BOARD OF DIRECTORS REPORT TO THE SHAREHOLDERS
Your Directors present their 32nd Annual Report on the business and operations of theCompany and its Audited Statements of Accounts together with Auditors Report for thefinancial year ended 31st March 2018.
| ||Current year ||Previous year |
| ||(31.03.2018) ||(31.03.2017) |
|1. SUMMARY OF FINANCIAL RESULTS AND ||Rupees in Lakhs ||Rupees in Lakhs |
|PERFORMANCE OF THE COMPANY: || || |
|Income from Operations (Including other Income) ||2482.97 ||406.18 |
|Profit before and also after exceptional and Extra-ordinary items and taxes ||38.61 ||81.82 |
|Less: Tax Expenses for the year ||21.58 ||20.26 |
|Add: Deferred Income Tax (Assets) ||34.77 ||14.40 |
|Net Profit for the year after tax ||51.79 ||75.96 |
|Add: Other Comprehensive income ||-4.80 ||-5.75 |
|Total Comprehensive income (including net Post Tax Profit for the year) ||46.99 ||70.21 |
Your Directors do not recommend any dividend for the year under review.
No amount has been transferred to the reserve by the Board during the year underreview.
4. THE COMPANYS WORKING/STATE OF AFFAIRS DURING THE FINANCIAL YEAR UNDER REVIEW
The Companys overall working during the Financial Year under review has not beensatisfactory. Due to unremunerative and financially unviable operations caused byhigh/unaffordable prices of iron ore/pellets together with expensive logistics cost fortransporting the same from Bellary/Hospet based iron ore mines and pellet plants(Karnataka) to Companys Sponge Iron Plant at Dist. Nalgonda; the management had nooption but to keep the said Sponge-Iron plant inoperative for the entire year. The saidunit is lying inoperative for the past few years and difficult for it to becomeeconomically viable unless the prices of iron ore/pellets fall through competition amongstthe suppliers without corresponding fall in the selling prices of Sponge Iron on asustainable basis. The said plant has been incurring losses since its shut-down asthe Company has to bear and pay for its fixed overheads and expenses and hence yourboard feels and considers that it will be prudent to sell /dispose off the same to anyprospective buyer to cut down the continuing losses though it is difficult to get a buyerconsidering the overall prevailing economic conditions particularly as substantial numberof medium sized industrial units of delinquent borrowers having been put on sale bylending banks with a weak response. However if conditions become favourable; themanagement will strive to restart the manufacturing operations at this plant.
The Companys Raigarh chhatisgarh based gas bottling plant also remainedinoperative due to uneconomic operations limited market and as the same cannot competewith the highly resourceful Government owned oil companies. This plant has also been lyinginoperative for several years and incurring losses due to fixed overheads and otherexpenses and your board considers it prudent to sell/dispose off the same as there islittle scope of its turning viable or to give it on lease/rent to any willing party.
In the case of LPG Bottling Plant at Uluberia Howrah given on lease; the Lessee hasconveyed unwillingness in continuing with the existing lease arrangement. However thesaid lessee has shown interest in outright purchase of companys said plant and is incontact with the management and your board will take a decision in the matter upon receiptof any formal and binding offer/proposal from the said lessee.
Your Boards prudent opinion and advisory as above with respect to the said unitsof the company; can fructify only upon identifying/finding prospective serious/genuinebuyers for them under the current difficult economic atmosphere
and receiving definite formal and binding offers/proposals for the said units andsubject to receipt of consent and approval from you as required under the applicableprovisions of the companies act2013 and other laws/regulations if any. It is pertinentto mention here that the board had taken your approval/consent to sell /dispose off thesaid units through a special resolution passed and adopted by you through postal ballotprocess during August 2016 but in absence of any serious and definite formal proposalsfrom any intending buyer(s) ; your board could not do anything in this respect. Your boardis considering taking fresh consent and approval from you in this respect through postalballot procedure.
However the Companys Sponge Iron Plant at Jamshedpur commenced commercialproduction from middle of April 2017 and barring for few interruptions it continued tooperate till the year end. The said plant has also been shut down temporarily from April2018 onwards to carry out major augmentation of Pollution Control Equipments at asubstantial capital cost. The said Sponge Iron Plant is expected to commence productionafter the end of rainy season of the calendar year 2018.
