Sunflag Iron & Steel Company Ltd.
|BSE: 500404||Sector: Metals & Mining|
|NSE: SUNFLAG||ISIN Code: INE947A01014|
|BSE 00:00 | 29 May||28.95||
|NSE 00:00 | 29 May||29.00||
|Mkt Cap.(Rs cr)||522|
|Mkt Cap.(Rs cr)||521.74|
Sunflag Iron & Steel Company Ltd. (SUNFLAG) - Director Report
Company director report
Your Directors take pleasure in presenting the Thirty-third (33rd) Annual Reportalongwith the Audited Financial Statements of the Company forthe year 2018-2019 ended 31s'March 2019.
The financial year under review could not see consistency in the demand supply scenarioin the steel market throughout the year particularly in the Automobile sector. Howeverthe Company could maintain capacity utilization at its maximum and remained stable duringthe year. This was due to the Company's potential to cater all sub-segment within theAutomobile sector. Further the input cost kept on increasing trend during the second halfof the financial year which has resulted in marginal drop in the bottom line forthe yearended 31st March 2019. EBIDTAas percentage to total income forthe year was 11.11% ascompared to 11.82% for the previous year.
1. FINANCIAL RESULTS
The summarised financial results for the year are as follows:-
TheTotal Income of your Company for the financial year 2018-2019 stood at Rs. 224061Lakh as compared to Rs. 214612 Lakh of the previous financial year. Your Company hasended the financial year 2018-2019 with a profit after tax of Rs. 11441 Lakh as againstthe previous financial year's Rs. 12867 Lakh. After taking into account the broughtforward profit of Rs. 61627 Lakh your Company has carried forward an amount of Rs.71600 Lakh to the Balance Sheet after appropriation of Rs. 1086 Lakh towards Dividendincluding Dividend distribution tax.
The Company is in need of more funds through internal accruals to cope up with theterms and conditions of the lending banks financing the ongoing capital projects under theexpansion programme which will enable future growth of the Company.
As such the Board of Directors feels appropriate and are pleased to recommend aDividend @5% (i.e. Rs. 0.50) per Equity Share on the Equity Shares in the Capital of theCompany for the financial year 2018-2019 ended 31st March 2019 subject to approval ofthe Members in the ensuing Thirty-third (33rd) Annual General Meeting of the Company.
4. SHARE CAPITAL
During the financial year 2018-2019 ended 31st March 2019 under review there is nochange in the capital structure of the Company and accordingly the issued subscribed andpaid-up Share Capital of the Company stand at Rs. 1802194480/- divided into180219448 equity shares of face value of Rs. 10/- each as on 3181 March 2019.
5. MARKET SCENARIO
Although Indian steel industry have seen a bit growth during the first half of thefinancial year under review the demand in the auto sector was not showing any growth andremained sluggish during the rest of the year. Besides liquidity pressures in the bankingsystem delayed availability of funds for operation as well as for CAPEX which was one ofthe major constraints for overall economic growth. This has adversely impacted yourCompany's sales and consequently end up with marginal decrease in the bottom line.
6. COMPANYS OPERATIONS OR OVERALL WORKING PERFORMANCE
During the financial year 2018-2019 under review the operational (production) detailsof the Company are as under: Production in MT and Power in Lakh kWh
The Company has taken up expansion in its exitsting Blooming Mill to utilize the fullcapacity of the Mill together with installation of finishing facilities like Bright BarMachines for value addition to the final products of Rolling Mill. The Company has alsotaken up the installation of certain Balancing Equipment to expand its existing Steel MeltShop to produce high quality clean steel to expand its market base and diversify itsproducts. During the financial year under review the Company has successfullycommissioned induction furnace which is a part of the above expansion program in SteelMelt Shop.
Sunflag Power Limited [CIN - U 31200 UR2003 PLC 027802]
There were no specific developments or updates for reporting and the process ofobtaining necessary approvals were continued for implementation and commencement ofoperations of Hydro Power Project of the Company at Hanol-Tuini in the State ofUttarakhand.
Khappa Coal Company Private Limited [CIN-U 10100 MH 2009 PTC 191907]
In view of order of the Honble Supreme Court of India dated 24th September 2014the Khappa & Ext" Coal Block which was allocated to Khappa Coal Company PrivateLimited stands de-allocated with immediate effect. The closure of the said Company solelydepends upon the outcome of final decision regarding bank guarantee and compensation fromthe appropriate authorities.
Sunflag Foundation [CIN-U 74999 MH 2017 NPL289961 ]
Sunflag Foundation a Section 8 Company (a Company not for profits) was incorporated on27th January 2017 as a Wholly-owned Subsidiary of Sunflag Iron and Steel Company Limited.The said Company was appointed as an Implementing Agency to carry out the Corporate SocialResponsibility (CSR) activities as per CSR Policy of the Company within the framework ofapplicable provisions of law.
