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Sathavahana Ispat Ltd.

BSE: 526093 Sector: Metals & Mining
NSE: SATHAISPAT ISIN Code: INE176C01016
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OPEN 9.69
PREVIOUS CLOSE 9.50
VOLUME 915
52-Week high 23.45
52-Week low 7.57
P/E
Mkt Cap.(Rs cr) 46
Buy Price 7.80
Buy Qty 17949.00
Sell Price 9.80
Sell Qty 100.00
OPEN 9.69
CLOSE 9.50
VOLUME 915
52-Week high 23.45
52-Week low 7.57
P/E
Mkt Cap.(Rs cr) 46
Buy Price 7.80
Buy Qty 17949.00
Sell Price 9.80
Sell Qty 100.00

Sathavahana Ispat Ltd. (SATHAISPAT) - Director Report

Company director report

To

The Members

SATHAVAHANA ISPAT LIMITED

Your Board of Directors has pleasure in presenting the 29th Annual Reporttogether with the Audited Accounts of the Company for the year ended 31stMarch 2018:

FINANCIAL RESULTS:

Your Board of Directors reports the following financial results for the year 2017-18:

(Amount in Rs.)

SL NO. Particulars Year ended 31-03-2018 Year ended 31-03-2017
1. Gross revenue from operations 2487308166 11315975529
2. Other income 81026938 119101662
3. Operating profit /(loss) before finance costs and depreciation (1152735074) 1009041013
4. Finance costs 1405597605 1169215306
5. Depreciation and amortization 505310460 482032028
6. Profit / (loss) before tax (3063643139) (642206321)
7. Tax expense 0 0
8. Net Profit / (loss) after tax (3063643139) (642206321)
9. Earning /(loss)per Equity Share-Basic (60.19) (12.62)
10. Earning/(loss)per Equity Share-Diluted (60.19) (12.62)

The performance during the year was impacted adversely due to factors beyond thecontrol of the Company. The performance suffered due to working capital constraints andthe consequent financial stress which resulted in underutilization of capacities and plantshut downs. Accordingly the gross revenue at Rs.2487308166/- is lower as comparedto previous year's revenue of

Rs.11315975529/-. The year ended with loss before tax of Rs.3063643139/- asagainst loss before tax of Rs.642206321/- in the previous year. During the year inthe absence of virtual certainty deferred tax asset on account of unabsorbed depreciationand business loss and others amounting to Rs.1114567283/- as against previousyear's amount of Rs.1047886528/- has been recognized to the extent it can berealised fully against deferred tax liability. Accordingly the tax impact is nil in bothcurrent and previous years. The year ended with net loss after tax of Rs.3063643139/-as against net loss after tax of Rs.642206321/- in the year before. Accordinglythe loss per share accounted for at Rs.60.19 as compared to loss per share of Rs.12.62in the previous year.

DIVIDEND AND GENERAL RESERVE:

The Board of Directors has not recommended any dividend for the year 2017-18 due toloss incurred during the year and carry forward loss from earlier years. Company cannotdeclare dividend until the carry forward loss is fully set off against the profits asprovided in the Companies Act 2013. The Board of Directors also has not proposed totransfer any amount to General Reserve in view of the carry forward loss.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 134(3)(c) of the Companies Act 2013 withrespect to Directors' Responsibility Statement your Directors hereby state and confirmthat: i) In the preparation of Annual Accounts for the Financial Year 2017-18 theapplicable Indian Accounting Standards (Ind AS) had been followed with proper explanationrelating to material departures; ii) The Accounting Policies selected were appliedconsistently and the judgements and estimates made are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at 31stMarch 2018 and of the Loss of the Company for the year ended on that date; iii) Proper andsufficient care has been taken for the maintenance of adequate accounting records inaccordance with the provisions of the Companies Act 2013 for safeguarding the assets ofthe Company and for preventing and detecting fraud and other irregularities; iv) TheAnnual Accounts have been prepared on a going concern basis; v) Internal financialcontrols to be followed by the Company have been laid down and that such InternalFinancial Controls are adequate and were operating effectively; and vi) Proper systems hadbeen devised to ensure compliance with the provisions of all applicable laws and that suchsystems were adequate and operating effectively.

