The Directors have pleasure in presenting the Forty-Ninth Annual Report on the businessand operations of the Company together with the Audited Financial Statements for theFinancial Year ended March 31 2022.
1. Financial Highlights (on stand-alone basis)
| ||2021-22 ||2020-21 |
|Total Income : ||17523.86 ||12305.29 |
|Total Expenditure : ||13674.65 ||9245.71 |
|Finance Cost : ||132.09 ||67.70 |
|Depreciation & amortization expenses : ||458.76 ||441.51 |
|Profit before Exceptional Item and Tax : ||3258.36 ||2550.37 |
|Exceptional Item : || || |
|Profit before Tax : ||3258.36 ||2550.37 |
|Tax Expenses : || || |
|- Current Tax : ||886.00 ||684.50 |
|- Deferred Tax : ||(56.79) ||(37.15) |
|Profit after Tax : ||2429.15 ||1903.02 |
2. Dividend & Reserves
The Directors are pleased to recommend a dividend of ' 10/- per Equity Share of ' 5/-each (i.e.200%) for the financial year ended March 31 2022 for approval of the members.The dividend on Equity Shares if approved by the members would involve cash outflow of '436.53 Million and shall be subject to deduction of income tax at source.
During the year under review the Company does not propose to transfer any amount tothe General Reserve. An amount of ' 12942 Million is proposed to be retained as RetainedEarnings.
3. Performance of the Company
Indian economy continued to face difficulties in year 2021-22 as COVID 19 continue tocreate havoc in healthcare system of the country with emergence of Second Wave and ThirdWave. Emergence of Second Wave forced government authorities to re-introduce lockdown likemeasures which impacted economic activities. During first quarter with emergence ofSecond Wave significant part of the oxygen was diverted to fulfil medical needs whichled many industries including steel to shut down or lower its production.
Government of India to support the economy announced several measures includingcredit facility for MSME sector fertilizer subsidy credit guarantees financial supportfor improving health infrastructure financial support for tourism sector etc.
In spite of such volatile and complex situation the Company performed extremely wellduring FY 2021-22. The Company achieved Revenue from Operations of ' 17060 Millionagainst ' 11880 Million in FY 2020-21. The Profit Before Tax is ' 3258 Million against '2550 Million in FY 2020-21 representing a growth of 27.8%.
In the Financial Year 2021-22 steel industry was severely hit by increase in rawmaterial cost especially coke and price increase from the customers was not linear toincrease in raw material costs leading to erosion of profits. However the Company pickedup the signals early identified the trend and took a strategic call to purchase Cokeduring first quarter itself which could cover the coke requirement for the financial year.This strategic purchase improved the Company's profitability in FY 2021-22 substantially.
Economic Activities picked up from Q2 onwards as COVID 19 Second Wave situation came incontrol. However economy was grappled with several issues including rising commodityprices increased freight rates raw material shortage etc. As per SIAM statistics dataAutomobile sales (domestic & Export) particularly hit by semiconductor shortage hasgrown by 2% in FY 2021-22 after contacting by 13% and 15% in FY 2020-21 & FY 2019-20respectively. Apart from revival in Auto sector Government push in infrastructure sectorand positive trends in Bearing & Engineering segment supported in business recovery ofthe Company.
While Auto sales exhibited a sign of recovery in FY 2021-22 industry as a whole isyet to reach its Pre-Covid level. With expected improvement in semiconductor chip supplyAutomobile sales are also expected to improve in FY 2022-23 and hence the Company'sbusiness situation further in FY 2022-23.
