Your Directors pleased to present the 14th Annual Report of your company onthe operations and performance along with the Audited Financial Statements for the yearended on 31st March 2017.
|Particulars ||March 31 2017 ||March 31 2016 |
|Total Revenues ||36298.13 ||33819.36 |
|Total Expenditure ||34771.59 ||31439.10 |
|Profit before interest depreciation extraordinary item and tax ||1526.54 ||2380.26 |
|Depreciation and Interest ||837.29 ||2086.86 |
|Profit / (Loss) before extraordinary item and tax ||689.25 ||293.40 |
|Extraordinary item ||Nil ||3170.24 |
|Profit / (Loss) before tax ||689.25 ||(2876.84) |
|Tax Expense / Deferred tax ||Nil ||Nil |
|Net Profit / (Loss) for the year ||689.25 ||(2876.84) |
|Profit / (Loss) Brought forward from last year ||(15689.69) ||(12812.85)* |
|Balance Carried forward ||(15000.44) ||(15689.69) |
* includes ' 54.13 lacs of transitional adjustment on depreciation.
STATE OF COMPANY'S AFFAIRS / PERFORMANCE OVERVIEW
During the year under review Total Revenue from operation has been increased from '33819.36 lacs to ' 36298.13 lacs as compared to previous year's turnover. Company hasregistered a net profit of ' 689.25 lacs in comparison of loss of ' 2876.84 lacs duringprevious year.
Due to high accumulated loss your Directors have not recommended dividend for thefinancial year 2016-17.
The company is engaged in manufacture of sponge iron ferro alloys and power. Companyis generating power on account of waste heat recovery system resulting economic price.Company is having its power plant of 40 MW. Power generated is used for captiveconsumption. There has been no change in the nature of business of the Company.
SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
The company does not have holding or subsidiary companies during the year and no othercompany has become holding / subsidiary/ joint venture / associate. The Company is anAssociate Company of M/s Shah Alloys Limited as it is holding more than 20% of the EquityShare Capital in the Company as a Promoter Company.
The Company has not accepted any public deposit during the year under review and noamount against the same was outstanding at the end of the year.
DETAILS OF LOANS GUARANTEES AND INVESTMENTS U/S 186 OF THE COMPANIES ACT 2013
During the year under review the Company has not made any inter corporate loansinvestments given any corporate guarantee to any other body corporate subsidiaryassociate or any other company.
In conformity with provision of regulation 34(2)(c) & 53(b) of SEBI (LODR)Regulations 2015 the Cash Flow Statement for the year ended 31.03.2017is annexed hereto.The equity shares of the Company are listed on the BSE Ltd. and the National StockExchange of India Ltd. (NSE).
The Company has paid listing fees for the year 2017-18 to above stock exchanges.
DETAILS OF DIRECTORS OR KMPs APPOINTMENT OR RESIGNATION
During the year under review Shri Sujal Shah Whole Time Director and Shri BabulalSinghal Whole Time Director of the Company reappointed by the Board for further period ofthree years subject to the approval of members in ensuing Annual General Meeting. Exceptthis there is no change in the Composition of the Board or KMPs.
MEETINGS OF THE BOARD
The Board met four times during the financial year.Details of meetings are given in theCorporate Governance Report annexed herewith and forms part of this report. Theintervening gap between the Meetings was within the period prescribed under the CompaniesAct 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declarations from each Independent Director of theCompany confirming that he/she met with the criteria of independence as laid out insub-section (6) of Section 149 of the Companies Act 2013 and under Regulation 16(1)(B) ofthe SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
A diverse Board enables efficient functioning through differences in perspective andskill and also fosters differentiated thought processes at the back of varied industrialand managementexpertise gender knowledge and geographical background.The Company followsdiverse Board structure.
As per the provisions of the Companies Act 2013 and SEBI(Listing Obligation andDisclosure Requirements) Regulations2015 the formal annual evaluation was carried out fortheBoard's own performance its committee & Individual directors.The manner and detailin which evaluation was carried out isstated in the Corporate Governance Report which isannexedand forms a part of this report.
INTERNAL FINANCIAL CONTROL SYSTEM AND THEIR ADEQUACY
The details in respect of internal financial control and their adequacy are included inManagement Discussion and Analysis Report which forms part of this report.
CORPORATE GOVERNANCE REPORT
The Company is committed to observe good corporate governance practices. The report onCorporate Governance for the financial year ended March 31 2017 as per regulation 34(3)read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 forms part of this Annual Report. The requisite Certificate from thePracticing Company Secretary of the Company confirming compliance with the conditions ofCorporate Governance is annexed to this Report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
As required under Section 134 (3) (m) of the Act read with Rule 8 of The Companies(Accounts) Rules 2014 particulars relating to conservation of Energy R & DTechnology absorption and foreign Exchange earnings / outgo are separately provided in theannexure to this report as Annexure - 1.
