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Uttam Galva Steels Ltd.

BSE: 513216 Sector: Metals & Mining
BSE 00:00 | 28 Feb 5.82 -0.28






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OPEN 6.29
52-Week high 12.59
52-Week low 5.61
Mkt Cap.(Rs cr) 83
Buy Price 5.82
Buy Qty 193.00
Sell Price 6.25
Sell Qty 1000.00
OPEN 6.29
CLOSE 6.10
52-Week high 12.59
52-Week low 5.61
Mkt Cap.(Rs cr) 83
Buy Price 5.82
Buy Qty 193.00
Sell Price 6.25
Sell Qty 1000.00

Uttam Galva Steels Ltd. (UTTAMSTL) - Director Report

Company director report

To The Members

Your Directors would like to present the 34th Annual Report on the Businessand Operations of the Company along with the Audited Financial Statements for theFinancial Year ended 31st March 2019.


Rs in Crore
Particulars Standalone Consolidated
Financial Year ended 31st March 2019 Financial Year ended 31st March 2018 Financial Year ended 31st March 2019 Financial Year ended 31st March 2018
Gross Sales Turnover 556.44 2622.16 756.81 3492.40
Profit / (Loss) before Interest Tax (32.08) 24.14 (50.56) 31.56
Depreciation and Amortization Interest 936.50 647.17 937.74 654.33
Profit/(Loss) before Tax (284.88) (623.03) (303.46) (622.77)
Depreciation and Amortization
Depreciation/ Amortization 252.80 258.12 252.90 258.49
Other Income (+/-) 15.11 69.18 15.73 69.45
Profit/ (Loss) from Operations (1221.38) (881.14) (1241.20) (881.26)
Exceptional Items (+/-) 904.81 904.81
Profit/(Loss) before Tax (2126.19) (881.14) (2146.01) (881.26)


Your Company has incurred Loss of Rs 1221.38 Crore from operations as against Loss ofRs 881.14 Crore in the previous year and Consolidated Loss of Rs 1241.20 Crore fromOperations as against Loss of Rs. 881.26 Crore in the previous year. The Turnover figuresare not comparable with the previous year mainly because during the year your Company hascarried out its operations on Job work basis due to lack of working capital and rawmaterials.

During the year under review ArcelorMittal India Private Limited (AMIPL) has made thepayment to the secured financial lenders of the Company to clear the overdue Principalamount as on 30th September 2018 and Interest due and payable as on 17thOctober 2018. Accordingly the overdue Principal amount paid were assigned to AMIPL andthe remaining outstanding loan (till the completion of its tenure) is being continued withthe existing Lenders as ‘Surviving Debt'. Similarly ECB Loan facilities are partlyassigned to Citi Bank NA London Branch and partly paid by ArcelorMittal Luxemburg.

Consequent to the aforesaid payment the State Bank of India- the Lead Bank who hadfiled the Petition against the Company under section 7 of the Insolvency and BankruptcyCode 2016 in National Company Law Tribunal (NCLT) Mumbai Bench has withdrawn the sameon 1st November 2018. Additionally your Directors would like to inform youthat the accounts of your Company with various banks are not classified as Non-PerformingAssets (NPA) as on 31st March 2019.


Due to heavy Losses your Directors regret their inability to recommend any dividendfor the year to the Members of the Company.


Pursuant to the regulation 34 read with the Schedule V of the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 your Directors wish to report as follows:

(i) Industry Structure & Developments:

Indian Steel Association- an industry body comprising domestic steel producers hasforecasted that India's steel consumption is poised to cross the psychological 100-milliontone mark in 2019.

The downstream steel industry consisting of Cold Rolled (CR) Galvanised and ColorCoated products (GP & GC) continue to grow. The focus to shift towards light weightcorrosion resistant durable high-shine products across industries & applications hasdriven this demand.

(ii) Opportunities & Threats:

India is being a very attractive destination for steel consumption imports havegrown by 4.5% whereas exports have fallen by 16 %.

