Your directors take pleasure in presenting the 44th Annual Report on business andoperations of your Company for the financial year ended 31st March 2017.
|Financial Performance || || || ||(' in crore) |
|Particulars || |
| ||2016-17 ||2015-16 ||2016-17 ||2015-16 |
|Revenue from operations (Gross) ||1147 ||1150 ||1571 ||1606 |
|Exports ||20 ||84 ||221 ||171 |
|EBIDTA ||207 ||162 ||285 ||227 |
|Depreciation ||47 ||51 ||69 ||75 |
|Finance cost (Net) ||42 ||56 ||94 ||112 |
|Exceptional item (income)/expense ||(44) ||- ||(28) ||- |
|Profit before tax ||162 ||55 ||150 ||40 |
|Provision for tax ||31 ||18 ||23 ||27 |
|Net Profit ||131 ||37 ||127 ||13 |
|Other Comprehensive Income || |
|1 ||1 ||1 |
|Total Comprehensive Income ||131 ||38 ||128 ||14 |
Adoption of Ind AS
The financial statements for the year ended 31st March 2017 along with restatedfinancial statement for the year ended 31st March 2016 are prepared in accordance withInd AS notified under the Companies (Indian Accounting Standards) Rules 2015.
Review of performance
The steel sector is going through a downturn and the year under review has been quitechallenging. In spite of this your Company has reported satisfactory performance throughoperational excellence and cost control measures with dedicated team work of its humanresource.
Your Company has achieved highest ever production of iron ore pellet sponge iron wirerod and HB wire during the year. One generating unit of power plant was shut down from15th December 2016 for replacement of the Turbine with new energy efficient Turbinesupplied by BHEL. Due to this the production of power steel billet and ferro alloys wasmarginally lower. The new turbine commissioned in April 2017 will give saving of about12% in coal consumption. Excellent operating performance in spite of shutdown in the powerplant helped the Company in achieving sales almost at par with the previous year. Theoperations of iron ore mine which were suspended in the previous year resumed in themonth of November 2016 which also helped in improving the financial performance.
Your Company has fulfilled all its financial obligations on time. The Long termDebt-Equity ratio of your Company on 31st March 2017 on standalone basis stood at 0.16:1as against 0.23:1 in the previous year and on consolidated basis it stood at 0.74:1 asagainst 0.78:1 in the previous year. This is in spite of ongoing large capexes in thesubsidiaries and controlled entities. Stakeholders are requested to refer the detailedanalysis of the performance given in the Management Discussion and Analysis Reportappended hereto.
The exceptional income of ' 44 crore represents receipt of an amount of ' 64 crore inan out of court settlement in an international arbitration and write off of ' 20 crore onaccount of the unrealized value of coal mine assets after cancellation of coal mineallotment. Your Company has challenged the compensation amount approved by the Govt. ofIndia. However as a prudent business practice the differential amount has been booked asexpense. There was no change in the nature of the business of the Company.
Your Directors have recommended highest ever dividend of ' 4/- (i.e. 40%) per equityshare for the financial year 2016-17 (last year ' 2/- per equity share). The dividend ifapproved by the shareholders in the ensuing Annual General Meeting will be paid as per theapplicable provisions.
During the year your Company has transferred the unpaid dividend amount in respect ofthe F.Y. 2008-09 to the Investor Education and Protection Fund.
During the year a sum of ' 1041 lakh has been transferred to General Reserves fromDebenture Redemption Reserve on account of partial redemption of the Non-convertibleDebentures issued by the Company.
Subsidiaries / Controlled Entities / Joint Ventures
During the year there was no change in the subsidiaries. Your Company has along withits Wholly Owned Subsidiary increased its stake in Madhya Bharat Power CorporationLimited from 76.74% to 80.87%. There was a slight reduction in Company's holding inChhattsgarh Hydro Power LLP from 60.92% in previous year to 60% in 2016-17. Brief on theperformance/progress of the project /business operations of subsidiaries/controlledentities/joint ventures consolidated with SEML is given hereunder:
Sarda Energy & Minerals Hongkong Limited Hongkong (SEMHKL) is a whollyowned subsidiary functioning as global investment arm of your Company. During the yearunder review the subsidiary reported a net profit of ' 25.64 crore as against net loss of' 5.63 crore in the previous year. The Company has not paid any dividend during the year(Pr. Year US$ 2.8 Mn).
Sarda Global Venture Pte. Limited Singapore (SGV) a wholly owned subsidiaryholds economic interest in coal mines in Indonesia. During the current year the Companyhas entered into a definitive joint venture agreement for operation of the mine with alocal business group. All required approvals related to the agreement have been obtained.During the year under review the subsidiary reported a net profit of ' 0.90 crore asagainst loss of ' 0.82 crore in the previous year.
