The Board of Directors of Usha Martin Limited present the 30th Annual Report andAudited Accounts for the Financial Year ended 31st March 2016.
FINANCIAL SUMMARY / HIGHLIGHTS
| || |
| ||31st march 2016 ||31 march 2015 ||31st march 2016 ||31 march 2015 |
|Net Sales / Income from Operations ||3447.47 ||3746.05 ||4147.92 ||4561.10 |
|Other Income ||37.46 ||38.68 ||35.33 ||36.99 |
|Net Sales and Other Income ||3484.93 ||3784.73 ||4183.25 ||4598.09 |
|Profit/(Loss) Before Interest Depreciation & Tax (Before Exceptional Items) ||335.57 ||646.38 ||389.34 ||753.48 |
|Depreciation ||273.78 ||383.00 ||311.99 ||418.42 |
|Finance Costs ||541.84 ||507.39 ||558.05 ||521.94 |
|Profit/(Loss) Before Tax (Before Exceptional Items) ||-480.05 ||-244.01 ||-480.70 ||-186.88 |
|Exceptional Items ||- ||-100.16 ||- ||-100.16 |
|Tax expenses (including MAT and Deferred Tax) ||-75.62 ||-51.76 ||-67.09 ||-35.64 |
|Profit (Loss) After Tax ||-404.43 ||- 292.41 ||-413.61 ||-251.40 |
|Minority Interest ||- ||- ||-137 ||-172 |
|Profit/(Loss) after Tax and Minority interest ||-404.43 ||- 292.41 ||-414.98 ||-253.1 2 |
|Profit/(Loss) Brought Forward from Previous Year ||-295.72 ||-3.31 ||73.74 ||335.17 |
|Appropriations are made as under: || || || || |
|-Transfer to Capital Redemption Reserve ||- ||- ||13.40 ||8.00 |
|-Proposed Dividend and Tax thereon ||- ||- ||0.19 ||0.21 |
|- Adjustment arising on acquisition of controlling interest in a Joint Venture ||- ||- ||- ||0.10 |
|-Balance Carried Forward to next year ||-700.15 ||-295.72 ||-354.83 ||73.74 |
Review of Operations
The turnover for the year was Rs. 4147.92 crores on consolidated basis and Rs.3447.47 crores on standalone basis as compared to Rs. 4561.10 crores and Rs. 3746.05crores respectively in the previous year. The operating profit got reduced on consolidatedbasis from Rs.753.48 crores in previous year to Rs. 389.34 crores in the current financialyear and on standalone basis from Rs. 646.38 crores to Rs. 335.57 crores.
The detailed review of operations under Steel and Wire & Wire Rope businesses hasbeen discussed in Management Discussion and Analysis which forms part of this report.
Dividend & Reserves
In view of there being no profits the directors are unable to recommend dividend forthe year under review nor do they propose to carry any amount to reserves.
Outlook and business
Steel business outlook is likely to stay challenging over the near term due toovercapacities in the sector. According to World Steel Association
(WSA) global steel demand is likely to contract by 0.8% in 2016 and expand by only 0.4%in 2017. Demand in China which produces more than 50% of the global steel is seen ascontracting at 4% and 3% in 2016 & 2017 respectively. At 626 million tons the steeldemand in China in 2017 would be 15% lower compared to 2016. In India though the demandof steel is expected to grow at a healthy 5.4% both in 2016 and 2017 the sector is likelyto be weighed down by global excess capacities and contraction in aggregate demand.
Wire ropes business continues to do reasonably well despite various headwinds thoughmargins are under continuous pressure. The demand has been weighed down by a collapse inproject lead demand in oil sector and slow-down in mining activity globally. The Companymanaged to increase volumes in some of the other product segments within Wire Ropesbusiness though the loss of volumes in oil and mining sector could not be compensated andtherefore the profitability was affected adversely when compared to the last financialyear and the year before. Given the Company's reputation marketing and distributionstrengths in this business we expect to weather this slowdown by focussing on new areas.
No material changes and commitments have taken place since the close of the previousfinancial year and till the date of this report which may significantly affect thefinancial position of the Company adversely.
