Your Directors hereby present their 45th Annual Report and AuditedAccounts of the Company for the year ended 31st March 2019.
| || |
Rs. in Lakhs
| ||Year Ended 31.03.2019 ||Year Ended 31.03.2018 |
|Net Sales & Income from ||32842 ||38419 |
|Operations || || |
|Operating Profit/(Loss) ||(1827) ||(2304) |
|Finance Cost ||177 ||179 |
|Cash Profit/(Loss) ||(2004) ||(2483) |
|Depreciation & Amortisation ||517 ||541 |
|Profit/(Loss) before Tax ||(2521) ||(3024) |
During the year Company's operations faced severe increase in metallics and ferroalloys prices.
Graphite electrodes which also has significant in the steel production through EAFroute also faced unprecedented increase in its cost.
The Company followed its customers for the price increase but there is always a timelag between the increase in cost of raw material and increase in selling price from theOEM's. Further increase in cost of production could not be passed to customers fully. Thisaffected the operations of the Company.
Due to the difficult financial position and the suffered by the Company the Directorshave not recommended any dividend for the year.
The current year has started with slow down in the economy and subdued demand from itscustomers. The Company is also facing liquidity challenge and the operating team isworking in midst of challenges.
STATUS OF COMPANY'S ACCOUNTS WITH LENDERS
Members will recall that the Company's account status is NPA. This is to update themembers that State Bank of India and Canara bank have already assigned its portion of debtthrough ARC route. The company has got an OTS sanctioned from Punjab National Bank (PNB).The Company has requested the bank for change in the terms of sanction which is underconsideration of the bank. The Company is following up with lenders for debt resolution.
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. In thisfinancialyear i.e. 2019-20 your company is pursuing for two prestigious accreditation:ISO 14001:2015 for Environment Management System (EMS) & ISO 45001:2018 as OH&SMSi.e. Occupational Health & Safety Management System.
The outstanding exempted deposits at the end of the year under review amount to Rs.131Lakhs (Previous year Rs. 161 Lakhs).
CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSIONS & ANALYSIS
A separate report on Corporate Governance and Management Discussions & Analysis isattached herewith and forms part of this report.
This is to inform with grief that our founder andcost Chairman of the Company Mr.Amarjit Goyal had left for his heavenly abode on 2nd December 2018. Mr. Goyalwas the Chairman of the Board of the Company since inception in 1973.
Mr. Goyal was associated with many trade and industrial associations and was alsoassociated with various social organisations.
The Board placed on record their sincere appreciation for the services rendered by himduring his long tenure since inception.
Mr. Krishan Kumar Goyal Managing Director of the Company has been appointed as theChairman of the Board of the Company with effect from 14th February 2019 andhas been redesignated as Chairman and Managing Director.
Dr. Meena Sharma (DIN: 07241589) was reappointed 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.
In accordance with SEBI (Listing Obligations and Disclosure Requirements) (Amendment)Regulations 2018 Mr. Dildar Singh Gill Independent Director (DIN: 00211236) to becontinued as independent non- executive director for the remaining period of his tenurenotwithstanding that he has attained 75 years of age. Mr. Krishan Kumar Goyal Director(DIN: 00482035) shall retire by rotation at the ensuing Annual General Meeting and beingeligible offers himself for re-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 andSEBI (Listing Obligations and DisclosureRequirements) 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 2019 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 2013information required under Section 197(2) read with rule 5(1) not forms part of thisreport 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 employeesfor their hard work and dedication.
KEY MANAGERIAL PERSONNEL
Mr. Krishan Kumar Goyal (Chairman and Managing Director) Mr. Rajesh Kumar Sinha (Wholetime Director) and Mr. Sanjeev Kumar Verma (Chief Financial Officer)are the Key ManagerialPersonnel of your Company in accordance with the provisions of Section 2(51) 203 of theCompanies Act 2013 read with Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014.
Mr. Ashish Kumar Sharma Company Secretary and Compliance Officer resigned thJune 2018.
During the year four 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 its Committees the Chairman andthe individual Directors was carried out for FY 2018-19. Led by the Nomination &Remuneration Committee (NRC') the evaluation was carried out using individualquestionnaires covering composition of Board conduct as per Company values & beliefscontribution towards development of strategy & business plan risk management receiptof regular inputs and information codes & policies for strengthening governancefunctioning performance & structure of Board Committees skill set knowledge &expertise of Directors 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. Pursuant to Section134 of the Companies Act 2013 read with Rule 8(2) of the Companies (Accounts) Rules2014 the particulars of such transactions are provided in Form AOC-2 which is annexed asAnnexure "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 30 manner.
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 2018-19 under review all recommendations of the Audit Committee wereaccepted by the Board of Directors of the Company.
Pursuant to Section 139 and 142 and other applicable provisions of Companies Act 2013if any and the rules framed thereunder M/s. Aaryaa & Associates CharteredAccountants (Registration No. 0015935N) who hold office till the conclusion of thisAnnual General meeting be and are hereby re-appointed as Statutory Auditors of the Companyfor a further period of three years to hold office from the conclusion of this AnnualGeneral Meeting till the conclusion of the Annual General Meeting to be held in the year2022 at a remuneration recommended by the Audit Committee and mutually agreed between theBoard of Directors of the Company and the Statutory 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 year2019-20 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 & AssociatesCompany Secretaries as Secretarial Auditor of the Company for the financial year 2018-19for conducting the Secretarial Audit as required under the provisions of Companies Act2013.
The Secretarial Audit Report issued by M/s. B.K. Gupta & Associates CompanySecretaries in Form MR-3 for the financial year ended 31st March 2019 is annexed herewithas Annexure "C" to this report.
The Statutory Auditors of the Company M/s. Aaryaa & Associates CharteredAccountants have submitted the Auditor's Report which has observation on StandaloneFinancial Statements for the period ended March 31 2019 as follows: .
As prescribed in Sec-197 and Schedule V of Companies Act 2013 if there are no profitsor profits are inadequate and where the company has defaulted in payment of dues to anybank or public financial institution the prior approval of the bank or public financialinstitution concerned shall be obtained by the company before approving the same byspecial resolution at general meeting.
Neither the required resolution has been passed nor the prior approval has b eenobtained from the bankers since having defaulted in paying their dues.
Therefore the Company is not eligible to pay director's remuneration due tonon-compliance of conditions prescribed in Schedule V of the Companies Act 2013. Duringthe year the company has given the director remuneration to Mr. Krishan Kumar Goyal(Managing Director) amounting to Rs. 3905614 and Mr. R.K. Sinha (Director) amounting toRs. 3515350.
Apart from the managerial remuneration for year ended 31st March 2019 asmentioned above the company has paid director remuneration of Rs. 9233084 till 31stMarch 2018 without complying the provisions of Schedule V of the Companies Act 2013.
The Company has paid managerial remuneration amounting to Rs. 7420964/- to directorsfor which the Company has yet to receive approval from the competent authority/agency.Management undertakes 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
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 2019 which may affect the financial position ofthe
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 2018-19.
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 the annual accounts for the year ended 31st March2019 the applicable accounting standards have been followed along with proper explanationrelating to material departures if any;
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 31st March 2019 and ofthe loss of the Company for the year ended on that date;
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 31st March2019 on 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;
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.
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 |
|Place: Chandigarh ||Chairman and Managing Director |
|Dated: 13th August 2019 ||DIN: 00482035 |