Sarda Metals & Alloys Limited (SMAL) a wholly owned subsidiary is operating2 x 33 MVA Ferro Alloys plant backed by 80 MW captive thermal power plant. During theyear power generation was 488.89 MU as compared to 612.83 MU in the previous year. Theferro alloys production (including Mno Slag) stood at 61578 MTs as against 49955 MTs inthe previous year. The power generation was lower than previous year because of poordemand and consequent back down by the state distribution companies with whom the Companyhad entered into supply agreement.
However the Company was successful in maintaining the growth rate in exports wherein ithas achieved Exports of ' 201 crore as against ' 119 crore in the PY. The Company has alsoreceived Two Star Export House status from Director General of Foreign Trade Ministry ofCommerce & Industry Government of India.
During the year Company reported loss of ' 17.74 crore as against loss of ' 3.82 crorein P.Y. mainly due to drastic reduction in power offiake by Telangana DISCOM and outage ofone of the furnaces of the Company for almost 3 months. The Company plans to set-up powerintensive industrial unit(s) in steel / ferro alloys for capative consumption of surpluspower for long term sustainability.
Sarda Energy Limited (SEL) a wholly owned subsidiary was incorporated as an SPVto put-up 1320 MW super critical IPP thermal power project in Chhattsgarh. As reportedearlier the Company has abandoned the project. The surplus funds lying with the Companywere invested in Madhya Bharat Power Corporation Limited as part of promoters'contribution. During the year under review the subsidiary reported a net profit of ' 0.92crore as against net profit of ' 4.16 crore in the previous year.
Parvatiya Power Limited (PPL) is operating 4.8 MW Loharkhet Hydro Power projectin Bageshwar district of Uttarakhand. The Company has supplied 190.98 lakh KWh (PreviousYear 182.60 lakh KWh). The plant enjoys debt free operations post repayment of term loanavailed for the project. During the year the Company has earned profit after tax of '4.55 crore. (Previous Year ' 2.26 Crore). During the year the Company has diluted itsholding in Sarda Dairy & Food Products Limited from 42.78% to 18.06%. Your Companycontinues to hold 51% stake in PPL.
Madhya Bharat Power Corporation Limited (MBPCL) is implementing 96 MW (2X48)Rongnichu HEP near Gangtok in East Sikkim. It is a run of the river scheme a CDMregistered project. The construction works of the project are consistently progressingahead. 84% excavation works of critical underground tunnel is complete and liningactivities have started in parallel. The financial closure for the revised project costhas been achieved during the year. The project is expected to be operational in the F.Y.2018-19. The Company has reported loss during the year mainly on account of expenses whichare not directly attributable to assets under construction and couldn't be capitalized asper prevailing accounting standards.
Your Company has infused ' 30 crore in MBPCL during the year under review. Your Companyholds 80.87% stake in the project (62.41% directly and 18.46% through its wholly ownedsubsidiary Sarda Energy Limited) as compared to 76.74 % in previous financial year.
Sarda Hydro Power Private Limited (SHPPL) has been allotted 24 MW Kotaiveeraand 9 MW Ganeshpur small hydro projects in the state of Chhattsgarh. The projects are inclearance stage. Your Company continues to hold 60% stake in this Company.
Raipur Fabritech Private Limited (RFPL) has been incorporated to undertake steelfabrication activities at the site of closed steel plant of your Company. The Company isyet to start operations. Your Company holds 52.38% stake in RFPL. Your Company isconsidering dissolution of this Company.
Raipur Industrial Gases Private Limited (RIGPL) has been incorporated toundertake activities related to production of industrial gases. The Company is yet tostart operations. Your Company holds 51% stake in RIGPL. Your Company is consideringdissolution of this Company.
Natural Resources Energy Private Limited (NREPL) is an SPV to carry on thebusiness of development of mines and minerals generation and trading of power andinfrastructure development. The entire share capital of the Company is held by SEML andits wholly owned subsidiary SMAL.
Chhaffisgarh Hydro Power LLP (CHP LLP) is pioneer in the state of Chhattsgarhfor implementation of Hydro Power projects under IPP route. The firm has been allottedfour run of river scheme small hydel power projects with total installed capacity of 77MW.
The first 24 MW project at Gullu has been synchronized with state power grid on31.03.2017 and has started generating power. The project has achieved commercialproduction in the month of July 2017. The firm has signed long term power purchaseagreement with Chhattsgarh State Power Distribution Company Limited for supply of powerfrom the Gullu project. The project has received part of MNRE subsidy for which it waseligible during construction phase. The plant will bring socio-economic development of theremote region. The LLP shall now augment the implementation of other allotted hydroprojects. The Rehar 24 MW project has received first stage forest clearance and isexpected to achieve financial closure during the current year.
