Your Directors are pleased to present their 27th Annual Report on thebusiness and operations of your Company along with the Audited Financial Statements forthe Financial Year ended 31 March 2017.
Rs in Crores
|Particulars || |
| || |
|Gross Income from Sales & other operations (including other income) ||1411.56 ||1391.76 |
|Profit before interest depreciation and taxes ||225.59 ||217.14 |
|Less : Interest ||37.50 ||45.88 |
|Profit before depreciation and taxes ||188.09 ||171.26 |
|Less : Depreciation ||36.43 ||32.97 |
|Profit before taxes ||151.66 ||138.29 |
|Less : Provision for taxes including deferred taxes ||35.61 ||26.02 |
|Profit after taxes ||116.05 ||112.27 |
|Profit / (Loss) and credit balance brought forward ||(97.74) ||(208.82) |
|Depreciation on transition to Schedule II of the Companies Act || || |
| ||- ||0.88 |
|2013 (Net of deferred tax) || || |
|Re-measurement Gain/(Loss) on defined benefit plans (Net of tax) ||(1.82) ||(0.30) |
|Amount available for appropriation ||16.49 ||(97.74) |
|Appropriation: || || |
|Equity Dividend ||5.06 ||- |
|Tax on Dividend ||1.03 ||- |
|Transfer to General Reserve ||- ||- |
|Balance carried forward ||10.40 ||(97.74) |
The Company has adopted Indian Accounting Standard (referred to as Ind AS)with effect from 1 April 2016 and accordingly these financial results along with thecomparatives have been prepared in accordance with the recognition and measurementprinciples stated therein prescribed under Section 133 of the Companies Act 2013 readwith the relevant rules issued thereunder and the other accounting principles generallyaccepted in India.
Upon amalgamation of Tata Metaliks DI Pipes Limited (erstwhile wholly owned subsidiary)with the Company the financial results for the year 2016-17 are comparable with theconsolidated financial results of 2015-16.
OPERATION AND PERFORMANCE
Your Company recorded a turnover of Rs 1410 crores for FY 2016-17 as comparedto Rs 1390 crores for FY 2015-16. The EBITDA for FY 2016-17 was Rs 226crores which is higher by 4% than Rs 217 crores for FY 2015-16. Your Companyrecorded its highest ever Profit after Tax of Rs 116 crores which is 4% higherthan that of FY 2015-16. This was primarily due to significant improvement in overallperformance of Ductile Iron (DI) pipes business. DI Pipe business has recorded a 32%growth in turnover compared to the previous year and a 41% increase in production offinished DI Pipes. During the year under review your Company has commissioned thefollowing capital projects which would have significant bearing on the operationalefficiencies and volume growth in the years to come:
Capacity expansion of DI pipe plant to 200000 tonnes by installing a newcasting machine and a finishing line during Quarter 2;
Coke Oven Project on BOOT (Build Own Operate Transfer) basis having a capacityof 10000 tonnes/ month of BF grade coke during Quarter 3;
10 MW Captive Power Plant utilising exhaust flue gases from Coke Ovens duringQuarter 3; and
Modernisation and expansion of Mini-Blast Furnace (MBF) - 1 in Quarter 4.
Several cost optimisation initiatives have immensely helped to reduce costs therebyhelping in achieving a robust bottom-line.
The Pig Iron (PI) division produced 381968 tonnes of hot metal against lastyears production of 433437 tonnes. Out of the total hot metal produced 177545tonnes were utilised for manufacture of DI pipes and the balance 204358 tonnes have beenutilised for manufacture of Pig Iron. Hot metal production has been lower than previousyear on account of a 91 days shutdown of MBF - 1 during last two quarters of FY 2016-17.PI division recorded a total sale of 199084 tonnes with a turnover of Rs 560crores including inter segment transfers.
Ductile Iron pipe
The Ductile Iron (DI) pipe business of your Company has recorded its highest everproduction of 187253 tonnes of finished pipes and highest ever dispatch of 182480tonnes thereby resulting in its highest ever turnover of Rs 850 crores. The resultis attributable to the successful execution of the expansion of DI pipe manufacturingplant and installation of a new casting and finishing line.
The Board has recommended a dividend of Rs 2.50 per Equity Share of Rs 10/-each for FY 2016-17 (Rs 2.00 per Equity Share of Rs 10/- each during FY2015-16).
