Rathi Steel & Power Ltd.
|BSE: 504903||Sector: Metals & Mining|
|NSE: N.A.||ISIN Code: INE336C01016|
|BSE 00:00 | 03 Dec||Rathi Steel & Power Ltd|
|NSE 05:30 | 01 Jan||Rathi Steel & Power Ltd|
|BSE: 504903||Sector: Metals & Mining|
|NSE: N.A.||ISIN Code: INE336C01016|
|BSE 00:00 | 03 Dec||Rathi Steel & Power Ltd|
|NSE 05:30 | 01 Jan||Rathi Steel & Power Ltd|
Your Directors have pleasure in presenting the 50th Annual Report together with theAudited Statement of Accounts of Rathi Steel & Power Limited for the year ended 31stMarch 2021.
1. FINANCIAL RESULTS:
2. OPERATIONAL REVIEW:
During the year under review the Company has achieved revenue from operation of Rs.43746.69 Lacs as against previous year of Rs. 10000.65 Lacs The Company has incurredloss of Rs. 35.74 Lacs against previous year loss of Rs. 2562.70 Lacs. Company expects todo better if there is an improvement in overall industrial scenario.
In view of losses no dividend has been recommended.
4. ECONOMIC SCENARIO AND OUTLOOK Introduction
India was the world's second-largest steel producer with production standing at 111.2million tonnes (MT) in 2019. The growth in the Indian steel sector has been driven bydomestic availability of raw materials such as iron ore and cost-effective labour.Consequently the steel sector has been a major contributor to India's manufacturingoutput.
The Indian steel industry is modern with state-of-the-art steel mills. It has alwaysstrived for continuous modernisation of older plants and up-gradation to higher energyefficiency levels.
Indian steel industry is classified into three categories - major producers mainproducers and secondary producers.
India's finished steel consumption grew at a CAGR of 5.2% during FY16-FY20 to reach 100MT. India's crude steel and finished steel production increased to 108.5 MT and 101.03 MTin FY20P respectively. Between April 2020 and February 2021 India's cumulativeproduction of finished steel at 85.60 MT. In April 2021 India's finished steelconsumption stood at 6.78 MT.
For the period April 2020 and February 2021 India's cumulative production of crudesteel stood at 92.78 MT. Export and import of finished steel stood at 8.24 MT and 6.69 MTrespectively in FY20P. Export and import of finished steel stood at 9.49 MT and 4.25 MTrespectively between April 2020 and February 2021. In April 2021 India's export rose by196% over 2020 and 17% over 2019.
Steel industry and its associated mining and metallurgy sectors have seen majorinvestments and developments in the recent past.
According to the data released by Department for Promotion of Industry and InternalTrade (DPIIT) the Indian metallurgical industries attracted Foreign Direct Investment(FDI) to the tune of US$ 14.24 billion in the period April 2000-September 2020.
Some of the major investments in the Indian steel industry are as follows:
In May 2021 JSW Steel signed a Memorandum of Understanding (MOU) to conduct afeasibility study with its strategic alliance partner JFE Steel Corporation to establish aGrain-oriented Electrical Steel Sheet Manufacturing and Sales JV Company in India.
In May 2021 JSW Steel announced the steel-making expansion at its Vijayanagarplant by 5 MT every year to 17 MT every year by the financial year ending March 2024.
In March 2021 JSW Steel completed its takeover of debt-ridden Bhushan Power andSteel Ltd. boosting to the former's overall output to 21.5 mtpa. JSW Steel's has 18 mtpaof capacity which will hit more than 26 mtpa with the addition of BPSL and a doubling ofcapacity at JSW Steel's Dolvi steel mill to 10 mtpa.
In March 2021 Arcelor Mittal Steel signed Rs 50000 crore deal with Odishagovernment to setup a steel plant in the state.
In February 2021 Tata Steel BSL collaborated with FarEye a software logisticsfirm to improve its digital transformation process.
In a move towards becoming self-reliant Indian steel companies have startedboosting steel production capacity. To this end SAIL announced doubling of its at 5 ofits steel plants capacity in September 2020.
