Orissa Sponge Iron & Steel Ltd.
|BSE: 504864||Sector: Metals & Mining|
|NSE: N.A.||ISIN Code: INE228D01013|
|BSE 00:00 | 04 Mar||Orissa Sponge Iron & Steel Ltd|
|NSE 05:30 | 01 Jan||Orissa Sponge Iron & Steel Ltd|
|BSE: 504864||Sector: Metals & Mining|
|NSE: N.A.||ISIN Code: INE228D01013|
|BSE 00:00 | 04 Mar||Orissa Sponge Iron & Steel Ltd|
|NSE 05:30 | 01 Jan||Orissa Sponge Iron & Steel Ltd|
Your Directors submit the following report on Financial Results for the year ended 31stMarch 2020:
State of Affairs
As reported in the previous years the Company suspended production in June 2012 due tounviable cost economics and continuing losses. The plant operations continues to remainsuspended till the date of this report. The loss for the financial year 2019-20 before taxamount to Rs. 1416.46 lakhs In the present scenario resumption of plant operations andviability of the Company is largely dependent on availability of raw material from captivesources.
Your Directors regret their inability to recommend any dividend for the year in view oflosses.
The Reserves and Surplus as on 31.03.2020 stands negative at Rs. 2020.23 lakhs.
The Company was allotted Iron Ore Mines by the Central Government and the StateGovernment of Odisha. Commencement of mining operations from the mines requires severalapprovals clearances and fulfilment of conditions as specified in the respectivedocuments. The Company has received all approvals and clearances including Stage IClearance from the Ministry of Environment and Forest vide Letter dated 21stSeptember 2016 and Compliance Certificate under the Scheduled Tribes and OtherTraditional Dwellers (Recognition of Forest Rights Act) 2006 vide Letter dated 23rdJune 2016. The Company has also received approval under Section 2 (iii) of the ForestConservation Act 1980 for proceeding to execute the Mining Lease. However the matter hasgone to the Court. The Company is hopeful of getting favourable judgement for execution ofmining lease in the near future.
Availability of iron ore from captive mines will permit production at higher capacityand significantly improve profitability of the Company.
Changes in Capital Structure
There is no change in the Equity Capital Structure and Preference Capital Structure ofthe Company during the year. However during the year the Authorised Equity Share Capitalwas increased to Rs. 200 crores (last year Rs. 60 crores) and Preference Share Capital wasincreased to Rs. 50 crores (last year Rs. 20 crores) as approved by the shareholders atthe last Annual General Meeting held on 15.11.2019
Transfer of Unclaimed Dividend to Investor Education and Protection Fund
The Company has no unclaimed dividend for transfer to Investor Education and ProtectionFund
The Company has no subsidiary on the reporting date.
Directors and Key Managerial Personnel
(1) Independent Directors
The Company had two Independent Directors Mr. Subhash Mishra (DIN 08728903) and Mrs.Ekta Sharma (DIN 08772631) on the reporting date. Mr. Dheeraj Singh Negi (DIN 00304928)was appointed as Independent Director w.e.f 05.09.2020. Proposal for confirmation of theirappointment as Independent Director is being placed before the shareholders at the ensuingAnnual General Meeting.
Mr. Chitranjan Aggarwal (DIN 00823166) resigned from the Board on 20.10.2019 and Mrs.Renu Singal (DIN 05286398) resigned from the Board w.e.f. 11.01.2020. Post the reportingdate Mr. Subhash Mishra (DIN 08728903) relinquished his position as Independent Director.
Your Directors place on record their appreciation for the valuable contribution of theaforesaid Directors as Directors as well as member of the Committees of the Board duringtheir tenure of office.
(2) Nominee Directors
Mr. S.K.Kar (DIN 07220972) resigned from the Board w.e.f. 02.11.2019 and Mr. D.K.Senapati (DIN 03449031) was appointed as Additional Director in the Capacity of NomineeDirector on the Board w.e.f. 06.01.2020 having been nominated by the promoters viz.Industrial Promotion and Investment Corporation of Orissa Limited. Resolution forconfirmation of his appointment by the Shareholders has been included in the notice of theforthcoming AGM
(3) Executive Directors
Mr. Munir Mohanty (DIN 00264239) relinquished his position as Whole-time Director andCFO on 16.09.2019 which was taken on record at the Board Meeting held on 24.09.2019. Hehowever continues as Non-Executive Director.
Mr. Neeraj Kumar (DIN 08138085) who was appointed as Whole-time Director in theprevious Annual General Meeting being nominated by Torsteel Research Foundation in Indiathe Promoters of the Company continues as Whole Time Director in the current financialyear.