The Companys income from operations (net of excise VAT and GST) for the yearended 31.03.2018 stood at Rs.2304.54 lacs (previous year Rs.185.13 lacs). The Company hasalso earned other income of Rs.178.42 lacs (previous year Rs.215.30 lacs). TheCompanys Sponge-Iron Plant at Jamshedpur produced a total of 13477 MT of Sponge Iron(previous year nil). After taking into account of the incomes and related expensesincluding Income Tax; the Company earned a net profit of Rs.51.79 lacs (previous yearRs.75.96 lacs). The other comprehensive income/(loss) pursuant to adoption of new IndianAccounting Standards (IND AS) w.e.f. 1.4.2017 amounted to Rs. (4.80) lacs and consequentlythe total comprehensive income including profit after tax stood at Rs.46.99 lacs. Yourdirectors are continuing their best efforts to improve the overall working and financialperformance of the Company.
5. CHANGE IN NATURE OF BUSINESS OF THE COMPANY:
None during the year
6. MATERIAL CHANGES AND COMMITMENTS AFTER THE END OF THE FINANCIAL YEAR 31.03.2018 TILLTHE DATE OF THIS BOARD REPORT:
The Companys Sponge Iron Plant at Jamshedpur has been temporarily shut down fromApril 2018 onwards for augmentation of Pollution Control Equipments as stated in Para 4above. Barring this; there are no other material changes.
7. SIGNIFICANT MATERIAL ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNALS AGAINST THECOMPANY:
8. ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO COMPANYS FINANCIALSTATEMENTS:
In the opinion of the Board the Company has adequate Financial Controls in place withrespect to Companys Financial Statements and Operations. Kindly refer to AnnexureB of the Statutory Auditors report dated 29th May 2018.
9. DETAILS OF NAMES OF COMPANIES WHICH HAVE BECOME OR CEASE TO BE THE COMPANYSSUBSIDIARY COMPANIES/ JOINT VENTURE/ ASSOCIATE COMPANIES DURING THE YEAR UNDER REVIEW ANDTHEIR FINANCIAL PERFORMANCE:
The Company neither has nor had in the past any subsidiary associate or joint ventureCompany.
10. FIXED DEPOSIT :
The Company has not accepted any deposits during the year from the Public under section73 or 74 (Chapter V) of the Companies Act 2013 nor did it receive the same in any of theprevious years and hence there are no overdue/ outstanding Deposits or any interestpayable thereon and therefore the prescribed details under the Companies Act 2013 are notrequired to be furnished.
11. STATUTORY AUDITORS :
The Board of Directors recommend re-appointment of M/s. M.R. Singhwi & Company(bearing firm Registration no. 312121E) as the statutory auditors of the company for thefinancial year 2018-19 beginning from the conclusion of 32nd AGM and upto the conclusionof 33rd AGM. The declaration to the effect that their appointment if made would bewithin the prescribed limits and they are eligible for appointment as such and do notsuffer from any disqualifications as specified in section 141 of the Companies Act 2013and the relevant rules made thereunder has been received from them and accordingly themembers are requested to consider adoption of the respective ordinary resolution as setout in the notice convening the next 32nd AGM.
12. AUDITORS REPORT :
The observations made in the Auditors Report are self-explanatory and do not callfor any further comments u/s 134(3)
(f) of the Companies Act 2013. The Auditors have not made any materially significantqualifications in their Report.
13. EXTRACT OF THE ANNUAL RETURN OF FINANCIAL YEAR ENDED 31.03.2018:
The same is annexed with this Report in the prescribed FORM NO. MGT-9.
14. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION EXPORTS AND FOREIGN EXCHANGEEARNINGS AND OUTGOINGS.
The informations required under Section 134(3)(m) of the Companies Act 2013 readwith Rule 8 of the Companies (Accounts) Rules 2014 are as under:-
(A) CONSERVATION OF ENERGY :
The Power requirement at Companys Gas Bottling Plant is negligible as onlybottling of gases is being done. For Sponge Iron Plants the Capacitor Panels of adequatesize and number have been installed and are maintained to save and economise on powerconsumption. The Company has not made any fresh investments on this account nor was thereany need to take any fresh initiatives on this account.
(B) TECHNOLOGY ABSORPTION :
The Company is using in-house technology and expertise for its Hydrocarbon Gas BottlingPlants. The technology to manufacture Sponge Iron was provided by an outside agency longago. The said technology is fully indigenous is now well established and has been fullyabsorbed by the Company. The Company has not so far made use of any imported technologyfor its products/plants. The Company has not made nor felt necessary to absorb any freshtechnology and the Company has not incurred any expenditure on Research and Development.
