The Board of Directors presents the 61 st Annual Report on the business and operationsof the Company and its Audited Statement of Accounts for the year ended March 31 2017together with the Auditors' Report and Comments on the Accounts by the Comptroller andAuditor General (CAG) of India.
The performance of the Company during the year 2016-1 7 vis- a-vis the previous year issummarized in the table below:
| ||2016-17 ||2015-16 |
|TURNOVER || || |
|Exports ||789 ||mi |
|Imports ||6382 ||8735 |
|Domestic ||581 ||633 |
|TOTAL ||7752 ||10479 |
|FINANCIALS || || |
|Profit Before Tax ||(-) 148 ||23 |
|Profit After Tax ||(-)66 ||18 |
|Net Worth (Including revaluation reserve) ||891 ||1057 |
OPERATIONS AND BUSINESS PERFORMANCE
During the year 2016-17 the Company achieved a total turnover of Rs7752 crore asagainst^l 0479 crore achieved in the previous year. The decline in turnover wasattributable mainly to (i) non-renewal of contract for export of steel plates/coilsto Iran(ii) lower allocation for import of urea by the GOI and (iii) reduced import of gold. Thedomestic sales of Rs581 crore achieved by the Company was the second best in past sevenyears.
The Company reported a net loss of Rs166 crore during the year 2016-1 7 due toprovisions and write-offs (net of write- back) of Rs144 crore made in respect of doubtfuldebts.
The Board of Directors have not recommended any dividend for the year 2016-17 in viewof loss of Rs166 crore suffered by the Company.
An amount of Rs996.79 crore was available in the Reserves and Surplus of the Company ason 1 st April 2016. During the year 2016-1 7 write-off / provisions (net of write-back)of Rs143.73 crore were made in the accounts as a matter of prudence as against (-) Rs23.78crore (net of write-back) in the previous year. This resulted in a net loss of Rs165.54crore to the Company thereby bringing down the Reserves & Surplus to Rs831.25 crore asat the end of the financial year.
FOREIGN EXCHANGE EARNINGS/OUTGO
The total foreign exchange earnings of the Company by way of exports trade marginsetc. during the year amounted to Rs742.90 crore while the foreign exchange outgo by way ofimports and other expenses amounted toRs6042.56 crore.
STC had 671 employees on its rolls as on 31.03.201 7 which included 464 managers and207 staff.
During the year the Company recruited thirty four Assistant Managers with professionalqualifications in various disciplines such as finance marketing personnel &administration and law. In addition lateral recruitments were made to fill four seniorpositions in the managerial cadre.
During the year 2016-1 7 the company continued to maintain harmonious industrialrelations. No man days were lost. Personnel policies and welfare schemes were suitablyimproved/amended so as to bring them in line with the overall business interest of thecompany.
Recruitment of SC/ST/OBC/PWD
The Company has been implementing the Government of India directives and guidelines forSC/ST/OBC/PWD issued from time to time with regard to recruitment of SC/ST/OBC anddifferently abled candidates. During the year 3 candidates belonging to PWD wererecruited at the level of Assistant Managers.
Human Resource Development
With a view to harness employees potential help them in their career progression andenhance employee productivity 29 Management Development Programmes (MDPs) were conductedduring the year on domain specific areas and behavioural/managerial skill development inwhich a total of 73 executives participated. Training programmes for women executives onleadership development and sexual harassment of women at workplace were also organisedwith a view to develop their managerial skills and sensitise them on legal issues.Dedicated In-house training programmes were conducted on Vigilance and implementation ofReservation Policy wherein a total of 119 executives participated. Nominations were alsomade towards 7 training programmes on implementation & awareness of Official Language(Rajbhasha).
In all 200 employees were imparted training during the year in domain specific areasand behavioural/managerial skill development wherein 495 man-days were dedicated.
All efforts were made to promote the use of Hindi in day to day official work so as toensure compliance of Official Language Policy of Govt of India and the guidelines issuedin this regard
from time to time. Hindi workshops were organised at regular intervals for impartingtraining to the employees on various aspects related to Official Language. Also HindiDiwas and Rajbhasha Week / Fortnight were organized across the Company. Employees doingexemplary work in Hindi were felicitated on these occasions. As a result STC was awardedwith "Rajbhasha Shield" (1st Prize) for the year 2015-16 by Ministry of Commerceforthe progress made in implementation of Official Language.