AUDIT COMMITTEE:

The Audit Committee comprises Chairman -Shri K.Thanu Pillai Independent Director andtwo other Independent Director members -Shri Syed Anis Hussain and Shri S.N.Rao. Smt Y.Prameela Rani and Shri M.S. Rama Mohan Rao have ceased to be members of the AuditCommittee with effect from 20.11.2017 and 01.10.2017 respectively upon cessation ofdirectorship. The Audit Committee at its meeting held on 30th May 2018 hasconsidered and approved the Audited Accounts of the Company for the financial year ended31st March 2018. The Audited Accounts for the financial year ended 31stMarch 2018 as approved and recommended by the Audit Committee do not require anyexplanations from the Board.

CORPORATE GOVERNANCE:

Pursuant to Listing Regulations 2015 the Company is required to comply with the Code ofCorporate Governance for the financial year under review. Accordingly the Reports onCorporate Governance and Management Discussion and Analysis together with Auditors' Reporton compliance of Code of Corporate Governance are attached to this Report and forms partof the Annual Report. These Reports are to be read in conjunction with this Directors'Report.

DIRECTORS:

Shri A.S. Rao and Dr. Shailendra Dasari are liable for retirement of Directors byrotation at the end of the ensuing 29th Annual General Meeting and beingeligible offer themselves for re-appointment at the said Annual General Meeting.

Shri A.S. Rao has been appointed as Executive Vice Chairman at 26th AnnualGeneral Meeting held on 30.09.2015 for a period of three years effective from 27.07.2015to 26.07.2018 and the office of Executive Vice Chairman is liable for retirement ofDirectors by rotation. Shri A.S. Rao is eligible for re-appointment and approval of theMembers for his re-appointment is being sought in the ensuing Annual General Meeting. TheNomination and Remuneration Committee at its meeting held on 30.05.2018 has recommendedthe re-appointment and the Board of Directors at its meeting held on 30.05.2018 hascommended the resolution for re-appointment to the members for their approval in theensuing Annual General Meeting. Dr. Shailendra Dasari has been appointed as ExecutiveDirector (Operations) at 26th Annual General Meeting held on 30.09.2015 for aperiod of three years effective from 01.10.2015 to 30.09.2018 and the office of ExecutiveDirector (Operations) is liable for retirement of Directors by rotation. Dr. ShailendraDasari is eligible for re-appointment and approval of the Members for his re-appointmentis being sought in the ensuing Annual General Meeting. The Nomination and RemunerationCommittee at its meeting held on 14.08.2018 has recommended the re-appointment and theBoard of Directors at its meeting held on 14.08.2018 has commended the resolution forre-appointment to the members for their approval in the ensuing Annual General Meeting.

In the opinion of the Board the proposed appointees fulfils the conditions specified inthe Companies Act 2013 and Rules made thereunder and keeps the Board strengthened. Theseappointments are subject to approval of secured lenders who have lent to the Company term/ corporate loans and working capital loans and approval of members in the Annual GeneralMeeting.

Smt Y. Prameela Rani an Independent Director on the Board of the Company has resigneddue to personal reasons and her resignation was accepted by the Board with effect from20.11.2017. Shri M. Sreerama Mohan Rao small shareholder holder director ceased to bedirector with effect from 01.10.2017 on expiry of tenor of appointment. Board wishes toplace on record of its appreciation for the valuable services rendered by these Directorsduring their tenure.

Policy on selection and appointment of Directors Composition and category ofDirectors attendance of each Director at meetings Number of other Directorships held byeach Director Number of Board meetings held and dates on which held Board meetingsprocess familiarisatioin programme of each Independent Directors Board's evaluationprocess are discussed in the Report on Corporate Governance which forms part of thisReport.

The Board of Directors confirms that based on the declarations given by all theIndependent Directors in pursuance of provisions of Section 149(7) of the Companies Act2013 they meet the criteria of independence as provided in Section 149(6) of the CompaniesAct 2013.

