Shah Alloys Ltd.
|BSE: 513436||Sector: Metals & Mining|
|NSE: SHAHALLOYS||ISIN Code: INE640C01011|
|BSE 14:24 | 23 Feb||25.50||
|NSE 14:53 | 23 Feb||25.95||
|Mkt Cap.(Rs cr)||50|
|Mkt Cap.(Rs cr)||50.49|
Shah Alloys Ltd. (SHAHALLOYS) - Director Report
Company director report
Your Directors pleased to present the 26th Annual Report of your company onthe operations and performance along with the Audited Financial Statements for the yearended on 31st March 2016.
Rs. In Crores
STATE OF COMPANY'S AFFAIRS / PERFORMANCE OVERVIEW
During the year under review Net Turnover of the Company has been decreased marginallyfrom ' 265.82 crores to ' 262.37 crores as compared to previous year'sturnover. Company has registered a net profit of '123.17 crores in comparison to the lossof ' 135.18 crores during previous year. Main reason for profit during the yearunder review was settlement of dues with ARCs on account of reversal of interest andwaiver of principal debts. Many a banks had transferred their debts to ARCs and finallydues were settled with few ARCs. Settlement of dues has been made as per directions ofHon'ble BIFR since the company had been declared as SICK company pursuant to theprovisions of SICA. Company has been in constant touch with the lenders financialinstitution and ARCs for settlement of dues.
Due to high accumulated loss your Directors have not recommended dividend for thefinancial year 2015-16.
The company is engaged in manufacturing of wide range of Stainless Steel alloy &Speicial steel Carbon/Mild Steel and Armour Steel in Flat and Long products. There hasbeen no change in the nature of business of the Company.
SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
The Consolidated Financial Statements of the Company and its Associates viz. SALSteel Ltd. prepared in accordance with the relevant Accounting Standards of the Instituteof Chartered Accountants of India duly audited by the Statutory Auditors form a part ofthe Annual Report and are reflected in the Consolidated Accounts.
The company does not have holding or subsidiary companies during the year and no othercompany has become holding / subsidiary/ joint venture. However it has one associatecompany details are as under:
Pursuant to the provisions of Section 129(3) of the Act a statement containing salientfeatures of the financial statements of the Company's associate in Form AOC-1 is attachedto this report as Annexure- 1.
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 Union Bank of India has withdraw nomination of ShriHarbans Lal Rawal as nominee Director on the Board of the Company. There is no otherchange in the Composition of the Board or KMPs during the year under review.
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 the necessary declarations from each Independent Director ofthe Company 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 - 2.
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 theCompany.
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 has earned a profit in the year under review. Accordingly Company hasconstituted Corporate Social Responsibility Committee as per Section 135 of Companies Act2013 and the rules framed thereunder. Since the average net profits of the Company duringimmediately three preceding financial years is negative provisions related to expenditureof atleast two percent of the average net profits in CSR activities is presently notapplicable to the Company.
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 theassets of the Company and for preventing and 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.shahalloys.com.
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-3. 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 '6000000 during the year if employed throughout the financial year or ' 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. Particulars ofrelated party transactions in prescribed Form AOC- 2 is attached at Annexure - 4.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 25th 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 26thAnnual 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 The Board of Directors has appointed M/s Kamlesh Shah & Co. Practicing CompanySecretaries as Secretarial Auditor to conduct the Secretarial Audit of the Company forthe Financial Year 2015-16. The report submitted by the Secretarial Auditor in Form MR-3is attached to this report as Annexure - 5. The remark of secretarial auditor is selfexplanatory 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 areus under:
Basis for Qualified Opinion - Para 1 of Standalone and Consolidated IndependentAuditor's Report
Dues on account of maturity of foreign currency convertible Bonds (FCCB) on 22.09.2011have been frozen on maturity due to sick company declared by Hon'ble BIFR u/s 3(1)(0) ofSICA and accordingly exchange rate fluctuation has not been considered thereafter. Paymentof FCCB shall be considered as per the scheme that may be considered by Hon'ble BIFR.
Annexure A to Independent Auditors' Report - Para 7 (i)
Payment of Statutory dues were marginally delayed on account of slow recovery /collection. However the same has been paid.
Annexure A to Independent Auditors' Report - Para 8
As per the scheme sanctioned by CDR (EG) consortium bankers were required to giveworking capital for the optimal utilization of production capacity. However in theabsence of non availability of funds from the lenders the accruals were not in line withthe sanctioned scheme and hence Company could not utilize optimally its productioncapacity. In view of this company was not able to make payments to banks/institutions anddebenture holders as per the sanctioned scheme. However before due date of repaymentCompany had approached Hon'ble BIFR for declaring it as a Sick company under Section3(1)(0) of the SICA and was declared so before the due date i.e. September 2011. Onaccount of sick status of the company payments will be made as per the scheme as may beapproved by the Hon'ble BIFR.
Most of the banks assigned the debts to various Asset Reconstruction Companies (ARCs).Company has entered into Settlement Agreements with INVENT in connection with dues ofUnion Bank of India and State Bank of India. Company has made proposal settlement withother banks financial institution and ARCs. Company is actively negotiating with theseARCs' for settlement of debts and expecting a settlement soon. Since the matter is pendingbefore Hon'ble BIFR and settlement proposals are under consideration.
Dues on account of maturity of Foreign Currency Convertible Bonds (FCCB) on 22.09.2011have been frozen on maturity and accordingly exchange rate fluctuations has not beenconsidered thereafter. Payment of FCCB shall be considered as per the scheme that may beconsidered by Hon'ble BIFR matter is pending before Hon'ble BIFR matter will be decidedas per directions of the Hon'ble BIFR.
MATERIAL CHANGES / INFORMATION:
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 - 6.
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.