The consumption growth is tipped to be driven by expected 7.1% growth in domestic steeldemand in calendar year 2019 the ISA said adding that demand is likely to grow marginallyin the next calendar year 2020 by 7.2%. For financial years 2019-20 and 2020-21 howeverthe forecast for steel demand growth is 7.2%. Consumption growth is expected to improvedriven by measures for farmers unorganized sector and government employees. Cumulativelythe Indian economy is likely to maintain above 7% growth in the next couple of years.

(iii) Segment-wise or Product-wise Performance:

Since your Company operates only in one Segment segment-wise or product- wise analysisof performance is not applicable.

(iv) Outlook :

Steel industry has been through a difficult phase largely due to impact of supplydisruptions with many players having to stop operations and your Company was not immune toit. However demand for downstream steel products remains strong on the back of growth inconstruction auto and appliance sectors in India. The emerging markets show a strongdemand due to infrastructure spending and shift towards usage of coated products. Alsowith the introduction of GST multiple new domestic markets will open up to the Companyfor sale of products at competitive prices. In addition to all resolution of stressedassets on is nearing end of litigation hurdle.

The positive impact of stable supply will be seen in next financial year.

(v) Risks and Concerns:

Your Company is continuously evolving and improving systems and measures to takecare of all the risk exigencies involved in the business. All inherent risks areidentified measured monitored and regularly reported to the management. The managementdecides measures required to overcome these risks and ensures implementation of properrisk mitigation plans. In accordance with Regulation 17 of the Securities Exchange Boardof India (Listing Obligations and Disclosure Requirements) Regulations 2015 your Companyhas duly adopted steps for framing implementing and monitoring the risk management planand accordingly your Directors have put in place critical risk management framework acrossthe Company for identification and evaluation of all potential risks.

(vi) Internal Control Systems and their adequacy:

Your Company has an effective Internal Control System to prevent fraud and misuse ofCompany's resources and protect shareholders' interest. The base of Internal ControlSystem lies in the Code of Conduct (‘CoC') and various policies and proceduresadopted by your Company. Board Members Senior Managements and every Employee in theorganization carries responsibility for internal control. All employees produceinformation used in the internal control system or take other actions needed to effectcontrol. Also all personnel are responsible for communicating to seniors about theproblems in operations non-compliances with the code of conduct/ applicable laws orother policy violations or illegal actions.

Your Company has also established and maintained the Internal Financial Control toensure adherence to Company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of accounting records andtimely preparation of financial information as required under the Companies Act 2013.

(vii) Discussion on Financial Performance with respect to Operational Performance andstate of Company's affairs:

Your Company has faced with the continued problem of working capital availability.This has resulted in the Company operating the plant on job-work basis at sub-optimalcapacity of 40%. The cash flows from the existing operations are not sufficient to coverthe fixed overheads let alone the principal and interest obligations of the Company.However to ensure that the outstanding debt does not become a non-performing asset theCompany has consistently cleared the dues before 90 days from the due date from the fundsborrowed from ArcelorMittal India Private Limited ("AMIPL") by way ofinter-corporate deposits ("ICDs").

(viii) Human Resources Development and Industrial Relations:

Your Company employs more than 875 employees. Your Company is having cordial IndustrialRelations record. Your Company has put in place ‘Employee Grievance RedressalCommittee' for their employees. Suitable processes and mechanism are in place to ensurethat grievance of any employee is effectively addressed and to ensure that it has beendealt with in a fair and just manner.

Your Company has in place an Anti-Sexual Harassment Policy in line with therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. An Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment. All employees (permanent contractualtemporary trainees) are covered under this policy.


All the Related Party Transactions entered into during the year under review were onarm's length basis and in the ordinary course of business. These transactions are incompliance with the applicable provisions of the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 (hereinafter "ListingRegulations") as may be amended from time to time.

During the year there was no transaction with any related parties which exceeds thethreshold limit as specified in the Companies Act 2013 and in the Listing Regulations andwhich may consider as material transaction. Hence the disclosure of material relatedparty transactions in the Form AOC- 2 as referred in Section 188 read with Section134(3)(h) of the Companies Act 2013 is not required to be annexed herewith.


A detailed report on Corporate Governance as required under Regulation 34 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 as may be amended fromtime to time forms part of this Annual Report as ‘Annexure I'. The Auditors'Certificate on compliance with the conditions of Corporate Governance requirements by theCompany is attached to the Report thereon.