The dividend on Equity Shares as recommended by the Board is subject to the approvalof the Shareholders at the ensuing Annual General Meeting (AGM) to be held on 26 July2017. The dividend if declared will be paid to the eligible Shareholders on orbefore 29 July 2017. The total equity dividend outgo works out to 6.56% (FY 2015-16:5.42%) of the net profit after tax. The dividend payout is in accordance with theCompanys efforts to pay sustainable dividend linked to long-term growth objectivesof the Company and enhancing Shareholder value.
The Register of Members and Share Transfer Books will remain closed from 15 July 2017to 26 July 2017 (both days inclusive) for the purpose of payment of the dividend for FY2016-17 and the AGM.
TRANSFER TO RESERVES
Your Directors do not propose to transfer any amount to the general reserve.
CHANGE IN SHARE CAPITAL
There has been no change in the capital structure of the Company during the year underreview.
CAPEX AND LIQUIDITY
During the year under review your Company has incurred capital expenditure to the tuneof Rs 126 crores which has been funded through internal accruals.The liquidityposition remains stable with undrawn lines of fund-based and non-fund based limitssanctioned by banks.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report as required under Regulation 34(2)(e) ofthe Listing Regulations forms an integral part of this report and is annexed herewith as AnnexureA.
EXTERNAL ENVIRONMENT Macro-Economic Environment
Weak international trade subdued investment heightened policy uncertainty has slowedglobal growth to its weakest pace since 2009. Geopolitical uncertainty remains high withconcerns about political leanings and increased protectionism.
During FY 2016-17 the macro-economic stability of Indian economy has improvedsubstantially with lower inflation fiscal prudence and moderate current account deficitcoupled with robust foreign exchange reserves. Growth was impacted in the last quarter ofFY 2016-17 due to the impact of the demonetisation which has faded quickly. However inthe long run this reform aims to foster greater transparency in financial transactionsand a progress towards a cashless economy.
Despite elevated uncertainties global steel demand grew by 1% to 1.5 billion tonnes in2016 due to stronger than expected demand growth in China supported by recovery in thedeveloped world and growth in emerging markets.The price recovery was driven by Chinesegovernment investment stimulus and rising raw materials prices. It was also supported byChinese steel capacity cuts of 45 million tonnes as well as global steel industryconsolidation trends.
The price of coal/ coke plays a pivotal role in the overall production cost of the ironand steel industry. During FY 2016-17 the coal price witnessed periodic surge inprices.The volatility of the coal prices remains a challenge for the industry.
Pig Iron and DI Pipe Industry Outlook
The foundry/ casting Industry is the key component supplier for automotive tractorspump valves compressors railways power equipment industrial machinery etc. It isexpected to grow at CAGR ~8% during financial years FY 2016-17 to FY 2020-21 on account ofgovernments focus on initiatives such as "Make in India".
At 10.77 million tonnes India is the second largest manufacturer of castings in theworld after China. The Government and the Indian Foundry Association have plans tomodernise foundry industry by 2020. As a result casting production capacity wouldincrease significantly during the next 5 years. The DI Pipe market is expected to remainpositive in the coming year due to increased government spending in water sanitation andirrigation infrastructure. With a renewed focus of various government agencies on smartcities sanitation and AMRUT (Atal Mission for Rejuvenation and Urban Transformation)water projects the outlook of the DI pipe business of your Company is expected to beoptimistic. Your Company has recently completed its expansion programme of the DI pipeplant facility. Your Company is also entering into DI fittings business throughfranchisee arrangement to supplement the DI pipe business.
Your Company endeavours to meet the ever increasing customer requirements throughproduct and service differentiation in its businesses i.e. PI and DI pipes.
Your Company conducts its strategic planning through a well-defined and structuredmechanism. It gathers inputs on contextual changes through an environment scan anddevelops Long-Term strategies (5 years). This is broken into yearly plans and deployedeach year through Short-Term plans (1 year) and Balanced Score Card. Key steps in theplanning process consists of scanning of external business environment internalcapabilities (participants respective functional heads) risk management [by RiskManagement group involving Strategic Leadership Team and various functional heads]developing Strategic objectives and Long term/Short term plan and deployment of plan.
Your Company aims to be the most competitive in the market place in terms of cost ofproduction of hot metal and DI pipe and be the customers choice through its qualityproducts and service differentiation. Cost competitiveness is being achieved throughcapital investments in coke ovens captive power plant and blast furnace modernisation.Simultaneously your Company is also working on increasing its top line and market sharethrough capacity expansion of value added products - DI pipes.
