Monnet Ispat & Energy Ltd.
|BSE: 513446||Sector: Metals & Mining|
|NSE: AIONJSW||ISIN Code: INE743C01021|
|BSE 12:19 | 06 Jul||13.70||
|NSE 12:13 | 06 Jul||13.90||
|Mkt Cap.(Rs cr)||643|
|Mkt Cap.(Rs cr)||643.28|
Monnet Ispat & Energy Ltd. (AIONJSW) - Director Report
Company director report
To the Members
The Reconstituted Board of Directors present the Twenty Eighth Annual Report of theCompany along with the financial statements for the financial year ended 31st March2018.
1. FINANCIAL SUMMARY
The financial summary and performance highlights of the Company for the year underreview are as follows:
(Rs. in Crores)
Previous year's figures have been regrouped/ rearranged wherever considered necessary.
2. FINANCIAL AND OPERATIONAL PERFORMANCE
The Financial Statements for the financial year ("FY" or "theYear") under review was approved by the Resolution Professional ("RP")pursuant to the powers vested in RP under Cl RP process as defined later.
In so far as the business operations are concerned the Company has two facilitiesnamely one at Raipur and the other at Raigarh. Raipur was running DRI Plant as also otherfacilities including Captive Power Plant and Ferro Alloys. Flowever the company's biggerfacility at Raigarh which houses an integrated steel plant was operating DRI Plant onlydue to lack of working capital resources.
The company's operational performance in terms of physical production and sales duringthe year ended on March 31 2018isasunder-
Production Data are as under-
Sales Data are as under-
During the year under review the Company's revenue from operations was Rs. 1419.09crores as against Rs 1375.08 crores in the previous year. The Company's Earning BeforeInterest Depreciation and Tax ("EBIDTA") was Rs.72.84 crores in the FinancialYear ended 31stMarch 2018 as opposed to EBITDA loss of Rs. 52.09 crores in immediatelypreceeding year due to better market conditions as also efficient operational performance.
As the EBITDA earned during the year was not sufficient to cover depreciation andinterest costs profit before tax (PBT) was negative and stood at Rs. (-)1900.96 crores asagainst Rs. (-)1728.80 crores in the previous year and profit after tax (PAT) was Rs.(-)1900.96 crores against Rs. (-)1733.86 crores in the previous financial year.
During the year under review there were exceptional items aggregating to Rs.(-) 440.53crores as against Rs.(-) 209.90 crores in the year ended on March 312017. The exceptionalitems include -
1. Rs.47.62 crores of certain non-recoverable advances written off;
2. Rs. 19.33 crores of inventory write-down and write-off based on physicalverification of inventory and technical evaluation of inventory in non-operationaldivisions of the Company;
3. Rs. 196.57 crores towards impairment of investments in Monnet Power Company Ltd.(MPCL) as MPCL has been admitted to the Corporate Insolvency Resolution Process under theprovisions of the Insolvency and Bankruptcy Code 2016;
4. Rs. 177.01 crores towards loss incurred due to appropriation of shares of OdishaSponge Iron & Steel Limited pledged with the financial creditors of the Company.
During the year under review the Company's revenue from operations was Rs. 1419.09crores as against Rs. 1375.08 crores in the previous year. Further in the financial yearended 31sMarch 2018 profit before tax (PBT) was negative and stood at Rs.(-)1759.29crores as against Rs.(-)2127.26 crores in the previous year and profit after tax (PAT) wasRs.(-)1759.29 crores against Rs.(-)2132.32 crores in the previous financial year.
Further there has been no change in the nature of business during the year underreview.
3. MATERIAL CHANGES AND COMMITMENTS. IF ANY. AFFECTING THE FINANCIAL POSITION OF THECOMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICHTHE FINANCIALSTATEMENTS RELATE ANDTHE DATE OFTHE REPORT
CORPORATE INSOLVENCY RESOLUTION PLAN & CHANGE OF MANAGEMENT
During the year under review in accordance with the applicable provisions of theInsolvency and Bankruptcy Code 2016 ("IBC") the Corporate Insolvency ResolutionProcess ("CIRP" or "CIRP Process") of Monnet lspat& Energy Limited("Company") was initiated by the Financial Creditors of the Company. TheFinancial Creditors petition to initiate the CIRP Process was admitted by the NationalCompany Law Tribunal ("NCLT") Mumbai Bench on July 18 2017 ("InsolvencyCommencement Date"). Mr. Sumit Binani was appointed as the Interim ResolutionProfessional ("IRP") to manage the affairs of the Company. Subsequently Mr.Sumit Binani was confirmed as the Resolution Professional ("RP") by theCommittee of Creditors ("CoC"). On appointment of the IRP/RP the powers of theBoard of Directors of the Company were suspended and were exercised by the IRP/RP.