In accordance with the requirements of Section 135 of Companies Act 2013 read with theCompanies (Corporate Social Responsibility Policy) Rules 2014 as may be amended from timeto time your Company has duly constituted Corporate Social Responsibility Committeeunder the Chairmanship of Shri G S Sawhney and two other Members namely Shri Rajiv Munjaland Shri Arvind Kumar Gupta. The Committee has framed the Corporate Social ResponsibilityPolicy of the Company which is available on the Company's website.

Due to heavy losses during the financial year 2017-18 the Company was not mandatorilyrequired to spend any amount on CSR activities in the financial year 2018-19. Thus noreport for CSR activities is required to be annexed herewith.


During the year under review there were following changes in the Board of Directors:

(i) Appointment/ Re-appointment :

Shri Ravinder Arora (DIN 00676323) was appointed as an Additional Directors witheffect from 9th July 2019. In accordance with the provisions of Section 161 ofthe Companies Act 2013 He will hold office upto the date of ensuing Annual GeneralMeeting (AGM). He has submitted declaration of Independence as required under sub-Section (7) of Section 149 of the Companies Act 2013 and Regulation 16(1)(b) of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 as amended time totime. The Company has received notice u/s 160 of the Act from a member proposing theappointment of Shri Ravinder Arora as an Independent Director. The Board thereforerecommends the appointment of Shri Ravinder Arora as the Independent Director in thisAGM.

Shri Anuj R Miglani (DIN 00287097) has been reappointed as Managing Director & CEOfor a period of three years with effect from 10th November 2018 to 9th November2021 subject to the approval of the Members in this AGM.

(ii) Sad demise:

Your Directors are regret to inform you the sad and sudden demise of Shri B LKhurana (DIN 00675192). Your Directors wish to take the opportunity to express theirgratitude and sincere appreciation to Shri B L Khurana for his immense and invaluablecontribution to the Company during their tenure of association as Independent Directors.

(iii) Retire by Rotation:

In accordance with the provisions of the Act and the Articles of Association of theCompany Shri Rajinder Miglani (DIN 00286788) being longest in office retires by rotationand being eligible offer his candidature for re-appointment as Director.

(iv) Key Managerial Personnel (KMP):

The following are the Key Managerial Personnel of the Company.

• Shri Anuj R Miglani:

Managing Director & Chief Executive Officer

• Shri Gursharan Singh Sawhney:

Director (Finance) & Chief Financial Officer

• Shri Raggvendra Agrawal:

Executive Director & Company Secretary

During the year there is no change in the role of the aforesaid KMP.


Your Company has in place a policy for selection and appointment of Directors SeniorManagement and their remuneration. A brief detail of the policy is given in the CorporateGovernance Report and also posted on our website

During the year under review the remuneration paid to the Managerial personnel is wellwithin the provisions and compliances under the Companies act 2013 and Schedule V andrules made thereof.

During the year under review no Employee of the Company other than the ManagingDirector & CEO has drawn remuneration of Rupees Eight Lakhs and Fifty Thousands permonth or more. The information required pursuant to Section 197(12) read with Rule 5 ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 as maybe amended from time to time in respect to remuneration to the Whole Time Directors andKey Managerial Personnel is prepared separately forming part of this report. Having regardto the provisions of the first proviso of Section 136(1) of the Companies Act 2013 theAnnual Report is being sent to the Members of the Company excluding the aforesaidinformation. However the said information is available for inspection at the registeredoffice of the Company on any working days upto the date of the ensuing Annual GeneralMeeting.


To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statement in terms ofSection 134 (3)(c) of the Act that: i) In the preparation of the annual financialstatements for the year ended 31st March 2019 the applicable AccountingStandards have been followed along with the proper explanation relating to materialdepartures if any.

ii) Appropriate Accounting Policies have been selected and applied consistently.Judgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company as on 31st March 2019 and of the Profitand Loss Account for the Financial Year 2018-19 have been made.

iii) Proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and preventing & detecting fraud and otherirregularities.

iv) The Annual Accounts have been prepared on a going concern basis.

v) The Internal Financial Controls were in place and that there are adequate and wereoperating effectively.

vi) Proper systems are in place to ensure compliance of all laws applicable to theCompany and that such systems are adequate and operating effectively.