In March 2020 Arcelor Mittal Nippon Steel India (AM/NS) acquired Bhander Powerplant in Hazira Gujarat from Edelweiss Asset Reconstruction Company.
In February 2020 GFG Alliance acquired Adhunik Metaliks and its arm Zion Steelfor Rs. 425 crore (US$ 60.81 million) marking its entry into the Indian steel market.
For FY20 JSW Steel set a target of supplying around 1.5 lakh tonnes of TMTRebars to metro rail projects across the country.
In December 2019 Arcelor Mittal completed the acquisition of Essar Steel at Rs.42000 crore (US$ 6.01 billion) and formed a joint venture with Nippon Steel Corporation.
JSW Steel has planned a US$ 4.14 billion capital expenditure programme toincrease its overall steel output capacity from 18 million tonnes to 23 million tonnes by2020.
Ministry of Steel plans to invest US$ 70 million in the eastern region of thecountry through accelerated development of the sector.
The production capacity of SAIL is expected to increase from 13 MTPA to 50 MTPAin 2025 with total investment of US$ 24.88 billion.
Tata Steel has decided to increase the capacity of its Kalinganagar integratedsteel plant from 3 million tonnes to 8 million tonnes at an investment of US$ 3.64billion.
5. REVIVAL SCHEME
Company is in continuous talks with all the lenders as well as investors to work out along term revival scheme to maximize the recovery for its lenders and stakeholders. As astep towards it the lenders have assigned the Odisha unit of Company on lease basis to anoutside entity. We believe this will be beneficial for up keep of the assets and anoperational plant is likely to enhance value and will also have a positive impact on thesocio economic conditions around the area.
At the Ghaziabad Unit the company is striving to improve capacity utilization ofStainless Steel products.
An improved demand scenario post lockdowns and efficient operations are likely toyield positive results going forward.
The operations of TMT bar still remain subdued due to sluggish demand and increasingcost disparities between primary / integrated set ups and Secondary producers. Goingforward the company will strive to make its operations more efficient and focus on valueadded products.
The company is also in regular dialogue with all its stake holders to arrive at a longterm sustainable business model.
6. CORPORATE SOCIAL RESPONSIBILITY
Even though the provisions of Companies Act 2013 regarding Corporate SocialResponsibility are not attracted to the company yet the Company has been over the yearspursuing as part of its corporate philosophy an unwritten CSR policy voluntarily whichgoes much beyond mere philanthropic gestures and integrates interest welfare andaspirations of the community with those of the Company itself in an environment ofpartnership for inclusive development
7. RISK MANAGEMENT POLICY
Risk management policy of the Company promotes a proactive approach in reportingevaluating and mitigating risks associated with the business. Mechanisms foridentification and prioritization of risks include business risk environment scanning andfocused discussions in the Risk Management Group (at Senior Management Level).
8. INTERNAL FINANCIAL CONTROLS
Internal financial control systems of the Company are commensurate with its size andthe nature of its operations. These have been designed to provide reasonable assurancewith regard to recording and providing reliable financial and operational informationcomplying with applicable accounting standards and relevant statutes safeguarding assetsfrom unauthorised use executing transactions with proper authorisation and ensuringcompliance of corporate policies. The Company has a well- defined delegation of power withauthority limits for approving revenue as well as expenditure both capital and revenue.The Company uses an established ERP system to record day to day transactions foraccounting and financial reporting.
The Company's internal audit function monitors and assesses the adequacy andeffectiveness of the Internal Financial Controls. The Audit Committee deliberated with themembers of the management considered the systems as laid down and met the internalauditors and statutory auditors to ascertain inter alia their views on the internalfinancial control systems. The Audit Committee satisfied itself of the adequacy andeffectiveness of the internal financial control system as laid down and kept the Board ofDirectors informed. Details of internal control system are given in the ManagementDiscussion and Analysis Report which forms part of the Report.
9. VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has adopted a Whistleblower Policy and Vigil Mechanism to provide a formalmechanism to the Directors employees and its stakeholders to report their concerns aboutunethical behavior actual or suspected fraud or violation of the Company's Code ofConduct or Ethics Policy. Protected disclosures can be made by a whistleblower throughseveral channels. The policy provides for adequate safeguards against victimisation ofemployees who avail of the mechanism and also provides for direct access to the Chairmanof the Audit Committee. It is affirmed that no personnel of the Company has been deniedaccess to the Audit Committee.
