Scan Steels Ltd.
|BSE: 511672||Sector: Metals & Mining|
|NSE: N.A.||ISIN Code: INE099G01011|
|BSE 15:41 | 22 Apr||37.90||
|NSE 05:30 | 01 Jan||Scan Steels Ltd|
|Mkt Cap.(Rs cr)||198|
|Mkt Cap.(Rs cr)||198.41|
Scan Steels Ltd. (CLARUSINFRARL) - Director Report
Company director report
Your Directors have pleasure in presenting the Twenty Fifth Annual Report of yourCompany together with the Audited Financial Statements for the year ended March 312018.
FINANCIAL HIGHLIGHTS / RESULTS
Your Directors take pleasure in presenting the 25th Annual Report on the business andoperations of your Company along with the financial statements for the year ended 31March 201 8.
( Rs. ln Lacs)
INDIAN ACCOUNTING STANDARD (IND AS)
In accordance with the notification issued by the Ministry of Corporate Affairs (MCA)your Company has complied with the new Accounting Standards IND AS in preparation offinancial statements under Indian Accounting Standards (Ind AS) prescribed under section133 of the Companies Act 2013 read with rule 3 of the Companies (Indian AccountingStandards Rules 2015 and Companies (Indian Accounting Standards) Amendment Rules 2016with effect from 1st April 2016. Ind AS has replaced the existing Indian GAAP prescribedunder section 133 of the Companies Act 2013 read with rule 7 of Companies (Accounts)Rules 2014.
Accordingly the Company has adopted Indian
Accounting Standard ("Ind AS") with effect from 1st April 2016 with thetransition date of 1st April 2015 and the financial Statements for the year ended 31 stMarch 2018 has been prepared in accordance with Ind AS.
RESULTS OF OPERATIONS & STATE OF AFFAIRS OF THE COMPANY
The gross turnover from manufacturing operation and including of other income thecompany has achieved ^51973.51 Lacs which is incremental income of ^42024.03 Lacs ascompared to corresponding period of last fiscal . There is an enhancement of about 24% ingross sales and other income due to incremental quantity movement as compared to lastfiscal. The net Loss after tax was Rs. 1.96 crore as compared to previous year loss of Rs.11.81 crores. The reason of Loss is unprecedented movement in realization price of thefinished product of the company.
The Company produced 68957.080 tonnes (MT) of TMT Rods in FY 2017-18 increased by10.25% in compare to the previous year and sold 69281.020MT increased by 6.72% in compareto previous year.
The Company's sustained efforts towards backend cost control new product launches andefficiency improvement measures supported theinsulation and limited the impact on theprofitability margins. The Company's ability to better utilise capacities and productrange will help derive better margins out of the businesses. The outlook of each businesshas been discussed in detail in the Management Discussion & Analysis' whichforms a part of this Annual Report.
PRODUCTION & TURNOVER / SALES
The production of steel product during the year under report compared to the previousyear is given below.
The outlook for its margins and profitability for this business depends on overalleconomic outlook. This company is likely to benefit most from an upturn in the businesscycle given its scale of operations and its competitive cost positions. Today it istruly a market-driven company making innovative changes and technological improvementsleaving no stone unturned in fulfilling dreams of its founding fathers tuning everyactivity to meet the subtle demands of its customers.
The Company has a Well-organized Marketing Department We have around very good marketshare in Odisha and also catering to outside states. We are in the process expanding ourmarket plan in India by appointment of Dealers at other major cities across India. We alsodirectly sell to the Customers through our Marketing staffs and agents.
The Company aims to be the benchmark for environmental stewardship in Steel Industry byfocusing on climate change mitigation and reducing its resource footprint. Given thenature of the business and the industry that we operate in the Company recognises itsimpact on the environment and is conscious of its duty towards safeguarding theenvironment. The Company is committed to responsible use and protection of the naturalenvironment through conservation and sustainable practices. The Company focuses onoperational excellence aimed at resource efficiency through a Prevent MinimiseRecover Reuse and Recycle' hierarchical approach to reducing its ecological footprint.
RESEARCH AND DEVELOPMENT
The competitive business environment in which the Company operates makes innovationimperative for success of the business. Recognizing the need to improve expand andinnovate the Company is concentrating efforts on research and development of alternatematerials and new products.
The Company has started working on the technology roadmap that aligns with it's visionof becoming a leader among the innovation driven organizations. Venturing into new marketareas is another focus area for research and development and accordingly a number of newproduct developments have been targeted.
In view of the losses incurred during the FY 2017-18 your Board of Directors has notrecommended any dividend on equity shares as well as on preference shares.
In terms of Regulation 34(2)(e) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 201 5 a report on the Management Discussion and Analysiscovering prospects is provided as a separate section in the Annual Report.
TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCTION AND PROTECTION FUND
Your Company did not recommend any dividend therefore there were no such funds whichwere required to be transferred to Investor Education and Protection Fund (IEPF).
TRANSFER TO RESERVE
During the financial year 2017-18 no amount has been transferred to reserve account.There is a loss of Rs. (772.02) Lacs in retained earning accounts is to be carried forwardto next year.
CONSOLIDATED FINANCIAL STATEMENT
As per the definition in the Companies Act 2013 ("the Act") and Ind AS - 110on Consolidated Financial Statements read with Ind AS - 28 on Investment in Associates andInd AS-31 Interest in Joint Venture the company does not have any investment in theSubsidiary Company Joint Ventures Company or any other Associates
Company therefore the Consolidation of Financial Statements is not applicable.
DETAILS OF SUBSIDIARY/JOINT VENTURES/ ASSOCIATE COMPANIES
The Company does not have any Subsidiary Associates and Joint venture Companies thereby; there are no details to be provided under (Rule 8 of the Companies (Accounts) Rules2014). Read with section 129 (3) of the Companies Act 2013.during the year under reviewno company has become or ceased as subsidiary associate or joint venture companies.