Pursuant to the provisions of Section 139 of the Companies Act 2013 read withCompanies (Audit and Auditors) Rules 2014 as amended from time to time M/s. Todarwal& Todarwal Chartered Accountants (Firm Registration No. 111009W) were appointed asstatutory auditors from the conclusion of the 32nd Annual General Meeting (AGM)held on 19th August 2017 till the conclusion of the 35th AGM of theCompany subject to the ratification of their appointment at every AGM if required underlaw.

The requirement of seeking ratification of the members for continuance of theirappointment has been withdrawn consequent upon the changes made by the Companies(Ammendment) Act 2017 w.e.f. 7th May 2018. However statement containingrelevant disclosures under the Listing Regulations is given in the Explanatory statementto the Notice of this Annual General Meeting of the Company.

Notes to the accounts as referred in the Auditor's report are self-explanatory and doesnot contain any qualifications and therefore do not call for any further comments andexplanations.


As per Section 148 of the Act read with Companies (Cost Records and Audits) Rules2014 as amended and on the recommendation of the Audit Committee the Board of Directorsof your Company has reappointed M/s. Manisha & Associates Cost Accountants as"Cost Auditors" to conduct Cost Audit for Steel and Power Plant of the Companyfor the Financial Year 2019-20.

As required under the Companies Act 2013 a resolution seeking Members' approval forthe remuneration payable to the Cost Auditors forms part of the notice of this AnnualGeneral Meeting for their ratification. The Cost Audit Report of the Company for theFinancial Year ended 31st March 2018 was duly filed with Central Governmentwithin the stipulated time as prescribed under Companies Act 2013 read with Companies(Cost Records and Audit) Rules 2014.


The Secretarial Audit of the Company for the financial year 2018-19 was carried out byM/s. JNG & Co. Practicing Company Secretaries (C.P. No. 8108). The Secretarial AuditReport is annexed hereto and part of the Director's Report as an ‘Annexure II'.The said report does not contain any qualification reservation or adverse remarks.


The Company has Seven Wholly-Owned Subsidiary Companies and One step down subsidiary ofthe Company namely:

(i) Uttam Galva Holdings Limited in Dubai;

(ii) Atlantis International Services Limited in British Virgin Islands;

(iii) Uttam Galva Steels Netherlands B.V. in Netherland;

(iv) Neelraj International Trade Limited in British Virgin Islands;

(v) Uttam Galva Steels BVI Limited in British Virgin Islands;

(vi) Uttam Exports BVI Ltd. in British Virgin Islands;

(vii) Uttam Galva North America Inc.; and

(viii) Uttam Galva International FZE (Step down Subsidiary) in Jebel Ali Free Zone inUnited Arab Emirates the subsidiary of Uttam Galva Holdings Limited Dubai.

Apart from the aforesaid subsidiaries your Company also has Two Joint VentureCompanies namely:

(i) Texturing Technology Private Limited; and

(ii) Moira Madhujore Coal Limited.


The Consolidated Financial Statements of the Company for the Financial Year ended 31stMarch 2019 are prepared in compliance with the applicable provisions of the CompaniesAct including Indian Accounting Standards specified under Section 133 of the Act. Theaudited consolidated financial statements together with the Auditors' Report thereon formpart of the Annual Report. Pursuant to Section 129(3) of the Act a Statement containingsalient features of the financial statements of each of the Subsidiaries and Joint VentureCompanies in the prescribed Form AOC-1 is annexed to this report as ‘AnnexureIII'.

Since in one of the subsidiary namely Uttam Galva Steels (BVI) Limited lenders haveappointed receiver due to default in repayment made by that subsidiary your Company isnot able to exercise control in that subsidiary. Hence account of the said subsidiary isnot consolidated.

In accordance with Section 136 of the Companies Act 2013 the audited financialstatements including the consolidated financial statements and related information of theCompany and financial statements of each of the subsidiary will be available on ourwebsite These documents will also be available for inspectionduring business hours at the Registered Office of the Company.