Associate / Joint Venture (JV) Companies:-
Madanpur (North) Coal Company Private Limited [CIN - U 10101 CT 2007 PTC 020161] and CT Mining Private Limited [CIN - U 10100 JH 2008 PTC 013329]
In view of order of the Honble Supreme Court of India dated 24th September 2014the Coal Block(s) which were allocated to Madanpur (North) Coal Company Private Limited inthe State of Chhattisgarh and to C T Mining Private Limited in the state of Jharkhandstands de-allocated with immediate effect. The closure of the said Company solely dependsupon the outcome of final decision regarding bank guarantee and compensation from theappropriate authorities.
Daido D.M.S. India Private Limited [CIN - U 28113 HR2015 FTC 054839]
Daido D.M.S. India Private Limited is a Joint Venture (JV) Company of Sunflag Iron andSteel Co. Ltd. Daido Steel Co. Ltd. Japan and Daido Die and Mold Steel Solutions Co.Ltd. Japan. Sunflag has made an investment of INR 36000000/-(INR Three crores sixtylakh) constituting twenty percent (20%) in the capital of the said JV Company. The JVCompany is engaged in the business of manufacturing import export and distributionindie mould steel (tool steel and other metallic materials) processed products and mouldparts.
Ramesh Sunwire Private Limited [CIN - U 28999 MH 2016 PTC 287281]
Sunflag jointly with Stumpp Schuele & Somappa Springs Private Limited Bengaluruhas formed and incorporated a Joint Venture (JV) Company - Ramesh Sunwire Private Limitedon 31s1 October 2016 in the State of Maharashtra. The main object of the JV Company ismanufacturing high quality of alloy steel wire for automobile and auto componentindustries both in domestic and export markets. Further during the financial year2018-2019 ended 31st March 2019 under review Sunflag has contributed an additional sumof Rs. 15000000/- in the capital of the Company.
The plant commissioned on 6th May 2019 and has now started its manufacturingactivities.
Present Status of Coal and Mineral Mines:-
8. NATURE OF BUSINESS ACTIVITIES AND CHANGES THEREOF
During the financial year 2018-2019 under review the Board of Directors thoughexploring addition to existing business and commercial activities had neither beenexplored any change in nature of business and commercial activities for the Company northere is a change in nature of business and commercial activities of the Company. As suchno specific details regarding change in nature of business activities are required to begiven or provided.
9. PUBLIC DEPOSITS
During the financial year 2018-2019 under review the Company has neither invited noraccepted any public deposits within the meaning of Section 73 and 74 of the Companies Act2013 read with the Companies (Acceptance of Deposits) Rules 2014 (as amended). As suchno specific details prescribed in Rule 8(1) of the Companies (Accounts) Rules 2014 (asamended) have been given or provided.
10. DIRECTORS AND KEYMANAGERIAL PERSONNEL
The changes amongst the Board of Director/s including the Executive Director/s and KeyManagerial Personnel during the period under review are as follows:-
I. CHANGES RELATED TO THE PROMOTER DIRECTOR(S)
Pursuant to the provisions of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 read with SEBI (Listing Obligations and Disclosure Requirements)(Amendment) Regulations 2018 the Members of the Company on the recommendation of theBoard of Directors and the Nomination and Remuneration Committee (NRC) of the Board attheir Thirty- second (32nd) Annual General Meeting held on 25th September 2018 consentedfor the continuation beyond 1st April 2019 of Mr. Ravi Bhushan Bhardwaj (DIN - 00054700)[Category- Non-executive Chairman & Promoter] who was attaining the age ofseventy-five (75) years on 23rd October 2018 as the Director of the Company for hisremainder term in the office of Director on the existing terms and conditions of hisappointment.
II CHANGES RELATED TO THE EXECUTIVE DIRECTOR/S:-
Pursuant to the provisions of Section 152 of the Companies Act 2013 the Members ofthe Company on the recommendation of the Board of Directors and the Nomination andRemuneration Committee (NRC) of the Board at their Thirty-second (32nd) Annual GeneralMeeting held on 25th September 2018 consented to the re-appointment of Mr. SurendraKumar Gupta (DIN-00054836) Deputy Managing Director of the Company who retired byrotation and being eligible offered himself for re-appointment.
