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ISMT Ltd.

BSE: 532479 Sector: Metals & Mining
NSE: ISMTLTD ISIN Code: INE732F01019
BSE 00:00 | 22 Mar 8.22 0.12
(1.48%)
OPEN

7.80

HIGH

8.50

LOW

7.80

NSE 00:00 | 22 Mar 8.45 0.30
(3.68%)
OPEN

8.50

HIGH

8.55

LOW

8.20

OPEN 7.80
PREVIOUS CLOSE 8.10
VOLUME 7171
52-Week high 10.94
52-Week low 5.00
P/E
Mkt Cap.(Rs cr) 120
Buy Price 8.20
Buy Qty 60.00
Sell Price 8.45
Sell Qty 3047.00
OPEN 7.80
CLOSE 8.10
VOLUME 7171
52-Week high 10.94
52-Week low 5.00
P/E
Mkt Cap.(Rs cr) 120
Buy Price 8.20
Buy Qty 60.00
Sell Price 8.45
Sell Qty 3047.00

ISMT Ltd. (ISMTLTD) - Director Report

Company director report

To the Members of ISMT Limited

The Directors have pleasure in presenting the 19th Annual Report and Audited FinancialStatements of the Company for the year ended March 31 2017.

FINANCIAL HIGHLIGHTS
Rs. in Crore
Particulars Financial Year
2016-17 2015-16
Gross Sales 1418.72 1331.28
Profit/ (Loss) before Finance Charges 50.25 33.65
Depreciation Amortization & Tax
(EBIDTA)
Cash Profit/ (Loss) (217.81) (300.99)
Gross Profit/ (Loss) (218.64) (246.47)
Profit/ (Loss) Before Tax (288.44) (372.82)
Taxation - (9.39)
Net Profit/ (Loss) (288.44) (382.21)
Add : Balance brought forward from (854.40) (472.19)
Previous Year
Balance carried to Balance Sheet (1142.84) (854.40)

DIVIDEND

Your Directors are unable to recommend a dividend for year ended on March 31 2017 inview of loss.

RESERVES

No amount was proposed to be transferred to Reserves.

OPERATIONS

Both the tube and steel segments continued to operate at low capacity utilizationlevels. However on account of cost reduction and other measures undertaken by theCompany the EBIDTA for the year went up by 50%.

The Company had declared lock-out at its Steel Plant with effect from February 16 2017which was lifted with effect from March03 2017.

MARKET

Though the steel sales were flat the tube sales recorded a healthy growth of 25%. Theimposition of long term anti-dumping duty on imports from China firming up ofinternational oil prices and gradual pick up in economic activity are expected to drivethe growth of both domestic and export markets.

FINANCE

The Company is exploring various strategic options for raising long term fundsincluding equity to meet capex and working capital requirements of the Company and to alsofacilitate restructuring of its debt as per the prevailing RBI guidelines. The Company isworking with advisers and lenders in taking this process further.

CAPTIVE POWER

The order passed by the APTEL dismissing Company's appeal against MERC order ischallenged by the Company before the Hon'ble Supreme Court of India which has already beenadmitted by the Supreme Court. The Company is yet to receive Rs. 39.53

Crore from Maharashtra State Electricity Distribution Company Limited (MSEDCL) towardsexcess energy charges paid on account of non-availability of banking facility.

SALE OF NON CORE ASSETS

The Company continued to work aggressively to find a buyer for sale of its non-coreassets viz. Port and Power Project in Tamil Nadu and Captive Power Project in ChandrapurDistrict

Maharashtra. The Company has taken various steps from time to time including engagingadvisers publishing advertisements and directly contacting potential buyers. However theefforts of the Company have not yielded results primarily due to lack of investmentappetite in the current economic scenario.

ANTI DUMPING DUTY

Based on the final findings and recommendation of Directorate General of Anti-Dumping& Allied Duties (DGAD) Ministry of Finance (MoF) have imposed Anti-Dumping Duty for aperiod of five years vide notification dated February 17 2017 on the imports of theseamless tubes and pipes originating in or exported from China. MoF had earlier hadimposed Provisional Anti-

Dumping Duty vide notification dated May 17 2016 The final duty is same as theprovisional duty which is imposed by way of reference price separately for respectivecategory of tubes.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

In accordance with the provisions of the Companies Act 2013 (‘Act') and theArticles of Association of the Company Mr. B R Taneja retires by rotation and beingeligible offers himself for re-appointment.

Five (5) meetings of the Board of Directors were held during the year. Detailedinformation is given in the Corporate Governance report.

The Independent Directors of the Company had given a declaration pursuant to Section149(7) of the Act.

