Mar 31, 2018
BOARD''S REPORT
Dear Shareholders,
The Directors take pleasure in presenting the Eleventh Annual Report along with the Audited Financial Statements of the Company for the year ended 31stMarch, 2018.
FINANCIAL SUMMARY/HIGHLIGHTS
Amount (Rs, in Lakhs)
(Except otherwise stated)
Particulars |
FY 2017-18 |
FY 2016-17 |
|
Revenue from Operations |
353,283.40 |
277,429.58 |
|
ii. |
Other Income |
8,843.06 |
9,353.12 |
iii. |
Total Income |
362,126.46 |
286,782.70 |
iv. |
Earnings Before Interest, Depreciation, Taxation And Amortization (EBIDTA) (excluding exceptional item) |
35,339.27 |
14,517.36 |
V. |
Finance Cost |
78,995.91 |
112,983.05 |
vi. |
Depreciation & Amortization Expenses |
53,415.20 |
47,882.30 |
vii. |
Exceptional Item |
(523,835.81) |
- |
viii. |
Profit/ (loss)before Taxation (PBT) |
(613,885.15) |
(146,347.99) |
ix. |
Tax including Deferred Tax |
- |
- |
X. |
Profit/ (loss) after Taxation (PAT) |
(613,885.15) |
(146,347.99) |
xi. |
Other Comprehensive Income |
(92.24) |
24.91 |
xii. |
Total Comprehensive Income |
(613,977.39) |
(146,323.08) |
xiii. |
Earnings Per Share (Rs) |
(25.48) |
(6.07) |
Your Company is selling Wire Rods, TMT Bars, Ductile Iron Pipes, Pig Iron and Billets in the open market. Continuous efforts for reduction of production cost and improvement of operational efficiency coupled with favorable market conditions has resulted in the Company being able to report positive Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) for the year.
Wide fluctuation in raw material prices, especially imported coking coal, also had a negative impact. Effective steps towards implementing better guidelines for operational procedure and precautionary measures thereto have been put in place. Continuous efforts were initiated to improve performance of the Company in both, quantitative and qualitative terms.
Despite operational and funding challenges of working capital, the Company was able to improve turnover vis-a vis previous financial year.
CORPORATE INSOLVENCY RESOLUTION PROCESS
As per the decision of the lenders of the Company at their meeting held on 22nd June, 2017, State Bank of India ("SBI"/ Financial Creditor), the Lead Banker, filed an application before the Hon''ble National Company Law Tribunal (NCLT), Kolkata, under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("Code") and rules and regulations made there under, for initiation of Corporate Insolvency Resolution Process ("CIRP") against the Company.
NCLT vide its Order dated 21st July, 2017 ("CIRP commencement date) admitted the application of the Financial Creditors. The NCLT, in terms of the aforesaid order appointed Mr. DhaivatAnjaria (having IBBI registration number: IBBI/IPA-001/IPP00088/2017-18/10184) as the Interim Resolution Professional (IRP) of the Company, who was confirmed as the Resolution Professional (RP) for the Company by the Committee of Creditors (CoC), pursuant to its majority decision passed on August 21, 2017.
In terms of the decision of the CoC, the RP invited expression of interest ("EOI") requesting prospective investors, i.e. potential resolution applicants to submit their EOI in relation to the CIRP of the Company and subsequently, received four resolution plans.
After evaluating the resolution plans, the CoC approved the resolution plan submitted by Vedanta Limited by 100% voting shares ("Resolution Plan"). Vedanta Limited is the Indian subsidiary of Vedanta Resources Pic, a London Stock Exchange listed Company. Vedanta Limited is a diversified natural resources company, whose business primarily involves producing oil & gas, zinc-lead-silver, copper, iron-ore, aluminum and commercial power, the company has a presence across India, South Africa, Namibia, Australia and Ire Land.
NCLT vide its Order dated 17th April, 2018 approved the Resolution Plan submitted by Vedanta Limited, wherein the Company''s majority ownership and management would with Vedanta Limited and such plan shall be binding on the Company, its employees, members, creditors, coordinators and other stakeholders.
With the passing of the Order, CIRP initiated in respect of the Company, came to end and tenure of Mr. Dhaivat Anjaria, who was appointed as RP completed his tenure.
As per the approved Resolution Plan, during the interim period, until the date on which Vedanta Limited acquires control of the Company (i.e. effective date), a "Steering Committee" was constituted comprising of majority nominees representing the financial creditors of the Company and minority nominees from Vedanta Limited.
The Steering Committee consisted of:
(a) Mr. ParthaSen, Deputy General Manager & Relationship Manager, State Bank of India
(b) Mr. Ramesh Chandra Ojha, Deputy General Manager, Punjab National Bank
(c) Mr. S. Ramasubramanian, Deputy General Manager, Canara Bank
(d) Mr. Naveen Kumar Singhal, CEO Iron Ore, Vedanta Limited; and
(e) Mr. Azad Shaw, CFO Iron Ore, Vedanta Limited
In addition to the above, PricewaterhouseCoopers Private Limited was appointed as Independent Managing Authority (IMA) to monitor the affairs of the Company under the instructions, control and management of the Steering Committee.
RESOLUTION PLAN & CHANGE OF MANAGEMENT
Pursuant to the Resolution Plan, Vedanta Star Limited, a wholly-owned subsidiary of Vedanta Limited, subscribed to the share capital of the Company for an aggregate amount of Rs. 1765.51 Crores and provided additional funds aggregating of Rs. 3,554.49 Crores byway of debt. The funds received thus by the Company as debt and equity were used to settle the debts owed to the existing financial creditors of the Company, by payment of Rs. 5,320 Crores.
Upon implementation of the Resolution Plan, Vedanta Star Limited now hold approximately 90% of the paid up share capital of the Company. The remaining 10% of the Company''s share capital is held by the Company''s existing shareholders and the financial creditors who received shares in exchange for the part debt owed to them.
The Resolution Plan envisages the treatment towards all the stakeholders of the Company including the shareholders of the Company and in terms of Section 31 of the Insolvency and Bankruptcy Code, 2016, the Approved Plan will be binding on the Company along with the stakeholders that are involved in the Approved Plan.
Salient features of the Resolution Plan approved are as follows:
a. Conversion of debt into equity share capital of the Company:
An amount of Rs. 7399,13,20,550 due to the financial creditors was converted into 739,91,32,055 fully paid-up equity shares of Rs. 10 each of the Company ("New Equity Shares"), which was issued to the financial creditors in proportion to their respective portion of the debt;
b. Capital Reduction and Consolidation of the share capital:
The existing equity shares of the Company i.e. 240,92,35,023 of Rs. 10 each and the New Equity Shares issued pursuant to conversion of debt i.e. 739,91,32,055 of Rs. 10 each stood reduced by reducing the face value of the equity shares, from Rs. 9808,36,70,780 divided into 980,83,67,078 equity shares of Rs. 10 each fully paid-up to Rs. 196,16,73,416 divided into 980,83,67,078 equity shares of Re 0.20 each fully paid-up. Immediately thereafter, 50 (fifty) equity shares of Re 0.20 each as reduced was consolidated into 1 (one) fully paid-up equity share of Rs. 10 each;
c. Issue of equity shares to Vedanta Star Ltd.:
Vedanta Star Ltd. (VSL) was issued and allotted 176,55,06,078 fully paid up equity shares of Rs. 10 each of the fully diluted share capital of the Company.
Upon allotment of the aforesaid equity shares of the Company, VSL holds 90% of the paid up share capital of the Company. The remaining 10% of the Company''s Share Capital is held by the Company''s existing shareholders and the financial creditors who receive shares in exchange for the debt owed to them.
d. Delisting:
As an integral part of the Resolution Plan, the Company would be delisted from the BSE and NSE. The financial creditors holding shares of the Company and existing shareholders holding equity shares shall be offered an exit ata price which shall be calculated as perthe Resolution Plan.
Pursuant to the Resolution Plan, on 4th June, 2018, was determined to be the "Effective Date" for the purpose of implementation of Resolution Plan.
On 4th June, 2018, Board of Directors of the Company was re-constituted and erstwhile Board of Directors were deemed to be resigned.
As on date the Board of Directors of the Company consists of the following Directors:
1. Mr. Prasun Kumar Mukherjee - Non-Executive Independent Director (Additional)
2. Mr. Naveen Kumar Singhal - Non-Executive Director (Additional)
3. Ms. Rashmi Mohanty - Non-Executive Director (Additional)
4. Mr. Mahendra Singh Mehta - Non-Executive Independent Director (Additional)
EQUITY SHARE CAPITAL
Authorized Share Capital of the Company as on 31st March, 2018 was Rs. 50,000,000,000 (Rupees Five Thousand crores), divided into 5,000,000,000 equity shares of Rs. 10 each. Issued and paid up share capital was Rs. 24,092,350,230 divided into 2,409,235,023 equity shares of Rs. 10 each.
Pursuant to the implementation of the Resolution Plan sanctioned by the NCLT, Authorized Share Capital of the Company has since been increased to Rs. 100,000,000,000 (Rupees Ten Thousands crores), divided into 10,000,000,000 equity shares of Rs. 10 each.
Further the paid up capital, after allotment of shares to the lenders of the Company and post reduction and consolidation and allotment of shares to Vedanta Star Ltd., new Promoter of the Company, stands at Rs. 19,616,734,200 divided into 1,961,673,420 number of equity shares of Rs. 10 each.
DIVIDEND
In view of the losses incurred by the Company, the Management of the Company expresses their inability to declare any dividend for the financial year ended 31st March, 2018.
TRANSFER TO RESERVES
In view of losses incurred by the Company during the year, no amount has been transferred to the General Reserve.
EROSION OF NETWORTH
As reported last year, since accumulated losses resulted in erosion of over 50% of peak net worth during the immediately preceding four financial years, your Company continues as a "Sick Company". A Resolution Plan has been sanctioned by the Hon''ble National Company Law Tribunal, Kolkata Bench with effect from 4th June, 2018, as stated above, wherein various restructuring plans are being implemented. The present Board of Directors of the Company is optimistic that such measures would revive the operations of the Company.