III. CHANGES RELATED TO THE KEY MANAGERIAL PERSONNEL (KMP):-
The Board of Directors of the Company at its 170th Meeting held on 12th November 2018on the recommendation of the Nomination and Remuneration Committee of the Board:
a. accepted the resignation of CS Pranab Panigrahi (ICSI Membership No. ACS-16186)Company Secretary & Compliance Officer designated Whole-time Key Managerial Personnel(KMP) of the Company and consequently CS Pranab Panigrahi ceased with effect from theclose of the business hours of 12th November 2018 as the Company Secretary &Compliance Officer designated Whole-time Key Managerial Personnel (KMP) of the Company.
b. pursuant to the provisions of Section 203 of the Companies Act 2013 read with Rule8 of Companies (Appointment & Remuneration of Managerial Personnel) Rules 2014 andRegulation 6 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 appointed CSAshutosh Mishra an Associate Member of the ICSI (Membership No: ACS-23011) holding the prescribed qualification under Section 2(24) of the Companies Act2013 as the Company Secretary and Compliance Officer designated Whole-time KeyManagerial Personnel (KMP) ofthe Company with effect from 12th November 2018.
IV. CHANGES RELATED TO THE INDEPENDENT DIRECTOR/S:-
1. The Members of the Company at their Thirty-second (32nd) Annual General Meeting heldon 25th September 2018 on the recommendation of the Board of Directors and theNomination and Remuneration Committee (NRC) of the Board have appointed Mr. Rooshad RussiPatel (DIN -00473945) as a Director [Category-Non-executive Independent] to hold theoffice for a fixed first term of consecutive five (5) years i.e. from the conclusion ofThirty-second (32nd) Annual General Meeting held for the financial year 2017-2018 up tothe conclusion of Thirty-seventh (37th) Annual General Meeting ofthe Company to be heldfor the financial year 2022-2023 in the calendar year 2023 ofthe Company in the interestof the Company.
2. Pursuant to the provisions of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 read with SEBI (Listing Obligations and Disclosure Requirements)(Amendment) Regulations 2018 the Members ofthe Company on the recommendation oftheBoard of Directors and the Nomination and Remuneration Committee (NRC) ofthe Board attheir Thirty-second (32nd) Annual General Meeting held on 25th September 2018 consentedfor the continuation beyond 1st April 2019 of Dr. E.R.C. Shekar (DIN - 00013670)[Category- Non-executive & Independent] who has already attained the age ofseventy-five (75) years as the Director ofthe Company for his remainder term in theoffice of Director on the existing terms and conditions of his appointment.
3. The Members ofthe Company at their Thirty-first (31st) Annual General Meeting heldon 28th September 2017 had approved the appointment of Mr. S. Gajendran (DIN -00250136) as a Director [Category - Non-executive Independent] ofthe Company fora fixedsecond term of consecutive two (2) years i.e. from the conclusion of Thirty-first (31th)Annual General Meeting up to the conclusion of Thirty-third (33rd) Annual General Meetingofthe Company to be held for the financial year 2018-2019.
However pursuant to the provisions of New Regulation 17(1 A) incorporated in the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 by SEBI (ListingObligations and Disclosure Requirements) (Amendment) Regulations 2018 - "No listedentity shall appoint a person or continue the directorship of any person as aNon-executive Director who has attained the age of Seventy-five (75) years unless aspecial resolution is passed to that effect."
Mr. S. Gajendran [DIN -00250136] Non-executive Independent Director of the Company[Date of Birth -7th July 1944] has attained the age of Seventy-five (75) years on 7thJuly 2019 and since no such Special Resolution has been passed by the Members Mr. S.Gajendran ceased as a Non-executive Independent Director of the Company w.e.f. 7th July2019 on attaining the age of Seventy-five (75) years pursuant to aforesaid provisions.
Your Board places on record its appreciation for the valuable services rendered by Mr.S. Gajendran during the tenure of his directorship.
4. The Board of Directors vide its 173rd Meeting held on 12th August 2019 has on therecommendation of the Nomination and Remuneration Committee (NRC) of the Board appointedMr. Sajiv Dhawan (DIN - 00160085) as an Additional Director [Category - Non-executiveIndependent] of the Company with effect from 12th August 2019 to hold the office tillthe conclusion of ensuing Annual General Meeting of the Company.
V. DIRECTOR - RETIREMENT BY ROTATION:-
Pursuant to Section 152 of Companies Act 2013 read with the Companies (Appointment andQualification of Directors) Rules 2014 (as amended) CA Rambhatla Muralidhar (DIN -00982212) Director [Category - Executive & Non-Independent] of the Company retiresby rotation and being eligible offers himself for re-appointment. The Board recommendshis re-appointment as a Director (with existing category) of the Company for the approvalof the Members at the ensuing Annual General Meeting in the interest of the Company.