The RP invited expressions of interest and submission of a resolution plan inaccordance with the provisions of the IBC. The CoC approved the resolution plan submittedby the Consortium of AION Investment Private II Limited and JSW Steel Limited. The RPsubmitted the CoC approved resolution plan to the NCLT on April 12 2018 for its approvaland the NCLT approved the resolution plan submitted by the Consortium with certainmodifications ("Approved Resolution Plan") on July 242018 ("NCLTOrder").
Upon implementation of the Resolution Plan the Resolution Applicants i.e. Consortiumof AION Investments Private II Limited ("AION") and JSW Steel Limited("JSW")(directly and through their affiliates) took control over the managementand ownership of the Company. The reconstituted Board reflects the joint control of thecompany's management by AION and JSW Steel as both the joint venture partners haveappointed their nominees apart from the appointment of Independent Directors.
Post-Acquisition a new Board was constituted in the current financial year i.e. onAugust 312018 ("Reconstituted Board" or "Board") and a new managementwas put in place. In accordance with the provisions of the IBC and the NCLT order theapproved resolution plan is binding on the Company and its employees members creditorsguarantors and other stakeholders involved.
Members may kindly note that the Directors of the Reconstituted Board("Directors") were not in office for the period to which this report primarilypertains. During the CIRP Process (i.e. between July 18 2017 to July 24 2018) the RPwas entrusted with the management of the affairs of the Company. Prior to the InsolvencyCommencement Date the erstwhile Board of Directors had the oversight on the management ofthe affairs of the Company. The Reconstituted Board is submitting this report incompliance with the provisions of the Companies Act 2013 the rules and regulationsframed thereunder ("Act") and the Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements)
Regulations 2015 ("SEBI Listing Regulations").
IBC is a new legislation in India and the Approved Resolution Plan of the Company isone of the few such resolution plans approved under the IBC. Members are requested to readthis report in light of the fact that the Reconstituted Board and the new management iscurrently implementing the resolution plan.
Steering Committee of lenders pursuant to approval of Resolution Plan by Hon'ble NCLTMumbai Bench appointed an Interim Board on 30th July 2018 to implement the approvedresolution plan. The Interim Board consisted of Mr. Sumit Binani non-executive DirectorMr. Jyotin Kantilal Mehta and Mrs. Anuradha Ambar Bajpai as Independent Directors of theCompany. Mr. Sumit Binani ceased to be director of the Interim Board of the Company w.e.f.31st August 2018 on conclusion of Corporate Insolvency Resolution Proceedings.
On 31st August 2018 the composition of Board of Directors of the Company wasre-constituted and as on date the Board of Directors of the Company consists of thefollowing Directors:
Salient features of the Resolution Plan approved and implemented during the currentfinancial year (2018-19) are as follows:
Pursuant to the corporate insolvency resolution process under the Insolvency andBankruptcy Code 2016 initiated on 18 July 2017 the NCLT on 24 July 2018 (Order date)approved (with modifications) the Resolution Plan (the Plan) submitted by the consortiumof AION Investments Private II Limited and JSW Steel Limited which inter alia resultedin the following:
(a) Extinguishment of 50732841 equity shares of Rs. 10 each and 17500000preference shares of Rs. 100 each held by the erstwhile promoters.
(b) Reduction in the face value of the balance 365233620 equity shares (includingthe equity shares issued under (c) and (d) below) held by the non- promoter equityshareholders to Rs. 3.30 per share and their consolidation into 120527534 equity sharesof Rs. 10 each.
(c) Settlement of debts of financial creditors amounting to Rs. 10247.86 crorespartly by issue of 200056892 equity shares of Rs. 10 each partly by cash payment ofRs. 2457.00 crores and partly by the effective purchase of the remaining debt (ondeemed conversion into Optionally Convertible Preference shares) for a sum of Rs. 199.85crores by a company of the Consortium namely Milloret Steel Limited ("MSL").
(d) Settlement of corporate guarantees issued to financial creditors amounting to Rs767.05 crores partly by issue of 15141327 equity shares of Rs. 10 each and cashpayment of Rs. 20.07 crores.
(e) Settlement of operational creditors (other than employees and workmen) amountingto Rs. 114.81 crores for a sum of Rs. 25 crores payable by the Company within one yearfrom the NCLT Order date.
(f) Extinguishment of other current and non-current liabilities amounting to Rs. 128.36crores standing asonthe NCLTOrderdate.
(g) Extinguishment of all contingent liabilities commitments and other claims andobligations including all taxes and other government dues standing as on the effectivedate (i.e. 31 August 2018).
