The Board of Directors of Usha Martin Limited ("the Company") present the34th Annual Report and Audited Accounts for the Financial Year ended 31st March 2020.
FINANCIAL SUMMARY / HIGHLIGHTS
| ||Standalone ||Consolidated |
| ||FY 201920 ||FY 201819 ||FY 201920 ||FY 201819 |
|Net Turnover ||1392.62 ||1708.03 ||2153.82 ||2488.25 |
|Earnings before Interest Tax Depreciation and Amortization ||200.55 ||282.32 ||284.96 ||336.10 |
|Depreciation ||27.77 ||28.10 ||63.62 ||60.86 |
|Finance costs ||58.07 ||90.22 ||74.18 ||113.53 |
|Profit before tax from continuing operations ||114.71 ||164.00 ||147.16 ||161.71 |
|Tax expenses ||200.75 ||(234.68) ||209.73 ||(227.46) |
|Profit / (Loss) after tax from continuing operations ||(86.04) ||398.68 ||(62.57) ||389.17 |
|Profit after tax from discontinuing operations ||481.44 ||(339.68) ||483.22 ||(342.71) |
|Profit after tax ||395.40 ||59.00 ||421.08 ||49.30 |
|Other comprehensive income / (loss) ||(10.95) ||(1.60) ||24.54 ||6.97 |
|Total comprehensive income / (loss) ||384.45 ||57.40 ||445.62 ||56.27 |
Review of Operations
The turnover (net of excise) for the year was Rs. 2153.82 Cr on consolidated basis andRs. 1392.62 Cr on standalone basis as compared to Rs. 2488.25 Cr and Rs. 1708.03 Crrespectively in the previous year. The Earnings before Interest Depreciation and Tax wasRs. 284.96 Cr on consolidated basis as compared to Rs. 336.10 Cr in previous year and onstandalone basis was Rs. 200.55 Cr as compared to Rs. 282.32 Cr in previous year.
A detailed discussion on review of operations of the Company has been included inManagement Discussion and Analysis which forms part of this Report.
Update On Covid-19 Pandemic
Towards the end of financial year 2019-20 the entire global economy faced anunprecedented disruption owing to the Covid-19 pandemic. The pandemic has resulted ininterrupted supply chain halted production and lock-down. With Covid-19 situationescalating the Company had proactively rolled-out a slew of measures to ensure health andsafety of its employees including suspending production at all its manufacturingfacilities by end of March 2020. Ensuring stringent safety protocols for employeewellbeing the Company reopened in a gradual manner all its manufacturing facilitiestowards the end of April 2020. The Company is proactively adapting to the changingbusiness needs and will stay prepared dynamically to do course correction if and whenrequired.
Dividend & Reserves
The Board of Directors has decided it would be prudent not to recommend dividend forthe year under review nor do they propose to carry any amount to reserves.
Slump Sale of Steel Business Undertaking
Pursuant to the business transfer agreement executed with Tata Sponge Iron Limited (nowknown as Tata Steel Long Products Limited) with an objective to deleverage the BalanceSheet of the Company the transfer of the Steel Business Undertaking including iron-oreand coal mines of the Company by way of slump sale on going concern basis was completedduring the year under review.
Outlook and Business
With adverse impact of Covid-19 on both domestic and international economy the overalloutlook for fiscal 2020-21 is expected to remain uncertain. The major challenge for theCompany is to remain agile and responsive to the changing market needs and focus uponincreasing market share in high contributory products such as crane elevator mining andbridge ropes. LRPC strands and GP ropes are expected to continue to remain growth driversfor the Company.
