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Sunflag Iron & Steel Company Ltd.

BSE: 500404 Sector: Metals & Mining
NSE: SUNFLAG ISIN Code: INE947A01014
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VOLUME 60402
52-Week high 87.70
52-Week low 31.50
P/E 17.42
Mkt Cap.(Rs cr) 1,337
Buy Price 0.00
Buy Qty 0.00
Sell Price 74.20
Sell Qty 422.00
OPEN 74.00
CLOSE 73.95
VOLUME 60402
52-Week high 87.70
52-Week low 31.50
P/E 17.42
Mkt Cap.(Rs cr) 1,337
Buy Price 0.00
Buy Qty 0.00
Sell Price 74.20
Sell Qty 422.00

Sunflag Iron & Steel Company Ltd. (SUNFLAG) - Director Report

Company director report

To

The Shareholders

The Board of Directors of the Company hereby present the Thirtieth (30th) Annual Reporttogether with the Audited Financial Statements for the year 2015-2016 ended 31st March2016.

During the financial year under review the profitability of Steel industry isshrinking across India due to sluggish market demand and onslaught of high imports. Eventhough the raw material prices have gone down in the FY 2015-2016 the same was not enoughto maintain margins given the decrease in steel prices. Despite the Government initiationon many infrastructure and policy reforms the pick-up in steel demand in the domesticmarket has been slower than expected. However with the continuous efforts by theCompany’s Management towards strict cost reduction and better financial / workingcapital management has helped to improve its overall performance in order to survive inthe difficult market conditions.

1. FINANCIAL RESULTS

The summarised financial results for the year are as follows :

Sr. No. Particulars

For the financial year ended

31st March 2016 31st March 2015
1 Total Income 166716 176259
2 Total Expenditure 146963 158731
3 Gross Profit 19753 17528
4 Finance Cost 6055 7144
5 Profit before Depreciation 13698 10384
6 Depreciation 5176 5113
7 Profit before exceptional and extraordinary items and Tax 8522 5271

2. FINANCE

Your Company has ended the financial year with a profit after tax of Rs. 5734 Lakh.After taking into account the brought forward profit of Rs. 36290 Lakh your Company hascarried forward an amount of Rs. 42024 Lakh.

3. DIVIDEND

To cope up with market conditions and to achieve high growth there is a need toupgrade product and its process with latest technology. The Company is always in theprocess of upgrading its facilities with certain capital projects either throughrenovation addition expansion or modernisation. Simultaneously the Company is requiredto infuse its internal accruals to comply with the requirements of the lending banksfinancing for such capital projects.

As such the Board of Directors does not recommend any dividend on the equity sharesfor the financial year 2015-2016 ended 31st March 2016.

4. SHARE CAPITAL

During the financial year under review there is no change in the capital structure ofthe Company and accordingly the issued subscribed and paid-up share capital of theCompany stand at Rs. 1802194480 as on 31st March 2016.

5. MARKET SCENARIO

Despite various initiatives of the Indian Government domestic steel companies arefacing stiff competition due to dumping from China Korea and Japan. Moreover there wasno substantial increase in demand from automobile and auto component industries. Howeverit is expected to improve the current market scenario in the days to come after a longslow down of the previous year/s. SUNFLAE STEEL is continuing to develop new highvalue grades of alloy steel to cater the needs of domestic as well as internationalmarkets in addition to existing ones.

6. COMPANY’S WORKING / OPERATIONS

During the financial year under review the operational (production) details of theCompany are as under (Production in MT and Power in Lakh kWh) :

Sr No Particulars Financial Year 2015 - 2016 Financial Year 2014 - 2015
1 Direct Reduction Plant (I + II) 98092 130762
2 Steel Melt Shop 334991 319969
3 Rolled products 322504 312839
4 Mini Blast Furnace (Hot Metal) / Pig Iron 265468 234841
5 Sinter Plant 336801 295794
6 Coal (Belgaon Coal Block) 165013 196380
7 Power Plant (Lakh kWh) 1598.54 1609.56

7. PROJECTS Steel Plant :

During the financial year 2015-2016 the Company has installed alloy feeding system inLadle re-heating furnace - 2 of Steel Melt Shop wherein alloy materials will be weighedand fed through automatic process in to steel ladle in re-heating process. This system hasreduced heat cycle time and in turn has resulted in improved productivity.

