To the Members
Your Directors have pleasure in presenting the 21stAnnual Reporttogether with the Standalone Audited Accounts for the year ended 31st March 2020
The performance of the Company for the Financial Year ended March312020 is as under:
(' in Lakhs)
|PARTICULARS ||31-Mar-20 ||31-Mar-19 |
|Total Revenue ||79142.14 ||102927.64 |
|Profit/ (Loss) before finance cost depreciation and tax expense ||6987.69 ||2241.35 |
|Finance cost ||347.06 ||996.55 |
|Profit / (Loss) before depreciation and tax expense ||6640.63 ||1244.81 |
|Depreciation ||2723.65 ||2962.16 |
|Profit/(Loss) before tax expense ||3916.98 ||(1717.36) |
|Tax expense || || |
|i. Tax expense of prior years || || |
|ii. Deferred Tax ||(2512.51) ||(1950.51) |
|Profit/(Loss) for the year ||6429.49 ||(3667.87) |
|Add: Other Comprehensive Income ||(13.05) ||(11.37) |
|Total Comprehensive Income/ (Loss) for the yeai ||6416.44 ||(3679.24) |
Review of operations:
During the year under review the total revenue of the company was Rs.791.42 crores as against the 1029.27 Crores.Net Profit recorded at 64.29 Crores as againstNet Loss of (36.67) crores in the Previous Year.
The Manufacturing Sales including power sales were Rs. 693.22Crores inthe current year compared to Rs.880crores in the previous year. The trading sales duringthe year amounted to Rs.87.20Crores compared to Rs.141.57Crores in the previous year.
State of Company's affairs and future outlook
As part of debt resolution lenders under Consortium agreed forsettlement of dues of the company under One Time Settlement Scheme (OTS). Till date thecompany received sanctions from majority of lenders including lead bank i.e. SBIconstituting 77.89% of the compromise offer. The company is actively pursuing sanctionsfrom remaining lenders.
The Company's financial performance has been affected mainly due toadverse steel markets weak demand and prices and non-availability of working capitalwhich have been compounded by the Covid-19 pandemic and other factors beyond the controlof the Company. Most of the lenders have agreed for the debt resolution by way of OTS andkeeping in view the expected gradual improvement in demand for steel in the nearby futurethe Company expects considerable improvement in its financial performance after the debtresolution. The impact of these developments is expected to be favorable on the Company'soperations and financials and the company has therefore prepared these financialstatements on the basis of going concern concept.
Listing of Equity Shares
The Equity Shares of your Company are listed on Bombay Stock ExchangeLimited and National Stock Exchange of India Limited. It may be noted that there are nopayments outstanding to the Stock Exchanges by way of Listing Fees. The company has paidthe listing fee for the financial year 2020-21.
Delisting from Calcutta Stock Exchange Limited (CSE)
The Company has made an application for voluntary delisting of equityshares from Calcutta Stock Exchange Limited (CSE) during the year 2017-18 and it's in workin progress and waiting for final order from CSE.
Unclaimed Suspense Account/Escrow Account:
In accordance with the procedure laid down in Schedule VI to the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Company hastransferred unclaimed shares of Equity shareholders (previously GSAL Shareholders)into onefolio in the name of "Steel Exchange India Limited -Unclaimed Suspense Account"and maintain details of shareholders whose shares are credited to the said UnclaimedSuspense Account.
Subsidiaries Joint Ventures or Associate Companies
Your company incorporated a wholly owned subsidiary company SEIL (HongKong) Ltd on 02nd June 2015 which was in dormant stage due to non- commencement ofbusiness operations since its incorporation. Your company does not have any Joint Venturesor associate companies except this company.
Number of Meetings of the Board of Directors
During the year ended March 312020 Four Board Meetings were held.
The dates on which the Board meetings were held are May 29 2019August 14 2019 November 08 2019 and February 12 2020.
Details of number of Meetings attended by each Director have been givenin the corporate governance report which forms part of the Annual Report.
