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Shah Alloys Ltd.

BSE: 513436 Sector: Metals & Mining
NSE: SHAHALLOYS ISIN Code: INE640C01011
BSE 00:00 | 04 Mar 8.37 0
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8.37

HIGH

8.37

LOW

8.37

NSE 00:00 | 05 Mar 6.80 -0.30
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6.80

HIGH

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OPEN 8.37
PREVIOUS CLOSE 8.37
VOLUME 170
52-Week high 12.96
52-Week low 4.51
P/E
Mkt Cap.(Rs cr) 17
Buy Price 8.49
Buy Qty 100.00
Sell Price 8.37
Sell Qty 1885.00
OPEN 8.37
CLOSE 8.37
VOLUME 170
52-Week high 12.96
52-Week low 4.51
P/E
Mkt Cap.(Rs cr) 17
Buy Price 8.49
Buy Qty 100.00
Sell Price 8.37
Sell Qty 1885.00

Shah Alloys Ltd. (SHAHALLOYS) - Director Report

Company director report

Dear Members

Your Directors are pleased to present the 29th Annual Report of your company on theoperations and performance along with the Audited Financial Statements for the year endedon 31st March 2019.

FINANCIAL HIGHLIGHTS

Particulars March 31 2019 March 31 2018
Total Revenues 576.66 480.53
Less: Total Expenditure 569.36 480.63
Profit / (Loss) before interest depreciation extraordinary item and tax 7.30 (0.10)
Less: Depreciation and Interest 13.01 13.64
Profit / (Loss) after depreciation and Interest but before extraordinary item and Tax. (5.71) (13.74)
Less: Extraordinary item (6.78) 140.88
Profit after Extraordinary item but before tax (12.49) 127.14
Less: Tax Expense / Deferred tax (13.24) 85.04
Net Profit available for Appropriation 0.75 42.09
Balance to be carried forward 0.79 42.37

STATE OF COMPANY'S AFFAIRS / PERFORMANCE OVERVIEW

During the year under review Total revenue from Operations and from other operatingincome increased from Rs. 480.53 crores in the previous year to Rs. 576.66 crores. Companyhas registered a profit of Rs. 0.75 crores in comparison to the profit of Rs. 42.09 croresduring previous year.

During the year under review Company has been regularly paying all the instalments asper the terms of settlements with banks and Financial Institution

DIVIDEND

Due to high accumulated losses your Directors have not recommended dividend for thefinancial year 2018-19.

BUSINESS ACTIVITY

The company is engaged in manufacturing of wide range of Stainless Steel alloy &Special steel Carbon/Mild Steel and Armour Steel in Flat and Long products. There hasbeen no change in the nature of business of the Company.

SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES

Sr. No. Name of the Company CIN/GLN Concern X of shares held by Company Applicable Section
1. S.A.L. Steel Limited L29199GJ2003PLC043148 Associate 35.61% 2(6)

The Consolidated Financial Statements of the Company and its Associate viz. SAL SteelLtd. has been prepared in accordance with the relevant Accounting Standards of theInstitute of Chartered Accountants of India duly audited by the Statutory Auditors andform part of the Annual Report and are reflected in the Consolidated Accounts.

Pursuant to the provisions of Section 129(3) of the Act a statement containing salientfeatures of the financial statements of the Company's associate in Form AOC-1 is attachedto this report as Annexure - 1.

DEPOSIT

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..

REGULATORY STATEMENT

In conformity with provision of regulation 34(2)(c) S 53(b) of SEBI (LODR) Regulations2015 the Cash Flow Statement for the year ended 31.03.2019 is annexed hereto. The equityshares of the Company are listed on the BSE Ltd. and the National Stock Exchange of IndiaLtd. (NSE).

The Company has paid listing fees for the year 2019-20 to above stock exchanges.