Further the Company has proposed installation of new capital projects viz. (i)Pulverized Coal Injection System (ii) Refurbishing of Mini Blast Furnace (iii) CapacityEnhancement of Sinter Plant (iv) Conversion of Heat Recovery Boiler of DRP-I to DualOperation of FBC and WHRB. The projects are expected to be commissioned in the financialyear 2017-2018.

Subsidiary Companies :

Sunflag Power Limited :

There were no specific developments or updates for reporting to the members and theprocess of obtaining necessary approvals were continued for implementation andcommencement of operations of Hydro Power Project of the Company at Hanol-Tuini in theState of Uttarakhand.

Sunflag Special Steels Limited :

The management is exploring the business opportunities for the Company and in absencethereof may explore the possibilities of closure of the Company according to theprovisions of applicable law.

Khappa Coal Company Private Limited :

In view of order of the Hon’ble Supreme Court of India dated 24th September 2014the Khappa & Extn coal block which was allocated to Khappa Coal Company PrivateLimited stands de-allocated with immediate effect. The closure of the said Company solelydepends upon the outcome of final decision regarding bank guarantee and compensation fromthe appropriate authorities.

Joint Venture (JV) Companies :

Madanpur (North) Coal Company Private Limited and C T Mining Private Limited :

In view of order of the Hon’ble Supreme Court of India dated 24th September 2014the coal block(s) which were allocated to Madanpur (North) Coal Company Private Limited inthe state of Chhattisgarh and to C T Mining Private Limited in the state of Jharkhandstands de-allocated with immediate effect. The closure of the said Company solely dependsupon the outcome of final decision regarding bank guarantee and compensation from theappropriate authorities.

Gujarat State Mining and Resources Corporation Limited :

The Joint Venture (JV) Company in absence of viability to continue has made anapplication and submitted requisite documents for strike-off (closure) of name of theCompany and in turn had received a confirmation Dated 3rd May 2016 from the Office of theRegistrar of Companies Gujarat at Ahmedabad about the Striking-off of its Name pursuantto Section 560(3) of the Companies Act 1956 that at the expiration of thirty (30) daysfrom the date hereof the name unless cause is shown to the contrary will be struck-offfrom the Register and the said Company will stand dissolved.

Daido D.M.S. India Private Limited :

The Joint Venture (JV) Company was formed by Sunflag jointly with Daido Steel Co. Ltd.Japan and Daido Die and Mold Steel Solutions Co. Ltd. Japan. Sunflag has made aninvestment of INR 36000000/- (INR Three crores sixty lakhs) constituting Twenty percent(20%) in the capital of the said JV Company. The JV Company's main object is to carry onthe business as manufacture (processing heat treatment surface treatment) importexport distribute or otherwise deal in die mould steel (tool steel and other metallicmaterials) processed products and mould parts thereof.

Ramesh Sunwire Private Limited :

Sunflag jointly with Stumpp Schuele & Somappa Springs Private Limited Bengaluruhas proposed for formation of a Joint Venture (JV) Company in the state of Maharashtrawith an object of manufacturing high quality alloy steel wire for automobile and autocomponent industries both in domestic and export market.

8. NATURE OF BUSINESS ACTIVITIES AND CHANGES THEREOF

During the financial year 2015-2016 under review the Board of Directors thoughexploring addition to existing business and commercial activities had neither beenexplored any change in nature of business and commercial activities for the Company northere is a change in nature of business and commercial activities of the Company. As suchno specific details regarding change in nature of business activities are required to begiven or provided.

9. PUBLIC DEPOSITS

During the financial year 2015-2016 under review the Company has neither invited noraccepted any public deposits within the meaning of Section 73 and 74 of the Companies Act2013 read with the Companies (Acceptance of Deposits) Rules 2014 (as amended). As suchno specific details prescribed in Rule 8(1) of the Companies (Accounts) Rules 2014 (asamended) are required to be given or provided.