Mr. Subhash Mishra (DIN 08728903) was appointed as Additional Director in the categoryof Whole-time Director at the Board Meeting held on 30.09.2020. Proposal for confirmationof his appointment as Whole-time Director is being placed before the shareholders at theensuing Annual General Meeting.
(4) Retirement by Rotation
In accordance with the provisions of Section 152 (6) (c) of the Companies Act 2013Mr. Munir Kamal Mohanty (DIN: 00264239) retires by rotation at the ensuing Annual GeneralMeeting and being eligible offers himself for re-appointment.
(5) Key Managerial Personnel
The Managing Director the Whole-time Directors Chief Financial Officer and CompanySecretary are the Key Managerial personals on the reporting date.
(1) Meeting of the Board of Directors
During the financial year 2019-20 six Meetings were held the details of which aregiven in the Corporate Governance Report. The intervening gap has not exceeded the periodprescribed under the Companies Act 2013.
(2) Meeting of the Independent Directors
In terms of Schedule IV of the Companies Act 2013 and revised Regulation 25 (3) ofSEBI (LODR) Regulation 2015 a meeting of the Independent Directors was held on28.02.2020 wherein the performance of the non-independent Directors including the Chairmanand the Board as a whole was reviewed. The Independent Directors also assessed thequality quantity and timeliness of flow of information between the Company management andthe Board of Directors of the Company.
(1) Directors' Responsibility Statement
Pursuant to Section 134 (3) (c) and 134 (5) of the Companies Act 2013 the Directorshereby confirm that:
a) In the preparation of the annual accounts for the year ended 31stMarch 2020 the applicable accounting standards have been followed along with properexplanation relating to material departures from the standards.
b) Accounting policies were selected are applied consistently. Judgments andestimates that are reasonable and prudent are made so as to give a true and fair view ofthe state of affairs of the Company as at 31st March 2020 and of the Loss ofthe Company for the year ended on that date.
c) Proper and sufficient care has been taken for 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 Accounts for the financial year ended 31st March 2020 havebeen prepared on a going concern basis.
e) The laid down internal financial controls to be followed by the company areadequate and are operating effectively
f) Proper system devised by the company to ensure compliance with the provisionsof all applicable laws were adequate and are operating effectively
(2) Management Discussion and Analysis
A detailed report on the Management Discussion and Analysis for the year under reviewas stipulated under Regulation 34 (2) (e) read with Section B of Schedule V of SEBI (LODR)Regulation 2015 is provided as a separate Section in the Annual Report which forms partof this Directors Report
(3) Corporate Governance Report
A detailed report on Corporate Governance as stipulated under Regulation 34(3) readwith Section C of Schedule V to SEBI (LODR) Regulation 2015 is provided in a separatesection and forms part of this Directors Report
A Certificate from M/s A.K.Labh & Co. Practicing Company Secretaries confirmingthe status of compliance with the conditions of Corporate Governance as stipulated underthe aforesaid Regulation is attached to the Report on Corporate Governance.
(4) CEO & CFO Certification
As required under Regulation 17(8) read with Part B of Schedule II to SEBI (LODR)Regulation 2015 the Whole-time Director and the Chief Financial Officer have providedCompliance Certificate to the Board of Directors.
Related Party transactions are disclosed in Note No. 32 of the Notes on Accounts andforms part of this report.
There are no materially significant related party transaction made by the Company withPromoters Directors Key Managerial Personnel or other designated persons which may havea potential conflict with the interest of the Company at large
Committees of the Board
(1) Audit Committee
The composition and terms of reference of the Audit Committee have been furnished inthe Corporate Governance Report forming part of this Report. There has been no instancewhere the Board has not accepted the recommendation of the Audit Committee
(2) Nomination and Remuneration Committee
The composition and terms of reference of the Nomination and Remuneration Committeehave been furnished in the Corporate Governance Report forming part of this Report.
(3) Stakeholders Relationship Committee
The composition and terms of reference of the Stakeholders Relationship Committee havebeen furnished in the Corporate Governance Report forming part of this Report.
(4) Ethics Committee
The composition and terms of reference of the Ethics Committee have been furnished inthe Corporate Governance Report forming part of this Report.
(5) Risk Management Committee
The composition and terms of reference of the Risk Management Committee have beenfurnished in the Corporate Governance Report forming part of this Report.
