Steelco Gujarat Ltd.
|BSE: 500399||Sector: Metals & Mining|
|NSE: STEELCOGUJ||ISIN Code: INE629B01024|
|BSE LIVE 15:40 | 08 Dec||9.16||
|NSE 05:30 | 01 Jan||Stock Is Not Traded.|
Steelco Gujarat Ltd. (STEELCOGUJ) - Director Report
Company director report
Your Directors are pleased to present the Twenty Sixth Annual Report of your Companytogether with the Audited Financial Statements for the year ended 31st March2016.
Your Directors do not recommend any dividend on the equity shares of the Company inview of carried forward losses.
3. REVIEW OF OPERATIONS & PERFORMANCE
The overall sales during FY 2015-16 stood at 104052 MT increased by 17.8% over FY2014-15 (88292 MT). However in terms of revenue it has decreased by 11% from ' 574.21crores to ' 510.53 crores due to reduction in steel prices (from USD 550 /MT to USD 390 /MT). Further the Company achieved Cash Profit of ' 3.53 crores as compared to Cash Lossof ' 8.83 crores of FY 2014-15.
The Steel Industry has been impacted very adversely during the year and the majorchallenges faced on ramping up volumes to planned levels were mainly on account of thebelow factors:
Cheap imports Dumping from China and highly competitiveness from China withsupply of material in other parts of the world;
pressure in margins to sustain Global Competition due to sluggish marketcondition;
Continuous and drastic reduction in HRC Prices during the year. (Which startedimproving after implementation of MIP from Feb' 16);
Discontinuance of Open Access Power;
Currency rate fluctuations/rupee depreciation;
Slowdown in Market leading to higher cost and lower realization of sales value;
Low order book upto Q3 FY 2015-16.
However after the initiatives taken by the Ministry of Steel for curbing of import ofsteel from China and FTA Countries a safeguard & MIP were put in place and thesituation started improving from last quarter of FY 2015-16. The Company was
able to achieve dreamed volume of 10000 plus MT from Dec'15 onwards and have achievedHighest Ever Sales Volume since inception of the Company of approx. 15000 MT during March2016. During Q4 of FY 2015-16 total revenue ' 155.72 crores (35410 MT) EBIDTA of ' 3.18crores and Operation Net Profit of ' 0.50 crores and total Net Profit of ' 15.38 crores(with sale of land of ' 14.88 crores). Resultantly there is an improvement in our volumesby 61% in Q4 2015-16 as compared to Q3 2015-16 with net profit from operations.
Although there are challenges going forward in FY 2016-17 the outlook of the Companyis quite optimistic in view of the following:
Implementation of MIP and the measures taken by the Government of India towardsgrowth of domestic steel industries and especially for downstream products;
Strategies & markets with upcoming economy;
- Started focusing in South East Asia Market (Indonesia Vietnam Philippines) for CRFH& Galvanized product;
- Focused Srilanka / Myanmar for Galvanized product;
- To overcome Chinese competitiveness started supplying into the Latin AmericanGalvanized markets (Peru Chili Columbia);
- Made significance presence in Ethiopian Market;
- Started focusing on Gal & CRFH domestic market other than current CRCA market;
With our presence started / to be started in new Export markets/areas includingSouth East Asia Market Latin American markets Ethiopian markets with flexibility in theproduct mix with better margins expansion in export business with better contribution isexpected;
Considering commissioning of color coated line by Oct-16 product will beinitially launched in Gujarat/Kerala/Assam/ J&K markets and after successful launching& establishing it in local market export market will be tapped;
Healthy outlook from order point of view.
The Company has been able to keep its Net worth positive as on 31st March2016 with improved performance and with the sale of Land (Subject to NOC from GiDc &Lenders). We are confident that Net Worth will remain Positive in coming times withbetter future prospectus and implementation of capex plan.
4. PERFORMANCE OF SUBSIDIARY COMPANY
The Company had its wholly owned subsidiary viz Steelco Colour Coating Ltd.(SCCL") (CIN U27310GJ2015PLC082627) incorporated in March 2015 which has yetnot commenced its business. However as at the end of 31st March 2016 SCCLceased to be subsidiary of the Company in view of further allotment of Equity Shares of '10 each by it to M/s. Metchem Singapore Pte. Ltd.
5. BOARD OF DIRECTORS
During the year under review Dr. R. S. Mamak completed his tenure as Executive ViceChairman as on 13th August 2015 and accordingly w.e.f. 14thAugust 2015 he has been re-designated as Non-Executive Vice Chairman.