4. Coke Making Facility and Waste Heat Recovery (WHR) based Captive Power Plant
The members are aware that the Company had planned to set up a 200000 TPA Non-recovery/ Heat recovery stamp charged Coke Oven with Modified wet Quenching of hot coke and 17-18MW captive power plant to be operated utilizing waste heat energy of flue gas generatedfrom Coke Oven. The electrical power so produced shall be used for captive consumption andthe surplus if any will be sold to external agencies. The Broad Specifications were asfollows :
> Annual capacity (Dry coke) - 0.2 MT
> No. of Ovens - 72 (Divided in two batteries of 36 ovens each)
Heat Recovery Captive Power Plant
> Power generation capacity - 17-18 MW
> Generation voltage - 11 KV
Respecting commitment to the Aatmanirbhar Bharat campaign the process technology beingadopted is indigenous coke-making technology with all latest innovations incorporated fora high degree of technological performance and product quality.
The Company has completed approx. 72% of the Coke Oven installation work and around 64%of the Power Plant installation work and the project is expected to be commissioned bySeptember 2022 as scheduled.
Owing to unprecedented rise in the prices of steel cement refractory coal andtransportation the budget at close (BAC) is expected to be ' 2775 Million funded by wayof debt and internal accruals.
5. State of Company's Affairs
Discussion on the state of Company's affairs has been covered as part of the ManagementDiscussion and Analysis (MD&A). MD&A for the year under review as stipulatedunder Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 is presented in a separate section forming part of the Annual Report.
6. Corporate Governance
The Company is committed to maintain the highest standards of Corporate Governance andadhere to the Corporate Governance Requirements set out by SEBI.
The Report on Corporate Governance as stipulated under SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 is presented in a separate section formingpart of the Annual Report.
The requisite certificate from Secretarial Auditors of the Company viz. M/s. SVD &Associates Company Secretaries Pune confirming compliance with conditions of CorporateGovernance is attached to Report on Corporate Governance.
During the year under review the Company has not accepted any deposit under Chapter Vof the Companies Act 2013.
In terms of the provisions of the Companies Act 2013 and the Articles of Associationof the Company Mr.B.N. Kalyani Mr.S.M. Kheny and Mr.M.U. Takale Directors of theCompany are retiring by rotation at the ensuing Annual General Meeting and beingeligible have offered themselves for re-appointment.
Mr.Sachin K. Mandlik Independent Director of the Company is seeking re-appointment fora Second Term of 3 (Three) consecutive years with effect from November 9 2022 to November8 2025.
Mr.Shrikrishna K. Adivarekar Independent Director of the Company is seekingre-appointment for a Second Term of 3 (Three) consecutive years with effect from May 182023 to May 17 2026.
Amb.Ahmad Javed Independent Director of the Company is seeking re-appointment for aSecond Term of 3 (Three) consecutive years with effect from June 26 2023 to June 252026.
These re-appointments form part of the Notice of the Annual General Meeting and theResolutions are recommended for your approval. Profiles of these Directors are given inthe Report on Corporate Governance for reference of the members.
The Company has received declarations from all Independent Directors that they meet thecriteria of independence as prescribed under Section 149(6) of the Companies Act 2013 andRegulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015.
8.1 Board Evaluation
Pursuant to provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board has carried out an annualperformance evaluation of its own performance the directors individually as well as theevaluation of the working of its Committees. The performance of the Board was evaluated bythe Board after seeking inputs from all the directors on the basis of criteria such as theboard composition and structure effectiveness of board processes information andfunctioning.
The performance of the committees was evaluated by the Board after seeking inputs fromthe committee members on the basis of criteria such as composition of the committeeeffectiveness of the committee meetings information and functioning.
The Board and the Nomination and Remuneration Committee reviewed the performance of theindividual directors on the basis of criteria such as contribution of individual directorto the Board and committee meetings like preparedness on the issues to be discussed andinputs in meetings etc.
In a separate meeting of independent directors the performance of the non-independentdirectors the Chairman of the Company and the Board as a whole was evaluated taking intoaccount the views of the executive and non-executive directors.
8.2 Nomination and Remuneration Policy
The Nomination and Remuneration Policy of the Company inter alia provides that theNomination and Remuneration Committee shall formulate the criteria for appointment ofDirectors on the Board of the Company and persons holding Senior Management positions inthe Company including their remuneration and other matters as provided under Section 178of the Companies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015. The Policy is available on the website of the Company. (Web-link :https://www.kalyanisteels.com/profile/policies/).
