Your Directors have pleasure in presenting the 48th Annual Report together with theAudited Statement of Accounts of Rathi Steel & Power Limited for the year ended 31stMarch 2019.
1. FINANCIAL RESULTS:
|PARTICULARS ||CURRENT YEAR ||PREVIOUS YEAR |
| ||(RS. IN LACS) ||(RS. IN LACS) |
|Sales ||35027.22 ||35001.35 |
|EBITDA ||(2861.47) ||(167.15) |
|Interest ||0.12 ||1422.21 |
|Depreciation ||840.05 ||1877.73 |
|Exceptional / Extraordinary Items ||4630.69 ||8151.09 |
|Profit Before Tax(PBT) ||(8332) ||(11618.18) |
|Tax adjusted for earlier year(s) ||- ||200.00 |
|Profit after Tax (PAT) ||(8332 ) ||(11818.18) |
|Dividend ||NIL ||NIL |
2. OPERATIONAL REVIEW:
During the year under review the Company has achieved revenue from operation of Rs.35027.22 Lacs as against previous year of Rs. 35001.35 Lacs The Company has incurred lossof Rs. 8332.34 Lacs against previous year loss of Rs. 11818.18 lacs. Net loss of theperiod under report consists of Rs 4630.69 lacs as against Extraordinary items and bad anddoubtful debts during the year. Company expects to do better if there is an improvement inoverall industrial scenario.
In view of losses no dividend has been recommended.
4. ECONOMIC SCENARIO AND OUTLOOK
Global growth is on an upswing and is expected to reach 3.60% in 2020. Growth inadvanced economies is expected to slow down from 2.2% in 2018 to 1.8% in 2019 to 1.7% in2020. The United States is expected to grow at a slower pace of 2.3% in 2019 down to afurther 1.9% in 2020 as the impact of the fiscal stimulus fades.
Growth in the Euro area is expected to decline to 1.3% in 2019 as the effect of theweakness in 2018 is likely to carry forward to the first half of 2019. China's economicgrowth is expected to be at 6.3% in 2019 due to lingering impact of trade tensions withthe US.
In January-July 2019 the world crude steel production reached 1083.95 milliontonnes (mt) and showed a growth of 4.6% over January-July 2018. China remained world'slargest crude steel producer in same period (577.06 mt) followed by India (66.19 mt)Japan (59.47 mt) and the USA (51.83 mt). World Steel Association has projected Indiansteel demand to grow by 7.1% in 2019 while globally steel demand has been projected togrow by 1.3% in 2019. Chinese steel use is projected to show 1.0% growth in 2019. Percapita finished steel consumption in
2018 was 224.5 kg for world and 590.1 kg for China. However as per JPC the same forIndia was 73.3 kg in 2018 The Indian economy is expected to grow at about 7.3% in 2019 andfurther by 7.5% in 2020 supported by the continued recovery of investment and robustconsumption amid a more expansionary stance of monetary policy and some expected impetusfrom fiscal policy.
Resolution of Non-Performing Assets (NPA') and other recoveries over the pastyear have been efficacious Large NPA accounts should continue to see resolution in 2019.The projected increase in growth rate can also be attributed to sustained rise inconsumption gradual revival in investments and greater focus on infrastructuredevelopment.
Indian Steel Sector
India was the world's second-largest steel producer with production standing at 106.5MT in 2018. The growth in the Indian steel sector has been driven by domestic availabilityof raw materials such as iron ore and cost-effective labour. Consequently the steelsector has been a major contributor to India's manufacturing output.
The Indian steel industry has entered into a new development stage post de-regulationriding high on the resurgent economy and rising demand for steel. Rapid rise in productionhas resulted in India becoming the 2nd largest producer of crude steel during 2018 fromits 3rd largest status in 2017. The country is also the largest producer of Sponge Iron orDRI in the world and the 3rd largest finished steel consumer in the world after China& USA. In a de-regulated liberalized economic/market scenario like India theGovernment's role is that of a facilitator which lays down the policy guidelines andestablishes the institutional mechanism/structure for creating conducive environment forimproving efficiency and performance of the steel sector. In this role the Government hasreleased the National Steel Policy 2017 which has laid down the broad roadmap forencouraging long term growth for the Indian steel industry both on demand and supplysides by 2030-31. The Government has also announced a policy for providing preference todomestically manufactured Iron & Steel products in Government procurement The Indiansteel industry is very modern with state-of-the-art steel mills. It has always strived forcontinuous modernisation and up-gradation of older plants and higher energy efficiencylevels. Indian steel industries are classified into three categories such as majorproducers main producers and secondary producers.
