Your Directors have pleasure in presenting the 47th Annual Report together with theAudited Statement of Accounts of Rathi Steel & Power Limited for the year ended 31stMarch 2018.
1. FINANCIAL RESULTS:
|PARTICULARS ||CURRENT YEAR ||PREVIOUS YEAR |
| ||(RS. IN LACS) ||(RS. IN LACS) |
|Sales ||35001.35 ||38174.98 |
|EBITDA ||(167.15) ||(2331.66) |
|Interest ||1422.21 ||1661.03 |
|Depreciation ||1877.73 ||2338.58 |
|Exceptional / ||8151.09 ||- |
|Extraordinary Items || || |
|Profit Before Tax (BT) ||(11618.18) ||(6331.27) |
|Tax adjusted for earlier year(s) ||200.00 ||- |
|Profit after Tax (PAT) ||(11818.18) ||(6331.27) |
|Dividend ||NIL ||NIL |
2. OPERATIONAL REVIEW:
During the year under review the Company has achieved revenue from operation of Rs.35001.35 Lacs as against previous year of Rs. 38174.98 Lacs mainly on account of temporaryclosure of TMT Mill operations at its Ghaziabad unit. The Company has incurred loss of Rs.11818.18 Lacs against previous year loss of Rs. 6331.27 lacs. Net loss for period underreport consists of Rs. 8351.09 Lacs as against Extraordinary Items and Bad Debts writtenoff during the year. Company expects to do better if there is an improvement in overallindustrial 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 3.9% in 2018 supported bystrong momentum favourable market sentiment accommodative financial conditions and thedomestic and international effects of expansionary fiscal policies. The global GDP isexpected to increase to $88 trillion. Both advanced economies and emerging markets areexpected to see a rise in growth figures in the near term before stabilisation in themedium-term.
This growth rate is the outcome of faster economic expansion in the Euro area JapanChina and the US. Advanced economies are projected to grow at 2.5% in 2018 as compared to2.3% growth in 2017 primarily driven by improving domestic demand and industrialactivities private investment moderate inflation and focus on domestic manufacturingactivities. In China growth is projected to soften slightly from 6.9% in 2017 to 6.6% in2018. Over the medium term the Chinese economy is projected to continue rebalancing awayfrom investment toward private consumption and from industry to services. Growth inemerging market and developing economies is expected to increase further from 4.8% in 2017to 4.9% in 2018 due to strong economic performance. This augers well and reflects improvedprospects for commodity exporters after three years of weak economic acitivity. There isalso a positive momentum in global trade and it is expected to moderately improve withnominal trade escalation by $2.0 trillion to $19.5 trillion.
After a brief period that was dedicated to introducing economic reforms that wouldfurther formalise the economy and boost ease of doing business India has achieved agrowth of 6.7% in FY18 with a 7.1% growth in Q-4'18. India has bounced back as the fastestgrowing economy in the world during the third quarter for FY18. The investment cycleexhibited a growth of 7.6% in FY18 and 14.4% in the Q-4'18. The FY18 is likely to see animproved growth of 7.5% due to transformative reforms undertaken by the Government.India's economic fundamentals continued to improve during the year. The Index ofIndustrial Production (IIP) touched 4.3% during the FY18 after a robust growth of 6.2% inthe Q-4'18 which was 1.9% in Q-1'18. Inflation figures are also largely in control withthe Consumer Price Inflation reducing to 3.6% in FY18 from a level of 4.5% in FY17keeping the food prices under control. Through the year India's foreign exchange reserveshas also increased to more than US$420 billion. The eight key sectors rose to 3.4%year-on-year in FY18 with cement coal and electricity registering a growth of 13% 9%and 6% respectively. The Government of India has put in place multiple enablers to bolsterthe country's consumption demand. Higher spending on social schemes such as NREGAcontinued thrust on rural infrastructure projects raising of minimum support pricesimplementation of 7th Pay Commission pay hikes across states and One Rank One Pensionscheme are also likely to lead to robust disposable income leading to higher spend andconsumption.
The major driver of India's consumption economy is the country's large population ofyouth (more than half of the population is below the age of 35). Two consecutive years offavourable monsoon addition of young working population and rising urbanisation are othermajor growth drivers. The 2018-19 Union Budget has emphasised on India's infrastructuralrequirements and the allocation on roads railways and rural infrastructure has beensignificant. The Budget also focussed considerably on health and education sectors whichare instrumental in developing a sustainable economy and society.
