Facor Steels Ltd.
|BSE: 532657||Sector: Metals & Mining|
|NSE: N.A.||ISIN Code: INE829G01011|
|BSE 00:00 | 04 Mar||Facor Steels Ltd|
|NSE 05:30 | 01 Jan||Facor Steels Ltd|
|BSE: 532657||Sector: Metals & Mining|
|NSE: N.A.||ISIN Code: INE829G01011|
|BSE 00:00 | 04 Mar||Facor Steels Ltd|
|NSE 05:30 | 01 Jan||Facor Steels Ltd|
Your Directors submit the THIRTEENTH ANNUAL REPORT on the business and operations ofthe Company and the Audited Statements of Accounts for the year ended 31st March 2016.
Your Companys performance during the financial year 2015-16 was badly affecteddue to the closure of the plant operations with effect from 30/05/2014 due to consensuslockout declared as per agreement reached with the workforce. This closure wasnecessitated due to adverse market conditions with subdue demand for Alloy and StainlessSteel resulting in lower utilization of capacity. The lay off is still continuing due tono change in the situation.
During the year under review Company reported a total income of Rs188.96 Lakhs asagainst Rs 3043.87 Lakhs of the previous year. After making a provision of Rs 410.34 Lakhstowards interest and Rs 418.90 Lakhs towards depreciation the loss for the currentfinancial year amounts to Rs 1426.10 Lakhs as against the net loss of Rs 3093.18 Lakhs ofthe previous year. The net loss after exceptional items for the current financial yearamounts to Rs 1426.10 Lakhs as against loss of Rs 1251.07 Lakhs reported in the previousyear. There are no significant material orders passed by the Regulators/Courts which wouldimpact the going concern status of the Company and its future operations. A detailedManagement Discussion and Analysis Report forms part of this report is annexed asAnnexure-1.
OUTLOOK FOR 2016-17
The lay off at Companys plant is continuing and it is unviable to operate theplant under present business conditions. Our efforts for scouting for tie up withpotential investors / strategic investors have not given any fruitful result. Hence theplant continues to remain under consensus lockout.
In the absence of profit your directors are unable to declare any dividend for theyear 2015-2016.
BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION
The accumulated losses of the Company for the financial year ended 31stMarch 2014 exceeded its net worth the Company has made reference to the Board forIndustrial and Financial Reconstruction (BIFR) under section 15 of the Sick IndustrialCompanies (Special) Provisions Act 1985. The reference has been registered vide Case No.74/2014 by BIFR. There were three hearings first hearing on 2nd July 2015second hearing on 13th May 2016 and the third hearing on 20th July2016. The proceedings are in progress.
PARTICULAR OF LOANS GUARANTEES OR INVESTMENT
There are no loans Guarantees and Investments made under the provisions of Section 186of the Companies Act 2013 during the year under review. Details of Loans Guarantees andInvestments as at the year end are given in the notes to the Financial Statements.
RELATED PARTY TRANSACTION
There are no contracts or arrangement with related parties referred to in Section 188(1) by the Companies Act 2013. The details of other transactions entered into with therelated parties are given in Note 45 to the Financial Statement. The Policy on RelatedParty Transactions are approved by Board is uploaded on the Companys Website.
The Company has not accepted deposit from the public falling within the ambit ofSection 73 of the Companies Act 2013 and The Companies (Acceptance of Deposits) Rules2014.
Authorised Capital of the Company is Rs 600000000/- and there was no change in theauthorised capital of the company during the year under review.
Paid up capital of the company is Rs 534323679/- comprising of 206523679 equityshares of Rs 1/- each and 3278000 5% Redeemable Cumulative Preference Shares of Rs100/-each. During the year under review there was no change in the paid up capital of thecompany.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES:
In view of the continuing losses the company is not in a position to make anyexpenditure under Corporate Social Responsibility as per the Provisions of Companies Act2013.
The Company has declared Consensus lock out as per the agreement reached with its workforce effective from 30th May 2014. Since then Company has separated 70Officers and 317 Staff and Workers through Voluntary Separation Scheme. The number atemployee as on 31st March 2016 is 55.
EXTRACT OF ANNUAL RETURN
The extract of the Annual Return in Form MGT 9 is annexed herewith as Annexure- 2
NUMBER OF BOARD MEETINGS HELD
A calendar of Meetings is prepared and circulated in advance to the Directors. Duringthe year Five Board Meetings and Five Audit Committee Meetings were convened and held. Thedetails of which are given in the Corporate Governance Report. The intervening gap betweenthe Meetings was within the period prescribed under the Companies Act 2013.
