Nova Iron and Steel Limited
Registered office: Village-Dagori
Tehsil-Belha Distt.-Bilaspur Chhattisgarh
Your Directors have pleasure in presenting the 27th Annual Report together withStandalone Audited Accounts for the year ended 31st March 2019.
FINANCIAL HIGHLIGHTS (STANDALONE)
(Rs. in Lacs)
|Particulars ||2018-19 ||2017-18 |
| ||(12 Months) ||(12 Months) |
|Gross Revenue ||526.97 ||2126.96 |
|Profit/Loss before Interest Depreciation and Tax ||(170.79) ||1006.62 |
|Interest & Financial Cost ||35.22 ||677.77 |
|Depreciation & Amortization ||90.80 ||101.80 |
|Profit/(Loss) before Exceptional item & tax ||(296.82) ||227.05 |
|Exceptional item ||363.85 ||0 |
|Profit/(Loss) after Exceptional item & before Tax ||67.03 ||227.83 |
|Tax Expenses: |
Deferred Tax Assets (+) / Liability (-)
|(4.86) ||0.78 |
|Net Profit/(Loss) after tax ||62.16 ||227.83 |
Company earned gross revenue Rs. 526.97 lacs for the financial year under review ascompared to Rs. 2126.96 lacs for the previous financial year. Company earned profit ofRs.62.16 lacs after tax as compared to Rs. 227.83 lacs for the previous year.
Increase in prices of key raw material rupee depreciation impacted the profitabilityand thus the profit for the year decreased as that of last year.
OPERATION AND FUTURE OUTLOOK
The year under review started on a positive note but could not sustain towards theend. In the first half of the year economic growth remained robust backed by fiscalstimulus and resilient Emerging Markets. However the second half of the year was marked byvolatility weakening demand caused by trade tensions China's slowdown and tighteningfinancial conditions.
On the other hand the major over-leveraged companies in the infrastructure powergeneration and steel sector referred to National Company Law Tribunal (NCLT) underInsolvency and Bankruptcy Code (IBC). Overall the sectors that company operates inremained depressed adversely impacting the business of the Company.
In response to recent declines and higher volatility in steel and raw material pricesthe Company is in process to implement a number of cost-saving measures intended toimprove operating income as well as measures to enhance cash generation from the business.
CAPITAL & RESERVES
During the year there is no change in the capital of the Company. Company has nottransferred any amount to the General Reserve. Balance of profit has been transferred toReserve and Surplus.
In view of inadequate profit during the year Board of Directors has not recommendedDividend for distribution.
CHANGE IN NATURE OF BUSINESS
There was no change in the nature of business of the Company during the financial year.
During the financial year 05 (Five) meetings of Board of Directors of the Company heldincluding one Meeting of the Independent Directors.
Consequent upon resignation from Directorship Mr. Arvind Gupta Independent Directorceased to be member of Audit Committee. Mrs. Sumiran Aggarwal Independent Director of theCompany appointed as member of Audit Committee w.e.f. 12/11/2018. Now the composition ofAudit Committee comprises 3(three) members Mr. N. Awatar Independent Director Mr. R.P. Goyal Director and Mrs. Sumiran Aggarwal Independent Director. Mr. N. Awatar isChairman of the Committee. Audit Committee have powers and authority as provided under theprovisions of Companies Act 2013 and Regulation 18 of SEBI (LODR) Regulations 2015 inaccordance with the terms of reference specified by the Board of Directors from time totime. Board has accepted all recommendations of the Committee made during the year. Duringthe year 4(four) meeting of audit committee held and committee has reviewed related partytransactions periodically.
EXTRACT OF ANNUAL RETURN
The extract of the Annual Return in Form MGT-9 under Companies Act 2013(Act) and rules made thereunder is at Annexure -1 attached to Board'sReport.
AUDITORS AND AUDITORS' REPORTS
The Board of Directors of the Company in its meeting held on 20/08/2019 appointed M/sAshwani & Associates Chartered Accountants Firm Regd. No. 000497N Ludhiana (Punjab)as Statutory Auditors to fill the casual vacancy caused due to resignation of the existingauditors M/s Mehra Goel & Co. The appointment of M/s Ashwani & AssociatesChartered Accountants Firm Regd. No. 000497N Ludhiana (Punjab) has been put forth beforethe members at the ensuing Annual General Meeting for their approval.
