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Vardhman Special Steels Ltd.

BSE: 534392 Sector: Metals & Mining
NSE: VSSL ISIN Code: INE050M01012
BSE 00:00 | 21 Jan 267.60 -7.55
(-2.74%)
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274.60

HIGH

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262.20

NSE 00:00 | 21 Jan 267.45 -8.05
(-2.92%)
OPEN

274.45

HIGH

279.20

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OPEN 274.60
PREVIOUS CLOSE 275.15
VOLUME 9239
52-Week high 309.30
52-Week low 111.20
P/E 10.84
Mkt Cap.(Rs cr) 1,085
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 274.60
CLOSE 275.15
VOLUME 9239
52-Week high 309.30
52-Week low 111.20
P/E 10.84
Mkt Cap.(Rs cr) 1,085
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Vardhman Special Steels Ltd. (VSSL) - Director Report

Company director report

Dear Members

The Directors of your Company have pleasure in presenting their 10thAnnual Report of the business and operations of the Company along with the AuditedFinancial Statements for the year ended 31st March 2020.

1. FINANCIAL RESULTS:

The financial performance of your Company for the year ended 31stMarch 2020 is as under:-

(Rs. in lakhs)

Particulars 2019-20 2018-19
Revenue from operations (Net) 84620.03 112075.94
Other Income 939.82 187.37
Profit before Depreciation Interest & Tax (PBDIT) 4912.05 6971.61
Interest and Financial expenses 2571.61 2365.92
Profit before Depreciation and Tax (PBDT) 2340.44 4605.69
Depreciation 2572.08 2391.77
Profit/(Loss) before Tax (PBT) (231.64) 2213.92
Provision for Tax - Current Tax 6.45 510.68
- Tax adjustment relating to prior years - (76.88)
- Deferred Tax (572.08) (440.48)
Profit after tax (PAT) 333.99 2220.60
Other Comprehensive Income/(Expense) (84.12) (18.59)
Total Comprehensive Income 249.87 2202.01
Earnings per share (C)
- Basic 0.89 6.22
- Diluted 0.89 6.19

2. FINANCIAL ANALYSIS AND REVIEW OF OPERATIONS:

PRODUCTION & SALES REVIEW:

During the year under review the production of Billet decreased from188499 MT to 118591 MT showing a decrease of 37.09% over the previous year. TheRolled production decreased from 159583 MT to 131576 MT showing a decrease of 17.55%over the previous year.

Your Company has registered Revenue from Operations of RS. 84620.03lakhs as compared to RS. 112075.94 lakhs in the previous year. The exports of theCompany decreased from RS. 5822.94 lakhs to RS. 2498.90 lakhs showing a decrease of57.09%.

PROFITABILITY:

The Company earned profit before depreciation interest and tax of RS.4912.05 lakhs as against RS. 6971.61 lakhs in the previous year. After providing fordepreciation of RS. 2572.08 lakhs (Previous Year RS. 2391.77 lakhs) interest of RS.2571.61 lakhs (Previous Year RS. 2365.92 lakhs) the total comprehensive income workedout to RS. 249.87 lakhs as compared to RS. 2202.01 lakhs in the previous year.

RESOURCES UTILISATION:

a) Fixed Assets:

The net block as at 31st March 2020 was RS. 30856.54 lakhsas compared to RS. 27982.86 lakhs in the previous year.

b) Current Assets:

The current assets as on 31st March 2020 were RS. 36086.79lakhs as against RS. 54582.23 lakhs in the previous year. Inventory level was at RS.15177.78 lakhs as compared to the previous year level of RS. 31322.20 lakhs.

FINANCIAL CONDITIONS & LIQUIDITY:

The Company enjoys a rating of "AA/Negative" from CreditRating Information Services of India (CRISIL) for long term borrowings and "A1+"for short term borrowings respectively. Management believes that the Company'sliquidity and capital resources should be sufficient to meet its expected working capitalneeds and other anticipated cash requirements. The position of liquidity and capitalresources of the Company is given below:-

(Rs. in lakhs)

PARTICULARS 2019-20 2018-19
Cash and Cash equivalents:
Beginning of the year 28.43 748.50
End of the year 230.31 28.43
Net cash provided (used) by:
Operating Activities 13542.86 (1884.68)
Investing Activities (8816.50) (7012.21)
Financing Activities (4524.48) 8176.82

3. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

Management Discussion and Analysis Report for the year under review asstipulated under Regulation 34(2) (e) of the Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 is presented in aseparate section forming part of this Annual Report.