(h) Merger of MSL into the Company resulting in the extinguishment of the deemedOptionally Convertible Preference Shares contemporaneously with (c) above. Theshareholders of MSL were issued 349020000 equity shares of Rs. 10 each and 525980000Compulsorily Convertible Preference Shares of Rs. 10 each. The compulsorily convertiblepreference shares issued to the shareholders of Milloret Steel Limited pursuant to themerger have a term of 20 (twenty) years and can be converted by the holders into anequivalent numbers of equity shares of the company at any time during their term.
Fractional entitlements of equity shares of the Company resulting from suchconsolidation of the equity shares has been consolidated into equity shares having a facevalue of IN R 10 each and has been held by a director of the Company as a trustee("Trustee") on behalf of the equity shareholders of the Company entitled to suchfractional entitlements for the purpose of sale in the open market. The sale proceedsrealized by the Trustee from such sale (less the costs incurred by the Trustee to carryout such sale) shall be distributed to the original equity shareholders entitled to suchfractional entitlements in the same proportion as their respective fractionalentitlements. Further in terms of NCLT Order every retail shareholder of the Companyholding 3 (three) or less equity shares of the Company as on the date of NCLT order i.e.July 24 2018 has been allotted one Equity Shares.
4. SHARE CAPITAL
Authorised Share Capital of the Company as on 31sMarch 2018 was Rs.3860000000/-(RupeesThree Hundred Eighty Six Crores Only) divided into 21.10.00. 000(Twenty One Crores Ten Lacs) equity shares of Rs. 10/- (Rupees Ten) each and 17500000(One Crore Seventy Five Lacs) Preference Shares of Rs. 100/-(RupeesOne Hundred) each.
Pursuant to the implementation of the Resolution Plan sanctioned by the NCLTAuthorized Share Capital of the Company has since been increased to Rs.1550.00. 00.000(Rupees One thousand five hundred and fifty crore only) comprising 825000000 (EightyTwo Crore Fifty lakh only) Equity Shares of Rs. 10/- (Rupees Ten) each and 550000000(Fifty Five Crore only) Preference Shares of Rs. 10/- (Rupees Ten) each and 17500000(One Crore Seventy five Lakh) Preference Shares of Rs 100/- (Rupees Hundred) each.
Further post implementation of the resolution plan the paid up capital stands at469547534 equity shares of Rs. 10 (RupeesTen) each and 525980000 CompulsoryConvertible Preference Shares of Rs. 10 (Rupees Ten) each.
Considering the business plans and fund requirements of the Company it is proposed toreclassify the Authorised Share Capital of the Company from the existing Authorisedcapital to Rs. 15500000000 (Rupees One thousand five hundred and fifty crore only)comprising 1000000000 (One Hundred Crore only) Equity Shares of Rs. 10 (Rupees Ten)each and55.00. 00.000 (Fifty Five Crore) Preference Shares of Rs. 10/-(Rupees Ten) each.
The Company has sought the approval of members of the Company in respect of theaforesaid reclassification in ensuing Annual General Meeting.
5. CREDIT RATING
The Company was undergoing the CIRP under the provisions of the IBC. The Insolvencycommencement date was July 18 2017. During the said process no credit rating was carriedout for the FY 2017-18. Post implementation of the resolution plan the Company iscurrently in the process of obtaining a credit rating.
6. NON-CONVERTIBLE DEBENTURES
As on 31sMarch 2018 the Company had 9200 Secured Redeemable Non-ConvertibleDebentures (NCDs) of Rs. 1000000/- each aggregating to Rs. 920 crores the details ofwhich are given in Note No 16(b) of the Standalone Financial Statement.
As on the date of report the Company does not have any outstanding debentures.
Pursuant to the implementation of the Resolution Plan sanctioned by the NCLT debts ofeligible financial creditors were also paid in the manner provided in the ApprovedResolution Plan.
7. DIVIDEND AND RESERVES
The RP in view of the losses incurred by the Company has not recommended any Dividendfor the year under review. As the Company has incurred losses during the year no amounthas been transferred to Reserves.
8. PUBLIC DEPOSITS
The Company has not accepted or renewed any fixed deposits during the period underreview. It has not accepted any deposits from the public within the meaning of theprovisions of Section 73 of the Companies Act 2013 and Rules madethereunder.
9. SUBSIDIARIES. JOINT VENTURES OR ASSOCIATE COMPANIES
As on 31sMarch 2018 the Company has seven subsidiary Companies (including 2step-down subsidiaries) four joint ventures and an associate Company. The consolidatedfinancial statements presented by the Company include financial information of itssubsidiaries joint ventures and associate companies and prepared in compliance withapplicable Ind AS.
Further during the year under review Monnet Power Company Limited ceased to be asubsidiary of the Company however it continues to be an associate of the Company.Further during the financial year under review Odisha Sponge Iron and Steel Limitedceased to be an associate of the Company.