VI. PROPOSED CHANGES RELATED TO DIRECTOR/S TO BE PLACED BEFORE THE MEMBERS FORTHEIRAPPROVAL:-
The term of Mr. Sajiv Dhawan (DIN - 00160085) as an Additional Director [Category -Non-executive Independent] of the Company is expiring at the conclusion of the ensuingThirty-third (33rd) Annual General Meeting of the Company.
The Board recommends appointment of Mr. Sajiv Dhawan (DIN - 00160085) as anIndependent Director [Category - Nonexecutive Independent] to hold the office for afixed first term of consecutive three (3) years from 27th September 2019 till 26thSeptember 2022 in the interest of the Company.
The Company has received a Notice in writing under Section 160 of the Companies Act2013 from a Member proposing the candidature of Mr. Sajiv Dhawan (DIN - 00160085) for theoffice of a Director of the Company.
The Company has also received the self-declaration/s from Mr. Sajiv Dhawan (DIN -00160085) inter-alia to the effect that (i) he was/is not disqualified from beingappointed as a Director of the Company in terms of the provisions of Section 164 of theCompanies Act 2013 and has submitted his consent to act as a Director of the Company;(ii) he was oris not debarred from holding the office of a Director pursuant to any orderof the SEBI or such other authority in terms of SEBI's Circular No. LIST/COMP/14/2018-19dated 20th June 2018 on the subject "Enforcement of SEBI Orders regardingappointment of Directors by listed companies"; and (iii) he meets the criteria ofindependence as provided in Section 149(6) of the Act and Regulation 16(1 )(b) of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 (as amended)["Listing Regulations"].
[Brief profile of all the Director/s including those seeking appointment andre-appointment is given in the Corporate Governance Report].
During the Financial year 2018-2019 under review Four (4) meetings of the Board ofDirectors of the Company held on (i) 28lh May 2018 (ii) 13th August 2018 (iii) 12thNovember 2018 and (iv) 24lh January 2019.
12. DIRECTORS RESPONSIBILITY STATEMENT
The Board of Directors confirms:-
i. That in the preparation of the Annual Accounts (Financial Statements) theapplicable Accounting Standards had been followed along with proper explanation relatingto material departures;
ii. That the Directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit of the Company for that financial year;
iii. That the Directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;
iv. That the Directors had prepared theAnnual Financial Statements on a going concernbasis;
v. That the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls were adequate and operating effectively;and
vi. That the Directors had devised proper system to ensure compliance with theprovisions of all applicable laws and regulations and that such systems were adequate andoperating effectively.
13. COST RECORDS
Pursuant to the amendment to the Companies (Accounts) Rules 2014 vide MCA'sNotification dated 31st July 2018 the Board of Directors do confirm that the maintenanceof cost records as specified by the Central Government under Sub-section (1) of Section148 of the Companies Act 2013 is required by the Company and accordingly such accountsand records are made and maintained by the Company for the financial year 2018-2019.
14. COMMITTEE(S) OF THE BOARD
The Company has constituted all the requisite Committee(s) of the Board namely AuditCommittee Nomination and Remuneration Committee Stakeholders RelationshipCommittee Corporate Social Responsibility (CSR) Committee Share Transfer Committee RiskManagement Committee and Project Monitoring Committee pursuant to the provisions of theCompanies Act 2013 read with the rules made there under and Listing Regulations. Thedetails of its constitution objective or terms of reference and other related informationhas been provided underthe Corporate Governance Report which forms part and parcel of theBoards Report.
I. STATUTORY AUDITORS AND THEIR REPORT:-
M/s. S. S. Kothari Mehta & Co. Chartered Accountants New Delhi (ICAI FirmRegistration No. 000756N Peer Review Certificate No. 008927) have been recommended by theAudit Committee and subsequently also approved and recommended by the Board of Directorsof the Company has been appointed as the Statutory Auditors of the Company at theThirty-second (32"") Annual General Meeting to hold office of the StatutoryAuditors for a fixed second term of two (2) years from the conclusion of Thirty-second(32nd) Annual General Meeting until the conclusion of Thirty-fourth (34th) Annual GeneralMeeting of the Members of the Company to be held for the financial year 2019-20.
The Statutory Auditors have furnished a Certificate of their consent qualification andeligibility for appointment including reappointment under Section 139 and 141 of theCompanies Act 2013 read with the rules and regulations made thereunder.
The Auditors' Report submitted by M/s. S. S. Kothari Mehta & Co. CharteredAccountants New Delhi (ICAI Firm Registration No. 000756N Peer Review Certificate No.008927) the Statutory Auditors to the Members of the Company for the financial year2018-19 ended 31st March 2019 do not contain any qualification. The observations made bythe Statutory Auditors in their report are self-explanatory and have also been furtheramplified in the Notes to the financial statements and as such do not call for anyexplanations.