4. DIVIDEND:

The Board of Directors of your Company has not recommended any dividendfor the financial year 2019-20.

5. CONSOLIDATED FINANCIAL STATEMENT:

As your Company does not have any subsidiary associate or jointventure company the provisions of Companies Act 2013 and Indian Accounting Standards(Ind AS) 110 111 and 112 in relation to consolidation of accounts do not apply.

6. SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES:

The Company does not have any subsidiary associate or joint venturecompany.

7. DIRECTORS:

Liable to retire by rotation: In accordance with the provisionsof the Articles of Association of the Company Mr. B. K. Choudhary Director of theCompany retires by rotation at the conclusion of the forthcoming Annual General Meetingand being eligible offers himself for reappointment. The Board recommended hisappointment for the consideration of the Members of the Company at the ensuing AnnualGeneral Meeting.

Appointments during the year: Mr. Raghav Chandra was appointedas an Independent Director of the Company w.e.f.

4th May 2019 and Mr. Takashi Ishigami was appointed as aNon-Executive Director of the Company w.e.f. 4th November 2019.

Declaration by Independent Directors:

The Independent Directors have submitted their disclosures to the Boardthat they fulfill all the requirements as stipulated in Section 149(6) of the CompaniesAct 2013 so as to qualify themselves to be appointed as Independent Directors under theprovisions of the Companies Act 2013 and the relevant rules thereof.

Your Board confirms that in its opinion the Independent Directorspossess the requisite integrity experience expertise proficiency and qualifications.All the Independent Directors on the Board of the Company are registered with the IndianInstitute of Corporate Affairs Manesar Gurgaon (IICA) as notified by the CentralGovernment under Section 150(1) of the Companies Act 2013 and shall undergo onlineproficiency self-assessment test if applicable within the time prescribed by the IICA.

Company's Policy relating to Directors appointment payment ofremuneration and discharge of their duties:

The Nomination & Remuneration Committee of the Company hasformulated a ‘Nomination & Remuneration Policy' on Director'sappointment and remuneration including the criteria for determining qualificationspositive attributes independence of a director and other matters as provided underSection 178(3) of the Companies Act 2013.

The Nomination & Remuneration Policy is annexed hereto and formspart of this report as Annexure I.

Familiarization programmes for Board Members:

Your Company has formulated Familiarization Programme for all the Boardmembers in accordance with Regulation 25 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 and Schedule IV of the Companies Act 2013 which providesthat the Company shall familiarize the Independent Directors with the Company theirroles rights responsibilities in the Company nature of Industry in which the Companyoperates business model of the Company etc. through various programs.

The Familiarization Programme for Board members may be accessed on theCompany's website at the link:https://www.vardhmansteel.com/vss/uploads/tpl-buddy-011/img/familarisation%20program.pdf

Annual Evaluation of the Board Performance:

The meeting of Independent Directors of the Company for the financialyear 2019-20 was held on 7th February 2020 to evaluate the performance ofNon-Independent Directors Chairperson of the Company and the Board as a whole.

The evaluation was done by way of discussions on the performance of theNon-Independent Directors Chairperson and Board as a whole.

A policy on the performance evaluation of Independent Directors BoardCommittees and other individual Directors which includes criteria for performanceevaluation of non-executive directors and executive directors has been formulated by theCompany.

8. KEY MANAGERIAL PERSONNEL (KMP):

In compliance with the provisions of Section 203 of the Companies Act2013 following are the KMPs of the Company as on 31st March 2020:

S.No. Name Designation
1. Sachit Jain Vice-Chairman & Managing Director
2. Sanjeev Singla Chief Financial Officer
3. Sonam Taneja Company Secretary

9. NUMBER OF BOARD MEETINGS:

During the year under review the Board met Five (5) times and theintervening gap between any two meetings was within the period prescribed under CompaniesAct 2013. The details of Board Meetings are set out in Corporate Governance Report whichforms part of this Annual Report.