A gist of financial performance of these companies is contained in form AOC-1 and formspart of this report and annexed as Annexure 1. The separate unaudited financial statementsof these subsidiaries are available on the website of the Company.
The annual accounts of the subsidiary companies are open for inspection by anyShareholder at the Company's Registered Office situated at Monnet Marg Mandir FlasaudRaipur Chhattisgarh -492101 and the Company will make available these documents and therelated detailed information upon request by any Shareholder of the Company or anyShareholder of its subsidiaries joint ventures and associate companies who may beinterested in obtaining the same. Also the standalone financial statements consolidatedfinancial statements and financial statements of subsidiaries are available on the websiteof the Company www.aionjsw.in
Further the consolidated financial statements of the Company and all its subsidiariesjoint ventures and associate company for the year under review is prepared in compliancewith the applicable provisions of the Companies Act 2013 Ind AS and the Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 ("SEBI Listing Regulation 2015") which forms part of the Annual Report.
10. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS
With the commencement of CIRP no significant and material order was passed by anyregulator or court or tribunal impacting the going concern status and its operations infuture. However Members attention is drawn to the statement of contingent liabilitiescommitments in the note forming part of financial statement.
The Resolution Plan approved by Hon'ble NCLT provides for extinguishment of the pendinglitigation by and against the Company.
The Nominated Authority Ministry of Coal Head vide their letter dated 30th December2017 ("The Letter") issued for termination of coal mines development andproduction agreement and vesting order in respect of Gare Palma IV/7 coal mine and thetermination is effective on completion of notice period of 15 business days as stated inthe letter i.e. on 19th January 2018. The Hon'ble National Company Law Appellate Tribunal("NCLAT") vide its order dated 08th February 2018 has restrained the NominatedAuthority Ministry of Coal Government of India from allotting the mine in question infavour of any person without the permission of the Hon'ble NCLAT. As on date of thisReport the matter is sub-judice and the mine is in possession of the Company.
11. INTERNAL FINANCIAL CONTROLS
The Reconstituted Board/ Management believes that based on the knowledge/ informationgained by them about affairs of the company in a limited period of time from records ofthe company the Company has effective internal financial control systems and policies andsuch controls are operating effectively. The internal control systems include documentedpolicies checks and balances guidelines and procedures that are supplemented by robustinternal audit processes and monitored continuously through periodical reviews bymanagement to provide reasonable assurance that all assets of the company are safeguarded;and all transactions entered into by company are authorized recorded and reportedproperly. Post acquisition the Reconstituted Board/ Management is in the processreviewing the internal controls framework of the company with an objective to have arobust internal control framework commensurate with the size scale and nature of businessof the company.
12. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)
With effect from the Insolvency Commencement Date Mr. Sumit Binani was appointed asthe Interim Resolution Professional ("IRP") to manage the affairs of theCompany. Subsequently Mr. Sumit Binani was confirmed as the Resolution Professional("RP") by the Committee of Creditors ("CoC"). On appointment of theIRP/RP the powers of the Board of Directors of the Company were suspended and wereexercised by the IRP/RP.
Resignations Durinethe year
During the year under review IDBI Bank Ltd. withdrew
its Nominee Director Mr. Shantanu Prasad and accordingly Mr. Shantanu Prasad ceased tobe a Director w.e.f. 05.08.2017. The Independent Directors of the erstwhile Board Ms.Ankita Wadhawan and Mr. Suman Jyoti Khaitan ceased to be Director w.e.f. 29.12.2017 and06.02.2018 respectively.
Upon approval of the Resolution Plan by the Hon'ble NCLT Mumbai the then existingBoard of Directors of the Company was deemed to have resigned and as provided in theapproved Resolution Plan a new Interim Board had been constituted for the purpose ofimplementation of the Resolution Plan. Subsequently on the effective date of the Plan theInterim Board has been reconstituted and the present composition of the Board of Directorsconsists of:
All the Directors have been appointed as Additional Directors and shall hold officeuntil the date of forthcoming Annual General Meeting. The Company has received noticesunder Section 160 of the Companies Act 2013 from shareholders signifying intention topropose their candidature as Directors of the Company.
The Board recommends their appointment at the forthcoming Annual General Meeting.
The Brief Resume/Profile of each Director recommended by the Board for appointment isattached with the Notice for the ensuing Annual General Meeting.
