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Inducto Steel Ltd.

BSE: 532001 Sector: Others
NSE: N.A. ISIN Code: INE146H01018
BSE 00:00 | 14 Jan 15.00 0






NSE 05:30 | 01 Jan Inducto Steel Ltd
OPEN 14.30
52-Week high 20.75
52-Week low 10.00
Mkt Cap.(Rs cr) 6
Buy Price 14.30
Buy Qty 30.00
Sell Price 15.00
Sell Qty 100.00
OPEN 14.30
CLOSE 15.00
52-Week high 20.75
52-Week low 10.00
Mkt Cap.(Rs cr) 6
Buy Price 14.30
Buy Qty 30.00
Sell Price 15.00
Sell Qty 100.00

Inducto Steel Ltd. (INDUCTOSTEEL) - Director Report

Company director report


Dear Members

The Board of Directors are pleased to present the Company's Thirty First (31st ) AnnualReport and the Company's audited financial statements (standalone and consolidated) forthe financial year ended March 31 2019 ("year under review/ FY 2018-19").

Management Discussion and Analysis

To avoid repetition of information the Management Discussion and Analysis onperformance of the Company is presented below.

Global Overview:

India was the world's second-largest steel producer with production standing at 106.5MT in 2018. The growth in the Indian steel sector has been driven by domestic availabilityof raw materials such as iron ore and cost-effective labour. Consequently the steelsector has been a major contributor to India's manufacturing output. The Indian steelindustry is very modern with state-of-the-art steel mills. It has always strived forcontinuous modernisation and up-gradation of older plants and higher energy efficiencylevels. Indian steel industries are classified into three categories such as majorproducers main producers and secondary producers.

Market Size

India's finished steel consumption grew at a CAGR of 5.69 per cent during FY08-FY18 toreach 90.68 MT. India's crude steel and finished steel production increased to 103.13 MTand 104.98 MT in 2017-18 respectively. In 2017-18 the country's finished steel exportsincreased 17 per cent year-on-year to 9.62 million tonnes (MT) as comared to 8.24 MT in2016-17. Exports and imports of finished steel stood at 5.77 MT and 7.13 MT during April2018 to February 2019 (P). Steel industry and its associated mining and metallurgy sectorshave seen a number of major investments and developments in the recent past. According tothe data released by Department for Promotion of Industry and Internal Trade (DPIIT) theIndian metallurgical industries attracted Foreign Direct Investments (FDI) to the tune ofUS$ 11.18 billion in the period April 2000–December 2018.

Government Initiatives

Some of the other recent government initiatives in this sector are as follows:

• An export duty of 30 per cent has been levied on iron ore^ (lumps and fines) toensure supply to domestic steel industry.

• Government of India's focus on infrastructure and restarting road projects isaiding the boost in demand for steel. Also further likely acceleration in rural economyand infrastructure is expected to lead to growth in demand for steel.

• The Union Cabinet Government of India has approved the National Steel Policy(NSP) 2017 as it seeks to create a globally competitive steel industry in India. NSP 2017envisages 300 million tonnes (MT) steel-making capacity and 160 kgs per capita steelconsumption by 2030-31.

• The Ministry of Steel is facilitating setting up of an industry driven SteelResearch and Technology Mission of India (SRTMI) in association with the public andprivate sector steel companies to spear head research and development activities in theiron and steel industry at an initial corpus of Rs 200 crore (US$ 30 million).

• The Government of India raised import duty on most steel items twice each timeby 2.5 per cent and imposed measures including anti-dumping and safeguard duties on ironand steel items.

External Environment

1. Macroeconomic Condition

Being a core sector steel industry tracks the overall economic growth in the longterm. Also steel demand being derived from other sectors like automobiles consumerdurables and infrastructure its fortune is dependent on the growth of these userindustries. The Indian steel sector enjoys advantages of domestic availability of rawmaterials and cheap labour. Iron ore is also available in abundant quantities. Thisprovides major cost advantage to the domestic steel industry. The Indian steel industry islargely iron-based through the blast furnace (BF) or the direct reduced iron (DRI) route.Indian steel industry is highly consolidated. About 60% of the crude steel capacity isresident with integrated steel producers (ISP). But the changing ratio of hot metal tocrude steel production indicates the increasing presence of secondary steel producers(non-integrated steel producers) manufacturing steel through scrap route enhancing theirdependence on imported raw material. In FY18 India's finished steel consumption grew at aCAGR of 5.6% during FY08-FY18 to reach 90.6 MT. India's crude steel and finished steelproduction increased to 102.3 MT and 104.9 MT in FY18 respectively. In FY18 thecountry's finished steel exports increased 17% year-on-year to 9.6 million tonnes (MT) ascompared to 8.2 MT in FY17. Exports and imports of finished steel stood at 1.3 MT and 1.89MT during Apr-Jun 2018. Further India was the only major steel consuming marketglobally which saw a demand escalation. However the country suffered from anunprecedented inflow of steel imports from China Japan South Korea and Russia. SouthKorea and Japan benefitted due to the free trade agreement with India. The result was thatthe domestic industry was forced to take a series of price cuts leading to a severemargin squeeze for domestic steel companies. Steel prices are now increasingly aligning toglobal export prices as markets strike a balance between imports and domestic demand.China's waning demand and resultant rise in exports poses a risk to leveraging improvingdomestic demand in South Asia and Europe. Further movement of currencies against the USdollar would also have a significant impact on the movement of global steel and rawmaterial prices.

The National Steel Policy 2017 has envisaged 300 million tonnes of productioncapacity by 2030-31. In 2018 steel consumption of the country is expected to grow 5.7 percent year-on-year to 92.1 MT. Further India is expected to surpass USA to become theworld's second largest steel consumer in 2019. Huge scope for growth is offered by India'scomparatively low per capita steel consumption and the expected rise in consumption due toincreased infrastructure construction and the thriving automobile and railways sectors.