In terms of provisions of section 139 of the Companies Act 2013 M/s Ashwani &Associates Chartered Accountants Firm Regd. No. 000497N Ludhiana (Punjab) havefurnished their consent letter that their appointment if made will be within the limitsprescribed under the said section of the Act. As required under Regulation 33 of theSecurities and Exchange Board
of India (Listing Obligations and Disclosure Requirements) Regulations 2015 theStatutory Auditors have also confirmed that they hold a valid certificate issued by thePeer Review Board of the Institute of Chartered Accountants of India.
The Auditors in their Audit Report have given qualified opinion relating to:-
a. The company has not provide for interest expenses amounting to Rs 2282.32 Lakhs(Estimated) for the year ended March 31st 2019 related to short term borrowings of Rs33829.69 Lakhs.
In reply to Auditors above observation Since the interest has not been paid and ispayable on demand as mutual agreed with the lenders therefore the same will be provide asand when demand by the lenders.
The statement of account from the lenders could not available to us till the date ofsigning to confirm the balances and/or interest chargeable thereon. (Refer note no 47 ofFinancial Statements)
In reply to Auditors above observation The statement of account of major lenders i.e.Bhushan Power & Steel Limited has been given and the others minor lenders has notprovided confirmation of Loan availed at year however Nova Iron and Steel Limitedintimates the balance outstanding on different loan account.
b. Non capitalisation by the company of capital expenditure of Rs. 655.99 Lakhs onupgradation of Kiln which was completed before 31stMarch 2019. (Refer note no 49 ofFinancial Statements)
In reply to Auditors above observation Since the project is under trial run and willbe capitalized as and when the trial run production stabilized.
Land under Property Plant and Equipment includes land measuring 72.95 acre amounting toRs 194.34 Lakhs bought by the company in the name of third parties. Transfer of the samein the company's name is yet to be initiated (Refer note no 3 of Financial Statements)
Our opinion is not qualified in respect of the aforesaid matters.
In reply to Auditors above observation Company has submitted the required documentswith the concerned authorities and registration is pending.
(a) The company has not deposited the ESI for a period January 2019 to March 2019 of Rs4.36 lakhs pF for a period December 2018 to March 2019 of Rs 25.10 lakhs and GST onReverse charge on Lease rent paid on lease hold land for the year ended March 2019 of Rs1.16 lakhs. Our opinion is not qualified in respect of the aforesaid matters.
In reply to Auditors above observation Company has already deposited the ESI for aperiod January 2019 to March 2019 of Rs 4.36 lakhs on 19/06/2019 and PF for a periodDecember 2018 to March 2019 of Rs 25.10 lakhs on 03/07/2019 and 09/07/2019 respectively.
In respect of companies fixed assets:
The Company has not maintained proper records showing full particulars includingquantitative details and situation of fixed assets;
In reply to Auditors above observation Proper record has been maintained and shown toAuditors
In respect of statutory dues:
The company has written back statutory dues payable amounting to Rs.3.64 Crores(including interest) during the financial year 2018-19. This amount was reported asundisputed statutory dues in the previous year. In the absence of any justificationdocuments information and explanation we are unable to verify and comment on the factualsituation in respect of the liability.
In reply to Auditors above observation Since the amount is not repayable andoutstanding from long time.
In terms of Section 204 of the Act read with Rule 9 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 Board at its meeting held on 29/05/2018appointed M/s Sharma Sarin & Associates Practicing Company Secretary Chandigarh asthe Secretarial Auditor of the Company to conduct the Secretarial Audit for the financialyear 31/03/2019 and to submit Secretarial Audit Report in Form No. MR-3. A copy of theSecretarial Audit Report is at Annexure-2 attached to Board Report.
Company is not required to appoint Cost Auditor since the turnover of the Company isbelow prescribed limit. However Company is maintaining Cost Records.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Company's Board is duly constituted which is in compliance with the requirements of theAct and SEBI (LODR) Regulation 2015.
Since last Financial year the following changes have taken place in theDirectorship/KMPs of the Company.
Sh. Arvind Gupta Independent Director Sh. Sanjay Singal Director and Sh. ManikamRamchandran Independent Director has resigned w.e.f. 01/10/2018 02/11/2018 and25/02/2019 respectively from the Directorship of the Company.
Sh. Aniket Singal (DIN 03478511) Non-Executive Director is due to retire by rotationat the ensuing AGM and being eligible offers himself for re-appointment. A brief profilealong with necessary disclosures of Sh. Aniket Singal has been annexed to the Noticeconvening the ensuing AGM.
