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 49th Annual Report togetherwith the Audited Statement of Accounts of Rathi Steel & Power Limited for the yearended 31st March 2020.
1. FINANCIAL RESULTS:
2. OPERATIONAL REVIEW:
During the year under review the Company has achieved revenue from operation of Rs.10000.65 Lacs as against previous year of Rs. 37002.21 Lacs The Company has incurred lossof Rs. 2562.70 Lacs against previous year loss of Rs. 8332.34 lacs. Company expects to dobetter if there is an improvement in overall industrial scenario.
In view of losses no dividend has been recommended.
4. ECONOMIC SCENARIO AND OUTLOOK Indian Steel Sector
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.
India was the world's second largest steel producer in 2019. India surpassed Japan tobecome the world's second largest steel producer in 2019 with crude steel production of111.2 million tonnes (MT). In India as per Indian Steel Association (ISA) steel demandis estimated to grow 7% in FY20 and FY21.
In FY20 crude steel production and finished steel production in India was 108.5 MT and101.03 MT respectively.
Export and import of finished steel stood at 8.42 MT and 6.69 MT respectively inFY20.
India's per capita consumption of steel grew at a CAGR of 4.43% from 46 kgs in FY08 to74.10 kgs in FY19.
Government has taken various steps to boost the sector including the introduction ofNational Steel Policy 2017 and allowing 100% Foreign Direct Investment (FDI) in the steelsector under the automatic route. According to the data released by Department forPromotion of Industry and Internal Trade (DPIIT) Indian metallurgical industriesattracted Foreign Direct Investment (FDI) to the tune of US$ 13.40 billion between April2000-March 2020.
The Government's National Steel Policy 2017 aims to increase the per capita steelconsumption to 160 kgs by 203031. The Government has also promoted policy which provides aminimum value addition of 15% in notified steel products covered under preferentialprocurement.
In 2019 the Government introduced Steel Scrap Recycling Policy with an aim to reduceimport.
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.
Export and import of finished steel stood at 8.24 MT and 6.69 MT respectively inFY20P.
> The Indian steel industry has entered into a new development stage postderegulation riding high on the resurgent economy and rising demand for steel.
> Rapid rise in production has resulted in India becoming the 2nd largest producerof crude steel during 2018 and 2019 from its 3 rd largest status in 2017. The country wasalso the largest producer of Sponge Iron or DRI in the world and the 2nd largest finishedsteel consumer in the world after China & USA in 2019 based on rankings released bythe World Steel Association.
> 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 has released the National Steel Policy 2017 whichhas laid down the broad roadmap for encouraging long term growth for the Indian steelindustry both on demand and supply sides by 2030-31. The Government has also announced apolicy for providing preference to domestically manufactured Iron & Steel products inGovernment procurement.
> India was the 2nd largest producer of crude steel in the world in 2019.
> In 2019-20 production of total finished steel (alloy/stainless + non alloy) was102.62 million tonnes (MT).
> Production of Pig Iron in 2019-20 was 5.42 MT a decline of 15.5% over last year.
> India was the largest producer of Sponge Iron in the world in 2019. The coal basedroute accounted for 82% of total Sponge Iron production (37.10 MT) in the country in2019-20.
5. FUTURE OUTLOOK
> The National Steel Policy 2017 envisage 300 million tonnes of production capacityby 2030-31. The per capita consumption of steel has increased from 57.6 kgs to 74.1 kgsduring the last five years.
> As per Indian Steel Association (ISA) steel demand will grow by 7.2% in 2019-20and 2020-21.
> Huge scope for growth is offered by India's comparatively low per capita steelconsumption and the expected rise in consumption due to increased infrastructureconstruction and the thriving automobile and railways sectors
6. 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.
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 foridentification and prioritization of risks include business risk environment scanning andfocused discussions in the Risk Management Group (at Senior Management Level) and RiskManagement 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 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.
10. 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.
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 is uploaded on theCompany's website. None of the Directors has any pecuniary relationships or transactionsvis-a-vis the Company.
12. DIRECTORS AND KEY MANAGERIAL PERSONNEL Directors
Mrs Sangeeta Pandey and Mrs. Pinky Verma both was appointed as an Additional Directorof the Company w.e.f. November 14 2018 and both were regularized as Director of theCompany in the 48th Annual General Meeting.
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 under
Section 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 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.
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 2019-20.
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:
M/s H. G & Company Chartered Accountants be appointed as Statutory Auditors ofthe Company for a period of two years i.e. till the financial year ending March 31 2022.As required by the provisions of the Companies Act 2013 their appointment should beratified by members each year at the AGM. Accordingly requisite forms part of the noticeconvening 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 2020-21. 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 14(Fourteen) 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
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 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.
For and on behalf of the Board of Directors