8.3 Meetings of the Board
During the Financial Year 2021-22 four Board Meetings were convened and held. Also aseparate meeting of Independent Directors as prescribed under Schedule IV of the CompaniesAct 2013 was held. The details of meetings of Board of Directors are provided in theReport on Corporate Governance that forms part of this Annual Report.
9. Directors' Responsibility Statement
Pursuant to the requirements under Section 134(5) of the Companies Act 2013 withrespect to Directors' Responsibility Statement it is hereby confirmed that :
i) in the preparation of the annual accounts for the year ended March 31 2022 theapplicable accounting standards have been followed and that there are no materialdepartures;
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 2022 and of the profit ofthe Company for that period;
iii) the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
iv) the Directors have prepared the annual accounts for the year ended March 31 2022on a going concern basis;
v) the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and
vi) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
10. Conservation of Energy Technology Absorption and Foreign Exchange Earnings &Outgo
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo as required to be disclosed under Section 134(3)(m) of the CompaniesAct 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 is annexed herewith asAnnexure "A".
11. Corporate Social Responsibility
The Company has been carrying out various Corporate Social Responsibility (CSR)activities in the areas of education health water sanitation etc. These activities arecarried out in terms of Section 135 read with Schedule VII of the Companies Act 2013 andCompanies (Corporate Social Responsibility Policy) Rules 2014.
The Annual Report on CSR Activities undertaken by the Company is annexed herewith asAnnexure "B". The CSR Policy is available on Company's website. (Web-link :https://www.kalyanisteels.com/profile/policies/)
12. Related Party Transactions
All contracts or arrangements entered into by the Company with Related Parties duringthe financial year were in the ordinary course of business on an arm's length basis andwere approved by the Audit Committee.. Pursuant to Section 134 of the Companies Act 2013read with Rule 8(2) of the Companies (Accounts) Rules 2014 the particulars oftransactions with related parties are provided in Form AOC-2 which is annexed herewithas Annexure "C". Related party disclosures as per Ind AS have been provided inNote 39 to the Financial Statements. The policy on Related Party Transactions as amendedin line with the requirements of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 and as approved by the Board is uploaded on the Company's website.(Web-link : https://www.kalyanisteels.com/profile/policies/)
13. Risk Management
The Board of Directors of the Company has formed a Risk Management Committee to frameimplement and monitor the risk management plan for the Company. The committee isresponsible for reviewing the risk management plan and ensuring its effectiveness. TheAudit Committee has additional oversight in the area of financial risks and controls. Themajor risks identified by the businesses and functions are systematically addressedthrough mitigating actions on a continuing basis.
The policy on Risk Management as approved by the Board is uploaded on the Company'swebsite. (Web-link : https://www.kalyanisteels.com/profile/policies/)
14. Audit Committee
As on March 31 2022 the Audit Committee comprises of Mr.S.K. Adivarekar Chairman ofthe Committee and Independent Director Mr.B.N. Kalyani Promoter Non-Executive DirectorMr.B.B. Hattarki Independent Director and Mrs.Shruti A. Shah Independent Director.
The Board of Directors at their meeting held on November 1 2021 had reconstituted theAudit Committee by inducting Mrs.Shruti A. Shah as member of the Committee.Reconstitution of the Committee was done as the category of Mr.M.U. Takale was changedfrom Independent Director to Non-Independent Director in order to comply with amendmentsin Listing Regulations.
All the recommendations made by the Audit Committee were deliberated and accepted bythe Board during the Financial Year 2021-22.
15. Auditors and Auditor's Report
M/s. P G Bhagwat LLP Chartered Accountants Pune Auditors of the Company will beretiring at the ensuing Forty-Ninth Annual General Meeting after completing two successiveterms of 5 (Five) years each. The Board places on records their sincere appreciation forthe valuable contribution made by them during their tenure.