During the year under review the Scheme of Amalgamation between your Company and itswholly owned subsidiary i.e. Tata Metaliks DI Pipes Limited (TMDIPL) with Tata SteelLimited was withdrawn due to multiple factors including inordinate delay in obtainingrequisite regulatory and statutory approvals along with the significant dilution in theintended synergies that were initially envisaged.
Subsequently a fresh Scheme of Amalgamation (Scheme) between TMDIPL and the Companywas filed with the Honble High Court Calcutta aimed to realise greater benefits offinancial managerial technical distribution and marketing synergies between theentities to maximise stakeholder value. The said Scheme has received the approval of theHonble High Court Calcutta and became effective from 22 December 2016. Upon theeffectiveness of this Scheme your Company has two integral business segments i.e. PigIron and Ductile Iron Pipes both structured as two separate divisions.
Pursuant to the effectiveness of the Scheme TMDIPL has ceased to be in existence asthe subsidiary of your Company.
Subsidiaries Joint Ventures and Associates
At the end of the year under review your Company does not have any subsidiaryassociate and joint venture
Company. Hence the requisite disclosure as per Section 129(3) of the Companies Act2013 (Act) in Form AOC-1 is not applicable.
Your Company enjoys a good reputation for its sound financial management and itsability to meet financial obligations. The current rating of the Company is [ICRA] A+(positive outlook).
Customer focus in your Company starts with one central theme "CustomerCentricity" with the objective of becoming "The Supplier of Choice" througha well-defined marketing and sales process. It includes listening and learning from thecustomer customer segmentation and feedback through various mechanisms in order todeliver on 3-D customer promise Develop deep insight Deliver outstanding productsand services and Delight customers at all touch points. For both DI pipes and pig ironour marketing and sales team work closely with customers to get a deep understanding oftheir unique needs.Thereafter the operations and logistics teams serve them withinnovative products and services.There is a structured complaint management system whichnot only captures customer complaints proactively but also resolves them to thesatisfaction of the customers. Social media and digital platform is also used formarketing the products and getting across to customers from all key segments.
Health and Safety
In line with our Group vision Health and Safety remains our top most priority. Ourcontinued efforts aimed at enhancing safety standards and processes and minimise safetyrisks and reduce health hazards are aligned with our focus to be the industry benchmark.TMLs slogan on safety is "Your safe return to your family".
Your Company remains focussed on minimising the environmental impact of its operationsand continues to adopt sustainable practices to improve its environmental performance.Aligned with the Group values compassion for environment under Corporate Citizenship isdeeply embedded in your Companys vision. Your Companys ISO 14001 ISO 27001and OHSAS 18001 certified manufacturing plant at Kharagpur continues to focus onoperational excellence aimed at resource and energy efficiency along with recovery reuseand recycling of waste to minimise ecological footprint.
Your Companys sustainability initiatives are driven by the Tata Group core valuesand rests on triple bottom-line approach viz. social environmental and financial. YourCompany continues to strive to have a positive influence on the community and all otherstakeholders through its sustainability-related initiatives and action plans. Corporatesustainability function in the Company is responsible for creating awareness onsustainability sharing best practices and incorporating valuable sustainabilityinitiatives on various materiality issues which are being taken care of after carrying outassessments on material issues related to all stakeholders in the value chain. YourCompany will publish the Sustainability Report for FY 2016-17 based on the GlobalReporting Initiative (GRI) G4 guidelines which will articulate your Companys focusto create long-term sustainability for all its Stakeholders and will be available at www.tatametaliks.com.
HUMAN RESOURCE MANAGEMENT & INDUSTRIAL RELATIONS
Your Company considers its employees as the most valuable resource and ensures thestrategic alignment of human resource practices to business priorities and objectives.Your Company strives to provide a conducive and competitive work environment for all itsemployees to excel and create new benchmarks of work culture employee engagementproductivity effectiveness efficiency and customer delight.
This year has been of significant importance as the Human Resources & IndustrialRelations function has seamlessly handled the amalgamation of TMDIPL with your Company.Subsequent to the amalgamation the focus remains on strengthening and standardising allpeople related processes and culture of amalgamation of two units.
The year under review also saw the signing of Charter of Demand and wage agreement ofPI Division which was a step further towards sustained harmonious industrial relationsfor uninterrupted operations. An employee engagement survey was conducted to assessimprovement in the level of engagement and commitment as compared to the previous year.The results show an upward trend. Initiatives like introduction of new employee centric HRpolicies (Paternity Leave Additional Privileged Leave for Women Employees Adoption Leavefor Women Convocation Leave Wedding Gift etc.) Employees Cultural Meet Holidayplan improved canteen amenities and ambience Employee connect programme IT enabledEmployee Concern Platform and Sports events were undertaken to meet the changing needs ofthe workforce attract and retain talent and enhance workforce engagement.