FIXED DEPOSITS COVERED UNDER CHAPTER V OF THE COMPANIES ACT 2013
Pursuant to Section 73 74 & 76 Rule 8(5)(v) of Companies (Accounts) Rules 2014.The details relating to deposits covered under Chapter V of the Act are as follows:-
a. accepted during the year - Rs. Nil
b. remained unpaid or unclaimed as at the end of the year -Nil
c. whether there has been any default in repayment of deposits or payment of interestthereon during the year and if so number of such cases and the total amount involved -
i. at the beginning of the year - Nil
ii. maximum during the year - Nil
iii. at the end of the year - Nil
There was No default in repayment of deposits or payment of interest thereon during theyear by Company and accordingly No details to be provided by the Company in this regard.
The details of deposits which are notin compliance with the requirements of Chapter Vof the Act -
Your Company has not accepted any deposits which are not in Compliance with therequirement of Chapter V of the Act.
CHANGE IN THE NATURE OF BUSINESS IF ANY
During the year under review there are no changes in the nature of business. TheCompany is continuing into the Steel Manufacturing Business.
DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THEFINANCIAL STATEMENTS.
INTERNAL CONTROL SYSTEMS AND AUDIT OVERVIEW
The Company has in place adequate internal financial controls with reference tofinancial statements commensurate with the size and nature of its business forms anintegral part of the Company's corporate governance policies.
The Company has a proper and adequate system of internal control commensurate with thesize and nature of its business. Internal control systems are integral to the Company'scorporate governance policy.
Some of the significant features of internal control systems include:
Documenting of policies guidelines authorities and approval proceduresencompassing the Company's all primary functions.
Deploying of an ERP system which covers most of its operations and is supportedby a defined on-line authorization protocol.
Ensuring complete compliance with laws regulations standards and internalprocedures and systems.
De-risking the Company's assets/resources and protecting them from any loss.
Ensuring the accounting system's integrity proper and authorised recording andreporting of all transactions.
Preparing and monitoring of annual budgets for all operating and servicefunctions.
Ensuring the reliability of all financial and operational information.
Forming an Audit committee of the Board of Directors comprising IndependentDirectors. The Audit Committee regularly reviews audit plans significant audit findingsadequacy of internal controls and compliance with accounting standards and so on.
Forming a comprehensive Information Security Policy and continuous up-gradationof IT Systems.
The internal control systems and procedures are designed to assist in theidentification and management of risks the procedure- led verification of all complianceas well as an enhanced control consciousness.
The Company has a strong internal audit department reporting to the Audit Committeecomprising Directors and Independent Directors who are experts in their field. The scopeof work authority and resources of Internal Audit (IA) are regularly reviewed by theAudit Committee and its work is supported by the services of M/s. GRC & Associatesthe Internal Auditor of the Company.
The Company continued to implement their suggestions and recommendationsto improve thecontrol environment. Their scope of work includes review of processes for safeguarding theassets of the Company review of operational efficiency effectiveness of systems andprocesses and assessing the internal control strengths in all areas. Internal Auditorsfindings are discussed with the process owners and suitable corrective actions taken asper the directions of Audit Committee on an ongoing basis to improve efficiency inoperations.
Through IA function the Board obtains the assurance it requires to ensure that risks tothe business are properly identified evaluated and managed. IA also provides assurance tothe Board on the effectiveness of relevant internal controls.
Audit plan and execution
Internal Audit department has prepared a risk- based Audit Plan. The frequency of auditis decided by risk ratings of areas functions. The audit plan is carried out by theinternal team. The audit plan is reviewed periodically to include areas which have assumedsignificant importance in line with the emerging industry trend and the aggressive growthof the Company.
In addition the audit committee also places reliance on internal customer feedback andother external events for inclusion of areas into the audit plan.
INTERNAL FINANCIAL CONTROLS
As per Section 134 (5) (e) of the Companies Act 2013 the Directors have an overallresponsibility for ensuring that the Company has implemented robust systems and frameworkof internal financial controls. This provides the Directors with reasonable assuranceregarding the adequacy and operating effectiveness of controls with regards to reportingoperational and compliance risks. To enable them to meet these responsibilities theCompany has devised appropriate systems and framework including proper delegation ofauthority policies and procedures effective IT systems aligned to business requirementsrisk based internal audit framework risk management framework and whistle blowermechanism.
The Audit Committee regularly reviews the internal control system to ensure that itremains effective and aligned with the business requirements. Where weaknesses areidentified as a result of the reviews new procedures are put in place to strengthencontrols. These are in turn reviewed at regular intervals.
The Company has developed a framework for designing and assessing effectiveness ofinternal controls over financial reporting & financial statements and has already laiddown entity level policies and process level standard operating procedures.
The entity level policies comprise anti-fraud policies (code of conduct includingconflict of interest confidentiality and whistle-blower policy) and other policies(organization structure roles and responsibilities insider trading policy HR policyrelated party policy prevention of sexual harassment policy IT security policy businesscontinuity and disaster recovery plan and treasury risk management policy). The Companyhas also prepared Standard Operating Practices (SOP) for each of its processes of revenueto receive procure to pay hire to retire finance and accounts fixed assets treasuryinventory manufacturing operations and administrative expenses.
Directors had devised proper systems to ensure compliance with the provisions of allapplicable laws and During the year such controls were tested and no reportable materialweakness in the design or operation were observed and such systems were adequate andoperating effectively.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:
All contracts / arrangements / transactions entered by the Company during the financialyear with related parties referred to in Section 188 (1) of the Companies Act 2013 werein the ordinary course of business and on an arm's length basis and Detail of which isfurnished in the Annexure A' in Form AOC-2 attached with this Report in compliancewith Section 134 (3) (h) read withl 88 (2) of the Companies Act 2013.