Indian Steel Sector
India's steel production grew 4.5% to its highest ever level of 102 million tonnes inFY18. The Government of India has been proactive in addressing the issues faced bydomestic steel makers. It has taken major steps to stop unfair trade and to safeguard theinterests of domestic players. This has been accompanied by recovery in constructionactivity and shut down of excess capacities in China. China has phased out capacities tothe tune of 115 million tonnes in the past two years; and is gearing up for anotherproduction cut of 30 million tonnes in 2018. Leading steel makers in India are well poisedto benefit from this development. Riding high on an all-round improvement in the growth ofkey sectors namely automobiles infrastructure and capital goods among others India'ssteel demand grew at a high rate of 7.9% to 91 million tonnes in FY18. This pace mayaccelerate further as domestic steel demand growth is pegged at 8.3% to 98.2 milliontonnes in the current fiscal year (Source: JPC). In FY18 India's per capita steelconsumption grew 6.2% to 69 kg while share of flats improved from 42% to 44%. India'sconstruction activity particularly in highways bridges and metro lines has bolstered thedemand for long steel products in recent times. Given their size long steel products arerelatively difficult to ship and hence most contractors are sourcing them locally.Domestic steel prices have started trending northwards since November 2017 owing to asurge in global prices healthy recovery in domestic demand and a weaker rupee. Theprices though still trail international prices and hence there is a scope for furtheruptick in prices. Governmental measures such as the National Steel Policy and extension ofanti-dumping duty on steel products imposition of quality standards are key facilitatorsfor the growth of domestic steel sector in India. Additionally the Government hasearmarked ' 14.3 lakh crores towards infrastructure
spending which will also enhance steel demand in the domestic market. 2.2.1.Highlights of India's Steel Industry Achieved all-time high crude steel production in FY18Third largest crude steel producer in the world in 2017 Third largest consumer of finishedsteel in the world in 2017 Steel consumption grew at a multi-year high in FY18 Contributesnearly 2% to the country's GDP Producer of world-class steel of all major varieties andgrades Government's wide-ranging reforms may aid the steel sector Broad-based improvementin the growth of infrastructure automobiles capital goods among others in FY18.
5. FUTURE OUTLOOK
According to the World Steel Association consumption of finished steel products inIndia is estimated at 92 million tonnes in 2018 - a growth of 5.5% over 2017. Of the totalincremental demand of 28.7 million tonnes in 2018 worldwide India alone is likely to addsteel demand of 4.8 million tonnes. Pegged at 5.5% the domestic steel demand is likely togrow at a faster pace than the global steel demand. Steel demand worldwide is likely togrow by 1.8% in 2018. The nation's per capita steel consumption is likely to improve to72-74 kgs in 2018-19. Clearly Indian steel players are looking inwards to achieve highergrowth. As China continues to trim its excess capacities in 2018 as well and given thelow-cost higher quality products offered by Indian companies opportunity to grow exportsis also sizeable. Against this backdrop Indian players having significant capacityexpansions on the cards are well poised to tap into these opportunities over the next fewyears.
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 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.
Prem Narain Varshney Managing Director. The details of the Committee along with itsterms of reference are set out in the Corporate Governance Report forming part of theAnnual Report.
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 internal financial control systems. The Audit Committeesatisfied itself of the adequacy and effectiveness of the internal financial controlsystem as laid down and kept the Board of Directors informed. Details of internal controlsystem are given in the Management Discussion and Analysis Report which forms part of theReport.
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 behaviour 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
There were no changes in the Board composition during the financial year ending March31 2018. However Mr. Abhishek Verma was appointed as an Additional Director of theCompany w.e.f. May 16 2018 and who is proposed to be regularized as Independent Directorof the Company in the ensuing 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 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. Varshney Managing Director Mr Shyam S Bageshara (CFO) and Mrs. ShobhitaSingh Company Secretary has been appointed in place of Mr. Sumit Dass (Former CompanySecretary) are the other KMP as per the definition under Section 2(51) and Section 203 ofthe 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 and committeemeetings like preparedness on the issues to be discussed meaningful and constructivecontribution and inputs in meetings etc. In addition the Chairman was also evaluated onthe 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 2017-18.
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 201819. 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 Company is properly maintaining the records for thepurpose of Cost Audit as per the provisions of the Companies Act 2013 and other Law/Acts.
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 10( Ten) 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 all of which are Independent Directors.During the year 5 (Five) Audit Committee meetings were held and the details of which areprovided 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
|Sd/- ||Sd/- |
|Shobhita Singh ||Prem Narain Varshney |
|Company Secretary ||Managing Director |
| ||DIN:00012709 |
|New Delhi || |
|01.09.2018 || |