Your Directors hereby present their 46th Annual Report and Audited Accountsof the Company for the year ended 31st March 2020.
|Particulars ||Year Ended 31.03.2020 ||Year Ended 31.03.2019 |
|Net Sales & Income from Operations ||21184 ||32342 |
|Operating Profit/(Loss) ||(4553) ||(1827) |
|Finance Cost ||39 ||177 |
|Cash Profit/(Loss) ||(4592) ||(2004) |
|Depreciation & Amortisation ||486 ||517 |
|Profit/(Loss) before Tax ||(5078) ||(2521) |
During the year under review the company achieved net sales of Rs. 21184 Lakhs asagainst Rs. 32342 Lakhs in the previous year and resulting into net loss of Rs. 5078 Lakhsagainst the net loss of Rs. 2521 Lakhs in the previous year.
The fiscal year witnessed slow-down in the Auto sector.
Further as the members are aware that the Company is facing liquidity crunchtherefore we could not pick up the volumes and profits could not be achieved. In view ofacute liquidity crunch the production got drastically reduced making the operationsun-economical. However to OEMs where we are committed we were able to supply them sothat their production line doesn't get hampered.
In view of low volume purchase & financial difficulties the input cost also gotaffected.
Due to the difficult financial position and the losses suffered by the Company theDirectors have not recommended any dividend for the year.
The year started with a huge challenge before humanity with the onset of COVID-19 whichlead to lockdown throughout the Country. Due to the same the company's operations alsocame to a standstill.
The first quarter was completely washed out. In the second quarter though the Companywas getting orders but the operations could be started at minimal quantity due to inherentproblem of liquidity/ financial difficulty.
The current half year sales is Rs.2294 Lacs against last half yearly sales ofRs.13841 Lacs.
STATUS OF COMPANY'S ACCOUNTS WITH LENDERS I.E. EDELWEISS ASSET RECONSTRUCTION COMPANY(EARC) AND PUNJAB NATIONAL BANK
The members are aware that the Account of the Company became NPA and the Company hasbeen trying to find out resolution with the lenders.
Business Transfer Agreement (BTA) / Slump Sale Execution
The management of the Company has been able to reach at a common understanding with thepurchaser for sale of its assets on "Slump Sale basis" to M/s
Arjas Steels Private Limited having its registered office at Tadipatri MandalAnanthpur Village Jambulapadu Andhra Pradesh for a consideration of Rs.86 Crores.
On 15th November 2020 the BTA had been executed between M/s Arjas SteelPrivate Limited / Arjas Modern Steel Private Limited (purchaser) Modern Steels Limited(seller) Promoters (Mr. Krishan Kumar Goyal and Mr. Aditya Goyal).
The whole transaction is expected to be completed on or before 15th March2021.
Edelweiss Asset Reconstruction Company (EARC)
The Company was in prolonged discussion with EARC for the settlement of its debt.Finally the Company had given its proposal for One Time settlement (OTS). This is tofurther inform that Edelweiss Asset Reconstruction Company (EARC) lead lender has givenits final approval for the OTS.
As per the lenders requirement the Company was able to mobilize funds from purchaserand deposited Rs. 8 crores with EARC as upfront amount.
Punjab National Bank
The Company has also given its proposal for One
Time Settlement to Punjab National Bank (PNB) which is under their consideration. Asper commitment the Company has deposited Rs. 1 Crore in the Bank's no lien account fromthe purchaser.
KAIZEN & TS 16949 ACCREDITATION
Your company has updated the accreditation of Quality Management System on 30thNovember2018. Now we are
IATF 16949:2016 accredited by DNV GL Netherlands.
The Company has neither accepted nor invited any deposit from the public and hencedirectives issued by Reserve Bank of India and the provisions of Chapter V
(Acceptance of deposits by Companies) of the
Companies Act 2013 and rules framed there under are not applicable for the year.
CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSIONS & ANALYSIS
A separate report on Corporate Governance and
Management Discussions & Analysis is attached herewith and forms part of thisreport.
Mr. Krishan Kumar Goyal (DIN: 00482035) Chairman &
Managing Director of the Company was appointed for a period of three years w.e.f 1stApril 2017 and is to be reappointed for a further period of three years w.e.f. 1stApril 2020 in terms of the provisions of Companies Act 2013.
Mr. Krishan Kumar Goyal Chairman & Managing Director (DIN: 00482035) shallretire by rotation at the ensuing
Annual General Meeting and being eligible offers himself for re-appointment.
Mr. Rajesh Kumar Sinha (DIN: 00556694) was appointed for a period of five years w.e.f28 th May 2015 and his tenure expired on 27th May 2020.The Board expressedits appreciation for the services rendered by him during his tenure.