5. FUTURE OUTLOOK
According to the International Monetary Fund (IMF') global economic growth isexpected to further decline to 3.3% in 2019 but return to 3.6% in 2020. While the slowpaced growth in the second half of 2018 is likely to continue in the first half of 2019growth in the second half of 2019 is expected to gain momentum owing to an ongoingbuild-up of policy stimulus in China improvements in global financial market sentimentwaning of some temporary drags on growth in the euro area and a gradual stabilisation ofconditions in stressed emerging market economies. Improved momentum for emerging marketand developing economies is projected to continue into 2020 primarily reflectingdevelopments in economies currently experiencing macroeconomic distress.
6. REVIVAL SCHEME
Company is in continuous talks with all the lenders as well as investors to work out along term revival scheme to maxmise the recovery for its lenders.
7. 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
8. RISK MANAGEMENT POLICY
Risk management policy of the Company promotes a proactive approach in reportingevaluating and mitigating risks associated with the business.
Mechanisms for identification and prioritization of risks include business riskenvironment scanning and focused discussions in the Risk Management Group (at SeniorManagement Level) and Risk Management Committee meetings.
Although non-mandatory the Company has constituted a Risk Management Committee (RMC)to oversee the risk management efforts in the Company under the Chairmanship of Mr. PremNarain Varshney Managing Director. The details of the Committee along with its terms ofreference are set out in the Corporate Governance Report forming part of the AnnualReport.
A risk assessment update is provided to the RMC on periodical basis. The Committeeassists the Audit Committee and the Board of Directors in overseeing the Company's riskmanagement processes and controls. Some of the risks identified are set out in theManagement Discussion and Analysis which forms part of the Annual Report.
9. 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 with authority limits for approvingrevenue as well as expenditure both capital and revenue. The Company uses an establishedERP system to record day to day transactions for accounting 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.
10. VIGIL MECHANISM / WHISTLE BLOWER
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.
11. 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 material relatedparty transactions in pursuance of regulation 23 of SEBI (LODR) regulations 2015. Allmaterial related party transactions that were entered into during the financial year wereon an arm's length basis and were in the ordinary course of business.
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.
All Related Party Transactions are placed before the Audit Committee as also the Boardfor approval. The policy on Related Party Transactions as approved by the Board isuploaded on the Company's website. None of the Directors has any pecuniary relationshipsor transactions vis--vis the Company.
12. DIRECTORS AND KEY MANAGERIAL PERSONNEL
In the financial year ending March 31 2019. Mrs Sangeeta Pandey and Mrs. Pinky Vermaboth were appointed as an Additional Director of the Company w.e.f. November 14 2018 andwho is proposed to be regularized as Director of the Company in the ensuing Annual GeneralMeeting. Further Sh. S. K. Daga and and Sh D. D. Lakhotia both resigned on November 142018 from the post of Director.
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 Shyam Bageshara (CFO) and Mrs. ShobhitaSingh Company Secretary are the other KMP as per the definition under Section 2(51) andSection 203 of the Act.
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 Directorsperformance of non independent directors performance of the board as a whole andperformance of the Chairman was evaluated taking into account the views of executivedirectors and non-executive directors. The same was discussed in the Board Meeting thatfollowed the meeting of the Independent Directors at which the feedback received from theDirectors on the performance of the Board its Committees and Individual directors werealso discussed.
13. 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 2018-19.
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.
14. 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.
15. 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:
In the AGM held on 26th September 2017 M/s. H. G & Company CharteredAccountants were appointed as Statutory Auditors of the Company for a period of threeyears i.e. till the financial year ending March 31 2020. As required by the provisions ofthe Companies Act 2013 their appointment should be ratified by members each year at theAGM. Accordingly requisite forms 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 2019-20. The remuneration proposed to be paid to ratification themrequires 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 18(Eighteen) 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 dated 2nd September2015 issued the (Listing Obligations and Disclosure Requirements) Regulations 2015 withan aim to consolidate and streamline the provisions of the Listing Regulations fordifferent 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 feeshave been paid to any director during the year. Details enclosed as Annexure-4 tothis Report
18. 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 andcooperation 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.
For and on behalf of the Board of Directors
|Sd/- ||Sd/- |
|Shobhita Singh ||Prem Narain Varshney |
|Company Secretary ||Managing Director |
| ||DIN: 00012709 |
|New Delhi || |
|30.09.2019 || |
This is to confirm that the Company has adopted the Code of Conduct for its employeesincluding the Managing Director and the Whole-time Directors. In addition the Company hasadopted the Code of Conduct for the Non-Executive Directors. Both these Codes areavailable on the Company's website.
I confirm that the Company has in respect of the Financial Year ended March 31st 2019received from the Senior Management Team of the Company and the Members of the Board adeclaration of compliance with the Code of Conduct as applicable to them.
For the purpose of this declaration Senior Management Team means the Members of theManagement one level below the Managing Director as on March 31st 2019.
| ||Sd/- |
| ||Prem Narain Varshney |
| ||Managing Director |
| ||DIN: 00012709 |
|New Delhi || |
|30.09.2019 || |