During the year the Company has infused a sum of ' 23 crore in the LLP towardspromoters' contribution. Your Company holds 60% stake in the LLP.
> Shri Ram Electricity LLP (SRE LLP) was incorporated as a special purpose vehicle(SPV) for settng up a captive thermal power plant of 40 MW in the State of Chhattsgarh. Inview of the cancellation of coal linkage for the power project the LLP has dropped theproject. During the year under review the entity reported a net profit of ' 0.08 crore atpar with previous year. Your Company continues to hold 51% stake in SRELLP.
> Raipur Infrastructure Company Limited (RICL) operates a private Railway Siding inMandhar Raipur. During the year 2016-17 the Company has earned net profit of ' 0.77 croreas against ' 2.62 crore in the previous year. The Company is pursuing with the Railwaysfor gettng refund of ' 5 crore deposited as security for siding at Odisha which projecthas been dropped by the Company. Your Company continues to holds one third share in theJoint Venture.
> Madanpur South Coal Company Limited (MSCCL) a SPV was allotted Madanpur SouthCoal Block in consortium. The allotment of coal block to the Company was cancelledpursuant to the Order of Hon'ble Supreme Court. During the current year the Company hasreceived reimbursement of ' 3.39 crore spent towards cost of purchase of G.R which willbe utilized for buyback of its equity shares. The Company does not have any business topursue. Your Company holds a 20.63% stake in the joint venture.
> Godawari Natural Resources Limited (GNRL) is an SPV for acquisition anddevelopment of mines and minerals generation and trading of power and infrastructuredevelopment. The Company remains invested in the JV for participating in auction foracquisition of coal mine jointly with others to meet the prescribed eligibility criteria.Your Company continues to hold 29.98% stake in GNRL.
A report on the performance and financial position of each of the subsidiariesassociates and joint venture companies as per the Companies Act 2013 is provided as partof the Consolidated Financial Statements and hence not repeated here for the sake ofbrevity. The Policy for determining material subsidiaries as approved by the Board may beaccessed on the Company's website www.seml.co.in under the head corporategovernance/policies under the Investors' section.
Consolidated financial statements
The consolidated financial statements presented by the Company include financialinformation of its subsidiaries prepared in compliance with applicable AccountingStandards.
The financial statements and related information of the subsidiary companies are openfor inspection by any member/ investor at the Registered Office of your Company and thesubsidiary concerned and your Company will make available these documents/details uponrequest by any member of the Company who may be interested in obtaining the same.
In accordance with Section 136 of the Companies Act 2013 the Audited financialstatements including the consolidated financial statements and related information of theCompany and audited financial statements of each of its subsidiaries are available on ourwebsite www.seml.co.in . These documents are also available for inspection during businesshours at our registered office.
Your Company treats its human capital as the most valued asset and as a gesture of itsfeeling your Company has implemented SEML ESOP Scheme 2012 for the employees anddirectors of your Company and its subsidiaries. As on 31st March 2017 out of total333360 options granted 180398 options have been exercised by the employees out ofwhich 52079 options were exercised during the F.Y. 2016-17. During 2016-17 69309options have expired unexercised. As on 31st March 2017 26464 options remainoutstanding.
The disclosures required to be made in the Directors' Report in respect of theaforesaid ESOP Scheme are contained in Annexure A forming part of the Directors' Report.
In accordance with the provisions of the Act and the Articles of Association of theCompany Mr. Pankaj Sarda Director of the Company retire by rotation at the ensuingAnnual General Meeting and being eligible has offered himself for reappointment.
Brief profile of Mr. Pankaj Sarda Director proposed to be re-appointed nature of hisexpertise in specific functional areas names of the companies in which he holdsdirectorships and his shareholding in the Company is provided in the Corporate GovernanceReport forming part of the Annual Report.
During the year under review the members approved the re-appointment of Mrs. Uma Sardaas Director liable to retire by rotation. Further the members also approved appointmentof Mr. P K Jain CFO of the Company as Whole-time Director for a term of five year w.e.f.1st June 2016 liable to retire by rotation. Mr. P.K. Jain continues to act as CFO also.
Mr. G.D. Mundra Wholetime Director resigned w.e.f. 1st April 2016. The Board takes onrecord its deep appreciation of the services rendered Mr. G. D. Mundra in variouscapacities during his nearly 29 years long association with the Company/ group.
Your Company has received declarations from all the Independent Directors of theCompany confirming that they meet the criteria of independence as prescribed under theCompanies Act and the Listing Regulations.