10. AUDITORS AND AUDITORS' REPORT:

Statutory Auditors:

At the Annual General Meeting held on 27th September 2018M/s. BSR & Co. LLP Chartered Accountants were appointed as Statutory Auditors of theCompany to hold office till the conclusion of 13th Annual General Meeting ofthe Company.

The Statutory Auditors of the Company have submitted Auditors'Report on the accounts of the Company for the accounting year ended 31st March2020.

The Auditors' Report is self-explanatory and requires no comments.-

Secretarial Auditor:

M/s. Harsh Goyal & Associates Company Secretary in Practice wereappointed as Secretarial Auditors of the Company by the Board of Directors of the Companyin its meeting held on 4th May 2019 for the financial year 2019-20.

The Secretarial Auditors of the Company have submitted their Report inForm No. MR-3 as required under Section 204 of the Companies Act 2013 for the financialyear ended 31st March 2020. The Auditors' Report is self-explanatory andrequires no comments. The Report forms part of this report as Annexure II.

Cost Auditor:

The Company is maintaining the Cost Records as specified by theCentral Government under section 148(1) of Companies Act 2013.

The Board of Directors has appointed M/s Ramanath Iyer

& Company Cost Accountants New Delhi as the Cost Auditors of theCompany to conduct Cost Audit of the Accounts for the financial year ended 2020-21.However as per provisions of Section 148 of the Companies Act 2013 read with Companies(Cost Records and Audit) Rules 2014 the remuneration to be paid to the Cost Auditors issubject to rati_cation by Members at the Annual General Meeting. Accordingly theremuneration to be paid to M/s Ramanath Iyer & Company Cost Accountants New Delhifor financial year 2020-21 is placed for rati_cation by the Members.

11. AUDIT COMMITTEE & VIGIL MECHANISM:

Composition of Audit Committee:

The Audit Committee consists of Mr. Rakesh Jain Independent DirectorMr. Sanjeev Pahwa Independent Director Mr. Sanjoy Bhattacharyya Independent Directorand Mr. Rajinder Kumar Jain Non-Executive Director. Mr. Rakesh Jain is the Chairman ofthe Committee and Ms. Sonam Taneja is the Secretary of the Committee. All therecommendations made by the Audit Committee were accepted by the Board.

Vigil Mechanism:

Pursuant to the provisions of Section 177(9) of the Companies Act2013 the Company has established a "Vigil Mechanism" incorporating whistleblower policy in terms of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 for employees and Directors of the Company for expressing the genuineconcerns of unethical behavior actual or suspected fraud or violation of the codes ofconduct by way of direct access to the Chairman/ Chairman of the Audit Committee.

The Company has also provided adequate safeguards against victimizationof employees and Directors who express their concerns.

The Policy on Vigil Mechanism and Whistle Blower Policy as approved bythe Board may be accessed on the Company's website at the link:https://www.vardhmansteel.com/vss/uploads/tpl-buddy-011/img/Vigil%20Mechanism%20final.pdf

12. CORPORATE GOVERNANCE:

The Company has in place a system of Corporate Governance. CorporateGovernance is about maximizing shareholder value legally ethically and sustainably. Aseparate report on Corporate Governance forming part of the Annual Report of the Companyis annexed hereto. A certificate from the Practising Company Secretary regardingcompliance of conditions of Corporate Governance as stipulated under Corporate GovernanceClauses of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 isannexed to the report on Corporate Governance.

13. CORPORATE SOCIAL RESPONSIBILITY (CSR):

Vision & Core areas of CSR: Your Company is committed to andfully aware of its Corporate Social Responsibility (CSR) the guidelines in respect ofwhich were more clearly laid down in the Companies Act 2013. The Company's vision onCSR is to pursue a corporate strategy that enables shareholder value enhancement andsocietal value creation in a mutually reinforcing and synergistic manner.

CSR Policy: The Corporate Social Responsibility Policy of theCompany indicating the activities to be undertaken by the Company as approved by theBoard may be accessed on the Company's website at the link:https://www.vardhmansteel.com/vss/uploads/tpl-buddy-011/img/Corporate%20Social%20Responsibility%20Policy.pdf

During the year the Company has spent RS. 50.68 lakhs on CSRactivities.