(C) FOREIGN EXCHANGE EARNINGS AND OUTGO :
Earnings: Nil (Previous Year : Nil)
Outgo : Nil (Previous Year : Nil)
D) Annual Evaluation:
Pursuant to the provisions of the Sec 134 (3) (p) of the Companies Act 2013 and clause2 (f) (9) of chapter II of SEBI (Listing Obligations and disclosure requirements)regulations 2015 (hereinafter in this board report called and referred to as "SEBILODR REGULATIONS); your Board has carried out an annual performance evaluation of its ownperformance the Directors individually as well as the evaluation of the working of itsAudit Nomination and Remuneration Committees as per a suitably conceived manner. Duringthe year under review the Independent Directors met on 28th March 2018 inter alia todiscuss the Performance evaluation of Non Independent Directors and Board of Directors asa whole and of the Chairman & Managing Director and Evaluation of the quality of flowof information between the Management and Board for effective performance by the Board andwere satisfied overall. The Board has carried out the performance evaluation of allIndependent Directors of the Company and is satisfied with their performance.
15. CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY:
As per criteria prescribed under section 135 of the Companies Act 2013; the CSR is notapplicable to the Company in respect of the financial year 2016-17 covered under thisReport. The Company will however formulate and implement CSR Policy as and when it getsapplicable to the Company.
16. DIRECTORS :
A) Changes in Directors and Key Managerial Personnel:
Mr. Suresh Kumar Agarwal and Mrs. Sushma Chhibbar were re-appointed as Directors of theCompany by the members in the last Annual General Meeting held on 18th September 2017.Mr. Vishesh Chhibbar and Mr. Puranmal Agarwal the Directors retire by rotation and areeligible for re-appointment in the ensuing 32nd AGM. The brief resume about the Directorsseeking re-appointment is enclosed with the notice of AGM. Mr. Nikhil Deora CompanySecretary had resigned during the year due to personal reasons. Miss Shweta Mishra hasbeen appointed as the new Company Secretary by the Board with effect from 29.05.2018being the date of this Board Report.
B) Declaration by an Independent Director(s) and Re-appointment if Any:
Declaration given by Independent Directors meeting the criteria of independence asprovided in sub-section (6) of Section 149 of the Companies Act 2013 and Rule 5 of theCompanies (Appointment and Qualification of Directors) Rules 2014 has been received andtaken on record. The Independent Directors are serving the Company for the past few yearsand over the period they have been well familiarized with every functional operationaland
financial aspects of the Company. During the year no new Independent Director wasappointed and no existing Independent Director had resigned.
17. BOARD MEETINGS HELD DURING THE YEAR :
During the year the Board of Directors Meetings were held on four occasions e.g.on 19.05.2017 09.08.2017 24.10.2017 and 02.02.2018. The Independent Directors held theirseparate annual meeting on 28.03.2018.
18. AUDIT COMMITTEE NOMINATION & REMUNERATION COMMITTEE STAKEHOLDERS RELATIONSHIPCOMMITTEE & VIGIL MECHANISM :
As stated in the Corporate Governance Report annexed hereto.
19. LOANS GUARANTEES AND INVESTMENTS:
Refer Note:11 in the Financial Statements of Accounts.
20. PARTY TRANSACTIONS AS REQUIRED UNDER SECTION 188(1) COMPANIES ACT 2013:
The company has paid office rent of Rs.1.5 lacs to a related party as rent and has alsopaid Rs.8.4 lacs as remuneration to the Managing Director. There are no other relatedparty transactions. Please refer to Form AOC-2 annexed with this Board Report and formspart of it.
21. MANAGERIAL/DIRECTORS REMUNERATION:
The particulars of the same are as mentioned in the Corporate Governance Report annexedto this Board Report.
22. STATEMENT OF COMPLIANCE WITH NEW SECRETARIAL STANDARDS AS NOTIFIED AND EFFECTIVEFROM 01.10.2017.
The Company has adopted and complied with the new secretarial standards for generalmeetings (SS-2) and with regard to meetings of the Board of Directors (SS-1) w.e.f.01.10.2017 as issued by the Institute of Company Secretaries of India and approved by theCentral Government under Section 118 (10) of the Companies Act 2013.
23. SECRETARIAL AUDIT REPORT:
A Secretarial Audit Report given by J. Patnaik & Associates a Company Secretary inPractice is annexed hereto in the prescribed Form No. MR-3 of Companies Act 2013 andforms part of this Board Report.
24. CORPORATE GOVERNANCE :
The Company files quarterly Corporate Governance Report with BSE Ltd. as required underSEBI LODR REGULATION- 24. Corporate Governance Report along with the Certificate of theSecretarial Auditors confirming compliance of conditions of Corporate Governance asrequired under the relevant Regulations of SEBI LODR Regulations - 2015 is annexed to andforms part of this Board Report.