DETAILS OF DIRECTORS OR KMPs APPOINTMENT OR RESIGNATION

The Board of Directors consists of 8 members of which 5 are Independent Directorsincluding one Women Independent Director.

During the year under review there is no change in the Composition of the Board.However during the current financial year Shri Vinod Kumar Shah resigned from the post ofHead - Legal cum Company Secretary S Compliance officer of the Company w.e.f. 10th April2018 and Shri Jayesh Bavsar was appointed as the Company Secretary of the Company w.e.f.01.10.2018 and due to his personal reasons Shri Jayesh Bhavsar resigned from the post ofCompany Secretary S Compliance officer of the Company w.e.f. 01.11.2018. The Boardappreciates the valuable services rendered by them during their tenure. Thereafter duringthe year Shri Vinay Kumar Mishra was appointed as the Company Secretary and ComplianceOfficer of the Company w.e.f. 04.01.2019.

MEETINGS OF THE BOARD

The Board met four times during the financial year. Details of meetings are given inthe Corporate 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 meets 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.

BOARD DIVERSITY

A diverse Board enables efficient functioning through differences in perspective andskill and also fosters differentiated thought processes at the back of varied industrialand management expertise gender knowledge and geographical background. The Companyfollows diverse Board structure.

BOARD EVALUATION

As per the provisions of the Companies Act 2013 and SEBI (Listing Obligation andDisclosure Requirements) Regulations 2015 the formal annual evaluation was carried outfor the Board's own performance its committee S Individual Directors. The manner anddetail in which evaluation was carried out is stated in the Corporate Governance Reportwhich is annexed and 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 2019 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 S D Technologyabsorption and foreign Exchange earnings / outgo are separately provided in the annexureto this report as Annexure - 2.

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 business activities. The Committee reviews strategic decisions of the Company onregular basis reviews the Company's portfolio of risks and considers it against theCompany's Risk Appetite.

VIGIL MECHANISM POLICY

The Company had implemented a vigil mechanism where by 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 whistleblowers 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. However the average net profitcalculated as per section 197 of the Companies Act 2013 of last three preceding years isnegative therefore provisions related to expenditure of atleast two percent of theaverage net profits in CSR activities is presently not applicable 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 31st March2019 as far as possible and to the extent if any accounting standards mentioned by theauditors in their report as not complied with all other applicable accounting standardshave 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 at www.shahalloys.com.

DISCLOSURE UNDER SECTION 22 OF THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT2013

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 Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are annexed to this Report as Annexure -3. 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 applicable since there was noemployee of the Company including Executive Directors who was in receipt of remunerationin excess of the limits set out in the said rules.

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 on arm's lengthbasis and as such did not attract provisions of Section 188 (1) of Companies Act 2013.Company has formulated policy on related party transactions. Particulars of related partytransactions pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies(Accounts) Rules 2014 in Form AOC-2 is attached at Annexure - 4. Approvals from the AuditCommittee are obtained even for transactions which are in ordinary course of business andrepetitive in nature. Further on quarterly basis disclosures are made to the AuditCommittee and to the Board in its meetings. Details of related party transactions aregiven in the notes to financial statements.

AUDITORS AND AUDIT REPORTS

a) Statutory Auditors

Members at its 27th Annual General Meeting held on September 30 2017 approved theappointment of M/s. Parikh S Majmudar Chartered Accountants as statutory auditors for aterms of five years as per provisions of the Companies Act 2013.

b) Cost Auditors

Pursuant to the provisions of Section 148 of the Companies Act 2013 and the Rules madethere under M/s. Ashish Bhavsar S Associates Cost Accountants were appointed for auditingcost accounting records of the Company for the year ending 31st March 2019. Board hasfurther appointed M/s. Ashish Bhavsar S Associates Cost Accountants as Cost Auditors forthe year ending 31st March 2020 subject to approval of remuneration in the forthcomingAnnual General Meeting.

c) Internal Auditor

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.

d) Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act 2013 read with rulesmade thereunder the Board of Directors has appointed M/s Kamlesh Shah S Co. PracticingCompany Secretaries as Secretarial Auditor to conduct Secretarial Audit of the Companyfor the Financial Year 2019-20. The report submitted by the Secretarial Auditor in FormMR-3 for the financial year ended as on 31st March 2019 is attached to this report asAnnexure - 5.