The Notes on Financial Statements referred to in the Auditor's Report of M/s. P GBhagwat LLP are self-explanatory and hence do not call for any further comments. TheAuditor's Report does not contain any qualification reservation adverse remark ordisclaimer.
During the year under review M/s. P G Bhagwat LLP Auditors of the Company have notreported any fraud as specified under Section 143(12) of the Companies Act 2013 to theAudit Committee.
On the basis of the recommendations of the Audit Committee the Board of Directors hasrecommended the appointment of M/s. Kirtane & Pandit LLP Chartered Accountant (FirmRegistration No.105215W / W100057) as Auditors of the Company to hold office from theconclusion of the ensuing Forty-Ninth Annual General Meeting till the conclusion of theFifty-Fourth Annual General Meeting to be held in the year 2027.
Necessary resolution for appointment of M/s. Kirtane & Pandit LLP is placed in theNotice of the ensuing Forty-Ninth Annual General Meeting for consideration of the Members.
16. Cost Auditors
Pursuant to Section 148 of the Companies Act 2013 read with The Companies (CostRecords and Audit) Rules 2014 the cost record maintained by the Company is required tobe audited. The Board of Directors on the recommendation of the Audit Committee hasappointed M/s. S.R. Bhargave & Co. Cost Accountants Pune for conducting the costaudit of the Company for Financial Year 2022-23.
As required under the Companies Act 2013 the remuneration payable to the CostAuditors is required to be ratified by the members of the Company. Accordingly resolutionseeking members' ratification for remuneration to be paid to Cost Auditors is included atItem No.10 of the Notice convening Annual General Meeting.
17. Secretarial Audit and Secretarial Standards
Pursuant to provisions of Section 204 of the Companies Act 2013 the Board hadappointed M/s. SVD & Associates Company Secretaries Pune to undertake SecretarialAudit of the Company for the Financial Year 2021-22. The Secretarial Audit Report for theFinancial Year ended March 31 2022 is annexed herewith as Annexure "D". TheSecretarial Audit Report does not contain any qualification reservation adverse remarkor disclaimer.
The Company is compliant with the Secretarial Standards issued by the Institute ofCompany Secretaries of India and approved by Central Government under Section 118(10) ofthe Companies Act 2013.
18. Particulars of Employees and related Disclosures
The information required pursuant to Section 197(12) of the Companies Act 2013 readwith Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 as amended has been provided in Annexure "E".
19. Annual Return
In accordance with Section 92(3) read with Section 134(3)(a) of the Companies Act2013 the Annual Return of the Company as on March 31 2021 filed with Registrar ofCompanies is available on the Web-site of the Company at www.kalyanisteels.com
20. Whistle Blower Policy
The Company has vigil mechanism named 'Whistle Blower Policy' wherein the employees /directors can report the instances of unethical behavior actual or suspected fraud or anyviolation of the Code of Conduct and / or laws applicable to the Company and seekredressal. This mechanism provides appropriate protection to the genuine Whistle Blowerwho avail of the mechanism. During the year under review the Company has not received anycomplaint under the said mechanism. The 'Whistle Blower Policy' as approved by the Boardis uploaded on the Company's website. (Web-link :https://www.kalyanisteels.com/profile/policies/)
21. Particulars of Loans Guarantees or Investments
Particulars of Loans Guarantees and Investments covered under Section 186 of theCompanies Act 2013 forms part of the notes to the Financial Statements provided in thisAnnual Report.
22. Internal Financial Controls
Your Company has in place adequate internal financial controls with reference tofinancial statements commensurate with size scale and complexity of its operations. Anextensive risk based programme of internal audits and management reviews providesassurance to the Board regarding the adequacy and efficacy of internal controls. Theinternal audit plan is also aligned to the business objectives of the Company which isreviewed and approved by the Audit Committee. Further the Audit Committee monitors theadequacy and effectiveness of your Company's internal control framework. The internalcontrol system has been designed to ensure that financial and other records are reliablefor preparing financial and other statements and for maintaining accountability of assets.