Company has carried out the Impairment testing determining the recoverable amount of the assets based on Value in Use of the cash generating unit, the same being higher than fair value less costs of disposal determined based on the transaction price in terms of the approved resolution plan. The computation of Value in Use has been carried out by an Independent Valuer appointed in this respect. Based on this Company has taken impairment loss in respect of Property, Plant & Equipment, Intangible Assets and CWIP amount to Rs. 433,869.51 lacs, Rs. 43.39 lacs and Rs. 77,280.11 lacs respectively.
MANAGEMENT DISCUSSIONS AND ANALYSIS
A report on Management Discussion and Analysis is enclosed as "Annexure A" and forms an integral part of this Report.
NATURE OF BUSINESS
There has been no change in the nature of the business of the Company during the year.
OPPORTUNITY/CHALLENGES/OUTLOOK:
Opportunities and Threats have been enumerated in the Management Discussion and Analysis section of the Report.
NUMBEROF BOARD MEETINGS
During the year, till 21st July, 2017, i.e. commencement of CIRP, only one Meeting of the Board of Directors was held on 15th May, 2017.
After commencement of CIRP, Mr. Dhaivat Anjaria, was appointed as Interim Resolution Professional, who later on was confirmed as Resolution Professional by the Committee of Creditors. As per Section 17 of the Insolvency & Bankruptcy Code 2016, upon appointment of the Resolution Professional, the powers of the Board of Directors stands suspended and such powers are exercised by the Interim Resolution Professional (''IRP'') appointed for the Company.
Post CIRP, three meetings of Resolution Professional with Key Managerial Personnel of the Company were held in lieu of the Board Meetings.
Details of these meetings are provided in the Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 and the SEBI (Listing Obligations And Disclosure Requirements) Regulations, 2015 (LODR Regulations).
DEPOSITS
The Company has not accepted or renewed any fixed deposits during the period under review. It has not accepted any deposits from the public within the meaning of the provisions of Section 73 of the Companies Act, 2013 and Rules made thereunder.
SUBSIDIARY/ASSOCIATE/JOINT VENTURE COMPANY
The Company did not have any subsidiary/associate/joint venture Company during the year ended 31st March 2018. INVESTOR EDUCATION AND PROTECTION FUND
All unclaimed / unpaid share application money, remaining unclaimed / unpaid for a period of seven years from the date they became due for payment, are required to be transferred to the Investor Education And Protection Fund (IEPF).
Accordingly, unclaimed /unpaid share application money, lying in the IPO Refund Account has been transferred to IEPF during the financial year 2017-18.
INTERNAL FINANCIAL CONTROLS
Your Company has in place policies and procedures to ensure orderly and efficient conduct of its business including adherence to Company policies, safeguarding its assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and timely preparation of reliable financial information. Your Company, with respect to all material aspects, has adequate internal financial controls over financial reporting and such internal financial controls were operating effectively during the period under review. Financial reporting criteria established by your Company considered the essential components of internal control stated in the Guidance Note on "Audit of Internal Financial Controls Over Financial Reporting" issued by The Institute of Chartered Accounts of India (ICAI).
Company''s ERP Package "SAP" is operated as per pre-defined manual. The Company also has adopted Standard Operating Practices (SOPs) for its various areas of operations, which are in line with SAP manual. SOPs are adopted or revised, if required, to ensure that internal control system is effective and constantly assessed and strengthened. The Company has appointed Internal Auditors who monitor and evaluate the efficacy and adequacy of the internal control systems in the Company, its compliance with operating systems and accounting procedures and policies adopted by it, besides bench marking controls with best practices in the Industry. Based on the reports of the internal auditor, process owners undertake corrective action in their respective areas and thereby strengthening the controls. Significant audit observation(s) and corrective action(s) thereon, if any, are presented to the Audit Committee and the Board.
Statutory Auditors of the Company have in their Report dated 29th August, 2018, opined that the Company has, in all material respects, adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March 2018.
SIGNIFICANT ANDMATERIAL ORDERS
During the period under review, financial creditors of the Company led by State Bank of India, initiated Corporate Insolvency Resolution Process, in respect of the Company, under Insolvency & Bankruptcy Code 2016. Hon''ble National Company Law Tribunal (NCLT), Kolkata, vide order dated 21st July, 2017 admitted the application and ordered for Corporate Insolvency Resolution Process for a period of 180 days and appointed Mr. Dhaivat Anjaria, PwC House, 252, Veer Savarkar Road, Shivaji park, Dadar, Mumbai - 400028, Registration Number: IBBI/IPA-001/IPP00088/2017-18/10184 as Interim Resolution Professional (IRP), who was later confirmed as Resolution Professional by the Committee of Creditors. Further, on the basis of the resolution passed by the Committee of Creditors for extension of CIRP period for 90 days and on the application made by the Resolution Professional, the NCLT granted further extension of CIRP by 90 days w.e.f. 17th January, 2018 i.e. till 17th April, 2018. During the pendency of the proceedings, the powers of the Board of Directors of the Company stood suspended and all powers were instead exercised by Mr. Dhaivat Anjaria till the time he continues to act as the IRP/Resolution Professional. Further as per provisions of Sec. 14 of The Insolvency And Bankruptcy Code, 2016, granted moratorium, during CIRP, prohibiting institution of any suits against the Company.
With the commencement of CIRP, no significant and material order was passed by any regulator or court or tribunal impacting the going concern status and Company''s operations in future. However, Members attention is drawn to the statement of contingent liabilities, commitments in the note forming part of Financial Statement.
Material changes and commitments affecting the financial position of the Company that have occurred between the end of the Financial Year and the date of the Board''s Report:
NCLT vide its Order dated 17th April, 2018 approved the Resolution Plan of Vedanta Ltd. for the Company and Corporate Insolvency Resolution Process initiated in respect of the Company came to an end.
One of the Resolution Applicants, had challenged the eligibility of other two Resolution Applicants, including Vedanta Ltd., whose Resolution Plan was approved by the Hon''ble National Company Law Tribunal and later challenged the Order of the Hon''ble National Company Law Tribunal, Kolkata Bench before the Hon''ble National Company Law Appellate Tribunal, New Delhi (NCLAT). NCLAT vide its Judgment dated 10th August, 2018 has inter alia upheld the eligibility of Vedanta Limited under Insolvency And Bankruptcy Code, 2016 and dismissed appeals filed by the aggrieved Resolution Applicant, challenging the resolution plan of Vedanta Limited for Electro steel Steels Limited.
Pursuant to the said Order of the NCLT, 4th June, 2018, was determined to be the "Effective Date" for the purpose of implementation of Resolution Plan. With effect from 4th June, 2018, Board of Directors was re-constituted and Vedanta Star Ltd. (wholly owned subsidiary of Vedanta Ltd.) became the new promoter of the Company and took control of Management of the Company. Salient features of approved Resolution Plan, have been stated elsewhere above.
ANNUAL EVALUATION OF THE BOARD
During the year, Corporate Insolvency Resolution Process (CIRP) was initiated in respect of the Company, vide order of the Hon''ble National Company Law Tribunal dated 21st July, 2017, under Insolvency And Bankruptcy Code 2016. During the pendency of the proceedings, the powers of the Board of Directors of the Company were suspended and all powers were instead exercised by Mr. Dhaivat Anjaria, Resolution Professional appointed for the Company.
Since post appointment of Interim/Resolution Professional, there was no Meeting of Directors, hence Annual Evaluation of the Board has not been done.
During the financial year ended 31st March, 2018, there was no Meeting of Independent Directors of the Company. DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year Mr. Pradeep Kumar Misra, who was Additional Independent Non-Executive Director designated as Chairman, resigned from the Board of Directors on personal grounds, with effect from 5th July, 2017.
Further, recommendation of re-appointment of Mr. Rama Shankar Singh as Whole Time Director of the Company for a period of three years with effect from 6th February, 2017 was not approved by the shareholders of the Company at the 10th Annual General Meeting held on 7th November, 2017. Accordingly, Mr. Rama Shankar Singh ceased to be Whole Time Director with effect from 7th November, 2017 and continued as a Non-Executive Director.
All Directors have made necessary disclosures as required under various provisions of the Act and the LODR Regulations.
Pursuant to the approved Resolution Plan, with effect from 4th June, 2018, i.e. "Effective Date" for the purpose of implementation of Resolution Plan, Board of Directors of the Company was re-constituted and erstwhile Board of Directors were deemed to be resigned.
As on date the Board of Directors consists of the following Directors:
1. Mr. Prasun Kumar Mukherjee - Non-Executive Independent Director (Additional)
2. Mr. Naveen Kumar Singhal - Non-Executive Director (Additional)
3. Ms. Rashmi Mohanty - Non-Executive Director (Additional)
4. Mr. Mahendra Singh Mehta- Non-Executive Independent Director (Additional)
All the Directors have been appointed as Additional Directors subject to the approval of the shareholders in the forthcoming Annual General Meeting for a term till conclusion of forth coming Annual General Meeting.
The Board recommends their appointment at the forthcoming Annual General Meeting.
The brief Resume/Profile of the Director recommended by the Board for appointment/re-appointment is attached with the Notice for the ensuing Annual General Meeting.
DETAILS OF KEYMENAGERIAL PERSONNEL :
As on date, the following are the Key Managerial Personnel, appointed by the Board of Directors of the Company:
1. Mr. Sunil Katial-Chief Executive officer
2. Mr.Jalaj KumarMalpani-Chief Financial Officer and
3. Mr. Binaya Kumar Dash-Company Secretary
Resignation of Mr. Ashutosh Agarwal, as Chief Financial Officer (Key Managerial Personnel) was accepted with effect from 11th August, 2018.
Mr. Jalaj Kumar Malpani was appointed as Chief Financial Officer (Key Managerial personnel) by the Board of Directors of the Company, with effect from 29th August, 2018.