10. RELATED PARTY TRANSACTIONS
There were no contracts or arrangements entered into by the company in accordance withprovisions of section 188 of the Companies Act 2013. However there were no materialrelated party transactions in pursuance of regulation 23 of SEBI (LODR) regulations 2015.
There are no materially significant related party transactions 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.
The policy on Related Party Transactions as approved by the Board is uploaded on theCompany's website. None of the Directors has any pecuniary relationships or transactionsvis-a-vis the Company.
11. DIRECTORS AND KEY MANAGERIAL PERSONNEL Directors
There was no new appointment during the year 2020-21.
The Independent Directors hold office for a fixed term of five years and are not liableto retire by rotation in terms of Section 149(13) the Act. In accordance with Section149(7) of the Act each Independent Director has given a written declaration to theCompany confirming that he/she meets the criteria of independence as mentioned underSection 149(6) of the Act and the Listing Regulations. Details of Familiarisationprogramme for Independent Director is provided separately in the Corporate GovernanceReport.
Key Managerial Personnel (KMP)
Mr. P. N. Vershney Managing Director Mr Rakesh Kumar (CFO) and Mrs. Shobhita SinghCompany Secretary are the other KMP as per the definition under Section 2(51) and Section203 of the Act.
Company accepted the Resignation of CFO (Chief Financial Officer) of the Company Mr.Shyam S Bageshara w.e.f. 12th March 2021. Company Appointed CFO in his place Mr. RakeshKumar on 12th March 2021.
Pursuant to the provisions of the Act and the corporate governance requirementsprescribed under the Listing Regulations the Board has carried out the annual performanceevaluation of its own performance and that of its Committees and Individual Directors.
The performance of the Board and individual Directors was evaluated by the Board afterseeking inputs from all the directors. The criteria for performance evaluation of theBoard included aspects such as Board composition and structure effectiveness of Boardprocesses contribution in the long term strategic planning etc. The performance of thecommittees was evaluated by the Board after seeking inputs from the committee members. Thecriteria for performance evaluation of the committees included aspects such as compositionof committees effectiveness of committee meetings etc.
The Board and the NRC reviewed the performance of the individual Directors on the basisof the criteria such as the contribution of the individual director to the Board andcommittee meetings like preparedness on the issues to be discussed meaningful andconstructive contribution and inputs in meetings etc. In addition the Chairman was alsoevaluated on the key aspects of his role.
In a separate meeting of Independent Directors performance of non independentdirectors performance of the board as a whole and performance of the Chairman wasevaluated taking into account the views of executive directors and non-executivedirectors. The same was discussed in the Board Meeting that followed the meeting of theIndependent Directors at which the feedback received from the Directors on theperformance of the Board its Committees and Individual directors were also discussed.
12. DIRECTORS' RESPONSIBILITY STATEMENT
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutory costand secretarial auditors and external consultant(s) including audit of internal financialcontrols over financial reporting by the statutory auditors and the reviews performed byManagement and the relevant Board Committees including the Audit Committee the Board isof the opinion that the Company's internal financial controls were adequate and effectiveduring the FY 2020-21.
Accordingly pursuant to Section 134(5) of the Act the Board of Directors to the bestof their knowledge and ability confirm that:
(a) in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;
(b) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the profitof the Company for that period;
(c) they have 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) they have prepared the annual accounts on a going concern basis;
(e) they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and were operating effectively; and
(f) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
13. MANAGEMENT DISCUSSION & ANALYSIS AND CORPORATE GOVERNANCE REPORTS
Pursuant to Regulation 34 of SEBI (LODR) Regulation 2015 the Management Discussionand Analysis and the Corporate Governance Report are presented in a separate sectionforming part of the Annual Report.
14. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed pursuant to the provisions ofSection 134 of the Act read with the Companies (Accounts) Rules 2014 are provided in Annexure-1 to this Report.