Director's Responsibility Statement as required under Section 134 ofthe Companies Act 2013
Pursuant to the requirement under Section 134(5) of the Companies Act2013 with respect to the Directors' Responsibility Statement the Board of Directors ofthe Company hereby confirms:
i. that in the preparation of the Annual Accounts the applicableaccounting standards have been followed (except in payment/provision of interest tolenders);
ii. that the Directors have selected such accounting policies andapplied them consistently and made judgments and estimates that are reasonable and prudentso as to give a true and fair view of the state of affairs of the Company as at March312020 and of Profit and Loss Account of the Company for that period;
iii. that the Directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of this Actfor safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
iv. that the Directors have prepared the Annual Accounts for theFinancial Year ended March 312020 on a going concern basis;
v. that the Directors have laid down internal financial controls to befollowed by the company and that such internal financial controls are adequate and wereoperating effectively; and
vi. That the Directors have devised proper systems to ensure compliancewith the provisions of all applicable laws and that such systems were adequate andoperating effectively.
Statement on Declaration given by Independent Directors underSub-Section (6) of Section 149
The independent directors have submitted the declaration ofindependence as required pursuant to section 149(7) of the Companies Act 2013 statingthat they meet the criteria of independence as provided in sub-section(6).
Separate Meeting of Independent Directors
During the year under review the Independent Directors held theirseparate meeting on February 12 2020 inter alia to discuss:
- Review the performance of Independent Directors.
- Review the performance of the Non-Independent Directors.
- Review the performance of the committees and Board as a whole.
- Review the performance of the Chairman of the Company taking intoaccount the views of Executive Directors and NonExecutive Directors.
- Assess the quality quantity and timeliness of flow of informationbetween the Company management and the Board that is necessary for the Board toeffectively and reasonably perform their duties.
Particulars of Loans Guarantees and Investments under Section 186 ofthe Companies Act 2013
The company has not given any Loans / Guarantees and not made anyInvestments during the FY 2019-20 as specified under the provisions of section 186 of theCompanies Act 2013 read with Companies (Meetings of Board and its Powers) Rules 2014.
Related Party Transactions
All transactions entered into with Related Parties as defined under theCompanies Act 2013 and Regulation 23 of SEBI (LODR) Regulations 2015 during theFinancial Year were in the ordinary course of business and on an arms' length pricingbasis. There were no materially significant transactions with related parties during theFinancial Year which were in conflict with the interest of the Company. Suitabledisclosure as required by the Indian Accounting Standards (Ind AS-24) has been made in thenotes to the Financial Statements.
A statement in summary form of all the transactions entered into withthe related parties in the ordinary course of business details of individual transactionswith related parties are placed before the audit committee for the review from time totime. .The particulars of contracts or arrangements with related parties referred to insub-section (1) of Section 188 are prepared in Form No. AOC-2 pursuant to clause (h) ofsub-section (3) of Section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules2014 and the same is given in notes to accounts of the company wide note no 3.36.3 andalso brief details are annexed to Boards Report as Annexure-1
Transfer of Amount to Reserves
The Company doesn't propose to transfer any amount to the generalreserve for the Financial Year ended 31st March 2020. Dividend
The Board of Directors of the Company has not recommend Dividend forthe financial year ended March 312020.
During the period under review there was no change in the AuthorizedShare Capital of the Company
The Authorized Share Capital of the Company is Rs.3320000000/-(Rupees Three Hundred and Thirty Two Crores only) divided into 258000000 (Twenty Fivecrores Eighty Lakhs only) equity shares of Rs.10/- ( Ten only) each and 74000000(Seven Crore Forty Lakhs only) preference shares of Rs. 10/- (Ten only) each.
There was no change in Paid up Share Capital of the Company during theyear under review
The Company has not issued any shares with differential rights andhence no information as per the provisions of Section 43(a)(ii) of the Act read with Rule4(4) of the Companies (Share Capital and Debenture) Rules 2014 is furnished and theCompany has not issued any stock options to its employees.
The Company has not accepted any deposits from the public and as suchno amount on account of principal or interest on deposits from public was outstanding ason the date of the balance sheet in terms of Section 73 of the Companies Act 2013 duringthe year ended 31st March 2020.