Pursuant to the provisions of the Companies Act and the Listing Regulations the Boardof Directors ("Board") has carried out an annual evaluation of its ownperformance and that of its Committees and individual Directors. The performance of theBoard and individual Directors was evaluated by the Board seeking inputs from all theDirectors. The performance of the Committees was evaluated by the Board seeking inputsfrom the Committee Members. The Nomination and Remuneration Committee ("NRC")reviewed the performance of the individual Directors. A separate meeting of IndependentDirectors was also held to review the performance of Non-Independent Directors;performance of the Board as a whole and performance of the Chairperson of the Companytaking into account the views of Executive Directors and Non-Executive Directors. Theevaluation of Independent Directors was carried out without the presence of concernedDirector. This was followed by a Board meeting that discussed the performance of theBoard its Committees and individual Directors. Key criteria's for performance evaluationare given in Annexure B to directors' report.
Your Company follows a policy on remuneration of Directors Key Managerial Personnel(KMP) Senior Management Personnel (SMP) and other employees of the Company. The policy isapproved by the Nomination & Remuneration Committee of the Company. RemunerationPolicy for Directors Key Managerial Personnel and other employees is given as Annexure Cto directors' report.
Your Company with the approval of Nomination & Remuneration Committee has adopted apolicy on Board diversity and the recommendation of candidature for Board appointment willbe based on merit that complements and expands the skills experience and expertise of theBoard as a whole taking into account gender age professional experience andqualifications cultural and educational background and any other factors that the Boardmight consider relevant and applicable from time to time towards achieving a diverseBoard. The criteria for determining Qualification positive attributes and Independence ofdirector is given in Annexure D to directors' report.
Familiarization programmes for Board Members
The Familiarization program aims to provide insight to the Independent Directors tounderstand the business of the Company. Upon induction the Independent Directors arefamiliarized with their roles rights and responsibilities. Your Company providesinformation to familiarize the Independent Directors with the strategy operations andfunctions of the Company.
At various Board meetings during the year the Board members are provided withinformation/ presentations and are given the opportunity to interact with the SeniorManagement of your Company to help them to understand the Company's strategy/policiesbusiness model operations products markets organization structure finance humanresources technology quality facilities and risk management changes in the regulatoryenvironment applicable to the corporate sector and to the industry in which it operatesand such other matters as may arise from time to time.
Quarterly presentations on operations made to the Board include information on businessperformance operations safety market scenario financial parameters working capitalmanagement fund flows senior management change major litigation compliancessubsidiary information regulatory scenario etc.
The policy on familiarization programmes for Independent Directors is posted on thewebsite of the Company www.seml . co.in and can be accessed under the head corporategovernance/policies under the Investors' section.
Directors' Responsibility Statement
Your Directors state that:
a) in the preparation of the annual accounts for the year ended 31st March 2017 theapplicable accounting standards read with requirements set out under Schedule III to theAct have been followed and there are no material departures from the same;
b) the Directors have selected such accounting policies and applied them consistentlyand made judgements 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 2017 and of the profitof 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 Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d) the Directors have prepared the annual accounts on a 'going concern' basis;
e) the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and
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.
Key managerial personnel
During the year under review there was no change in the Key Managerial Personnel. Mr.Padam Kumar Jain has been elevated to the position of Wholetime Director w.e.f. 1st June2016. He also continues as the Chief Financial Officer of the Company.
Auditors and Auditors' Report Statutory Auditors
At the Annual General Meeting for the financial year 2013-14 held on 29th September2014 M/s. O.P. Singhania & Company Chartered Accountants Raipur were appointed asstatutory auditors of the Company to hold office till the conclusion of the Annual GeneralMeeting (AGM) to be held in the calendar year 2019. In terms of the first proviso toSection 139 of the Companies Act 2013 the appointment of the Auditors is required to beplaced for ratification at every Annual General Meeting. Accordingly the appointment ofM/s O.P. Singhania & Company Chartered Accountants Raipur as statutory auditors ofthe Company is placed for ratification by the shareholders. In this regard the Companyhas received a certificate from the Auditors to the effect that if they are re-appointedin the ensuing AGM it would be in accordance with the provision of Section 141 of theCompanies Act 2013.
The Notes on financial statement referred to in the Auditors' Report areself-explanatory and do not call for any further comments. The Auditors' Report does notcontain any qualification reservation or adverse remark.
Pursuant to Section 148 of the Companies Act 2013 read with The Companies (CostRecords and Audit) Rules 2014 the cost audit records maintained by the Company inrespect of various manufacturing activities are required to be audited.
The cost audit report for the financial year 2015-16 was filed with the Ministry ofCorporate Affairs. M/s. S. N. & Company Cost and Management Accountants wereappointed as the Company's Cost Auditor.
Your Directors have on the recommendation of the Audit Committee appointed M/s. S. N.& Company Cost and Management Accountants to audit the cost accounts of the Companyon a remuneration of ' 1.50 lakh for the year 201617.
As required under the Companies Act 2013 the remuneration payable to the CostAuditors:
i) for 2016-17 has been ratified by the members in the Annual General Meeting held on30.09.2016.
ii) for 2017-18 is being placed before the members in the ensuing annual generalmeeting for ratification.
