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Modern Steels Ltd.

BSE: 513303 Sector: Metals & Mining
NSE: N.A. ISIN Code: INE001F01019
BSE 00:00 | 06 Mar Modern Steels Ltd
NSE 05:30 | 01 Jan Modern Steels Ltd
OPEN 11.00
PREVIOUS CLOSE 11.00
VOLUME 500
52-Week high 17.40
52-Week low 6.45
P/E
Mkt Cap.(Rs cr) 15
Buy Price 0.00
Buy Qty 0.00
Sell Price 10.95
Sell Qty 7600.00
OPEN 11.00
CLOSE 11.00
VOLUME 500
52-Week high 17.40
52-Week low 6.45
P/E
Mkt Cap.(Rs cr) 15
Buy Price 0.00
Buy Qty 0.00
Sell Price 10.95
Sell Qty 7600.00

Modern Steels Ltd. (MODERNSTEEL) - Director Report

Company director report

Dear Members

Your Directors hereby present their 44th Annual Report and auditedaccounts of the Company for the year ended 31st March 2018.

FINANCIAL HIGHLIGHTS
Rs. in Lakhs
Year Ended Year Ended
31.03.2018 31.03.2017
Net Sales & Income from 38419 31504
Operations
Operating Profit (2304) 764
Finance Cost 179 486
Cash Profit/(Loss) (2483) 278
Depreciation & Amortisation 541 536
Profit/(Loss) before Tax (3024) (258)

PERFORMANCE

The performance of the Company was adversely affected during the year under reviewbecause of the continuous increase in the prices of raw materials and Graphite Electrodes.The price increase could not be passed to customers fully.

DIVIDEND

Due to the difficult financial position and the losses suffered by the Company theDirectors have not recommended any dividend for the year.

CURRENT OPERATIONS

The Company is still facing the scenario of increased prices in raw material. There isa time lack between the increase in raw material cost and increase in selling price fromthe OEMs. So the Company is continues facing challenges due to increase in the inputcost.

STATUS OF COMPANY'S ACCOUNTS WITH LENDERS

Members will recall that the Company account status is NPA and your Company has beenfollowing up regularly with the lenders for resolution of the debts. This is to furtherupdate the members that State Bank of India who is the lead bank has already assigned itsportion of debt through ARC route. The Company is following with other lenders as well forthe debt resolution.

KAIZEN & TS 16949 ACCREDITATION

Your Company's manufacturing facilities continue to maintain the prestigious TS 16949certification by DNV Netherlands a leading international Certification Company.

During the year the Company continued implementation of Kaizen and 5'S' projects tocome up to the expectations of major global OEMs.

FIXED DEPOSITS

The outstanding exempted deposits at the end of the year under review amount to Rs.161Lakhs (Previous year Rs. 679 Lakhs). There are no overdue deposits.

CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSIONS & ANALYSIS

A separate report on Corporate Governance and

Management Discussions & Analysis is attached herewith and forms part of thisreport.

DIRECTORS

Mr. Amarjit Goyal Chairman and Whole Time Director of the Company during the yearwithdrew himself from executive operations of the company. Accordingly his designationwas changed to Chairman and Non Executive

Non Independent Director w.e.f 13th December 2017. Mr. D.K. Gupta the nomineedirector of the bank was withdrawn by SBI and he ceased to be a director w.e.f 4thDecember 2017.

The Board placed on record their appreciation for the services rendered by him duringhis tenure.

Dr. Meena Sharma (DIN: 07241589) to be re-appointed as an Independent Non- ExecutiveDirector for a second term for a period of 5 (five) consecutive years commencing from 26thSeptember 2018 to 25th September 2023 on the Board of the Company.

Mr. Rajesh Kumar Sinha Director (Operations) DIN: 00556694 shall retire byrotation at the ensuing Annual General Meeting and being eligible offers himself forre-appointment.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received the necessary declaration from each Independent Director inaccordance with Section 149 (7) of the Companies Act 2013 that they meet the criteria ofindependence as laid out in Sub Section (6) of

Section 149 of the Companies Act 2013 and SEBI (Listing

Obligations and Disclosure Requirements) Regulations 2015.

BOARD DIVERSITY AND REMUNERATION POLICY

The Company has a policy for formation of the Board to have

Executive Directors and Independent Directors of diverse background to maintain theindependence of the Board. As on 31st March 2018 the Board consists of six members outof which two are Executive Directors one Non-Executive

Director and three are Independent Directors.

The Board periodically evaluates the need for change in its composition and size.

We affirm that the remuneration paid to the Directors is as per the terms approved bythe Nomination and Remuneration Committee of the Company.