Smt. Ameeta Trehan had been appointed as an Additional Director of the Company w.e.f.16th May 2015 to hold the office upto the 25th Annual GeneralMeeting and at the 25th Annual General Meeting
held on 30th September 2015 she was appointed as a Director (IndependentWoman Director).
As per the provisions of the new Companies Act 2013 with regard to Sections 149 and152 and to comply with the provisions of the said Sections Shri Mitesh H. Shah ManagingDirector of the company's terms of appointment is changed to subject to retirement byrotation instead of not subject to retire by rotation by the Board of Directors.
The Independent Directors on the Board of the Company as on date are Shri J. MehraShri Mahendra Lodha Shri S. S. Ranjan & Smt. Ameeta Trehan (Woman Director) and theCompany has received confirmation / declarations from the Independent Directors of theCompany under Section 149(6) of the Companies Act 2013 and applicable provisions of theSEBI (Listing Obligations & Disclosure Requirements) Regulations 2015.
6. KEY MANAGERIAL PERSONNEL
During the year under review the details of Key Managerial Personnel are as under:
7. BOARD EVALUATION
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations& Disclosure Requirements) Regulations 2015 and Clause 49 of the listing agreementas may be applicable a structured questionnaire was prepared after taking intoconsideration of the various aspects of the Board's functioning composition of the Boardand its Committees culture execution and performance of specific duties obligations andgovernance. Respective member of the Board does not participate in the discussion of his /her evaluation. The Board of Directors expressed their satisfaction with the evaluationprocess.
8. NUMBER OF MEETINGS OF THE BOARD
The Company has complied with the provisions for holding Board Meetings and the gapbetween any two meetings did not exceed 120 days. Five meetings (including one adjournedmeeting) of the Board of Directors of the Company were held during the year under reviewon 16/05/2015 28/05/2015 (adjourned) 13/08/2015 06/11/2015 & 05/02/2016.
9. WHISTLE BLOWER POLICY / VIGIL MECHANISM
The Company has a Whistle Blower Policy pursuant to Section 177 of the Companies Act2013 and the rules made thereunder and applicable provisions of the listing agreement andSEBI (Listing Obligations & Disclosure Requirements) Regulations 2015 to reportgenuine concerns of Directors and Employees. The Policy has been posted on website of theCompany www.steelcogujarat.com.
10. NOMINATION AND REMUNERATION POLICY
The Policy of the Company has been framed on Directors' appointment and remunerationincluding criteria for determining qualifications positive attributes independence of aDirector and
remuneration of Key Managerial Personnel and other employees of the Company pursuant toSub-section (3) of Section 178 and Regulation 19 of SEBI (Listing Obligations &Disclosure Requirements) Regulations 2015. The details of this policy have beenelaborated in the Corporate Governance Report. The Policy has been posted on website ofthe Company www.steelcogujarat.com.
11. CORPORATE GOVERNANCE
Your Company is compliant of all mandatory requirements pursuant to Clause 49 ofListing Agreement and SEBI (Listing Obligations & Disclosure Requirements)Regulations 2015. A separate report on Corporate Governance as stipulated by Regulation72 of SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015 alongwith the required certificate from a Practicing Company Secretary regarding compliance ofthe conditions of Corporate Governance as stipulated by the said Regulations is given inAnnexure - 3.
12. MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis Report is given in Annexure - 4.
13. RELATED PARTY TRANSACTIONS
All transactions entered with related parties during the year under review were on armslength basis and in ordinary course of business and that the provisions of Section 188 ofthe Companies Act 2013 are not attracted. The related party transaction entered into withthe Steelco Colour Coating Limited the then Wholly Owned Subsidiary Company for sale ofpartial land of the Company approval of the Audit Committee and Board has been obtainedand shareholders' approval is sought at the ensuing Annual General Meeting. Further thereis no material related party transaction during the year under review with the promotersdirectors or key managerial personnel.
14. DIRECTORS RESPONSIBILITY STATEMENT
To the best of the knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statement in terms ofSection 134(4) (c) of the Companies Act 2013:
i. That in preparation of the annual accounts for the year ended 31st March2016 the applicable accounting standards read with requirements set out under ScheduleIII have been followed along with proper explanation relating to material departures ifany;
ii. 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 as at 31st March 2016 and ofthe loss of the Company for the year ended on that date;
iii. That the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother regularities;
iv. The annual accounts have been prepared on a Going Concern' basis;
v. That the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively and
vi. That the Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such system were adequate and operatingeffectively.