During the financial year 2018-19 under review:
a) there is no fraud occurred noticed and/or reported by the Statutory Auditors underSection 143(12) of the Companies Act 2013 read with the Companies (Audit and Auditors)Rules 2014 (as amended);
b) the observations made by the Statutory Auditors on the financial statements for thefinancial year 2018-2019 ended 31st March 2019 under review including the affairs of theCompany are self-explanatory and do not contain any qualification reservation adverseremarks or disclaimer.
As such no specific information details or explanations required to be given orprovided by the Board of Directors of the Company.
II. COST AUDITORS AND THEIR REPORT:-
Pursuant to Section 148 of the Companies Act 2013 the Board of Directors on therecommendations of the Audit Committee of the Company has appointed M/s. G. R. Paliwal& Company Cost Accountants Nagpur (Membership No. 7815) Cost Accountants Nagpuras the Cost Auditors of the Company for the financial year 2019-20 and has alsorecommended their remuneration to the Members of the Company for their ratification at theensuing Thirty-third (33rd) Annual General Meeting of the Company.
The said Cost Auditors have furnished a Certificate of their eligibility forappointment including re-appointment pursuant to Section 141 (3)(g) Section 148(5) of theCompanies Act 2013 read with the rules made there under Certificate for independence andarms length relationship with the Company and have confirmed about their not beingdisqualified for such appointment including re-appointment within the meaning of Section141 (3) of the Companies Act 2013.
Pursuant to the applicable provisions of the Act read with the rules made there underthe Statements Annexures Proforma annexed to the Cost Audit Report in Form No. CFtA-3to be submitted by the said Cost Auditors with the Central Government in e- Form No.CRA-4 for the financial year 2017-18 was filed vide SRN FI-05616321 dated 30lh August2018.
Moreover the Statements Annexures Proforma annexed to the Cost Audit Report in FormNo. CFtA-3 to be submitted by the said Cost Auditors with the Central Government ine-Form No. CFtA-4 for the financial year 2018-19 do not contain any adverse remarks andqualifications is self-explanatory and do not call for any further explanation/s by theCompany.
III. SECRETARIALAUDITORS AND THEIR REPORT:-
M/s. Mukesh Parakh & Associates Company Secretaries Nagpur [ICSI Membership No.FCS-4343 & Certificate of Practice No. 13693] were appointed as the SecretarialAuditors of the Company for the financial year 2018-19.
The Secretarial Audit Report in Form No. MR-3 submitted by the said SecretarialAuditors is attached herewith as an Annex - B which forms an integral part of theBoards Report do not contain any adverse remarks and qualifications is self-explanatory and do not call for any further explanation/s by the Company.
Further the Board of Directors of the Company at its 173rd meeting held on 12thAugust 2019 has approved and re-appointed M/s. Mukesh Parakh & Associates CompanySecretaries Nagpur [ICSI Membership No. FCS-4343 & Certificate of Practice No.13693] as the Secretarial Auditors of the Company for the financial year 2019-20.
IV. INTERNAL AUDITORS AND THEIR REPORT:-
M/S.AKMK& Associates Chartered Accountants Surat [ICAI Firm Registration No.136206W] and M/s. Nitin Alshi & Associates Chartered Accountants Nagpur [ICAI FirmRegistration No. 116875W] were appointed as the Internal Auditors and Joint InternalAuditors respectively of the Company for the financial year 2018-19 pursuant to theprovisions of Section 138 of the Companies Act 2013 read with Rule 13 of the Companies(Accounts) Rules 2014 and relevant SEBI Regulations including the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 (as amended).
The InternalAuditfinding/sand report/s submitted by the said InternalAuditor/s fromtime to time during the financial year 2018-19 to the Audit Committee and Board ofDirectors of the Company do not contain any adverse remarks and qualifications is/areself- explanatory and do not call for any further explanation/s by the Company.
M/S.AKMK& Associates Chartered Accountants Surat (ICAI Firm Registration No.136206W) will continue to act as the Internal Auditors of the Company as approved andappointed on the recommendation of the Audit Committee by the Board of Directors of theCompany at its 153rd meeting held on 12th August 2015 for a period of five (5) financialyear/s from the financial year 2015-16 to the financial year2019-20.
Further the Board of Directors of the Company at its 173rd meeting held on 12thAugust 2019 on the recommendation of the Audit Committee has approved and appointedM/s. Nitin Alshi & Associates Chartered Accountants Nagpur (ICAI Firm RegistrationNo. 116875W) as the Joint Internal Auditors of the Company for the financial year2019-20.