The disclosures related to CSR activities pursuant to Section 134(3) ofthe Companies Act 2013 read with Rule 9 of Companies (Accounts) Rules 2014 and Companies(Corporate Social Responsibility) Rules 2014 is annexed hereto and forms part of thisreport as Annexure III.

14. RISK MANAGEMENT:

The Risk Management Policy required to be formulated under theCompanies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 has been duly formulated and approved by the Board of Directors of theCompany. The aim of Risk Management Policy is to maximize opportunities in all activitiesand to minimize adversity. The policy includes identifying types of risks and itsassessment risk handling monitoring and reporting which in the opinion of the Board maythreaten the existence of the Company.

The Risk Management Policy may be accessed on the Company'swebsite at the link:https://www.vardhmansteel.com/vss/uploads/tpl-buddy-011/img/RISK_MANAGEMENT_POLICY%20final.pdf

15. BUSINESS RESPONSIBILITY REPORT (BRR):

SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 mandate the inclusion of the BRR as part of the Annual Report for top 1000 listedentities based on market capitalization. In compliance with the Listing Regulations wehave integrated BRR disclosure into our Annual Report.

16. INTERNAL FINANCIAL CONTROLS:

The Company has in place adequate internal financial controls withreference to financial statements. During the year such controls were tested and noreportable material weakness in the design or operation was observed.

A report on the Internal Financial Controls under clause (i) ofsub-section 3 of section 143 of the Companies Act 2013 as given by the StatutoryAuditors of the Company forms part of the Independent Auditor's Report as AnnexureB.

17. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES:

All contracts / arrangements / transactions entered by the Companyduring the financial year with related parties were in the ordinary course of business andon an arm's length basis. During the year the Company had not entered into anycontract/ arrangement/ transaction with related parties which could be considered materialin accordance with the Regulation 23 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. Accordingly the disclosure of Related Party Transactionsas required under

Section 134(3)(h) of the Companies Act 2013 in Form AOC-2 is notapplicable .

The Policy on dealing with related party transactions as approved bythe Board may be accessed on the Company's website at the link:https://www.vardhmansteel.com/vss/uploads/tpl-buddy-011/img/RELATED_PARTY_TRANSACTION%20Final.pdf

Your Directors draw attention of the Members to Note 43 to thefinancial statement which sets out related party disclosures.

18. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS MADE UNDER SECTION186 OF THE COMPANIES ACT 2013

Particulars of loans given/ taken investments made guarantees givenand securities provided along with the purpose for which the loan or guarantee or securityis proposed to be utilized by the recipient are provided in the financial statement(Please refer to Note 6 12 and 20 to the financial statement).

19. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGEEARNINGS AND OUTGO:

Energy conservation continues to be an area of major emphasis in ourCompany. E_orts are made to optimize the energy cost while carrying out the manufacturingoperations. Particulars with respect to conservation of energy and other areas as perSection 134(3)(m) of the Companies Act 2013 read with the Companies (Accounts) Rules2014 are annexed hereto and forms part of this report as Annexure IV.

20. ANNUAL RETURN:

Pursuant to the provisions of Section 134(3)(a) of Companies Act 2013the web address of the extract of Annual Return of the Company ishttps://www.vardhmansteel.com/vss/ uploads/tpl-buddy-011/img/MGT-9_2019-20.pdf

21. HUMANRESOURCES/INDUSTRIALRELATIONS:

Human resource is considered as the most valuable of all resourcesavailable to the Company. The Company continues to lay emphasis on building and sustainingan excellent organization climate based on human performance. The Management has beencontinuously endeavoring to build high performance culture on one hand and amiable workenvironment on the other hand. During the year the Company employed around 953 employeeson permanent rolls.

Pursuit of proactive policies for industrial relations has resulted ina peaceful and harmonious situation on the shop floor of the plant.

22. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:

The disclosures in respect of managerial remuneration as required undersection 197(12) read with Rule 5(1) of the Companies (Appointment & Remuneration ofManagerial Personnel) Rules 2014 is annexed hereto and forms part of this report.

A statement showing the names and other particulars of the employeesdrawing remuneration in excess of the limits set out in Rule 5(2) and 5(3) Companies(Appointment

& Remuneration of Managerial Personnel) Rules 2014 is annexedhereto and forms part of this report.