Further there are no materially significant related party transactions made by theCompany with Promoters Directors Key Managerial Personnel or other designated personswhich may have a potential conflict with the interest of the Company at large. All RelatedParty Transactions are placed before the Audit Committee as also the Board for approval.
The Company has developed an Internal Guide on Related Party Transactions Manual andprescribed Standard Operating Procedures for purpose of identification and monitoring ofsuch transactions none of the Directors has any pecuniary relationships or transactionsvis-a-vis the Company.
Moreover on the recommendations of the Audit Committee your Board had revised thePolicy on Related Party Transactions in accordance with Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 and as per theamended provisions of the Companies Act 2013.The Policy on materiality of related partytransactions and dealing with related party transactions as approved by the Board may beaccessed on the Company's website at www.scansteels . com- Investor Relations Segment. The Policy intends to ensure that proper reporting; approvaland disclosure processes are in place for all transactions between the Company and RelatedParties. This Policy specifically deals with the review and approval of Related PartyTransactions keeping in mind the potential or actual conflicts of interest that may arisebecause of entering into these transactions. All Related PartyTransactions are placedbefore the Audit Committee for review and approval. All Related PartyTransactions aresubjected to independent review by a reputed accounting firm to establish compliance withthe requirements of Related Party Transactions under the Companies Act 2013 andRegulation 23 of the Securities and Exchange Board of India (Listing Obligation andDisclosure Requirements) Regulations 2015.
Your Directors draw attention of the members to Note 30 to the financial statementwhich sets out related party disclosures.
ISO 9002 CERTIFICATION
Your company is having status of ISO 9001 ISO 14001 and ISO 18001 certification whichis internationally recognized for the production quality control and Environmental aswell as OHSAS respectively.
During the year the credit rating for long term debt/facilities/FD have not been rateddue to Non Performing Asset (NPA) declared by Banks/ lenders.
AUTHORITY TO DETERMINE MATERIALITY OF AN EVENT AND DISCLOSURE OF THE SAME TO STOCKEXCHANGE UNDER REGUALTION 30(5) OF SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS)REGAULTION 2015
Mr. Ankur Madaan Whole- Time Director of the Company and Mr. Prabir Kumar DasCompany Secretary and Compliance Officer of the Company and Mr. Gobinda Chandra NayakChief Financial Officer of the Company authorized by the Board for the purpose ofdetermining the materiality of an event or information in terms with the Company's Policyon disclosure of material event / information and archival policy to comply with theProvisions of Regulation 30 (5) of the SEBI ( Listing Obligations and DisclosureRequirements) Regulations 2015 and they are jointly and severally authorized to makenecessary disclosure to stock exchanges regarding the same on behalf of the Company.
The "SHRISTN" brand for its TMT bars are well accepted in the market invaried segments and sectors with wide customer base.
The Assets of the company are adequately insured against the loss of fire riotearthquake loss of profit etc and other risk which is considered by management Inaddition to this coverage a statutory public liability insurance policy has been taken tocover by the company for providing against the public liability arising out of industrialaccidents for employees working in plants.
The Company endeavors to develop and sustain long-term value-creating partnerships withour customers and channel partners through a wide range of product offerings innovativeservices and unique solutions.
During the year the lead banker State Bank of India has approved the restructuringproposal and has executed all related documents for restructuring of the facility and hasfiled with the Ministry of Corporate Affairs towards creation/ modification of charges inits favour. The State Bank of India has recovered all the scheduled repayments along withoverdue (till the date of recovery) as per proposal approved vide letter dated March 172018. Other members to the consortium are in the process of up gradation of the account.
BANKERS AND CONSORTIUM ARRANGEMENT
The Company has consortium arrangement of their bankers with State Bank of India asLead Bank. This consortium arrangement is well defined and takes care of company's creditfacilities requirement from time to time. The consortium meetings hold quarterly inregular basis and also visit company's plant from time to time as per their requirement.
The company has continued to scale up safety performance at all locations. Safetymeasures have been strengthened and employees are being trained to think on hazards/risksassociated with their job. Systems have been established to make employees responsible andaccountable for safety. Good safety performance is being rewarded. While Safety has beenincluded as a corporate value the main objective is to achieve better standard of safetyin the shortest possible time.
HUMAN RESOURCE DEVELOPMENT AND PERSONNEL
The company has been given much emphasis on Human Resources Development and thus hasbeen well recognized in the steel industrial for sound Human Resources Management. Over aperiod of time we have built and nurtured a dedicated and excellent workforce and alsorecruiting new people in order to meet the revival plans of the company. The Company hasemerged as a true national firm with cosmopolitan atmosphere.
The company's HR polices and process is as well aligned to effectively suit itsexpanding business horizons and future manpower requirement. This has been achieved bycontinuously stressing upon training & development empowerment and creating acompelling work environment and maintaining well structured reward & recognitionmechanism. Company is committed to the welfare of its people and their families and toimprove the quality of their life by providing the required facilities. During the yearunder the review industrial relations at all units of the Company continued to be cordialand peaceful.
CORPORATE SOCIAL RESPONSIBILITY
Corporate Social Responsibility is the continuing commitment by the business to behaveethically and contribute to economic development while improving the quality of life ofthe workforce and their families as well as of the local community and society at large.As a part of its policy for corporate social responsibility the Company is associatedwith charitable and social activities and thereby playing a pro-active role in thesocioeconomic growth. In structuring its efforts to the various aspects of CorporateSocial Responsibilities the Company takes account guidelines and statements issued bystakeholders and other regulatory bodies.
The management has adopted corporate social responsibility (CSR) well at par with itsbusiness with the objective of creating wealth in the community with focus on educationhealth water and society. Social welfare community development economic andenvironmental responsibilities are at the core of the CSR of the Company.