AUDITORS AND AUDIT REPORT:

The tenor of present Auditors M/s Majeti & Co. Chartered Accountants Hyderabadhas been fixed for period of five years at the Annual General Meeting held on 29.09.2017subject to ratification of appointment at every subsequent Annual General Meeting. Howeverthe Ministry of Corporate Affairs Government of India has vide Companies (Amendment) Act2017 notified vide notification dated 07.05.2018 that such ratification of appointment ofstatutory auditors is not required at the subsequent Annual General Meetings which inother words means that appointment made initially continues to be effective until theexpiry of five years from the date of their appointment. Accordingly no ratifications ofappointment of statutory auditors is proposed in the ensuing Annual General Meeting.

With respect to the Independent Auditors' Report for the year ended 31stMarch 2018 which forms part of the Annual Report containing emphasis of matter andqualification your Board of Directors state that the management replies to the same are asunder:

1. With respect to emphasis matter the explanation contained in Note No.35 to thefinancial statements is self-explanatory and the opinion of the Auditors is unmodified inrespect of this matter.

2. With respect to Qualification on Trade receivables supplier advances and capitaladvances as at March 31 2018 the explanation contained in Note No.38 to the financialstatements is self-explanatory and does not require further explanations.

The Independent Auditors' Report for the financial year ended 31st March2018 which forms part of the Annual Report do not require any further explanations fromthe Board.

COST AUDITORS AND COST AUDIT REPORT:

Company appointed M/s. S. Mahadevan & Co Coimbatore Practicing Cost Accountants(Firm's Registration Number 00007) as Cost Auditors for the financial year 2016-17 and2017-18. The Cost Compliance Report as prepared by the Cost Auditors for the financialyear 2016-17 has been filed with the Central Government with in the due date. The CostCompliance Report for the year 2017-18 prepared by the said Cost Auditors has beenreviewed and adopted by the Board. The Board of Directors based on the recommendations ofthe Audit Committee has appointed M/s S. Mahadevan & Co. Practicing Cost Accountants(Firm's Registration Number : 00007) as Cost Auditors for conducting Cost Audit of theCost Records of the Company for the year 2018-19. In pursuance of the provisions ofSection 148 and other applicable provisions if any of the Companies Act 2013 read withCompanies (Audit and Auditors) Rules 2014 the remuneration payable for conducting the CostAudit for the year ending 31st March 2019 to M/s S. Mahadevan & Co.Practicing Cost Accountants is being placed before the Members in the ensuing AnnualGeneral Meeting for their ratification and approval.

SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT:

M/s D. Hanumanta Raju & Co. Practicing Company Secretaries Hyderabad who havebeen appointed as Secretarial Auditor for the financial year 2017-18 have conducted theAudit of the Secretarial Records and submitted their Report in MR-3 which is annexed tothis Report (Annexure-V). With respect to observation of Secretarial Auditor onNon-appointment of woman director on the Board the response of your Board is that theCompany is in search of suitable person who has sectoral and financial background withintegrity and is in the process of identifying the person for complying with Regulation 17of Listing Regulations 2015. The Board of Directors at its meeting held on 30thMay 2018 has re-appointed D. Hanumanta Raju & Co. Practicing Company SecretariesHyderabad as Secretarial Auditor for the financial year 2018-19.

TRANSFER OF UNCLAIMED DIVIDEND AMOUNTS TO IEPF:

Pursuant to the provisions of Section 205A(5) of the Companies Act 1956 and / orSection 124(5) of the Companies Act 2013 previously declared dividends which remainedunclaimed for a period of seven years have been transferred by the Company to theInvestor Education and Protection Fund (IEPF) established by the Central Governmentpursuant to Section 205C of the Companies Act 1956 and / or Section 125 of the CompaniesAct 2013.