15. STATUTORY AUDITORS
The present statutory auditors M/s Mukesh M. Shah & Co. Chartered AccountantsAhmedabad hold office until the conclusion of the ensuing Annual General Meeting and areeligible for re-appointment. The Company has received consent and requisite certificatefrom the Auditors to the effect that their reappointment if made would be within theprescribed limit under Section 141 of the Companies Act 2013 confirming theireligibility for re-appointment as Auditors of the Company.
16. COST AUDITORS
Your Directors have appointed M/s A. G. Tulsian & Co. Cost Accountants Ahmedabadas Cost Auditors in compliance with the Companies (Cost Accounting Records) Rules 2011.The Cost Auditors have filed the Cost Audit Report for the financial year ended 31stMarch 2015 within the due date.
Pursuant to provisions of section 148 of the Companies Act 2013 and the Companies(Audit & Auditors) Rules 2014 the Board on the recommendation of the AuditCommittee has approved the appointment of M/s A. G. Tulsian & Co. Cost AccountantsAhmedabad as the Cost Auditors and remuneration payable to them to conduct the audit ofthe cost records of the Company for the financial year ending 31st March 2017.The Company has received a letter from M/s A. G. Tulsian & Co. Cost AccountantsAhmedabad showing their willingness to be appointed as Cost Auditors certifying that theyare not disqualified under section 148(5) read with section 141(3) of the Companies Act2013.
17. SECRETARIAL AUDITOR
The Company has received consent and requisite certificate from M/s. Devesh Vimal &Co. Practising Company Secretaries Vadodara present Secretarial Auditors to the effectthat their reappointment if made would be within the prescribed limit confirming theireligibility for re-appointment as Auditors of the Company. Accordingly M/s. Devesh Vimal& Co. has been re-appointed to act as Secretarial Auditors of the Company for the FY2016-17.
18. OBSERVATION OF STATUTORY AUDITORS REPORT AND SECRETARIAL AUDIT REPORT
Note No. 35 relating to preparation of financial statement on Going Concern basis inspite of accumulated losses and their impact on net worth is self-explanatory as regardsthe observation made by the Statutory Auditors in their report.
In Secretarial Audit Report Observations as regards
- observation (a) relating to order of SEBI for non-compliance / delayed compliance ofMinimum Public Shareholding please refer to clause IX para 3 of Corporate GovernanceReport which is self-explanatory.
- observation (b) relating to order of Collector and Additional Superintendent ofStamps Gujarat State Gandhinagar regarding recovery of deficient stamp duty the Companyis in process of making payment against the said order as per the decision of the theBoard of Directors of the Company.
19. POTENTIAL SICK COMPANY
The Company had become potentially sick company within the meaning of Section 23 ofSick Industrial Companies (Special Provisions) Act 1985 (SICA) as the accumulated lossesof the Company as at 31st March 2015 have resulted in to erosion of
more than 50 % of the its peak net worth during the immediately preceding fourfinancial years and therefore the Board of Directors at its meeting held on 28thMay 2015 formed an opinion to report to the Board for Industrial and FinancialReconstruction.
Accordingly the fact under Section 23 of Sick Industrial Companies (SpecialProvisions) Act 1985 (SICA) was reported to the shareholders of the Company at the AnnualGeneral Meeting held on 30th September 2015 and to Board for Industrial andFinancial Reconstruction in November 2015.
20. SECRETARIAL AUDIT REPORT
Pursuant to the provisions of section 204 of the Companies Act 2013 and the rules madethereunder the Company has appointed M/s. Devesh Vimal & Co. Practicing CompanySecretaries Vadodara to undertake the Secretarial Audit of the Company. The SecretarialAudit Report is included as Annexure -5 and forms an integral part of this report.
21. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form MGT-9 as requiredunder section 92 of the Companies Act 2013 is included in this Report as Annexure - 6 andforms an integral part of this report.
22. INTERNAL FINANCIAL CONTROLS
The Company has appointed M/s. CNK & Associates LLP Chartered Accountants toreport on adequacy and effectiveness of internal financial controls with reference tofinancial statements. During the year under review such controls were tested and noreportable weakness in the design or operation was observed by them. The StatutoryAuditors have opined that the Company has in all material respects internal financialcontrols over financial reporting which is required to be strengthened further and itsoperative effectiveness requires improvement.