The Corporate Social Responsibility Committee (CSR Committee) Composition and Terms ofreference of which is detailed in the Corporate Governance Part of this Annual Report hasformulated and recommended to the Board a Corporate Social Responsibility Policy (CSRPolicy) indicating the activities to be undertaken by the Company which has been approvedby the Board.
The key philosophy of all CSR initiatives of the Company is guided by three corecommitments of Scale Impact and Sustainability.
The Company has identified six focus areas of engagement which are as under:
Rural Transformation: Creating sustainable livelihood solutions addressingpoverty hunger and malnutrition.
Health: Affordable solutions for healthcare through improved access awarenessand health seeking behavior.
Education: Access to quality education training and skill enhancement.
Environment: Environmental sustainability ecological balance conservation ofnatural resources.
Water: The Company makes affordable solution for water crises in the local areawithin the factory.
The Company would also undertake other need based initiatives in compliance withSchedule VII to the Act.
The disclosures required to be made as per Rule 9 of Companies (Corporate SocialResponsibility Policy) Rules 2014 is annexed to this report as Annexure B'.
The CSR Policy of the Company is available on the company's website at
The Company's robust risk management framework identifies and evaluates business risksand opportunities. The Company recognizes that these risks need to be managed andmitigated to protect its shareholders and other stakeholder's interest to achieve itsbusiness objectives and enable sustainable growth. The risk frame work is aimed ateffectively mitigating the Company's various business and operational risks throughstrategic actions. Risk management is embedded in our critical business activitiesfunctions and processes. The risks are reviewed for the change in the nature and extent ofthe major risks identified since the last assessment. It also provides control measuresfor risks and future action plans. Pursuant to the requirement of Regulation 21 of theSecurities and Exchange Board of India (Listing Obligation and Disclosure Requirements)Regulations 2015 the Company has constituted a sub-committee of Directors to overseeEnterprise Risk Management Framework to ensure execution of decided strategies with focuson action and monitoring risks arising out of unintended consequences of decisions oractions and related to performance operations compliance incidents processes systemsand transactions are managed appropriately. The Company believes that the overall riskexposure of present and future risks remains within risk capacity.
A Risk Management Policy was reviewed and approved by the Committee and which can beaccessed on the website of the Company at www. scansteels.com - Investor RelationsSegment.
GOODS AND SERVICES TAX (GST)
The introduction of Goods and Services Tax (GST) is a very significant step in thefield of indirect tax reforms in India. By amalgamating a large number of Central andState taxes into a single tax it would mitigate cascading or double taxation in a majorway and pave the way for a common national market. The transition to GST scenario is amajor change process and the Company has established a dedicated team to evaluate theimpact analysis and carry out changes to the business process & IT systems as per theGST framework.
Transparency is the cornerstone of your Company's philosophy and all requirements ofCorporate Governance are adhered to both in letter and spirit. All the Committees of theBoard of Directors meets at regular intervals as required in terms of SEBI (ListingObligations & Disclosure Requirements) Regulations 2015 and Companies Act. 2013. YourBoard of Directors has taken all necessary steps to ensure compliance with all statutoryrequirements. The Directors and Key Management Personnel of your Company have compliedwith the approved Code of Ethics for Board of Directors and Senior Executives' ofthe Company.
The Report on Corporate Governance as required under the SEBI (Listing Obligations& Disclosure Requirements) Regulations 2015 forms part of this Annual Report. TheAuditors' Certificate on compliance with Corporate Governance requirements is alsoattached to Directors Report as Annexure T. Further as required under Regulation 17(8) ofSEBI (Listing Obligations & Disclosure Requirements) Regulations 2015 a certificatefrom the Whole- Time Director & CFO is being annexed with this Annual Report.
ISSUED/SUBSCRIBED/PAID UP CAPITAL
The authorized share capital of the Company is ^700000000/- (Rupees Seventy Croresonly) divided into 55000000 (Five Crore Fifty Lacs) equity shares of ^10/- (Rupees Ten)each and 15000000 (One Crore Fifty Lacs only) Non- cumulative Redeemable PreferenceShare of Rs. 10/- (Rupees Ten) each.
On 04.04.2017 the allottee(s) had exercised their right to convert 800000 warrantsinto equity shares of Rs. 10/- each out of total allotted to them. Accordingly During theYear under review the company has allotted 800000 Equity Shares of Rs. 10 / - each onConversion of Warrants in to Equity Shares.
There were No outstanding Warrants of the company as on March 31201 8 which was to beconvertible into equity shares.
The paid-up equity share capital as on March 31 201 8 and as on date is Rs.523522950 (Fifty Two Crore Thirty Five Lakhs Twenty Two Thousand Nine Fifty) dividedinto 52352295 (Five Crore Twenty Three Lakhs Fifty Two Thousand Two Hundred NinetyFive) fully paid up Equity Shares of Rs. 10/- (Rupees Ten Only) each and the preferenceshare capital is ^128496050/- (Twelve Crore Eighty Four Lacs Ninety Six Thousand Fifty)divided into 12849605 (One crore Twenty Eight Lacs Forty Nine Thousand Six Hundred Fiveonly) fully paid up NCRPS of Rs. 10/- (Rupees Ten) each.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In accordance with the provisions of Section 1 52 of the Companies Act 2013 andin terms of the Articles of Association of the Company Mr. Rajesh Gadodia (DIN:00574465) retires by rotation at the forthcoming Annual General Meeting and beingeligible offers himself for re-appointment.
The proposal regarding the re-appointment of the aforesaid Director is placed for yourapproval. The Board of Directors recommends his re-appointment.
Mr. Praveen Kumar Patro (DIN: 02469361) was appointed as an Additional Directorand designated as the Executive Director (Director-Project) w. e. f. 30/05/2018. Mr.
Praveen Kumar Patro shall hold office till the date of the forthcoming Annual GeneralMeeting (AGM).