The Board has appointed S. G. Kankani & Associates Practicing Company Secretariesto conduct Secretarial Audit for the financial year 2016-17. The Secretarial Audit Reportfor the financial year ended 31st March 2017 is given as Annexure E to this Report.
With reference to the comments of the secretarial auditors regarding non-submission ofinformation to Calcutta Stock Exchange your Directors wish to inform that the Company hasapplied for delisting of its shares from Calcutta Stock Exchanges in February 2004. Thedelisting application is still pending. In view of the pendency of delisting applicationthe Company has stopped sending any information to the Calcutta Stock Exchange and hasalso reported the matter to SEBI.
Corporate Social Responsibility (CSR)
With the objective of sustainable development and continuous improvement your Companyadopts a voluntary and proactive approach to CSR to connect with the society by creating asense of belonging. Your Company strives for sustainable development programs inpartnership with the community.
Members are requested to refer the Corporate Governance Report forming part of thisannual report for the composition of the CSR Committee. The CSR policy of the Company isavailable on the website of the Company - www.seml.co.in - under the head corporategovernance/policies under the Investors' section. The annual report on the CSR activitiesis annexed as Annexure F to this report.
The Company's CSR initiatives usually involve seffing the foundation of variousprograms at a small scale to learn from onground realities geffing feedback fromcommunity and then puffing an enhanced sustainable model to ensure maximum benefit to thecommunity. During the year the Company's spending on the CSR activities has beenmarginally less than the required amount. However the amount short spent shall be spentduring the year 2017-18.
Pursuant to the Listing Regulations Corporate Governance Report along with theAuditors' Certificate regarding compliance of conditions of Corporate Governance is made apart of the Annual Report.
The Board of Directors met 6 (six) times during the financial year 2016-17. The detailsof the composition of Board of Directors Corporate Social Responsibility Committee AuditCommittee other committees of the Board meetings of the board and committees andattendance of directors at the Board and committee meetings and implementation of VigilMechanism are given in the Corporate Governance Report forming part of this Annual Report.
Particulars of Loans given Investments made Guarantees given and Securities provided
Particulars of loans given investments made and guarantees given are given in note no.3 4 and 40 to the standalone financial statements. The Company in its capacity ofpromoter has pledged 51% of its holding in Sarda Metals & Alloys Limited. 100% ofits holding in Parvatiya Power Limited and 60% of its holding in Madhya Bharat PowerCorporation Limited with the lenders for loans granted to the respective companies by thelenders. The loans and the guarantees given are utilized by the recipients for theirbusiness purposes. Members are requested to refer the notes for details which are notrepeated here for the sake of brevity.
Contracts and Arrangements with Related Parties
All contracts/arrangements/transactions entered by the Company during the financialyear with the related parties were in the ordinary course of business and on an arm'slength basis in the best interest of the Company. During the year the Company had notentered into any contract/arrangement /transaction with related party which could beconsidered material in accordance with the policy of the Company on materiality of relatedparty transactions.
The Policy on materiality of related party transaction and dealing with related partytransactions as approved by the Board may be accessed on the Company's website -www.seml.co.in under the head corporate governance/policies under Investor' section.
Internal Financial Control
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 were observed.
Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo
The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under the Act are provided inAnnexure G to this Report.
Extract of Annual Return
Extract of Annual Return of the Company is annexed as Annexure H to this report.
Particulars of Employees and related disclosures
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 is annexed herewith as Annexure I to theDirectors' Report.
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are provided in Annexure J to the Directors' Report.
The Risk Management Committee has been entrusted with the responsibility to assist theBoard in (a) Overseeing and approving the Company's enterprise wide risk managementframework; and (b) Overseeing that all the risks that the
organization faces such as strategic financial credit market liquidity accidentsecurity property IT legal regulatory reputational and other risks have beenidentified and assessed and there is an adequate risk management infrastructure in placecapable of addressing those risks.
A Risk Management Policy approved by the Board of Director is in place. The Companymonitors and manages the risks and uncertainties that can impact its ability to achieveits strategic objectives.
Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:
1. Details relating to deposits covered under Chapter V of the Act.
2. Issue of equity shares with differential rights as to dividend voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of the Company underany scheme save and except Employee Stock Options Scheme referred to in this Report.
4. Neither the Managing Director nor the Whole-time Directors of the Company receiveany remuneration or commission from any of its subsidiaries except sittng fees forattending Board/Committee Meetings.
5. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future.
Your Directors further state that during the year under review there were no casesfiled pursuant to the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013.
The disclosures/information/details disclosed/given elsewhere in the annual report hasnot been repeated again in the directors' report for the sake of brevity. Members arerequested to refer relevant sections for the information. All policies/ disclosuresrequired to be disclosed on the website are available under the Investors section on thewebsite of the Company.