TPM & Quality
WWR division's Quality Management System Certification has transitioned from ISO9001:2008 to ISO 9001:2015. The Environmental Management System (EMS) Certification hastransitioned from ISO 14001:2004 to ISO 14001:2015. Approval of manufacturing (AOM) byDNV-GL ABS & Lloyd's are in place. The organization is licensed for manufacture ofropes under API Spec 9A. The Company has product certification by SNI of IndonesiaInMetro of Brazil and SONCAP of Nigeria & CCS of China. LRPC product is certified byACRS of Australia & Testing Laboratory has accreditation under ISO 17025: 2017. Inorder to strengthen our basic systems the concept of Business Excellence is beingpursued. Concepts like Daily Routine Work Management Kaizen Management Cost ReductionIdeas and Fuguai Management have successfully been implemented in operation maintenanceand service areas in the plants. All the Key Process Indicators (KPIs) of differentfunctions are being monitored regularly in a centralized place known as Wire RopeExcellence Center. The Business Excellence journey will further strengthen thecompetitiveness with respect to quality cost and delivery of rope business.
The Company strives for improvement in environmental performance by taking efforts tominimize the process emission waste minimization and reduction in consumption of energywater and raw materials. Periodic environmental monitoring online monitoring of emission& effluent at captive power plants are being carried out. Utilization of fly ash hasincreased which ensures that disposal of accumulated fly ash and process effluent arebeing treated and recycled. The Company has taken initiative to address globalenvironmental issues climate change and global warming by use of liquefied petroleum gasand biomass briquette as fuel energy efficient LED bulbs and motors. There is continuedfocus on greenery & greenbelt development within the plant premises and socialforestry in nearby villages.
Subsidiaries & Joint Ventures
The international subsidiaries of the Company provide significant synergy and supportto the overall business and performance. All the operating subsidiaries of the Companyhave continued to perform reasonably well in the economic and business environment whichprevailed during the year under review. A key joint venture formed by the Company namelyPengg Usha Martin Wires Private Limited has reported satisfactory results in the yearunder review. During the year under review there were no other entities which became orceased to be subsidiaries joint ventures and associates of the Company. A statementcovering report on the performance and financial position of each of the subsidiariesassociates and joint ventures is provided separately and forms part of this Report.
During the year under review the Company has not accepted any deposit under Section 73of the Companies Act 2013 ("the Act") and the Companies (Acceptance ofDeposits) Rules 2014 (as amended). As on 31st March 2020 there are no unclaimeddeposits with the Company. The Company has not defaulted in repayment of deposits orpayment of interest on deposits thereon in the past.
The paidup Equity Share Capital as on 31st March 2020 stood at Rs. 30.54 Crore.During the year under review the Company has not issued any shares with or withoutdifferential voting rights granted stock options or issued sweat equity shares.
Significant and material orders passed by regulators or courts or tribunals impactingthe going concern status and Company's operations in future
During the year no significant material orders were passed by any regulatory authorityor court against the Company which may affect the going concern status of the Company.
The Directorate of Enforcement Patna had passed a provisional order dated 9th August2019 ("Provisional Order") for provisional attachment of certain immovableproperties of the Company valued at approximately Rs. 190 crore pertaining to the wirerope business of the Company situated at Ranchi in the State of Jharkhand. This order waspassed in connection with sale of iron-ore fines in earlier years from the erstwhileiron-ore mines of the Company situated at West Singhbhum in the State of Jharkhand. On10th January 2020 the Adjudicating Authority under the Prevention of Money LaunderingAct 2002 ("PMLA") issued an order confirming the Provisional Order subsequentto which the Company filed applications for stay and appeal against the order ofAdjudicating Authority PMLA with the Appellant Tribunal PMLA New Delhi. The AppellantTribunal vide an order dated 31st January 2020 directed that status quo be maintained tillthe next date of hearing. The aforesaid matter has also been intimated to the StockExchanges where the Equity Shares of the Company are listed.
Details in respect of adequacy of internal financial controls with reference to thefinancial statements
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company (with its inherent weaknesses) work performedby the internal statutory cost and secretarial auditors and external consultantsspecially appointed for this purpose including audit of internal financial controls overfinancial reporting by the statutory auditors and the reviews performed by management andrelevant board committees including the Audit Committee the Board is of the opinion thatthe Company's internal financial controls were adequate and effective during the yearended on 31st March 2020.