Diversity is embedded in our people processes from recruitment to development and is reflected in all HR-related offerings. Your Company is committed to aninclusive culture that respects and embraces the diversity of employees and communities.The Company aims to attract develop and retain the most capable employees without regardto culture ethnicity race gender ability belief and background.
Your Company seeks to build the capabilities of its employees to help them develop bothprofessionally and personally. Learning and development activities are aligned to threepriorities i.e. (1) building leadership capabilities and developing future leaders; (2)fostering an environment that supports sustainable performance; and (3) promotingcontinual professional and personal development for all employees.
Particulars of Employees
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 annexed to this Report in Annexure B. Interms of the provisions of Section 197(12) of the Act read with sub-rules (2) and (3) ofRule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 a statement containing names and other prescribed particulars of Top 10 employees interms of remuneration drawn and that of every employee who if employed throughout theyear ended 31 March 2017 was in receipt of remuneration aggregating not less than Rs 102.00lakhs and if employed for part of the same year was in receipt of remuneration of notless than Rs 8.50 lakhs per month is annexed to and forms part of this report.
CORPORATE SOCIAL RESPONSIBILITY
The objective of our Corporate Social Responsibility (CSR) initiatives is to improvethe quality of life of communities through long-term value creation for all ourStakeholders. This objective is in alignment with the Tata Group core purpose.
We continue to remain focused on improving the quality of life and engaging communitiesthrough health education sanitation infrastructure development etc. As per the Act CSRactivities may be undertaken through a registered trust or a registered society. YourCompany carries out its CSR activities through Sadbhavna Trust. Briefdetails on the various focus areas of interventions are part of the Annual Report on CSRactivities annexed to this report.
During the year under review your Company has spent a sum of Rs 2.28 crores onCSR and Affirmative Action initiatives. The Annual Report on CSR activities in terms ofSection 135 of the Act is attached as Annexure C.
Your Company strives to ensure that corporate governance guidelines and best practicesare followed in letter and spirit and believes in accurate and timely disclosure ofinformation regarding financials performance as well as the leadership and governance ofthe Company.
Aligned with the Tata Steel Group Vision to be the industry benchmark for valuecreation and corporate citizenship all initiatives are directed in order to achieve thegoals of value creation safety environment and people.
Pursuant to Regulation 34(3) of the Listing Regulations a separate section onCorporate Governance and a Certificate from a Practicing Company Secretary regardingcompliance of conditions of Corporate Governance are made part of this report as AnnexureD.
Board and Committee Meetings
The Board of Directors of the Company met 6 (six) times during FY 2016-17. The detailsof the composition of the Board and its Committees and of the meetings held and attendanceof the Directors at such meetings are provided in the Corporate Governance Report in AnnexureD. The intervening gap between the meetings was within the period prescribed under theAct and the Listing Regulations.
Policy on appointment and remuneration of Directors Key Managerial Personnel and otheremployees
There is a well-defined policy in place for appointment of Directors Key ManagerialPersonnel (KMP) and other employees and their remunerations. The Nomination andRemuneration Committee (NRC) functions in consultation with the Board if necessaryand follows the guidelines of this policy both in letter and spirit while selecting acandidate for appointment. The NRC recommends to the Board suitable candidates based ontheir qualifications skills and experiences for Board Membership. The Policy onappointment and removal of Directors is available on our website at www.tatametaliks.com/static-files/pdf/policies/TML-NRC-policy.pdf.
Familiarisation Programme for Independent Directors
In accordance with the provisions of the Listing Regulations the Company has put inplace various programmes to familiarise Independent Directors with respect to the natureof the industry in which the Company operates business model the roles rights andresponsibilities of the Independent Directors etc. Details of the familiarisationprogramme for Independent Directors are provided in the Corporate Governance Reportannexed herewith and is also available on our website http://www.tatametaliks.com/static-files/pdf/policies/policy-prog-Director.pdf.
The process and criteria for annual performance evaluation of the Board its Committeesand individual
Directors had been laid down by the NRC and the Board of Directors of the Company.
In accordance with the provisions of the Listing Regulations the evaluation processfor the performance of the Board its various Committees and individual Directors wascarried out during the year. Each Director filled-up a questionnaire giving feedback onthe functioning of the Board and its various Committees on the parameters such asexecution of specific duties timeliness of flow of information including its quality andquantity independence of judgment etc.