2. Economic Outlook

Steel demand in India is tipped to show an above-7% in both 2019 and 2020 on sustainedinfra spends with the economy expected to achieve faster growth in the second half of 2019post general elections having overcome the shocks of demonetisation and the Goods &Services Tax (GST) implementation the World Steel Association (worldsteel) has said."While the fiscal deficit might weigh on public investment to an extent the widerange of continuing infrastructure projects is likely to support growth in steel demandabove 7% in both 2019 and 2020 the Brussels-based industry association said in its latestShort Range Outlook April 2019. Worldsteel members represent around 85% of global steelproduction.

In 2018 global steel demand increased by 2.1% growing slightly slower than in 2017.In 2019 and 2020 growth is still expected but in a less favourable economic environment.China's deceleration a slowing global economy and uncertainty surrounding trade policiesand the political situation in many regions suggest a possible moderation in businessconfidence and investment. Steel demand in the developed economies grew by 1.8% in 2018following a resilient 3.1% growth in 2017. We expect demand to further decelerate to 0.3%in 2019 and 0.7% in 2020 reflecting a deteriorating trade environment.

The following financial performance and analysis details of various plants/segments isintended to convey the Management's perspective on the financial and operating performanceof the Company at the end of Financial Year 2017-18. It should be read in conjunction withthe Company's financial statements the schedules and notes thereto and other informationincluded elsewhere in the Integrated Report. The Company's financial statements have beenprepared in accordance with Indian Accounting Standards (‘Ind

AS') complying with the requirements of the Companies Act 2013 and guidelines issuedby the Securities and Exchange Board of India (‘SEBI'). Aspects on industry structureand developments outlook risks internal control systems and their adequacy and materialdevelopments in human resources have been covered hereinbelow.

Financial Performance and Analysis

The Company's financial performance for the year ended March 31 2019 is summarizedbelow: a) Standalone Ind AS Financial Results : Review and Analysis

(Rs. in Lakhs)


For the year ended

March 31 2019 March 31 2018
Revenue from operations(1) 7583.41 2202.82
Other Income 19.66 170.95
Total Revenue 7603.07 2373.77
Cost of raw materials consumed 2581.73 2026.66
Purchase of Stock – in – trade 4272.44 0.00
Changes in inventories of finished goods stock – in – trade work – in – process (44.25) (31.35)
Employee benefits expenses 100.27 72.97
Finance costs 85.37 30.45
Excise Duty 0 126.55
Depreciation and amortization expenses 15.16 14.76
Other expenses 516.02 94.25
Total Expenses 7526.76 2334.28
Profit / (Loss) before tax 76.31 39.48
Less: Current Tax 36.44 16.97
Less: Deferred Tax (2.82) (1.59)
Profit / (Loss) after tax 42.69 24.10
Other Comprehensive Income 0.34 (0.04)
Total Comprehensive Income for the year 43.03 24.07
Earnings Per Share (Face Value of Rs. 10/- each)-
Basic 1.07 0.60
-Diluted 1.07 0.60

b) Standalone Cash Flow Analysis (Rs. in Lakhs)

Particulars March 31 2019 March 31 2018
- Net Cash Flow from Operating Activities (273.68) 3183.03
- Net Cash Outflow from Investing Activities- 329.83 (3177.69)
- Net Cash Outflow from Financing Activities- (85.37) (30.44)
- Net Cash Inform/(Outflow) 6.77 (25.10)


Your Company reported Revenue of Rs.7583.41 Lakhs during the year as compared to Rs.2202.82 lakhs of the previous year. Revenue of current year has increased by more thanthree times of the previous year.

Operating Profit (EBITDA)

The Operating Profit of the Company including other income and finance income isRs.176.85 Lakhs (previous year Rs.84.69 Lakhs).

Finance Cost

Finance cost during the year has increased from Rs. 30.45 lakhs in the previous year toRs. 85.37 Lakhs during the year under review. However in spite of increase in financecost company was able to increase net profit of year under review.


Depreciation during the year increased to Rs. 15.16 lakhs from Rs. 14.76 lakhs inprevious year due to addition in fixed assets.

Financial Performance Review and Analysis (Consolidated)

The Company's financial performance for the year ended March 31 2019 is summarizedbelow:

a) Consolidated Financial Results : Review and Analysis

Particulars For the year ended
March 31 2019 March 31 2018
Revenue from operations(1) 7583.41 2202.82
Other Income 19.66 170.95
Total Revenue 7603.07 2373.77
Cost of raw materials consumed 2581.73 2026.66
Purchase of Stock – in – trade 4272.44 0.00
Changes in inventories of finished goods stock – in – trade work – in – process (44.25) (31.35)
Employee benefits expenses 100.27 72.97
Finance costs 85.37 30.45
Excise Duty 0 126.55
Depreciation and amortization expenses 15.16 14.76
Other expenses 516.02 94.25
Total Expenses 7526.76 2334.28
Profit / (Loss) before tax 76.31 39.48
Less: Current Tax 36.44 16.97
Less: Deferred Tax (2.82) (1.59)
Profit / (Loss) after tax 42.69 24.10
Other Comprehensive Income 0.34 (0.04)
Total Comprehensive Income for the year 43.03 24.07
Total comprehensive income for the year attributable to :
- Owners of the Company 43.03 24.07
- Non controlling interest - -
Earnings Per Share (Face Value of Rs. 10/- each)-
-Basic 1.07 0.60
-Diluted 1.07 0.60