Extracts of Annual Return
As required by Section 92(3) of the Act read with Rule 12(1) of theCompanies (Management and Administration) Rules 2014 extract of the Annual Return inForm MGT-9 is attached to this Report as Annexure-2.
Conservation of energy technology absorption foreign exchangeearnings and outgo pursuant to provisions of Section 134(3)(m) of the Companies Act 2013(Act) read with the Companies (Accounts) Rules 2014
Information with respect to conservation of energy technologyabsorption foreign exchange earnings and outgo pursuant to Section 134(3)(m) of the Actread with Companies (Accounts) Rules 2014 is prepared and the same is enclosed asAnnexure-3 to this Report.
The Board of Directors has not formed any risk management committee toidentify evaluate mitigate and monitor the risk associated with the business carried bythe company. The Audit committee/Board reviews the risk management plan and ensures itseffectiveness.
Corporate Social Responsibility
The Board of Directors has constituted a Corporate SocialResponsibility (CSR) Committee to monitor implementation of CSR activities of yourCompany. The details of the composition of the CSR Committee CSR policy CSR initiativesand activities during the year are given in the Annual Report on CSR activities inAnnexure -4 to this Report.
Committees of the Board
The Board has Audit Committee Nomination and Remuneration CommitteeStakeholders' Relationship Committee and Corporate Social Responsibility Committee. Thecomposition and other details of these committees have been given in the Report on theCorporate Governance forming part of the Annual Report.
A separate report on Corporate Governance is annexed as part of theAnnual Report along with the Auditor's Certificate on its compliance.
Management Discussion and Analysis
Management Discussion and Analysis Report for the year under review asstipulated under Listing Regulations is annexed herewith which forms part of this report.
Whistle Blower Policy and Mechanism
The Board of Directors has adopted Whistle Blower Policy. The WhistleBlower Policy aims for conducting the affairs in a fair and transparent manner by adoptinghighest standards of professionalism honesty integrity and ethical behavior. Allpermanent employees of the Company are covered under the Whistle Blower Policy.
A mechanism has been established for employees to report concerns aboutunethical behavior actual or suspected fraud or violation of Code of Conduct and Ethics.It also provides for adequate safeguards against the victimization of employees who availof the mechanism and allows direct access to the Chairperson of the audit committee inexceptional cases.
The Board of Directors has carried out an annual evaluation of its ownperformance board committees and individual directors pursuant to the provisions of theAct and the corporate governance requirements as prescribed by SEBI (Listing Obligationsand Disclosure Requirement) Regulations 2015. The performance of the Board was evaluatedby the board after seeking inputs from all the directors on the basis of the criteria suchas the board composition and structure effectiveness of the board processes in formationand functioning etc. In a separate meeting of independent directors performance ofnon-independent directors performance of the Board as a whole and performance of theChairman was evaluated taking into account the views of executive directors andnon-executive directors. The same was discussed in the board meeting that followed themeeting of the independent directors at which the performance of the board itscommittees and individual directors was also discussed. Performance evaluation ofindependent directors was done by the entire board excluding the independent directorbeing evaluated.
Directors and Key Managerial Personnel
In accordance with the provisions of Section 152 of the Companies Act2013 Shri Bavineni Suresh and Shri Veeramachaneni Venkata Krishna Rao will be retiring byrotation at the ensuing Annual General Meeting and being eligible offer themselves forre-appointment. Accordingly the resolutions seeking the approval of the members for thesaid re-appointments have been incorporated in the Notice of the AGM.
Shri B Suresh Kumar (DIN: 00206473) was re-appointed as Joint ManagingDirector of the Company for a further period of three years with effect from October 27th2019 pursuant to the provisions of Sections 196 and 197 read with Schedule V and all otherapplicable provisions of the Companies Act 2013 and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014.
Shri C Siva Prasad (DIN: 01904785) was reappointed as a IndependentDirector of the company for a period of five years with effect from 31 st December 2019till 30th December 2024.