The Chairman of NRC also sought one-on-one feedback from the Managing Director and allother Directors. A one-on-one meeting of the individual Directors with the Chairman of theBoard was also conducted.The NRC and subsequently the Board discussed the collatedfeedback received from the Directors.
The evaluation process found the overall performance of the Board satisfactory inworking as a team and guiding the Management. The Board also appreciated the Chairman andthe Management in guiding the Company during turbulent times and making it the bestperformer amongst the Tata Steel group companies. In addition the evaluation processcompared the evaluation reports of 2015-16 and 2016-17 and reviewed the areas where theBoard has improved and the areas where more improvement is desired. The Board would workto improve its performance in general and specifically in areas where additional focus isrequired. The Independent Directors met on 23 February 2017 and reviewed the performanceof the Managing Director the Board and its Chairman. The Independent Directorsappreciated the exemplary leadership role of the Board Chairman in upholding the higheststandards of corporate governance.
Based on the outcome of the evaluation and feedback in future the Board would look atguiding the Company to become a top player both in pig iron and DI pipes businesses.
Remuneration Policy for the Board and other employees
The policy on remuneration of the Directors KMPs and other employees was approved andadopted by the NRC and the Board on 30 March 2015. The main objective of the said policyis to ensure that the level and composition of remuneration for Directors KMPs and otheremployees is sufficient and reasonable to attract pool retain and motivate them. Theremuneration involves a balance between fixed and variable pay reflecting short andlong-term objectives of the Company.
During the year under review there has been no change in the Policy. The said policyis available on our website http://www.tatametaliks.com/static-files/pdf/policies/TML-NRC-policy.pdf.
Independent Directors Declaration
Pursuant to the provisions of Section 149(7) of the Act and the provisions of theListing Regulations the Company has received requisite declaration from each of theIndependent Directors stating that they meet the criteria of independence as per Section149(6) of the Act and the Listing Regulations.
Directors a) Re-appointment
In accordance with the provisions of Section 152 of the Act read with Article 110 ofthe Articles of Association of the Company Ms. Samita Shah (DIN: 02350176) will retire byrotation at the ensuing AGM of the Company and is eligible for re-appointment.
The Board recommends and seeks your support in confirming re-appointment of Ms. SamitaShah. The profile and particulars of experience attributes and skills that qualify herfor the Board Membership is disclosed in the Notice convening the AGM to be held on 26July 2017. b) Inductions
The Board appointed Mr. Sandeep Kumar (DIN: 02139274) as an Additional Directorw.e.f. 20 March 2017. He holds office up to the date of the ensuing Annual GeneralMeeting.
Pursuant to Section 160 of the Act your Company has received requisite noticeproposing the appointment of Mr. Kumar as a Director on the Board. Accordingly the Boardrecommends his appointment as Director.
The Board of Directors at its meeting held on 20 March 2017 on the recommendation ofthe NRC has appointed Mr. Kumar as a Whole-time Director (Designated as an ExecutiveDirector) of the Company for a period of 3 (three) years w.e.f. 10 April 2017.
The Board of Directors subsequently at its meeting held on 1 June 2017 appointed Mr.Kumar as the Managing Director of the Company for a period of 3 (three) years w.e.f. 1July 2017.
Accordingly the Board recommends his appointment as Managing Director. The resolutionconfirming the above appointment forms part of the Notice convening the ensuing AGM of theCompany. We seek your support in confirming the above appointment to the Board.
Dr. Rupali Basu (DIN: 01778854) and Mr. Amit Ghosh (DIN: 00482967) have beenappointed as Additional (Independent) Directors w.e.f. 24 January 2017. They will holdtheir respective offices up to the date of the ensuing AGM.
Pursuant to Section 160 of the Act your Company has received separate requisitenotices proposing the appointments of Dr. Rupali Basu and Mr. Amit Ghosh as IndependentDirectors on the Board at the said AGM. Accordingly the Board recommends theirappointments as Independent Directors.The resolutions confirming the above appointmentsforms part of the Notice convening the ensuing AGM of the Company. We seek your support inconfirming the above appointments to the Board. c) Cessation
In line with the group policy on retirement of Directors (IndependentDirectors to retire on attaining 75 years of age) Mr. Ashok Kumar Basu (DIN: 01411191)retired as an Independent Director of the Company w.e.f. 24 March 2017. Mr. Basu joinedthe Board on 29 March 2007. The Directors place on record their sincere appreciation ofMr. Basus valuable contributions during his long tenure of association as a Directorin the Company.