Your Directors place on record their gratitude for the valuable guidance and supportrendered by various Government departments Financial Institutions Banks and variousstakeholders such as shareholders surrounding societies customers and suppliers amongothers. The Directors also commend the continuing commitment and dedication of theemployees at all levels which has been critical for the Company's success. The Directorslook forward to their continued support in future.
On behalf of the Board of Directors
(K. K. Sarda)
Chairman & Managing Director
5th August 2017
ANNEXURE 'A' to the Directors' Report
DISCLOSURE PURSUANT TO THE PROVISIONS OF SECURITIES AND EXCHANGE BOARD OF INDIA (SHAREBASED EMPLOYEE BENEFITS) REGULATIONS 2014 AND COMPANIES (SHARE CAPITAL AND DEBENTURES)RULES 2014
|. Particulars ||ESOP Scheme 2012 |
|(i) General terms & conditions || |
|a. Date of shareholders' approval ||12.05.2012 |
|b. Total number of options approved under ESOP ||717000 |
|c. Vesting requirements ||The Options Granted under the SEML ESOP Scheme 2012 shall vest as under: |
| ||a) 1/3 rd at the end of one year from the date of Grant. |
| ||b) 1/3 rd at the end of two years from the date of Grant. |
| ||c) 1/3 rd at the end of three years from the date of Grant. |
|d. Exercise price or pricing formula ||' 125/- |
|e. Maximum term of options granted ||2 years from the date of vesting |
|f. Source of shares (primary secondary or combination) ||Primary |
|g. Variation in terms of options ||No change was made in the schemes or terms of option during the year 2016-17 |
|(ii) Method used to account for ESOP ||Intrinsic Value Method |
|(iii) Where the company opts for expensing of the options ||Please refer point (f) of Note No.13(H) to standalone |
|using the intrinsic value of the options the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognized if it had used the fair value of the options shall be disclosed. The impact of this difference on profits and on EPS of the company shall also be disclosed ||accounts |
|(iv) Option movement during the year 2016-17 || |
|No. of options outstanding as on 1st April 2016 ||147852 |
|Options granted during April 2016-March 2017 ||NIL |
|Number of options forfeited/ lapsed during April 2016-March 2017 ||69309 |
|Number of options vested during April 2016-March 2017 ||NIL |
|Number of options exercised during April 2016-March 2017 ||52079 |
|Number of shares arising as a result of exercise of options during April 2016-March 2017 ||52079 |
|Money realized by exercise of options during April 2015-March 2016 (amount in ') ||' 6509875/- |
|Loan repaid by the Trust during the year from exercise price received ||NA |
|Number of options outstanding/in force as on 31st March 2017 ||26464 |
|Number of options exercisable as on 31st March 2017 ||26464 |
|(v) Weighted-average exercise price of each option outstanding as on 31st March 2017 ||' 125.00 |
|Weighted-average fair value of each option outstanding as on 31st March 2017 ||' 126.43 |
|(vi) Employee wise details (name of employee designation number of options granted during the year exercise price) of options granted during the year to: a Senior Managerial Person (including KMP) ||No option has been granted during the year under review |
| || |
|b Any other employee who receives a grant in any one year of option amounting to 5% or more of options granted during the year || |
|c Identified employees who were granted options during any 1 year equal to or exceeding 1% of the issued capital (excluding outstanding warrants & conversions) of the Company at the time of grant || |
|(vii) A description of the method and significant assumptions used during the year to estimate the fair value of options including the following information: ||Not Applicable as no stock option has been granted during the year. |
|a the weighted-average values of share price exercise price expected volatility expected option life expected dividends the risk-free interest rate and any other inputs to the model; || |
|b the method used and the assumptions made to incorporate the effects of expected early exercise; || |
|c how expected volatility was determined including an explanation of the extent to which expected volatility was based on historical volatility; and || |
|d whether and how any other features of the option grant were incorporated into the measurement of fair value such as a market condition. || |
ANNEXURE 'B' to the Directors' Report
Key Evaluation criteria Evaluation of Board
Composition of the Board
Procedures for Nomination and appointment of Board members and theirremuneration
Leadership by the Chairman of the Board
Receipt of proper and timely information by the Board members
Meaningful/acti've participation at board meetings
Consideration of quality and appropriateness of financial accounting andreporting including the transparency of disclosures
Existence and effective working of necessary committees Evaluation ofIndependent Directors
Understanding of the Company and the external environment in which it operatesand contribution to strategic direction
Knowledge about Company's products/services/activities
Attendance and participations in the meetings and timely inputs on the minutes
Adherence to ethical standards and code of conduct of Company and disclosure ofnon-independence as and when it exists and disclosure of interest
Raising of valid concerns to the Board and constructive contribution toresolution of issues at meetings
Interpersonal relations with other directors and management
Objective evaluation of Board's performance rendering independent unbiasedopinion Evaluation of Non-Independent Directors
Attendance and participations in the meetings and timely inputs on the minutes
Contribution towards growth of the Company
Adherence to ethical standards and code of conduct of Company
Team work attributes and supervising & training of staff members
Compliance with policies reporting of frauds violations etc. and disclosureof interest
Safeguarding of interest of whistle blowers under vigil mechanism and safeguardof confidential information
ANNEXURE 'C' to the Directors' Report
As per the requirements of Companies Act 2013 and the Listing Regulations the Boardof Directors of Sarda Energy & Minerals Limited ("Company") has constituteda Nomination and Remuneration Committee. The Committee's role is to be supported by apolicy for remuneration of Directors Key Managerial Personnel (KMP) Senior ManagementPersonnel and other Employees.