The report on corporate governance as per the requirement of the listing agreement withstock exchange forms part of this report is annexed as Annexure-3. The Company hascomplied with all the requirements of corporate governance. The certificate from theAuditors of the Company confirming compliance to the conditions of the corporategovernance requirements is also annexed.
DIRECTOR RESPONSIBILITY STATEMENT
The Directors Responsibility Statement referred in Section 134(5) of CompaniesAct 2013 shall State that
(a) in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;
(b) the directors have 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 at the end of the financial year and ofthe loss of the company for that period;
(c) the directors have 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 have prepared the annual accounts on a going concern basis; and
(e) the directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.
(f) the directors have devised proper systems to ensure compliance with the provisionsof all applicable Laws and that such system were adequate and operating effectively.
INFORMATION ON REMUNERATION
Information as per the provisions of Section 197(12) of the Companies Act 2013 readwith Rule 5(1) 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 are annexed as Annexure-4 to this report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The manufacturing operations were suspended with effect from 30th May 2014and hence there is no matter to be reported under this para for the period under review Refer Annexure-5 and Form-A.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations.
Companys banks accounts have been classified as NPA by all banks in the previousfinancial year due to non-payment of interest. Bank of India has issued a SARFAESI Noticeunder Section 13(2) of the SARFAESI Act on 25th July 2015 and further tooksymbolic possession of the assets of the Company vide Public Notice dated 10thOctober 2015. Indian Overseas Bank has also issued a Notice under Section 13(2) of theSARFAESI Act on 9th October 2015. The Company has challenged the action of Bankof India in the Debt Recovery Tribunal Nagpur on the ground that Bank of India lacks therequisite majority for initiation of action under Section 13(4) of the SARFAESI Act. Thematter is under subjudice. Invent Assets Securitisation & Reconstruction Pvt. Ltd.(INVENT) has informed the Company that the following four Banks have assigned their debtsin their favour and INVENT has executed the necessary assignment agreement.
Some unsecured creditors have also filed winding up petition in the Nagpur Bench of theMumbai High Court against the Company. The Company has taken necessary steps to protectits interst.
M/s Salve & Company Chartered Accountants hold office upto the conclusion of theensuing 13th Annual General Meeting. Based on the recommendation of the AuditCommittee the Board of Directors of the Company have proposed the appointment of M/sSalve & Co. Chartered Accountants as the Auditors of the Company from the conclusionof the forthcoming 13th Annual General Meeting till the conclusion of the 14thAnnual General Meeting (subject to ratification by shareholders at every Annual GeneralMeeting). M/s Salve &
Co. have expressed their willingness to act as Auditors of the Company if appointedand have further confirmed that the said appointment would be in conformity with theprovisions of Section 141 of the Companies Act 2013.
Your Directors request you to ratify the appointment of M/s Salve & CompanyChartered Accountants (Registration No.109003W) as Statutory Auditors of the Company atthe ensuing 13th Annual General Meeting and to fix their remuneration.
The manufacturing operations have been suspended with effect from 30th May2014 as per the consensus lockout agreement reached with the workforce. In view of thisthe Company has not maintained any cost records and hence question of cost audit does notarise.
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 hasappointed M/s P. S. Channe & Co. a firm of Company Secretaries in Practice toundertake the Secretarial Audit of the Company for financial Year 2015-16. M/s P. S.Channe & Co. have expressed their willingness to act as Auditors of the Company ifappointed and have further confirmed that the said appointment would be in conformitywith the provisions of Section 141 of the Companies Act 2013. The Report of theSecretarial Audit Report is annexed herewith as Annexure-6. There are no qualifications orobservations or remarks made by Secretarial Auditor in his report.
DECLARATION BY INDEPENDENT DIRECTORS:
Shri A. S. Kapre Shri M. B. Thaker Shri Mohan S. Adige and Shri K. A. Pardhi areIndependent Directors on the Board of your Company. In the Opinion of the Board and asconfirmed by the these Directors they fulfill the conditions specified in Section 149 ofthe Companies Act 2013 and the rules made thereunder about their status as IndependentDirectors of the Company.