Your Company values environmental protection and safety as the major considerations inits functioning.

We have well-versed pollution control devices namely Air Pollution Control device(scrubber followed by fume extraction system and adequate height of chimney) to ensurelevel of pollutant parameter which are well within the standard norms. Your Company haszero water discharge unit and 100% of Industrial waste water is being recycled and reusedin the process. Your Company is yearly submitting Hazardous waste return and EnvironmentStatement Report to Maharashtra Pollution Control Board.

The Company is continuously endeavoring to improve the health and quality of life inthe communities surrounding its industrial complexes.


i) Annual Return: Subsequent to the enforcement of the relevant provision of theCompanies Amendment Act 2017 the Annual Return in Form MGT 7 shall be available on thewebsite of the Company. weblink is html

ii) Particulars of Loans Guarantee or Investment: Details of Loans Guarantees andInvestments covered under the provisions of Section 186 of the Companies Act 2013 aregiven in the notes to the Financial Statements. Kindly refer note no. 4 of the stand-alonebalance sheet.

iii) Compliance with Secretarial Standards:

The Company confirms compliance with the applicable requirements of SecretarialStandards 1 and 2.

iv) Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo:

a) Conservation of Energy

The Company has an Energy Conservation Cell which ensures implementation of the EnergyConservation efforts & Energy Management Policy. Conservation of energy is acontinuous activity and the Company continually strives to conserve energy. During theyear under review followings steps have been taken by the Company to conserve energy atits Plant:

• Monitor and Optimize process parameters in the combustion system of all thethermal equipment's in the Plant. This includes Incinerators Galvanizing furnaceAnnealing furnace Acid Re-generation Plant Boilers etc.

• During the year under review the Company has not taken any steps for utilizingalternate source of energy.

• During this year under review no capital expenditure has been incurred inenergy conservation equipment.

• Energy conservation has been carried out by effective process optimization.

b) Technology Absorption

The Company's products are manufactured by using in-house know-how and no outsidetechnology is being used for manufacturing activities. The Company constantly strives formaintenance and improvement in quality of its products and entire Research &Development activities are directed to achieve the aforesaid goal. c) Foreign ExchangeEarnings & Outgo During the year under review the Company has also madeexpenditure in foreign currency. The details of the foreign exchange earnings & outgoof the Company for the Financial Year 2018-19 are as below:

Rs in Crore
Particulars 2018-19 2017-18
Foreign Exchange Earnings - 176.84
Value of direct Imports 2.75 122.29
Expenditure in Foreign Currency 350.45 15.71

v) General Disclosures:

Your Directors state that no disclosures/ reporting are required since there were notransactions in respect of the following items during the year under review:

a. Details relating to deposits covered under Chapter V of the Act.

b. Significant and material orders passed by the Regulators or the Courts which wouldimpact the going concern status of the Company and its future operations.

c. Issue of Equity shares with differential rights as to dividend voting or otherwise.

d. Issue of Shares (including sweat equity shares) to employees of the Company underany scheme.

e. Neither the Managing Director not the Whole Time Directors of the Company receiveany remuneration or commission from any of its subsidiaries.


Statements in this Directors' report and in the Management Discussion and Analysisdescribing the Company's objectives projections estimates expectations or predictionsand those are forward looking statements within the meaning of applicable laws andregulations. Actual results could differ from those expressed or implied. Importantfactors that could make a difference to the Company's operations include raw materialavailability and its prices economic conditions affecting demand and supply priceconditions in domestic and international market change in Government regulations taxregimes economic developments and other related and incidental factors.


Your Directors would like to express their appreciation to the Central State &Local Governments Authorities Regulatory Bodies Financial Institutions BanksCustomers of the Company for their continued support and co-operation.

Your Directors also like to place on record their sincere appreciation for the totalcommitment dedication and hard work put in by every Member of the Uttam Galva Family.Your Directors are deeply grateful to you Shareholders for the confidence and trustreposed in us.

For and on behalf of the Board
Rajinder Miglani
Place: Mumbai Chairman
Date: 18th April 2019 (DIN 00286788)