Your company has received a notice under section 160 of the companies act 2013 from amember signifying his intension to propose the name of Mr. Praveen Kumar Patro forappointment as a director of the company in the forthcoming Annual General Meeting.
Suitable resolutions) for appointment / reappointment of Directors) as referred abovewill be placed for approval of the members in the forthcoming Annual General Meeting. Thebrief resume and other information of the concerned directors) in terms of the Regulation26(4) and 36 (3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 have been detailed as an annexure in the notice convening the forthcoming AnnualGeneral Meeting.
During the year the non-executive directors of the Company had no pecuniaryrelationship or transactions with the Company other than sitting fees and reimbursementof expenses incurred by them for the purpose of attending meetings of the Company.
KEY MANAGERIAL PERSONNEL
Mr. Ankur Madaan Whole Time Director Mr. Prabir Kumar Das President & CompanySecretary and Mr. Gobinda Chandra Nayak Chief Financial Officer are the Key ManagerialPersonnel of your company in accordance with the provision of Section 2(51) and 203 of thecompanies act
2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules
2014 read with SEBI (LODR) Regulations 201 5.
Company'spolicyofappointmentand remuneration for directors KMP and other employeesincluding criteria for determining qualifications positive attributes director'sindependence (read with Sections 178 (1) (3) (4))
The Nomination and Remuneration Committee works with the Board to determine theappropriate characteristics skills and experience for the Board as a whole and itsindividual members with the objective of having a Board with diverse backgrounds andexperience in business government education and public service. Characteristics expectedof all Directors include independence integrity high personal and professional ethicssound business judgment ability to participate constructively in deliberations andwillingness to exercise authority in a collective manner.
The current policy is to have a balanced mix of executive and non-executive IndependentDirectors to maintain the independence of the Board and separate its functions ofgovernance and management.
The Company's Policy relating to appointment of Directors payment of Managerialremuneration Directors' qualifications positive attributes independence of Directorsand other related matters as provided under Section 178(3) of the Companies Act 2013 isfurnished in Annexure C' and is attached to this report.
Further Nomination and Remuneration Policy for Directors Key Managerial Personnel andother employees is furnished in Annexure D' and is attached to this report.
Declaration by Independent Director(s)
As required under section 149(7) of the Companies Act 2013 The Company has receiveddeclarations from all the Independent Directors of the Company confirming that they meetthe criteria of independence and / or to qualify themselves to be appointed as Independent
Directors as prescribed both under Section 149 (6) of the Companies Act' 2013 andRegulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 The Board considered the independence of each of the Independent Directors in termsof the above provisions and is of the view that they fulfill/meet the criteria ofindependence. And the declarations are put up on the website of the Company at www.scansteels.com - Investor Relations Segment.
Familliarisation Programme for Independent Directors.
All New Independent Directors (IDs) whenever inducted into the Board are given anorientation. Presentations are made by Executive Directors (EDs) and Senior Managementgiving an overview of our operations to familiarize the new IDs with the Company'sbusiness operations. The new IDs are given an orientation on our products groupstructure Board constitution and Procedures matters reserved for the Board and ourmajor risks and risk management strategy. Visits to Plant and Factory locations areorganized for the IDs to enable them to understand the business better.
The company familiarises the New and Existing Independent Directors of the Company fromtime to time with their roles rights responsibilities in the company nature of theindustry in which the company operates business model of the company etc. and also byupdating them about latest amendments in Companies Act 2013 and SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015. Details of Same are put up on the websiteof the Company at www.scansteels.com - Investor Relations Segment.
Separate Independent Director Meeting
In term of requirements of Schedule IV of the Companies Act 2013 and Regulation 25 ofSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 a separate meeting of the independent directors ("Annual IDmeeting") was convened on 14th February 2018 and All the Independent Directors werepresent at the said Meeting.
The Independent Directors at the meeting reviewed the following:
a. Performance of Non-Independent Directors and the Board as a whole;
b. Performance of the Chairman of the Company taking into account the views ofExecutive Directors and Non-Executive Directors; and
c. Assess the quality quantity and timeliness of flow of information between theCompany Management and the Board that is necessary for the Board to effectively andreasonably perform their duties.
Post the Annual ID meeting the collective feedback of each of the IndependentDirectors was discussed by the Chairperson of the Nomination Remuneration Committee withthe Board covering performance of the Board as a whole performance of the non-independentdirectors and performance of the Board Chairman. In addition to formal meetingsinteractions outside the Board meetings also take place between the Chairman andIndependent Directors.
BOARD ANNUAL EVALUATION
Pursuant to Regulation 17(10) of SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015 and In compliance with the Section 134(3) (p) Company hasdevised a Policy for performance evaluation of Independent Directors Board Committeesand other individual Directors which include criteria for performance evaluation of thenon-executive directors and executive directors.
The Board carried out an annual performance evaluation of its own performance theindividual Directors as well as the evaluation of the working of the Committees of theBoard. The performance evaluation of the Chairman Whole- Time Director and the Non-Independent Directors was carried out by Independent Directors. The performance evaluationof the Independent Directors was carried out by the entire Board in compliance with theCompanies Act 2013. The performance evaluation of all the Directors was also carried outby the Nomination and Remuneration Committee. Details of the same are given in the Reporton Corporate Governance annexed hereto.
The Chairman of the Board had one-on-one meetings with the IDs. The Chairperson of theNomination and Remuneration Committee (NRC) held separate discussions with each of theDirectors of the Company and obtained their feedback on overall Board effectiveness aswell as on each of the other Directors. These meetings were intended to obtain Directors'inputs on effectiveness of the Board/ Committee processes.