TPM & Quality
Steel Division and Wire Ropes & Speciality Products Division continue to havecertification for its quality management systems in accordance with ISO 9001 2000 fromBVQI.
The TQM journey of Wire & Wire Rope Division for further strengtheningcompetitiveness is progressing well to enable the Company to reap long term benefits.
Subsidiaries & Joint Ventures
The international subsidiaries provide significant synergy and support to the Company'swire rope business and performance. Further all the operating subsidiaries of the Companyhave continued to perform reasonably well in the economic and business circumstances whichprevailed during the year under review.
A key joint venture formed by the Company namely Pengg Usha Martin Wires PrivateLimited has reported satisfactory results in the year under review.
During the year under review with a view to reduce non - core assets of the Companythe Board has decided to divest its' entire shareholding of 50% in Dove Airlines PrivateLimited (a joint venture company) ["DAPL"] and the same is under process.
During the year under review no company has become or has ceased to be subsidiaryjoint venture or associate company.
A statement covering report on the performance and financial position of each of thesubsidiaries associates and joint ventures is provided separately and forms part of thisReport.
Steel Division and Wire Ropes & Speciality Products Division operate under ISO14001 Environment Management Systems (EMS) Standards from Det Norseke Veritas (DNV) ofU.K. The effectiveness of these systems is evident from reduced oil and water consumptionreuse of waste oils and water and utilisation of iron containing wastes.
Wire Rope & Specialty Products Division is driving improvements in effluenttreatment plant to eliminate sludge carry over by incorporation of filter press theoutput of which is being used for non-critical applications and continues to target zerodischarge condition. The Division is also focused on reducing air pollution by convertingfrom oil to LPG and eliminating emission of un-burnt fuels in atmosphere. Deposits
During the year the Company has not accepted any deposit under Section 73 of theCompanies Act 2013 ("the Act") and the Companies (Acceptance of Deposits)Rules 2014. As on 31st March 2016 there are no unclaimed deposits with the Company.Further the Company has not defaulted in repayment of deposits or payment of interestthereon in the past.
The Paid-up Equity Share Capital as on 31st March 2016 stood at Rs.30.54 crores. TheCompany has not during the year under report issued any shares with or withoutdifferential voting rights granted stock options or issued sweat equity shares.
Subsequent to Shareholder's approval obtained at the Extra Ordinary General Meetingheld on 16th March 2015 the Company had during the year under review issued andallotted 34285600 convertible equity warrants each convertible into one Equity Share offace value of Re. 1 each at the option of the allottees to certain persons from Promoterand Promoter Group. Further out of the aforesaid warrants 750000 convertible equitywarrants lapsed as on 31st March 2016 due to non-exercising of the option for conversion.
Significant and material orders passed by regulators or courts or tribunals impactingthe going concern status and Company's operations in future.
During the year no material orders were passed by any regulatory authority or courtwhich may affect the status of going concern of the Company.
Details in respect of adequacy of internal financial controls with reference to thefinancial statements.
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company (with its inherent weaknesses) work performedby the internal statutory and secretarial auditors and external consultants speciallyappointed for this purpose including audit of internal financial controls over financialreporting by the statutory auditors and the reviews performed by management and therelevant board committees including the audit committee the Board is of the opinion thatthe Company's internal financial controls were adequate and effective during the periodended on 31st March 2016.
Mr. Prashant Jhawar (DIN: 00353020) is retiring by rotation and being eligible offershimself for re - appointment. His brief profile is given in the Notice convening theforthcoming Annual General Meeting.
During the year Mr. R Venkatachalam (DIN: 02194830) was appointed on the Boardeffective 4th November 2015 as a nominee of State Bank of India.
Mrs. Ramni Nirula (DIN: 0001 5330) an Independent Director resigned as Director of theCompany effective 4th April 2016. The Board places on record its appreciation for Mrs.Nirula's active participation and the guidance provided by her during her tenure asDirector of the Company.