Industry Overview

Total crude steel production in India has increased at a CAGR of 5.4% duringFY12–FY18 with country's output reaching 103.1 million tonnes per annum (MTPA) inFY18.The country remained the third largest crude steel producer in 2017 as large publicand private sector players increased steel production in view of rising demand. Moreovercapacity has increased to 138 million tonnes (MT) in FY18 while in the coming ten yearsthe figure is anticipated to rise to 300 MT of steel. Steel demand in the emerging anddeveloping economies excluding China which accounts for 30% of world total is expectedto grow by 4.9% in FY18. In FY18 the country's finished steel exports increased 17%year-on-year to 9.6 million tonnes (MT) as compared to 8.2 MT in FY17. During the sameperiod the country's finished steel imports rose 3.5% year-on-year to 7.4 MT as comparedto 7.2 MT in FY17. Exports and imports of finished steel stood at 3.7 MT and 4.7 MT duringApr-Oct 2018 India is expected to overtake Japan to become the world's second largeststeel producer soon. The National Steel Policy 2017 has envisaged 300 million tonnes ofproduction capacity by 2030. In 2018 steel consumption of the country is expected to grow5.7% year-on-year to 92.1 MT. Huge scope for growth is offered by India's comparativelylow per capita steel consumption and the expected rise in consumption due to increasedinfrastructure construction and the thriving automobile and railways sectors. Companies inthe steel industry are investing heavily in expanding their capacity. Major public andprivate companies including Tata Steel SAIL and JSW Steel are expanding theirproduction capacity. The capital goods sector accounts for 11% of steel consumption andexpected to increase 14-15% by 2025-26 and has the potential to increase in tonnage andmarket share. The infrastructure sector accounts for 9% of steel consumption and expectedto increase 11% 2025-26. In FY18 passenger traffic at Indian airports stood at 308.7million and number of operational airports stood at 100 in September 2018. Estimated steelconsumption in airport building is likely to grow more than 20% over next few years.

Industry's Initiative/ Structure and Developments

The Indian steel industry is seeking a safeguard duty of 25% ad valorem on a wide rangeof steel products in the face of a sharp and significant increase in imports. In apetition filed with the Directorate General of Trade Remedies the Indian SteelAssociation (ISA) on behalf of domestic steelmakers has argued that as a consequence ofduties imposed by the USA and consequently by the EU Turkey and Canada steel exportsfrom some Asian countries are being diverted to India. Steel exporters from South KoreaJapan China and Asean countries have diverted as much as 43% of the volume or 1.204million tonnes that they lost from the US into India the petition claimed.

Domestic steelmakers who had convinced the government to impose trade remedialmeasures in 2016 and 2017 argue that whatever gains those measures achieved will beeroded if the government failed to immediately impose safeguards against steel imports.They expect the trend to worsen with the Eurasian Economic Union –which includesRussia Kazakhstan Belarus Armenia and Kyrgyzstan – also having initiated safeguardinvestigations.

The ISA petition seeks a tapering safeguard duty on semis flats longs pipes andtubes stainless steel and railway products over a period of four years – startingwith 25% in the first year and going down to 22% in the fourth year.

There has been a sharp decline in the prices of steel imports despite a steep increasein production costs. For example between October 2018 to June 2019 international costindex for hot rolled coils rose by $27 to $339 per tonne from $312 while prices ofimported HR coils (benchmark China HR export FOB prices) declined to $490 a tonne from$547. Prices of the same in India have come down to Rs 40000 per tonne from Rs 47000which is a decline of about $100.

In India steel demand is predicted to grow 7.1% in 2019 and 7.2% in 2020 againstglobal demand growth of just 1.3% and 1% respectively. Steel imports had declined to 7.96mt in 2016-17 from 13.43 mt in the previous year and 10.61 mt in 2014-15 due to thegovernment's trade measures and a change in global market conditions.

Government Initiatives

The economic reforms initiated by the Government since 1991 added new dimensions toindustrial growth in general and the steel industry in particular. Licensing requirementfor capacity creation was abolished except for certain locational restrictions and thesteel industry was removed from the list of industries reserved for the public sector.Automatic approval of foreign equity investment up to 100% was granted. Price anddistribution controls were removed with a view to make the steel industry efficient andcompetitive. Restrictions on external trade both in import and export were removed withdrastic reductions in import duty. General policy measures like reduction in import dutyon capital goods convertibility of rupee on trade account permission to mobiliseresources from overseas financial markets among others also benefited the Indian steelindustry. The liberalization of industrial policy and other initiatives taken by theGovernment have given a definite impetus for entry participation and growth of theprivate sector in the steel industry. While the existing units are beingmodernized/expanded a large number of new steel plants have also come up in differentparts of the country based on modern cost effective state of-the-art technologies. Inthe last few years the rapid and stable growth of the demand side has also prompteddomestic entrepreneurs to set up fresh green field projects in different states of thecountry. Today as the 2nd largest crude steel producer globally and with a capacity ofover 100 million tonne the Indian steel industry has come a long way.

• Pig Iron: India is also an important producer of pig iron. Post-liberalizationwith setting up several units in the private sector not only imports have drasticallyreduced but also India has turned out to be a net exporter of pig iron. The private sectoraccounted for 94% of total production of pig iron in the country. Pig iron crude ironobtained directly from the blast furnace and cast in molds.

• Sponge Iron: India world's largest producer of sponge iron (2018) has a hostof coal based units located in the mineral-rich states of the country. Over the years thecoal based route has emerged as a key contributor and accounted for 79% of total spongeiron production in the country.

• Sponge iron is a metallic product produced through direct reduction of iron orein the solid state. The process of sponge iron making aims to remove the oxygen from ironore. The quality of sponge iron is primarily ascertained by the percentage ofmetallization (removal of oxygen) which is the ratio of metallic iron to the total ironpresent in the product.

An export duty of 30 per cent has been levied on iron ore to ensure supply to domesticsteel industry. Government's focus on infrastructure and restarting road projects isaiding the boost in demand for steel. Also further likely acceleration in rural economyand infrastructure is expected to lead to growth in demand for steel. The Union Cabinethas approved the National Steel Policy (NSP) 2017 to create a globally competitive steelindustry in India.

Business Overview

The company is in the business of ship breaking trading and investment activities.