DIRECTORS EMPLOYEES AND THEIR REMUNERATION:

The particulars of employees required to be furnished pursuant to Section 197(12) ofthe Companies Act 2013 read with sub rule (2) to Rule 5 to the Companies (Appointment& Remuneration) Rules 2014 as amended are not required to be provided as there wereno employees drawing remuneration more than the stipulated limits. Details of RemunerationPolicy and payment of remuneration to all Directors / Key Managerial Personnel / othermanagerial employees is given in the Report on Corporate Governance under the headNomination and Remuneration Committee which forms part of this Report. Managing Directorand other Whole Time Directors have not received any remuneration or commission fromholding or subsidiary companies as the Company do not have such companies. In the opinionof the Board the level and composition of remuneration to Directors Key ManagerialPersonnel and other managerial employees is reasonable and sufficient to attract retainand motivate the people who could run the Company efficiently. The Board affirms that theremuneration paid is in accordance with Remuneration Policy of the Company. Therelationship between performance and remuneration is clear and meets appropriatebenchmarks and that the remuneration criteria succinctly balances between fixed andvariable pay wherever set reflecting short and long term performance objectivesappropriate to the working of the Company and its goals. Disclosures required to be madepursuant to Rule 5 to the Companies (Appointment & Remuneration) Rules 2014 areattached to this report (Annexure-II).

DEMATERIALISATION OF EQUITY SHARES:

The Agreements entered into by the Company with the two Depositories viz. NationalSecurities Depository Limited (NSDL) and Central Depository Services (India) Limited(CDSL) for dematerialisation of Shares are in force and the Company's Shares are indematerialised mode under ISIN No. INE176C01016. As per the Securities and Exchange Boardof India(SEBI) directives the Equity Shares of the Company are to be compulsorily tradedin dematerialisation form with effect from 26th Febru-ary 2001. Further theSecurities and Exchange of India (SEBI) in its circular dated 20.04.2018 has stated thatthe equity shares have to compulsorily converted into dematerialization before 5thDecember 2018 and thereafter dematerialized equity shares are only eligible for transferswith the exception of transmissions. In view of the significant benefits that accrue ondematerialisation of securities Members may avail the facility.

LISTING OF SHARES ON STOCK EXCHANGES:

The Equity Shares of the Company are listed on BSE Ltd (formerly The Bombay StockExchange Limited) Stock Code:526093 and The National Stock Exchange of India Limited (NSE)Stock Code: SATHAISPAT and are regularly traded. The listing fee to these Stock Exchangeshas been paid upto date.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO:

Information on conservation of energy technology absorption foreign exchange earningsand out go required to be disclosed under Section 134 of the Companies Act 2013 read withCompanies (Accounts) Rules 2014 is given in the Annexure forming part of this Report(Annexure-I).

FIXED DEPOSITS:

During the year the Company has not accepted fixed deposits within the meaning ofSection 2(31) read with Sections 73 and 74 of the Companies Act 2013. There are no overduedeposits or outstanding deposits as on the Balance Sheet date.

RISK MANAGEMENT:

The Board engaged itself with the task of Risk Management by preparing implementingand monitoring the risk management plan of the Company. The Board apart from ensuring theeffectiveness of risk management covering internal financial risks and controls alsoreviews the same on regular basis. Major risks identified are monitored on a regular basisby the Board.

INTERNAL FINANCIAL CONTROL AND SYSTEMS AND THEIR ADEQUACY:

The Company has put in place Internal Financial Controls that will ensure the policiesand procedures of the Company are followed regularly so that the business of the Companyis conducted in orderly and efficient manner. The Internal Financial Controls are appliedinter alia to test various aspects in the conduct of business including adherence toCompany's policies safeguarding Company's assets prevention and detection of frauds anderrors or irregularities the accuracy and completeness of the accounting records andtimely preparation of reliable financial information and the financial statements. In theopinion of the Board such Internal Financial Controls are adequate and were operatingeffectively. During the year such Internal Financial Controls have been tested and noreportable weaknesses in the design and operations were observed. With respect to theIndependent Auditors' Report for the year ended 31st March 2018 which formspart of the Annual Report containing qualification on the Internal Financial Controls yourBoard of Directors state that the management replies to the same are contained in NoteNo.38 to the financial statements which is self-explanatory.