Mr. Sanjiv Paul (DIN: 00086974) will hold office as Managing Director of theCompany till the close of business hours on 30 June 2017. He will however continue as aNon-Executive Director on the Board w.e.f. 1 July 2017.
The Directors would like to place on record their deep sense of appreciation towardsthe valuable contribution made by Mr. Paul particularly in turning around the Companyduring his tenure as Managing Director.
Key Managerial Personnel
During the year under review there has been no change in the offices of the KMPs.
However after the close of the financial year under review following changes havetaken place in the offices of KMPs:
Mr. Sandeep Kumar has become a Key Managerial Personnel w.e.f. 10 April 2017and has been appointed as the Managing Director of the Company w.e.f 1 July 2017; and
Mr. Sanjiv Paul will continue to hold the position as the Key ManagerialPersonnel till the closing hours of 30 June 2017.
The remuneration and other details of the Key Managerial Personnel for FY 2016-17 areprovided in Extract of the Annual Return which forms part of this Directors Report.
Our Audit Committee was constituted in the year 1995. The Committee has adopted acharter for its functioning. The primary objective of the Committee is to monitor andprovide effective supervision of the Managements financial reporting process toensure accurate and timely disclosures with the highest levels of transparency integrityand quality of financial reporting. During the financial year there has been no instancewhere the Board has not accepted any recommendation of the Committee.
During the year the Audit Committee comprised of Mr. Krishnava Dutt Chairman(Independent Director) Mr. Ashok Kumar Basu (Independent Director) Dr. Pingali Venugopal(Independent Director) and Ms. Samita Shah (Non-executive Director) as Members. Mr. AshokKumar Basu ceased to be a Member with effect from 24 March 2017 consequent uponcompletion of his tenure as a Director in the Company and Mr. Amit Ghosh (IndependentDirector) was appointed as a Member of the Audit Committee with effect from 21 April2017. The Committee met 6 (six) times during the year the details of terms of referenceof the Committee number and dates of meetings held and attendance of Directors during theyear are given in the Corporate Governance Report forming part of this Annual Report.
Internal Control Systems
The Board of Directors of the Company is responsible for ensuring that InternalFinancial Controls have been laid down in the Company and that such controls are adequateand operating effectively. The Company has adequate and effective Internal FinancialControls (IFC) framework commensurate with its size scale and complexity of operations.The framework has been designed to provide reasonable assurance with respect to recordingand providing reliable financial and operational information complying with applicablelaws safeguarding assets from unauthorised use executing transactions with properauthorisation and ensuring compliance with corporate policies. The controls based on theprevailing business conditions and processes have been tested during the year and noreportable material weakness in the design or effectiveness was observed. The framework onInternal Financial Controls over Financial Reporting has been reviewed by the internal andexternal auditors.
The Audit Committee reviews the reports submitted by the Internal Auditors in each ofits meeting. Also the Audit Committee at frequent intervals has independent sessions withthe external auditor and the Management to discuss the adequacy and effectiveness ofinternal financial controls. The details of the internal financial control system andtheir adequacy are included in the Management Discussion and Analysis as Annexure Awhich forms a part of this Annual Report.
Your Company has a robust risk management framework in line with its holdingCompanys risk management process for identifying prioritizing and mitigating riskswhich may impact attainment of short and long term business goals of the Company.The riskmanagement framework is aligned with strategic planning deployment and capital projectevaluation process of the Company. The process aims to analyse internal and externalenvironment and manage economic financial market operational compliance andsustainability risks and capitalises opportunities for business success.
The Company has identified key risk areas which may affect the business and operationalgoals of the Company. These identified risks are periodically revisited against theirrespective mitigation plans. The Board has constituted a separate Risk ManagementCommittee consisting of Directors and a management representative. The Committee meets atperiodic intervals and monitors evaluates and strengthens the effectiveness of riskmanagement framework of the Company.
Vigil Mechanism / Whistle Blower Policy
Your Company has adopted a Vigil Mechanism policy that provides a formal mechanism forall Directors Employees and Vendors of the Company to approach the EthicsCounsellor/Chairman of the Audit Committee to make protective disclosures about anyunethical behaviour actual or suspected fraud or violation of the Tata Code of Conduct(TCoC).
The Whistle Blower Policy is an extension of the TCoC which requires every Director/employee/ vendor to promptly report to the Management any actual or possible violation ofthe TCoC or any event which he or she becomes aware of that could affect the business orreputation of the Company.