Shri R Ramachandra Rao (DIN: 00226945) was reappointed as a IndependentDirector of the company for a period of five years with effect from 31st December 2019till 30th December 2024.
Shri K Krishna Rao (DIN: 00382726) was reappointed as a IndependentDirector of the company for a period of five years with effect from 31 st December 2019till 30th December 2024.
Shri G Venkata Narayana Reddy (DIN: 05358117) was reappointed as aIndependent Director of the company for a period of five years with effect from 31stDecember 2019 till 30th December 2024.
Policy on directors' appointment and remuneration
A gist of policy of the Company on directors' appointment andremuneration including criteria for determining qualifications positive attributesindependence of a director and other matters as required under sub-section (3) of Section178 of the Companies Act 2013 is available in the Corporate Governance Report.
The company's policy on directors' appointment and remuneration andother matters provided in Section 178 (3) of the Act have been disclosed in the corporategovernance report. Under Section 178 (3) of the Companies Act 2013 the Nomination andRemuneration Committee of the board has adopted a policy for nomination remuneration andother related matters for directors and senior management personnel. A gist of the policyis available in the Corporate Governance Report.
M/s. Bhavani & Co. Chartered Accountants (FRN 012139S) wereappointed as Statutory Auditors of the Company in the Annual General Meeting held on 30thSeptember 2019 for a term of 5 (five) consecutive years. M/s. Bhavani & Co.Chartered Accountants have confirmed their eligibility and qualification required underthe Act for holding the office as Statutory Auditors of the Company.
The para-wise management response to the qualifications / observationsmade in the Independent Auditors Report is stated as under:
Attention is drawn to point No 8 of the Independent Auditors Reportregarding Basis for Qualified Opinion. The detailed clarification of the same is providedin Note No. 3.11 of the Accounts of the Standalone Audited Financial Statements of theCompany.
The Auditors observation in point No. 8of the Annexure to the Auditorsreport regarding Interest due to financial institution and banks aggregating Rs 421.28Crwere due to severe liquidity crisis being faced by the Company on account of continuedcash losses incurred.
The majority of the lenders have stopped charging interest on debtssince the dues from the Company have been categorized as Non-performing Asset. The Companyis in active discussion / negotiation With the Lenders for a suitable debt resolution byway of debt restructuring at a sustainable level. Pending finalization of a suitable debtresolution the Company has stopped providing for accrued Interest and unpaid effectivefrom 1st January 2018 in its books of accounts as the same is under discussion with theLenders. The amount of such accrued and unpaid interest (including penal interest andother charges) not ' provided for is estimated at Rs.421.28 Crores for the year ended 31stMarch 2020 and the same has not been considered for preparation of the financialstatements for the year ended 31st March 2020.
Cost Aud it/Cost Auditors:
The Products classified as "Steel and Electricity"manufactured by the Company are subject to Cost Audit in terms of Sec. 148 of theCompanies Act 2013 read with the rules issued there under by the Central Government.
The Cost Audit Report for year ended 31st March 2019 was reviewed bythe Audit Committee at its meeting held on August 14 2019 and has been filed with MCA on12th September 2019.
The Board of Directors of the Company has appointed M/s. Pavuluri&Co. Chartered Accountantsas Internal Auditors to perform Internal Audit of the operationsof the Company for the Financial Year 2019-20 and the Internal Auditors have presented theobservations to the Audit Committee at the meetings of the board held on 14.08.201908.11.2019 12.02.2020 and 29.07.2020 respectively.
Internal Control Systems and their Adequacy
The Company has an Internal Control System commensurate with the sizescale and complexity of its operations. The scope and authority of the Internal Auditor iswell defined in the company. To maintain its objectivity and independence the InternalAuditor reports to the Chairman of the Audit Committee of the Board.
The Internal Auditor monitors and evaluates the efficacy and adequacyof internal control systems in the Company its compliance with operating systemsaccounting procedures and policies at all locations of the Company. Based on the report ofInternal Auditor process owners undertake corrective action in their respective areas andthereby strengthen the controls. Significant audit observations and corrective actionssuggested are presented to the Audit Committee of the Board.