RELATED PARTY TRANSACTIONS:

There are no material related party transactions entered into by the Company fallingwithin the meaning of Section 188(1) of the Companies Act 2013. Other related partytransactions contracts or arrangements entered into by the Company are in the ordinarycourse of business and at arm's length price. The details of these contracts orarrangements or transactions as required to be disclosed in terms of Section 134(3)(h)areprovided in Form AOC-2 which forms part of this Report (Annexure-III) and accompanyingFinancial Statements.

PARTICULARS OF LOANSGUARANTEES AND INVESTMENTS:

The Company has not granted loans guarantees or made investments in or to companiesfirms or other parties covered in the Register maintained under Section 189 of theCompanies Act 2013. The Company has not extended any loans to the employees for purchaseof its shares. Other investments made by the Company are given in the accompanyingFinancial Statements which are in the ordinary course of business.

EXTRACTS OF ANNUAL RETURN:

Information on Extracts of Annual Return required to be disclosed under Section 92(3)of the Companies Act 2013 read with Rule 12 of Companies (Management and Administration)Rules 2014 is given in the prescribed Form MGT-9 forming part of this report(Annexure-IV).

CORPORATE SOCIAL RESPONSIBILITY:

The details with respect to Corporate Social Responsibility of the Company as requiredto be disclosed in terms of provisions of Section 135 read with Section 134(3)(o) and Rule9 of Companies (Accounts) Rules 2014 are given in the Report on Corporate Governanceattached to and forming part of this Report. During the year the Company in terms ofprovisions of sub section 5 to Section 135 of the Companies Act 2013 is not required toearmark any fund for Corporate Social Responsibility activities in view of the losses.

MATERIAL CHANGES: Adoption of S4A scheme:

The Company during the year considering the delay in repayment of term loans includinginterest thereon and in meeting the obligations of short term borrowings and letters ofcredit has requested the secured lenders to consider and adopt the "Scheme forSustainable Structuring of Stressed Assets' (S4A) with respect to the total exposure tothe Company on the term loans and working capital loans.

The Lenders having constituted Joint Lenders Forum (JLF) in their meeting held oni.e.07-Jun-2017 have acceded in-principle to the request of the Company for S4A schemewith Reference date i.e. 07-Jun-2017 which scheme shall be finalised within 180 days fromReference Date in terms of guidelines / directions of Reserve Bank of India (RBI) issuedfrom time to time with respect to S4A scheme. Under the S4A scheme the debt exposure ofthe Company based on Techno Economic Viability study will be bifurcated into two parts–Sustainable and Unsustainable debt. The Sustainable debt amount which shall not beless than 50% of existing debt shall have to be serviced by the Company on the same termsas that of existing terms and conditions including repayment schedules. The Unsustainabledebt portion of the exposure shall be converted in to equity or other instruments asmutually agreed between the Company and the JLF by following the RBI guidelines for theS4A scheme with a clearly spelt out terms. JLF gets 180 days from Reference Date toformulate the resolution plan and implement the same after due internal approvals.

The S4A scheme however could not be implemented due to non-fulfillment of mandatorynorm of sufficient cash flows six months prior to and after the reference date and thesame was called off on 19.11.2017. Consequent to the calling off the implementation of theS4A scheme and the debt of the Company was classified by JLF as Non-Performing Asset(NPA).

Debt Restructuring:

Consequent to the calling off the implementation of the S4A scheme and classifying thedebt of the Company by JLF as Non-Performing Asset (NPA) the Company has requested the JLFto consider deep restructuring of the debt which the banks have considered favourably andinitiated the process of restructuring which is under different stages of progress andshall be implemented upon full tie up of restructuring package. The restructuring planenvisages extended tenors of repayment of loans and sanction of additional working capitalfunding. The restructuring plan also envisages no haircuts to banks and the sacrificeamount on interest concessions requested by the Company would be fully re-compensed afterthe end of restructuring scheme. Promoters have offered to pledge their total shareholdingto the secured lenders apart from offering some personal assets as a collateral securityupon sanction of the restructuring plan. The existing personal guarantees of Whole-timePromoter Directors continues to be inforce. The management believes that the shortage ofworking capital funds faced by the Company will be temporary and lenders will consider therequest for deep restructuring of the debt and arrive at the resolution plan at theearliest.