While evaluating the performance and effectiveness of the Board various aspects of theBoard's functioning such as adequacy of the composition and quality of the Board timedevoted by the Board to Company's long-term strategic issues quality and transparency ofBoard discussions execution and performance of specific duties obligations andgovernance were taken into consideration. Committee performance was evaluated on the basisof their effectiveness in carrying out respective mandates. A separate exercise wascarried out to evaluate the performance of Independent Directors including the Chairman ofthe Board who were evaluated on parameters such as level of engagement and contributionto Board deliberations independence of judgment safeguarding the interest of the Companyand focus on creation of shareholders value ability to guide the Company in key mattersattendance at meetings etc. The Executive Directors were evaluated on parameters such asstrategy implementation leadership skills quality quantity and timeliness of theinformation flow to the Board etc.
The Board considered and discussed the inputs received from the Directors. Further theIDs at their meeting reviewed the performance of non Independent Directors Board as awhole and Chairman of the Board after taking into account views of Executive Directors andNon-Executive Directors.
The Directors expressed their satisfaction with the evaluation process.
The evaluation process endorsed the Board Members' confidence in the ethical standardsof the Company the resilience of the Board and Management in navigating the Companyduring challenging times cohesiveness amongst the Board Members constructiverelationship between the Board and the Management and the openness of the Management insharing strategic information to enable the Board Members to discharge theirresponsibilities.
The Detailed Policy on Performance Evaluation of Independent Directors BoardCommittees and other individual Directors can be accessed from the website of the Companyat www.scansteels . com - Investor Relations Segment.
Based on the recommendations of the NRC the Board has approved the Remuneration Policyfor Directors Key Managerial Personnel (KMPs'j and all other employees of the Company. Aspart of the policy the Company strives to ensure that:
the level and composition of remuneration is reasonable and sufficient toattract retain and motivate Directors of the quality required to run the Companysuccessfully;
relationship between remuneration and performance is clear and meets appropriateperformance benchmarks; and
remuneration to Directors KMPs and Senior Management involves a balance betweenfixed and incentive pay reflecting short medium and long-term performance objectivesappropriate to the working of the Company and its goals.
The following disclosures have been mentioned in detail under the heading"Corporate Governance" part of this Annual Report:
(i) all elements of remuneration package such as salary benefits etc. of all thedirectors;
(ii) details of fixed component and performance linked incentives along with theperformance criteria;
(iii) service contracts notice period severance fees;
(iv) Stock option details if any and whether the same has been issued at a discountas well as the period over which accrued and over which exercisable.
CODE OF INDEPENDENT DIRECTORS - SCHEDULE - IV
The Board has considered Code of Independent Directors as prescribed in Schedule IV ofthe Companies Act 2013. The code is a guide to professional conduct for independentdirectors' adherence to these standards by independent directors and fulfillment of theirresponsibility in a professional and faithful manner will promote confidence of theinvestment community and regulators.
The broad items for code for independent directors are:
(i) Guidelines for Professional conduct.
(ii) Role and Functions.
(iv) Manner and process of appointment.
(v) Re-appointment on the basis of report of performance evaluation.
(vi) Resignation or Removal.
(vii) At least one Separate meeting of Independent Directors in a year withoutattendance of non independent directors or members of management.
(viii) Evaluation mechanism of Independent Directors by entire Board of Directors.
The Detailed Code of Conduct of Independent Directors of the Company and Code ofConduct for Board of Directors and Senior Management of the Company can be accessed on thewebsite of the Company at www.scansteels.com -Investor Relations Segment.
SCAN STEELS'S CODE OF CONDUCT FOR THE PREVENTION OF INSIDER TRADING
The Board of Directors has adopted the Insider Trading Policy in accordance with therequirements of the SEBI (Prohibition of Insider Trading) Regulations 2015.
The Insider Trading Policy of the Company lays down guidelines and procedures tobefollowed and disclosures to be made while dealing with shares of the Company. As wellas the consequences of violation. The Policy has been formulated to regulate monitor andensure reporting of deals by employees and to maintain the highest ethical standards ofdealing in Company Securities.
The Insider Trading Policy of the Company covering code of Practices and procedures forfair disclosures of unpublished price sensitive information and code of conduct for theprevention of insider trading is available on our website at www. scansteels.com -Investor Relations Segment.
COMPLIANCE WITH CODE OF ETHICS FOR BOARD OF DIRECTORS AND SENIOR EXECUTIVES
All Directors and Senior Management Personnel have affirmed Compliance with the Code ofEthics for Board of Directors and Senior Executives. A Declaration to that effect isattached with the Corporate Governance Report.
The Directors state that applicable Secretarial Standards i.e. SS-1 and SS-2 relatingto Meetings of the Board of Directors' and General Meetings' respectivelyhave been duly followed by the Company.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirements under section 134(3)(c) and 134(5) of the Companies Act2013 your directors hereby state and confirm that
a) In the preparation of the annual accounts for the year ended March 31 2018 theapplicable accounting standards read with requirements set out under Schedule III to theAct have been followed and there are no material departures from the same;
b) The directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company as at March 31 2018 and of the profitand loss of the company for the year ended on that date;
c) The directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;
d) The directors had prepared the annual accounts on a going concern basis; and
e) The directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively; and
f) The directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
AUDITORS AND AUDITOR'S REPORT STATUTORY AUDITORS
The Auditors M/s. SRB & Associates Chartered Accountant (Firm's Registration No.3100098) (SRB) of Bhubaneswar were appointed with your approval at the 21st AGM for aperiod of five years to hold such office till the conclusion of the 26th AGM.
The Company has received necessary consent and certificates under Section 139 from theabove Auditors to the effect that they satisfied the criteria provided in section 141 ofthe Companies Act 2013 read with Cos. (Audit &Auditors) Rules 2014 including anystatutory modification or reenactment thereof for the time being in force.
No frauds have been reported by the Auditors under Section 143 (12) of the CompaniesAct 2013 requiring disclosure in the Board Report.