During the year under review none of the Directors/ employees/ vendors was deniedaccess to the Ethics Counsellor/ Chairman of the Audit Committee.
The said policy is available on the Companys website at http://www.tatametaliks.com/static-files/pdf/whistleblower-policy.pdf
Related Party Transactions
During the year under review all Related Party Transactions (RPTs) were on ArmsLength basis and in the ordinary course of business and hence do not fall under the ambitof Section 188(1) of the Act. There was no material RPT entered into by the Company withPromoters Directors KMPs or other designated persons during FY 2016-17 except thosereported in the financial statements.
In compliance with the provisions of the Act and the SEBI Regulation 2015 each RPT isplaced before the Audit Committee for prior approval. A prior omnibus approval of theAudit Committee is obtained on a yearly basis for the transactions which are foreseen andrepetitive in nature. The transactions pursuant to the omnibus approval so granted isaudited and a detailed quarterly statement of all RPTs is placed before the AuditCommittee for its review. The quarterly statement is supported by a Certificate dulysigned by the Managing Director and the Chief Financial Officer. The policy on RPTs asapproved by the Board is available on the Companys website at http://www.tatametaliks.com/static-files/pdf/policies/rpt-policy.pdf
In view of the above the disclosure required under the Act in Form AOC-2 is notapplicable for FY 2016-17. None of the Directors or KMPs has any pecuniary relationshipsor transactions with the Company during FY 2016-17.
Disclosure as per Sexual Harassment of Women at Workplace (Prevention Prohibition AndRedressal) Act 2013
Your Company has zero tolerance towards sexual harassment at workplace. It has in placea Policy in line with the requirements of The Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the rules framed thereunder. AnInternal Complaints Committee (ICC) is in place to redress complaints received regardingsexual harassment. All employees (permanent contractual temporary trainees etc.) arecovered under this Policy.
The Company has not received any complaint of sexual harassment during the financialyear 2016-17.
Directors Responsibility Statement
Based on the framework of IFC established and maintained work performed by theinternal statutory cost and secretarial auditors and the external agencies includingaudit of internal financial controls over financial reporting by the statutory auditorsand the reviews performed by Management and the Audit Committee the Board is of theopinion that the Companys internal financial controls were adequate and effectiveduring FY 2016-17.
Accordingly pursuant to the provisions of Section 134(3)(c) read with Section 134(5)of the Act the Board of Directors to the best of its knowledge and ability confirmthat: a) in the preparation of the annual accounts the applicable accounting standardshave been followed along with proper explanation relating to material departures; b) theDirectors have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the profitof the Company for that period; c) the Directors have taken proper and sufficient care forthe maintenance of adequate accounting records in accordance with the provisions of thisAct for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities; d) the Directors have prepared the annual accounts on a goingconcern basis; e) the Directors have laid down internal financial controls in the Companyand that such internal financial controls are adequate and were operating effectively; andf) the Directors have devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
Pursuant to Section 139 of the Act read with the Companies (Audit and Auditors) Rules2014 the current term of Messrs Deloitte Haskins & Sells (Firm Registration No.302009E) Chartered Accountants as the Statutory Auditors of the Company expires at theconclusion of the ensuing AGM of the Company.
Your Board at its meeting held on 1 June 2017 upon the recommendation of the AuditCommittee has recommended the appointment of Messrs Price Waterhouse & Co CharteredAccountants LLP Chartered Accountants (ICAI Registration No.304026E/E300009) as theStatutory Auditors of the Company at the 27th AGM of the Company for an initial term of 5(five) years. Accordingly a resolution proposing appointment of
Messrs Price Waterhouse & Co Chartered Accountants LLP Chartered Accountants asthe Statutory Auditors of the Company for a term of 5 (five) consecutive years i.e. fromthe conclusion of 27th AGM till the conclusion of 32nd AGM of theCompany pursuant to Section 139 of the Act forms part of the Notice of the 27thAGM of the Company. The Company has received their written consent and a certificate thatthey satisfy the criteria provided under Section 141 of the Act and that theirappointment if made shall be in accordance with the applicable provisions of the Act andrules framed thereunder.
Messrs Deloitte Haskins & Sells had been appointed as the Statutory Auditors of theCompany in FY 2006-07 and will hold office until the conclusion of the ensuing AGM. Onyour behalf and on our own behalf we place on record our sincere appreciation for theservices rendered by Deloitte during its long association with the Company.