The Policy is designed to attract motivate improve productivity and retain manpowerby creating a congenial work environment encouraging initiatives personal growth andteam work and inculcating a sense of belonging and involvement besides offeringappropriate remuneration packages and superannuation benefits. The policy reflects theCompany's objectives for good corporate governance as well as sustained long-term valuecreation for stakeholders.
The objectives of the Policy shall be to:
1. retain motivate and promote talent and to ensure long term sustainability forretention of talented managerial persons and create competitive advantage for the Company.
2. guide and assist the Board in laying down and administer ESOP Compensation policy interms of SEBI Guidelines as and when decided.
III. Guiding Principles
The following principles shall act as guiding factors while designing compensation forDirectors Key managerial personnel senior management and other employees:
1. Aligning key executive and board remuneration with the long term interests of theCompany and its shareholders
2. Minimize complexity and ensure transparency
3. Link to long term strategy as well as annual business performance of the Company
4. Promote a culture of meritocracy and is linked to key performance and businessdrivers
5. Reflective of line expertise market competitiveness so as to attract the besttalent
6. Consideration for living condition industry practices pay and employmentconditions with peers / elsewhere in the competitive market to ensure that pay structuresare appropriately aligned and that levels of remuneration remain appropriate in thiscontext
IV. Remuneration 1. General
a. The remuneration / compensation / commission etc. to the Whole-time Director KMPand Senior Management Personnel will be determined by the Committee and recommended to theBoard for approval. The remuneration / compensation / commission etc. shall be subject tothe provisions of the Act and further subject to prior/post approval of the shareholdersof the Company and Central Government wherever required.
b. The remuneration and commission to be paid to the Whole-time Directors shall be inaccordance with the approval of the shareholders of the Company and as per the provisionsof the Act.
c. Increments to the existing remuneration/ compensation structure may be recommendedby the Committee to the Board which should be in terms of the approval of the Shareholdersin the case of Whole-time Director.
d. Where any insurance is taken by the Company for its Whole-time Director KeyManagerial Personnel and any other employees for indemnifying them against any liabilitythe premium paid on such insurance shall not be treated as part of the remunerationpayable to any such personnel.
Provided that if such person is proved to be guilty the premium paid on such insuranceshall be treated as part of the remuneration.
The employees including directors where applicable shall be eligible for casualleave earned leave and maternity leave as per prevailing Rules of the Service.
f. Retirement benefits
The Company shall extent Provident Fund and Gratuity benefits as per provisions of theapplicable law. In addition the Company may extent benefit of Provident Fund to employeesdrawing higher salary and also contribution to superannuation and other pensionfund/schemes for selective employees with mutual consent. The gratuity superannuation andpensionary contribution shall be invested in approved funds.
g. Loans to employees
The Company may extend interest free/ concessional loans to the employees of theCompany for meeting fund requirement for higher education of children land purchasebuilding purchase/ construction/ furnishing & repair marriage of self and familymembers medical treatment of self and family members and other exigencies. For thepurpose Rules shall be framed with authority for exceptions at appropriate levels.
2. Remuneration to Whole-time / Managing Director
a. Fixed pay
The Whole-time Director shall be eligible for a monthly remuneration as may be approvedby the Board on the recommendation of the Committee subject to approval of theshareholders and Central Government wherever required. The breakup of the pay and quantumof perquisites including employer's contribution to P.F pension scheme medicalexpenses club fees allowances severance payments etc. shall be decided and approved bythe Board/the Person authorized by the Board on the recommendation of the Committee.
b. Variable pay
The Committee may recommend suitable performance related variable payments linked tothe performance of the Director concerned and of the Company.
c. Minimum Remuneration
If in any financial year the Company has no profits or its profits are inadequatethe Company shall pay remuneration to its Whole-time Director in accordance with theprovisions of Schedule V of the Act and if it is not able to comply with such provisionswith the previous approval of the Central Government.
d. Provisions for excess remuneration
If any Whole-time Director draws or receives directly or indirectly by way ofremuneration any such sums in excess of the limits prescribed under the Act or without theprior sanction of the Central Government where required he / she shall refund such sumsto the Company and until such sum is refunded hold it in trust for the Company. TheCompany shall not waive recovery of such sum refundable to it unless permitted by theCentral Government.
e. Stock Options
The Committee shall determine the stock options and other share based payments to bemade to Whole time Directors subject to prevailing guidelines of SEBI if any.