With a view to ensure transparency fair play and objectivity in the functioning of theCompany Vigilance Division of the Company followed a multi-pronged strategy by stressingon punitive preventive and participative vigilance measures to check corruption.
Steps were taken to expedite timely completion of investigations and disciplinaryproceedings as per CVC instructions. Measures were also taken for systemic improvementparticularly in the area of record management. Vigilance team inspected Branch offices atJalandhar and Chennai. Three CTE type inspections were conducted to check theimplementation of instructions and guidelines issued by the Company from time to time andidentify the areas requiring improvement.
The Company observed Vigilance Awareness Week 2016 from 31 st October to 5th November2016. The theme of the Vigilance Awareness Week was "Public Participation inPromoting Integrity and Eradicating Corruption". The Company and all the employeessigned Integrity Pledge to enlist support and commitment for upholding the higheststandard of ethical conduct honesty and integrity. Outreach activities focussing oninculcating greater awareness on corruption and anticorruption measures were also held incolleges and schools. Two training programmes on Vigilance Administration1 andVigilance Clearance1 were organised for executives of the Company. As part ofthe Knowledge Management efforts a quarterly e-newsletter "NAI DISHA" waslaunched to create awareness about the rules and procedures prescribed by the Company andinstructions issued by CVC and Government of India form time to time.
PERFORMANCE OF SUBSIDIARY COMPANY
STCL Ltd. (Formerly Spices Trading Corporation Limited)
In view of extraordinary losses suffered by STCL leading to erosion of its net worthand remote possibility of its turnaround the Union Cabinet had in August 2013 decidedto wind up STCL. Accordingly a winding up petition was filed by STCL before the Hon'bleHigh Court of Karnataka in November 2013 and the same continues to be pending due toobjections by Banks.
At present STCL has 13 employees including the Managing Director.
As a result of the above developments no business operations were undertaken by STCLduring the year.
The subsidiary company incurred a loss of Rs563 crore during 2016-17 mainly on accountof the interest accrued on outstanding loans and had a negative net worth of ^3904 croreas on 31.03.201 7.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
As per the requirement of Regulation 34(2) of schedule V of the SEBI (ListingObligation and Disclosure Requirements) Regulation 2015 a detailed Management Discussionand Analysis Report forming part of the Annual Report of the Company is placed atAnnexure-I.
EXTRACT OF THE ANNUAL RETURN
As required under Section 134(3)(a) of the Companies Act 2013 an extract of theAnnual Return pursuant to Section 92(3) of the Act is annexed to this Report at Annexure-II.
ANTI SEXUAL HARASSMENT POLICY
The Company has laid down an Anti Sexual Harassment Policy in line with therequirements of The Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. An Internal Complaints Committee has been set up to redresscomplaints received in this regard. All employees (permanent contractual temporarytrainees) are covered underthis policy.
During the year one complaint of sexual harassment was received and the findings ofthe same have been submitted to the Management.
RIGHT TO INFORMATION
In order to promote transparency and accountability an appropriate mechanism has beenput in place in the Company to provide information to citizens under the provisions ofRight to Information (RTI) Act 2005. For this purpose the Company has in line with theRTI Act nominated Central Public Information Officers at all its Divisions at New Delhiand at Branch Offices across the country. For the convenience of public a coordinatingCPIO has also been nominated. First Appellate Authority has also been nominated forconsidering the appeals of information seekers against the orders of Public InformationOfficers.
The Company has not accepted any deposits from Public. Therefore the requirement ofChapter V of the Companies Act 2013 is not applicable to it.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186
During the year the company has not provided/given any loans guarantees or made anyinvestment as specified under section 186 ofthe Companies Act 2013.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO INSUB-SECTION (1) OF SECTION 188 IN THE PRESCRIBED FORM
The company has not entered into any contracts or arrangements with related parties asreferred to in sub-section (1) of section 188 ofthe Companies Act 2013.
CORPORATE SOCIAL RESPONSIBILITY (CSR) AND SUSTAINABILITY
As per DPE guidelines & provisions of Companies Act 2013 the budgetary allocationof CSR is based on the profitability of the company. In the year2015-16 the Companyearned profit of Rs23 crore but due to average net loss of Rs146 crore for the last threeyears; the Company was not mandated to allocate CSR Funds for the financial year 2016-17.
