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 2019: Financial Results
State of Affairs
As reported last year the Company suspended production in June 2012 due to unviablecost economics and continuing losses. The plant operations continues to remain suspendedtill the date of this report The loss for the financial year 2018-19 before tax amount toRs. 17370.98 lakhs In the present scenario resumption of plant operations and viabilityof the Company is largely dependent on availability of raw material from captive sources.
The Company has successfully completed the One Time Settlement (OTS) sanctioned by allits lenders. Having paid the full amount sanctioned by the lenders the Company as on thereporting date has no outstanding dues to its lenders. The resultant gains on OTS hasbeen added to the Capital Reserve.
Your Directors regret their inability to recommend any dividend for the year in view oflosses Reserves
The Reserves and Surplus as on 31.03.2019 stands negative at Rs. 650.50 lakhs FutureOutlook
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 Preference Shares
10% 20000000 Redeemable Non-Convertible Cumulative Preference Shares of Rs. 10 eachaggregating to Rs. 20 crores which was cancelled in 2017 has been restored to itsoriginal position with all rights obligation interest and title in terms of theResolution passed by the Board of Directors at the meeting held on 30.11.18 following theadvice and opinion of legal experts on the subject.
There is no change in the equity capital structure of the Company during the year.
Transfer of Unclaimed Dividend to Investor Education and Protection Fund
The Company has no unclaimed dividend for transfer to Investor Education and ProtectionFund Subsidiary Company
The Company has no subsidiary on the reporting date.
Directors and Key Managerial Personnel
(1) Independent Directors
The company had three Independent Directors on the reporting date. However post thereporting date Mr. A.K.Mukherjee (DIN 00047844) resigned from the Board on 14.06.19.Earlier Mr. B.K.Sarkar (DIN 00670952) resigned from the Board w.e.f. 18.12.18
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.
The appointment of Mr. Chitranjan Aggarwal (DIN 00823166) and Ms. Renu Singal (DIN05286398) at the Board Meeting held on 18.08.18 in the category of Independent Directorswas confirmed by the Shareholders at the Annual General Meeting held on 28.09.18. Both theDirectors continue as Independent Directors.
(2) Nominee Directors
Mr. S.K.Kar (DIN 07220972) continues to be on the Board having been nominated by thepromoters' viz. Industrial Promotion and Investment Corporation of India
(3) Executive Directors
Dr. P.K.Mohanty (DIN 00238329) was re-appointed as Managing Director w.e.f. 11.02.2018at the Board Meeting held on 10.02.2018 for a period of 3 years without any remuneration.He continues as Managing Director having received the approval of the Shareholders by aSpecial Resolution at the Annual General Meeting held on 28.09.18. In terms of the BoardResolution dated 24.09.2019 Dr. P.K.Mohanty has been designated as Managing Director(Mines & Technology)
Mr. Munir Mohanty (DIN 00264239) who was re-appointed as Whole Time Director w.e.f.31.05.2018 prospectively on 10.02.2018 for a period of 3 years without any remunerationwhich was approved by the Shareholders at the Annual General Meeting held on 28.09.18. Mr.Munir Mohanty relinquished his position as Whole-time Director and CFO on 16.09.2019which was taken on record at the Board Meeting held on 24.09.2019. He however continues asNon-Executive Director
Mr. Neeraj Kumar (DIN 08138085) was appointed as Additional Director at the BoardMeeting held on 24.09.2019 in the category of Whole-time Director with effect from16.09.2019 on being nominated by Torsteel Research Foundation in India the Promoters ofthe Company. Having been appointed as Additional Director he ceases to hold office at theconclusion of the ensuing Annual General Meeting (AGM). The Company has received proposalfrom some members for his appointment as Director at the ensuing AGM. The confirmation ofhis appointment as Whole-time Director by the shareholders at the ensuing AGM is beingincluded in the Notice of the AGM.
(4) Retirement by Rotation
In accordance with the provisions of Section 152 of the Companies Act 2013 Mr.S.K.Kar (DIN 07220972) retires by rotation at the ensuing Annual General Meeting andbeing eligible offers himself for re-appointment.
(5) Key Managerial Personnel
Mr. Chandan Kumar Mishra was appointed as Chief Financial Officer with effect from01.07.2019 which was confirmed at the Board Meeting held on 24.09.2019.
Mr. Vikal Madan was appointed as Company Secretary with effect from 23.09.2019 whichwas confirmed at the Board Meeting held on 24.09.2019.
The Managing Director the Whole-time Director 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 2018-19 four 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 on 28.02.19wherein the performance of the non-independent Directors including the Chairman and theBoard as a whole was reviewed. The Independent Directors also assessed the qualityquantity and timeliness of flow of information between the Company management and theBoard 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 31st March2019 the applicable accounting standards have been followed along with proper explanationrelating to material departures from the standards.
b) Accounting policies were selected are applied consistently. Judgments and estimatesthat are reasonable and prudent are made so as to give a true and fair view of the stateof affairs of the Company as at 31st March 2019 and of the Loss of the Companyfor the year ended on that date.
c) Proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of this Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities.
d) The Accounts for the financial year ended 31st March 2019 have beenprepared on a 'going concern' basis.
e) The laid down internal financial controls to be followed by the company are adequateand are operating effectively
f) Proper system devised by the company to ensure compliance with the provisions of allapplicable 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 formspart of 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 Section135 of the Companies Act 2013 is not applicable tothe Company. However the internal CSR Policy encompasses the Company's philosophy forgiving back to the society as a corporate citizen. CSR activities in the Company arecarried through 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.
(S) 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 BSE pursuant to the aforesaid provisions. As aresult the company could not pursue it's "in principle approval" for revocationof suspension from trading on its shares. Having regard to these facts the Company couldalso be subjected to compulsory de-listing of its shares pursuant to the provisions ofSEBI (Delisting) Regulations 2009. Public Notice in this regard has been given by BSE on08.06.19
The annual listing fees have been paid to the Stock Exchanges up to 2018-19 where theCompany's shares are listed. Your Company's application to National Stock Exchange (NSE)for listing and Calcutta Stock Exchanges for de-listing is pending before the respectiveExchanges.
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 outgoSince 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 496080 Units (last year546480 units) from NESCO amounting to Rs. 44.47 lakhs (last year Rs. 45.86 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
Pursuant to the provisions of Section 139 of the Companies Act 201 read with Companies(Audit and Auditors) Rules 2014 as amended from time to time M/s A.K.Bhardwaj &Co. Chartered Accountants FRN 316085E Membership No 052723 was appointed as StatutoryAuditors at the Annual General Meeting of the Company held on 19.02.2016 to hold officefor a period of five years up to the conclusion of the Annual General meeting in 2020subject to ratification of their appointment by members at every AGM if so required underthe Act. The requirement to place the matter relating to appointment of auditors forratification by members at every AGM has been done away by the Companies (Amendment) Act2017 with effect from May 07 2018. Accordingly no resolution is being proposed forratification of appointment of statutory auditors at the ensuing AGM.
(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 2019. 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 2018-19 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 Indian RenewableEnergy Development Agency Limited Edelweiss Asset Construction Company Limited StateBank of India Bank of India and Punjab National Bank for NPA Resolution through OTS. TheDirectors also acknowledge with gratitude the co-operation extended by Central GovernmentState Government Local and District Administration Suppliers Customers and Shareholdersand solicit their continued support. The Directors also wish to place on records theirsincere appreciation of the dedicated services put in by the Company's workers staff andexecutives under difficult conditions.