INDEPENDENT DIRECTORS
Mr. Prasun Kumar Mukherjee and Mr. Mahendra Singh Mehta are the Independent Directors of the Company. The Company has received declarations pursuant to Section 149(7) of the Companies Act, 2013 from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under Section 149(6) of the Companies Act, 2013 and in terms of Regulation 16 of Listing Regulations.
DIRECTORS'' RESPONSIBILITY STATEMENT
Your Directors hereby confirm, in terms of Section 135 (5) of the Companies Act, 2013 ("the Act"), that:
a) in the preparation of annual accounts, containing financial statements for the year ended March 31, 2018, the applicable accounting standards have been followed along with proper explanations, wherever required.
b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year 2017-18 and of the loss of the Company for that period.
c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safe guarding the assets of the Company and for preventing and detecting any fraud and other irregularities.
d) they have prepared Annual Accounts on a going concern basis.
e) they have laid down Internal Financial Controls to be followed by the Company and that such Internal Financial Controls are adequate and were operating effectively.*
f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
*Please refer to the Section ''Internal Financial Controls'' of the Report and ''Internal Controls'' in the enclosed Management Discussion & Analysis Report.
PARTICULARS OF THE EMPLOYEES
As per provisions of Sec. 197(12) of the Companies Act, 2013, a listed Company is required to disclose in Board''s Report, the ratio of the remuneration of each of the Director to the median employee''s remuneration.
The Reports and Accounts are being sent to Members and other entitled thereto, excluding the information on employee''s particulars which are available for inspection by the Members at the Registered Office of the Company during business hours on any working day. If any member is interested in obtaining a copy thereof, such member may write to the Company Secretary in this regard.
AUDIT COMMITTEE
Pursuant to the Resolution Plan approved by the Hon''ble National Company Law Tribunal, Kolkata Bench dated 17th April, 2018, Board of Directors of the Company was re-constituted on 4th June, 2018 and erstwhile Board Of Directors was deemed to be resigned. Accordingly, the Committees of the Board of Directors was also deemed to be resigned.
Audit Committee has been re-constituted, pursuant to provisions of Companies Act, 2013 & SEBI (Listing Obligations And Disclosure Requirements) Regulations, 2015, with effectfrom 12thJuly, 2018, detailed as below:
1. Mr. Prasun Kumar Mukherjee, Non-Executive Independent Director-Chairman
2. Mr. Mahendra Singh Mehta, Non-Executive Independent Director- Member
3. Mr Naveen KumarSinghal, Non-Executive Director-Member
In view of commencement of Corporate Insolvency Resolution Process in respect of the Company with effect from 21st July, 2017 and power of the Board of Directors being suspended, only one Meeting of the Audit Committee, prior to commencement of CIRP was held during the year on 15th May, 2017.
The composition, terms of the reference and number of meetings of the Audit Committee during the year is covered in the Corporate Governance Report.
During the financial year there were no recommendations of the Audit Committee to the Board.
OTHER COMMITTEES
Pursuant to the Resolution Plan approved by the Hon''ble National Company Law Tribunal, Kolkata Bench dated 17th April, 2018, Board of Directors of the Company was re-constituted on 4th June, 2018 and erstwhile Board of Directors was deemed to be resigned. Accordingly, the Committees of the Board of Directors was also deemed to be resigned.
Accordingly the following Committees have been re-constituted, pursuant to provisions of Companies Act, 2013 & LODR Regulations, with effect from 12th July, 2018, detailed as below:
NOMINATION & REMUNERATION COMMITTEE:
1. Mr. Prasun Kumar Mukherjee, Non-Executive Independent Director-Chairman
2. Mr. Mahendra Singh Mehta, Non-Executive Independent Director-Member
3. Mr. Naveen KumarSinghal, Non-Executive Director-Member STAKEHOLDERS'' RELATIONSHIP COMMITTEE:
1. Mr. Prasun Kumar Mukherjee, Non-Executive independent Director-Chairman
2. Mr. Naveen KumarSinghal, Non-Executive Director-Member
3. Ms. Rashmi Mohanty, Non-Executive Director-Member CORPORATE SOCIAL RESPONSIBILITY COMMITTEE:
1. Mr. Prasun Kumar Mukherjee, Non-Executive independent Director-Chairman
2. Mr. Naveen KumarSinghal, Non-Executive Director-Member
3. Ms. Rashmi Mohanty, Non-Executive Director-Member
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The information related to conservation of energy, technology absorption, foreign exchange earnings and outgo is enclosed as "Annexure B" and forms an integral part of this Report.
CORPORATE GOVERNANCE
Your Company has complied with the requirements of the LODR Regulations, relating to Corporate Governance. A Report on Corporate Governance and the Certificate on compliance of conditions of Corporate Governance as stipulated therein, issued by Practicing Company Secretary is enclosed as "Annexure C" and forms an integral part of this Report.
STATUTORY AUDITORS
The shareholders of the Company at the Tenth Annual General Meeting (AGM) held on 7th November, 2017 had appointed M/s. Lodha & Co., Chartered Accountants (Firm Registration No.:301051E) of 14, Government Place East, Kolkata 700069, as Statutory Auditors of the Company to hold office for a period of five consecutive years, commencing from the conclusion of Tenth Annual General Meeting till the conclusion of the Fifteenth Annual General Meeting to be held in F Y 2022-23, subject to ratification by the members at every subsequent AGM.
As per the Notification of Ministry of Corporate Affairs dated 7th May, 2018, ratification of appointment of Statutory Auditors at every AGM is not required.
Accordingly, the Notice convening the forthcoming Annual General Meeting does not carry any resolution on ratification of appointment of Statutory Auditors. However, the said M/s. Lodha & Co., Chartered Accounts has confirmed that they are eligible to continue as Statutory Auditors of the Company for the financial year ended 31st March, 2019.
AUDITOR''S REPORT
M/s. Lodha & Co., Chartered Accountants have audited the books of accounts of the Company for the financial year ended 31st March, 2018 and have issued the Auditors'' Report thereon. There are no qualifications or reservations or adverse remarks or disclaimer in the said Report.
COST AUDITORS & COST AUDIT REPORT
In terms of requirement of Section 148 of the Act, read with Companies (Audit and Auditors) Rules, 2014, the Board in its meeting held on May 15, 2017 and on the recommendation of the Audit Committee, had approved appointment of M/s S. G. & Associates, Cost Accountants, Kolkata (Registration No 000138) as Cost Auditors for audit of the Cost records to be maintained by the Company for the goods to be produced by the Company during the Financial Year 2017-18. The appointment as Cost Auditors is till the expiry of 180 days from the closure of the financial year ending 31st March, 2018 or till the submission of the Cost Audit Report for the financial year 2017-18 in the prescribed format to the Board, whichever is earlier.
The Cost Auditor is expected to submit their Cost Audit Report to the Board of Directors in the prescribed form for the financial year 2017-18 within the due date of 27th September 2018.
The Cost Audit Report for the Financial year 2016-17 does not contain any qualification or reservation or adverse remark and was filed with the Ministry of Corporate Affairs within the stipulated time.
As required under the Act, the remuneration payable to the Cost Auditors is required to be placed before the Members for ratification. Accordingly, a resolution seeking Members ratification for the remuneration payable to M/s. S. G. & Associates, Cost Accountants is included in the Notice convening the ensuing AGM. The Company has received consent letter from M/s. S. G. & Associates, Cost Accountants, for their re-appointment for the financial year ended 31st March, 2019.
SECRETARIAL AUDITOR & SECRETARIAL AUDIT REPORT
The Board in its meeting held on May 15, 2017 and on the recommendations of the Audit Committee had approved appointment of M/s K Arun & Co., Practicing Company Secretaries, as Secretarial Auditor of the Company for audit of the secretarial and related records of the Company for the financial year ending 31st March 2018.
The Secretarial Audit Report of M/s K Arun & Co., Practicing Company Secretaries for the financial year ended 31st March, 2018 does not contain any qualification or reservation or adverse remark or disclaimer and is enclosed as "Annexure D" and forms an integral part of this Report.
The Board of Directors have appointed M/s. Chandrasekaran Associates, Company Secretaries of 11-F, Pocket-IV, MayurVihar, Phase I, Delhi, as Secretarial Auditors of the Company for the FY 2018-19
EXTRACTS OF ANNUAL RETURN
In accordance with Section 134 (3)(a) of the Companies Act, 2013, an extract of the Annual Return in the prescribed format is appended as "Annexure E" and forms an integral part of this Report.
PARTICULARS OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES
The related party transactions are entered into based on considerations of various business requirement such as synergy in operations, profitability, legal requirements, liquidity, resources availability, etc. of related parties. All related party transactions are intended to further the Company''s interests.
All related party transactions entered during the year 2017-18 have been placed on quarterly basis before the Audit Committee/Meeting of Resolution Professional with KMPs for approval and before the Board/Meeting of Resolution Professional with KMPs for consideration and noting. The Company pursuant to the requirement of Section 188 of the Act read with Rules made therein had taken shareholders'' approval on 11th September 2015 for execution of related party transactions with Electro steel Castings Limited, then Promoter Company.
In terms of provisions of Insolvency and Bankruptcy Code, 2016, related party transactions have also been reviewed and approved by the Committee of Creditors constituted pursuant to Sec. 21 of the Insolvency And Bankruptcy Code, 2016.
During the period under review related party transactions have been on arms- length basis and in ordinary course of business and they were not material in nature. Accordingly the particulars of the transactions as prescribed in form AOC-2 under Section 134 of the Act read with rules made therein are not required to be disclosed as they are not applicable.
The policy on Related Party Transactions as approved by the Board is available on the Company''s website: www.electrosteelsteels.com.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
During the year, the Company has not provided any loan, guarantee or made investment under provisions of Sectionl86 of the Act.
RISK MANAGEMENT POLICY
The Company has in place a Risk Management Policy, which is reviewed by the Audit Committee from time to time. The details of the identification of the various risk associated with the business of the Company which in the opinion of the Board may threaten existence of the Company is detailed in the enclosed Management Discussion & Analysis Report.