Pursuant to the provisions of Section 204 of the Act and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 your Directors hadappointed M/s. BSS& Associates Practicing Company Secretaries Hyderabad to undertakethe Secretarial Audit of your Company for the financial year 2019-20. The SecretarialAudit Report does not contain any qualifications reservation or adverse remarks. TheReport in Form MR-3 is enclosed as Annexure-5.
Maintenance of Cost Records
The Company is required to maintain cost records of the Company asspecified under Section 148 (1) of theCompanies Act 2013. Accordingly the Company hasproperly maintained cost records and accounts.
Particulars of employees
The ratio of remuneration of each director to the median of employees'remuneration as per Section 197(12) of the Companies Act 2013 read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 forms part ofthe Board's report.
A statement containing the names of every employee posted throughoutthe financial year and in receipt of a remuneration of Rs.1.20 Crore or more or postedfor part of the year and in receipt of Rs.8.50 lakh or more a month under Rule 5(2) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 formspart of the Board's report enclosed as Annexure - 6
Details in respect of frauds reported by Auditors under Section 143(12)other than those which are reportable to the Central Government
There were no frauds reported by the Statutory Auditors underSub-section 12 of Section 143 of the Companies Act 2013 along with the Rules made thereunder.
The Company has devised proper systems to ensure compliance with theprovisions of all applicable Secretarial Standards issued by the Institute of CompanySecretaries of India and that such systems are adequate and operating effectively.
All properties and insurable interests of the Company includingbuilding plant and machinery and stocks have been fully insured.
Change in the nature of business
There is no change in the nature of business of the Company.
The details of significant and material orders passed by the regulatorsor courts or tribunals impacting the going concern status and company's operations infuture
There are no significant and material orders passed by the regulatorsor courts or tribunals impacting the going concern status and company's operations infuture
Material changes and commitments
During the year under review the majority of the lenders have stoppedcharging interest on debts since the dues from the Company have been categorized asNon-performing Asset. The Company is in active discussion / negotiation With the Lendersfor a suitable debt resolution by way of debt restructuring at a sustainable level.Pending finalization of a suitable debt resolution the Company has stopped providing foraccrued Interest and unpaid effective from 1st January 2018 in its books of accounts asthe same is under discussion with the Lenders. The amount of such accrued and unpaidinterest (including penal interest and other charges) not ' provided for is estimated atRs.421.8 Crores for the year ended 31st March 2020 and the same has not been consideredfor preparation of the financial statements for the year ended 3lst March 2020. Exceptthis there are no Material changes and commitments in the business operations of theCompany from the financial year ended 31stMarch 2020 to the date of signing of theDirector's Report.
Prevention of Sexual Harassment at workplace
The Company has in place a Prevention of Sexual Harassment Policy inline with the requirements of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013. An Internal Committee has been set up to redresscomplaints received regarding sexual harassment. During the financial year 31st March2020 the company has not received any complaints pertaining to sexual harassment.
Industrial Relations and Human Resources
Your company believes that its employees are one of the most valuableassets of the Company and the Board appreciates the employees across the cadres for theirdedicated service to the company and expects their continuous support and higher level ofproductivity for achieving the targets set for the company. During the year under reviewthe company organized various training programmes at all levels to enhance skills ofemployees. The total employee strength is over 738 and strength of trainees is over 81 ason 31st March 2020.
The Directors take this opportunity to place on record their sincerethanks to the Banks and Financial Institutions Insurance Companies Central and StateGovernment Departments and the shareholders for their support and co-operation extended tothe Company from time to time. Directors are pleased to record their appreciation of thededicated services of the employees and workmen at all levels.
On behalf of the Board of Directors For Steel Exchange India Limited
|Place: Visakhapatnam ||B. Suresh Kumar ||B. Satish Kumar |
|Date: 02.09.2020 ||Joint Managing Director ||Chairman and Managing Director |
| ||(DIN:00206473) ||(DIN:00163676) |