23. Material Changes and Commitments if any affecting Financial Position of theCompany
There are no adverse material changes or commitments occurred after March 31 2022which may affect the financial position of the Company or may require disclosure.
24. Significant and Material Orders
There are no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and Company's operations in future.
25. Familiarization Programme
The Company on a regular basis makes detailed presentation to the entire Boardincluding Independent Directors on the Company's operations and business plans strategyglobal and domestic business environment. Such presentations are made by the seniormanagement so that the Independent Directors can have direct interaction with them. TheBoard members are provided with necessary documents / brochures reports and internalpolicies to enable them to familiarize with the Company's procedures and practices.
The details of programmes for familiarization of Independent Directors with the Companyare put up on website of the Company. (Web-link :https://www.kalyanisteels.com/profile/policies/)
26. Subsidiaries Joint Ventures or Associate Companies
As on March 31 2022 the Company has one Subsidiary and two associates / joint venturecompanies. A statement containing the salient features of the financial statement of thesubsidiary and associates / joint ventures in the prescribed format AOC-1 is annexedhereto as Annexure "F".
The Policy for determining 'Material' subsidiaries has been displayed on the Company'swebsite. (Web-link : https://www.kalyanisteels.com/profile/policies/)
Lord Ganesha Minerals Private Limited (LGMPL) subsidiary of the Company has madevoluntary application on February 9 2022 to the Registrar of Companies (ROC) Pune(Maharashtra) for striking off its name from the Register of Companies pursuant to theprovisions of Section 248 of the Companies Act 2013. The final order of the ROC approvingstriking off the name is awaited.
27. Business Responsibility Report
In accordance with SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 Business Responsibility Report (BRR) is provided as a part of this Annual Report asAnnexure "G".
28. Consolidated Financial Statements
The Consolidated Financial Statements pursuant to Section 129 of the Companies Act2013 are attached to the Standalone Financial Statements of the Company.
29. Transfer to Investor Education and Protection Fund (IEPF)
Pursuant to provisions of the Companies Act 2013 read with the Investor Education andProtection Fund Authority (Accounting Audit Transfer and Refund) Rules 2016 (IEPFRules) the declared dividends which are unpaid
or unclaimed for a period of seven (7) years and the shares thereof shall betransferred by the Company to the Investor Education and Protection Fund (IEPF)established by the Central Government.
Accordingly during the year the Company has transferred the unpaid or unclaimeddividend for a period of seven (7) years from the date they became due for payment alongwith the shares thereof to IEPF. The shareholders have an option to claim their shares and/ or amount of dividend transferred to IEPF. No claim shall be entertained against theCompany for the amounts and shares so transferred.
30. Obligation of Company under The Sexual Harassment of Women at Workplace(Prevention Prohibition And Redressal) Act 2013
The Company has zero tolerance for sexual harassment of women at workplace and hasadopted a Policy for prevention prohibition and redressal of sexual harassment atworkplace in terms of provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the rules framed thereunder. Allwomen employees (permanent temporary contractual and trainees) as well as any womenvisiting the Company's office premises are covered under the Policy. During the year underreview no complaint was filed pursuant to the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013.
The Directors would like to express their sincere appreciation of the co-operationreceived from the Central Government the Government of Maharashtra the Government ofKarnataka Karnataka Industrial Area Development Board Financial Institutions and theBankers. The Directors also wish to place on record its appreciation for the commitmentdisplayed by all employees at all levels resulting in the successful performance of theCompany during the year.
The Directors also take this opportunity to express its deep gratitude for thecontinued co-operation and support received from its valued shareholders.
The Directors express their special thanks to Mr.B.N. Kalyani Chairman of the Companyfor his untiring efforts for the progress of the Company.
| ||for and on behalf of the Board of Directors |
|Place : Pune ||B.N. Kalyani |
|Date : May 12 2022 ||Chairman |