Key Managerial Personnel
During the year under review in terms of the provisions of Section 2(51) and 203 ofthe Companies Act 2013 the Key Managerial Personnel (KMP) of the Company were as under:-
1. Mr. Sandeep Kumar Jajodia - Chairman & Managing Director
2. Mr. SanjayKumarGarodia-ChiefFinancial Officer
3. Mr. HardeepSingh-CompanySecretary
Post implementation of the resolution plan the following are the Key ManagerialPersonnel appointed by the Board of Directors of the Company:
1. Mr. Ravichandar Moorthy Dhakshana- Whole Time Director
2. Mr. Sanjay Kumar Garodia - Chief Financial Officer
3. Mr. HardeepSingh-CompanySecretary
13. DIRECTORS' RESPONSIBILITY STATEMENT
Members may kindly note that the Directors of the Reconstituted Board were not inoffice for the period to which this report primarily pertains. During the CIRP Process(i.e. between July 18 2017 to July 24 2018) RP and prior to the Insolvency CommencementDate the erstwhile Board of Directors were entrusted with and responsible for themanagement of the affairs of the Company.
The Reconstituted Board is submitting this report in compliance with the Act andListing Regulations and the Directors as on date are not to be considered responsiblefor the fiduciary duties discharged with respect to the oversight on financial andoperational health of the Company and performance of the managementforthe periodpriortotheacquisition.
As pointed out above the Reconstituted Board of Directors have been in office onlysince August 31 2018. Consequentlythe Reconstituted Board hasonlya limited overview ofthe effectiveness of the internal financial and other controls of the Company since then.
Accordingly as required under Section 134 (5) of the Act the Reconstituted Board ofDirectors based on the knowledge/ information gained by them about the actions of theerstwhile directors of the Company (i.e. the directors of the Company prior to theAcquisition) and the affairs of the Company in a limited period of time from the recordsof the Company state that:
(a) in the preparation of the annual accounts for the financial year ended March 312018 the applicable accounting standards have been followed and a proper explanation hasbeen provided in relation to any material departures;
(b) Such accounting policies have been applied consistently and made judgments andestimates that are reasonable and prudent so as to give a reasonably true and fair view ofthe state of affairs of the Company at the end of the financial year ended March 31 2018and of the profit or loss of the Company forthat period;
(c) the erstwhile directors of the Company (i.e. the directors of the Company prior tothe Acquisition) had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;
(d) The annual accounts for the financial year ended March 31 2018 have been preparedon a going concern basis;
(e) the erstwhile directors of the Company (i.e. the directors of the Company prior tothe Acquisition) had laid down internal financial controls to be followed by the Companyand such internal financial controls are adequate and are operating effectively; and
(f) the erstwhile directors of the Company (i.e. the directors of the Company prior tothe Acquisition) had devised proper systems to ensure compliance with the provisions ofall applicable laws and such systems are adequate and operating effectively.
14. BOARD PERFORMANCE EVALUATION
Pursuant to applicable provisions of the Companies Act 2013 and the SEBI ListingRegulations the Board has formulated a framework containing inter-alia the criteria forperformance evaluation of the entire Board of the Company its Committees and individualDirectors including Independent Directors.
Schedule IV to the Companies Act 2013 also provides for the performance evaluation ofIndependent Directors by the entire Board of Directors excluding the Directors beingevaluated.
Since post appointment of Interim/Resolution Professional there was no meeting ofDirectors hence annual performance evaluation of the Board and its committees has notbeen carried out.
15. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS
During the year till 18th July 2017 i.e. commencement of Corporate InsolvencyResolution Process ("CIRP") only 2(Two) Board Meetings were duly convened andheld the details of which are given in the Corporate Governance Report which forms partof this Annual Report. The intervening gap between the meetings was within the periodprescribed under the Companies Act 2013 andtheSEBI Listing Regulations.
After commencement of CIRP Mr. Sumit Binani was appointed as Interim ResolutionProfessional ("IRP") who was later on confirmed as Resolution Professional("R P") by the Comm ittee of Creditors. As per Section 17 of the Insolvency& Bankruptcy Code 2016 upon appointment of the IRP the powers of the Board ofDirectors stands suspended and thereafter such powers are exercised by the IRP/ RPappointed for the Company.
16. COMMITTEESOFTHE BOARD
Pursuant to the Resolution Plan approved by the Hon'ble NCLT the Composition of Boardof Directors of the Company and their committees were re-constituted.
Only two meetings of the Audit Committee prior to commencement of CIRP were held duringthe year.
Post implementation of the resolution plan the Audit Committee has beenre-constituted in accordance with the provisions of Companies Act 2013 & SEBIListing Regulations with effect from 31st August 2018 as detailed below:
1. Mr. Jyotin Kantilal Mehta Non-Executive Independent Director-Chairman
2. Mr. Nikhil Omprakash Gahrotra Non-Executive Director-Member
3. Mrs. Anuradha Ambar Bajpai Non-Executive Independent Director - Member
The composition terms of the reference and number of meetings of the Audit Committeeduring the year is covered in the Corporate Governance Report.