During the financial year 2018-19 sales turnover of the company has increased by morethan three times of the preceding financial year. The sales turnover of the company for FY2018-19 and FY 2017-18 were Rs. 7583.40 Lakhs and Rs. 2202.82 Lakhs respectively. In spiteof frequent fluctuation in the prices of old ship in the international market and alsoheavy dollar exchange rate fluctuations the company was able to perform well in terms ofsales turnover. However the prices in Iron and steel industry are gradually gettingstabilized but foreign currency and fluctuations in value of Indian Rupee vis--vis USDollar remains a concerning area for the company even in the current year.

Whenever there is no immediate payment liability against old ship purchased forbreaking the surplus funds available with the Company are given as loan on short termbasis. The Company is hopeful that the Company can earn reasonable return on theseloans/investments.

Surplus funds are also invested in new avenues of earnings in the form of partnershipwith other entities like in Real Estate and Redeveloping firms. At present the Company haspartnership with M/s. Calvin Divine Enterprises with 20% share and M/s. Shree BalajiAssociates with 5% share. The management is hopeful that the Company can earn reasonablereturn on these investments.

Segmental Review

The company's business segments are identified based on the geographic locations of itsunits and the internal business reporting system as per Ind AS 108. Business segments ofthe company are primarily categorized as: Mumbai (Trading & Investment) and Bhavnagar(Ship Breaking & Trading).

Segment-wise Standalone Ind AS Financial Results

(Rs. in Lakhs)

Particulars Mumbai Bhavnagar Total
a) Revenue from External Source 0.00 7583.41 7583.41
b) Other Income 18.27 1.39 19.66
c) Segment Results Before Interest and Taxes -370.11 531.79 161.68
d) Segment Assets 3173.41 2120.58 5293.99
e) Segment Liabilities 33.71 1120.14 1153.85

Bhavnagar :

During the financial year 2018-19 ship-breaking unit at Alang Ship Breaking YardBhavnagar has performed well in term of sales turnover and net profit margin. In spite ofvolatile prices of old Ships Iron and Steel products coupled with fluctuations in valueof Indian Rupee vis--vis US Dollar during the year this segment has achieved revenue ofRs. 7583.41 Lakhs and result of Rs. 531.79 Lakhs. Though the year under review sawfluctuation in the international market of old ships coming for breaking the managementwas very cautious and purchased ships at proper time and built a good level of inventoriesto earn better profits in coming years. During the year under review Trading activitieswere also carried out in Bhavnagar. Moreover the management is of the view that in thecoming years the ship breaking industry will be stable and with expected boost in theeconomy the requirement of iron and steel will increase which will help the company tomove towards its sustained path of growth.

Mumbai :

During the year under review the Mumbai Unit has not carried out any tradingactivities.

Risk Management

The Company is exposed to the risk from the market fluctuations of foreign exchange aswell as the fluctuation in the price of iron and steel. The Company's raw material is oldship which is purchased from the international market on credit ranging up to 180 days to360 days. The Company is adopting policy of full hedging or covering the foreign exchangerequirement the Company is regularly monitoring the foreign exchange movement andsuitable remedial measures are taken as and when felt necessary.

Though the Company is employing such measures the Company is still exposed to the riskof any heavy foreign exchange fluctuation.

Likewise the Company's finished products are mainly re-rollable scrap generated fromship breaking and the price of the same is linked to the market rate for iron and steel.Any up and down in the price of the iron and steel will affect the profitability of theCompany. However taking into account the price fluctuations already affected during theyear 2018-19.

Outlook – Way Forward

According to a Crisil report steel companies with 22 MT capacity were referred to theNational Company Law Tribunal (NCLT) in the RBI's first round of resolution of stressedassets. An eventual resolution may have multiple benefits as it will resolve more thanhalf of the sector's outstanding debt move a large proportion of production capacity tostronger hands and consolidate the industry. The steel sector is considered very importantfor the overall economic health of the country given its use in a number of keyindustries like automobile process plants capital goods and defence equipments. MinisterSingh said the Indian steel sector is full of opportunities and the country must aim tograb the numero uno position in quality steel production.

Talking about the goals that the steel ministry has set for itself for 2019 new SteelSecretary Binoy Kumar said steel players especially the PSUs will have to produce morevalue-added products. The aim will definitely be to increase the output of special steelin the country while the PSUs would need to ramp up their overall production he said.Kumar also assured that the government would strive to ensure better availability of rawmaterials which has been a key demand of the industry.

Sourcing raw materials Jayanta Roy Senior Vice President at rating agency ICRALimited said the closure of mining at the country's largest iron ore miner NMDC'sDonimalai mine in Karnataka will affect the availability of iron especially for southIndian mills. "Authorities need to immediate steps to resolve the issue to avoidshortage. Iron ore and coking coal are two key raw materials used in steel manufacturingwhile coal is also used in a big way by captive power plants to generate power.

The Steel Secretary said the government is also taking measures to resolve the logisticissue for smooth supply of raw materials. Indian Steel Association (ISA) said the domesticsteel demand outlook in China is not optimistic and this situation raises fear of largeexport volumes from that country.

Internal financial controls and its adequacy

Internal financial control systems of the Company are commensurate with its size andnature of its operations. These have been designed to provide reasonable assurance withregard to the orderly and efficient conduct of its business including adherence to theCompany's policies safeguarding of its assets prevention and detection of frauds anderrors accuracy and completeness of the accounting records and the timely preparation ofreliable financial information and disclosures.

Systems and procedures are periodically reviewed and these are routinely tested byStatutory as well as Internal Auditors and cover all functions and business areas. TheAudit Committee reviews adequacy and effectiveness of the Company's internal controlenvironment and monitors the implementation of audit recommendations including thoserelating to strengthening of the Company's risk management policies and systems. Duringthe year under review no material or serious observation has been received from theStatutory Auditors and the Internal Auditors of the Company on the inefficiency orinadequacy of such controls.

Human Resources

Your Company treats its "human resources" as one of its most importantassets.