16. PERSONNEL/ PARTICULARS OF EMPLOYEES
The information required to be provided pursuant to the provisions of Section 197 ofthe Companies Act 2013 read with Rule 5(1) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 are given below:-
a) The ratio of the remuneration of each Executive Director to the median remunerationof the Employees of the Company for the financial year 2018-19 ended 31st March 2019:-
b) The percentage increase in remuneration of each Director Chief Executive OfficerChief Financial Officer Company Secretary in the financial year 2018-2019 ended 31stMarch 2019:-
(*) - Not comparable as they were in service for part of the year.
c) The percentage increase in the median remuneration of employees in the financialyear2018-2019 ended 3151 March 2019: 6.26%
d) The number of permanent employees on the rolls of Company as on 31st March2019:1257
e) 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:
^ The average annual increase was about 6.26%. During the financial year the totalincrease was approximately 4.92% after accounting for promotions and other event basedcompensation revisions.
^ The increase in the managerial remuneration for the financial year 2018-19 ended 31stMarch 2019 was around 11.50% other than commission based on net profit as per the termsof their appointment.
f) Affirmation : The remuneration paid to Director/s Key Managerial Personnel andEmployees of the Company is as per the remuneration policy of the Company.
g) Information as per Section 197 of the Companies Act 2013 ("the Act") readwith Rule 5(2) of the Companies (Appointment & Remuneration of Managerial Personnel)Rules 2014 (as amended) forms part of this report. Flowever in terms of Section 136(1)of the Act the Report and Financial Statements are being sent to all the Shareholders andothers entitled to receive the same excluding the statement of particulars of employees.The statement is available for inspection by the Members at the Registered Office of theCompany during business hours on any working day up to the date of the ensuing AnnualGeneral Meeting. If any member interested in obtaining a copy thereof such member maywrite to the Company Secretary whereupon a copy would be sent.
17. ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars relating to energy conservation technology absorption foreignexchange earnings and outgo as required to be disclosed under Section 134(3)(m)oftheCompanies Act 2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 are givenin the Annex - C to this report.
18. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OFTHE COMPANIESACT 2013
The particulars of Loans Guarantees or Investments given or made by the Company underSection 186 of the Companies Act 2013 are disclosed in the Notes to the FinancialStatements of the Company for the financial year 2018-19.
19. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES UNDER SECTION 188 OFTHE COMPANIES ACT 2013
a) Details of contracts or arrangements or transactions not at arm's length basis:
There are no such transactions and hence not applicable.
b) Details of contracts or arrangements or transactions at arm's length basis:
The details of contracts or arrangements or transactions in the ordinary course ofbusiness and at arm's length basis are as given below:
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 (as amended):
Note: Particulars of contracts or arrangements or transactions with related parties arenot given in FormAOC-2 as during the financial year 2018-19 under review the Company hasnot entered into any contracts or arrangements ortransactions which are material in natureor are not at arm's length.
20. LISTING OF SHARES
The Equity Shares in the capital of the Company continued to be listed with andactively traded on BSE Limited (BSE) and National Stock Exchange of India Limited (NSE).The listing fees for the financial year 2019-20 ending 31st March 2020 have been paid toboth the Stock Exchanges (BSE & NSE) within the normal stipulated time.
21. DEMATERIALISATION OF SHARES
As on 3T1 March 2019 there were 110895184 Equity Shares dematerialised throughdepositories viz. National Securities Depository Limited and Central Depository Services(India) Limited which represents about 61.53% of the total issued subscribed and paid-upcapital of the Company.
22. EXTRACT OF THE ANNUAL RETURN
The extract of the Annual Return (MGT-9) for the financial year 2018-2019 ended and ason 31sl March 2019 pursuant to the provisions of Section 92(3) of the Companies Act 2013read with Rule 12 of the Companies (Management and Administration) Rules 2014 (asamended) is furnished in the Annex - D attached to this report which forms an integralpart of the Board's Report of the Company. The extract of Annual Return is also availableon the website of the Company i.e. https://www.sunflagsteel.com.
23. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND
The detailed information related to the dividend declared by the Company in theprevious year/s together with the amount remained unpaid or unclaimed its transfer to theInvestor Education and Protection Fund are provided in the Notes annexed to the Noticeconvening the Thirty-third (33rd) Annual General Meeting of the Company. To avoidrepetition the Shareholders of the Company are advised to refer the said Notes fordetailed information on the subject matter.