10. DIRECTORS AND KEY MANAGERAIL PERSONNEL

The changes amongst the Directors including the Executive Directors and Key ManagerialPersonnel during the period are as follows :-

I. CHANGES IN THE MANAGEMENT STURCTURE

i. Mr. Ravi Bhushan Bhardwaj ceased to be the Managing Director and Key ManagerialPersonnel (KMP) of the Company effective 12th August 2015. However he continued as aNon-executive Vice Chairman of the Company.

ii. Mr. Pranav Bhardwaj Joint Managing Director is re-designated as the ManagingDirector of the Company effective 12th August 2015.

iii. Mr. Surendra Kumar Gupta Whole-time Director designated as the Director & CEOis re-designated as the Deputy Managing Director of the Company effective 12th August2015.

II. KEY MANAGERIAL PERSONNEL (KMP)

Apart from change referred to in (I) there is no change in the Key ManagerialPersonnel (KMP) of the Company and accordingly Mr. Pranav Bhardwaj (Managing Director)Mr. Surendra Kumar Gupta (Deputy Managing Director) Mr. R. Muralidhar (Executive Director(Finance) & CFO) and CS Pranab Panigrahi (Company Secretary) continued to act as theKey Managerial Personnel (KMP) of the Company pursuant to the provisions of Section 203 ofthe Companies Act 2013 read with the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 (as amended).

III. DIRECTORS INCLUDING INDEPENDENT DIRECTORS WOMEN DIRECTOR AND CHANGES AMONGST THEM

a. During the continuous absence of Mr. Ravi Bhushan Bhardwaj Non-executive ViceChairman (DIN : 00054700) from India Mr. Suhrit Ravi Bhushan Bhardwaj (DIN : 02318190)was appointed as an Alternate Director effective 7th November 2015. Further he ceased tobe the Alternate Director effective 28th May 2016 as Mr. Ravi Bhushan BhardwajNon-executive Vice Chairman (DIN : 00054700) returned to India.

b. During the continuous absence of Mr. P. B. Bhardwaj Non-executive Chairman (DIN :00136076) from India Mr Vinod Kumar Kapur (DIN : 05256912) was appointed as an AlternateDirector effective 8th February 2016.

c. Pursuant to Section 149 and 152 of and Schedule IV to the Companies Act 2013 readwith the Companies (Appointment and Qualification of Directors) Rules 2014 (as amended)Listing Agreement and Listing Regulations (to the extent applicable) Dr. E. R. C. ShekarMr. S. Gajendran CA Jayesh M. Parmar Mr. Kumar Jitendra Singh and Mrs. Neelam Kotharicontinued to be the Independent Non-executive Directors on the Board of the Company asthey satisfy the criteria of independence under respective statutory provisions.

IV. RETIREMENT BY ROTATION

Pursuant to Section 152 of Companies Act 2013 read with the Companies (Appointment andQualification of Directors) Rules 2014 (as amended) Mr. Surendra Kumar Gupta (DIN :00054836) Deputy Managing Director retires by rotation and being eligible offers himselffor re-appointment. The Board recommends his re-appointment in the interest of theCompany. Except the above there is no change in the composition of the Board of Directorsduring the period under review.

11. NUMBER OF MEETINGS OF THE BOARD

Five (5) meetings of the Board of Directors of the Company were held during thefinancial year 2015-2016 under review on 30.05.2015 12.08.2015 07.11.2015 08.02.2016and 15.03.2016.

12. DIRECTORS' RESPONSIBILITY STATEMENT The Borad of Directors confirms :

i. That in the preparation of the Annual Financial Accounts the applicable AccountingStandards had been followed along with proper explanation relating to materialdepartures;

ii. That the Directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit of the Company for that financial year;

iii. That the Directors had taken proper and sufficient care for the maintenance ofadequate Accounting records in accordance with the provisions of this Act for safeguardingthe Assets of the Company and for preventing and detecting fraud and other irregularities;

iv. That the Directors had prepared the Annual Financial Statements on a going concernbasis;

v That the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls were adequate and operating effectively;and

vi. That the Directors had devised proper system to ensure compliance with theprovisions of all applicable laws and regulations and that such systems were adequate andoperating effectively.