Directors and Key Managerial Personnel
Mr. Brij Kishore Jhawar (DIN: 00086200) is retiring by rotation and being eligibleoffers himself for re-appointment at the forthcoming Annual General Meeting. A briefprofile of Mr. Jhawar is given in the Notice convening the forthcoming Annual GeneralMeeting.
The tenure of Late Pravin Kumar Jain (DIN: 02583519) as Joint Managing Director [Wire& Wire Rope Business] of the Company ended on 31st January 2020. The Board ofDirectors at its Meeting held on 20th January 2020 had in accordance with therecommendation of the Nomination and Remuneration Committee reappointed him as JointManaging Director for a further period of one year till 31st January 2021. However Mr.Jain passed away after brief illness on 17th May 2020. While conveying the deepestcondolences to his family the Board places its appreciation for the invaluable andimmense contribution made by him towards the growth and development of the Company. Theresolution for approval of shareholders for ratification of the appointment andremuneration paid to him shall be placed at the forthcoming Annual General Meeting of theCompany.
Mr. Prashant Jhawar (DIN: 00353020) Non-Executive Promoter resigned from the Board ofDirectors with effect from 13th September 2019. The shareholders of the Company at the28th Annual General Meeting had appointed Mr. Jitender Balakrishnan (DIN: 00028320) Mr.Salil Singhal (DIN: 00006629) and Mr. P S Bhattacharyya (DIN: 00329479) as independentdirectors for a tenure of five years each till 30th July 2019. Accordingly after expiryof the said tenure Mr. Balakrishnan Mr. Singhal and Mr. Bhattacharyya ceased to bedirectors of the Company. The Board placed on record its appreciation for their immensesupport invaluable guidance and contribution. Mr. Vijay Singh Bapna (DIN: 02599024) wasappointed as Independent Director of the Company for a term upto four consecutive yearscommencing from 27th May 2019 and Mrs. Ramni Nirula (DIN: 00015330) was appointed asIndependent Director of the Company for a term upto five consecutive years commencing from26th July 2019. In the opinion of the Board the Independent Directors appointed duringthe year possess required skills expertise experience (including the proficiency) andintegrity to allow them to make effective contribution to the Board and its Committees.
The Board of Directors at its meeting held on 20th January 2020 had appointed Mr.Mukesh Rohatgi (DIN: 00136067) Independent Director as Non-Executive Chairman of theBoard and Company with effect from the said date.
Mr. Dhrub Jyoti Basu (DIN: 02498037) was appointed as an Additional Whole Time Directorof the Company with effect from 6th June 2020 and shall hold office till the date offorthcoming 34th Annual General Meeting of the Company. A brief profile of Mr. Basu isgiven in the Notice convening the forthcoming Annual General Meeting.
As required under provisions of the Act and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 all Independent Directors of the Company have confirmedthat they meet the requisite criteria of independence.
During the year under review there has been no change in the Key Managerial Personnelof the Company except that Mr. Rohit Nanda ceased to be the Chief Financial Officer of theCompany with effect from close of business hours on 9th April 2019 and Mr. Anirban Sanyalwas appointed the Chief Financial Officer of the Company with effect from 10th April 2019.Mr. Sanyal is also the Chief Operating Officer of the Company.
Directors' Responsibility Statement
Pursuant to requirements under Section 134(5) of the Act the Board to the best of itsknowledge and belief confirms that:
i) the applicable accounting standards have been followed in preparation of annualaccounts for Financial Year ended 31st March 2020 and proper explanations have beenfurnished relating to material departures;
ii) accounting policies have been selected and applied consistently and prudentjudgments and estimates have been made so as to give a true and fair view of state ofaffairs of the Company at end of financial year and of loss of the Company for year underreview;
iii) proper and sufficient care has been taken for maintenance of adequate accountingrecords in accordance with provisions of the Act for safeguarding assets of the Companyand for preventing and detecting fraud and other irregularities;
iv) the annual accounts for Financial Year ended 31st March 2020 have been prepared ona going concern basis;
v) internal financial controls are in place and that such financial controls areadequate and operating effectively;
vi) adequate systems to ensure compliance with the provisions of all applicable lawsare in place and are operating effectively.