25. RISK MANAGEMENT POLICY:
The Companys biggest risk is with regard to procurement of critical raw materialsnamely Iron-Ore and Coal at reasonable/affordable rates but it has virtually no control onthe same as several of the Iron-Ore Mines in the Country still remain closed and nosignificant new commercial iron ore and/or coal mines have come up in the last severalyears and Coal has to be sourced mainly from Government-Owned Companies who decide and fixthe prices arbitrarily. The other risks are the wide fluctuations in the selling price ofSponge-Iron which again depend on Demand and Supply and your Company being a nominalplayer has no control or influence on the same. The Company has however laid downprocedures to inform the Board of Directors about Risk Assessments and itsminimization procedures. The Board has also framed and implemented the Risk ManagementPlan for the Company to the extent it was possible feasible and practical. The formationof Risk Management Committee is not applicable to the Company as the requirement isapplicable to only top 100 listed entities on BSE Ltd. as per Regulation 21 of SEBI LODRREGULATIONS 2015.
26. DISCLOSURES ABOUT REMUNERATION TO DIRECTORS VIS-A-VIS EMPLOYEES AND OTHERPARTICULARS AS REQUIRED UNDER SECTION 197 OF THE COMPANIES ACT 2013 READ WITH RULE 5 OFCOMPANIES (APPOINTMENT & REMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014:
A. During the year a remuneration of Rs 840000/- was paid to Managing Director andsitting fees of Rs 33000/- was paid to the Independent Directors for attending the BoardMeetings and none of the other directors received any remuneration and therefore thecomputation of ratio of remuneration of each Director to the median remuneration of theemployees of the Company are not furnished.
The remuneration paid and/or payable to the Key Managerial Personnels are veryreasonable and is commensurate with their performances. The remuneration paid to theemployees is as per the remuneration policy of the Company which is dynamic in nature andchanges as per the financial performance of the Company and of an individual employeeincluding their work experience competency job profile skill and seniority.
B. No employee of the Company during the financial year was in receipt of remunerationaggregating to Rs.60 lacs or more if employed for the whole year and Rs.5 lacs per monthif employed for a part of the financial year. No employee of the Company is holding 2% ormore of the Equity Shares of the Company. The number of permanent employees as at year endwere twenty and the ratio of remuneration paid to Managing Director to median remunerationof the employees was 4.32 :1.
27. DISCLOSURE UNDER SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION& REDRESSAL) ACT 2013:
The Board of Directors and/or the Management of the Company has not received anycomplaint on this account from any of the employees of the Company or from any otherperson.
28. DIRECTORS RESPONSIBILITY STATEMENT:
The Directors Responsibility Statement referred to in clause (c) of sub-section(3) of Section 134 of the Companies Act 2013 states:-
(i) That in the preparation of the annual accounts for the financial year ended 31stMarch 2018 the applicable accounting standards had been followed along with properexplanation relating to material departures.
(ii) That the Directors had selected such accounting policies and applied themconsistently and made judgments and estimates that were 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 the year under review.
(iii) That the Directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities.
(iv) That the Directors have prepared the accounts for the financial year ended 31stMarch 2018 on a going concern basis.
(v) That the Directors had laid down internal financial controls which are to befollowed by the Company and that such internal financial controls are adequate and wereoperating effectively.
(vi) That the Directors had devised proper systems to ensure compliance with provisionsof all applicable laws and that such systems were adequate and operating effectively.
29. ADOPTION 0F NEW ACCOUNTING STANDARDS - IND-AS :
The Company has adopted the new accounting standards being called as IND-AS w.e.f.01.04.2017 (with transition period being 01.04.2016) in compliance with the requirement ofSection 133 of the Companies Act 2013 and Companies (Indian accounting Standards) Rules2015 vide notification dated 16.02.2015 and accordingly the current years financialfigures and audit thereof are as per requirements of new IND-AS to the extent the samewere applicable to the Companys financial transactions and found practical to adoptwith use of optional exemptions. The comparatives of the previous financial year 2016-17and as on 01.04.2016 have also been furnished.
Your Directors would like to convey their sincere appreciation for the assistance andco-operation received from all Stakeholders during the year under review. Your Directorsalso wish to place on record their appreciation for the contribution of the employees atall levels.
| ||For and on behalf of the Board |
| ||Ashirwad Steels & Industries Limited |
| ||Dalbir Chhibbar |
|Place: Kolkata ||Chairman & Managing Director |
|Dated: 29th May 2018 ||(DIN : 00550703) |