the Independent Auditors' Report - Para viii
In view of the market conditions of steel sector at the relevant time Companyapproached to the Consortium of the Banks for restructuring of the debts through CDRmechanism. The lenders appointed SBI Capital Market Limited to prepare a financial packageand GITCO to carry out the Techno Economic Viability (TEV) Report. Based on the viabilityof the plant certified by SBI Caps and GITCO SBI approached to the CDR (EG) and the casewas admitted by the CDR and directed the lenders to submit the final report within 90 daysfor the sanction of the package. In between SBI withdrew the support from the CDR bysubmitting letter of withdrawal without assigning any reason. As a result Company sufferedbadly and later not able to make the payments as per the terms of sanction. As a resultfinancial health of the Company got further deteriorated and net worth became negative.Thus Company approached to Hon'ble BIFR for declaring company as sick undertakingpursuant to the provisions of Section 3 (1) (o) of the SICA. The application of theCompany has been registered vide letter dated 24.08.2015.
All the banks assigned debts to Assets Reconstruction Company (ARC). Company has madeproposal for settlement with ARC. Company is actively negotiating with them for settlementof debts and expecting a settlement. Since matter is pending before Hon'ble BIFR andsettlement proposals are under considerations.
1. No material changes have taken place after the closure of the financial year up tothe date of this report which may have substantial effect on the business and financial ofthe Company.
2. No significant and material orders have been passed by any of the regulators orcourts or tribunals impacting the going concern status and companies operations in future.
EXTRACT OF ANNUAL RETURN
An extract of the Annual Return in Form MGT-9 in compliance with Section 92 of theCompanies Act 2013 read with applicable rules made thereunder is annexed to this report atAnnexure - 5.
Your Directors place on record their sincere appreciation for the valuable support andco-operation as received from government authorities Financial Institutions Banks andARCs during the year. Directors are also thankful for the support extended by CustomersSuppliers and contribution made by the employees at all level. Directors would also liketo acknowledge continued patronage extended by Company's shareholders in its entireendeavor.
| ||For and on behalf of the Board |
| ||Rajendra V. Shah |
|Date : 30th May 2016 ||Chairman |
|Place : Santej ||(DIN: 00020904) |
ANNEXURE - 1 TO THE DIRECTORS' REPORT
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
(Statement pursuant to Section 134 (3) (m) of the Companies Act 2013 read with theRule 8(3) of Companies (ACCOUNTS) Rules 2014 for the year ended March 31 2016.)
A. CONSERVATION OF ENERGY
(a) Energy conservation measures taken:-
Your company gives priority to Energy conservation. It regularly reviews measures to betaken for Energy Conservation/Consumption and its effective utilization.
(b) Additional investments and proposals if any being implemented for reduction ofconsumption of energy:-
Your Company is highly power intensive industry and power is the basic requirements ofmanufacturing process. In order to reduce the cost per unit for power consumption theCompany has installed 40 MW Captive Power Plant.
(c) Impact of measures at (a) and (b) above for reduction of energy consumption andconsequent impact on the cost of production of goods:
The company is operating 40 MW Captive Power Plant in parallel with GETCO Grid and withthe consumption of own power Company saves substantial amount from the same.
(d) Total energy consumption and energy consumption per unit of production:
(I) POWER & FUEL CONSUMPTION
| ||2015-16 ||2014-15 |
|1 ELECTRICITY || || |
|(a) Purchased || || |
|Unit (Kwh) ||1300560 ||2796920 |
|Total Amount (Rs.) ||37341897 ||44128702 |
|Rate/Unit (Rs) ||28.71 ||15.78 |
|(b) Own Generation || || |
|(i) Through Diesel Generator Unit (Kwh) || || |
|Unit Per Ltr of Diesel Oil ||Nil ||Nil |
|Cost/Unit (Rs.) ||Nil ||Nil |
|(ii) Through Steam Turbine/Generator Unit (Kwh) ||88907 ||76603 |
|Unit Per Kg of Lignite ||0 ||0 |
|Cost Lignite/Unit (Rs.) ||272 ||0 |
|Cost Coal/Unit (Rs.) ||2529 ||2938 |
|Cost Coal & Lignite/Unit (Rs.) ||2797 ||2938 |
|2 COAL (Including Coal Fines) || || |
|Quantity (MT) ||85835 ||81306 |
|Total Cost (Rs.) ||224537868 ||225032910 |
|Average Rate (Rs.) ||2616 ||2768 |
|3 FURNACE OIL || || |
|(used in the generation of power) || || |
|Quantity (K Ltr) ||Nil ||Nil |
|Total Cost (Rs.) ||Nil ||Nil |
|Average Rate (Rs.) ||Nil ||Nil |
|4 OTHERS - LIGNITE || || |
|(used in the generation of steam) || || |
|Quantity (K Tonns) ||9210 ||Nil |
|Total Cost (Rs.) ||24174834 ||Nil |
|Average Rate (Rs.) ||2625 ||Nil |
(II) CONSUMTION PER M.T. OF PRODUCTION
|Particulars of Product ||2015-16 ||2014-15 |
|Electricity (in Unit) ||Nil ||Nil |
|Furnace Oil ||Nil ||Nil |
|Coal (Specify quantity) ||Nil ||Nil |
|Others ||Nil ||Nil |
B. TECHNOLOGY ABSORPTION
|Particulars ||2015-16 ||2014-15 |
|(I) Research and Development (R & D) || || |
|1. Specific areas in which R&D carried out by the company. ||NIL ||NIL |
|2. Benefits derived as a result of the above R&D ||NIL ||NIL |
|3. Future plan of action: ||NIL ||NIL |
|a) Capital || || |
|b) Recurring || || |
|c) Total || || |
|d) Total R&D expenditure as a percentage of total turnover || || |
|(II) Technology absorption adaptation: || || |
|Company has not carried out research development & innovation activities. || || |
|1. Efforts in brief made towards technology absorption adaptation and innovation. ||NIL ||NIL |
|2. Benefits derived as a result of the above efforts e.g. product improvement NIL cost reduction product development import substitution etc. ||NIL || |
|3. In case of imported technology ||NIL ||NIL |
|(imported during the last 5 years reckoned from the beginning of the financial year) following information may be furnished: || || |
|a) Technology imported || || |
|b) Year of import || || |
|c) Has technology has been fully absorbed || || |
|d) If not fully absorbed areas where this has not taken place reasons therefore and future plans of action. || || |
C. FOREIGN EXCHANGE EARNINGS AND OUTGO
| || ||(Rs. in lakhs) |
|Particulars ||2015-16 ||2014-15 |
|1) EARNINGS & OUTGO || || |
|a) Foreign Exchange earnings ||19.44 ||Nil |
|b) Foreign Exchange outgo ||4260.98 ||1496.41 |
2) TOTAL FOREIGN EXCHANGE USED AND EARNED:
As per notes on account.
| ||For and on behalf of the Board |
| ||Rajendra V. Shah |
|Date : 30th May 2016 ||Chairman |
|Place : Santej ||(DIN: 00020904) |