Policies and Codes
(1) Remuneration Policy
The Policy of the Company on appointment and remuneration of Directors Key ManagerialPersonnel and Senior Management Personnel including criteria for determiningqualification positive attributes independence of a Director and other matters providedin Section 178 (3) of the Companies Act 2013 is dealt in detail in the Report onCorporate Governance
(2) Whistle Blowers Policy
The Company has formed a Whistle Blower Policy/Vigil Mechanism as required underSection 177 (9) of the Companies Act 2013 and Regulation 22 of SEBI (LODR) Regulation2015 A Vigil (Whistle Blower) Mechanism provides a channel to the Directors and Employeesto report their concerns about unethical behaviour actual or suspected fraud or violationof the code of conduct / business ethics that provides for adequate safeguards againstvictimization of the director(s) and employee (s) who avail of the mechanism. No director/ employee have been denied access to the Chairman of the Audit Committee. The said Policymay be referred to at the Company s Website.
(3) Risk Management Policy
The process of identification and evaluation of various risks inherent in the businessenvironment and the operations of the company and initiation of appropriate measures forprevention and /or mitigation of the same are dealt with by the concerned operationalheads under the overall supervision of the Managing Director of the Company. The RiskManagement Committee periodically reviews the adequacy and efficacy of the overall riskmanagement system.
(4) Policy on prevention of Sexual Harassment
The Company has in place an Anti-Sexual Harassment Policy in line with the requirementsof the Sexual Harassment of Woman at the Workplace (Prevention Prohibition &Redressal) Act 2013 covering all employees of the Company. Internal Complaints Committeehas been set up for the purpose. No complaint was received during the year. The AuditCommittee periodically reviews the adequacy of the system on prevention of sexualharassment overall risk management system.
(5) Policy on Corporate Social Responsibility
The provisions of Section 135 of the Companies Act 2013 is not applicable to theCompany. However the internal CSR Policy encompasses the Company s philosophy for givingback to the society as a corporate citizen. CSR activities in the Company are carriedthrough OSIL TRFI Community Services Trust.
(6) Policy on determining Material Subsidiaries
As the Company has no subsidiary the requirement of Regulation 34(3) read withSchedule V Part C (10) (e) of SEBI (LODR) Regulations 2015 is not applicable to theCompany
(7) Policy on Materiality of and Dealing with Related Party Transactions
As required under Regulation 23 of SEBI (LODR) Regulation 2015 the company hasformulated a Policy on Materiality of and Dealing with Related Party Transaction and thesame has been put up on the Company s Website.
(8) Code of Conduct
Code of conduct for Prevention of Insider Trading and Code of Corporate DisclosurePractices for prevention of Insider Trading
In compliance with the provisions of SEBI (Prohibition of Insider Trading)Regulations 1992 as amended from time to time the Company has in place a comprehensivecode of conduct for its Directors and Senior Management Officers Which lays downguidelines and procedures to be followed and disclosures to be made while dealing withshares of the Company so as to preserve the confidentiality and prevent misuse ofunpublished price sensitive information by Directors and specified employees of theCompany. This policy also provides for periodical disclosures from designated employees aswell as pre clearance of transactions by such persons so that they may not use theirposition or knowledge of the company to gain personal benefit or to provide benefit to anythird party.
Corporate Social Responsibility
Your Company could not provide financial assistance to Green Field School located inPalaspanga Dist. Keonjhar Odisha for Children education in view of the financial lossessuffered by the Company for the year under review.
Your Company continues to follow the Quality Management System for Production andsupply of Sponge Iron and Steel Billets and possesses Certificate of Registration of ISO9001:2008 from British Certification Inc. Your Company is proud of maintaining the cleanenvironment in the vicinity of the Plant and your Company s Environmental ManagementSystem applicable to production and supply of Sponge Iron and Steel Billets has beencertified under ISO 14001:2004 by British Certification Inc. The occupational Health andSafety Management System of your Company has also been certified by the same Agency andyour Company complies with the requirements of OHSAS 18001:2007.
Listing with Stock Exchanges
The Company has been subjected to the consequences of SEBI (Delisting) Regulations2009 as the listed equity shares of Bilati (Orissa) Limited which was promoted by theCompany was compulsorily de-listed vide Bombay Stock Exchange (BSE) pursuant to theaforesaid provisions. As a result the company could not pursue it s in principle approvalfor revocation of suspension from trading on its shares. As a consequence BSE proceededto initiate action for compulsory delisting under the provisions of SEBI (Delisting)Regulations 2009. In fact a public announcement was also made by BSE in leadingnewspapers on 08.06.2019. However the whole matter of delisting has been put on hold byBSE following the instructions from SEBI having regard to the shareholding in the companyby Industrial Promotion and Investment Corporation of Orissa Limited being a GovernmentCompany which was informed to the Company vide letter dated 14.01.2020
The annual listing fees have been paid to the Stock Exchanges up to 2019-20 where theCompany s shares are listed. However the annual listing fee for 2020-21 has not been paidin view of the action initiated by BSE for delisting of shares. Your Company s applicationto National Stock Exchange (NSE) for listing and Calcutta Stock Exchanges for de-listingis pending before the respective Exchanges.