Directors' Responsibility Statement
Pursuant to requirements under Section 134(5) of the Companies Act 2013 the Board tothe best of it's knowledge and belief confirms that that:
(i) the applicable accounting standards have been followed in preparation of annualaccounts for financial year ended 31st March 2016 and proper explanations have beenfurnished relating to material departures;
(ii) accounting policies have been selected and applied consistently and prudentjudgments and estimates have been made so as to give a true and fair view of state ofaffairs of the Company at end of financial year and of loss of the Company for year underreview;
(iii) proper and sufficient care has been taken for maintenance of adequate accountingrecords in accordance with provisions of the Act for safeguarding assets of the Companyand for preventing and detecting fraud and other irregularities;
(iv) the annual accounts for financial year ended 31st March 2016 have been preparedon a going concern basis;
(v) internal financial controls are in place and that such financial controls areoperating effectively.
(vi) adequate systems to ensure compliance with the provisions of all applicable lawsare in place and are operating effectively.
Criteria has been formulated for formal evaluation of the individual Directors Boardas a whole and the Board Committees. Every Director evaluated the performance of otherDirectors (excepting himself / herself) the Board as a whole and it's Committees andprovided feedback to the Nomination & Remuneration Committee. The Nomination &Remuneration Committee reviewed the feedback and made it's recommendation to the Board forfinal evaluation.
Nomination & Remuneration Policy
In accordance with the provisions of the Act and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 (erstwhile Clause 49 of the Listing Agreement)the Board of Directors of the Company on recommendation of the Nomination &Remuneration Committee have adopted the criteria for determination of qualificationpositive attributes and independence of Directors alongwith Policies on Remuneration ofDirectors Remuneration of Senior Management Personnel (including Key ManagementPersonnel) and Remuneration of Other Employees. The above mentioned criteria and Policiesare available at www.ushamartin. com/investor
Vigil Mechanism and Whistle Blower Policy
The Company has a coded Vigil Mechanism and Whistle Blower Policy available atwww.ushamartin.com/investor This Policy provides a framework to promote responsible andsecure reporting of undesirable activities ("whistle blowing"). Through thisPolicy the Company seeks to provide a mechanism to all employees or directors of theCompany ("whistleblower") to disclose any misconduct malpractice unethical andimproper practice taking place in the Company for appropriate action and reportingwithout fear of any kind of discrimination harassment victimisation or any other unfairtreatment or employment practice being adopted against the whistleblower
particulars of employees & managerial remuneration
The required disclosures in accordance with Section 197 of the Act read with Rule 5 ofCompanies (Appointment and Remunaration of Managerial Personnel) Rules 2014 are providedseparately and forms part of this report.
CEo and CFo Certification
In accordance with the provisions of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 (erstwhile Clause 49 of the Listing Agreement) theManaging Director and Chief Financial Officer of the Company have submitted a certificatefor the year ended 31st March 2016 to the Board of Directors.
In line with requirements of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 and Accounting Standards issued by the Institute of Chartered Accountantsof India the Company has made additional disclosures in respect of Consolidated FinancialStatements Related Party Transactions and Segmental Reporting.
In accordance with the provisions of Section 139 of the Act and the transition periodmentioned therein Price Waterhouse Chartered Accountants were appointed as StatutoryAuditors of the Company at the 28th Annual General Meeting of the Company held on 31stJuly 2014 for a period of two years and upto the conclusion of the 30th Annual GeneralMeeting.
The Board of Directors recommend to the shareholders the appointment of S.R. Batliboi& Co. LLP Chartered Accountants (Firm Registration No. 301003E) as the Auditors ofthe Company to hold office from the conclusion of 30th Annual General Meeting till the35th Annual General Meeting of the Company.
Pursuant to Section 148 of the Act and Rules made thereunder the Board has appointedMessers. Guha Ghosh Kar & Associates Cost Accountants to conduct cost audit of theCompany for the Financial Year 2015-16 and had recommended their remuneration to theshareholders which was ratified at the Annual General Meeting held on 30th July 2015.
The Board of Directors have appointed Messers Guha Ghosh and Kar & Associates asthe Cost Auditors for the Financial Year 2016-17 and their remuneration is sought to beratified from the shareholders at the forthcoming Annual General Meeting.