Mr. M.D. Saraf shall retire by rotation at the 13th Annual General Meetingand being eligible offers himself for reappointment in accordance with the provisions ofthe Companies Act 2013 and in terms of the Memorandum and Articles of Association of theCompany.
Mrs. (Dr) Champaka Rangachari ceased to be director with effect from 6thMay 2016.
The Company has formulated a code of conduct for all members of the Board. Allconcerned members have affirmed compliance with the said code.
NOMINATION AND REMUNERATION POLICY
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. The Remuneration Policy is stated in the Corporate Governance Report. Theabove policy was approved by the Board of Directors in their Meeting held on 14thFebruary 2015.
Audit Committee of the Company comprises of Mr. A. S. Kapre Mr. M. B. Thaker Mr. M.S. Adige and Mr. Anurag Saraf Except Mr. Anurag Saraf who is a Promoter Director of theCompany rest all members of the Audit Committee are Independent Directors. The committeehas been constituted in strict compliance with the provisions of Clause 49 of the Listingagreement and assumes all responsibilities provided therein discharging their dutiesdiligently with transparency and accountability as their sole motivation.
You are requested to appoint Auditors for the current year and to fix theirremuneration.
The report by Auditors if self explanatory. Further in view of consensus lockout atplant and preparation of Accounts on going concern basis the Auditors have made someobservations under "Emphasis of matter appearing in the Auditors Report whichmanagement has responded in Note 1(b) under Significant Accounting Policies and 29 to theAudited Financial Statements for the year ended 31st March 2016.
DISCLOSURE WHERE COMPANY IS REQUIRED TO CONSTITUTE NOMINATION AND REMUNERATIONCOMMITTEE:
The Company has constituted a Nomination & Remuneration Committee under Clause 49of the Listing Agreement & has Nomination & Remuneration Policy for appointmentand remuneration of Directors Under Section 178 of the Companies Act 2013 and Clause 49of the Listing Agreement. All the appointments of Directors is as per the Nomination &Remuneration Policy of the Company which were also approved by the Committee.
DISCLOSURE OF VIGIL MECHANISM IN BOARD REPORT:
The Company have adopted the Vigil Mechanism Policy for the Company in its duly heldBoard Meeting on 14th February 2015 and the same is available on the websiteof the Company.
DISCLOSURE ABOUT ESOP AND SWEAT EQUITY SHARE
Company has not issued any share under ESOP or Sweat Equity Shares during the year.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMAN AT WORK PLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has in place a policy for Prevention of Sexual harassment in accordancewith the requirements of the Sexual Harassment of Women at work place (PreventionProhibition and Redressal) Act 2013. All employees (Permanent Contractual temporarytrainees) are covered under this policy. The Company did not receive any complaint duringthe year 2015-16.
Directors of the Company wish to thank the Central and State Governments for theircontinued support and co-operation extended towards the business as well as thecompanys social functions. The Management also thanks the shareholders BusinessAssociates Financial Institutions & Banks Customers and Suppliers for the faithreposed in the Company. The Board expresses its sincere appreciation to the dedicated andcommitted team of employees and workmen of your Company.
Annexure-4 to the Directors Report
Information under Section 197(12) of the Companies Act 2013 read with Rule 5(2) &5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014and forming part of the Directors Report for the year ended March 31 2016 No employee ofthe company is paid gross remuneration aggregate of not less than Rs.500000/- per month.
Annexure-5 to the Directors Report
Additional information as required under the Companies (Disclosure of particulars inthe Report of Board of Directors) Rules 1988.
FORM OF DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY.