HUMAN RESOURCES

The Company is having motivated work force. Harmonious employee relations prevailedthroughout the year.

Your Directors place on record their appreciation for all employees for their hard workand dedication.

KEY MANAGERIAL PERSONNEL

Mr. Amarjit Goyal (Chairman) Mr. Krishan Kumar Goyal (Managing Director) Mr. RajeshKumar Sinha (Whole time Director) and Mr. Ashish Kumar Sharma (Company Secretary resignedon 30th June 2018) are the Key Managerial Personnel of your Company inaccordance with the provisions of Section 2(51) 203 of the Companies Act 2013 read withCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014.

BOARD MEETINGS

During the year five Board Meetings were convened and held the details of which aregiven in the Corporate Governance Report.

ANNUAL EVALUATION OF THE BOARD ITS COMMITTEES AND INDIVIDUAL DIRECTORS

A formal evaluation of the performance of the Board it's Committees the Chairman andthe individual Directors was carried out for FY 2017-18. Led by the Nomination &Remuneration Committee (‘NRC') the evaluation was carried out using individualquestionnaires covering composition of Board conduct as per Company values

& beliefs contribution towards development of strategy & business plan riskmanagement receipt of regular inputs and information codes & policies forstrengthening governance functioning performance & structure of Board Committeesskill set knowledge & expertise of Directors preparation & contribution at Boardmeetings leadership etc. As part of the evaluation process the performance of NonIndependent Directors the Chairman and the Board was conducted by the IndependentDirectors. The performance evaluation of the respective Committees and that of Independentand Non Independent Directors was done by the Board excluding the Director beingevaluated.

DIRECTOR'S RESPONSIBILITY STATEMENT

Pursuant to requirements under Section 134(3)(c) of the Companies Act 2013 withrespect to Directors

Responsibility Statement it is hereby confirmed that: i) in the preparation of theannual financial statements for the year ended 31st March 2018 the applicable accountingstandards have been followed along with proper explanation relating to materialdepartures if any; ii) the Directors have selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the Company as at 31st March 2018and of the loss of the

Company for the year ended on that date; iii) the Directors have taken proper andsufficientcare for the maintenance of adequate accounting records in accordance with theprovisions of the Companies Act 2013 for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities; iv) the Directors have preparedthe annual financial statements for the year ended 31st March 2018 on a

‘going concern' basis; v) the Directors have laid down internal financial controlsto be followed by the Company and that such internal financial controls are adequate andwere operating effectively; vi) the Directors have devised proper systems to ensurecompliance with the provisions of all applicable laws and that such systems are adequateand operating effectively.

RELATED PARTY TRANSACTIONS

All contracts or arrangements entered into by the Company with Related Parties havebeen done at arm's length and are in the ordinary course of business.

Pursuant to Section 134 of the Companies Act 2013 read with Rule 8(2) of the Companies(Accounts) Rules 2014 the particulars of such transactions are provided in Form AOC-2which is annexed as Annexure "A" to this report. Related Party disclosures asper AS-18 have been provided in the Notes to the financial statements.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of the Companies (Accounts) Rules

2014 is annexed herewith as Annexure "B".

RISK MANAGEMENT

The Company recognises that risk is an integral and unavoidable component of businessand is committed to managing the risk in a proactive and efficient manner.

The Company has formulated Risk Management Policy to identify and then managethreats/risks that could have impact on the goals and objectives of the Company.

VIGIL MECHANISM/ WHISTLE BLOWER POLICY

Your Company is committed to highest standards of ethical moral and legal businessconduct. Accordingly the Board of Directors have formulated Vigil Mechanism/ WhistleBlower Policy which provides a robust framework for dealing with genuine concerns &grievances. Specifically employees can raise concerns regarding any discriminationharassment victimization any other unfair practice being adopted against them or anyinstances of fraud by or against your Company. During financial year

2017-18 no complaints were received.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

Modern Steels Limited has aligned its current systems of internal financial controlwith the requirement of

Companies Act 2013.

Modern Steels Limited's internal controls are commensurate with its size and nature ofits operations.

These have been designed to provide reasonable assurance with regard to recording andproviding reliable financial and operational information complying with applicablestatues safeguarding assets from unauthorized use executing transactions with properauthorisation and ensuring compliance of corporate policies.

The management assessed the effectiveness of the

Company's internal control over financial reporting (as defined in Regulation 17 ofSEBI Regulations 2015) as of 31st March 2018. The assessment involved selfreview and external audit.

M/s Aaryaa & Associates the statutory auditors of Modern Steels Limited hasaudited the financial statements including in this annual report and has issued anattestation report on our internal control over financial reporting (as defined in Section143).