Reconciliation of Share Capital
In compliance of the directions of Securities and Exchange Board of India (SEBI)Reconciliation of Share Capital is being carried out quarterly by a Practising CompanySecretary. The findings of the Reconciliation of Share Capital were satisfactory.
Conservation of energy technology absorption foreign exchange earnings and outgo
Since the plant operations are closed from June 2012 no figures are available forconservation of energy; technology absorption etc as required under the provisions of theAct read with Rule 8 (3) of the Companies (Accounts) Rules 2014.The relevant informationapplicable to the company under these circumstances are given below:
(1) During the year the Company has purchased electricity 259800 Units (last year496080 units) from NESCO amounting to Rs. 30.33 lakhs (last year Rs. 44.47 lakhs)
(2) During the year the Company has neither earned nor spent in foreign currency.
Particulars of Employees
There were no employees drawing the requisite remuneration whose names are required tobe disclosed as required under Section 197 of the Companies Act 2013 read with Rule 5 (2)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014
Industrial relations have by and large remained cordial during the year.
(1) Statutory Auditors
M/s A. K.Bhardwaj & Co. Chartered Accountants FRN 316085E Membership No 052723was appointed as Statutory Auditors at the Annual General Meeting of the Company held on19.02.2016 to hold office for a period of five years up to the conclusion of the AnnualGeneral meeting in 2020. His term of office would expire on conclusion of the ensuing AGM.
Having regard to the instant Rules and Regulations concerning rotation of Auditors theBoard of Directors appointed M/s B D S & Co. Chartered Accountants (FRN 326264E) fora period of three years commencing from Financial Year 2020-21 subject to approval of themembers at the ensuring Annual General Meeting.
(2) Secretarial Auditors
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remunerations of Managerial Personnel) Rule 2014 the Company appointedMs. Disha Dugar Practicing Company Secretary PCS) to conduct Secretarial Audit for thefinancial year ended 31st March 2020. The Report on Secretarial Audit isprovided in the Annexure and forms part of this Report.
(3) Cost Auditors
Pursuant to the provision of Section 148 of the Companies Act 2013 and the Companies(Audit and Auditors) Rules 2014 M/s. B. Ray & Associates Cost Accountants Kolkatawas re-appointed as Cost Auditor of the Company for the year 2019-20 to conduct audit ofcost records maintained by the Company.
Explanation to remarks made in the Statutory Auditors Report and Secretarial AuditorsReport pursuant to Section 134(3)(f) of the Companies Act 2013 is given in Annexure Iforming part of the Directors Report.
Extract of Annual Return
The extract of the Annual Return in Form MGT 9 is provided in the Annexure and formspart of this Report.
Significant and Material Orders Passed by the Regulators/Courts/Tribunals
There are no significant material orders passed by the Regulators/Courts/Tribunalswhich would impact the going concern status of the Company and its future operations.
Acknowledgement and Appreciation
The Directors acknowledge with gratitude the co-operation extended by CentralGovernment State Government Local and District Administration Suppliers Customers andShareholders and solicit their continued support. The Directors also wish to place onrecords their sincere appreciation of the dedicated services put in by the Company sworkers staff and executives under difficult conditions.
For and on behalf of the Board
Neeraj Kumar Whole-time Director Subhash Mishra Whole-time Director
Place: New Delhi Dated: 06.11.2020
Annexure I to the Director's Report
Explanation to the Auditors' Report and Secretarial Auditors' Report pursuant toSection 134 (3) (f) of the Companies Act 2013
(1) Explanation to Statutory Auditor's Report
a) Reference to Annexure B to the Audit Report vide Para 7 (a) & (b) ofyour Directors submit that due to shut down of plant operations since 2012 and in theabsence of regular flow of funds fund situation continues to be critical. Consequentlythe undisputed liability on account of Central Sales Tax Orissa Sales Tax Entry Tax andProvident Fund dues could not be paid and efforts are being made to settle the issues. Theother claims made by various departments are disputed and contested by the Company in theappropriate forum.
b) There are no other observation or adverse remarks in the Auditors Reportwhich require any clarification/explanation in the Directors Report. The Notes on Accountsforming part of the financial statements are self-explanatory and needs no furtherexplanation.