An amount of T22A7 lakh was carried forward during 2016- 17 from previous financialyear 2015-16 out of which an amount of Z7 lakh was spent on ongoing project"Conservation of Jai Prakash Yantra at Jantar Mantar New Delhi". Further anamount of Rs0.56 lakh was spent towards completion cost of Construction of Toilet Complexundertaken by Sulabh International Delhi.
An annual report on Company's CSR activities in prescribed format as per the Companies(Corporate Social Responsibility Policy) Rules 2014 is placed atAnnexure -III.
PUBLIC PROCUREMENT POLICY
In pursuance of the Public Procurement Policy for Micro & Small Enterprises (MSEs)Order 2012 notified by Ministry of Micro Small and Medium Enterprises vide their Orderdated 23rd March 2012 the Company had set an annual target of making a minimum 20 percentof its annual procurement of goods and services from MSEs including 4 percent from MSEsowned by SC or ST entrepreneurs.
During the year 2016-17 the Company made procurement worth Rs1.61 crore from MSEswhich accounted for 30.55 percent of total value of annual procurement made by STC ofgoods produced and services rendered by MSEs. Out of this procurement from SC/STentrepreneur was Nil as against a sub-target of 4% and the same was due to either no SC/STentrepreneur participating in the tender process or no SC/ST entrepreneur being declaredsuccessful in the tender process. During the year 2017-18 also the Company shall striveto achieve the annual procurement target of 20 percent of goods and servicesproduced/rendered by MSEs including 4 percent from MSEs owned by SC or ST entrepreneur.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION ETC.
The information required to be disclosed in accordance with the Companies (Accounts)Rules 2015 is 'nil' as the Company is mainly engaged in trading activities.
The Financial Statements have been prepared in accordance with the Generally AcceptedAccounting Principles (GAAP) and in compliance with all applicable Accounting Standardsissued by The Institute of Chartered Accountants of India (ICAI) and provisions of theCompanies Act 2013.
INTERNAL FINANCIAL CONTROLS
The Company has in place well-established internal financial
controls. The Company has a well-defined delegation of powers (DOP) which lays downthe financial powers available to various levels of company's executives. The DOP helpsfacilitate faster and prudent commercial decision-making by executives at various levels.
The Company has an Internal Audit Division supported by an outside professionalChartered Accountant firm which conducts internal audit of company's corporate office aswell as branches and suggests various preventive and corrective steps. The auditobservations are periodically reviewed by the Management Audit Committee and the AuditCommittee of the Board of Directors and necessary directions are issued whereverrequired.
NUMBER OF MEETINGS OF THE BOARD
During the financial year 2016-1 7 six meetings of the Board of Directors were heldand the interval between any two Board meetings did not exceed 120 days.
DECLARATIONS GIVEN BY INDEPENDENT DIRECTORS
All the Part-time Non-official Directors (Independent Directors) have affirmed thatthey meet the criteria of Independence as provided in Section 149(6) of the Companies Act2013 for the financial yearending 31.03.201 7
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION ETC.
STC being a Government company the terms and conditions of appointment andremuneration of its whole-time functional Directors are determined by the Governmentthrough the Ministry of Commerce and Industry the administrative Ministry of the company.The non-executive part-time official Directors (Government nominees) do not draw anyremuneration or sitting fee. The part-time non-official (Independent) Directors are paidsitting fee for each Board/ Committee meeting attended by them at the rate as perprovisions of the Companies Act 2013 and as approved by the Board from time to time.
The eligibility criterion for appointment of Independent Directors is laid down by theDepartment of Public Enterprises of the Govt of India. The positive attributes expected tobe exhibited by the Independent Directors are conveyed to them on their appointment and adeclaration in the appropriate performa is obtained from them every year to confirm thatthey continue to qualify as Independent Director.