24. TRANSFER OF SHARES TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
Ministry of Corporate Affairs (MCA) has notified "Investor Education andProtection Fund Authority (Accounting Audit Transfer and Refund) Rules 2016" (theRules) which have come into force from 7th September 2016. The said Rules amongst othermatters contain provisions for transfer of all shares in respect of which dividend hasnot been claimed for seven (7) consecutive years or more in the name of 'IEPF DematAccount'. Accordingly the Company has transferred during the period under review 77616Equity Shares constituting about 0.0431 % of the total issued subscribed and paid-upcapital. The voting rights on these shares shall remain frozen till the rightful owner ofsuch shares claim the Equity Shares from the IEPF Authority. The IEPF Authority has laiddown the detailed procedure for claiming both Dividend as well as Equity Shares by theShareholders or Investors of the Company.
25. CORPORATE GOVERNANCE
The Company is committed to maintain the highest standards of Corporate Governance andadhere to the Corporate Governance practices or requirements as set out in the ListingRegulations by the SEBI enforced through the Stock Exchange/s (BSE & NSE). TheCompany has also implemented several best Corporate Governance practices as prevalentglobally.
Your Board of Directors are pleased to report that your Company has complied with theSEBI Guidelines on Corporate Governance for the financial year 2018-2019 ended and as of31st March 2019 relating to the Listing Regulations. Certificates from M/s. Mukesh Parakh& Associates Company Secretaries Nagpur (ICSI Membership No. FCS-4343 Certificateof Practice No. 13693) confirming compliance with conditions as stipulated under ListingRegulations and Non-disqualification of Directors are annexed to the Corporate GovernanceReport which form an integral part of the Boards Report of the Company.
26. CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company's Steel plant is located at Bhandara Road Village Warthi Tahsil MohadiDistrict Bhandara in the State of Maharashtra. It is located at a distance of about 12kilometers from the Bhandara District Headquarters. The unit is surrounded by seven (7)villages in the radius of 5 KMs. The Company is having its captive Coal Mines at BelgaonVillage Aathmurdi District Chandrapur in the State of Maharashtra. The Company's CSRactivities as per its CSR Policy are strictly implemented in all the areas close to themanufacturing facilities (Steel Plant) and coal mines of the Company.
All the activities and programs covered under SISCO CSR are being monitored by the CSRCommittee and are implemented by the CSR Sub-committee through an implementing Agency.
Sunflag Foundation (CIN-U 74999 MH 2017 NPL 289961) - a Section 8 Company (A Companynot for Profits) was incorporated on 27th January 2017 as a Wholly-owned Subsidiary ofSunflag Iron and Steel Company Limited. The said Company has been appointed as animplementing Agency to carry out the Corporate Social Responsibility (CSR) activities asper CSR Policy of the Company within the framework of applicable provisions of law.
Accordingly Sunflag Foundation is implementing and monitoring all the CSR activitiesbudget and accounts for the same the manner in which the CSR amount has been spent or tobe spent etc. and in turn furnishes its report to the Company on regular basis. Asrequired the details pertaining to the Corporate Social Responsibility (CSR) activitiestogether with details of expenditure is enclosed herewith as an Annex - A which forms anintegral part of the Board's Report of the Company.
27. CODES OF CONDUCT OF BUSINESS PRINCIPLES & ETHICS AND PREVENTION OF INSIDERTRADING AND OTHER CODES / POLICIES
The Board of Directors are pleased to report that your Company has complied with the:-
i) Code of Conduct of Business Principles and Conduct;
ii) Code of Prevention of InsiderTrading in Sunflag Securities by the designatedpersons [Insider] (as amended from time to time);
iii) CodeforVigil Mechanism-Whistle Blower Policy;
iv) Code for Independent Directors;
v) Corporate Social Responsibility (CSR) Policy;
vi) Risk Management Policy which includes identification of elements of risk if anywhich in the opinion of the Board of Directors may threaten the existence of the Company;
vii) Policy on Document Preservations (Regulation 9 of the SEBI (LODR) Regulations2015);
viii) Policy for determining of'material'Subsidiary (Regulation 16 of the SEBI (LODR)Regulations 2015);
ix) Policy on materiality of related party transaction/s and on dealing with relatedparty transaction/s (Regulation 23 of the SEBI (LODR) Regulations 2015); and
x) Policy for determination of materiality based on specified criteria andaccordingly grant authorisation for determination of materiality of events (Regulation 30of the SEBI (LODR) Regulations 2015).
The aforesaid code(s) and policy(ies) are available on the Companys Website
28. MATERIAL DEVELOPMENT IN HUMAN RESOURCES
An improvement in employee productivity is the key focus area for the Company wherebyachieving benchmark performance in this area year on year is a major goal for theCompany led by its Human Resource Department.