Pursuant to provisions of Section 161 and Section 149 of the Companies Act 2013 Prof.Satish Kumar
Kapoor (DIN: 00009122) is appointed as an Additional
Independent Director by the Board of Directors w.e.f 14th October 2020 uptothis Annual General Meeting. In this AGM he is to be appointed for a period of threeyears upto the conclusion of AGM to be held in the year 2023.
Pursuant to provisions of Section 149 of the Companies
Act 2013 Mr. DS Gill (DIN: 00211236) and Dr. Priyavrat Thareja (DIN: 06984057) wereappointed as Independent
Directors of the Company w.e.f 29th September 2014 and were furtherre-appointed for a further period of three years w.e.f 9th September 2017 andhence their tenure is expiring in this Annual General Meeting.
The board placed on record its appreciation for the valuable contribution and theservices rendered by Mr. DS Gill and Dr. Priyavrat Thareja during their tenure asDirectors. The Board expressed its gratitude for their able guidance during theirassociation with the company.
KEY MANAGERIAL PERSONNEL
Mr. Krishan Kumar Goyal (Chairman and Managing Director) Mr. Rajesh Kumar Sinha (Wholetime Director) Mr. Sanjeev Kumar Verma* (Chief Financial Officer) and Mr. Ashish KumarSharma (Company Secretary) are the Key Managerial Personnel of your Company in accordancewith the provisions of
Section 2(51) 203 of the Companies Act 2013 read with Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014.
During the year under review Mr. Ashish Kumar
Sharma Company Secretary and Compliance Officer joined again the Company w.e.f 1stOctober 2019.
*Mr. Sanjeev Kumar Verma has resigned from the
Company. Mr. Divnain Singh Chowdhary has been appointed as Chief Financial Officerw.e.f 1 st October 2020.
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 read with the rules made thereunder andRegulation 25
(8) of the SEBI (Listing Obligations and Disclosure Requirements) (Amendment)Regulations 2018 that they meet the criteria of independence as laid out in
Subsection (6) of Section 149 of the Companies Act 2013 and SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015.
BOARD DIVERSITY AND REMUNERATION POLICY
The Company has a policy for formation of the Board to have Executive Directors andIndependent Directors of diverse background to maintain the independence of the Board. Ason 31st March 2020 the Board consists of five directors out of which two areExecutive Directors 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.
With reference to the provisions of Section 136(1) of the
Companies Act 2013 information required under Section
197(2) read with rule 5(1) not forms part of this report.
However no employees were employed throughout the Financial Year or part thereofdrawing remuneration pursuant to the provision of 197(2) read with rule 5(2).
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.
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
In pursuance of Section 134 (3) (p) of the Companies Act 2013 read with rules madethereunder and the SEBI (Listing Obligations and Disclosure Requirements) Regulations
2015 the Board of Directors carried out the performance evaluation of the Board as awhole its Committees and individual directors. Led by the Nomination & RemunerationCommittee (NRC') the evaluation was carried out using individual questionnairescovering composition of Board conduct as per Company values & beliefs contributiontowards development of strategy & business plan risk management receipt of regularinputs and information codes & policies for strengthening governance functioningperformance & structure of Board Committees skill set knowledge & expertise ofDirectors preparation & contribution at Board meetings leadership etc.
As part of the evaluation process the performance of Non Independent Directors theChairman and the Board was conducted by the Independent Directors. The performanceevaluation of the respective Committees and that of Independent and Non IndependentDirectors was done by the Board excluding the Director being evaluated.
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. Related Partydisclosures as per AS-18 have been provided in the Notes to the Financial Statements.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-2 which is annexedas Annexure "A" to this report. Related Party disclosures as per AS-18 have beenprovided 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" to this report.
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/
Whistle Blower Policy which provides a robust framework for dealing with genuineconcerns & grievances. Specifically employees can raise concerns regarding anydiscrimination harassment victimization any other unfair practice being adopted againstthem or any instances of fraud by or against your Company. During financial year 2019-20no 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 torecording and providing reliable financial and operational information complying withapplicable statutes safeguarding assets from unauthorized use executing transactionswith proper authorisation 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 (Listing Obligations and Disclosure Requirements) Regulations 2015) as of 31stMarch 2020. The assessment involved self- review and external audit.
M/s Aaryaa & Associates the statutory auditors of Modern Steels Limited haveaudited 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 177 of Companies Act 2013 andRegulation 18 of SEBI
(Listing Obligations and Disclosure Requirements) Regulations 2015) the AuditCommittee has concluded that as of 31st March 2020 the internal financialcontrols were adequate and operating effectively.