Secretarial audit and Corporate Governance report
During the year under review the Board of Directors had appointed M/s A K Labh &Co. firm of Practicing Company Secretaries for conducting secretarial audit in accordancewith the provisions of the Act and the
Rules framed thereunder. The Secretarial Audit Report is annexed and forms part of thisReport.
The Company has complied with the applicable requirements of SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 (erstwhile Clause 49 of Listing Agreement)and followed the practice of getting disclosures from directors and senior managementpersonnel relating to any material financial and commercial transactions where they haveany personal interest with a potential conflict of interest with the Company at large. Adetailed Report on Corporate Governance is annexed and forms part of this Report.
Further your attention is drawn to the observations made in the Secretarial AuditReport and Auditors' Certificate on Corporate Governance Report with regard to IndependentDirectors for which appropriate explanation has been provided in Disclosure XI of theReport on Corporate Governance.
Corporate Social Responsibility (CSR)
Usha Martin Limited has been constantly involved in sustainable development ofcommunities around its plants & mines. It has expanded its CSR activities to the otherdistricts of Jharkhand. Commitment of founders of Usha Martin Limited towards sustainabledevelopment has led KGVK a non - profit seeking organization CSR arm of the Company toreach more than 190 villages of Jharkhand.
The CSR Committee consists of the following Members:
|Mr. B K Jhawar - ||Chairman (Non - executive director) |
|Mr. Brij K Jhawar - ||Member (Non - executive director) |
|Mrs. Ramni Nirula - ||Member (Independent Director) |
| ||[till 4th April 2016] |
|Mr. P S Bhattacharyya - ||Member (Independent Director) [effective 25th May 2016] |
The contents of the CSR Policy of the Company is available at www.ushamartin.com/investor The CSR activities undertaken by KGVK on behalf of the Company(including the Annual Report on CSR activities) has been annexed separately and forms partof this Report.
Extract of Annual Return
The details forming part of the extract from the Company's Annual Return in Form MGT 9are annexed separately with this Report.
Number of Meetings of Board and it's Committees
The details regarding Meetings of the Board and its Committees have been provided inthe Corporate Governance Report.
Statement on declaration given by independent directors under Section 149 of theCompanies act 2013
As required under provisions of the Act and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 all Independent Directors of the Company have confirmedthat they meet the requisite criteria of independence.
particulars of loans guarantees and investments
The particulars of loans guarantees or investments are provided in the FinancialStatement.
particulars of contracts or arrangements with related parties
The related party contracts or arrangements entered into by the Company during the yearunder review do not fall under the ambit of Section 188 (1) of the Act and all relatedparty transactions during the financial year were at arm's length basis and in theordinary course of business. In compliance with the Act and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 all related party transactions had been placedbefore the Audit Committee for prior approval. The related party transaction policy asapproved by the Board is hosted on the Company's website. Further Form AOC - 2 is notattached with this Report as there were no such related party transactions for whichdisclosure under Rule 8 of the Companies (Accounts) Rules 2014 was required.
Conservation of energy technology absorption foreign exchange earnings and outgo:
Information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134 (3) of the Act read with Rule 8 of theCompanies (Accounts) Rules 2014 is annexed seperately and forms part of this report.
The Company has a Risk Management Committee to assist the Board in discharging itsresponsibilities towards management of material business risk (material business risksinclude but is not limited to operational financial sustainability compliancestrategic ethical reputational product quality human resource industry legislativeor regulatory and market related risks) including monitoring and reviewing of the riskmanagement plan / policies in accordance with the provisions of SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 and erstwhile Clause 49 of the ListingAgreements.
The Committee consists of the following members :
|Mr. P S Bhattacharyya ||- Chairman (Independent Director) |
|Mr. Rajeev Jhawar ||- Member (Managing Director) |
|Mr. P K Jain ||- Member (Jt. Managing Director [Wire & Wire Rope Business]) |
Your Directors place on record their appreciation for the valuable co-operation andsupport of its employees customers suppliers contractors shareholders investorsgovernment authorities financial institutions banks partners and collaborators.
| ||On behalf of the Board of Directors |
|Place : Kolkata ||B.K. Jhawar ||R. Jhawar |
|Date : 25th May 2016 ||Chairman - Emeritus ||Managing Director |