RISK MANAGEMENT POLICY
The Company had put in place an enterprise wide risk management framework. Thisholistic approach provides the assurance that to the best of its capabilities theCompany identifies assesses and mitigates risks that could materially impact itsperformance in achieving the stated objectives. The Audit committee ensures that theCompany is taking appropriate measures to achieve prudent balance between risk and rewardin both ongoing and new business activities. The Committee reviews strategic decisions ofthe Company and on regular basis reviews the Company's portfolio of risks and considersit against the Company's Risk Appetite. The Committee also recommends changes to the RiskManagement Technique and / or associated frameworks processes and practices of theCompany.
VIGIL MECHANISM POLICY
The Company had implemented a vigil mechanism whereby employees directors and otherstakeholders can report matters such as generic grievances corruption misconduct fraudmisappropriation of assets and non-compliance of code of conduct to the Company. Thepolicy safeguards the whistle blowers to report concerns or grievances and also provides adirect access to the Chairman of the Audit Committee. During the year under review none ofthe personnel has been denied access to the Chairman of Audit Committee.
CORPORATE SOCIAL RESPONSIBILITY
Company has earned a profit in the year under review. Accordingly Company hasconstituted Corporate Social Responsibility Committee as per Section 135 of Companies Act2013 and the rules framed thereunder. Since the average net profits of the Company duringimmediately three preceding financial years is negative provisions related to expenditureof atleast two percent of the average net profits in CSR activities is presently notapplicable to the Company.
DIRECTORS' RESPONSIBILITY STATEMENT
In Compliance with Section 134(5) of the Companies Act 2013 the Board of Directors tothe best of their knowledge and hereby confirm the following:
a) In the preparation of the annual accounts for the financial year ended 31stMarch 2017 as far as possible and to the extent if any accounting standards mentionedby the auditors in their report as not complied with all other applicable accountingstandards have been followed along with proper explanation relating to material departure;
b) The Directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year andprofit and loss account of the Company for that period;
c) The Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d) The Directors had prepared the annual accounts on a going concern basis; and
e) The directors in the case of a listed company had laid down internal financialcontrols to be followed by the company and that such internal financial controls areadequate and were operating effectively.
f) The Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
The policy of the Company on Director's appointment and remuneration includingcriteria for determining qualifications independence and other matters as provided undersubsection (3) of Section 178 of the Companies Act 2013 is available on the Company'swebsite atwww.salsteel.co.in
DISCLOSURE UNDER SECTION 22 OF THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013
There were no complaints pending for the redressal at the beginning of the year and nocomplaints received during the financial year.
PARTICULARS OF THE EMPLOYEES
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Companies Act2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are annexed to this Report as Annexure-2.Further particulars of employees remuneration as required under section 197(12) ofthe Companies Act 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are not attached with this report sincethere was no employee who was in receipt of remuneration in excess of aggregate of ' 1.02Cr. during the year if employed throughout the financial year or ' 8.5 Lakh per month inthe aggregate if employed for part of the year.
DETAILS OF RELATED PARTIES TRANSACTIONS PURUSANT TO SECTION 188(1) OF THE COMPANIESACT 2013
During the financial year all transactions entered into with the Related Parties asdefined under Companies Act 2013 were in the ordinary course of business and on an arm'slength basis and as such did not attract provisions of Section 188 (1) of Companies Act2013. The Company has formulated policy on related party transactions.Particular ofrelated party transactions in prescribed Form AOC-2 is attached atAnnexure-3.Approvalsfrom the Audit Committee are obtained even for transactions which are in ordinary courseof business and repetitive in nature. Further on quarterly basis disclosures are made tothe Audit Committee and to the Board. Details of related party transactions are given inthe notes to financial statements.
Your company has adopted IND AS w.e.f. 1st April 2017 pursuant toNotification of the Ministry of Corporate Affairs dated 16th February 2015 inplace of Accounting Standards.
M/s. Talati & Talati Chartered Accountants have been giving services as StatutoryAuditors of the Company and are eligible to be appointed as Statutory Auditors in theforthcoming Annual General Meeting. However M/s Talati & Talati CharteredAccountants at their own expressed their inability to continue as Statutory Auditors andas such has not accorded consent for appointment as Statutory Auditors in the forthcomingAnnual General Meeting. Accordingly M/s Talati & Talati Chartered Accountants willbe ceased to Statutory Auditors after the forthcoming 14th Annual GeneralMeeting.