Explanation to Auditor's emphasis of matter:
Auditors have in their report drawn attention to Note No. 40 to the financialstatements which describes the approval of the restructuring arrangement by the leadbankers State Bank of India and about recognition of interest cost of other members.
In the opinion of the Board The company's funding has been funded through consortiummember banks. The leader State Bank of India along with other member banks have classifiedthe asset as Non-performing Assets in their books of account in previous year. During theyear the lead banker State Bank of India has approved the restructuring proposal and hasexecuted all related documents for restructuring of the facility and has filed with theMinistry of Corporate Affairs towards creation/ modification of charges in its favour. TheState Bank of India has recovered all the scheduled repayments alongwith overdues (tillthe date of recovery) as per proposal approved vide letter dated March 17201 8. Theinterest component
of Rs. 16.92 crores from the date of NPA to the cut off date i.e March 31 2017 hasbeen converted to FITL and same has been charged to current year's financial statement.Other members to the consortium are in the process of restructuring as at the end ofreporting date.
Further the company has provided interest cost on borrowings for all the member banksexcept IDBI Bank Limited for the FY 2017-18 as per interest rate approved by the leadbanker i.e State Bank of India. IDBI Bank Limited has recalled the loan vide letter datedOctober 312017 for which no interest has been provided for.
Auditors have in their report drawn attention to Note No- 41 to the financialstatements which describes on steps taken by the company for transition to the Ind AScompliances.
In the opinion of the Board The company has implemented / adopted the followingpolicies and procedures for accounting:
Componentization: As per prevailing practice company componentized fixed assets asdetailed in the Invoice. It does not have a separate componentization policy. Accordinglycomponents identified ( as mentioned above) are also depreciated based on the useful livesprescribed under Schedule-ll ( of the Companies Act.) for the main asset.
Steps : The company is in the process of identification of the major componentssignificant to the total cost of the asset accordingly necessary requirements to becomplied.
Stores and Spares : The company on purchases of stores and spares if it relates to anitem of PPE the same are capitalized on the date of issue and which are issued forrevenue expenditure purpose are charged to Profit & Loss Account on the date ofconsumption.
Steps: The company is in the process of identifying the doubtful debtors to makeprovision for impairment to be recognized as per the Expected Credit Loss Method.
Except of the emphasis of matters mentioned above all other observations made by theStatutory Auditors in their report for the financial year ended 31st March 2018 read withthe explanatory notes therein are self-explanatory and therefore do not call for anyfurther explanation or comments from the Board under Section 134(3) of the Companies Act2013.
Pursuant to Section 148 (2) of the Companies Act 2013 read with the Companies (CostRecords and Audit) Amendment Rules 2014 your Company is required to get its costaccounting records audited by Cost Auditor.
Accordingly the Board at its meeting held on May 30 2018 has on the recommendation ofthe Audit Committee re-appointed M/s. Ray Nayak & Associates Partner CMA. ChaitanyaKumar Ray Cost Accountants having office at MIG-26 Manorama Estate RasulgarhBhubaneswar - 751010 (Odisha) as the Cost Auditors of the Company to conduct the audit ofthe cost accounting records of the Company for the financial year 2018-19 on aremuneration of ^45000/- plus service tax as applicable and reimbursement of actualtravel and out of pocket expenses.
The remuneration is subject to the ratification of the members in terms of Section 148read with Rule 14 of the Companies (Audit and Auditors) Rules 2014 and is accordinglyplaced for your ratification.
Pursuant to section 148( 1) of the companies act 2013 The company has maintained thecost accounts and records.
The Cost Audit Report for the financial year ended 31st March 2017 was filed in XBRLmode on 7th August 2017.
SECRETARIAL AUDITORS AND AUDIT REPORT
Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies
(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hadappointed M/s. K.K.Giri & Associates a Practicing Company Secretary (CP No-14459)having office at Plot No-215(l) 2nd floor District Centre Chandrasekharpur Bhubaneswar- 751016 to undertake the Secretarial Audit of the Company. The Report of the SecretarialAudit carried out is annexed herewith as Annexure "E".
The report does not contain any observation or qualification requiring explanation orcomments from the Board under Section 134(3)(f)(ii) of the Companies Act 2013.
The Board at its meeting held on May 30 201 8 has re-appointed M/s. K.K.Giri &Associates a Practicing Company Secretary (CP No-14459) having office at Plot No-21 5(l)2nd floor District Centre Chandrasekharpur Bhubaneswar - 751016 as SecretarialAuditor for conducting Secretarial Audit of the Company for F.Y. 2018- 19.
Audit Committee is constituted as per Regulation 18 of the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 read with Section 177 of the Companies Act2013. Composition of Audit Committee is as per Section 177 (8) of Companies Act 2013. ThePrime Objective of the Committee is to monitor and provide effective supervision of theManagements financial reporting process to ensure accurate and timely disclosures withthe highest levels of transparency integrity and quality of financial reporting.
Composition and Terms of reference of the Committee is explained in Detail in theCorporate Governance Part of this Annual Report.
There was no recommendation as such in the Financial Year 2017-2018 from the AuditCommittee which was not accepted by the Board.
In pursuance of Section 177(9) of the Companies Act 2013 and Regulation 22 read withRegulation 4(2)(d)(iv) of Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 Vigil
Mechanism has been Constituted for directors and employees to report genuine concernsand Audit committee shall overseethe vigil mechanism through the committee and provideadequate safeguards against victimization of employees and directors who availed of thevigil mechanism and have a direct access to the chairman of the audit committee inexceptional case.
In case of repeated frivolous complaints being filed by the director or an employee theaudit committee may take suitable action including reprimand if necessary.