The Company has considered adopting the restructuring scheme of loans for the firsttime in its history of over two and a half decades.

Plant shutdown:

Due to tight cash flows and non-availability of working capital limits the operationsat ferrous division have been impacted and the plant was under shut down since 12thJune 2017. The operations at Kudithini works too were impacted where Metallurgical Cokefacility is running partly on job work basis and partly for own production and powergeneration has been restarted. This impact is likely to continue until the restructuringof the loans are done by the secured lenders.

Barring the above there are no material changes and commitments affecting thefinancial position of the Company which have occurred between the end of the financialyear to which the Financial Statements relates and the date of this Report.

ORDERS PASSED BY THE REGULATORS COURTS OR TRIBUNALS:

There are no significant and material orders passed by the Regulators or Courts orTribunals impacting the going concern status and Company's operations in future. Howeverthe Company in the year 2015-16 along with some other buyers of Iron Ore contested beforethe Hon'ble High Court of Karnataka (HC) the levy of Forest Development Tax (FDT) by theminers on their sale of Iron Ore. The Hon'ble HC vide its judgement dated 15.02.2016 hasgranted partial relief to the Company and directed the Government of Karnataka (GOK) torefund the FDT collected earlier. Following the judgement the Company has vide its letterdated 09.03.2016 filed an application for refund of 2325.73 lakhs towards FDT collected inthe earlier years. However Government of Karnataka and some mining companies have sincegone on appeal before the Hon'ble Supreme Court against the above judgement. Company hasalso filed a petition before the Hon'ble High Court of Karnataka against collection ofForest Development Fee (FDF) on purchase of Iron Ore and the petition has been held infavour of the Company where an amount of Rs.264.11 lakhs was ordered to be refunded to theCompany. The Government of Karnataka has appealed before the Hon'ble Supreme Court againstthe Order of High Court of Karnataka. Pending disposal of these appeals the Company hasnot recognised the said refund claims in its books of account in the Financial Year2017-18 or in the earlier financial years.

SUBSIDIARY OR ASSOCIATE COMPANIES:

There are no subsidiary or associate companies to the Company as at the end of 31stMarch 2018. Accordingly no Consolidated Financial Statements is required to be preparedand reported.

CREDIT RATING:

During the year Brickwork Ratings India Private Limited. has assigned BWR D rating forthe Company's long term bank borrowings and BWR D for working capital limits a notch downconsidering the stress in the financial resources of the Company. The rating will berevisited by the Rating agency once the restructuring of the debt is implemented.

STANDALONE FINANCIAL STATEMENTS:

The accompanying Financial Statements and this Board's Report are prepared based onstandalone operations of the Company.

BOARD'S APPROVAL:

This Directors' Report has been considered approved and adopted by the Board ofDirectors at its meeting held on 14th August 2018. The accompanying FinancialStatements were approved and adopted by the Board of Directors at its meeting held on 30thMay 2018.

ACKNOWLEDGMENTS:

Your Directors take this opportunity to express their grateful thanks to Canara BankState Bank of India (formerly State Bank of Hyderabad) Andhra Bank Shareholders Centraland State Governments and valued suppliers and customers for their cooperation andsupport. The Board also places on record its appreciation of the valuable servicesrendered by the employees at all levels of the Company.

for and on behalf of the Board
(K. Thanu Pillai)
Place: Hyderabad Chairman
Date: 14.08.2018 (DIN:00025312)