Annexure 6 to Directors Report
SECRETARIAL AUDIT REPORT
FOR THE FINANCIAL YEAR ENDED ON 31STMARCH 2016
[Pursuant to section 204(1) of the Companies Act 2013 and rule No.9 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014]
Facor Steels Limited
46-A & B MIDC Ind. Estate Hingna Road Hingna Road
I have conducted the secretarial audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by Facor Steels Limited(hereinafter called the Company) having CIN: L27100mh2004PLC146283. Secretarial Audit wasconducted in a manner that provided me a reasonable basis for evaluating the corporateconducts/statutory compliances and expressing my opinion thereon. Based on my verificationof the Companys books papers minute books forms and returns filed and otherrecords maintained by the company and also the information provided by the Company itsofficers agents and authorized representatives during the conduct of secretarial audit Ihereby report that in my opinion the company has during the audit period covering thefinancial year ended on 31st March 2016 complied with the statutory provisionslisted hereunder and also that the Company has proper Board-processes andcompliance-mechanism in place to the extent in the manner and subject to the reportingmade hereinafter:
I have examined the books papers minute books forms and returns filed and otherrecords maintained by the Company for the financial year ended on 31st March2016 according to the provisions of:
1. The Companies Act 2013(the Act) and the rules made there under as applicable;
2. The Securities Contracts (Regulation) Act 1956 (SCRA) and the rulesmade thereunder;
3. The Depositories Act 1996 and the Regulations and Bye-laws framed thereunder;
4. Foreign Exchange Management Act 1999 and the rules and regulations made thereunderto the extent of Foreign Direct Investment Overseas Direct Investment and ExternalCommercial Borrowings;
5. The following Regulations and Guidelines prescribed under the Securities andExchange Board of India Act 1992 (SEBI Act):-
a. The Securities and Exchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations 2011;
b. The Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations1992;
c. The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2009
Not applicable as the Company did not issue any security during the financial yearunder review;
d. The Securities and Exchange Board of India (Employee Stock Option Scheme andEmployee Stock Purchase Scheme) Guidelines 1999 and the Securities and Exchange Board ofIndia (Share Based Employee Benefits) Regulations 2014 notified on 28thOctober2014 Not applicable as the Company has not granted any Options to its employees duringthe financial year under review; e. The Securities and Exchange Board of India (Issueand Listing of Debt Securities) Regulations 2008 Not applicable as the Companyhas not issued any debt securities during the financial year under review;
f. The Securities and Exchange Board of India (Registrars to an Issue and ShareTransfer Agents) Regulations 1993 regarding the Companies Act and dealing with client;
g. The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations2009- Not applicable as the Company has not delisted its equity shares from any stockexchange during the financial year under review ;
h. The Securities and Exchange Board of India (Buyback of Securities) Regulations 1998 Not applicable as the Company has not bought back any of its securities duringthe financial year under review and i. The Secretarial Standards issued by theInstitute of Company Secretaries of India
6. Labour Laws Factories Act Pollution Laws and other applicable laws Companyhas suspended its production activity completely and locked out is effective from 30thMay 2014. I have examined compliances from the papers/register and the information givenby the staff members/officers (who have not adequate knowledge about the subject matter)available in the office of the Company. I have audited and examined in very specificmanner to ensure whether adequate system and process is in order or not and commented uponirregularities seen apparently.
I have also examined compliance with the applicable clauses of the Listing Agreementsentered into by the Company with BSE Ltd.
I have not examined compliance by the Company with the applicable clauses of thefollowing: a. Applicable financial laws like direct and indirect tax laws since thesame have been subject to review by statutory financial auditor and other designatedprofessionals.
During the period under review the Company has complied with the provisions of the ActRules Regulations Guidelines Standards etc. mentioned above subject to the followingobservations:
a) That the Company had not given facility of Ballot Paper to the Shareholders of theCompany at the time of Annual General Meeting.
b) That Company has received two notices from BSE Limited (formerly known as BombayStock Exchange Ltd.) for Non-submission of Corporate Governance Report for the Quarterended December 2015 and Non-submission of Share Capital Audit Report for the Quarter endedDecember 2015. Company has not submitted Reports for further period also. The Company hasnot submitted Shareholding Pattern for the Quarter ended March 2016.
c) That Company has not altered the Articles of the Company nor adopted Table- F toinclude the matters as require under the provisions of the Companies Act 2013
d) That the Company has not published its notice for the Board Meeting in thenewspapers as require under Listing Agreement for the meeting held for adopting resultsfor the Quarter ended on December 2015 and March 2016..
e) That the Company has not filed its Annual Return in form MGT-7 along with MGT-8 asrequired under section 92 of the Companies Act 2013 and Rules applicable.
f) That the Company has not appointed Key Managerial Person i.e. Company Secretary andChief Financial Officer within 6 months from the date of vacation of respective designatedpost.
g) That the Company has not appointed an Internal Auditor and did not carried out Costaudit as require.
h) That the Mrs. Champaka Rangachari (Independent and Women Director) did not attendany Board Meeting during the year under review. We have noticed that in the Minutes Booksof the meetings Leave of absence has been granted but no such documents are availablewith Company.
i) That the Company has not complied with procedure as prescribed in the SecretarialStandards as issued by the Institute of Company Secretaries of India.
j) That the Company has not signed new Listing Agreement with BSE Ltd. k) That theProvident Fund deducted but not deposited for the month of February 2016 and March 2016.l) That the Company has not renewed licenses related to Pollution Laws etc.
m) That the Factory License under Factories Act has not been renewed from 01.01.2015and has been deposited with Deputy Director Industrial Safety & Health Civil LinesNagpur.