ANNUAL EVALUATION OF THE PERFORMANCE OF THE BOARD ITS COMMITTEES AND INDIVIDUALDIRECTORS
In line with the exemption provided in the Companies Act 2013 to the GovernmentCompanies regarding evaluation of Board and its Directors many CPSEs requested to theDepartment of Public Enterprises to seek exemption in the matter on the same ground fromSecurities and Exchange Board of India (SEBI). Upon request and representations asreceived from CPSEs the Department of Public Enterprises has written to Department of
Economic Affairs and Securitiesand Exchange Board of India to align the SEBI (LODR)Regulations 2015 with the Companies Act 2013 based on the exemptions under CompaniesAct 2013 provided to the Government Companies.
RISK MANAGEMENT POLICY
A Risk Management Framework has been put in place to add objectivity to the process ofrisk assessment while taking a decision on accepting or rejecting a trade proposal. TheRisk Management Framework measures the risk involved in a business proposal in the form ofa total risk score which is weighed vis-a-vis available risk mitigation measures.
Further the company has implemented an Anti-Fraud Policy in orderto enforce controlsand to aid in prevention and detection of frauds in the Company. The Policy intends topromote consistent legal and ethical organizational behaviour by assigning responsibilityfor the development of controls and providing guidelines for reporting and conduct ofinvestigations of suspected fraudulent behaviour.
The Company does not take exposure in volatile commodities. Generally it makespurchases only against confirmed orders backed by appropriate margin money.
Guidelines are in place requiring forward foreign exchange coverto betaken in respectof transactions involving STC funds.
The Company believes that Corporate Governance is at the root of the shareholders'value creation. Pursuant to SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 and Guidelines on Corporate Governance for CPSEs issued by theDepartment of Public Enterprises (DPE) Govt of India a report on Corporate Governancefortheyear2016-1 7 forming part of this report is placed at Annexure-IV. The Company hascomplied with the conditions of Corporate Governance as stated in the above referredRegulations and DPE guidelines on Corporate Governance for CPSEs. Compliance certificatefrom the practicing Company Secretary in this regard and Management replies theretoforming part of this report are placed at Annexure -V.
The Company has got its Secretarial Audit for the financial year ended 31st March 2017 conducted by practicing Company Secretaries M/s Chandrasekaran Associates and theirreport alongwith Management replies to the observations made by Secretarial Auditorsforming part of this Annual Report is placed at Annexure -VI.
In line with the best practices your Company has made available all information ofinterest to its investors on the Company's corporate website namelywww.stclimited.co.in. The Company has also put in place various policies such as:
Whistle Blower Policy
Web Archival Policy
Policy on Preservation of Documents
Policy on Materiality of Related Party Transactions and dealings with RelatedParty Transactions
Policy for determination of materiality of events and information andtheirdisclosures.
Policyfordetermining material subsidiaries.
All the policies are also available on STC's website.
The separate meeting of Independent Directors was held on 08.03.201 7 at the registeredoffice of the Company.
M/s P Jain & Company Chartered Accountants were appointed as Statutory Auditors ofthe company for the financial year 2016-1 7 by the Comptroller & Auditor General ofIndia (C&AG). Their report along with replies of the Management is attached andforms part of this report.
COMMENTS OF C&AG
The comments of C&AG under Section 143(6) of the Companies Act 2013 on theaccounts of the Company for the year 2016-1 7 are yet to be received. Hence the commentsof CAG and replies of the management thereto will be attached separately in Directors'Report as an Addendum thereto.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 134(5) of the Companies Act 2013 inrelation to Directors' Responsibility Statement it is hereby confirmed that:
(a) in the preparation of the annual accounts for the year ended 31st March 2017 theapplicable accounting standards have been followed along with proper explanation relatingto material departures;
(b) the directors have 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 and ofthe profit and loss of the company forthe year under review;
(c) the directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities;
(d) the directors have prepared the annual accounts on a going concern basis fortheyear ended 31 st March 201 7;
(e) the directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and operating effectively;
(f) the directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
BOARD OF DIRECTORS
Since the last Annual General Meeting pursuant to Office Order dated 02.11.2016 issuedby the Government of India Ministry of Commerce & Industry Department of CommerceDr. Inder Jit Singh Additional Secretary Department of Commerce Ministry of Commerce& Industry was appointed as Part time Official Director on the Board of STC w.e.f.
