The Board of Directors presents the 60th Annual Report on the business andoperations of the Company and its Audited Statement of Accounts for the year ended March31 2016 together with the Auditors Report and Comments on the Accounts by theComptroller and Auditor General (CAG) of India.
The performance of the Company during the year 2015-16 vis--vis the previousyear is summarized in the table below:
| ||2015-16 ||2014-15 |
|TURNOVER || || |
|Exports ||1111 ||1884 |
|Imports ||8735 ||12042 |
|Domestic ||633 ||471 |
|GRAND TOTAL ||10479 ||14397 |
|FINANCIALS || || |
|Profit Before Tax ||23 ||31 |
|Profit After Tax ||18 ||26 |
|Net Worth (Including revaluation reserve) ||1057 ||1039 |
OPERATIONS AND BUSINESS PERFORMANCE
During the year 2015-16 the Company achieved a total turnover of Rs. 10479 crore asagainst Rs. 14397 crore achieved in the previous year. The decline in turnover was mainlydue to reduction of Rs. 3882 crore in bullion imports because of lower demand attributableto large imports of dore bars into the Country. The domestic sales turnover of theCompany however increased to Rs. 633 crore during the year 2015-16 and was the best inpast six years.
The Profit Before Tax (PBT) during the year amounted to Rs. 23 crore.
The Board of Directors have not recommended any dividend for the year 2015-16 as theCompany needs to conserve cash for its business operations due to rising borrowing costsand low profitability.
An amount of Rs. 978.92 crore was available in the Reserves and Surplus of the Companyas on 1st April 2015. The Profit After Tax of Rs. 17.86 crore made during theyear is being retained as surplus in the Balance Sheet. Accordingly as on 31st March2016 the Reserves and Surplus stood at Rs. 996.79 crore.
FOREIGN EXCHANGE EARNINGS/OUTGO
The total foreign exchange earnings of the Company by way of exports trade marginsetc. during the year amounted to Rs. 51.13 crore while the foreign exchange outgo by wayof imports and other expenses amounted to Rs. 8254.75 crore.
HUMAN RESOURCE Manpower
STC had 692 employees on its rolls as on 31.03.2016 which included 468 managers and224 staff.
During the year the Company recruited fifteen Assistant Managers with professionalqualifications in various disciplines. In addition lateral recruitments were made to filltwo positions in the managerial cadre. The Company also appointed two persons oncompassionate grounds in the staff cadre.
The Company continued to maintain harmonious industrial relations during the year. Noman days were lost. As per changing dynamics new personal policies were framed andaligned with the overall business interests of the Company.
Reservation in recruitments/promotions
The Company has been implementing the directives and guidelines issued by theGovernment of India from time to time with regard to recruitment/promotion of SC/ST/OBCdifferently abled candidates and those from minorities.
Human Resource Development
During the year the Company continued to lay emphasis on training and learningopportunities of its employees at various levels and dedicated 857 mandays for thepurpose.
Professional training programmes were especially formulated and approved in June 2015for enhancing knowledge on matters like international trade trade finance and riskmanagement through one of the reputed institutes namely National Institute of BankingStudies and Corporate Management (NIBSCOM). A total of 62 managers participated in theseprogrammes which had an in-built programme evaluation system. The Company also conductedintensive training programmes especially designed for 69 non-professional managers tobridge the skill gap in areas like computer usage office management etc. throughNTPCs Power Management Institute Noida.
Besides above six executives at the level of Directors/ CGMs/ GMs attended seminars/conferences/programmes on Strategic Management and Corporate Governance during the year.
In all the Company conducted 9 in-house dedicated training programmes covering 232employees.
The Company also nominated 80 employees for management development programmes organisedby external agencies.
In compliance with the Governments Policy on Official Language continuousefforts were made for promoting the use of Hindi in day to day official work. Hindi Diwasand Rajbhasha Week/Fortnight were organised in the Corporate Office as well as BranchOffices of the Company. During these events employees who had done most of their work inHindi were felicitated.
The Company was awarded the Rajbhasha Shield (First prize) by the Ministry of Commerce& Industry in view of progressive and notable use of Hindi in official work. Theemployees of the Company won prizes in various Hindi competitions organised by TownOfficial Language Implementation Committee (TOLIC).
The Committee of Parliament on Official Language inspected the work related to officiallanguage of the Company and found the same to be satisfactory. The Committee praised theefforts being made by STC.
With a view to create awareness among the employees on the ill-effects of corruptionand the need for eradication of the same Vigilance Division of the Company took a numberof steps during the year. As part of Vigilance Awareness Week it organised a talk onPreventive Vigilance as a tool of Good Governance by a senior IPSofficer.