13. COMMITTEE(S) OF THE BOARD

The Company has constituted all the requisite Committee(s) of the Board namely AuditCommittee Nomination and Remuneration Committee Stakeholders’ RelationshipCommittee Corporate Social Responsibility Committee Share Transfer Committee RiskManagement Committee and Project Monitoring Committee pursuant to the provisions of theCompanies Act 2013 read with the rules made there under and Listing Agreement or ListingRegulations (to the extent applicable). The details of its constitution objective orterms of reference and other related information has been provided under the CorporateGovernance Report which forms part and parcel of the Board’s Report.

14. AUDITORS

I. STATUTORY AUDITORS AND THEIR REPORT :

M/s. S S Kothari Mehta & Co. Chartered Accountants New Delhi (ICAI FirmRegistration No. 000756N) have been recommended by the Audit Committee and subsequently bythe Board of Directors of the Company to be appointed as the Statutory Auditors of theCompany at the ensuing Thirtieth (30th) Annual General Meeting to hold office of theStatutory Auditors for a period of two (2) years from the conclusion of Thirtieth (30th)Annual General Meeting until the conclusion of Thirty- second (32nd) Annual GeneralMeeting subject to ratification by the members at Thirty-first (31st) Annual GeneralMeeting of the Company.

M/s. Patel Shah & Joshi Chartered Accountants Mumbai (Firm Registration No.107768W) - the Statutory Auditors of the Company are eligible and recommended forre-appointment as the Joint Statutory Auditors at the ensuing Thirtieth (30th) AnnualGeneral Meeting to hold office of the Statutory Auditors for a further period of one (1)year from the conclusion of Thirtieth (30th) Annual General Meeting until the conclusionof Thirty-first (31st) Annual General Meeting.

Both the proposed Statutory Auditors have furnished a Certificate of their consentqualification and eligibility for appointment including re-appointment under Section 139and 141 of the Companies Act 2013 read with the rules and regulations made thereunder.

The Auditors’ Report submitted by M/s. Patel Shah & Joshi the StatutoryAuditors of the Company to the shareholders for the financial year 2015-2016 ended 31stMarch 2016 do not contain any qualification. The observations made by the StatutoryAuditors in their report are self-explanatory and have also been further amplified in theNotes to the Accounts and as such do not call for any explanations.

During the financial year 2015-2016 under review :

a) there is no fraud occurred noticed and/or reported by the Statutory Auditors underSection 143(12) of the Companies Act 2013 read with the Companies (Audit and Auditors)Rules 2014 (as amended);

b) the observations made by the Statutory Auditors on the financial statements for thefinancial year 2015-2016 under review including the affairs of the Company are selfexplanatory and do not contain any qualification reservation adverse remarks ordisclaimer thereof.

As such no specific information details or explanations required to be given orprovided by the Board of Directors of the Company.

II. COST AUDITORS AND THEIR REPORT :

Pursuant to Section 148 of the Companies Act 2013 the Board of Directors of theCompany on the recommendations of the Audit Committee has appointed M/s. G. R. Paliwal& Company (Membership No. 7815) Cost Accountants Nagpur as the Cost Auditors of theCompany for the financial year 2016-2017 and has also recommended their remuneration tothe shareholders for their ratification at the ensuing Annual General Meeting.

The said Cost Auditors have furnished a Certificate of their eligibility forappointment pursuant to Section 141 (3)(g) Section 148(5) of the Companies Act 2013 readwith the rules made there under Certificate for independence and arms length relationshipwith the Company and have confirmed about their not being disqualified for suchappointment including re-appointment within the meaning of Section 141(3) of the CompaniesAct 2013.

Pursuant to the applicable provisions of the Act read with the rules made there underthe Cost Audit Report for the financial year 2014-2015 was filed vide SRN : S39583471dated 26th September 2015.

III. SECRETARIAL AUDITORS AND THEIR REPORT :

M/s. Mukesh Parakh & Associates Company Secretary in Practice Nagpur (MembershipNo. FCS-4343 & Certificate of Practice No. 13693) were appointed as the SecretarialAuditors of the Company for the financial year 2015-2016 ended 31st March 2016. TheSecretarial Audit Report in Form No. MR-3 submitted by the said Secretarial Auditors isattached herewith as an Annex - B and forms part and parcel of the Board’sReport do not contain any adverse remarks and qualifications is self explanatory and donot call for any further explanations by the Company.