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board of Directors upon therecommendation of the Audit Committee has approved the appointment of Mr. P VSubramanian Company Secretary in Whole-time-Practice [CP. No. 2077 (ACS-4585)] as theSecretarial Auditor of the Company for the Financial Year ending 31 March 2018. TheSecretarial Audit Report for the financial year ended 31 March 2017 in Form MR-3 formsan integral part of the report and is annexed herewith as Annexure E.
Pursuant to the provisions of Section 148 of the Act and the Companies (Cost Recordsand Audit) Rules 2014 your Company is required to have its cost records audited by aCost Accountant in practice. The Board of Directors upon the recommendation of the AuditCommittee has approved the appointment of Messrs Shome & Banerjee Cost Accountants(Firm Registration No: 000001) as the Cost Auditors of the Company for the Financial Yearending 31 March 2018. Pursuant to Section 148 of the Act read with Rule 14 of Companies(Audit and Auditors) Rules 2014 ratification of the remuneration of Cost Auditors isbeing sought from the Members of the Company at the ensuing AGM. The details of the sameis provided in the Notice convening the AGM.
The due date for filing the Cost Audit Report of the Company for the Financial Yearended 31 March 2016 was 30 September 2016 and the same was filed in XBRL mode by theCost Auditor on 17 August 2016.
There are no qualifications in the respective reports of the Statutory AuditorsSecretarial Auditor and Cost Auditors.
Reporting of Fraud
The Auditors of the Company have not reported any fraud as specified under Section143(12) of the Act.
Extract of the Annual Return
In compliance with Section 134(3)(a) of the Act the extract of the Annual Return inForm MGT 9 as per Section 92 of the Act and the Rules framed thereunder forms anintegral part of this report and is annexed herewith as Annexure F.
Significant and Material Orders passed by the Regulators or Courts
There has been no significant and material order(s) passed by any Regulator(s) orCourt(s) or Tribunal(s) impacting the going concern status of the Companysoperations. However Members attention is drawn to the statement on contingentliabilities and commitments in the notes forming part of the Financial Statements. Nomaterial changes and commitments have occurred after the close of the financial year tillthe date of this Report which affect the financial position of the Company for thereporting period.
Particulars of Loans Guarantees or Investments
Your Company did not give any loans directly or indirectly to any person or to otherbody corporate nor did it give any guarantee or provide any security in connection with aloan to any other body corporate or person during the financial year under review. TheCompany has certain long term non-current investments as detailed under note 6 to theNotes to the Financial Statements; such investments are in compliance withSection 186 of the Act.
Your Company has not accepted any fixed deposits nor does the Company has anyoutstanding deposits under Section 73 of the Act read with the Companies (Acceptance ofDeposit) Rules 2014 as on the Balance Sheet date.
Energy Conservation Technology Absorption and Foreign Exchange Earnings & Outgo
Details of energy conservation technology absorption and foreign exchange earnings andoutgo is an integral part of this report and is annexed herewith as Annexure G.
Awards and Accolades
During the year under review your Company received multiple awards and appreciations.Noteworthy among them was the IIM National Sustainability Award in Iron and Steel sectorfor 2015-16 under the category of DR plants/Pig Iron Plants/Major Re-Rolling Units.
Your Company was also the proud recipient of the Tata Engage Responsible Leader Awardfor Employee Volunteering a Tata Group level appreciation for significantcontribution towards CSR initiatives.
No disclosure or reporting is made in respect of the following items as there were notransactions during the year under review:
Details relating to deposits covered under Chapter V of the Act;
Issue of equity shares with differential rights as to dividend voting orotherwise;
Issue of shares to the employees of the Company under any scheme (sweat equityor stock options)
The Company does not have any scheme or provision of money for the purchase ofits own shares by employees or by trustees for the benefit of employees;
Managing Director has not received any remuneration or commission from itserstwhile subsidiaries during the year;
There was no revision in the financial statements other than as required to bedone as per Ind AS ; and
There was no change in the nature of business.
Your Directors take this opportunity to thank all its Stakeholders i.e. shareholderscustomers vendors dealers investors business associates and bankers for theircontinued support during the year. They place on record their deep sense of appreciationfor the contribution made by Senior Leadership team and employees at all levels across theorganisation. The resilience to meet and successfully overcome several challenges waspossible due to their hard work solidarity co-operation and support.
Your Directors also express their deep sense of gratitude towards various Governmentsand regulatory authorities for their continued support and look forward to their guidancein the future.
| ||On behalf of the Board of Directors |
| ||Koushik Chatterjee |
|Place: Kolkata ||Chairman |
|Date : 1 June 2017 ||DIN: 00004989 |