A training programme was also organised for the officials of the Company on "PreventiveVigilance as a tool of Good Governance". In addition to investigation ofcomplaints and handling departmental inquiries having vigilance angle the VigilanceDivision also maintained constant liaison with various agencies viz. CVC CBI &MOC&I etc. for ensuring preventive vigilance and providing details/inputs toregulatory agencies as per statutory requirements. Vigilance Division also conductedinspection of Branch Offices of the Company thereby bringing out areas forcorrective/preventive action.
PERFORMANCE OF SUBSIDIARY COMPANY
STCL Ltd. (Formerly Spices Trading Corporation Limited)
In view of extraordinary losses suffered by STCL leading to erosion of its net worthand remote possibility of its turnaround the Union Cabinet had in August 2013 decidedto wind up STCL. Accordingly a winding up petition was filed by STCL before theHonble High Court of Karnataka in November 2013 and the same continues to be pendingdue to objections by Banks.
At present STCL has 13 employees including the Managing Director.
As a result of the above developments no business operations were undertaken by STCLduring the year.
The subsidiary company incurred a loss of Rs. 480 crore during 2015-16 mainly onaccount of the interest accrued on outstanding loans and had a negative net worth of Rs.3342 crore as on 31.03.2016.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
As per the requirement of Regulation 34(2) of schedule V of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 a detailed ManagementDiscussion and Analysis Report forming part of the Annual Report of the Company is placedat Annexure-I.
EXTRACT OF THE ANNUAL RETURN
As required under Section 134(3)(a) of the Companies Act 2013 an extract of theAnnual Return pursuant to Section 92(3) of the Act is annexed to this Report atAnnexure-II.
ANTI SEXUAL HARASSMENT POLICY
The Company has laid down an Anti Sexual Harassment Policy in line with therequirements of The Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. An Internal Complaints Committee has been set up to redresscomplaints received in this regard. All employees (permanent contractual temporarytrainees) are covered under this policy.
No sexual harassment complaints were received during the year 2015-16.
RIGHT TO INFORMATION
In order to promote transparency and accountability an appropriate mechanism has beenput in place in the Company to provide information to citizens under the provisions ofRight to Information (RTI) Act 2005. For this purpose the Company has in line with theRTI Act nominated Central Public Information Officers at all its Divisions at New Delhiand at Branch Offices across the country. For the convenience of public a coordinatingCPIO has also been nominated. First Appellate Authority has also been nominated forconsidering the appeals of information seekers against the orders of Public InformationOfficers.
The Company has not accepted any deposits from Public. Therefore the requirement ofChapter V of the Companies Act 2013 is not applicable to it.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186
During the year the Company has not provided/given any loans guarantees or made anyinvestment as specified under section 186 of the Companies Act 2013.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SUBSECTION(1) OF SECTION 188 IN THE PRESCRIBED FORM
The Company has not entered into any contracts or arrangements with related parties asreferred to in subsection (1) of section 188 of the Companies Act 2013.
CORPORATE SOCIAL RESPONSIBILITY (CSR) AND SUSTAINABILITY
In line with the Corporate Social Responsibility (CSR) Policy of the Company and theprovisions of the Companies Act 2013 STC executed CSR projects during the year 2015-16 inthe areas of health and sanitation special education for differently-abled people andpromotion of art/culture/heritage. The projects were taken up after due deliberations bythe Board level CSR Committee. All the three projects were commenced in the year 2014-15and continued in the year 2015-16. The project on promotion of art/culture/heritage isstill continuing. An annual report on Companys CSR activities in prescribed formatas per the Companies (Corporate Social Responsibility Policy) Rules 2014 is placed atAnnexure III.
PUBLIC PROCUREMENT POLICY
In pursuance of the Public Procurement Policy for Micro & Small Enterprises (MSEs)Order 2012 (dated 23rd March 2012) notified by Ministry of Micro Small andMedium Enterprises the Company had set an annual target of making a minimum 20 percent ofits annual procurement of goods and services from MSEs including 4 percent from MSEsowned by SC or ST entrepreneurs.
Duringtheyear2015-16theCompanymadeprocurements worth Rs. 2.06 crore from MSEs whichaccounted for 11.6 percent of total value of annual procurement made by STC of goodsproduced and services rendered by MSEs. Efforts are on to increase procurement from MSEsin the current year.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION ETC.
The information required to be disclosed in accordance with the Companies (Accounts)Rules 2015 is nil as the Company is mainly engaged in trading activities.