The Company has devised a Policy for performance evaluation of

Independent Directors Board Committees and other individual Directors which includecriteria for performance evaluation of the non-executive directors and executive directorsas under: a) Knowledge and Skills. b) Familiarity with the Company and its business c)Monitoring Company's Corporate Governance Practices d) Development of strategies and riskmanagement e) Participation and attendance in meetings f) Professional conduct g) Sharingof information

The details of familiarization Programme of Independent

Directors with the Company their roles rights responsibilities in the Companynature of the industry in which the Company operates business model of the Company andrelated from Auditors matters are of put up on the website of the Company atwww.ismt.co.in

AUDITORS REMARKS

In respect of the Qualified Opinion and Emphasis of Matter by the

Auditors on the Standalone and Consolidated Financial Statement it has been explainedin the Notes forming part of said Financial

Statements which are self-explanatory and therefore do not call for any furthercomments.

COST AUDITORS

Pursuant to Section 148 of Companies Act 2013 read with The Companies (Audit &Auditors) Rules 2014 your Directors had on recommendation of the Audit Committeeapproved the appointment and remuneration of following Cost Auditors for

Financial Year 2016-17:

(i) M/s D V Joshi & Associates (ii) M/s Parkhi Limaye & Co.

The payment of remuneration for FY 2016-17 to aforesaid Cost

Auditors is subject to ratification by the Members in the ensuing

Annual General Meeting.

The Cost Audit Report for FY 2015-16 was filed within the prescribed time limit as perCompanies (Cost Record and Audit Rules) 2014.

SUBSIDIARIES

As on date of this report the Company has ten direct and indirect subsidiarycompanies. In accordance with Section 129(3) of the Companies Act 2013 a statmentcontaining salient features of the financial statements of the subsidiary companies inForm AOC-1 is provided separately in this Annual Report. A report on the performance andfinancial position of each of the subsidiary companies is provided in the FinancialStatements forming part of this Annual Report. The Company has framed a Policy fordetermining Material Subsidiaries which is available on its website at www.ismt.com.

FIXED DEPOSITS

The Company has not accepted any deposits from the public.

RESEARCH & DEVELOPMENT

As part of the Company's overall strategy throughout the year the Company remainedfocused on developing value added products for all its market segments including EnergyOCTG Bearing Auto and Mining Sectors. R & D activities also focused on process costreductions. Details of the R & D activities undertaken are enumerated in Annexureattached to this Report.

MANAGEMENT DISCUSSION & ANALYSIS AND CORPORATE GOVERNANCE REPORT

Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 aseparate section on Management Discussion and Analysis Corporate Governance'

Report is forming part of this Report.

The Managing Director and CFO have certified to the Board with regard to the financialstatements and other matters as required under regulation 17(8) of the aforesaidRegulations.

Company regarding compliance Certificate of conditions of Corporate Governance isannexed to this Report.

EXTRACT OF ANNUAL RETURN

The extract of the Annual Return in Form MGT-9 is forming part of this Report asAnnexure ‘A'.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

The information required under Section 134 (3) (m) of the Companies Act 2013 read withCompanies (Accounts) Rules 2014 is forming part of this Report as Annexure ‘B'.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(3)(c) read with Section 134(5) of theCompanies Act 2013 your Directors make the following statement: i) That in thepreparation of the annual accounts the applicable accounting standards have been followedalong with proper explanation relating to material departures; ii) that the Directors haveselected such accounting policies and applied them consistently and made judgments andestimates that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company at the end of the financial year March 31 2017 and of the Lossof the

Company for that period; iii) that the Directors have taken proper and sufficientcarefor the maintenance of adequate accounting records in accordance with the provisions ofthe Companies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities; iv) That the Directors have prepared the annualaccounts on a going concern basis; v) That the Directors had laid down internal financialcontrols to be followed by the Company and that such internal financial controls areadequate and were operating effectively; and vi) That the Directors had devised propersystems to ensure compliance with the provisions of all applicable laws and that suchsystems were adequate and operating effectively.

NOMINATION AND REMUNERATION POLICY

The Nomination and Remuneration Policy of the Company on director's appointment andremuneration including criteria for determining qualifications positive attributesindependence of a director and other matters is available on the website of the Company atwww.ismt.com. The criteria for performance evaluation as laid down by Nomination andRemuneration Committee has been defined in the Nomination and Remuneration Policy.

Details pertaining to Section 197(12) of the Companies Act 2013 read with Rules framedthereunder are forming part of this Report as Annexure ‘C'.