NOMINATION & REMUNERATION COMMITTEE:
Post implementation of the resolution plan the Nomination and Remuneration Committeewas reconstituted in accordance with Section 178 of the Act & SEBI ListingRegulations w.e.f August 31 2018 as under:-
1. Mrs. Anuradha Ambar Bajpai Non-Executive Independent Director-Chairperson
2. Nikhil Omprakash Gahrotra Non-Executive Director-Member
3. Mr. Jyotin Kantilal Mehta Non-Executive Independent Director- Member
The composition terms of the reference and number of meetings of the Nomination andRemuneration Committee during the year is covered in the Corporate Governance Report.
STAKEHOLDERS' RELATIONSHIP COMMITTEE:
Post implementation of the resolution plan the Stakeholder's Relationship Committeewas reconstituted in accordance with Section 178 of the Act & SEBI ListingRegulations w.e.f August 31 2018 as under:-
1. Mrs. Anuradha Ambar Bajpai Non Executive Independent Director-Chairperson
2. Mr. Nikhil Omprakash Gahrotra Non-executive Director-Member
3. Mr. Jyotin Kantilal Mehta Independent Directors- Member
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE:
Post implementation of the resolution plan the Corporate Social ResponsibilityCommittee was reconstituted in accordance with Section 135 of the Act & SEBI ListingRegulations w.e.f August 31 2018 as under:-
1. Mr. Nikhil Omprakash Gahrotra Non Executive Director-Chairman
2. Mrs. Sutapa Banerjee Independent Director -Member
3. Mr. Ravichandra Moorthy Dhakshana Whole-Time Director-Member
The composition terms of the reference and details on meetings of the Corporate SocialResponsibility Committee during the year is covered in the Corporate Governance Report.
Post implementation of the resolution plan the Finance Committee was re-constitutedw.e.f August 312018 as under:-
1. Mr. Ravichandra Moorthy Dhakshana - Member
2. Mr. Seshagiri Rao MVS-Member
3. Mr. Kalpesh Pankaj Kikani-Member
INTERNATIONAL TRADE PRACTICES AND CORPORATE GOVERNANCE COMMITTEE
Post implementation of the resolution plan the International Trade Practices andCorporate Governance Committee has been re-constituted w.e.f August 312018 as under:-
1. Mrs. Anuradha Ambar Bajpai-Chairperson
2. Mr. Ravichandra Moorthy Dhakshana-Member
3. Mr. Nikhil Omprakash Gahrotra -Member
The details of the Committees along with their composition number of meetings heldduring the year under review terms of reference and attendance of members at the meetingsare provided in the Corporate Governance Report which forms part of this Annual Report.Further during the year under review the Board has accepted all the recommendations ofthe Audit Committee.
17. STATEMENT ON DECLARATION BY INDEPENDENT DIRECTORS
Post implementation of Approved Resolution Plan the Company has received the necessarydeclaration from each Independent Director who are part of reconstituted Board confirmingthat he/she meets the criteria of Independence as laid out in Section 149(6) of theCompanies Act 2013 read with the Schedules rules made thereunder and Regulation 25 ofSEBI Listing Regulations 2015.
18. NOMINATION AND REMUNERATION POLICY
Pursuant to applicable provisions of Companies Act 2013 & SEBI ListingRegulations 2015 the erstwhile
Board of Directors has framed a policy which lays down a framework in relation toremuneration of Directors Key Managerial Personnel and Senior Management of the Company.This policy also lays down criteria for selection and appointment of Board Members. Thedetails of this policy are explained in the Corporate Governance Report which forms partof this Annual Report.
The Nomination and Remuneration Policy as approved by the erstwhile Board ofDirectors has also been uploaded on the website of the Company viz:-
The reconstituted Board is in process of reviewing the policy and would carry outnecessary changes as may be required in due course of time.
19. VIGIL MECHANISM Cum WHISTLE BLOWER POLICY
The Company has a vigil mechanism named Vigil Mechanism Cum Whistle Blower Policyframed by erstwhile Board of the Company to deal with instances offraud andmismanagement if any. Details of the same are given in the Corporate Governance Report.
The same has also been disclosed on the website of the Company viz: -
The reconstituted Board is in process of reviewing the policy and would carry outnecessary changes as may be required in due course of time.