The Audit Committee reviews reports submitted by the management and audit reportssubmitted by internal auditors and statutory auditors. Suggestions for improvement areconsidered and the audit committee follows up on corrective action.

Based on its evaluations (as defined in Section of Companies Act 2013 and Regulation18 of SEBI Regulations 2015) the Audit Committee has concluded that as of 31stMarch 2018 the internal financial controls were adequate and operating effectively.

AUDIT COMMITTEE

The Audit Committee of your Company comprises of the following Directors:

1. Mr. D.S. Gill-Chairman

2. Prof. Priyavrat Thareja-Member

3. Mr. R.K. Sinha-Member

Further details of the Audit Committee and its terms of reference etc. have beenfurnished in Corporate Governance Report which forms part of this report. During theFinancial Year 2017-18 under review all recommendations of the Audit Committee wereaccepted by the Board of Directors of the Company.

AUDITORS

Statutory Auditors

At the Annual General Meeting held on 29th September 2014 M/s. Aaryaa& Associates

Chartered Accountants were appointed as Statutory

Auditors of the Company to hold office till the conclusion of the Annual GeneralMeeting to be held in the year 2019 subject to the ratification by members at everyAnnual

General Meeting.

However the ratification of their appointment pursuant to

Section 139 of the Companies Act 2013 is not required in terms of Notification No.S.O. 1833(E) dated May 7 2018 issued by the Ministry of Corporate Affairs andaccordingly the item has not been included in the Ordinary Business of the AGM Notice.

Cost Auditors

The Board of Directors have approved the appointment and remuneration of M/s. V. Kumar& Associates as Cost

Auditors of the Company to conduct the cost audit for the year 2018-19 on therecommendations of the Audit

Committee subject to the ratification of the remuneration by the shareholders.

Secretarial Auditors

The Secretarial Audit Report issued by M/s. B.K. Gupta

& Associates Company Secretaries in Form MR-3 for the financial year ended 31stMarch 2018 is annexed herewith as Annexure "C" to this report.

AUDITOR'S REPORT

The Auditor's Report contains the qualification as follows:

Director's remuneration is not admissible as prescribed in Sec-197 of Companies Act2013 if there are no profits or profits are inadequate except in accordance with theprovision of Schedule V and if it is not able to comply with such provisions the priorapproval of central government is required.

The Company is not eligible to pay director remuneration for non-compliance ofconditions prescribed in Schedule V of the Companies Act 2013. The Company during theyear has given the following director remuneration:

S. No. Name Designation Remuneration (Rs)
1. Mr. Amarjit Goyal Chairman 1354800
2. Mr. Krishan Managing 4014684
Kumar Goyal Director
3. Mr. R.K. Sinha Director 3863600

*Above figures of director's remuneration is inclusive of perks.

Prior approval from central government for inability to comply with the said conditionshas however not been taken.

MANAGEMENT'S REPLY:

Pursuant to the Section 197 & schedule V of the Companies

Act 2013 the Central Government approval of managerial remuneration is awaited. Thecompany has paid the remuneration amounting to Rs. 9233084/- to directors during theyear. The Directors undertakes that in case the approval is not received from the CentralGovernment remuneration received by them shall be refunded.

EXTRACT OF ANNUAL RETURN

The extract of the Annual Return of the Company in Form MGT-9 is annexed herewith asAnnexure "D" to this report.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

Particulars of Loans Guarantees and Investments covered under Section 186 of theCompanies Act 2013 form part of the notes to the financial statements provided in theAnnual

Report.

MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING FINANCIAL POSITION OF THE COMPANY

There are no adverse material changes or commitments occurring after 31stMarch 2018 which may affect the financial position of the Company.

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.

DISCLOSURE UNDER THE SEXUAL HARASSMENT

OF WOMEN AT THE WORKPLACE (PREVENTION

PROHIBITION & REDRESSAL) ACT 2013

Your Company has in place a policy on Prevention of

Sexual Harassment at workplace. This policy is in line with the requirements of TheSexual Harassment of Women at the Workplace (Prevention Prohibition & Redressal) Act

2013. All employees are covered under this Policy. As per the said Policy an InternalComplaints Committee is also in place to redress complaints received regarding sexualharassment. No complaints were received during financial year 2017-18.

APPRECIATION

The Directors also wish to place on record its appreciation for the commitmentdisplayed by all employees at all levels during the year.

The Directors also take this opportunity to express its deep gratitude for thecontinued co-operation and support received from its valued stakeholders.

By order of the Board of Directors
For Modern Steels Limited
Amarjit Goyal
Place: Chandigarh Chairman
Dated: 11th August 2018 DIN: 00219943