We continuously invest in attraction retention and development of talent on an ongoingbasis. Our thrust is on the promotion of talent internally through job rotation and jobenlargement. We believe in harnessing its leadership and people capabilities through sharpfocus and initiatives on talent development.

We review our talent based on their performance and potential to assess their readinessfor future roles of higher scale and complexity. We believe in developing our employeesthrough multiple experiences requiring them to handle scale and complexity. We haveinstituted this through varied job rotation and project roles. We have put in placevarious recognition initiatives for our employees to reward them on their noteworthyperformance and contribution.

Our Company is committed to providing work environment that ensures every employee istreated with dignity and respect and afforded equitable treatment. The Company is alsodedicated at promoting a work environment that is conducive to the professional growth ofits employees and encourages equality of opportunity. To foster a positive workplaceenvironment free from harassment of any nature we have institutionalized the Anti SexualHarassment Framework through which we address complaints of sexual harassment at theworkplace. We follow a gender-neutral approach in handling complaints of sexual harassmentand we are compliant with the law of the land where we operate. We have also constitutedComplaints Committee to consider and address sexual harassment complaints in accordancewith Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013.

Consolidated Financial Statement

As per applicable provisions of the Companies Act 2013 ("the Act") if anyread with the Rules issued thereunder and in accordance with principles and procedures asset out in the Indian Accounting Standards (Ind AS) notified under the Companies (IndianAccounting Standards) Rules 2015 the Consolidated Financial Statements of the Companyfor the financial year ended March 31 2019 have been prepared.

The Consolidated Financial Statements together with the Auditors' Report form part ofthis Annual Report.

Details of Subsidiary/Joint Ventures/Associate Companies

The Company has no subsidiary associate companies or joint venture companies withinthe meaning of Section 2(6) and 2(87) of the Act and thus pursuant to the provisions ofSection 129(3) of the Act the statement containing the salient features of financialstatements of the Company's subsidiaries in Form AOC-1 is not required to be attached tothe financial statements of the Company.

Secretarial Standards

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.


Your Directors have considered it financially prudent in the long term interest of theCompany to reinvest the profits into the business of the Company to build strong reservebase meet the funds requirement and grow the business of the Company. Thus your Board ofDirectors regrets their inability to recommend any dividend for the year ended March 312019.

Loans Guarantee & Investments

Loans guarantees and investments covered under Section 186 of the Companies Act 2013read with the Companies (Meetings of Board and its Powers) Rules 2014 as on March 312019 if any form part of the Notes to the Standalone Financial Statements provided inthis Annual Report.

Contracts or Arrangements with Related Parties

As per the provisions of Section 188(1) of the Act read with Companies (Meetings ofBoard and its Powers) Rules 2014 and Regulation 23 of the Listing Regulations allcontracts/arrangements/transactions entered by the Company with Related Parties were inordinary course of business and at arm's length basis.

All Related Party Transactions entered into during the year under review were approvedby the Audit Committee and the Board from time to time and the same are disclosed in theFinancial Statements of your Company for theyear under review.

Further pursuant to the provisions of the Act and the SEBI Listing Regulations theBoard has on recommendation of its Audit Committee adopted a Policy on Related PartyTransactions and the said policy isavailable on the website of the Company

Further during the year the Company had not entered into any contract / arrangement /transaction with related parties which could be considered material in accordance with thepolicy of the Company on materiality of related party transactions. There were nomaterially significant related party transactions which could have potential conflict withinterest of the Company at large.

Accordingly Form AOC-2 prescribed under the provisions of Section 134(3)(h) of the Actand Rule 8 ofthe Companies (Accounts) Rules 2014 for disclosure of details of RelatedParty Transactions which are "not at arm's length basis" and also which are" material and arm's length basis" is not provided as an annexure to the Board'sReport

Directors and Key Managerial Personnel (KMP)

All the Independent Directors of the Company have given their respective declarationsstating that they meet the criteria of Independence as provided in Section 149(6) of theAct and Regulation 16(1)(b) of the SEBI Listing Regulations and there has been no changein the circumstances which may affect their status as an independent director during theyear. During the year the non-executive directors of the Company had no pecuniaryrelationship or transactions with the Company.

Further the list of the present Directors and KMP forms part of this Annual Reportunder the section Company details.

Performance Evaluation of the Board

In terms of the provisions of the Act the Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 ("SEBI ListingRegulations") and Nomination Policy of the Company NARC and the Board have approveda framework which lays down a structured approach guidelines and processes to be adoptedfor carrying out an evaluation of the performance of the Board its Committees andindividual Directors.

During the year under review the Board carried out the evaluation of its ownperformance and that of its Committees and the individual Directors.

The evaluation process focused on various aspects of the functioning of the Board andits Committees such as composition of the Board and Committees attendance of Directorsat Board and committee meetings acquaintance with business communicating inter se boardmembers effective participation domain knowledge compliance with code of conductvision and strategy experience and competencies performance of specific duties andobligations governance issues etc. The Board also carried out the evaluation of theperformance of individual directors based on criteria such as contribution of the directorat the meetings strategic perspective or inputs regarding the growth and performance ofthe Company etc

Outcome of the Evaluation


The Board carried out an annual performance evaluation of the Board CommitteesIndividual Directors and the Chairman alongwith assessing the quality quantity andtimeliness of flow of information between the Company Management and the Board that isnecessary for the Board to effectively and reasonably perform their duties. Theperformance evaluation of the Board is carried out taking into account the variousparameters like composition of Board process of appointment to the Board commonunderstanding amongst Directors of their role and responsibilities timelines and contentof Board papers strategic directions advice and decision making etc. The Board alsonotes the actions undertaken pursuant to the outcome of previous evaluation exercises.

The performance evaluation of the Independent Directors was carried out by the entireBoard excluding the independent director being evaluated.

The Chairman of the respective Committees shared the report on evaluation with therespective Committee members. The performance of each Committee was evaluated by theBoard based on report on evaluation received from respective Committees.

