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Marmagoa Steel Ltd.

BSE: 513355 Sector: Metals & Mining
NSE: N.A. ISIN Code: INE698E01023
BSE 05:30 | 01 Jan Marmagoa Steel Ltd
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Marmagoa Steel Ltd. (MARMAGOASTEEL) - Director Report

Company director report

Dear Shareholders

Your Directors are pleased to present the Twenty Eighth Annual Report along with theaudited Statements of Accounts for the year ended 31st March 2016.

FINANCIAL RESULTS:

For the Year ending 31.03.2016 (Rs. in Lakhs) For the Year ending 31.03.2015 (Rs. in Lakhs)
Gross Sales 0 0
Interest and Other Income 0 1205
(Loss) / Profit before Interest Depreciation & Extra ordinary Items (257) (2924)
Interest 71 60
Depreciation 201 204
Prior Period adjustments 0 4
(Loss) / Profit before tax (529) (3192)
Provision for taxation (80) (28)
(Loss)/Profit after tax (449) (3164)

OPERATIONS:

There were no operations during the year also as the Company was forced to suspend theoperations since June 2013 as the Banks stopped lending Working Capital support consequenton the Accounts being classified as NPA. Also on account of the demand of Rs.87 croresraised by the GEB and non grant of reliefs and concessions by the Govt. of Goa Banks wereapprehensive of lending further exposure to your Company.

As communicated in the previous year the Company’s Bankers viz. Bank ofMaharashtra and Union Bank of India invoked the provisions of SARFAESI ACT 2002 and alsoassigned the respective debts in favour of ARCs; PARAS and ARCIL respectively. Theassignees viz. PARAS and ARCIL have notified their acquiring the debts as above and theCompany has recognised the said change in the lenders particulars accordingly.

After holding a series of meetings with the Union as well as all the Officers onaccount of the suspension of operations since June 2013 the employees have been requestednot to report for duty except a few essential employees (with an assurance that no soonerthe Company is in a position to restart the operations they would be called to report forduty) and hence no provision has been made for Salaries/wages from June 2013. Similarlyinterest on loans has not been provided for the year under report.

With a view to restart the operations the Company has approached the Hon’ble BIFRwith Modified Draft Rehabilitation (MDRS) envisaging restructuring of dues assigned toARCs power sales tax and entry tax concessions from the Govt. of Goa and infusion offunds.

BOARD:

Shri Ashok Mittal retires by rotation at this Annual General Meeting and is eligiblefor reappointment. Mr. Mittal aged 57 years is a Commerce graduate and has been in thesteel business for over 35 years. He has vast experience in promoting and operating steelplants and rolling mills. He is also a Director in 1. Chandor Engineering & T radingCompany Private Limited 2. Rukmani Finance Private Limited 3. Amona Power Private Limited4. Karnataka Steel Private Limited 5. Jiva Metal & Trading Limited and 6. Jiva FerroLimited.

Mr. Ashok Mittal does not hold by himself or for any other person on a beneficialbasis any shares in the Company.

The Board considers that his continued association would be of immense benefit to theCompany and it is desirable to continue to avail services of Mr. Ashok Mittal as aDirector. Accordingly the Board recommends the resolution in relation to appointment ofMr. Ashok Mittal as a Director for the approval by the shareholders of the Company.

REHABILITATION SCHEME:

The BIFR Sanctioned Scheme 2002/2003 has been fully implemented by all the concernedAgencies. viz. Financial Institutions Banks and Promoter; except the State Govt. of Goa.The Company has approached the Hon’ble BIFR with Modified Draft Rehabilitation(MDRS).

AUDITORS:

Pursuant to the provisions of Section 139 of the Companies Act 2013 and the rulesframed there under M/s. N. D. Hegde & Associates Chartered Accountants Margao wereappointed as Auditors of the Company from the conclusion of the 26th Annual GeneralMeeting of the Company held on 29.09.2014 till the conclusion of the 30th Annual GeneralMeeting to be held in the year 2018 subject to ratification of their re-appointment atevery Annual General Meeting.

SECRETARIAL AUDITORS:

Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Mr. Prasanna S. Rao Company Secretary in Practice to undertake the SecretarialAudit of the Company for the Financial Year 2015-16. The Report of the Secretarial Auditoris annexed herewith as "ANNEXURE - I".

EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return in form MGT 9 is annexedherewith as "ANNEXURE - II".