The criteria and manner for formal evaluation of individual Directors the Board as awhole and the Board Committees has been formulated. Every Director evaluates theperformance of other Directors (excepting himself/herself) the Board as a whole and itsCommittees and provides feedback to the Nomination & Remuneration Committee. TheNomination & Remuneration Committee reviews the feedback and makes relevantrecommendation to the Board for final evaluation.
Nomination & Remuneration Policy
In accordance with the provisions of the Act and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board of Directors of the Company onrecommendation of the Nomination & Remuneration Committee has formulated the criteriafor determination of qualification positive attributes and independence of Directorsalong with remuneration of Directors Senior Management Personnel (including KeyManagerial Personnel) and other employees. The Remuneration Policy of the Company isannexed as part of this Report and is also available on the website of the Companywww.ushamartin.com.
Vigil Mechanism and Whistle Blower Policy
The Company has a coded Vigil Mechanism and Whistle Blower Policy available atwww.ushamartin.com/investor. This Policy provides a framework to promote responsible andsecure reporting of undesirable activities ("whistle blowing"). Through thisPolicy the Company seeks to provide a mechanism to the whistleblower to disclose anymisconduct malpractice unethical and improper practice taking place in the Company forappropriate action and reporting without fear of any kind of discrimination harassmentvictimisation or any other unfair treatment or employment practice being adopted againstthe whistleblower.
Particulars of Employees & Managerial Remuneration
The required disclosure in accordance with Section 197 of the Act read with Rule 5 ofCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 as amendedfrom time to time are provided separately and forms part of this report.
CEO and CFO Certification
In accordance with the provisions of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Managing Director and Chief Financial Officer of theCompany have submitted the relevant certificate for the year ended 31st March 2020 to theBoard of Directors.
The Company had adopted effective from 1st April 2016 the notified
Indian Accounting Standards (Ind AS) and accordingly the Financial Statements (bothstandalone and consolidated) for the year ended 31st March 2020 have been prepared underInd AS. In line with requirements of applicable provisions of law the Company has madenecessary disclosures in respect of Consolidated Financial Statements Related PartyTransactions and Segmental Reporting.
In accordance with the provisions of Section 139 of the Act and pursuant toshareholders approval at the 30th Annual General Meeting S.R. Batliboi & Co. LLPChartered Accountants (Firm Registration No. 301003E/E300005) have been appointed asStatutory Auditors of the Company to hold office from the conclusion of the 30th AnnualGeneral Meeting till the conclusion of the 35th Annual General Meeting of the Company. TheEmphasis of Matter mentioned in the Auditors' Report is self explanatory.
Pursuant to Section 148 of the Act and Rules made thereunder the Board has appointedMessers Guha Ghosh Kar & Associates Cost Accountants to conduct cost audit of theCompany for the Financial Year 2019-20 and had recommended their remuneration to theshareholders which was ratified at the Annual General Meeting held on 21st September2019. The Board of Directors have re-appointed Messers Guha Ghosh Kar & Associatesas the Cost Auditors for the Financial Year 2020-21 and their remuneration is sought to beratified from the shareholders at the forthcoming Annual General Meeting and is includedas an agenda item in the Notice convening the 34th Annual General Meeting.
Secretarial Audit and Corporate Governance Report
During the year under review the Board of Directors had appointed M/s. A K Labh &Co. firm of Practicing Company Secretaries for conducting secretarial audit in accordancewith the provisions of the Act and the Rules framed thereunder. The Secretarial AuditReport is annexed and forms part of this Report. The Secretarial Audit Report for thefinancial year ended 31st March 2020 contains three observations which areself-explanatory in nature. The Company has complied with the applicable requirements ofSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (as amended) andfollowed the practice of getting disclosures from directors and senior managementpersonnel relating to any material financial and commercial transactions where they haveany personal interest with a potential conflict of interest with the Company at large. Adetailed Report on Corporate Governance is annexed and forms part of this Report. TheCompany has also complied with the Standards of Secretarial Standards 1 & 2 issued bythe Institute of Company Secretaries of India as applicable during the year ended 31stMarch 2020.