I further report that based on the information provided by the Company itsofficers and authorized representatives during the conduct of the audit and also on thereview of quarterly compliance reports by respective department heads / company secretarytaken on record by the Board of Directors of the Company in my opinion adequate systemsand processes and control mechanism exist in the Company to monitor and ensure compliancewith applicable laws subject to the observations made hereinbefore.
I further report that
The Board of Directors of the Company is duly constituted with proper balance ofExecutive Directors Non-Executive Directors and Independent Directors except theincidence of Women & Independent Director. The changes in the composition of the Boardof Directors that took place during the period under review were carried out in compliancewith the provisions of the Act. Adequate notice is given to all Directors to schedule theBoard Meetings. With respect to the agenda and detailed notes on agenda start time andend time of the Board meeting company has not complied with the Ssecretarial Standardsissued by ICSI. A system exists for seeking and obtaining further information andclarifications on the agenda items before the meeting and for meaningful participation atthe meeting.
As per minutes of the meetings duly recorded and signed by the Chairman the decisionswere unanimous and no dissenting views have been recorded.
I further report that there are adequate systems and processes in the companycommensurate with the size and operations of the company to monitor and ensure compliancewith applicable laws rules regulations and guidelines except to the observations madeearlier.
I further report that Company has made application to MSEDCL for reduction in PowerContract from 7500kva to 1000Kva for its mini steel plant.
I further report that Company has passed Special Resolution by Postal Ballot andsold its investment held in Sai Wardh Power (Wardha Power Company Ltd.) .
I further report that the Invent Assets Securitization and Reconstruction PrivateLimited acquired debt from Central Bank of India and Syndicate Bank.
I further report that the Kesari Steels Limited filed a Recovery Suit at RohiniCourt Delhi and company has received summons on 28th September 2015.
I further report that the Bank of India a secured creditor of the Company issueda notice dated July 25 2015 u/s 13 (2) of the SARAESI calling upon Company to pay theoutstanding dues within 60 days from the date of said notice. Also received Notice underSARFEASI from Indian Overseas Bank Vizag on 9th October 2015 u/s 13 (2) Ifurther report that the MSEDCL has disconnected electricity supply at Factory premisesdue to non-payment of electricity charges.
I further report that Company has filed petition to the High Court Nagpur forwithdrawal of complaint by DRS Logistics Private Limited.
I further report that we have asked for a certificate from its Registrar& Transfer Agent for due compliances with respect to Share Transfer Transmission etc.& members register. Company has informed us that Registrar and Transfer Agent is onlyreporting to the SEBI hence we are unable to comment. I further report that Companyhas not taken note of observation/comment made by me in the Secretarial Audit Report dated05/08/2015.
For P S CHANNE & ASSOCIATES
CS PRADIP S CHANNE
Place : NAGPUR (Proprietor)
Date : 05/08/2016
FCS No. 6265 C.P No.7138
Note: This report is to be read with my letter of even date which is annexed asANNEXURE A and forms an integral part of this report.
The Members Facor Steels Limited 46-A & B MIDC Ind. Estate Hingna RoadNAGPUR-440028
My report of even date is to be read along with this letter.
1. Maintenance of secretarial record is the responsibility of the management of thecompany. My responsibility is to express an opinion on these secretarial records based onmy audit.
2. I have followed the audit practices and processes as were appropriate to obtainreasonable assurance about the correctness of the contents of the Secretarial records. Theverification was done on test basis to ensure that correct facts are reflected insecretarial records. I believe that the processes and practices I followed provide areasonable basis for my opinion.
3. I have not verified the correctness and appropriateness of financial records andBooks of Accounts of the Company.
4. Where ever required I have obtained the Management representation about thecompliance of laws rules and regulations and happening of events etc.
5. The compliance of the provisions of Corporate and other applicable laws rulesregulations Standards is the responsibility of management. My examination was limited tothe verification of procedures on test basis.
6. The Secretarial Audit report is neither an assurance as to the future viability ofthe company nor of the efficacy or effectiveness with which the management has conductedthe affairs of the company.