The report on performance evaluation of the Individual Directors was reviewed by theChairman of the Board and feedback was given to Directors.

Committees of the Board:

The Committee's self-assessment is carried out based on degree of fulfillment of keyresponsibilities adequacy of Committee composition effectiveness of meetings Committeedynamics and quality of relationship of the Committee with the Board and the Management.

The Independent Director(s) also evaluated the performance of Non-IndependentDirectors the Chairman of the Board and the Board as a whole at the meeting ofIndependent Director(s) held on March 31 2019. The outcome and feedback from Directorswas discussed at the respective meetings of Board Committees of Board and meetings ofIndependent Directors.

The overall performance evaluation exercise was completed to the satisfaction of theBoard. The Board of Directors deliberated on the outcome and necessary steps will be takengoing forward.

The details of the evaluation process are set out in the Corporate Governance Reportwhich forms a part of this Annual Report.

Number of meetings of the Board

During the year 9 (Nine) Board meetings were held. The details of the composition ofthe Board and its Committees and of the meetings held and attendance of the Directors atsuch meetings are provided in the Corporate Governance Report.

Committees of the Board


The composition of the Audit Committee is in alignment with provisions of Section 177of the Companies Act 2013 read with the Rules issued thereunder and Regulation 18 of theListing Regulations.

All the recommendations made by the Audit Committee were accepted by the Board ofDirectors of the Company.

The details pertaining to Audit Committee and its composition are included in theCorporate Governance Report which forms part of this report.


Your Company has a duly constituted NARC with its composition quorum powers roleand scope in line with the applicable provisions of the Act and SEBI Listing Regulations.The detailed information with respect to the NARC is disclosed in the Corporate GovernanceReport forming part of this Annual Report.

Nomination Policy and Remuneration Policy/ Philosophy

The Board has on recommendation of the NARC adopted a Nomination Policy whichenumerates your Company's policy on appointment of Directors and Key Managerial Personnel("KMP") including criteria for determining qualifications positive attributesindependence of a director and other matters provided under Section 178(3) of the Act.

The Nomination Policy is enacted mainly to deal with the following matters fallingwithin the scope of the NARC: • to institute processes which enable theidentification of individuals who are qualified to become Directors and who may beappointed as KMP and/or in senior management and recommend to the Board of Directors theirappointment and removal from time to time;

• to devise a policy on Board Diversity;

• to review and implement the succession and development plans for ManagingDirector Executive Directors and Senior Managers;

• to formulate the criteria for determining qualifications positive attributesand independence of Directors; and

• to establish evaluation criteria of Board its Committees and each Director.

Further the Board has on recommendation of the NARC also adopted a policy entailingRemuneration Philosophy which covers the Directors KMP and employees included in SeniorManagement of the Company.

While formulating this policy the NARC has considered the factors laid down underSection 178(4) of the Act which are as under:

• the level and composition of remuneration is reasonable and sufficient toattract retain and motivate directors of the quality required to run the companysuccessfully; • relationship of remuneration to performance is clear and meetsappropriate performance benchmarks; and • remuneration to directors key managerialpersonnel and senior management involves a balance between fixed and incentive payreflecting short and long-term performance objectives appropriate to the working of thecompany and its goals.

Both the aforesaid policies are available on the website of the Company


The details pertaining to composition of the Committee is included in the CorporateGovernance Report which forms part of this report.


In terms of the provisions of Section 135 of the Act read with the Companies (CorporateSocial Responsibility Policy) Rules 2014 your Company has a duly constituted CSRCommittee comprising the following members:

Sr. No. Name of Member Designation
1 Mr. Yogesh Thakkar Chairman
2 Mr. Bhushanlal Behl Member
3 Ms. Sweety Reniwal Member

Policy on Corporate Social Responsibility ("CSR")

The Board has with a vision "to actively contribute to the social and economicdevelopment of the communities in which your Company operates and in doing so build abetter sustainable way of life for the weaker sections of society and raise the country'shuman development index" adopted a CSR Policy and the same is available on thewebsite of the Company i.e.

The CSR Policy of the Company also mentions the process to be implemented with respectto the identification of projects and philosophy of the Company alongwith key endeavorsand goals i.e.

• Education - to spark the desire for learning and knowledge;

• Health care - to render quality health care facilities to people living in thevillages and elsewhere;

• Sustainable Livelihood - to provide livelihood in a locally appropriate andenvironmentally sustainable manner;

• Infrastructure Development - to set up essential services that form thefoundation of sustainable development; and

• Social Cause - to bring about the Social Change we advocate and support.

Corporate Social Responsibility (CSR) initiatives taken during the year

In terms of section 135 and Schedule VII of the Act the Corporate SocialResponsibility Committee (CSR Committee) has formulated and recommended to the Board aCorporate Social Responsibility Policy (CSR Policy) indicating the activities to beundertaken by the Company which has been approved by the Board.

The CSR Policy may be accessed on the Company's website i.e.

During the year under review Corporate Social Responsibility is not applicable to thecompany

Extract of Annual Return

The extract of the Annual Return of the Company as on March 31 2019 in Form MGT - 9 inaccordance with Section 134(3)(a) Section 92 (3) of the Companies Act 2013 read withCompanies(Management and Administration) Rules 2014 is appended as Annexure-I to theBoard's Report.

Corporate Governance

A separate section on Corporate Governance forming part of the Board's Report and aCertificate from the Company's Auditors is included in the Annual Report as Annexure-II tothe Board's Report.

Auditors and Auditors' Report

Statutory Auditors and Joint Auditors

M/s. P. D. Goplani & Associates Chartered Accountants Bhavnagar having ICAI FirmRegistration No. 118023W were appointed as Auditors of the Company at the Annual GeneralMeeting held on September 30 2017 for a term of 5 (five) consecutive years i.e. to holdoffice from the conclusion of 29th Annual General Meeting until the conclusion of 34thAnnual General Meeting of the Company to be held in the financial year 2022.