20. RELATED PARTY TRANSACTIONS
There were no material related party transactions nor any related party transactionswhich are not on arms length basis between the Company and related parties during the yearunder review and hence disclosure in Form AOC-2 in terms of Section 134 of the CompaniesAct 2013 is not required and does not form part of this report. The necessary disclosuresfor related party transactions as required by the Ind AS has been made in the notes to theaccompanying Financial Statements. The secretarial auditor has made certain observationsrelating to related party transactions in theirSecretarial Audit report. Theseobservations pertain to period prior to commencement of CIRP process. Pursuant to theAcquisition and the IBC Order dated July 24 2018 passed by the NCLT there has been achange in the Board and the management of the Company. Given that the observations pertainto the prior period the Board does not have any additional comments on the saidobservations.
The policy on Related Party Transactions as approved by the Board of Directors has beenuploaded on the website of the Company viz https://www.aionjsw.in/documents/default.aspx?f=investor-relations/ material-related-party-policy-49.pdf
The reconstituted Board is currently in a process of reviewing the policy and carryingout necessary changes as may be required in due course of time.
21. CORPORATE SOCIAL RESPONSIBILITY
In compliance with Section 135 of the Companies Act 2013 read with Companies(Corporate Social Responsibility Policy) Rules 2014 as amended the erstwhile Board ofthe Company has formed Corporate Social Responsibility ("CSR") Committee.Details of CSR Committee along with their composition number of meetings terms ofreference and attendance of members at the meetings are provided in the CorporateGovernance Report. The policy on CSR as approved by the erstwhile Board of Directors isalso uploaded on the website of the Company i.e. www.aionisw.in.
Pursuant to Section 135 of the Companies Act 2013 read with CSR policy of the Companyit is required to spend two percent of the average net profit of the Company for threeimmediately preceding financial years. As the average net profit of the Company duringprevious three financial years is negative the company is not required to spend anyamount for the CSR purpose during the year under review.
Annual Report on CSR activities as required under the Companies (Corporate SocialResponsibility Policy)Rules 2014 as amended have been annexed as Annexure -2 and formsintegral part of this Report.
The reconstituted Board is in process of reviewing the policy and would carry outnecessary changes as may be required in due course of time.
a) Statutory Auditor
Members of the Company at the Annual General Meeting ("AGM") held onSeptember 28 2017 approved the appointment of M/s. APAS & Co. Chartered Accountants(FRN No. 000340C) as the statutory auditor from the conclusion of the 27hAGM till theconclusion of the 32ndAG M.
The Statutory Auditors have in their report drawn attention to Note no 47 and 48 andcertain matters relating to investments made in Monnet Power Company Limited of theStandalone and Consolidated Financial Statements of the Company. The notes on financialstatements referred to in the Auditors Report are self-explanatory and do not call for anyfurther comments.
Pursuant to the acquisition and the NCLT Order dated July 24 2018 passed by the NCLTthere has been a change in the Board and the management of the Company. Given that theemphasis of matter pertains to the prior period the reconstituted Board does not have anyadditional comments on the said matter. The Board is however working towards analyzing thefinancial and operational affairs of the Company and will take steps to address therelevant issues if any.
b) Secretarial Auditor
Section 204 of the Act inter-alia requires every listed company to annex with itsBoard's report a secretarial audit report given by a Company Secretary in practice inthe prescribed form. The erstwhile Board had appointed M/s Sanjay Grover & Associatespracticing Company Secretaries as secretarial auditor to conduct a secretarial audit ofthe Company for the financial year 2017-18. The secretarial auditor has made certainobservations in their report on certain non compliances. Pursuant to the NCLT Order datedJuly 24 2018 there has been a change in the Board and the management of the Company.Given that the observations pertain to the prior period the Board does not have anyadditional comments on the said observations and in the process of addressing theseobservations. The composition of Reconstituted Board is in accordance with applicable lawand comprises of women directors and sufficient number of Independent Directors asrequired under the Act and SEBI Listing Regulations.
The Secretarial Audit report for financial year ended 31st March 2018 is annexed tothis report (Annexure - 3). Post-implementation of resolution plan the Board at itsmeeting held on October 15 2018 has appointed M/s S. Srinivasan & Co. a CompanySecretaries Firm to conduct a secretarial audit of the Company for the financial year2018-19.
c) Cost Auditor
In terms of Section 148 of the Act the Company is required to maintain cost recordsand have the audit of its cost records conducted by a cost accountant. Cost records aremade and maintained by the Company as required under Section 148(1) of the Act. The Boardof Directors at its meeting held on May 30 2017 appointed M/s. N. K. Jain and Associates(Firm Registration Number: 101952) Cost Auditors to conduct the Cost Audit for theFinancial Year 2017- 2018.
For the financial year ending March 312019 the Board of Directors of the Company hason the recommendation of the Audit Committee approved the appointment of M/s Shome &Banerjee Cost Accountants (Firm Reg. No. 00001) as the cost auditors of the Company. M/sShome & Banerjee Cost Accountants (Firm Reg. No. 00001) have vast experience in thefield of cost audit.