3. Remuneration to Non- Executive / Independent Director
a. Remuneration / Commission
Commission may be paid within the monetary limit approved by shareholders subject tothe limits prescribed in the Act computed as per the applicable provisions of the Act.
b. Sirtng Fees
The Non-Executive / Independent Director may receive remuneration by way of fees forattending meetings of Board or Committee thereof as may be approved by the Board on therecommendation of the Nomination & Remuneration Committee.
Provided that the amount of such fees shall not exceed the amount as may be prescribedby the Central Government from time to time.
c. Stock Options
An Independent Director shall not be entitled to any stock option of the Company.
d. Any remuneration paid to Non- Executive / Independent Directors for servicesrendered which are of professional in nature shall not be considered as remuneration ifthe following conditions are satisfied:
i) The Services are rendered by such Director in his capacity as the professional; and
ii) In the opinion of the Committee the director possesses the requisite qualificationfor the practice of that profession.
4. Remuneration to Key Managerial Personnel and Senior Management
a. The remuneration to Key Managerial Personnel and Senior Management may consist offixed pay and incentive pay in compliance with the provisions of the Companies Act 2013and in accordance with the Company's Policy.
b. The Committee shall determine the stock options and other share based payments to bemade to Key Managerial Personnel and Senior Management.
c. The Fixed pay shall include monthly remuneration employer's contribution tosuperannuation fund Provident Fund contribution to pension fund pension schemesallowances bonus etc. as decided from to time for which Rules shall be framed.
d. The Incentive pay if any shall be decided based on the performance of the Companyand the performance of the Key Managerial Personnel and Senior Management to be decidedannually or at such intervals as may be considered appropriate.
5. Other Employees
a. The remuneration of other employees shall be fixed from time to time as per theguiding principles outlined above and considering industry standards and cost of living.In addition to basic salary they shall also be provided perquisites and retirementbenefits as per schemes of the Company and statutory requirements wherever applicable.Policy of motivation/reward/severance payments are applicable to this category ofpersonnel as in the case of those in the management cadre.
b. The implementation of remuneration policy for other employees is to be ensured byCMD/DMD of the Company or any other personnel that the CMD/DMD may deem fit to delegate.
V Remuneration Duties
The duties of the Committee in relation to remuneration matters shall include:
1. considering and determining the remuneration based on such other factors as theCommittee shall deem appropriate bearing in mind that the remuneration is reasonable andsufficient to attract retain and motivate talent.
2. approving the remuneration of the Senior Management including key managerialpersonnel of the Company maintaining a balance between fixed and incentive pay reflectingshort and long term performance objectives appropriate to the working of the Company.
3. professional indemnity and liability insurance for Directors and senior management.
1. The Committee may issue guidelines procedures formats reporting mechanism andmanuals in supplement and for better implementation of this policy as consideredappropriate.
2. The Committee may delegate any of its powers to one or more of its members.
VII Policy Review
The Committee may assess the adequacy of this Policy and suggest any necessary ordesirable amendments from time to time in the policy to the Board for approval to ensureit remains consistent with the Company's objectives current laws and best practices.VIIIDissemination
This Remuneration Policy shall be disclosed in the Board's report and shall be placedon the website of the Company
as required under the Companies Act 2013 and the Listing Regulations.
CRITERIA for determining Qualifications Positive Attributes and Independence of aDirector
i) diversity of thought experience knowledge perspective age and gender.
ii) appropriate blend of functional and industry expertise.
iii) Independent Directors ("ID") ideally should be thought/ practice leadersin their respective functions/ domains.
i) compliance with duties as provided in the Companies Act 2013.
ii) possessing highest standards of ethical and moral qualities strong interpersonaland communication skills and soundness of judgment as are considered eligible for theposition.
iii) act in good faith in order to promote the objects of the Company for the benefitof its members as a whole and in the best interests of the Company its employees theshareholders the community and for the protection of environment.
iv) exercise duties with due and reasonable care skill and diligence and exerciseindependent judgment.
v) IDs are also expected to abide by the Code for Independent Directors as outlined inSchedule IV to section 149(8) of the Companies Act 2013.
A director will be considered as an "independent director" if the personmeets with the criteria for 'independent director' as laid down in the Companies Act 2013and/or Listing Regulations.