(2) Explanation to Secretarial Auditor's Report
c) Reference to para (I) A) (i) of the Report your Directors submit that theposition of company secretary was vacant in the first two quarters till appointment of newcompany secretary on 23rd September 2019. Consequently no company secretary was presentat the meeting.
a) Reference to para (I) A) (ii) of the Report your Directors submit that inspite of the efforts taken the Company could not find a suitable candidate for filling upthe position of Company Secretary caused by the resignation of the earlier CompanySecretary within a short period of time. However the position has been filled up and a newCompany Secretary was appointed w.e.f. 23.09.2019.
b) Reference to para (I) A) (iii) of the Report your Directors submit that theCommittee Meeting could not be held for the 1st and 3rd quarter asthe committee was reduced to one member only due to resignation of Independent Director.However the Board discharged the functions of the Audit Committee at the Board Meeting.
c) Reference to Para (I) A (iv) of the Report your Directors submit that due toresignation of Independent Directors the Audit Committee and Nomination Committee wasreduced below the required minimum. Efforts are being taken to include other Directors inthe respective committees for proper constitution.
d) Reference to the Audit Report vide Para I B (i) xiii A (i) & (ii) and ixB your Director submit that the claim/allegations made by the parties is disputed andbeing contested by the Company in the appropriate forums
e) Reference to Para (d) (A) & (D) of the Report your Directors submit thatthe Company has been subjected to the consequences of SEBI (Delisting) Regulations 2009as the listed equity shares of Bilati (Orissa) Limited which was promoted by the Companywas subjected to compulsory delisting of its shares by BSE pursuant to the aforesaidprovisions. As a result the company could not pursue it s in principle approval forrevocation of suspension from trading on its shares. Having regard to these facts theCompany was subjected to compulsory delisting process initiated by BSE so much that PublicNotice in this regard was given by BSE on 08.06.19. However the whole matter wassubsequently put on hold by BSE on the advice of SEBI due to the shareholding in thecompany by Industrial Promotion and Investment Corporation of Orissa Limited being aGovernment Company. The matter has been taken up with BSE for a resolution to the issue.As the company was already suffering on all counts of delisting as mentioned above andfurther having regard to initiation of similar action against the company was delistingcompliance under SEBI (LODR) Regulations 2015 was not found to be appropriate.
f) Reference to Para (ix) A and the concluding Para vide serial no I of theAudit Report your Directors submit that due to shut down of plant operations since 2012and in the absence of regular flow of funds fund situation continues to be critical.Consequently the undisputed liability on account of Central Sales Tax Orissa Sales TaxEntry Tax Provident Fund dues Employee Pension Fund dues could not be fully paid.
g) Reference to the second last para of the Audit Report your Directors submitthat on the reporting date the company had 6 Directors out of which two were whole-timedirectors two were independent directors one nominee director and one non-executivedirector. While the balance in the board composition was well maintained under theCompanies Act 2013 the Board is short of one independent directors required under SEBI(LODR) Regulations 2015. This shortfall happened due to the resignation of oneindependent director in the last quarter of the financial year which could not be filed upwithin the financial year.
h) Other than the above observations of the Auditors in their Report which havebeen specifically addressed no explanation is given on other observations as all of themcomprise of statement of facts.
FORM NO. MGT-9
EXTRACT OF ANNUAL RETURN
As on the financial year ended 31st March 2020
[Pursuant to Section 92(3) of the Companies Act 2013 and Rule 12(1) of the Companies(Management and Administration) Rules 2014]
1. REGISTRATION AND OTHER DETAILS
2. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY
All the business activities contributing 10% or more of the total turnover of thecompany shall be stated. There is no business activity during the year due to shut down ofplant operations since June 2012
3. PARTICULARS OF HOLDING SUBSIDIARY AND ASSOCIATE COMPANIES
4. SHARE HOLDING PATTERN i) Equity share Capital Breakup as percentage of TotalEquity
ii) Shareholding of Promoters
iii) Change in Promoters Shareholding (Please specify if there is no change)
There is no change in Promoters Shareholding between 01.04.2019 and 31.03.2020
iv) Shareholding Pattern of Top ten Shareholders (other than Directors Promoters andHolders of GDRs and ADRs)
(v) Shareholding of Directors and Key Managerial Personnel
Indebtedness of the Company including interest outstanding /accrued but not due forpayment
I REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
A. Remuneration to Managing Director Whole-time Directors and / or Manager
B. Remuneration to other Directors:
No remuneration has been paid to non-executive directors including independentdirectors during the year.
C. Remuneration to Key Managerial Personnel Other than MD/Manager/WTD
II PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES: