The Directors of your Company have pleasure in presenting their 9th Annual Report ofthe business and operations of the Company along with the Audited Financial Statements forthe year ended 31st March 2019.
1. FINANCIAL RESULTS:
The financial performance of your Company for the year ended 31st March 2019 is asunder:-
| || ||(Rs. in Lakhs) |
|PARTICULARS ||2018-19 ||2017-18 |
|Revenue from operations (Net) ||112075.94 ||87788.73 |
|Other Income ||187.37 ||610.79 |
|Profit before Depreciation Interest & Tax (PBDIT) ||6971.61 ||6803.68 |
|Interest and Financial expenses ||2365.92 ||2143.08 |
|Profit before Depreciation and Tax (PBDT) ||4605.69 ||4660.60 |
|Depreciation ||2391.77 ||2151.04 |
|Profit before Tax (PBT) ||2213.92 ||2509.56 |
|Provision for Tax - Current Tax ||510.68 ||584.93 |
|- Tax adjustment relating to prior years ||(76.88) ||- |
|- Deferred Tax ||(440.48) ||(579.00) |
|Profit after tax (PAT) ||2220.60 ||2503.63 |
|Other Comprehensive Income ||(18.59) ||(29.77) |
|Total Comprehensive Income ||2202.01 ||2473.86 |
|Earnings per share (C) || || |
|- Basic ||6.22 ||7.91 |
|- Diluted ||6.19 ||7.88 |
2. FINANCIAL ANALYSIS AND REVIEW OF OPERATIONS:
PRODUCTION & SALES REVIEW:
During the year under review the production of Billet increased from 167425 MT to188499 MT showing an increase of 12.59% over the previous year. The Rolled productionincreased from 149957 MT to 159583 MT showing an increase of 6.42% over the previousyear.
Your Company has registered Revenue from Operations of 1112075.94 lakhs as comparedto 187788.73 lakhs in the previous year. The exports of the Company increased from14941.67 lakhs to I5822.94 lakhs showing an increase of 17.83%.
The Company earned profit before depreciation interest and tax of I6971.61 lakhs asagainst I6803.68 lakhs in the previous year. After providing for depreciation ofI2391.77 lakhs (Previous Year I2151.04 lakhs) interest of I2365.92 lakhs (PreviousYear I2143.08 lakhs) the net profit from operations after comprehensive income workedout to I2202.01 lakhs as compared to I2473.86 lakhs in the previous year.
a) Fixed Assets:
The net block as at 31st March 2019 was I27982.86 lakhs as compared to I24955.90lakhs in the previous year.
b) Current Assets:
The current assets as on 31st March 2019 were I54582.23 lakhs as against I38808.99lakhs in the previous year. Inventory level was at I31322.20 lakhs as compared to theprevious year level of I15860.29 lakhs.
FINANCIAL CONDITIONS & LIQUIDITY:
The Company enjoys a rating of "AA/Stable" from Credit Rating InformationServices of India (CRISIL) for long term borrowings and "A1+" for short termborrowings respectively. Management believes that the Companys liquidity andcapital resources should be sufficient to meet its expected working capital needs andother anticipated cash requirements. The position of liquidity and capital resources ofthe Company is given below:-
| || ||(Rs. in Lakhs) |
|PARTICULARS ||2018-19 ||2017-18 |
|Cash and Cash equivalents: || || |
|Beginning of the year ||748.50 ||594.64 |
|End of the year ||28.43 ||748.50 |
|Net cash provided (used) by: || || |
|Operating Activities ||(1884.68) ||1121.01 |
|Investing Activities ||(7012.21) ||(1625.24) |
|Financial Activities ||8176.82 ||658.09 |
3. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
Management Discussion and Analysis Report for the year under review as stipulated underRegulation 34(2) (e) of the Securities and Exchange Board of India (Listing Obligationsand Disclosure Requirements) Regulations 2015 is presented in a separate section formingpart of this Annual Report.
No Dividend was declared during the current financial year.
5. CONSOLIDATED FINANCIAL STATEMENT:
As your Company does not have any subsidiary associate or joint venture company theprovisions of Companies Act 2013 and Indian Accounting Standards (Ind AS) 110 111 and112 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 venture company.
Liable to retire by rotation: In accordance with the provisions of the Articlesof Association of the Company Mr. Rajinder Kumar Jain Director of the Company retiresby rotation at the conclusion of the forthcoming Annual General Meeting and beingeligible offers himself for re-appointment. The Board recommended his appointment for theconsideration of the members of the Company at the ensuing Annual General Meeting.
Cessation from Directorship: Mr. Jayant Davar Independent Director ceased tobe the Director of the Company w.e.f. 16th January 2019 as he resigned from the Board ofthe Company due to his professional pre-occupations.
Additional Director: During the year Mrs. Shubhra Bhattacharya was appointed asan Additional Director of the Company w.e.f. 1st February 2019. Further Mr. RaghavChandra has also been appointed as an Additional Director of the Company w.e.f. 4th May2019.
Declaration under Section 149(6):
The Independent Directors have submitted their disclosures to the Board that theyfulfill all the requirements as stipulated in Section 149(6) of the Companies Act 2013 soas to qualify themselves to be appointed as Independent Directors under the provisions ofthe Companies Act 2013 and the relevant rules thereof.
Companys Policy relating to Directors appointment payment of remuneration anddischarge of their duties:
The Nomination & Remuneration Committee of the Company has formulated theNomination & Remuneration Policy on Directors appointment and remunerationincluding the criteria for determining qualifications positive attributes independenceof a director and other matters as provided under Section 178(3) of the Companies Act2013.
The Nomination & Remuneration Policy is annexed hereto and forms part of thisreport as Annexure I.
Familiarization programmes for Board Members:
Your Company has formulated Familiarization Programme for all the Board members inaccordance with Regulation 25 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 and the Schedule IV of the Companies Act 2013 whichprovides that the Company shall familiarize the Independent Directors with the Companytheir roles rights responsibilities in the Company nature of Industry in which theCompany operates business model of the Company etc. through various programs.
The Familiarization Programme for Board members may be accessed on the Companyswebsite 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 calendar year 2018 was heldon 3rd November 2018 to evaluate the performance of Non-Independent DirectorsChairperson of the Company and the Board as a whole.
The evaluation was done by way of discussions on the performance of the Non-Independent Directors Chairperson and Board as a whole.
A policy on the performance evaluation of Independent Directors Board Committees andother individual Directors which includes criteria for performance evaluation ofnon-executive directors and executive directors has been formulated by the Company.
8. KEY MANAGERIAL PERSONNEL (KMP):
In compliance with provisions of Section 203 of the Companies Act 2013 following arethe KMPs of the Company as on 31st March 2019:
|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 Four (4) times and the intervening gapbetween any two meetings was within the period prescribed under Companies Act 2013. Thedetails of Board Meetings are set out in Corporate Governance Report which forms part ofthis Annual Report.
10. AUDITORS AND AUDITORS REPORT:
At the Annual General Meeting held on 27th September 2018 M/s. BSR & Co. LLPChartered Accountants were appointed as Statutory Auditors of the Company to hold officetill the conclusion of 13th Annual General Meeting of the Company.
The Statutory Auditors of the Company have submitted Auditors Report on theaccounts of the Company for the accounting year ended 31st March 2019.
The Auditors Report is self-explanatory and requires no comments.
M/s. Harsh Goyal & Associates Company Secretary in Practice were appointed asSecretarial Auditors of the Company by the Board of Directors of the Company in itsmeeting held on 27th April 2018 for the financial year 2018-19.
The Secretarial Auditors of the Company have submitted their Report in Form No. MR-3 asrequired under Section 204 of the Companies Act 2013 for the financial year ended 31stMarch 2019. The Auditors Report is self-explanatory and requires no comments. TheReport forms part of this report as Annexure II.
The Company is maintaining the Cost Records as specified by the Central Governmentunder section 148(1) of Companies Act 2013.
The Board of Directors has appointed M/s Ramanath Iyer & Company Cost AccountantsNew Delhi as the Cost Auditors of the Company to conduct Cost Audit of the Accounts forthe financial year ended 2019-20. However as per provisions of Section 148 of theCompanies Act 2013 read with Companies (Cost Records and Audit) Rules 2014 theremuneration to be paid to the Cost Auditors is subject to ratification by members at theAnnual General Meeting. Accordingly the remuneration to be paid to M/s Ramanath Iyer& Company Cost Accountants New Delhi for financial year 2019-20 is placed forratification by the members.