I. Auditors and their report:
M/s H. G & Company Chartered Accountants were re-appointed as Statutory Auditorsof the Company to hold office till the conclusion of 51st Annual General Meeting to beheld in year 2022. As required by the provisions of the Companies Act 2013 theirappointment should be ratified by members each year at the AGM. Accordingly requisiteforms part of the notice convening the AGM.
Further the report of the Statutory Auditors along with notes to Schedules is enclosedto this Report. The observations made in the Auditors' Report are self-explanatory andtherefore do not call for any further comments.
II. Cost Auditors and Cost Audit report:
In view of the provisions of Section 148 and all other applicable provisions of the Actread with the Companies (Audit and Auditors) Rules 2014 R. M. Bansal & Co. CostAccountants have been appointed as Cost Auditors to conduct the audit of cost records ofyour Company for the FY 2021-22. The remuneration proposed to be paid to them requiresratification of the shareholders of the Company. In view of this your ratification forpayment of remuneration to Cost Auditors is being sought at the ensuing AGM. The Companyis properly maintaining the records for the purpose of Cost Audit as per the provisions ofthe Companies Act 2013.
III. Secretarial Audit
In terms of Section 204 of the Act and Rules made there under M/s. Samir Bhatnagar& Company Practicing Company Secretaries have been appointed as Secretarial Auditorsof the Company. The report of the Secretarial Auditors is enclosed as Annexure-2 tothis Report. The report is self-explanatory and do not call for any further comments.
IV. Internal Auditors
M/s Rajiv S Agarwal & Co. Chartered Accountants performs the duties of internalauditors of the company and their report is reviewed by the audit committee from time totime.
i. Details of Board meetings
During the year 13 (Thirteen) Board meetings were held and the details of which areprovided in the Corporate Governance Report.
ii. Composition of Audit Committee:
The Audit Committee comprises 3 (three) Members out of which two are IndependentDirectors. During the year 4 (Four) Audit Committee meetings were held and the details ofwhich are provided in the Corporate Governance Report.
The Securities and Exchange Board of India (SEBI) has by its notification dated 2ndSeptember 2015 issued the (Listing Obligations and Disclosure Requirements) Regulations2015 with an aim to consolidate and streamline the provisions of the Listing Regulationsfor different segments of capital markets to ensure better enforceability. The Regulationsbecame effective from 1st December 2015 and have replaced the Listing Agreements.Accordingly all listed entities were required to enter into the Listing Agreement within6 (six) months from the effective date. The Company has entered into Listing Agreementwith BSE Limited. Pursuant to the Listing Regulations the following policies wereapproved and adopted by the Board:
(i) Policy on determination of Materiality for disclosures of events or information.
(ii) Policy for preservation of documents to classify documents in two categoriesviz. documents which need to be preserved permanently and documents which need to bepreserved for not less than 8 years after completion of the relevant transactions.
(iii) Archival Policy to determine the period for which information is required to bedisclosed on the Company's website. Policy on Materiality and Archival Policy are alsoavailable on the website of the Company under Investor Relations' section.
Particulars of Employees
The information required pursuant to Section 197 read with Rule 5 of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of employeesof the Company is as follows:
The company has One Executive Director and no sitting fees have been paid to anydirector during the year. Details enclosed as Annexure-4 to this Report
17. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
A detailed note on ongoing litigations/court orders has been provided in the notes toaccount.
EXTRACT OF ANNUAL RETURN
Pursuant to Section 92(3) of the Act and Rule 12(1) of the Companies (Management andAdministration) Rules 2014 extract of annual return in Form MGT 9 is enclosed as Annexure-3 to this Report.
The Directors wish to place on record their appreciation for the continued support andco-operation by Financial Institutions Banks Government authorities and otherstakeholders. Your Directors also acknowledge the support extended by the Company's Unionsand all the employees for their dedicated service.
The statements contained in the Board's Report and Management Discussion and Analysiscontain certain statements relating to the future and therefore are forward looking withinthe meaning of applicable securities laws and regulations.
Various factors such as economic conditions changes in government regulations taxregime other statues market forces and other associated and incidental factors mayhowever lead to variation in actual results.