The emphasis on the people of the organisation stems from the belief that humanresource is the key factor to achieve success in any business. Sunflag Steel has alwaysbeen a front runner in its human resource practices with many pioneering policies in thearea of human resources. Our human resource practices are based on the values of SunflagSteel with emphasis on respect dignity unity and fostering a culture of togetherness.
Employees' competencies and skills were enhanced by exposing them to several internaland external training programmes. Various measures were taken to improve motivation levelof each employees. Asa result many improvements were seen where initiatives wereundertaken to bring about a change in culture and mind set of the workforce of theCompany.
PRVEVENTION OF SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE
Sunflag Iron and Steel Company Limited ("the Company") has in place anAnti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013 and InternalComplaints Committee (ICC) has been set up to redress complaints received regarding sexualharassment.
All employees (permanent contractual temporary trainees etc.) are covered underthis Policy. Pursuant to the amendment to the Companies (Accounts) Rules 2014 videMCAs Notification dated 31s1 July 2018 the Board of Directors do confirm that theCompany has complied with provisions relating to the constitution of Internal ComplaintsCommittee under the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 [14 of 2013].
The Certificate by the Deputy Managing Director and Chairman of the Company to thateffect is enclosed herewith as an Annex - E and forms an integral part of the Board'sReport of the Company.
HEALTH AND SAFETY
Health and safety remains the Company's highest priority and Sunflag Steel aspires tobe the steel industry benchmark in health & safety. The Health & Safety of theworkforce is of utmost importance and hence the need was felt for the same to percolatefrom the top leadership in the form of learning and experience-sharing.
Several initiatives were undertaken during the financial year to improve health &safety standards of the Company. Steps were taken to improve competency and capability forhazard identification and risk management. Further departmental safety co-ordinator/s areat place for monitoring & training on safety related matters at shop-floor. The SafetyCommittee and Apex Committee are available for periodical review on health safety &environment of all department/s of the Company. As a part of regular assignment trainingprograms on safety are being organised for New Joinee as well as for regular employeesand contract labour/s and as a part of this mock-drills are conducted for practicalexposure to meet emergency need on quarterly basis. The Hand book on safety awareness aredistributed to all employees of the Company as well as it is displayed at Notice Board/sat the Works and Offices of the Company.
29. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has in place adequate internal control systems and procedures commensuratewith the size and nature of business. These procedures are designed to ensure:-
a) that all assets and resources are used efficiently and are adequately protected;
b) that all the internal policies and statutory guidelines are complied with; and
c) the accuracy and timing of financial reports and management information ismaintained.
30. MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY
There have been no material changes and commitments affecting the financial positionof the Company which have occurred between the end of the financial year of the Companyunder review to which the financial statements relate and the date of this Board's Report.As such no specific details are required to be given or provided.
31. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATIONS IN FUTURE
During the financial year 2018-2019 no significant and material order is passed by anyof the Regulators or Courts or Tribunals impacting the going concern status and theCompany's operations in future. As such no specific details are required to be given orprovided.
32. COMPLIANCE WITH SECRETARIAL STANDARDS
The Board of Directors confirms that the Company has duly complied with the applicableSecretarial Standards namely Secretarial Standard-1 ('SS-1') on Meetings of the Board ofDirectors Secretarial Standard-2 ('SS-2') on General Meetings and Secretarial Standard-3('SS-3') on Dividend during the financial year 2018-2019.
33. OTHER DISCLOSURES
The details regarding Board and its Committee Meeting/s Evaluation of Boardperformance Self-Declaration by the Independent Director/s Remuneration policy forDirector/s and KM Ps Induction training and familiarisation programmes for theDirector/s including Independent Director/s and such other related information has beenprovided under the Corporate Governance Report which forms an integral part of theBoards Report of the Company.
a) Annex-A : Annual Report on Corporate Social Responsibility (CSR) activities togetherwith expenditure details;
b) Annex-B : SecretarialAudit Report in Form No. MR-3;
c) Annex-C : Report on Energy Conservation TechnologyAbsorption and Foreign ExchangeEarnings and Outgo;
d) Annex - D : Extract of Annual Return forthe financial year ended and as of 31s1March 2019 in the prescribed Form No. MGT-9; and
e) Annex-E : Certificate on Prevention of Sexual Harassment of Women at the Workplaceand its Prohibition and Redressal.
The Board of Directors acknowledge with thanks co-operation and assistance received bythe Company from the Shareholders Consortium and other Banks or Lenders Central StateGovernment and Local Authorities and other external agencies involved in the overallbusiness operations of the Company.
The Board of Directors also record their appreciation of the dedication of all theemployees of the Company and their support and commitments to ensure that the Companycontinues to grow.