Further the Statutory Auditors have confirmed that they are not disqualified to act asAuditors and are eligible to hold office as Auditors of your Company for financial year2019-20.

In the Last Annual General Meeting. M/s. Lahoti Navneet & Co CharteredAccountants Mumbai (ICAI Firm Registration No. 116870W) were appointed as Joint Statutoryauditors for a period of 4 years i.e. to hold office from the conclusion of 30th AnnualGeneral Meeting until the conclusion of 34th Annual General Meeting of the Company to beheld in the financial year 2022.M/s. Lahoti Navneet & Co Chartered AccountantsMumbai now acts as the Joint Statutory Auditor instead of Branch Auditor.

The Notes on financial statement referred to in the Auditors' Report areself-explanatory and do not call for any further comments. The Auditors' Report does notcontain any qualification reservation adverse remark or disclaimer. Also no frauds interms of the provisions of Section 143(12) of the Act have been reported by the StatutoryAuditors in their report for the year under review.

Secretarial Auditors

The Board had appointed M/s. Dilip Bharadiya & Associates Practicing CompanySecretaries to conduct Secretarial Audit for the FY 2018-19. The Secretarial Audit Reportfor the financial year ended March 31 2019 is annexed herewith marked as Annexure-III tothis Report.

The Secretarial Audit Report does not contain any qualification reservation adverseremark or disclaimer.

Further pursuant to provisions of Section 204 of the Act and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014; the Board of theCompany at its meeting held on May 30 2019 has reappointed M/s. Dilip Bharadiya &Associates Practicing Company Secretaries (Certificate of Practice No. 7956) toundertake the Secretarial Audit of the Company for the financial year 2019-2020.

Directors' Responsibility Statement

Pursuant to Section 134(5) of the Companies Act 2013 the Board of Directors to thebest of their knowledge and ability state that:

(i) in the preparation of the annual accounts for the financial year ended March 312019 the applicable accounting standards and Schedule III of the Companies Act 2013 havebeen followed and there are no material departures from the same;

(ii) 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 as at March 31 2019 and of the profitand loss of the Company for the financial year ended March 31 2019;

(iii) proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

(iv) the annual accounts have been prepared on a going concern basis;

(v) proper internal financial controls laid down by the Directors were followed by theCompany and that such internal financial controls are adequate and operating effectively;

(vi) proper systems to ensure compliance with the provisions of all applicable lawswere in place and that such systems are adequate and operating effectively.

Conservation of energy technology absorption foreign exchange earnings and outgo

The Company makes all efforts towards conservation of energy protection of environmentand ensuring safety.

The particulars as required under Section 134(3) (m) of the Companies Act 2013 readwith Rule 8(3) of the Companies (Accounts) Rules 2014 with respect to conservation ofenergy technology absorption and foreign exchange earnings and outgo is as follows:

A. Health Safety and Environment:

The Company aims to provide a safe and healthy workplace to our employees visitors andcontract workers and achieve high standards of environment protection. We are certified tothe following:

Certificate No./ Standard Description/Compliance/Requirement
ISO 9001:2015 The Quality Management System of the Inducto Steels Limited has been audited and has been found to be in accordance with the requirements of ISO 9001:2015
Quality Management System
The Environmental Management System of the Inducto Steels
ISO 14001:2015
Environmental Management System Limited has been audited and has been found to be in accordance with the requirements of ISO 14001:2015
OHSAS 18001:2007 The Occupational Health and Safety Management System of the Inducto Steels Limited has been audited and has been found to be in accordance with the requirements of OHSAS 18001:2007
Occupational Health and Safety
Management System

B. Conservation of energy:

(i) the steps taken or impact on conservation of energy;

(ii) the steps taken by the Company for utilising alternate sources of energy;

In light of the global challenges concerning energy security the Company considersenergy management as one of the key components of its responsible business strategy. TheCompany recognized the importance of energy conservation in decreasing the deleteriouseffects of global warming and climate change. The Company has implemented variousinitiatives for the conservation of energy and all efforts are made to minimize energycosts. Company is engaged in Ship Breaking trading in metal scrap coals graphiteelectrodes and other industrial inouts. No significant power consumption is required inship breaking industry as major portion in production process consist of non mechanicalprocesses. However industrial gases are used in ship dismantling activities and theCompany has taken various measures to control the consumption of fuel and energy.

(iii) the capital investment on energy conservation equipments;

The Company is taking adequate steps to conserve energy though no such capitalinvestment has been made.

C. Technology absorption:

The Company continues to adopt and use the latest technologies to improve theproductivity and quality of its services and products. The Company's operations do notrequire significant absorption of technology. There has been no import of technology in FY2018-19.

D. Foreign exchange earnings and Outgo:

Particulars Current Year Previous Year
Foreign Exchange Earnings - - - - - -
Foreign Exchange Outgo 0 0 0 0 0 0

Vigil Mechanism

The Whistleblower Policy has been approved and adopted by Board of Directors of theCompany in compliance with the provisions of Section 177 (10) of the Companies Act 2013and Regulation 22 of the Listing Regulations which provides a formal mechanism to theemployees business associates and stakeholders of the Company to inter-alia report anyinstances of financial irregularities breach of code of conduct abuse of authoritydisclosure of financial/ price sensitive information unethical / unfair actionsconcerning Company vendors/ suppliers malafide manipulation of company data/recordsactual or suspected fraud or discrimination to the Company's Code of Conduct in ananonymous manner.