Further the Company has re-appointed M/s. Mukesh Parakh & Associates CompanySecretary in Practice Nagpur (Membership No. FCS-4343 & Certificate of Practice No.13693) as the Secretarial Auditors of the Company for the financial year 2016-2017 ending31st March 2017.

15. PERSONNEL / PARTICULARS OF EMPLOYEES

The information required under Section 197 of the Act read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are givenbelow:

a) The ratio of the remuneration of each Executive Director to the median remunerationof the employees of the Company for the financial year :

Executive Directors Ratio to Median remuneration
Mr. Ravi Bhushan Bhardwaj - Non-executive Vice-Chairman 9.84 : 1
Mr. Pranav Bhardwaj - Managing Director 24.50 : 1
Mr. Surendra Kumar Gupta - Deputy Managing Director 16.28 : 1

b) The percentage increase in remuneration of each Director Chief Executive OfficerChief Financial Officer Company Secretary in the financial year 2015-2016 :

Directors Chief Executive Officer Chief Financial Officer and Company Secretary % increase in remuneration in the financial year
Mr. Ravi Bhushan Bhardwaj - Non-executive Vice Chairman N.A.
Mr. Pranav Bhardwaj - Managing Director 5.83%
Mr. Surendra Kumar Gupta - Deputy Managing Director 4.42%
Mr. R. Muralidhar - Chief Financial Officer 6.17%
CS Pranab Panigrahi - Company Secretary 3.26%

c. The percentage increase in the median remuneration of employees in the financialyear : 0.80%

d. The number of permanent employees on the rolls of Company as on 31st March 2016 :1349

e. Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration:

The average annual increase was about 5%. During the financial year the total increaseis approximately 5% after accounting for promotions and other event based compensationrevisions.

Increase in the managerial remuneration for the financial year was around 5% other thancommission based on net profit as per the terms of their appointment.

f. Affirmation : Remuneration paid to Director/s Key Managerial Personnel andEmployees of the Company is as per the remuneration policy of the Company.

g. Information as per Section 197 of the Companies Act 2013 ("the Act") andRule 5(2) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules2014 (as amended) forms part of this report. However in terms of Section 136(1) of theAct the Report and Financial Statements are being sent to all the shareholders and othersentitled to receive the same excluding the statement of particulars of employees. Thesatement is available for inspection by the members at the Registered Office of theCompany during business hours on any working day up to the date of the ensuing AnnualGeneral Meeting. If any member interested in obtaining a copy thereof such member maywrite to the Company Secretary whereupon a copy would be sent.

16. ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGES EARNINGS AND OUTGO

The particulars relating to energy conservation technology absorption foreignexchange earnings and outgo as required to be disclosed under Section 134(3)(m) of theCompanies Act 2013 read with Rule 8(3) of The Companies (Accounts) Rules 2014 are givenin the Annex - C to this report.

17. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIESACT 2013

Name of the related party and nature of relationship Nature of contracts / arrangements / transactions Duration of contracts / arrangements / transactions Salient terms of the contracts / arrangements / transactions including the value if any Dates of approval by the Board if any Amount paid as advance if any
Sunflag Power Limited - Wholly owned subsidiary Interest Free Unsecured Loan Continuing N.A. 30.05.2015 and ratified on 28.05.2016 Rs. 1208663/- for the financial year 2015-2016
Daido D.M.S. India Pvt. Ltd. Associate (JV) Company Investment in equity Share Capital N.A. N.A. 30.05.2015 and ratified on 28.05.2016 Rs. 36000000 in the capital of the Company

18. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES UNDER SECTION 188 OFTHE COMPANIES ACT 2013

a) Details of contracts or arrangements or transactions not at arm’s length basis:

There are no such transactions and hence not applicable.

b) Details of contracts or arrangements or transactions at arm’s length basis :

The details of contracts or arrangements or transactions in the ordinary course ofbusiness and at arm's length basis are as given below :