11. AUDIT COMMITTEE & VIGIL MECHANISM:
Composition of Audit Committee:
The Audit Committee consists of Mr. Rakesh Jain Independent Director Mr. SanjeevPahwa Independent Director Mr. Sanjoy Bhattacharyya Independent Director and Mr.Rajinder Kumar Jain Non-Executive Director. Mr. Rakesh Jain is the Chairman of theCommittee and Ms. Sonam Taneja is the Secretary of the Committee. All the recommendationsmade by the Audit Committee were accepted by the Board.
Pursuant to the provisions of Section 177(9) of the Companies Act 2013 the Company hasestablished a "Vigil Mechanism" incorporating whistle blower policy in terms ofSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 for employees andDirectors of the Company for expressing the genuine concerns of unethical behavioractual or suspected fraud or violation of the codes of conduct by way of direct access tothe Chairman/ Chairman of the Audit Committee. The Company has also provided adequatesafeguards against victimization of employees and Directors who express their concerns.The Policy on Vigil Mechanism and whistle blower policy as approved by the Board may beaccessed on the Companys 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. Corporate Governance isabout maximizing shareholder value legally ethically and sustainably. A separate reporton Corporate Governance forming part of the Annual Report of the Company is annexedhereto. A certificate from the Auditors of the Company regarding compliance of conditionsof Corporate Governance as stipulated under Corporate Governance Clauses of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 is annexed to thereport on Corporate Governance.
13. CORPORATE SOCIAL RESPONSIBILITY (CSR):
Vision & Core areas of CSR: Your Company is committed to and fully aware ofits Corporate Social Responsibility (CSR) the guidelines in respect of which were moreclearly laid down in the Companies Act 2013. The Companys vision on CSR is topursue a corporate strategy that enables shareholder value enhancement and societal valuecreation in a mutually reinforcing and synergistic manner. CSR Policy: TheCorporate Social Responsibility Policy of the Company indicating the activities to beundertaken by the Company as approved by the Board may be accessed on the Companyswebsite 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 I2.61 lakhs onCSR activities.
The disclosures related to CSR activities pursuant to Section 134(3) of the CompaniesAct 2013 read with Rule 9 of Companies (Accounts) Rules 2014 and Companies (CorporateSocial Responsibility) Rules 2014 is annexed hereto and forms part of this report as AnnexureIII.
14. RISK MANAGEMENT:
The Risk Management Policy required to be formulated under the Companies Act 2013 andSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 has been dulyformulated and approved by the Board of Directors of the Company. The aim of RiskManagement Policy is to maximize opportunities in all activities and to minimizeadversity. The policy includes identifying types of risks and its assessment riskhandling monitoring and reporting which in the opinion of the Board may threaten theexistence of the Company.
The Risk Management policy may be accessed on the Companys website at the link:https://www. vardhmansteel.com/vss/uploads/tpl-buddy-011/img/RISK MANAGEMENTPOLICY%20final.pdf
15. INTERNAL FINANCIAL CONTROLS:
The Company has in place adequate internal financial controls with reference tofinancial statements. During the year such controls were tested and no reportablematerial weakness in the design or operation was observed.
A report on the Internal Financial Controls under clause (i) of sub-section 3 ofsection 143 of the Companies Act 2013 as given by the Statutory Auditors of the Companyforms part of the Independent Auditors Report as Annexure B.
16. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES:
All contracts / arrangements / transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and on an armslength basis. During the year the Company had not entered into any contract/ arrangement/transaction with related parties which could be considered material in accordance with theRegulation 23 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.Accordingly the disclosure of Related Party Transactions as required under Section134(3)(h) of the Companies Act 2013 in Form AOC-2 is not applicable . The Policy ondealing with related party transactions as approved by the Board may be accessed on theCompanys website at the link:https://www.vardhmansteel.com/vss/uploads/tpl-buddy-011/ img/RELATED PARTYTRANSACTION%20Final.pdf Your Directors draw attention of the members to Note 39 to thefinancial statement which sets out related party disclosures.
17. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THECOMPANIES ACT 2013
Particulars of loans given/ taken investments made guarantees given and securitiesprovided along with the purpose for which the loan or guarantee or security is proposed tobe utilized by the recipient are provided in the financial statement (Please refer to Note5 10 and 17 to the financial statement).
18. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO:
Energy conservation continues to be an area of major emphasis in our Company. Effortsare made to optimize the energy cost while carrying out the manufacturing operations.Particulars with respect to conservation of energy and other areas as per Section134(3)(m) of the Companies Act 2013 read with the Companies (Accounts) Rules 2014 areannexed hereto and form part of this report as Annexure IV.