In accordance with the provisions of Section 148(3) of the Act read with Rule 14 of theCompanies (Audit and Auditors) Rules 2014 the remuneration payable to the cost auditorsas recommended by the Audit Committee and approved by the Board has to be ratified by themembers of the Company.
Accordingly an appropriate resolution forthe proposed remuneration of Rs. 300000 perannum plus applicable taxes and out-of-pocket expenses payable to the cost auditors forthe Financial Year ending March 31 2019 forms part of the notice of ensuing AnnualGeneral Meeting for ratification.
23. OTHER INFORMATION
a) Details in respect of frauds reported by Auditors other than those which arereportable to the Central Government
The Statutory Auditors Secretarial Auditors Cost Auditors or Internal Auditors of theCompany have not reported any frauds to the Audit Committee or to the Board of Directorsunder Section 143(12) of the Companies Act 2013 including rules made thereunder.
b) Stock Options Scheme
The Company does not have any Scheme of Stock Option for its employees Directors etc.
c) Disclosure under Section 43(a)(iii) and Section 54(l)(d) of the Companies Act 2013
During the year under review the Company has not issued any shares with differentialvoting rights and sweat equity shares and hence no information as required under Section43(a)(iii) & Section 54(l)(d) of the Companies Act 2013 read with applicable rules isrequired to be disclosed.
d) Risk Management
The Reconstituted Board/ management is reviewing the Risk management framework of theCompany. The Company would put in place a suitable enterprise risk management frameworkfor identifying and evaluating risks and opportunities that may have bearing on theorganization. The Company recognises that these risks needs to be managed and mitigated toprotect the shareholders and other stakeholders interest.
e) Conservation of Energy Technology Absorption and Foreign Exchange Earnings andoutgo
In accordance with Section 134(3)(m) of the Companies Act 2013 read with the Rule8(3) of the Companies (Accounts) Rules 2014 as amended the information on conservationof energy technology absorption and foreign exchange earnings and outgo are annexed asAnnexure - 4 hereto and forms an integral part of this Report.
f) Particulars of Employees and Related Disclosures
Disclosures pertaining to the remuneration and other details of the employees asrequired under Section 197(12) of the Companies Act 2013 read with Rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 as amendedare annexed to this report as Annexure -5.
g) Extract of Annual Return
In accordance with the provisionsoftheCompaniesAct 2013 and amendments thereto theextract of the annual return in Form No. MGT - 9 placed on the website of the Company andweb link of the same is given below.
h) Management Discussion & Analysis Report
A detailed analysis of the Company's performance is discussed in the ManagementDiscussion and Analysis Report which forms part of this Annual Report and annexed asAnnexure-6
i) Particulars of Loans Guarantees or Investments under Section 186
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the note no 5 6 & 12 to the FinancialStatements.
j) Corporate Governance Report
The Company has complied with requirements of Regulation 34 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015. A report on the CorporateGovernance practices followed by the Company together with a certificate from thePracticing Company Secretary regarding compliance are given as an Annexure 7 to thisreport.
k) Disclosure under the Sexual Harassment of Women at Work Place (PreventionProhibition and Redressal) Act 2013.
The Company has laid down Anti Sexual Harassment policy on Gender Equality GenderProtection Prevention of Sexual Harassment and Redressal System inline with therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. An Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment. All employees (permanent contractualtemporary Apprenticeship) are covered under this policy. The following is a summary ofsexual harassment complaints received and disposed of during the year under review-
No. of complaints received: Nil
No. of complaints disposed off: NA
I) Secretarial Standards
The Company has in place proper systems to ensure compliance with the provisions of theapplicable secretarial standards issued by the Institute of Company Secretaries of Indiaand such systems are adequate and operating effectively.
24. CAUTIONARY NOTE
Certain Statements in the 'Management Discussion and Analysis' section may beforward-looking and are stated as required by applicable laws and regulations. Manyfactors may affect the actual results which would be different from what the Directorsenvisage in terms of the future performance and outlook. Investors are cautioned that thisdiscussion contains forward looking statement that involve risks and uncertaintiesincluding but not limited to risks inherent in the Company's growth strategy dependenceon certain businesses dependence on availability of qualified and trained manpower andother factors discussed. The discussion and analysis should be read in conjunction withthe Company's financial statements and notes on accounts.
The Directors wish to place on record their gratitude to the Authorities BanksBusiness Associates Debenture holders and Shareholders for their unstinted supportassistance and co-operation. The Directors place on record their deep appreciation toemployees at all levels for their hard work dedication and commitment.
The Board acknowledges the contribution made by Mr. SumitBinaniRPduringtheCIRPProcess.
By order of the Board For Monnet Ispat and Energy Limited