CORPORATE SOCIAL RESPONSIBILITY POLICY
The Company has in place a Board approved Corporate Social Responsibility Policy and it is available on the website of the Company at www.electrosteelsteels.com.The composition and the terms of reference of the Committee are detailed in the enclosed Corporate Governance Report.
During the year, the CSR initiatives undertaken by the Company, although not mandatory under Section 135 of the Act read with Companies (Corporate Social Responsibility Policy) Rules, 2014, are detailed in the enclosed Management Discussion & Analysis Report.
REMUNERATION POLICY
The Company has in place Remuneration Policy for Directors, Key Managerial Personnel and Senior Management Personnel to align with the requirement of the Act and the LODR Regulations. The particulars of the remuneration policy are stated in the enclosed Corporate Governance Report.
DISCLOSURE UNDER "THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has in place "Internal Complaints Committee" and redressal policy in case of sexual harassment of women at workplace as envisaged under aforesaid Act. During the year, the Company has not received any complaint with respect to sexual harassment of woman at work place.
VIGIL MECHANISM/WHISTLE BLOWER POLICY
The Company has in place Vigil Mechanism/Whistle Blower Policy. The details of the Policy as well as establishment of vigil mechanism are provided in the Corporate Governance Report enclosed and are also available on the website of the Company i.e. www.electrosteelsteels.com.
SECRETARIAL STANDARDS
The Company has in place proper system to ensure compliance with the provisions of the applicable Secretarial Standards issued by The Institute of Company Secretaries of India and such systems are adequate and operating effectively.
APPRECIATION
Your Directors take this opportunity to place on record their gratitude and thanks the Banks, Financial Institutions, Government Authorities, Resolution Professional and other advisors/consultants, customers, vendors, shareholders and employees for their valuable guidance, support continued assistance and co-operation to the Company and look forward for their continued support in future.
For and on behalf of the Board of Directors
Naveen Kumar Singhal Rashmi Mohanty
Place: Kolkata Non-Executive Director Non-Executive Director
Dated : August 29, 2018 (DIN : 02642057) (DIN : 07072541
Mar 31, 2017
Dear Shareholders,
The Directors take pleasure in presenting the Tenth Annual Report along with Audited Financial Statements for the year ended 31st March 2017.
FINANCIAL SUMMARY/HIGHLIGHTS
Amount (Rs. in Lakhs)
Particulars |
FY 2016-17 |
FY 2015-16 |
i. Revenue from Operations |
277,429.58 |
288,875.89 |
ii. Other Income |
9,353.12 |
1,571.44 |
iii. Total Income |
286,782.70 |
290,447.33 |
iv. Earnings Before Interest, Depreciation, Taxation and Amortization (EBIDTA) (excluding exceptional item) |
14,517.36 |
8,469.86 |
v. Finance Cost |
112,983.05 |
52,663.27 |
vi. Depreciation& Amortization Expenses |
47,882.30 |
20,257.93 |
vii. Exceptional Item |
- |
(27,651.92) |
viii. Profit before Taxation (PBT) |
(146,347.99) |
(36,799.42) |
ix. Tax including Deferred Tax |
- |
- |
x. Profit after Taxation (PAT) |
(146,347.99) |
(36,799.42) |
xi. Other Comprehensive Income |
24.91 |
(19.86) |
xii. Total Comprehensive Income |
(146,323.08) |
(36,819.28) |
xiii. Earnings Per Share |
(6.07) |
(1.53) |
Pursuant to the notification dated February 16, 2015 issued by the Ministry of Corporate Affairs, the Company has adopted the Indian Accounting Standards (âInd ASâ) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) with effect from April 1,2016. Financial Statements for the year ended and as at March 31, 2016 have been restated accordingly to conform Ind AS.
OPERATIONS
Companyâs Greenfield Integrated Steel & Ductile Iron Pipe Plant with 2.51 Million Ton Per Annum (MTPA) capacity as detailed hereunder is under construction and erection:
Finished Products |
MTPA |
Wire rods |
0.60 |
TMT Bars |
0.85 |
Ductile Iron Pipe |
0.33 |
Billets |
0.33 |
Pig Iron |
0.40 |
Total |
2.51 |
Your Company is selling Pig Iron, Billets, TMT Bars, Wire Rods and Ductile Iron Pipes in the open market. Itâs flagship product - Ductile Iron Pipe has established its presence in the market and is contributing significantly to Companyâs growth. Continuous efforts for reduction of production cost and improvement in operational efficiency has resulted in the Company being able to report positive Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) for the year.
Owing to the shutdown of the Oxygen Plant as a result of an accident and to sustain the production level, your Company had to resort to procurement of oxygen from Open Market which resulted in increase in costand increase in operating and maintenance cost which adversely affected performance of the Company to some extent. Wide fluctuation in raw material prices, especially imported coking coal, also had a negative impact. Effective steps towards implementing better guidelines for operational procedure and precautionary measures thereto have been put in place. Continuous efforts were initiated to improve performance of the Company in both, quantitative and qualitative terms.
Inspite of paucity of working capital, the Company was able to sustain turnover vis-a vis previous financial year.
The Lenders had invoked Strategic Debt Restructuring pursuant to RBI Circulars dated 8th June 2015 and 24th September 2015 and implementation thereof is in progress. Lenders of the Company are proposing to change the Management of the Company, in accordance with RBI Circular on Prudential Norms on change in Ownership of Borrowing entities (Outside SDR Scheme).
EQUITY SHARE CAPITAL
Authorised Share Capital of the Company is Rs. 50,000,000,000(Rupees Five Thousand crores), divided into 5,000,000,000 equity shares of Rs. 10 each. Issued and paid up share capital is Rs. 24,092,350,230 divided into 2,409,235,023 equity shares of Rs. 10 each.
DIVIDEND
In view of the loss, your Directors regret their inability to declare any dividend for the year.
TRANSFERTO RESERVES
In view of losses incurred by the Company during the year, no amount has been transferred to the General Reserve.
EROSION OF NETWORTH
As reported last year, since accumulated losses resulted in erosion of over 50% of peak net worth during the immediately preceding four financial years, your Company continues as a âSick Companyâ, the fact of which has already been reported to erstwhile Board for Industrial and Financial Reconstruction (BIFR).
During the period under review, your Company, in spite of financial constrains as stated earlier, had been able to maintain its overall revenue. However, due to insufficient funds for completion of remaining modules of the Plant, the Company is not able to operationalize to its envisaged capacity.
Your Board is confident and optimistic that it would continue to implement effective measures in normal course of business to revive the operations of the Company as it did during the period under review, which is evident from the positive EBIDTA. The financial statements for the period under review have been prepared on a going concern basis.
MANAGEMENT DISCUSSIONSANDANALYSIS
A report on Management Discussion and Analysis is enclosed as âAnnexure Aâ and forms an integral part of this Report.
NATUREOF BUSINESS
There has been no change in the nature of the business of the Company during the year. No material changes and commitments occurred between 31st March, 2017 and 15th May, 2017 i.e. the date of the Boardâs Report, affecting the financial position of the Company.
NUMBEROF BOARD MEETINGS
During the year, 6 (Six) Board Meetings were convened and held, details of which are provided in the Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013.
FIXED DEPOSITS
The Company has not accepted or renewed any fixed deposits during the period under review.
SUBSIDIARY/ASSOCIATE/JOINT VENTURE COMPANY
The Company did not have any subsidiary/associate/joint venture Company during the year ended 31st March 2017.
INVESTOR EDUCATION AND PROTECTION FUND
All unclaimed / unpaid share application money, remaining unclaimed / unpaid for a period of seven years from the date they became due for payment, are required to be transferred to the Investor Education and Protection Fund (IEPF). Accordingly, unclaimed/unpaid share application money, lying in the IPO Refund Account shall be transferred to IEPF during the financial year2017-18.
INTERNAL FINANCIAL CONTROLS
Your Company has in place policies and procedures to ensure orderly and efficient conduct of its business including adherence to Company policies, safeguarding its assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records and timely preparation of reliable financial information. Your Company, with respect to all material aspects, has adequate internal financial controls over financial reporting and such internal financial controls were operating effectively during the period under review. Financial reporting criteria established by your Company considered the essential components of internal control stated in the Guidance Note on âAudit of Internal Financial Controls Over Financial Reportingâ issued by The Institute of Chartered Accounts of India (ICAI).
Companyâs ERP Package âSAPâ is operated on a pre-defined manual. The Company also has adopted Standard Operating Practices (SOPs) for its various areas of operations, which are in line with SAP manual. SOPs are adopted or revised, if required, to ensure that internal control system is effective and constantly assessed and strengthened. The Company has appointed Internal Auditors who monitor and evaluate the efficacy and adequacy of the internal control systems in the Company, its compliance with operating systems and accounting procedures and policies adopted by it, besides bench marking controls with best practices in the Industry. Based on the reports of the internal auditor, process owners undertake corrective action in their respective areas and thereby strengthening the controls. Significant audit observation(s) and corrective action(s) thereon, if any, are presented to the Audit Committee and the Board.
Statutory Auditors of the Company have in their Report dated 15th May, 2017, opined that the Company has, in all material respects, adequate internal financial controls over financial reporting and such internal financial controls over financial reportingwereoperatingeffectivelyasat31 March2017.
SIGNIFICANT AND MATERIAL ORDERS
During the period under review no significant and material order was passed by any regulator or court or tribunal impacting the going concern status and Companyâs operations in future. However, Members attention is drawn to the statement of contingent liabilities, commitments in the note forming part of Financial Statement.
ANNUAL EVALUATION OF THE BOARD
The Board on the recommendation of the Nomination and Remuneration Committee had adopted Schedule IV to the Companies Act, 2013 (hereinafter referred to as âthe Actâ) as criteria for evaluating performance of Independent Directors and on the basis of the performance evaluation report has determined to continue their term of appointment as Independent Directors of the Company.
The Independent Directors of the Company in their meeting held on February 2, 2017, without the attendance of Non-Independent Directors and members of the Management, on the basis of defined and agreed parameters, interalia, had (i) reviewed the performance of the Non Independent Directors, the Board and Committees thereof;(ii) reviewed the performance of the Chairman taking into account the views of the Executive Director and Non Executive Directors (iii) assessed the quality, quantity and timeliness of flow of information between the Management and the Board, that is necessary for the Board to be effective and reasonably perform their duties.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The Board at its Meeting held on September 29, 2016, on the recommendation of the Nomination & Remuneration Committee and subject to approval of shareholders in the ensuing Annual General Meeting, appointed Mr. Pradeep Kumar Misra as an Additional Independent Non-Executive Director designated as Chairman, not liable to retire by rotation.
The Board at its Meeting held on September 29, 2016, accepted the resignation of Ms. Rishu Kumari, Independent Non-Executive Woman Director with effect from September 29,2016.
The Board at its Meeting held on December 8, 2016, accepted the resignation of Mr. Amrendra Prasad Verma, Nominee Director, with effect from October 18, 2016.
The Board places on record its appreciation for the valuable services provided by Mr. Amrendra Prasad Verma and Ms. Rishu Kumari.
The Board at its Meeting held on December 8, 2016, appointed Mr. Devaprasad Mozumder as a Nominee Director, proposed by the Lenders of the Company, not liable to retire by rotation. The Board at its Meeting held on December 8, 2016, on the recommendation of the Nomination & Remuneration Committee and subject to approval of shareholders in the ensuing Annual General Meeting, appointed Ms. Jayantika Ganguly as an Additional Independent Non-Executive Woman Director, not liable to retire by rotation.
The Company has received from Mr. Pradeep Kumar Misra and Ms. Jayantika Ganguly, (i) Consent to act as Director in Form DIR-2 pursuant to Rule 8 of the Companies (Appointment & Qualification of Directors) Rules, 2014 (ii) Intimation by Director in Form DIR-8 pursuant to Rule 14 of the Companies (Appointment & Qualification of Directors) Rules, 2014, to the effect that they are notdis-qualified in accordance with the provisions of Sec. 164(2) of the Companies Act, 2013 and (iii) Statement of declaration that they meet the criteria of independence as provided in Sec. 149(6) of the Act. The Board is of the opinion that Mr. Pradeep Kumar Misra and Ms. Jayantika Ganguly are persons of integrity and possess relevant expertise and experience and are eligible and fulfills the conditions as specified in the Act and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, (hereinafter referred to as âthe LODR Regulationsâ) for such appointment for a period of five years.
All Directors have made necessary disclosures as required under various provisions of the Act and the LODR Regulations.
During the period under review, Mr. Binaya Kumar Dash was appointed as the Company Secretary and Compliance Officer of the Company w.e.f. February 14, 2017 in place of Mr. Anubhav Maheshwari who tendered his resignation as Company Secretary and Compliance Officer w.e.f. February 4,2017.
Mr. Lalit Kumar Singhi , Non-Executive Director shall retire at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. The Board recommends his re-appointment for the consideration of Members of the Company at the ensuing Annual General Meeting.
The brief Resume/Profile of the Director recommended by the Board for appointment/re-appointment is attached with the Notice for the ensuing Annual General Meeting.
DIRECTORSâ RESPONSIBILITY STATEMENT
Your Directors hereby confirm that:
a) in the preparation of annual accounts, containing financial statements for the year ended March 31, 2017, the applicable accounting standards have been followed along with proper explanations, wherever required.
b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year 2016-17 and of the loss of the Company for that period.
c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safe guarding the assets of the Company and for preventing and detecting any fraud and other irregularities.
d) they have prepared annual accounts on a going concern basis.
e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.*
f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
*Please refer to the Section âInternal Financial Controlsâ of the Report and âInternal Controlsâ in the enclosed Management Discussion & Analysis Report.
PARTICULARS OF THE EMPLOYEES
The information required pursuant to Section 197 of the Act, read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, in respect of employees of the Company is given as annexure to this Report. The Reports and Accounts are being sent to Members and other entitled thereto, excluding the information on employeeâs particulars which is available for inspection by the Members at the Registered Office of the Company during business hours on any working day. If any member is interested in obtaining a copy thereof, such member may write to Company Secretary in this regard.
AUDIT COMMITTEE
The composition, terms of the reference and number of meetings of the Audit Committee during the year is covered in the enclosed Corporate Governance Report.
All recommendations made by the Audit Committee during the financial year 2016-17 were accepted by the Board of Directors of the Company.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The information related to conservation of energy, technology absorption, foreign exchange earnings and outgo is enclosed as âAnnexure Bâ and forms an integral part of this Report.
CORPORATE GOVERNANCE
Your Company has complied with the requirements of the LODR Regulations, relating to Corporate Governance. A Report on Corporate Governance and the Certificate on compliance of conditions as stipulated therein, issued by Practicing Company Secretary is enclosed asâAnnexure Câ and forms an integral part of this Report.
STATUTORY AUDITORS
Companies Act, 2013, introduces the requirement of rotation of Auditor after a specified period. As per provisions of Section 139(2) of the Companies Act, 2013, a listed Company shall not appoint or re-appoint an Audit Firm as Auditor for more than two terms of five consecutive years. Further every Company which was required to comply with the aforesaid provisions was given a period of three years from the date of commencement of the Act, for compliance with the said provisions.
M/s B Chhawchharia & Co., Chartered Accountants, the existing Auditors has remained as Statutory Auditors of the Company, since incorporation of the Company i.e. December 20, 2006. Hence, they do not qualify to be reappointed, your Directors recommends M/s. Lodha & Co., Chartered Accountants (Firm Registration No.:301051E) of 14, Government Place East, Kolkata 700069 as Statutory Auditors of the Company and has received their Consent in this regard, for a period of five years i.e. from conclusion of the tenth Annual General Meeting to be held in FY 2017-18 till the conclusion of the Fifteenth Annual General Meeting to be held in F Y 2022-23, subject to approval and subsequent ratification of the shareholders at every Annual General Meeting.
Pursuant to Sections 139,141 and 142 of the Act, and relevant rules prescribed therein, the Company has received consent and certificate from Lodha & Co., to the effect, inter alia, that (1) they are not disqualified for appointment under the provisions of the applicable laws (2) the appointment would be as per the terms and the limits prescribed under the Act and (3) no proceedings against them or any of their Partners are pending with respect to matters of professional conduct under the Chartered Accountants Act, 1949 and the Rules and Regulations made therein.
The said Lodha & Co., have also confirmed that they have subjected themselves to Peer Review, a process of Institute of Chartered Accountants of India (ICAI) for evaluating the quality of audit and attestation services and that they hold a valid certificate issued by the Peer Review Board of the ICAI.
AUDITORâS REPORT
The Auditorsâ Report addressed to the Members of the Company, does not contain any qualification or reservation or adverse remark or disclaimer.
COST AUDITORS & COST AUDIT REPORT
In terms of requirement of Section 148 of the Act, read with Companies (Audit and Auditors) Rules, 2014, the Board in its meeting held on May 15, 2017 and on the recommendation of the Audit Committee, had approved appointment of M/s S. G. & Associates, Cost Accountants, Kolkata (Firm Registration No 000138) as Cost Auditors for audit of the Cost records to be maintained by the Company for the goods to be produced by the Company during the Financial Year 2017-18. The appointment as Cost Auditors is till the expiry of 180 days from the closure of the financial year ending 31st March 2018 or till the submission of the Cost Audit Report for the financial year 2017-18 in the prescribed format to the Board, whichever is earlier.
As required under the Act, the remuneration payable to the Cost Auditors is required to be placed before the Members for ratification. Accordingly, a resolution seeking Members ratification for the remuneration payable to M/s. S. G. & Associates, Cost Accountants is included in the Notice convening the ensuing AGM. The Company has received consent letter from M/s. S. G. & Associates, Cost Accountants, for their appointment.
The Cost Auditors are expected to submit their Cost Audit Report to the Board of Directors in the prescribed form for the financial year 2016-17 within the due date of 27th September 2017.
The Cost Audit Report for the Financial year 2015-16 do not contain any qualification or reservation or adverse remark and was filed with Ministry of Corporate Affairs within the stipulated time.
SECRETARIAL AUDITOR & SECRETARIAL AUDIT REPORT
The Board in its meeting held on May 15, 2017 and on the recommendations of the Audit Committee had approved appointment of M/s K Arun & Co., Practicing Company Secretaries, as Secretarial Auditor of the Company for audit of the secretarial and related records of the Company for the financial year ending 31st March 2018. The Company has received consent letter from M/s KArun & Co., Practicing Company Secretaries, for their appointment.
The Secretarial Audit Report of M/s K Arun & Co., Practicing Company Secretaries for the financial year ended 31st March 2017 do not contain any qualification or reservation or adverse remark or disclaimer and is enclosed as âAnnexureDâ and forms an integral part of this Report.
EXTRACTS OFANNUAL RETURN
In accordance with Section 134 (3)(a) of the Companies Act, 2013, an extract of the Annual Return in the prescribed format is appended as âAnnexure Eâ and forms an integral part of this Report.
PARTICULARS OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES
The related party transactions are entered into based on considerations of various business exigencies such as synergy in operations, profitability, legal requirements, liquidity, resources availability, etc. of related parties. All related party transactions are intended to further the Companyâs interests.
All related party transactions are placed on quarterly basis before the Audit Committee for approval and before the Board for consideration and noting. The Company pursuant to the requirement of Section 188 of the Act read with Rules made therein had taken shareholdersâ approval on 11th September 2015 for execution of related party transactions with Electro steel Castings Limited, Promoter Company.
During the period under review related party transactions have been on arms-length and in ordinary course of business and they were not material in nature. Accordingly the particulars of the transactions as prescribed in form AOC-2 under Section 134 of the Act read with rules made therein are not required to be disclosed as they are not applicable.