None of the Directors has incurred disqualification under Section 164 of the Act orliable to cease director under section 167 of the Act.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(3)(c) of the Act with regard to Directors' ResponsibilityStatement your Directors hereby confirm that:
(a) in the preparation of the annual accounts for the year ended 31.03.2019 theapplicable accounting standards have been followed to the extent of its applicabilityalongwith proper explanation relating to material departures and the annual accounts havebeen prepared in compliance with the provisions of the Companies Act 2013;
(b) 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 at the end of the financial year and ofthe profit of the Company for the year;
(c) the Directors have taken proper and sufficient care of the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
(d) the Directors have prepared the annual accounts on a going concern basis.
(e) the internal financial controls to be followed by the company were laid down andsuch internal financial controls were adequate and were operating effectively.
(f) proper systems to ensure compliance with the provisions of all applicable laws weredevised.
DIRECTOR IDENTIFICATION NUMBER (DIN)
Present Directors have obtained Director Identification Number (DIN) under DirectorIdentification Rules 2006 which is valid DIN under Companies (Appointment andQualification of Directors) Rules 2014.
NOMINATION AND REMUNERATION POLICY FOR DIRECTORS KEY MANAGERIAL PERSONNEL AND OTHEREMPLOYEES
Board of Directors of the Company has approved a policy for nomination and remunerationfor directors KMP and other employees containing interalia criteria for determiningqualifications positive attributes independence of a director payment of Managerialremuneration and other related matters is at Annexure-3 attached to the Board'sReport which can be assessed at Company's weblink; http://www.novaironsteel.com/pdfs/Remuneration%20Policy.pdf.
PARTICULARS RELATING TO TECHNOLOGY ABSORPTION CONSERVATION OF ENERGY & FOREIGNEXCHANGE EARNINGS AND OUTGO
Information pursuant to Section 134(3)(m) of the Act regarding conservation of EnergyTechnology Absorption foreign exchange earnings and outgo is enclosed at Annexure - 4 attachedto Board's Report.
INTERNAL AUDITORS AND ADEQUACY OF INTERNAL FINANCIAL CONTROLS
Company has appointed M/s Rajesh Aggarwal & Associates Practicing CharteredAccountant as Internal Auditor. Internal control framework of the Company is adequate andcommensurate with the nature of the business and size of
the Company. The internal auditors monitor and evaluate the efficacy and adequacy ofInternal Financial Control system in the company its compliance with operating systemaccounting procedures and policy. Internal Auditors submit his report to Audit committeehalf yearly.
PARTICULARS OF LOAN GUARANTEE INVESTMENT OR PROVIDING SECURITY
During the financial year Company has neither given Loan nor given guarantee norprovided security or made investment u/s 186 of the Act. (Please refer note 4 attached tofinancial statements of the Company for the year ended 31/03/2019 in respect ofinvestments of the Company).
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
During the year under review there is no contract and arrangement entered into by theCompany with related parties referred to in sub-section (1) of section 188 of theCompanies Act 2013. Hence no Disclosure in Form AOC-2 is required to be attached withBoard's Report.
EMPLOYEES STOCK OPTION
Company has not issued Sweat Equity Shares or ESOP (Employees Stock Option) to itsemployees.
The Equity shares of the company are listed at Bombay Stock Exchange. The Company haspaid listing fees to the Stock Exchange for the year 2018-19.
BUY BACK OF SHARES
During the year Company has not made buy back of its shares nor it has given any loanfor purchase of its own shares.
No material changes and commitments affecting the financial position of the Companyoccurred between the end of the financial year to which this financial statements relateand the date of this Report.
RISK MANAGEMENT POLICY
Board of Directors has adopted a Risk Management Policy/ Plan for the Company wherebyrisks are broadly categorized. The Policy outlines the parameters of identificationassessment monitoring and mitigation of various risks which are key to businessobjectives which is also available at Company's weblink:http://www.novaironsteel.com/pdfs/ Risk%20Management%20Policv.pdf.
PERFORMANCE EVALUATION OF BOARD
During the year under report Board of Directors evaluated performance of Committees andall the individual Directors including Independent Directors and concluded by affirmingthat the Board summarizing as a whole as well as all of its Directors individually andthe Committees of the Board continued to good governance and contribute its best in theoverall growth of the organisation. Independent Directors also held separate meeting toevaluate annual performance of Chairman and executive directors and expressed satisfactionon their performance.