The Financial Statements have been prepared in accordance with the Generally AcceptedAccounting Principles (GAAP) and in compliance with all applicable Accounting Standardsissued by The Institute of Chartered
Accountants of India (ICAI) and provisions of the Companies Act 2013.
INTERNAL FINANCIAL CONTROLS
The Company has in place well-established internal financial controls. The Company hasa well-defined Delegation of Powers (DOP) which lays down the financial powers availableto various levels of Companys executives. The DOP helps facilitate faster andprudent commercial decision-making by executives at various levels.
The Company has an Internal Audit Division supported by an outside professionalChartered Accountant firm which conducts internal audit of Companys corporateoffice as well as branches and suggests various preventive and corrective steps. The auditobservations are periodically reviewed by the Management Audit Committee and the AuditCommittee of the Board of Directors and necessary directions are issued wherever required.
NUMBER OF MEETINGS OF THE BOARD
During the financial year 2015-16 six meetings of the Board of Directors were held andthe interval between any two Board meetings did not exceed 120 days.
DECLARATIONS GIVEN BY INDEPENDENT DIRECTORS
There were no Part-time Non-official Directors (Independent Directors) on the Board ofthe Company on the date of the first Board meeting held during the financial year 2015-16.The term of the two Independent Directors who were on the Board as on 01.04.2015 expiredon 17.04.2015 and no Independent Director was nominated on the Board by the Governmentthereafter till the end of the financial year 2015-16.
POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION ETC.
STC being a Government company the terms and conditions of appointment andremuneration of its whole-time functional Directors are determined by the Governmentthrough the Ministry of Commerce and Industry the administrative ministry of the company.The non-executive part-time official Directors (Government nominees) do not draw anyremuneration or sitting fee. The non-executive part-time non-official (Independent)Directors are paid a sitting fee for each Board/ Committee meeting attended by them at therate approved by the Board from time to time.
The eligibility criterion for appointment of Independent Directors is laid down by theDepartment of Public Enterprises of the Govt of India. The positive attributes expected tobe exhibited by the Independent Directors are conveyed to them on their appointment and adeclaration in the appropriate performa is obtained from them every year to confirm thatthey continue to qualify as Independent Director.
ANNUAL EVALUATION OF THE PERFORMANCE OF THE BOARD ITS COMMITTEES AND INDIVIDUALDIRECTORS
The Company being a Government Company is exempted from the requirements in thisregard in terms of notification dated 05.06.2015 issued by the Ministry of CorporateAffairs Government of India.
RISK MANAGEMENT POLICY
A Risk Management Framework has been put in place to add objectivity to the process ofrisk assessment while taking a decision on accepting or rejecting a trade proposal. TheRisk Management Framework measures the risk involved in a business proposal in the form ofa total risk score which is weighed vis--vis available risk mitigation measures.
Further the Company has implemented an Anti-Fraud Policy in order to enforce controlsand to aid in prevention and detection of frauds in the Company. The Policy intends topromote consistent legal and ethical organizational behaviour by assigning responsibilityfor the development of controls and providing guidelines for reporting and conduct ofinvestigations of suspected fraudulent behaviour.
The Company does not take exposure in volatile commodities. Generally it makespurchases only against confirmed orders backed by appropriate margin money.
Guidelines are in place requiring forward foreign exchange cover to be taken in respectof transactions involving STC funds.
The Company believes that Corporate Governance is at the root of the shareholdersvalue creation.
Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015and Guidelines on Corporate Governance for CPSEs issued by the Department of PublicEnterprises (DPE) Govt of India a Report on Corporate Governance for the year 2015-16forming part of this report is placed at Annexure-IV. The Company has complied with theconditions of Corporate Governance as stated in the above referred Regulations and DPEguidelines on Corporate Governance for CPSEs with a few exceptions regarding appointmentof woman director and number of independent directors which are mentioned in the Report.Compliance certificate from the practicing Company Secretary in this regard and Managementreplies thereto forming part of this Report are placed at Annexure -V.
The Company has got its Secretarial Audit for the financial year ended 31stMarch 2016 conducted by practicing Company Secretaries M/s Chandrasekaran Associates andtheir report alongwith Management replies to the observations made by SecretarialAuditors forming part of this Annual Report is placed at Annexure -VI.
In line with the best practices your Company has made available all information ofinterest to its investors on the Companys corporate website namely www.stclimited.co.in .