23. ENVIRONMENT & SAFETY
The Company is conscious of the importance of environmentally clean and safeoperations. The Company's policy requires conduct of operations in such a manner so as toensure safety of all concerned compliances environmental requirement regulations andpreservation of natural resources.
The Company has been awarded Gold Safety Award 2016 from Greentech Foundation NewDelhi at their Annual Award Function for outstanding achievements in Safety Management.
24. ANTI-SEXUAL HARASSMENT POLICY
As required by the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 the Company has formulated and implemented a policy on prevention ofsexual harassment at workplace with a mechanism of lodging complaints. All employees(permanent contractual temporary trainees) are covered under this policy. During theyear under review there were no cases filed pursuant to the Sexual Harassment of Womenunder Workplace (Prevention Prohibition and Redressal) Act 2013.
25. HUMAN RESOURCES & INDUSTRIAL RELATIONS
The Company takes pride in the commitment competence and dedication shown by itsemployees in all areas of business. The Company has structured induction process andmanagement development programs to upgrade skills of managers. Objective appraisal systemsbased on Key Result Areas (KRAs) are in place for senior management staff. The Company iscommitted to nurturing enhancing and retaining top talent through superior learning &organizational development.
26. CREDIT RATING
During the year under review the Company has got its rating renewed by an independentcredit rating agency M/s Brickwork Ratings India Pvt. Ltd. and the ratings awarded weresame as earlier i.e. BWR B' in respect of long term debts and BWR A4' inrespect of Short term Debts.
27. DISCLOSURE OF PARTICULARS REGARDING CONSERVATION OF ENERGY TECHNOLOGY ABSORPTIONAND FOREIGN EXCHANGE EARNINGS AND OUTGO:
The disclosure of particulars relating to conservation of energy and technologyabsorption and foreign exchange earnings and outgo as required by Section 134 of theCompanies Act 2013 read with the Companies (Accounts) Rules 2014 is given in Annexure -1.
28. CORPORATE SOCIAL RESPONSIBILITY
Considering the losses and exposure the CSR requirements are not applicable to yourCompany; hence the Company has not framed Corporate Social Responsibility (CSR) Policy.
29. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
In terms of the provisions of Section 197 (12) of the Act read with Rules 5(1) 5(2)and Rules 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 a statement showing the names and other particulars of the employees and theDisclosure pertaining to remuneration and other details are set out in Annexure - II tothe Board's Report.
Having regard to the provisions of the first proviso to Section 136(1) of the Act andas advised the Annual Report excluding the aforesaid information is being sent to themembers of the Company. The said information is available for inspection at the registeredoffice of the Company during working hours and any member interested in obtaining suchinformation may write to the Company Secretary and the same will be furnished on request.
None of the employees listed in the said Annexure - II is a relative of any Director ofthe Company. None of the employees hold (by himself or alongwith his / her spouse anddependent children) more than two percent of the equity shares of the Company.
30. GENERAL DISCLOSURES
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:
a) Details relating to deposits covered under Chapter V of the Act.
b) Details of remained unpaid or unclaimed dividend at the end of year.
c) Issue of equity shares with differential right as to dividend voting or otherwise.
d) Issue of shares (including Sweat Equity Shares) to employees of the Company underany scheme.
e) Neither the Managing Director nor the Whole Time Directors of the Company receiveany remuneration or commission from any of its subsidiaries.
f) No significant or material orders passed by the Regulators or Courts or Tribunalswhich impact the going concern status and Company's operations in future.
Your Directors take this opportunity to express their appreciation for the co-operationand assistance received from the Government of India Government of Gujarat FinancialInstitution the Company's Bankers Electricity Companies Palej Gram Panchayat otherGovernment Agencies Customers Suppliers and Investors. Your Directors express gratitudeto the investors for their confidence reposed in the Company and Co-operation andespecially to the employees for their dedicated service and support.
32. CAUTIONARY STATEMENT
Statement in the Board's Report and Management Discussion and Analysis describing theCompany's objectives projections estimates expectations or predictions may beForward Looking Statements' within the meaning of applicable securities laws andregulations. Actual results may differ materially from those expressed or implied.Important factors that may make difference to the Company's operations include rawmaterial availability and its prices cyclic demand and the pricing in the Company'sprincipal markets changes in government policies regulations tax regimes economicdevelopments within India and countries in which the Company conducts business.