Form No. AOC - 2

Pursuant to clause (h) of sub-section (3) of Section 134 of the Companies Act 2013 andRule 8(2) of the Companies (Accounts) Rules 2014 (Amended) :

Name of the related party and nature of relationship Nature of contracts / arrangements / transactions Duration of contracts / arrangements / transactions Salient terms of the contracts / arrangements / transactions including the value if any Dates of approval by the Board if any Amount paid as advance if any
Haryana Television Limited Ordinary Course of Business and at Arm's length Continuing Rent paid for Company’s Godown at Faridabad 30.05.2015 and ratified on 28.05.2016 Rent : Rs. 4784453/- for the financial year2015 - 2016
Mr. Suhrit Ravi Bhushan Bhardwaj Ordinary Course of Business and at Arm's length Continuing Rent paid for Company’s Transit House 30.05.2015 and ratified on 28.05.2016 Rent : Rs. 2050830/- for the financial year2015 - 2016

19. LISTING OF SHARES

The Equity shares of the Company continued to be listed with and actively traded on theBSE Limited (BSE) and The National Stock Exchange of India Limited (NSE). The listing feesfor the financial year 2016-2017 have been paid to both the Stock Exchanges (BSE &NSE).

20. DEMATERIALISATION OF SHARES

As on 31st March 2016 there were approximately 1073.79 lakh equity sharesdematerialised through depositories viz. National Securities Depository Limited andCentral Depository Services (India) Limited which represents about 59.58% of the totalissued subscribed and paid-up capital of the Company.

21. EXTRACT OF THE ANNUAL RETURN

The extract of the Annual Return as on 31st March 2016 pursuant to the provisions ofSection 92(3) of the Companies Act 2013 read with Rule 12 of the Companies (Managementand Administration) Rules 2014 (as amended) is furnished in the Annex - D attachedto this report which forms an integral part of this report.

22. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

The detailed information related to the dividend declared by the Company in theprevious years together with amount remained unpaid or unclaimed its transfer to theInvestor Education and Protection Fund are provided in Notes annexed to the Noticeconvening the Thirtieth (30th) Annual General Meeting of the Company.

23. CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of corporate governance andadhere to the corporate governance requirements set out by the SEBI through ListingAgreement and Listing Regulations (to the extent applicable) executed with the stockexchanges(s). The Company has also implemented several best corporate governance practicesas prevalent globally.

Your Directors are pleased to report that your Company has complied with the SEBIGuidelines on Corporate Governance as of 31st March 2016 relating to the Listing Agreementand Listing Regulations (to the extent applicable). A Certificate from M/s. Mukesh Parakh& Associates Company Secretary in Practice Nagpur (Membership No. FCS-4343Certificate of Practice No. 13693) confirming compliance with conditions as stipulatedunder Listing Agreement and Listing Regulations (to the extent applicable) is annexed tothe Corporate Governance Report.

24. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company’s steel plant is located at Bhandara Road Village Warthi TahsilMohadi District Bhandara. It is located at a distance of 12 kilometers from the districtplace Bhandara. The unit is surrounded by about 3 villages in the radius of 5 Kms. TheCompany is having its captive coal mines at Belgaon near Village Aathmurdi in Chandrapurdistrict. The residents of these localities are directly or indirectly associated with theCompany. The Company has primarily focused on the development of the residents of theselocalities.

All the activities / programmes covered under SISCO CSR are being monitored by the CSRCommittee and are implemented by the CSR Sub-committee.

As required the details pertaining to the Corporate Social Responsibility (CSR)activities together with details of expenditure is enclosed herewith as an Annex - A andthe same is attached to this Report.

25. CODES OF CONDUCT OF BUSINESS PRINCIPLES & ETHICS AND PREVENTION OF INSIDERTRADING AND OTHER CODES / POLICIES

Your Directors are pleased to report that your Company has complied with the :

i) Code of Conduct of Business Principles and Conduct;

ii) Code of Prevention of Insider Trading in Sunflag securities by the designatedpersons (insider) (as amended from time to time);

iii) Code for Vigil Mechanism - Whistle Blower Policy ;

iv) Code for Independent Directors;

v) Corporate Social Responsibility Policy;

vi) Risk Management Policy;

vii) Policy on Document Preservations (Regulation 9 of the SEBI (LODR) Regulations2015);

viii) Policy for determining of ‘material’ Subsidiary (Regulation 16 of theSEBI (LODR) Regulations 2015);

ix) Policy on materiality of related party transaction/s and on dealing with relatedparty transactions (Regulation 23 of the SEBI (LODR) Regulations 2015); and

x) Policy for determination of materiality based on specified criteria andaccordingly grant authorisation for determination of materiality of events (Regulation 30of the SEBI (LODR) Regulations 2015).