The policy on Related Party Transactions as approved by the Board is available on the Companyâs website :www.electrosteelsteels.com.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
During the year, the Company has not provided any loan, guarantee or made investment under provisions of Sectionl86 of the Act.
RISK MANAGEMENT POLICY
The Company has in place the Risk Management Policy, which is reviewed by the Audit Committee from time to time. The details of the identification of the various risk associated with the business of the Company which in the opinion of the Board may threaten existence of the Company is detailed in the enclosed Management Discussion & Analysis Report.
CORPORATE SOCIAL RESPONSIBILITY POLICY
The Company has in place Corporate Social Responsibility Policy and it is available on the website of the Company www.electrosteelsteels.com.The composition and the terms of reference of the Committee are detailed in the enclosed Corporate Governance Report.
During the year, the CSR initiatives undertaken by the Company, although not mandatory under Section 135 of the Act read with Companies (Corporate Social Responsibility Policy) Rules, 2014, are detailed in the enclosed Management Discussion & Analysis Report.
REMUNERATION POLICY
The Company has in place Remuneration Policy for Directors, Key Managerial Personnel and Senior Management Personnel to align with the requirement of the Act and the LODR Regulations. The particulars of the remuneration policy are stated in the enclosed Corporate Governance Report.
DISCLOSURE UNDER âTHE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has in place âInternal Complaints Committeeâ and redressal policy in case of sexual harassment of women at workplace as envisaged under aforesaid Act. During the year, the Company has not received any complaint with respect to sexual harassment of woman at work place.
VIGIL MECHANISM/WHISTLE BLOWER POLICY
The Company has in place Vigil Mechanism/Whistle Blower Policy. The details of the Policy as well as establishment of vigil mechanism are provided in the Corporate Governance Report enclosed and are also available on the website of the Company i.e. www.electrosteelsteels.com.
APPRECIATION
Your Directors take this opportunity to place on record their gratitude and thank the Financial Institutions, Bankers, Government Authorities, Customers, Vendors, Shareholders and Employees for their valuable guidance, support continued assistance and co-operation to the Company and look forward for their continued support in future.
For and on behalf of the Board of Directors
R S Singh Lalit Kumar Singhi
Place: Kolkata Whole-time Director Director
Dated : 15th May, 2017 (DIN: 02093276) (DIN: 00893144)
Mar 31, 2015
Dear Members,
The Directors take pleasure in presenting the Eighth Annual Report
along with Audited Financial Statements for the year ended 31stMarch,
2015.
FINANCIAL SUMMARY/HIGHLIGHTS
Amount (Rs in Lakhs)
Particulars FY 2014-15 FY 2013-14
i. Gross Turnover 203287.58 57,616.92
ii. Net Turnover 183124.07 513,22.19
iii. Other Income 1560.49 692.57
iv. Total Revenue 184684.56 52,014.76
v. Earnings Before Interest,
Depreciation,
Taxation and Amortization
(EBIDTA) 2855.09 (4,616.29)
vi. Interest 45173.13 17,731.41
vii. Depreciation 20085.09 6,764.31
viii. Profit before Taxation (PBT) (62403.13) (29,112.00)
ix. Tax including Deferred Tax 1.10 1.17
x. Profit after Taxation (PAT) (62404.23) (29,113.17)
xi. Profit brought forward from
previous year - -
xii. Amount available for
appropriation (62404.23) (29,113.17)
xiii. Transfer to general reserve - -
xiv. Surplus/ (Deficit) carried
to Balance Sheet (62404.23) (29,113.17)
OPERATIONS
The Company's Greenfield Integrated Steel & Ductile Iron Pipe Plant
with 2.51 Million Ton Per Annum (MTPA) capacity as detailed hereunder
is under construction and erection:
Finished Products MTPA
Wire rods 0.60
TMT Bars 0.85
Ductile Iron Pipe 0.33
Billets 0.33
Pig Iron 0.40
Total 2.51
In addition to the already operational Blast Furnace of smaller 350 M3
capacity, Your Company has operationalised bigger Blast Furnace of 1050
M3 capacity resulting in increase in production and turnover. In
addition to above, the already operational ancillary units viz Vertical
Coke Oven, Rebar Mill and one unit each of Sinter & Steel Melt Shop
were further buoyed by the successful trial run of Lime and Dolomite
Plant, Oxygen Plant, Power Plant and balance unit of Sinter Plant.
Hence, the development of ancillary modules is resulting into
augmentation of integrated capabilities of the Plant and further
reducing dependency for supply from outside. A part of the Plant
facility has commenced production and the work for completion of the
balance Project modules to make the Plant completely commissioned to
its annual capacity are in progress.
Presently Your Company is selling TMT Bar, Billets, Ductile Iron Pipes
and Pig Iron in the open market. With the commencement of production of
the flagship product - Ductile Iron Pipe, Your Company expects better
margins translating into improved performance with the increase in
turnover. Your Company has also started exporting billets to various
neighbouring countries like Nepal, Bangladesh, Bhutan and Sri Lanka.
However, sluggishness in the global steel industry remains a matter of
concern.
It is pertinent to note that the execution of balance project modules
has been funded by the Corporate Debt Restructuring (CDR) Package
sanctioned to the Company in September 2013. However, the sanction of
CDR Package, post the referral to CDR forum, and consequent release of
additional term loan under CDR Package happened with delay which
resulted in further delay of operationalization of the balance project
modules.
Further, the CDR Package had also approved the assessed Need Based
Working Capital facility of Rs 1300 Crores. However, the financial
closure of said facility took inordinate delay and ultimately the
documents for the same were executed in November 2014. The release of
the sanctioned working capital facility by majority of the lenders was
done gradually and only subsequent to the execution of the documents in
November 2014. The delay in release of working capital facilities had
impacted the cash flow generation of the Company. Further, the Company
is still to get the entire sanctioned need based working capital
facility.
The shareholders of the Company pursuant to the requirement of the
Companies Act 2013 had approved procurement of coal/coking coal from
Electrosteel Castings Limited (ECL) on the terms and conditions as
stated in the notice for the Annual General Meeting held on 16th
September 2014. However, Supreme Court vide its order dated 24th
September 2014 had de-allocated Parbatpur Coal Block allotted to ECL.
Hence the agreement with ECL for procurement of coking coal stood
cancelled w.e.f. 1st April 2015 due to Force Majure.
Your Company is optimistic that with the release of entire working
capital facilities, it will be able to step up production levels, which
will add to enhanced top line and cash flow generation.
Under the CDR Package, further funds in the form of equity/preference
shares/unsecured loan etc. needs to be infused, for which Company is
seeking potential investment sources.
Thus, with the operationalization of other Project modules together
with the increase in release of working capital facilities and the
infusion of funds, it is expected that the overall financial health of
the Company would improve considerably.
EQUITY SHARE CAPITAL
In terms of CDR Package, Electrosteel Castings Limited (ECL), the
Promoter Company, was required to make contribution by way of equity
and/or unsecured (subordinate) loans for Rs 222.50 crores. The Board of
Directors ("Board") in its meeting held on 13 th August 2014 after the
approval of the shareholders on 19th March 2014 through Postal Ballot
process had allotted 22.25crores equity shares of Rs 10 each fully paid
up to ECL. The equity shares were later admitted for listing and
trading on both the stock exchanges i.e. National Stock Exchange of
India Limited (NSE) and Bombay Stock Exchange Limited (BSE). The equity
share capital of the Company was enhanced from Rs 2,18,673.50 lakhs to
Rs 2,40,923.50 lakhs.
DIVIDEND
In view of the loss, Your Directors regret their inability to declare
any dividend for the year.
TRANSFER TO RESERVES
In view of losses incurred by the Company during the year, no amount
has been transferred to the General Reserve. EROSION OF NETWORTH
With accumulated losses of Rs. 1,356.33 crores at the end of the
financial year, resulting in erosion of over 50% of peak net worth
during the immediately preceding four financial years, we regret to
inform that Your Company has become a "Potential Sick Company" within
the meaning of Section 23 of the Sick Industrial Companies (Special
Provisions) Act, 1985 (SICA).
The Board in its meeting held on 11th May 2015 has reviewed the causes
for such erosion and the reasons amongst others which adversely
affected the performance of the Company were:
(a) Delay in execution of Project mainly due to change in visa policy
for Chinese work force deployed, problems in aggregation of land,
necessity to hire local workmen, adverse operating and financial
leverage and delay in sanction and disbursement of required Project
Loan which resulted in huge overrun and caused non achievement of
performance and profitability and thereby losses.
(b) Delay in sanction & disbursement of "need based working capital
facilities "which resulted in lower capacity utilization and lower cash
flow generation.
The Board after considering the various steps implemented and/or to be
undertaken for improvement of performance of the Company is
confident/optimistic that the Company would be able to implement
effective measures in normal course of business to revive the
operations of the Company. Accordingly, the financial statements for
the Financial Year 2014-15 has been prepared on a going concern basis.
The Board in its meeting held on 11th May 2015 also approved Report of
even date to such erosion and causes for such erosion, for
consideration of the shareholders in the Extra Ordinary General Meeting
to be convened on Friday, 11th September, 2015. The said Report is
enclosed as an Annexure to the Notice of the Extra Ordinary General
Meeting. In terms of the requirement of SICA, the Company shall also
report to Board for Industrial and Financial Reconstruction (BIFR) the
fact of erosion after consideration of the Report by the shareholders
in the ensuing Extra-Ordinary General Meeting.
MANAGEMENT DISCUSSIONS AND ANALYSIS
A report on Management Discussion and Analysis is enclosed as "Annexure
A" and forms an integral part of this Report.
NATURE OF BUSINESS
There has been no change in the nature of the business of the Company
during the year. No material changes and commitments occurred between
31st March 2015 and 11th May 2015 i.e. the date of the Directors
Report, affecting the financial position of the Company.
NUMBER OF BOARD MEETINGS
During the year 6 (Six) Board Meetings were convened and held, details
of which are provided in the Corporate Governance Report. The
intervening gap between the meetings was within the period prescribed
under the Companies Act, 2013 ("Act").