During the year under report company has not accepted any deposits under Chapter V ofthe Act from the public and as such no amount of principal or interest was outstanding onthe date of Balance Sheet. Information under Rule 8(5)(v)(vi) of Companies (Accounts)Rules 2014 be treated as Nil.
The Company is primarily engaged in the business of manufacturing / trading of Iron& Steel Metals Securities & Natural Resources business and also engaged inInvestment in commodities/ Securities. So accordingly segment report has been disclosed atnote 32 of attached financial statement.
SIGNIFICANT AND MATERIAL ORDERS
During the year there was no significant and material orders passed by the regulatorsor courts or tribunals impacting the going concern status and Company's operations infuture.
PARTICULARS RELATING TO REMUNERATION OF EMPLOYEES OF THE COMPANY
Details pursuant to section 197(12) of the Act read with Rule 5(1) of Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is at Annexure -5 attachedto the Board' Report. During the year no employee has remuneration equal to or more thanprescribed limit under Rule 5(2) and 5(3) of Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 hence information under these rules be treated as NIL.Pursuant to MCA Notification dated 30.06.2016 detail of top ten employees as attached toBoard Report is at Annexure-6.
CODE OF CONDUCT
Declaration pursuant to Regulation 34(3) of SEBI (LODR) Regulations 2015 in respect ofcompliance with code of conduct by Whole Time Director/CEO is at Annexure-7 attachto the Board Report.
CORPORATE SOCIAL RESPONSIBILITY POLICY
Company has constituted Corporate Social Responsibility (CSR) Committee. Mr. R.P.Goyal Director Mr. H.C. Verma Whole Time Director and Mr. Narsingh Awatar IndependentDirector are members of the Committee. Mr. R.P. Goyal is the Chairman of the Committee. Onthe recommendation of CSR Committee CSR Policy of the Company has been approved by theBoard which is uploaded at Company's weblink: http://www.novaironsteel.com/pdfs/CSR%20Policy.pdf.The Annual Report on CSR activities as perCompanies (Corporate Social Responsibility Policy) Rules 2014 is at Annexure -8 attachedto the Board's Report. Company was not required to spend any amount on CSR Activitiesduring the year since company has incurred net average loss in last three years of thecompany.
SUBSIDIARIES JOINT VENTURES OR ASSOCIATE COMPANIES
Company do not have Subsidiary or Associates company. During the year M/s Bijahan Coal(P) Ltd. ceased to joint
venture. Therefore consolidated financial statement in form AOC-1 is not applicable.
VIGIL MECHANISM /WHISTLE BLOWER POLICY
Company has in place a composite Vigil Mechanism' Policy/ Whistle Blower Policyavailable to the employees and directors to blow the whistle/ highlight any fraudirregularity wrongdoing etc. which is also available at weblink: http://www.novaironsteel.com/pdfs/Vigil%20Mechanism.pdf. Audit Committee periodically reviewedVigil Mechanism.
A report on Corporate Governance in compliance of conditions of Corporate Governance interms of SEBI (Listing Obligations and Disclosures Requirements) Regulations 2015 is at Annexure-9.
A certificate of Auditors and a certificate from Whole Time Director/CEO of the Companyregarding is at Annexure-10 and 11 respectively attached to Board's Report incompliance of SEBI (LODR) Regulations 2015.
(i) ENVIRONMENT & OTHER APPLICABLE LAW
The Company is committed to the protection of environment and is not involved in anyactivity hazardous to environment. The Company adheres to the provisions of the applicableprovisions of environment laws.
(ii) HEALTH & SAFETY
In order to build a sustainable work place environment a common health and safetymanagement system is being implemented. All efforts are being made to enhance safetystandards and processes in order to minimize safety risks in all our operations.
(iii) SEXUAL HARASSMENT OF WOMEN
The Company has zero tolerance towards sexual harassment at the workplace. During theFinancial Year 2018-19 the Company has received no complaints of sexual harassment sincethere is no female employee.
(iv) INDUSTRIAL RELATIONS
Relations between the Management and its Employees/ Workmen have been cordial andmanagement expressed their appreciation for the co-operation and dedication of theemployees/workmen at all levels of the Company.
Your Directors convey their sincere thanks to the Bankers various departments inCentral and State Governments and all others associated with the Company for theirco-operation continued support and confidence reposed by them in the Company.
| ||For and on behalf of the Board |
| ||(Aniket Singal) |
|Place : New Delhi ||Chairman |
|Date :20/08/2019 ||DIN: 03478511 |