The aforesaid code(s) and policy(ies) are available on the Company’s website www.sunflagsteel.com

26. MATERIAL DEVELOPMENT IN HUMAN RESOURCES INDUSTRIAL RELATIONS

During the financial year under review industrial relations remained cordial.Employees’ competencies and skills were enhanced by exposing them to several internaland external training programmes. Various measures were taken to improve motivation levelof employees. Additional efforts are continued to be implemented with a view to obtaincommitment and loyalty towards the organisation.

SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE

Sunflag Iron and Steel Company Limited ("the Company") has in place an AntiSexual Harassment Policy in line with the requirements of the Sexual Harassment of Womenat the Workplace (Prevention Prohibition & Redressal) Act 2013 and InternalComplaints Committee (ICC) has been set up to redress complaints received regarding sexualharassment. All employees (permanent contractual temporary trainees etc) are coveredunder this Policy. The Certificate by Deputy Managing Director and Chairman AuditCommittee of the Company to that effect is enclosed herewith as an Annex - E andforms part of this report.

HEALTH AND SAFETY

Departmental safety coordinators are identified for monitoring & training on safetyrelated matter at shop-floor. Safety Committee and Apex Committee are available forperiodical review on safety health & environment of all departments.

Regular Training on Safety is being organised for New Joinee regular employees &contract labour. Mock-drills are conducted for practical exposure to meet emergency needon quarterly basis.

Hand book on safety awareness are distributed to all employees.

27. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has in place adequate internal control systems and procedures commensuratewith the size and nature of business. These procedures are designed to ensure :-

(a) that all assets and resources are used efficiently and are adequately protected;

(b) that all the internal policies and statutory guidelines are complied with; and

(c) the accuracy and timing of financial reports and management information ismaintained.

28. MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY

During the financial year 2015-2016 under review there are no material changes andcommitments affecting the financial position of the Company which have occurred betweenthe end of the financial year of the Company to which the financial statements relates andthe date of this report. As such no specific details are required to be given orprovided.

29. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY’S OPERATIONS IN FUTURE

During the financial year 2015-2016 under review no significant and material order ispassed by any of the Regulators or Courts or Tribunals impacting the going concern statusand Company’s operations in future. As such no specific details are required to begiven or provided.

30. OTHER DISCLOSURES

The details regarding Board and its Committee meetings Evaluation of Boardperformance Declaration by Independent Directors Remunreation policy for Directors andKMP’s Induction training and familiarisation programmes for Directors includingIndependent Directors and such other related information has been provided under theCorporate Governance Report which forms part and parcel of the Board’s Report.

31. ENCLOSURES

a) Annex - A : Annual Report on Corporate Social Responsibility (CSR) activitiestogether with expenditure details;

b) Annex - B : Secretarial Auditors Report in Form No. MR-3;

c) Annex - C : Report on Energy Conservation Technology Absorption and ForeignExchanges Earnings and Outgo;

d) Annex - D : Extract of Annual Return as of 31st March 2016 in the prescribed FormNo. MGT-9; and

e) Annex - E : Certificate on Sexual Harassment of Women at the Workplace and itsPrevention Prohibition & Redressal.

32. ACKNOWLEDGEMENT

The Directors acknowledge with thanks co-operation and assistance received by theCompany from the Members Central & State Government and Banks.

The Directors also record their appreciation of the dedication of all the employees ofthe Company for their support and commitment to ensure that the Company continues to grow.

For and on behalf of the Board
Dr. E.R.C. Shekar Surendra Kumar Gupta
Nagpur Director Deputy Managing Director
19.08.2016 DIN : 00013670 DIN : 00054836