FIXED DEPOSITS
The Company has not accepted any fixed deposit during the period under
review.
SUBSIDIARY / ASSOCIATE /JOINT VENTURES COMPANIES
The Company does not has a subsidiary/associate /Joint venture company
for the year ended 31st March 2015. INTERNAL FINANCIAL CONTROLS
The Company has in place ERP Package "SAP" which is operated on a
pre-defined manual. The Company also has adopted Standard Operating
Practices (SOPs) for its various areas of operations, which are in line
with SAP manual. SOPs are adopted or revised, if required, to ensure
that internal control system is effective and constantly assessed and
strengthen. The Company has appointed Internal Auditors who monitor and
evaluate the efficacy and adequacy of the internal control systems in
the Company, its compliance with operating systems and accounting
procedures and policies adopted by it, besides benchmarking controls
with best practices in the Industry. Based on the reports of the
internal auditor, process owners undertake corrective action(s) in
their respective area(s) and thereby strengthening the controls.
Significant audit observation(s) and corrective action(s) thereon are
presented to the Audit Committee and the Board.
SIGNIFICANT AND MATERIAL ORDERS
During the year no significant and material order was passed by any
regulator or court or tribunal impacting the going concern status and
Company's operations in future.
ANNUAL EVALUATION OF THE BOARD
The Board on recommendation of the Nomination and Remuneration
Committee, had adopted Schedule IV to the Act, as criteria for
evaluating the performance of the Independent Directors and on the
basis of the performance evaluation report has determined to continue
their term of appointments as Independent Directors of the Company.
All the Independent Directors of the Company in its separate meeting
held on 13th February 2015, without the attendance of Non-Independent
Directors and members of management, on the basis of defined and agreed
parameters, inter-alia, without the attendance of non-executive
Directors and members of management had (i) reviewed the performance of
the Non Independent Directors, the Board and Committees thereof and
(ii) assessed the quality, quantity and timeliness of flow of
information between the Company management and the Board that is
necessary for the Board to be effective and reasonably perform their
duties.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The shareholders of the Company in its previous Annual General Meeting
held on 16th September 2014 had approved appointment of Mr Rajkumar
Khanna as an Independent Director of the Company for a period of five
years w.e.f 5th May 2014. In terms of requirement of the Act, Mr Naresh
Pachisia and Mr Jinendra Kumar Jain, were also appointed in the
aforesaid Annual General Meeting as Independent Directors of the
Company for a period of 5 years w.e.f 1st April 2014. The Company has
received from Mr Rajkumar Khanna, Mr Naresh Pachisia and Mr Jinendra
Kumar Jain (i) intimation in Form DIR-8 pursuant to Section 152(2) of
the Act read with Rule 14 of the Companies (Appointment &
Qualifications of Directors) Rules, 2014 to the effect that they are
not disqualified in accordance with Section 164(2) of the Act (ii)
statement on declaration that they meet the criteria of Independence as
provided in Section 149(6) of the Act and (iii) declaration that they
have abide by the provisions specified in Schedule IV to the Act.
The Board in its meeting held on 21st March 2015, on the recommendation
of the Nomination &Remuneration Committee and subject to approval of
the shareholders in the ensuing Annual General Meeting, appointed Ms
Rishu Kumari as an Additional Independent Non Executive Director not
liable to retire by rotation. The Board is of opinion that her
appointment is appropriate and in the best interest of the Company. The
Company has received from Ms Rishu Kumari (i) consent in writing to act
as Director in Form DIR-2 pursuant to Rule 8 of the Companies
(Appointment & Qualifications of Directors) Rules, 2014 (ii) intimation
in Form DIR-8 pursuant to Rule 14 of the Companies (Appointment &
Qualifications of Directors) Rules, 2014 to the effect that she is not
disqualified in accordance with Section 164(2) of the Act and (ii)
statement on declaration that she meet the criteria of Independence as
provided in Section 149(6) of the Act. Based on the declarations
received, the Board is of opinion that Ms Rishu Kumari is a person of
integrity and possesses relevant expertise and experience and is
eligible and fulfills the conditions specified in the Act and Listing
Agreement for such appointment and is independent of the management of
the Company. The Board recommends her appointment as Independent
Director of the Company.
The Company issued letter of appointment to all Independent Directors
as per Scheduled IV to the Act and the terms and conditions for
appointment are disclosed on the website of the Company
www.electrosteelsteels.com.
The Board in its meeting held on 5th May 2014 had appointed Mr Ashutosh
Agarwal as Chief Financial Officer of the Company. During the period
under review, Mr Anubhav Maheshwari was appointed as Company Secretary
and Compliance officer of the Company w.e.f. 5th September 2014 in
place of Mr Vikash Kumar Agarwal who tendered his resignation as
Company Secretary and Compliance officer of the Company w.e.f. 27th
August 2014.
All the Directors have made necessary disclosures as required under
various provisions of the Act and Clause 49 of the Listing Agreement.
Mr A P Verma and Mr Sunil V Diwakar, Directors shall retire at the
Annual General Meeting and being eligible offers themselves for
re-appointment.
The brief Resume/Profile of the Directors recommended by the Board for
appointment /re-appointment is attached with Notice for the ensuing
Annual General Meeting.
DIRECTORS' RESPONSIBILITY STATEMENT
Your Directors hereby confirm that:
a) in the preparation of annual accounts, containing financial
statements for the year ended March 31, 2015, the applicable accounting
standards have been followed along with proper explanations, wherever
required.
b) thy have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year 2014-15 and of the loss of
the Company for that period.
c) they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 2013 for safe guarding the assets of the company and for
preventing and detecting any fraud and other irregularities.
d) they have prepared annual accounts on a going concern basis.
e) they have laid down internal financial controls to be followed by
the Company and that such internal financial controls are adequate and
were operating effectively.*
f) The Directors had devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were
adequate and operating effectively.
*Please refer to the Section 'Internal Financial Controls' of the
Report and 'Internal Controls' in the enclosed Management Discussion &
Analysis Report.
PARTICULARS OF THE EMPLOYEES
The information required pursuant to Section 197 of the Companies Act,
2013 read with Rule 5 of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules 2014 in respect of employees of the Company
is given a separate annexure to this Report. The Reports and Accounts
are being sent to members and other entitled thereto, excluding the
information on employee's particulars which is available for inspection
by the members at the Registered Office of the Company during business
hours on any working day. If any member is interested in obtaining a
copy thereof, such member may write to Company Secretary in this
regard.
AUDIT COMMITTEE
The composition, terms of the reference and number of meetings of the
Audit Committee during the year is covered in the enclosed Corporate
Governance Report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO
The information related to conservation of energy, technology
absorption, foreign exchange earnings and outgo stipulated under
Section 134 (3)(m) of the Act read with Rule 8 of the Companies
(Accounts) Rules 2014 is enclosed as "Annexure B" and forms integral
part of this Report.
CORPORATE GOVERNANCE
Your Company has fully complied with the requirements of Clause 49 of
the Listing Agreement regarding Corporate Governance. A Report on
Corporate Governance and the Auditors Certificate on compliance of
conditions as stipulated therein is enclosed as "Annexure C" and forms
integral part of this Report.
STATUTORY AUDITORS & AUDITORS REPORT
The Shareholders of the Company in the 7th Annual General Meeting (AGM)
held on 16th September 2014 had approved appointment of M/s. B
Chhawchharia & Co., Chartered Accountants as Statutory Auditors of the
Company until the conclusion of the 10th AGM of the Company and
authorized the Board to fix their remuneration. In terms of the
requirement of the Act, their appointment is required to be ratified by
the members at the ensuing AGM. Accordingly, the Notice convening the
ensuing 8th AGM includes the resolution seeking such ratification by
the members for the said re-appointment of the Auditors.
Pursuant to Sections 139, 141 and 142 of the Act, and relevant rules
prescribed there under, the Company has received certificate from the
Statutory Auditors to the effect, inter alia, that they are not
disqualified for ratification of appointment under the provisions of
applicable laws, the appointment is as per the terms and the limits
prescribed under the Act, and no proceedings against them or any of
their partners are pending with respect to matter of professional
conduct.
The Auditors have also confirmed that they have subjected themselves to
Peer Review, a process of Institute of Chartered Accountants of India
(ICAI) for evaluating the quality of audit and attestation services and
that they hold a valid certificate issued by the Peer Review Board of
the ICAI.
The Auditors' Report addressed to the Members of the Company, does not
contain any qualification or reservation or adverse remark or
disclaimer.
COST AUDITORS & COST AUDIT REPORT
In terms of requirement of Section 148 of the Act, read with Companies
(Audit and Auditors) Rules, 2014, the Board in its meeting held on 11th
May 2015 on the recommendation of the Audit Committee, had approved
re-appointment of M/s S. G. & Associates, Cost Accountants, Kolkata
(Registration No 000138) as Cost Auditors for audit of the Cost records
to be maintained by the Company for the Steel Products and Mineral
Fuels (Other than Petroleum) to be produced by the Company during the
Financial Year 2015-16 on a remuneration of Rs 60,000 (Sixty Thousand)
plus out of pocket expenses. The appointment as Cost Auditors is till
the expiry of 180 days from the closure of the financial year ending
31st March 2016 or till the submission of the Cost Audit Report for the
financial year 2015-16 in the prescribed format to the Board, which
ever is earlier.
As required under the Act, the remuneration payable to the Cost
Auditors is required to be placed before the Members for ratification.
Accordingly, a resolution seeking Members ratification for the
remuneration payable to M/s S. G. & Associates, Cost Accountants is
included at Item No. 6 of the Notice convening the AGM. The Company has
received consent letter from M/s S. G. & Associates, Cost Accountants,
for their appointment.
The Cost Auditors are expected to submit their Cost Audit Report to the
Board of Directors in the prescribed form for the financial year
2014-15 within the due date of 27th September 2015.