On the recommendations of the Audit Committee Board of Directors has recommendedappointment of M/s. Parikh & Majmudar Chartered Accountants (Firm Reg. No. 107525W)as the Statutory Auditors of the Companyfor a period of five consecutive years from theconclusion of the 14th Annual General Meeting of the Company till theconclusion of the 19th Annual General Meeting to be held in the year 2022subject to the approval of the shareholders of the Company. On approval of theshareholders in the forthcoming Annual General Meeting new firm will audit financialstatements for the year ending 31st March 2018. However the new firm will beauditing quarterly financial statements from the quarter ended 30th September2017.
Pursuant to the provisions of Section 148 of the Companies Act 2013 and the Rules madethere under M/s. Ashish Bhavsar & Associates Cost Accountants wereappointed forauditing cost accounting records of the Company for the yearending 31stMarch2017. Board has further appointed M/s. Ashish Bhavsar & Associates Cost Accountantsas Cost Auditors for the year ending 31st March 2018 subject to approval ofremuneration in the forthcoming Annual General Meeting.
The Company has appointed an Independent firm of Chartered Accountants to act as anInternal Auditor as per suggestion of auditors and recommendation of the Audit Committeein order to strengthen the internal control system for the Company.
Pursuant to the provisions of Section 204 of the Companies Act 2013 read with rulesmade thereunderthe Board of Directors has appointed M/s Kamlesh Shah & Co.Practicing Company Secretaries as Secretarial Auditor to conduct Secretarial Audit of theCompany for the Financial Year 2017-18. The report submitted by the Secretarial Auditor inForm MR-3 for the financial year ended as on 31st March 2017 is attached tothis report as Annexure - 4. Remarks of secretarial auditor areself-explanatory.
BOARD'S RESPONSE ON the REMARKS MADE BY STATUTORY Auditors
The Directors submit their explanations to then variousobservations made by theAuditors in their report for the year 2016-17. Para nos. of Auditors' Report and reply areus under:
Basis for Qualified Opinion - Para 1
Company has paid the capital advances in earlier years for total amounting Rs.94122080 which are currently shown under long term loans and advances to the suppliersfor the supply of customized equipments. The machines are manufactured and ready fordispatch but lenders had stopped funding and Company does not have enough accruals to liftthe machines.
Annexure A to the Independent Auditors' Report - Para vii a
Payments of Statutory dues were marginally delayed on account of slowrecovery/collection. However the same has been paid.
Annexure A to the Independent Auditors' Report - Para viii
In view of the market conditions of steel sector at the relevant time Companyapproached to the Consortium of the Banks for restructuring of the debts through CDRmechanism. The lenders appointed SBI Capital Market Limited to prepare a financial packageand GITCO to carry out the Techno Economic Viability (TEV) Report. Based on the viabilityof the plant certified by SBI Caps and GITCO SBI approached to the CDR (EG) and the casewas admitted by the CDR and directed the lenders to submit the final report within 90 daysfor the sanction of the package. In between SBI withdrew the support from the CDR bysubmitting letter of withdrawal without assigning any reason. As a result Company sufferedbadly and later not able to make the payments as per the terms of sanction. As a resultfinancial health of the Company got further deteriorated and net worth became negative.Thus Company approached to Hon'ble BIFR for declaring company as sick undertakingpursuant to the provisions of Section 3 (1) (o) of the SICA. The application of theCompany has been registered vide letter dated 24.08.2015.
All the banks assigned debts to Assets Reconstruction Company (ARC). Company isnegotiating with them for settlement of debts.
MATERIAL CHANGES / INFORMATION:
1. No material changes have taken place after the closure of the financial year up tothe date of this report which may have substantial effect on the business and financialposition of the Company. However during the year company does not have status of Sickcompany due to repeal of SICA.Except this no material change has taken place after theclosure of the financial year up to the date of this report which may have substantialeffect on the business and financial of the Company.
2. No significant and material orders have been passed by any of the regulators orcourts or tribunals impacting the going concern status and companies operations in future.
EXTRACT OF ANNUAL RETURN
An extract of the Annual Return in Form MGT-9 in compliance with Section 92 of theCompanies Act 2013 read with applicable rules made thereunder is annexed to this report atAnnexure- 5.
Your Directors place on record their sincere appreciation for the valuable support andco-operation as received from government authoritiesFinancial Institutions Banks andARCs during the year. Directors are also thankful for the support extended by CustomersSuppliers andcontribution made by the employees at all level. Directors would also like toacknowledge continued patronage extended by Company'sshareholders in its entire endeavor.
| ||For and on behalf of the Board |
|Date:5thAugust 2017 ||Rajendra V. Shah |
|Place: Santej ||Chairman |
| ||(DIN: 00020904) |