SECRETARIAL AUDIT REPORT

Pursuant to Section 204 of the Act and Rules made thereunder the

Board has appointed M/s. MRM Associates Company Secretaries in Practice as SecretarialAuditors to undertake the Secretarial

Audit of the Company for the financial year ended March 31 2017.

The Report of the Secretarial Auditors in Form MR-3 is forming part of this Report asAnnexure ‘D'.

PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS

Particulars of Loans Guarantees and Investments covered under Section 186 of the Acthas been mentioned in the Notes to the Financial Statements forming part of this AnnualReport.

RISK MANAGEMENT

The Company has constituted a Risk Management Committee to address organization widerisk including credit security property regulatory and other risks. The Committee isassisting the Board in ensuring that there is adequate risk management policy in or placecapable of addressing those risks.

INTERNAL FINANCIAL CONTROLS

The existing internal financial control systems are being further strengthened to meetthe requirements of the Auditors in terms of the new Guidelines.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Pursuant to Section 135 of the Companies Act 2013 a CSR

Committee constituted by the Board of Directors consists of three directors includingone independent director.

In view of losses during three immediately preceding financial years the Company wasnot required to spend on CSR activities in the year 2016-17.

AUDIT COMMITTEE AND VIGIL MECHANISM

Pursuant to Section 177 of the Companies Act 2013 an Audit

Committee constituted by the Board of Directors consists of three directors withindependent director forming a majority. The Whistle Blower Policy/ Vigil Mechanism of theCompany was established by the Board of Directors and is available on the website of theCompany at www.ismt.com.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

During the year the Company had not entered into any contract/ arrangement/transaction with related parties which were either not at an arm's length or not in theordinary course of business and further could be considered material in accordance withthe policy of the Company on materiality of related party transactions.

Hence there is no information to be provided in Form AOC-2 while the particulars ofall Related Party Transactions in terms of AS-18 are forming part of the financialstatements

The Policy on materiality of related party transactions and dealing with related partytransactions as approved by the Board may be accessed on the Company's website atwww.ismt.com

GENERAL

1. orders No significant were passed by the

Regulators or Courts or Tribunals which impact the going concern status and Company'soperations in future.

2. Your Directors further state that during the year under review there were no casesfiled pursuant Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013.

ACKNOWLEDGEMENTS

Your Directors take this opportunity to express its sincere gratitude for continuedsupport & co-operation received by the Company from Government of India Government ofMaharashtra Reserve

Bank of India Stock Exchanges other regulatory agencies and the shareholders. TheBoard would also like to acknowledge the continued support of its bankers vendorsclients and investors. The

Directors also wish to place on record their appreciation of all the employees fortheir dedication and team work.

For and on behalf of the Board of Directors
Pune S C Gupta
May 30 2017 Chairman

Annexure 'B' to the Directors' Report

Information required under Section 134 of the Companies Act 2013 read with Companies(Accounts) Rules 2014 and forming part of the Director's Report for the year ended onMarch 31 2017 :

(A) Conservation of Energy

(i) The steps taken or impact on conservation of enrgy :

1. Improvement in condition and rectification of heat leakages in Roller Hearth Furnaceat Ahmednagar Tube Plant

2. Modification of heat treatment cycles of Roller

Hearth Furnace - 5 at Ahmednagar Tube Plant Modification 3. of maximum demandcontroller software to reduce the average Maximum

Demand (MD) for Electric Arc Furnace at Jejuri Steel Plant

4. Replacement of sodium vapour lamps with LED lights at workers' colony in Jejuri (ii)the steps taken by the company for utilising alternate sources of energy : NIL

(iii) the capital investment on energy conservation equipments : NIL

(B) Technology absorption

(i) the efforts made towards technology absorption :

1. Development of Hexagonal Bore cold work tubes at Ahmednagar Tube Plant

2. Developed Rolling and Cold Pilgering of T9 / T91 grade at Ahmednagar Tube PlantModification 3. of Cold Pilger process for yield improvement for production of 13CR andEN1A grades at Ahmednagar Tube Plant

4. Water cooled plug for PQF Mill at Baramati Tube Plant

5. Process development for Iron recovery from FES dust at Jejuri Steel Plant

(ii) the benefits derived like product improvement cost reduction product developmentor import substitution:

Developments as mentioned in B(i) above have become functional. Apart from improvementin productivity and cost reduction it has helped develop in house expertise.

Measures were undertaken to reduce both fixed and variable costs in the currentscenario of reduced plant operations.