CONSTITUTION OF STAKEHOLDERS RELATIONSHIP COMMITTEE
The Board has constituted a Stakeholders Relationship Committee According to 178 (5) ofthe Companies Act 2013 and Regulation 20 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. The SR Committee is primarily responsible to review allmatters connected with the Company's transfer of securities and redressal of shareholders'/ investors' / security holders' complaints.
Composition and Terms of Reference of the SR Committee is Detailed in CorporateGovernance Report Part of this Annual Report.
NOMINATION AND REMUNERATION COMMITTEE
The Board has set up a Nomination and Remuneration Committee In compliance with Section178 of the Companies Act 2013 and Regulation 1 9 of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015. This Committee is responsible for makingPolicy pursuant to Proviso to Section 178 (3) & (4) read with Rules made there underand Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 and / or recommending to the Board the remunerationpackage of Directors KMP & other employees including their annual increment andcommission after reviewing their performance and also to decide the Criteria fordetermining appointment Oualifications Positive attributes and Independence of aDirector.
The Details Regarding the Composition of the Committee Meetings held and Terms Ofreference etc. is Detailed in Corporate Governance Report Part of this Annual Report. Andthe Detailed Nomination and Remuneration Policy is attached as Annexure 'D' to thisReport.
CONSTITUTION OF CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
Scan Steels's commitment towards excellence in Health Safety and Environment is one ofthe company's core values by complying with the Laws and Regulations first and then goingbeyond the mandate to keep our planet safe for future generations. Minimizing theenvironment impact of our operations assumes utmost priority.
The company is unwavering in its policy of ''safety of persons overrides all productiontargets" which drives all employees to continuously break new grounds in safetymanagement for the benefit of the people property environment and the communities inwhich Scan Steels operate. Our dedicated measures by conducting the Risk AssessmentIdentification of significant environment aspects of all manufacturing plants andsignatory commitment of Responsible Care Greatest emphasis is given to safety measuresfor minimizing accidents and incidents.
In View of the above The Board has Constituted Corporate Social ResponsibilityCommittee to Comply the Section 135 of the Companies Act 2013. Composition and Terms ofReference of which is Detailed in Corporate Governance Report Part of this Annual Report.
DISCLOSURE AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013.
The Company has zero tolerance towards sexual harassment at the workplace and hasadopted a policy on prevention prohibition and redressal of sexual harassment atworkplace in line with the provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the Rules there under.
Your Directors state that during the year under review there were no cases filedpursuant to the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013.
E-VOTING FACILITY AT AGM
In compliance with Section 108 of the Companies Act 2013 Rule 20 of the Companies(Management and Administration) Rules 2014 as substituted by the Companies (Managementand Administration) Amendment Rules 2015 and Regulation 44 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 201 5 the company is pleased toprovide members facility to exercise their votes for all the resolutions detailed in theNotice of the 25th Annual Report of the company and the business may be transacted throughe-voting. The company has engaged the services of Central Depository Services Limited(CDSL) as the authorized agency to provide the e-voting facility.
LISTING ON STOCK EXCHANGE
The Company continues to remain listed with Bombay Stock Exchange Limited and annuallisting fee for the same has been paid.
NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS
During the year Six Board Meeting were convened and held details of the meetings ofthe Board and various Committees of your Company are set out in the Corporate GovernanceReport which forms part of this Annual Report. The intervening gap between the meetingswas within the period prescribed under the Companies Act 2013 and Regulation 17 of theSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015.
EXTRACT OF THE ANNUAL RETURN
The extracts of Annual Return pursuant to the provisions of Section 92(3) read withRule 1 2 of the Companies (Management and administration) Rules 2014 and Section134(3)(a) of Companies Act 2013 is furnished in Form No. MGT-9 as Annexure F' andis attached to this Report.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186
There were no loans made by the Company under Section 186 of the Companies Act 2013during the year under review. However the company has given the corporate guarantee andmade investment in quoted securities as a long term investments and the details of theguarantees and investments covered under the provisions of section 186 of the companiesact 2013 are given in the financial statements.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The details of conservation of energy technology absorption foreign exchange earningsand outgo as required under Section 134 (3)(m) of the Companies Act 2013 read with Rule8(3) of the Companies (Accounts) Rules 2014 is furnished in Annexure G' and isattached to this report.
PARTICULARS OF EMPLOYEES (RULE 5(2) AND 5(3)) AND MANAGERIAL REMUNERATION (RULE 5(1))OF THE COMPANIES
(APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014 AND UNDER SECTION197(12) OF THE ACT
The total number of employees as on 31 st March 201 8 stood at 1489.
Disclosures pertaining to remuneration and other details as required under Section 197(1 2) of the Act read with Rule 5(1) 5(2) and 5 (3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are provided in the Annexure H'in this Report.
MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION
F THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR
F THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THEREPORT
In term of Section 134(3)(1) of the Companies Act 2013 no material changes andcommitments have occurred after the close of the year till the date of this Report whichcould affect the financial position of the Company.
Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:
1. Issue of equity shares with differential rights as to dividend voting or otherwise.
2. Issue of shares (including sweat equity shares) to employees of the Company underany scheme.
3. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future.
4. There is No Revision of Financial Statement or Board Report Adopted by the Companythereby there is no Disclosures to be made by the Company u/s 131 of the Companies Act2013 for Voluntary Revision of Financial Statement.
5. Your Company has No Holding or Subsidiary Company and thereby Whole time Directorof the Company do not receive any commission or remuneration from the same. Accordinglythere is no Details to be Provided by the Company pursuant to Section 1 97 (14) of theCompanies Act 2013.
Your Directors wish to place on record their gratitude for the valuable guidance andsupport rendered by the Government of India various State Government departmentsFinancial Institutions Banks and various stakeholders such as shareholders customersand suppliers among others. The Directors also commend the continuing commitment anddedication of the employees at all levels which has been critical for the Company'ssuccess. The Directors look forward to their continued support in future.