ANNEXURE-I TO DIRECTORS' REPORT

Statutory information as required under Section 134(3) (m) read with Rule 8(3) of theCompanies (Accounts) Rules 2014 a) Conservation of Energy: The Company has set-upCaptive Power Generation Plants which utilise surplus Blast Furnace gas and waste heatfrom exhaust gases of Coke Ovens for generating Power apart from thermal coal. The PowerPlants have been functioning satisfactorily. The power requirement of operations is metfrom these Power Plants. b) Technology absorption: The technologies sourced in earlieryears from SINO STEEL for the Pig Iron plant and from Chinese Academy of AgricultureMechanisation Sciences (CAAMS) for Ductile Iron Pipe manufacturing plant at Haresamudramworks and Anshan Technology for Metallurgical Coke plant at Kudithini works alltechnologies sourced from P.R.China stand fully absorbed. c) The Company is not engagedinto any Research and Development activity and as such there is no expenditure incurred onResearch and Development activity. d) Foreign Exchange earnings and outgo:

( Amount in Rs.)
I) Foreign Exchange Earnings:
a) F.O.B value of exports : Nil
II) Foreign Exchange Outgo:
a) C.I.F. value of imports:
I. Raw materials : 240746551
ii. Capital goods : 12041679
b) Usance interest : 12921638

 

for and on behalf of the Board
(K. Thanu Pillai)
Place: Hyderabad Chairman
Date: 14.08.2018 (DIN:00025312)

ANNEXURE-II TO DIRECTORS' REPORT DIRECTORS EMPLOYEES AND THEIR REMUNERATION

DISCLOSURES REQUIRED TO BE MADE PURSUANT TO SECTION 197 (12) READ WITH RULE 5 TO THECOMPANIES(APPOINTMENT & REMUNERATION) RULES 2014 a) Details of Remuneration Policyand payment of remuneration to all Directors / Key Managerial Personnel / other managerialemployees is given in the Report on Corporate Governance under the head Nomination andRemuneration Committee which forms part of this Report. b) The particulars of employeesrequired to be furnished pursuant to Section 197(12) of the Companies Act 2013 read withsub rule (2) to Rule 5 to the Companies (Appointment & Remuneration) Rules 2014 asamended are not required to be provided as there were no employees drawing remunerationmore than the stipulated limits: c) The ratio of the remuneration of each Director to themedian remuneration of the employees of the Company for the financial year:

S.No. Directors Ratio
Independent Directors:
1. Shri K. Thanu Pillai 1.09
2. Shri Syed Anis Hussain* 3.41
3. Shri S.N.Rao 0.72
4. Smt Y.Prameela Rani # 0.59
5. Shri M.S.Rama Mohan Rao 0.59
Whole Time Directors:
6. Shri A.Naresh Kumar 46.38
7. Shri A.S.Rao 39.99
8. Dr. Shailendra Dasari 41.94

* Including arrears of previous year Rs.150000/-

# Ceased to be director with effective from 20.11.2017 by virtue of resignation.

Ceased to be director with effective from 01.10.2017 on expiry of tenure ofappointment. d) The percentage increase in remuneration of each Director Chief FinancialOfficer Chief Executive Officer Company Secretary or Manager if any in the financialyear:

S.No. Directors % increase
Independent Directors:
1. Shri K. Thanu Pillai 50.56
2. Shri Syed Anis Hussain 8.91
3. Shri S.N.Rao 71.15
4. Smt Y.Prameela Rani -14.29
5. Shri M.S.Rama Mohan Rao -14.29
Whole Time Directors:
6. Shri A.Naresh Kumar 12.31
7. Shri A.S. Rao 13.89
8. Dr. Shailendra Dasari 8.96
Key Managerial Personnel:
9. Shri K.V.Krishna Rao 12.10

1. Remuneration of Independent Directors for current year includes fees for committeemeetings.

2. Remuneration of Shri Syed Anis Hussain is computed considering the arrears ofprevious year of Rs.150000/-as if paid in the previous year.