Pursuant to Order dated 27.01.201 7 of Government of India Ministry of Commerce &Industry Department of Commerce the President of India has appointed Dr. Amitabh Rajan(holding DIN 05299866) Shri Mohan Lai Pareek (holding DIN 00027693) Smt. Bharathi Magdum(holding DIN 07775091) and Shri Bharatsinh Prabhatsinh Parmar (holding DIN 07781550) aspart-time non-official Directors (Additional / Independent Directors) and as perprovisions of the Companies Act 2013 Dr. Amitabh Rajan and Shri Mohan Lai Pareek havebeen appointed as Director on the Board of the Company with effect from 14.02.2017 andSmt. Bharathi Magdum and Shri Bharatsinh Prabhatsinh Parmar w.e.f. 24.03.2017 and31.03.201 7 respectively.
As per Sections 149 161 and other applicable provisions of the Companies Act 2013and Article 79(4) of the Article of Association of the company these Directors will holdoffice up to the next Annual General Meeting of the Company and are eligible forappointment by the Company at that meeting as Director.
The Board welcomes all the new Directors and hopes that the Company shall immenselybenefit from their rich and varied experience.
Pursuant to the provisions of Section 152 of the Companies Act 2013 Shri JitendraKumar Dadoo AS&FA DoC and Shri Rajiv Chopra Director (Marketing) STC withadditional charge of CMD would retire by rotation at the ensuing Annual General Meetingand being eligible have offered themselves for reappointment.
As per Regulation 36 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 a brief resume of all Directors seeking appointment/re-appointmentaregiven in the notice convening the 61st Annual General Meeting of the Company.
Shri Ajay Kumar Bhalla AS DoC who was appointed as Director w.e.f. 28.09.2015 ceasedto be Director pursuant to Office Order dated 02.11.2016 issued by the Government ofIndia Ministry of Commerce & Industry Department of Commerce.
The Board appreciates the efforts and valuable contribution put in and guidanceprovided by Shri Ajay Kumar Bhalla during his tenure as Member of the Board and Chairmanof Stakeholders Committee of STC.
Shri Khaleel Rahim Chairman & Managing Director of the Company has been placedunder suspension pursuant to Order dated 18.11.2016of Ministry of Com merce&Industry.Pursuant to Order of Ministry of Commerce & Industry Department of Commerce ShriRajiv Chopra Director (Marketing) has been given additional charge of CMD and similarlyShri Sanjeev Kr. Sharma Director (Personnel) has been given additional charge of Director(Finance).
Department of Commerce vide its Office Order dated 13.07.2017 has conveyed terminationof tenure of Shri
S.K.Gupta from the post of Director (Marketing) w.e.f.
KEY MANAGEMENT PERSONNEL
The Company has nominated its CMD all functional Directors and Company Secretary asKey Management Personnel pursuant to Section 203 of the Companies Act 2013.
COMMITTEES OF DIRECTORS
Pursuantto the provisions of various Sections of the Companies Act 2013 and SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Board ofDirectors of the Company have constituted various Committees of Directors like AuditCommittee Stakeholders Committee Relationship Committee CSR Committee Nomination &Remuneration Committee. The composition of these committees & other details arementioned in the Corporate Governance Report forming part of and annexed to the Directors'Report.
CODE OF CONDUCT
Pursuant to the requirements of Schedule V of the SEBI (Listing Obligation andDisclosure Requirements) Regulation 2016 and DPE guidelines on Corporate Governance forCPSEs the Board Members and Senior Management Personnel have affirmed compliance to theCode of Conduct for the financial year ending 31 st March 201 7.
The Board of Directors places on record its appreciation of the continued patronage andthe confidence posed by business associates and customers during the year.
The Board expresses its gratitude for the continued cooperation and support provided bythe Ministry of Commerce and Industry other Ministries and Departments of the Governmentof India various state governments financial institutions banks railways portsregulatory and statutory authorities shareholders legal advisers and consultants fromtime to time.
The Board also acknowledges the constructive suggestions received from Comptroller& Auditor General of India Statutory Auditors and Internal Auditors.
Last but not the least the Board places on records its appreciation for the hard workand dedication of all the employees.
|For and on behalf of the Board of Directors |
|(Rajiv Chopra) |
|Chairman & Managing Director |
|(Additional Charge) |
|New Delhi |
|Date: 30.08.201 7 |