All the above details are provided in Annexure V.

In terms of section 197(14) of the Companies Act 2013 the Companydoes not have any Holding or Subsidiary Company.

23. MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIALPOSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THESEFINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT:

No material changes and commitments affecting the financial position ofthe Company occurred between the end of the financial year to which these financialstatements relate and the date of this report.

24. DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to the provisions of Section 134(5) of the Companies Act2013 the Board hereby submit its Responsibility Statement:—a. in the preparation ofthe annual accounts the applicable accounting standards have been followed along with theproper explanation relating to material departures; b. appropriate accounting policieshave been selected and applied consistently and have made judgments and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany as at 31st March 2020 and of the profit of the Company for the yearended on 31st March 2020; c. proper and sufficient care has been taken for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities; d. the annual accounts have been prepared on agoing concern basis; e. the Internal financial controls have been laid down to be followedby the Company and that such internal financial controls are adequate and are operatingeffectively; and f. Proper systems have been devised to ensure compliance with theprovisions of all applicable laws and such systems are adequate and operating effectively.

25. GENERAL DISCLOSURES:

Your Directors state that no disclosure or reporting is required inrespect of the following items as there were no transactions on these items during theyear under review: a. Details relating to deposits covered under Chapter V of the Act. b.Issue of equity shares with differential rights as to dividend voting or otherwise. c.Significant or material orders passed by the Regulators or Courts or Tribunals whichimpact the going concern status and Company's operations in future. d. Change innature of Business of Company. e. Transfer of Unclaimed dividend to Investor Education andProtection fund. f. No fraud has been reported by the Auditors to the Audit Committee orthe Board. g. There is no Corporate Insolvency Resolution Process initiated under theInsolvency and Bankruptcy Code 2016.

Further your Directors state that the Company has complied with theprovisions relating to constitution of Internal Complaints Committee under the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 andthere was no complaint filed under the said Act.

26. VARDHMAN SPECIAL STEELS LIMITED EMPLOYEE STOCK OPTION PLAN 2016:

The Company has granted options to its employees under Vardhman SpecialSteels Limited Employee Stock Options Plan 2016 (hereinafter referred as ESOP Plan). Asper the terms of the plan the Company can grant a maximum of 371108 options to eligibleemployees from time to time. One option entitles the holder to apply for one equity shareof the Company in terms of ESOP Plan. Accordingly during the financial year a total of6250 options were exercised by the eligible employees. The paid-up equity share capitalof the Company after this allotment stood increased to RS. 357648730.

The ESOP Plan of the Company is being implemented in accordance withSEBI (Share Based Employee Benefits) Regulations 2014 and the resolution passed by theshareholders approving the said plan. A certificate received from the Auditors of theCompany in this regard would be available during the Annual General Meeting for theinspection by the Members.

The details as required to be disclosed are put on the Company'swebsite and may be accessed at https://www.vardhmansteel.com/vss/uploads/tpl-buddy-011/img/ ESOP%20Disclosure%20-%202019-20.pdf

27. PREFERENTIAL ALLOTMENT:

The Members of the Company in their Extra-Ordinary General Meeting heldon 24th October 2019 had given their approval for issuance of equity shares toAichi Steel Corporation (ASC) by way of a preferential allotment on private placementbasis.

Accordingly the Board of Directors in its meeting held on 4thNovember 2019 had issued and allotted 4629629 equity shares @ RS. 108/- per equityshare to ASC. The paid-up capital of the Company after the preferential allotment stoodincreased from RS. 357648730 to RS. 403945020. The funds raised from the allotmenthave not been utilised till date.

. 28. ACKNOWLEDGEMENT:

Your Directors are pleased to place on record their sincere gratitudeto the Government Financial Institutions Bankers Business Constituents and Shareholdersfor their continued and valuable co-operation and support to the Company and look forwardto their continued support and co-operation in future too.

They also take this opportunity to express their deep appreciation forthe devoted and sincere services rendered by the employees at all levels of the operationsof the Company during the year.

FOR AND ON BEHALF OF THE BOARD
Place : Ludhiana (RAJEEV GUPTA)
Dated : 15th June 2020 Chairman

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