The policy of vigil mechanism is available on the Company's website

Particulars of Employees

A) The information required under Section 197(12) of the Act read with rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014:

a. Ratio of the remuneration of each Director to the median remuneration of theemployees of the Company for the Financial Year 2018-19; and

b. Percentage increase in remuneration of each Director Chief Executive Officer ChiefFinancial Officer Company Secretary if anyfor the Financial Year 2018-19: NIL

c. Percentage increase in the median remuneration of employees in the financial year:

There is no increase in the remuneration of employees in the financial year and hencethe information cannot be furnished.

d. Number of permanent employees on the rolls of Company: 4

e. Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration:

Save and except the payment of remuneration to Company Secretary with no percentageincrease in remuneration in the financial year no remuneration is being paid to anyDirector or KMP of the Company. Hence the information pertaining to percentage increasein remuneration cannot be provided.

f. Affirmation that the remuneration is as per the remuneration policy of the Company:

It is hereby affirmed that the remuneration paid to:

• Directors KMP and members of Senior Management is as per RemunerationPhilosophy/Policy of the Company; and

• other employees of the Company is as per the Human Resource Philosophy of theCompany.

B) The information required under Section 197(12) of the Act read with Rules 5(2) and5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014:

Having regard to the provisions of Section 136(1) of the Act the Annual Reportexcluding the aforesaid information is being sent to the members of the Company. The saidinformation is available for inspection on all working days during business hours at theRegistered Office of the Company 21 days before the AGM and upto the date of the ensuingAGM. Any member interested in obtaining such information may write to the CompanySecretary and the same will be furnished on request.

Familiarization Programme

The Company conducts Familiarization Programme for the Independent Directors to enablethem to be familiarized with the Company its management and its operations to gain aclear understanding of their roles rights and responsibilities for enabling theircontribution to the Company. They are provided a platform to interact with multiple levelsof management and are provided with all the documents required and/or sought by them tohave a good understanding of Company's operations businesses and the industry as a whole.

Further when a new Director is inducted on the Board they are provided with necessarydocuments/ brochures reports internal policies strategy and such other operationalinformation to enable them to familiarise with the Company's procedures and practices.Site visits to various plant locations are organised for the Independent Directors toenable them to understand and acquaint with the operations of the Company.

Periodic presentations are made at the Board and Committee meetings on business andperformance updates of the Company global business environment business strategy andrisks involved. Detailed presentations on the Company's business segments are made at theseparate meetings of the Independent Directors from time to time.

The details of such familiarization programmes for Independent Directors are put up onthe Company's website and can be accessed at

Sexual harassment of women at workplace

Your Company is committed towards providing a work environment that is professional andmature free from animosity and one that reinforces our value of ‘integrity' thatincludes respect for the individual. The Company is committed to providing a safe andconducive work environment to all of its employees and associates.

In line with the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 your Company has adopted a Policy on Prevention ofSexual Harassment at Workplace. This policy is applicable to all employees irrespectiveof their level and it also includes ‘Third Party Harassment' cases i.e. where sexualharassment is committed by any person who is not an employee of the Company. The saidpolicy is available on the website of the Company i.e. InternalComplaints Committees have also been set up to redress complaints received regardingsexual harassment.

The Company has not received any complaint of sexual harassment during the financialyear 2018-19.

Other Disclosures

In terms of the applicable provisions of the Act and SEBI Listing Regulations yourCompany additionally discloses that during the year under review:

• there was no change in the nature of business of your Company;

• your Company has not accepted any fixed deposits from the public falling underSection 73 of the Act read with the Companies (Acceptance of Deposits) Rules 2014. Thusas on March 31 2019 there were no deposits which were unpaid or unclaimed and due forrepayment hence there has been no default in repayment of deposits or payment ofinterest thereon;

• your Company has not issued any shares with differential voting rights;

• your Company has not issued any Sweat Equity Shares; and

• no significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status operations of your Company in future.

It is further disclosed that:

• There is no plan to revise the Financial Statements or Directors' Report inrespect of any previous financial year.

• No Material changes and commitments have occurred between the end of theFinancial Year of the Company to which the Financial Statements relate and the date of thereport affecting the financial position of the Company.

• Your Company does not engage in Commodity hedging activities.

Corporate Governance

Your Company is committed to follow the best practices of Corporate Governance and theBoard is responsible to ensure the same from time to time.

Your Company has duly complied with the Corporate Governance requirements as set outunder Chapter IV of the SEBI Listing Regulations from time to time and the StatutoryAuditors of the Company vide their certificate dated May 302019 have confirmed that theCompany is and has been compliant with the conditions stipulated in the Chapter IV of theSEBI Listing Regulations. The said certificate is annexed as Annexure-IV to this Report.Further a separate report on Corporate Governance forms part of this Annual Report.

Cautionary Statement

[Statements in the Board's Report and the Management Discussion and Analysis describingthe Company's objectives projections estimates expectations or predictions may be"forward looking statements" within the meaning of applicable securities lawsand regulations. Actual results could differ materially from those expressed or implied.Important factors that could make a difference to your Company's operations include globaland Indian demand supply conditions finished goods prices feed stock availability andprices cyclical demand and pricing in your Company's principal markets changes inGovernment regulations tax regimes economic developments within India and the countrieswithin which your Company conducts business and other factors such as litigation and yourCompany is not obliged to publicly amend modify or revise any forward looking statementson the basis of any subsequent development information or events or otherwise. The"Management's Discussion and Analysis" does not constitute a prospectusoffering circular or offering memorandum or an offer to acquire any shares and should notbe considered as a recommendation that any investor should subscribe for or purchase anyof the Company's securities.


The Board of Directors would like to express their sincere gratitude for the assistanceand co-operation received from the financial institutions banks Government authoritiescustomers vendors and members during the year under review.

The Board of Directors also wish to place on record its deep sense of appreciation forthe committed services by the Company's executives staff and workers at all levels. Ourconsistent growth was made possible by their hard work solidarity co-operation andsupport.

For and on behalf of the Board of Directors

For Inducto Steels Limited
Sd/- Sd/-
Rajeev Reniwal Sweety Reniwal
Managing Director Director
(DIN: 00034264) (DIN: 00041853)
Date: May 30 2019
Place: Mumbai