BOARD'S RESPONSE ON THE REMARKS MADE BY STATUTORY AUDITORS

The Directors submit their explanations to various observations made by the Auditors intheir report for the year 2018-19. Para nos. of Auditors' Report and reply are us under:

Basis for Qualified Opinion - Para 1 of Standalone and Consolidated IndependentAuditor's Report

On account of maturity of foreign currency convertible Bonds (FCCB) on 22.09.2011 dueshave been frozen. On 13.09.2010 the Company was declared as Sick Unit by Hon'ble BIFR u/s3(1)(0) of SICA. It was taken a conscious decision that the principal amount be frozen onthe date of maturity and no further exchange gain / loss and interest to be provided onFCCB. This liability was frozen on the maturity.

Para 2 of Standalone and Consolidated Independent Auditor's Report

On account of non-payment of principle and interest to the Banks debts were declaredNPA by the Banks. Since Company wants to settle the dues amicably with the Banks it didnot provide for interest.

Para 3 of Standalone and Consolidated Independent Auditor's Report

It is expected that the impact of "Effective Interest Method" to the FinanceCost as per the Requirements of IND AS 109 on the financial Results will not be materialenough and hence the Management has not given effect of the same in the consolidatedfinancial results.

Annexure A to Standalone Independent Auditors' Report - Para viii

As per the scheme sanctioned by CDR (EG) consortium bankers were required to giveworking capital for the optimal utilization of production capacity. However in theabsence of non availability of funds from the lenders the accruals were not in line withthe sanctioned scheme and hence Company could not utilize optimally its productioncapacity. In view of this company was not able to make payments to banks/institutions anddebenture holders as per the sanctioned scheme. However before due date of repaymentCompany had approached Hon'ble BIFR for declaring it as a Sick company under Section3(1)(0) of the SICA and was declared so before the due date i.e. September 2011. Onaccount of sick status of the company payments will be made as per the scheme as may beapproved by the Hon'ble BIFR.

Almost of the banks assigned the debts to various Asset Reconstruction Companies(ARCs). Company has entered into Settlement Agreements with ARCs. Company has madeproposal settlement with other banks financial institution and ARCs. Company is activelynegotiating with lenders and ARCs' for settlement of debts and expecting a settlementsoon.

On account of maturity of Foreign Currency Convertible Bonds (FCCB) on 22.09.2011 dueshave been frozen on maturity since company was declared Sick company by Hon'ble BIFR u/s3(1)(o) of SICA. In view of the insufficient accruals of the Company the cash flow is notsufficient enough to pay to the FCCB holders. The company's operations are not profitableand market conditions of steel industries are very bad. All the steel industries in Indiaat large is facing crisis due to dumping of material from China and Company is also not anexception to that.

Para 4 of Consolidated Independent Auditor's Report

It is expected that the loss of allowance if any as per Expected credit loss Method onthe financial assets will not be material enough and hence the Management has not giveneffect of the same in the consolidated financial results.

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 financialsof 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 there under is annexed to this reportat Annexure - 6.

APPRECIATION

Your Directors place on record their sincere appreciation for the valuable support andco-operation as received from government authorities Financial Institutions Banks andARCs during the year. Directors are also thankful for the support extended by CustomersSuppliers and contribution made by the employees at all level. Directors would also liketo acknowledge continued patronage extended by Company's shareholders in its entireendeavor.

For and on behalf of the Board
Sd/-
Date: 30th May 2019 Rajendra V. Shah
Place: Santej Chairman
(DIN: 00020904)

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