19. ANNUAL RETURN:
Pursuant to the provisions of Section 134(3)(a) of Companies Act 2013 the web addressof the Annual Return of the Company ishttps://www.vardhmansteel.com/vss/uploads/tpl-buddy-011/img/ Extract of Annual%20Return2018-19.pdf
20. HUMAN RESOURCES /INDUSTRIAL RELATIONS:
Human resource is considered as the most valuable of all resources available to theCompany. The Company continues to lay emphasis on building and sustaining an excellentorganization climate based on human performance. The Management has been continuouslyendeavoring to build high performance culture on one hand and amiable work environment onthe other hand. During the year the Company employed around 997 employees on permanentrolls.
Pursuit of proactive policies for industrial relations has resulted in a peaceful andharmonious situation on the shop floor of the plant.
21. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:
The disclosures in respect of managerial remuneration as required under section 197(12)read with Rule 5(1) of the Companies (Appointment & Remuneration of ManagerialPersonnel) Rules 2014 is annexed hereto and form part of this report.
A statement showing the names and other particulars of the employees drawingremuneration in excess of the limits set out in Rule 5 (2) and 5 (3) Companies(Appointment & Remuneration of Managerial Personnel) Rules 2014 is annexed hereto andform 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 Company does not have anyHolding or Subsidiary Company.
22. MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THESE FINANCIAL STATEMENTSRELATE AND THE DATE OF THE REPORT:
No material changes and commitments affecting the financial position of the Companyoccurred between the end of the financial year to which these financial statements relateon the date of this report.
23. DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to provisions of Section 134 (5) of the Companies Act 2013 the Board herebysubmit its responsibility Statement:
a. in the preparation of the annual accounts the applicable accounting standards havebeen followed along with the proper explanation relating to material departures;
b. appropriate accounting policies have been selected and applied consistently and havemade judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at 31st March 2019 and of the profitof the Company for the year ended on 31st March 2019;
c. proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d. the annual accounts have been prepared on a going concern basis;
e. the Internal financial controls has been laid down to be followed by the Company andthat such internal financial controls are adequate and are operating effectively; and
f. Proper systems have been devised to ensure compliance with the provisions of allapplicable laws and such systems are adequate and operating effectively.
24. GENERAL DISCLOSURES:
Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year 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 Companys operations in future.
d. Change in nature of Business of Company.
e. Transfer of Unclaimed dividend to Investor Education and Protection fund.
f. No fraud has been reported by the Auditors to the Audit Committee or the Board.
g. There is no Corporate Insolvency Resolution process initiated under the Insolvencyand Bankruptcy Code 2016.
Further your Directors state that the Company has complied with the provisionsrelating to constitution of Internal Complaints Committee under the Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013 and there was no casefiled under the said Act.
25. VARDHMAN SPECIAL STEELS LIMITED EMPLOYEE STOCK OPTION PLAN 2016:
The Company has granted options to its employees under Vardhman Special Steels LimitedEmployee Stock Options Plan 2016 (hereinafter referred as ESOP Plan). As per the terms ofthe plan the Company can grant a maximum of 371108 options to eligible employees fromtime to time. One option entitles the holder to apply for one equity share of the Companyin terms of ESOP Plan. Accordingly during the financial year a total of 61247 optionswere exercised by the eligible employees. So the paid up equity share capital of theCompany stood increased to I35758623 as on 31st March 2019.
The ESOP Plan of the Company is being implemented in accordance with SEBI (Share BasedEmployee Benefits) Regulations 2014 and the resolution passed by the shareholdersapproving the said plan. A certificate received from the Auditors of the Company in thisregard would be available at the Annual General Meeting for the inspection by the Members.
The details as required to be disclosed are put on the Companys website and maybe accessed athttps://www.vardhmansteel.com/vss/uploads/tpl-buddy-011/img/ESOP%20Disclosure.pdf
Your Directors are pleased to place on record their sincere gratitude to theGovernment Financial Institutions Bankers Business Constituents and Shareholders fortheir continued and valuable cooperation and support to the Company and look forward totheir continued support and co-operation in future too.
They also take this opportunity to express their deep appreciation for the devoted andsincere services rendered by the employees at all levels of the operations of the Companyduring the year.
| ||FOR AND ON BEHALF OF THE BOARD |
|Place : Ludhiana ||(RAJEEV GUPTA) |
|Dated : 04.05.2019 ||Chairman |