3. Remuneration of Smt Y. Prameela Rani and Shri M.S. RamaMohan Rao is up to the dateof their resignation or expiry of tenure respectively and hence is lower.

e) The percentage increase in the median remuneration of employees in the financialyear:(-)6.39% f) The number of permanent employees on the rolls of Company:1024 g) Theexplanation on the relationship between average increase in remuneration and Companyperformance: The weighted average increase in remuneration of employees across includingthose who left the services of the Company and new joiners is (-)3.32%. The individualincrements varied from 6% to 14% based on the performance of each employee. h) Comparisonof the remuneration of the Key Managerial Personnel against the performance of theCompany:

S.No. Description Amount Rs. Comparative%
1. Aggregate remuneration of Key Managerial Personnel during
financial year 2017-18 3707245
2. Revenue 2487308166
3. Loss before tax 3063643139
4. Remuneration of Key Managerial Personnel as % of Revenue 0.15
5. Remuneration of Key Managerial Personnel as % of profit before tax negative

i) Variations in the market capitalisation of the Company price earnings ratio as atthe closing date of the current financial year and previous financial year and percentageincrease over decrease in the market quotations of the shares of the Company in comparisonto the rate at which the Company came out with the last public offer:

S.No. Particulars 31.03.2018 31.03.2017 % change
1. Market capitalisation 908565000 2756235000 -67.04
2. Price Earnings Ratio -29.66 -4.26 -596.24
S.No. Particulars 31.03.2018 IPO price % change
April 1994
1. Market price -BSE 17.85 10.00 178.50
2. Market price -NSE 17.65 10.00 176.50

j) Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration: Theweighted average increase in remuneration of employees across including those who left theservices of the Company and new joiners is (-)3.32%. The percentile increase in theremuneration of managerial personnel is within the normal range of increase of otheremployees. k) Comparison of the each remuneration of the Key Managerial Personnel againstthe performance of the Company: The comparison is as provided in clause-h herein above. l)The key parameters for any variable component of remuneration availed by the Directors:There is no variable component of remuneration to Independent Directors. m) The ratio ofthe remuneration of the highest paid Director to that of the employees who are notdirectors but receive remuneration in excess of the highest paid director during the year:None of the employees receiving remuneration higher than that of remuneration highest paidto the Director. n) Affirmation that the remuneration is as per the remuneration policy ofthe Company: The Board affirms that the remuneration paid is in accordance withRemuneration Policy of the Company.

for and on behalf of the Board
(K. Thanu Pillai)
Place: Hyderabad Chairman
Date: 14.08.2018 (DIN:00025312)

ANNEXURE-III TO DIRECTORS' REPORT

FORM NO. AOC-2

(Pursuant to clause (h) of sub-section (3) of section 134 of the Companies Act 2013 andRule 8(2) of the Companies (Accounts) Rules 2014) Form for disclosure of particulars ofcontracts/arrangements entered into by the Company with related parties referred to insub-section (1) of section 188 of the Companies Act 2013 including certain arm's lengthtransactions under third proviso thereto

1 Details of contracts or arrangements or transactions not at arm's length basis :
(a) Name(s) of the related party and nature of relationship
(b) Nature of contracts/arrangements/transactions
(c) Duration of the contracts / arrangements / transactions
(d) Salient terms of the contracts or arrangements or transactions including the value if any During the financial year 2017-18 Sathavahana Ispat Limited has not entered into any contracts or arrange- ments or transactions that are not at arm's length basis.
(e) Justification for entering into such contracts or arrangements or transactions date(s) of approval by the Board
(f)
(g) Amount paid as advances if any:
(h) Date on which the special resolution was passed in general meeting as required under first proviso to section 188
2. Details of material contracts or arrangement or transactions at arm's length basis :
(a) Name(s) of the related party and nature of relationship
(b) Nature of contracts/arrangements/ transactions The details are provided in the Report on Corporate Governance and accompanying Financial Statements.
(c) Duration of the contracts / arrangements / transactions Transactions contracts or arrangements entered into by the Company are in the ordinary course of business on an annual renewal basis and at arm's length price.
(d) Salient terms of the contracts or arrangements or transactions including the value if any: These transactions were duly approved by the Audit Committee and the Board on 30th May 2017.
(e) Date(s) of approval by the Board if any:
(f) Amount paid as advances if any:

 

for and on behalf of the Board
(K. Thanu Pillai)
Place: Hyderabad Chairman
Date: 14.08.2018 (DIN:00025312)