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 (Ceased to be the member w.e.f 27th May 2020)
4. Dr. Meena Sharma-Member (Appointed as the member w.e.f 28th May 2020)
5. Prof. Satish Kumar Kapoor-Member (Appointed as the member w.e.f 14th October2020) 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 2019-20 under review all recommendations of the Audit Committee wereaccepted by the Board of Directors of the Company.
AUDITORS Statutory Auditors
Pursuant to Section 139 and 142 and other applicable provisions of Companies Act 2013if any and the rules framed thereunder M/s.
Aaryaa & Associates Chartered Accountants (Registration No. 015935N)werere-appointed as
Statutory Auditors of the Company at 45th Annual General Meeting for a period of threeyears till the conclusion of the 48th Annual General Meeting to be held in the year 2022at a remuneration mutually agreed between the Board of Directors of the Company and theStatutory 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 year2020-21 on the recommendations of the Audit Committee subject to the ratification of theremuneration by the shareholders.
Pursuant to the provisions of Section 204 of the Companies Act 2013 read with rulesmade thereunder the Board of Directors had appointed M/s. B.K. Gupta
& Associates Company Secretaries as Secretarial Auditor of the Company for thefinancial year 2019-20 for conducting the Secretarial Audit as required under theprovisions of Companies Act 2013.
The Secretarial Audit Report issued by M/s. B.K. Gupta
& Associates Company Secretaries in Form MR-3 for the financial year ended 31stMarch 2020 is annexed herewith as Annexure "C" to this report.
The Statutory Auditors of the Company M/s. Aaryaa &
Associates Chartered Accountants have submitted the Auditor's Report which hasobservation on Standalone Financial Statements for the period ended March 31 2020 asfollows: Director's remuneration is not admissible as prescribed in
Sec-197 of Companies Act 2013 except in accordance with the provision of Schedule Vand if it is not able to comply with such provisions the prior approval of lenders isrequired. The Company is not eligible to pay director remuneration for non-compliance ofconditions prescribed in schedule V of the companies Act 2013. During the year thecompany has given the director remuneration to Mr.
Krishan Kumar Goyal (Managing Director) amounting to Rs. 1783328 and Mr. R.K Sinha(Director) amounting to Rs. 3515350.
Apart from the managerial remuneration for year ended 31st March 2020 asmentioned above the company has paid director remuneration of Rs. 16656048 till 31stMarch 2019 without complying the provisions of Schedule V of the companies Act2013.
The company has paid Managerial Remuneration amounting to Rs.5298678/- to directorsfor which the company is yet to receive approval from the competent authority/agency.Directors undertake that in case the approval is not received from the competentauthority/ agency they shall refund the remuneration paid to them by the company.Profitability of the company shall affect to the same extent.
Secretarial Auditors' Qualification in Secretarial
The Company also not Complied with Section 197 of Companies Act 2013 in respect ofremuneration paid to Managerial Personal of the Company.
Directors undertake that in case the approval is not received from the competentauthority/agency they shall refund the remuneration paid to them by the company.Profitability of the company shall affect to the same extent.
EXTRACT OF ANNUAL RETURN
In compliance with Section 92(3) Section 134(3)(a) and Rule 12 of the Companies(Management and Administration) Rules 2014 the extract of the annual return in Form No.MGT 9 is annexed as ANNEXURE
D with 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 the Annual Report.
MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING FINANCIAL POSITION OF THE COMPANY
The material changes and commitments occurring after 31st March 2020 havebeen given under status of company's accounts with lenders on page 2.
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 (PREVENTIONPROHIBITION & 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 The Sexual Harassment of Women at theWorkplace (Prevention Prohibition & Redressal) Act 2013. All employees are coveredunder this Policy.
As per the said Policy an Internal Complaints Committee is also in place to redresscomplaints received regarding sexual harassment. No complaints were received duringfinancial year 2019-20.
COMPLIANCE WITH SECRETARIAL STANDARDS
The Company is compliant with the applicable Secretarial
Standards (SS) viz. SS-1 & SS-2 on Meetings of the
Board of Directors and General Meetings respectively.
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 accounts for the year ended 31st March 2020 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 31stMarch 2020 and of the loss of the
Company for the year ended on that date; iii) the Directors have taken proper andsufficient care 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 accounts for the year ended 31st March 2020 on a goingconcern' basis; v) the Directors have laid down internal financial controls to be followedby the Company and that such internal financial controls are adequate and were operatingeffectively; vi) the Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems are adequate and operatingeffectively.
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
Krishan Kumar Goyal Chairman and Managing Director