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION:

The Company continued its emphasis on upgradation of process technology and on energyconservation on a continuous basis. The company has installed facilities for improvedquality of production like Vacuum Degassing and Vacuum Oxygen Decarburization ElectroMagnetic Stirrer and Auto Cutters.

The details required pursuant to Section 134 (3) (m) of The Companies Act 2013 aregiven in the annexure form ’A’ and ’B’.

FOREIGN EXCHANGE EARNING AND OUTGO:

During the year under report our Company has earned and expended foreign exchange asunder:

Foreign exchange earned - Rs. NIL
Foreign exchange outgo - Rs. NIL

DIRECTORS’ RESPONSIBILITY STATEMENT:

As required by Section 134 (3) (c) of The Companies Act 2013 the Directors’state as under:

(i) that in the preparation of the annual accounts the applicable accounting standardshas been followed along with proper explanation relating to material departures;

(ii) that the Directors had selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit or loss of the Company for that period;

(iii) that the Directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and preventing and detecting fraud and other irregularities;

(iv) that the Directors had prepared the annual accounts on a going concern basispending sanction of the MDRS by the Hon’ble BIFR;

(v) that the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively;

(vi) that the Directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

Disclosure on Voluntary Corporate Governance Guidelines:

The Ministry of Corporate Affairs has issued a set of Voluntary guidelines called"Corporate Governance - Voluntary Guidelines 2009" in December 2009. Theguidelines include conditions for composition of board appointment of directors scopeand role of audit committee Secretarial Audit Report and Institution of mechanism forwhistle blowing. The Company is substantially complying with the recommendations on Auditcommittee and Internal Auditors and is taking steps towards implementation of otherguidelines.

Management Discussion And Analysis Opportunities and threats:

Opportunities:

The Company’s plant in the West Coast of India has state-of-the-art facilitieswith ISO 9001 and 14001 affiliations. The company is well connected by road rail and sea.The company enjoys the benefits of the lowest power cost in the country proximity to thesea port and cordial labour relations. The Company manufactures alloy and special steelthrough the Electric Arc Furnace route 1

to produce Alloy Steel Billets Flats and Rounds. The billets produced are for captiveconsumption for re-rolling.

The main product of the Company is spring steel flats which is the key component formanufacture of leaf spring used in automobiles.

The Steel industry is presently doing well due to the growth in automobileconstruction and infrastructural activities.

Threats:

The company faces competition from other steel mills in the country who can offer thesame products at a lower price mainly due to locational advantage.

Risks and Concerns:

Nature of the industry:

The company presently produces Alloy Steel rounds and Steel flats for the automobileindustry. This segment has very high competition. The management is consideringdevelopment of alternate products to improve the company’s performance.

Technology:

With technology obsolescence being an inherent risk in any industry the Company isconstantly upgrading and modernizing its manufacturing process. The company hascommissioned an Electro Magnetic Stirrer and has commissioned a Vacuum Degassing System /Vacuum Oxygen Decarburization for the melting process for improvement in the quality ofthe steel billets.

The company is now in a position to cater to the stringent requirement of theautomobile defense and Railways sectors.

Financial:

The lack of adequate Working Capital Facilities has had an adverse impact not only onthe volume of production but also on the liquidity position of the company's finances.

Outlook:

There is a good demand for the company's product. If adequate Working Capital supportis extended by the Companies Banker’s the management is confident that there will beno fall in demand for its product in the near future.

Internal Control Systems

There are adequate internal control procedures commensurate with the size of theCompany and the nature of its business for:

Purchase of stores and assets and sales of its products.

Adequacy of accounting records and Authorisation for and record of transactions.

Financial Performance The current year’s financial performance has beendiscussed in detail in the Directors’ Report forming part of this Annual Report.

Industrial Relations

Industrial relations have remained cordial and good.

Cautionary Statement

Statements in this report describing the Company’s objectives projectionsestimates and expectations may be "forward looking statements" within themeaning applicable in securities law and regulations. Actual results could differmaterially from those expressed or implied.

ACKNOWLEDGEMENT:

The Board of directors wishes to thank the Company’s shareholders employeescustomers suppliers bankers/ARC’s and the Government of Goa and its agencies fortheir continued and unstinted support.

For and on behalf of the Board

Ashok Mittal K.V. Ramarathnam
DIRECTOR DIRECTOR
DIN:00066318 DIN:00097892

Place: Camp Bangalore

Date:29.06.2016

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