Business Responsibility Report
The Business Responsibility Report as stipulated under Regulation 34(2)(f) of SEBIListing Regulations 2015 describing the initiatives taken by your Company from anenvironmental social and governance perspective forms part of the Annual Report.
Members of the Audit Committee as on 31st March 2020 were Mr. Vijay Singh Bapna asChairman Mr. Mukesh Rohatgi and Mr. P K Jain as Members. The Company Secretary acts asthe Secretary to the Audit Committee. Subsequent to the demise of Mr. Jain on 17th May2020 Mr Rajeev Jhawar was appointed as a member of the Committee effective 25th May2020. All recommendations of the Audit Committee were duly accepted by the Board and therewere no instances of any dis-agreement between the committee and board.
Corporate Social Responsibility (CSR)
The Company continues to be deeply involved in sustainable development of communitiesin and around its areas of operations. The CSR policy of the Company is available onwww.ushamartin.com/ investor. The Company's commitment to its responsibilities towardssociety over the years has never been confined to the requirements of any statute. As perthe provisions of Section 135 of the Act the Company need not statutorily incur anysocial responsibility spending owing to absence of profits over the last three years.However the annual report on CSR activities as required in accordance with the Act andRules made thereunder forms part of this Report. In accordance with the requirements ofthe Act as on 31st March 2020 the CSR committee comprised of Mr. Brij Kishore Jhawar asChairman and Mrs. Ramni Nirula and Mr. P K Jain as members. Subsequent to demise of Mr. PK Jain on 17th May 2020 Mr. Dhrub Jyoti Basu has been inducted as a member of theCommittee with effect from 6th June 2020.
Extract of Annual Return
The details forming part of the extract from the Company's Annual Return in Form MGT 9are annexed separately with this Report. Further in accordance with the requirement ofSection 92(3) of the Companies Act 2013 a copy of the Annual Return of the Company ishosted at http://www.ushamartin.com/investor-relation/.
Number of Meetings of Board and it's Committees
The details regarding meetings of the Board and Committees have been provided in theCorporate Governance Report forming part of this Report.
Particulars of Loans Guarantees and Investments
The particulars of loans guarantees or investments are provided in the FinancialStatements.
Particulars of contracts or arrangements with Related Parties
During the year under review in compliance with the Act and SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 all related party transactions had beenplaced before the Audit Committee for approval. Necessary approval of the Board has alsobeen obtained where required. Relevant disclosure has been made in Form AOC2pursuant to Rule 8(2) of the Companies (Accounts) Rules 2014 (as amended) given as anannexure to this Report. The Related Party Transaction Policy as approved by the Board ishosted on the Company's website www.ushamartin.com.
Conservation of energy technology absorption foreign exchange earnings and outgo
Information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134 (3) of the Act read with Rule 8 of theCompanies (Accounts) Rules 2014 (as amended) is annexed separately and forms part of thisreport.
The Audit Committee of the Board of Directors of the Company is entrusted withassisting the Board in discharging its responsibilities towards management of materialbusiness risk (material business risks include but is not limited to operationalfinancial sustainability compliance strategic ethical reputational product qualityhuman resource industry legislative or regulatory and market related risks) includingmonitoring and reviewing of the risk management plan / policies in accordance with theprovisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.The Company has formulated a Risk Organisation Structure as part of a risk mappingexercise which reviews risks identifies ownership of risk assesses the implication ofsuch risks and the method to mitigate the same.
Material changes between the end of the Financial Year and date of report
There has been no material changes subsequent to the end of the Financial Year and thedate of this report which requires to be specifically reported.
Your Directors place on record their appreciation for the valuable co-operation andsupport of its employees customers suppliers contractors shareholders investorsgovernment authorities financial institutions banks and other stakeholders.
| || ||On behalf of the Board of Directors |
| ||Rajeev Jhawar ||Dhrub Jyoti Basu |
|Place : Kolkata ||Managing Director ||Whole time Director |
|Date : 6th June 2020 ||DIN: 00086164 ||DIN: 02498037 |