The Company has also put in place various policies such as:
Whistle Blower Policy
Web Archival Policy
Policy on Preservation of Documents
Policy on Materiality of Related Party Transactions and dealings with RelatedParty Transactions
Policy for determination of materiality of events and information and theirdisclosures.
Policy for determining material subsidiaries.
All the policies are also available on STCs website.
The independent meeting of Independent Directors of the company could not be heldduring 2015-16 because of there being no Independent Director on the Board of the Companyfrom 18.04.2015 to 31.03.2016.
M/s P. Jain & Company Chartered Accountants were appointed as Statutory Auditorsof the company for the financial year 2015-16 by the Comptroller & Auditor General ofIndia (C&AG). Their report along with replies of the Management is attached andforms part of this report.
COMMENTS OF C&AG
The comments of C&AG under Section 143(6) of the Companies Act 2013 on theaccounts of the Corporation for the year 2015-16 and replies of the management thereto areattached and form part of this Report.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 134(5) of the Companies Act 2013 inrelation to Directors Responsibility Statement it is hereby confirmed that:
(a) in the preparation of the annual accounts for the year ended 31st March2016 the applicable accounting standards have been followed along with proper explanationrelating 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 at the end of the financial year and ofthe profit and loss of the company for the year under review;
(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 on a going concern basis for theyear ended 31st March 2016;
(e) the directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and operating effectively;
(f) the directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
BOARD OF DIRECTORS
Since the last Annual General Meeting Shri Ravichandran Gurusamy (DIN 07449503) ShriPrasanta Kumar Das (DIN 03145622) and Shri Sanjeev Kumar Gupta (DIN 01127710) have beenappointed on the STC Board as Director (Finance) Director (Marketing) and Director(Marketing) respectively w.e.f. 27.01.2016 19.02.2016 and 27.04.2016. Pursuant to theorder dated 15.06.16 of the Govt. of India through Ministry of Commerce & Industrythe President of India has appointed Dr. K. Rangarajan (DIN 07579562) Sh. Sunil Trivedi(DIN 01670280) Sh. N. Sundaradevan (DIN 00223399) and Sh. Arvind Gupta (DIN00090360) as Independent Directors on STCs Board on 03.08.2016. Except ShriRavichandran Director Finance who has tendered his resignation from the post of DirectorFinance and was relieved from the Company on 24.08.2016 other Directors shall hold officeupto the date of ensuing AGM and offer themselves for re-appointment at the AGM. The Boardwelcomes all the new Directors and hopes that the Company shall immensely benefit fromtheir rich and varied experience.
Pursuant to the provisions of Section 152 of the Companies Act 2013 Shri RajivChopra Director (Marketing) and Shri S.K. Sharma Director (Personnel) would retire byrotation at the ensuing Annual General Meeting and being eligible have offered themselvesfor re-appointment.
As per Regulation 36 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 brief resumes of all Directors seeking appointment/re-appointment aregiven in the notice convening the 60th Annual General Meeting of the Company.
KEY MANAGEMENT PERSONNEL
The Company has nominated its CMD all functional Directors and Company Secretary asKey Management Personnel pursuant to Section 203 of the Companies Act 2013.
COMMITTEES OF DIRECTORS
Pursuant to the provisions of various sections of the Companies Act 2013 and SEBI(LODR) Regulations 2015 the Board of Directors of the Company have constituted variousCommittees of the Directors like Audit Committee Stakeholders RelationshipCommittee CSR Committee Nomination & Remuneration Committee. The Composition ofthese committees & other details are mentioned in the Corporate Governance Reportforming part of and Annexed to the Directors Report.
CODE OF CONDUCT
Pursuant to the requirements of Schedule V of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 and DPE guidelines on Corporate Governance forCPSEs the Board Members and Senior Management Personnel have affirmed compliance to theCode of Conduct for the financial year ending 31st March 2016.
The Board of Directors places on record its appreciation of the continued patronage andthe confidence posed by business associates and customers during the year.
The Board expresses its gratitude for the continued co-operation and support providedby the Ministry of Commerce and Industry other Ministries and Departments of theGovernment of India various state governments financial institutions banks railwaysports regulatory and statutory authorities shareholders legal advisers and consultantsfrom time to time.
The Board also acknowledges the constructive suggestions received from Comptroller& Auditor General of India Statutory Auditors Internal Auditors and SecretarialAuditors of the Company.
Last but not the least the Board places on records its appreciation for the hard workand dedication of all the employees.
| ||For and on behalf of the Board of Directors |
| ||Sd/- |
| ||(Khaleel Rahim) |
|New Delhi ||Chairman & Managing Director |
|August 26 2016 ||DIN 02455606 |