(iii) in case of imported technology (imported during the last three years reckonedfrom the beginning of the financial year) Not Applicable

(iv) as part of the Company's overall strategy throughout the year the Companyremained focused on developing value added products for all its market segments includingEnergy OCTG Bearing Auto and Mining Sectors. R & D activities also focused onprocess cost reductions. The expenditure incurred on Research and

Development are detailed below:

(Rs. in Crore)
Sr. No. Particulars 2016-17 2015-16
i) Capital 0.00 0.05
ii) Recurring 0.96 0.69
Total 0.96 0.74
Total R & D as a % of Turnover 0.09% 0.08%

(C) Foreign exchange earnings and Outgo

The Company continues to strive to improve its export earnings across regions andacross sectors. Your company has established strong foothold in the value added seamlesstubes segment in the overseas market and continue to pursue product certifications.Further details in respect of exports as set out elsewhere in the report.

The information on foreign exchange earnings and outgo is furnished in the Notes onaccounts.

Annexure ‘C' to the Director's Report

DETAILS PERTAINING TO REMUNERATION PURSUANT TO SECTION 197 (12) OF THE COMPANIES ACT2013 READ WITH RULE THEREUNDER

1) The percentage increase in remuneration of each Director Chief Financial Officerand Company Secretary in the fianancial year 2016-17. Ratio of the remuneration of eachDirector to median remuneration of employees of the Company for the financial year

2016-17.

Sr. No. Name of the Directors/ Key Managerial Personnel ( KMP) and Designation Remuneration of Directors/KMP for financial year 2016-17 (Rs) % increase in remuneration in the Financial Year 2016-17 Ratio of the remuneration of each Director to median remuneration of employees
1 B. R. Taneja Managing Director 16000000 19% 40:1
2 Rajiv Goel Whole-time Director & Chief Financial Officer 11598000 23% 29:1
3 Jaikishan Pahlani Company Secretary 1302816 N.A. N.A.

2) The median remuneration of employees of the Company during the financial year wasRs. 3.96 Lakh p. a.

3) In the financial year under review there was a increase of 3.53 % in the medianremuneration of employees.

4) There were 2103 permanent employees on the rolls of the Company as on March 312017

5) Average percentile increase made in the salaries of employees other than themanagerial personnel in the financial year 2016-17 was 6 %. The percentile increase in themanagerial remuneration for the same financial year was 19 %.

6) Statement showing the names of the top ten employees in terms of remuneration drawnand receipt of remuneration aggregating to Rs. 8.50 Lakh per month.and above.

Sr. No. Name of the Employee Designation Remuneration Qualifications Experience Date of commencement of employment Age Last employment held (Yrs)
1 Baldev Raj Taneja Managing Director 16000000 B.E. (Mechanical) 56 December 01 2005 81 The Indian Seamless Metal Tubes Limited
2 Rajiv Goel Whole time Director and Chief Financial Officer 11598000 B. Com (Hons) FCA FCS 38 December 01 2005 63 The Indian Seamless Metal Tubes Limited
3 Pankaj Kumar Wahi Executive Vice President (Finance & Accounts) 6466507 B. Com ( Hons) ACMA ACS 27 February 11 2010 50 Reliance Global Management Services Limited
4 Kishore Bharambe President Tube Operations 5980252 B.E. (Mechanical) PGDBA 28 March 27 2002 52 The Indian Seamless Metal Tubes Limited
5 Karthikeyan S * Director ( Marketing) 3200539 B. E. (Electrical & Electronics) PGDBA 25 August 17 2016 49 Tube Products of India
6 Kishore Bhapkar * Executive Vice President (Works) 1320502 B. E. (Mechanical) 34 December 15 2016 54 Baramati Agro Limited
7 Rakesh Duda Director (Corporate) 4002286 B. E. (Electrical ) 36 April 1 2011 63 Jai Prakash Associates
8 Pratap Dhaybar Director (Steel Operations) 3792594 B. E. (Mechanical) 37 June 04 2001 61 Mahindra Ugine Steel Company Limited
9 Ramesh Kumar Rathi Executive Vice President (Internal Audit) 3735036 B Sc LLB ACA 28 February 22 2005 56 J K Industries Limited
10 Balram Agarwal Executive Vice President (Works) 3564913 B.E. (Mechanical) PGDBA 23 August 01 2013 50 Remi Metals Gujrat Limited

* Remunration was paid for the part of the year.

Notes :

1. Nature of employment is contractual for all the above employees.

2. Remuneration includes salary and allowances (contribution to Provident Fund &Superannuation Fund House Rent Allowance Leave Travel Allowance Medical Reimbursementand other allowances payable as per Rules of the company)

3. None of the employees is covered under Rules 5 (3) (viii)of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 of Section 197 of theCompanies Act 2013.

7) It is hereby affirmed that the remuneration is as per the Remuneration Policy of theCompany.