The Cost Audit Report for the Financial year 2013-14 do not contain any
qualification or reservation or adverse remark and was filed with
Ministry of Corporate Affairs on 24th September 2014.
SECRETARIAL AUDITOR & SECRETARIAL AUDIT REPORT
The Board in its meeting held on 11th May 2015 on the recommendations
of the Audit Committee had approved appointment of M/s K Arun & Co.,
Practicing Company Secretaries, as Secretarial Auditor of the Company
for audit of the secretarial and related records of the Company for the
financial year ending 31st March 2016. The Company has received consent
letter from M/s K Arun & Co., Practicing Company Secretaries, for their
appointment.
The Secretarial Audit Report of M/s K Arun & Co., Practicing Company
Secretaries for the financial year ended 31st March 2015 do not contain
any qualification or reservation or adverse remark or disclaimer and is
enclosed as "Annexure D" and forms integral part of this Report.
EXTRACTS OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form
MGT-9 as required under section 92 of the Act is enclosed as "Annexure
E" and forms integral part of this Report.
PARTICULARS OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES
During the period under review, the related party transactions with
Electrosteel Castings Limited, Promoter Company, is within the limits
and terms and conditions approved by the shareholders of the Company in
its meeting held on 16th September 2014. The policy on Related Party
Transactions as approved by the Board of Directors is available on the
Company's website http://www.electrosteelsteels.com/investor-relations/
pdf/rpt.pdf
The particulars of the material contract or arrangements with related
party are enclosed as "Annexure F" and forms integral part of this
Report.
The related party transactions are entered into based on considerations
of various business exigencies such as synergy in operations,
profitability, legal requirements, liquidity, resources availability
etc of related parties. All related party transactions are intended to
further the Company's interests.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
During the year, the Company has not provided any loan, guarantee or
made investment under provisions of Section 186 of the Act.
RISK MANAGEMENT POLICY
The Board in its meeting held on 13th November 2014 had amended the
Risk Management Policy of the Company. The details of the
identification of the various risk associated with the business of the
Company is detailed in the enclosed Management Discussion & Analysis
Report.
CORPORATE SOCIAL RESPONSIBILITY POLICY
The Board in its meeting held on 13th August 2014 on the recommendation
of the Corporate Social Responsibility (CSR) Committee had approved the
Corporate Social Responsibility Policy. The CSR policy is available on
the website of the Company www.electrosteelsteels.com. The composition
and the terms of reference of the Committee are detailed in the
enclosed Corporate Governance Report.
During the year, the CSR initiatives undertaken by the Company,
although not mandatory under Section 135 of the Act read with Companies
(Corporate Social Responsibility Policy) Rules 2014, are detailed in
the enclosed Management Discussion & Analysis Report.
REMUNERATION POLICY
The Board on the recommendation of the Nomination & Remuneration
Committee in its meeting held on 13th November 2014 modified/amended
its remuneration policy for Directors, Key Managerial Personnel and
Senior Management Personnel to align with the requirement of the Act
and Listing Agreement. The particulars of the remuneration policy are
stated in the enclosed Corporate Governance Report.
DISCLOSURE UNDER "THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
(PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has in place "Internal Complaints Committee" and redressal
policy in case of sexual harassment of women at workplace as envisaged
under aforesaid Act. During the year, the Company has not received any
complaint with respect to sexual harassment of woman at work place.
VIGIL MECHANISM/WHISTLE BLOWER POLICY
The Board in its meeting held on 5th May 2014 had approved Vigil
Mechanism/Whistle Blower Policy. The details of the Policy as well as
establishment of vigil mechanism are provided in the Corporate
Governance Report enclosed and are also available on the website of the
Company i.e. www.electrosteelsteels.com.
APPRECIATION
Your Directors take this opportunity to place on record their gratitude
and thank the Financial Institutions, Bankers, Government Authorities,
Customers, Vendors, Shareholders and Employees for their valuable
guidance, support continued assistance and cooperation to the Company.
The Directors also commend the continuing commitment and dedication of
the employees at all levels. The Directors also look forward to their
continued support in future.
For and on behalf of the Board of Directors
Place : Kolkata R S Singh Lalit Kumar Singhi
Dated : 11th May, 2015 Whole-time Director Director
Mar 31, 2014
Dear Shareholders,
The Directors take pleasure in presenting their Seventh Annual Report
and the Audited Accounts of your Company for the year ended March 31,
2014.
FINANCIAL RESULTS Amount (Rs/Lakhs)
Particulars FY 2013-14 FY 2012-13
i. Gross Turnover 57,616.92 18,329.76
ii. Net Turnover 513,22.19 16,311.01
iii. Other Income 692.57 93.39
iv. Total Revenue 52,014.76 16,404.40
v. Earnings Before Interest,
Depreciation, Taxation and
Amortization (EBIDTA) (4,616.28) (8,422.33)
vi. Interest 17,731.41 13,441.11
vii. Depreciation 6,764.31 6136.39
viii. Profit before Taxation (PBT) (29,112.00) (27,999.83)
ix. Tax including Deferred Tax 1.17 1.42
x. Profit after Taxation (PAT) (29,113.17) (28,001.25)
xi. Profit brought forward
from previous year  Â
xii. Amount available
for appropriation (29,113.17) (28,001.25)
xiii. Transfer to general reserve  Â
xiv. Surplus/ (Deficit) carried
to Balance Sheet (29,113.17) (28,001.25)
PROPOSED ISSUE OF EQUITY SHARE CAPITAL UNDER PREFERENTIAL ALLOTMENT
During the year the Board of Directors of the Company at its Meeting
held on February 6, 2014 and further as approved by the shareholders by
a resolution passed by Postal Ballot and as announced on 19th March,
2014, it has been decided to issue equity shares of Rs 10 each ("Equity
Shares") on preferential basis to the promoter of the Company, namely,
Electrosteel Castings Limited, aggregating to Rs-222.50 Crores.
The above issue is as per Corporate Debt Restructuring Package as
approved by Corporate Debt Restructuring Empowered Group (CDR EG) on
26-09-13 and the Letter of Approval (LOA) was issued by CDR EG on
28-09-13. The Company has made petition before the Company Law Board
for issuance of Shares at a discounted value of Rs-5 per share or such
other value as may be sanctioned by the Company Law Board. The petition
is pending before the Company Law Board.
DIVIDEND
You will appreciate that since the project is under implementation,
there is not much earnings as of now, and hence your Directors are not
recommending any dividend on the Equity Shares of the Company for the
year ended 31st March 2014.
OPERATIONS
As you are aware, that your Company is setting up a 2.51 MTPA
integrated Steel & Ductile Iron (DI) Pipe project, at Siyaljori
village, in Bokaro District, in the state of Jharkhand, which is about
22 kms from Bokaro city, a well- developed industrial town of
Jharkhand, the plant will produce;
Finished Products MTPA
Wire rods 0.60
Reinforcement bars in straight lengths 0.85
Ductile Iron Pipe 0.33
Commercial Billets 0.33
Pig Iron 0.40
Total 2.51
Your Company has operationalised Blast Furnace (BF #II) of 1050 M
capacity in addition to Blast Furnace (BF #III) of 350 M3 capacity.
Operations of Coke Oven and Sinter Plant are continuing. In addition to
Pig Iron, production of Billets and Re-bars are persistent from Steel
Melt Shop (SMS) and Rebar Mill. One unit of Captive Power Plant (CPP)
of 60 MW based on Waste Heat Recovery Boiler has been commissioned
during the year. This would result in the reduction of overall power
cost of the plant. Pulverized Coal Injection System has also been
commissioned during the reporting period. Lime Calcination Plant has
also started operations thereby reducing the dependence on supply from
outside. With the operationalization of BF #II, daily production of
steel has increased.
Presently your Company is selling TMT Bar, Billets and Pig Iron in the
open market. Your Company is also tapering international market and
exploring possibilities of export of its products. Your Company has
already exported few consignments of Billets and has few export orders
in hand.
Construction activities of the balance facilities are in full swing.
Capex Loan of Rs.824 Crs, as reported in the last year''s director''s
report, could not be availed because sanction from one of the banks
expired and took inordinate time in renewal.
Ultimately in the Joint Lenders Meeting held in May''13, it was decided
by all the lenders that the Company should go for Corporate Debt
Restructuring (CDR). Accordingly, flash report was filed by State Bank
of India. Your Company''s CDR Package was approved by CDR EG on 26-09-13
and the Letter of Approval (LOA) was issued by CDR EG on 28- 09-13 with
additional Term Loan of Rs.1307.10 Crs to complete the Project
(Rs.1107.10 Crs for the Capex and Rs.200 Crs for shoring up of working
capital). Rs.1107.10 Crs is assessed considering the undisbursed
portion of Capex Loan of Rs.824 Crs required earlier. In addition to
the additional loan, CDR EG has allowed some other benefits like:
- Reduction in rate of interest
- Longer Repayment Period
- Conversion of interest on Term Loan into Funded Interest Term Loan
CDR Package was implemented well within the stipulated time frame.
Assessment of Need Based Working Capital of Rs.1300 Crores for FY
2014-15 was also approved under the CDR Package.
The Company has started receiving disbursements of approved additional
term loan from Banks for completion of balance facilities.
The Company has during the year capitalised part of the plant facility
comprising of Vertical Coke Oven including CPCS, Sinter Plant (Unit-I),
Steel Melting Shop and Rebar Mill. Accordingly the Pre-Operative
Expenses incurred upto the date of capitalisation have been allocated
to the cost of the various facilities on a proportionate basis.
LISTING
The equity shares of your Company continue to be listed on Bombay Stock
Exchange Limited (BSE) and National Stock Exchange of India Limited
(NSE). Both these stock exchanges have nation-wide terminals and
therefore, shareholders/ investors are not facing any difficulty in
trading in the shares of the Company from any part of the Country. The
Company had paid annual listing fees for the financial year 2014-15 to
BSE & NSE and will also pay the annual custodian fees to National
Securities Depository Limited (NSDL) and Central Depository Services
(India) Limited (CDSL).
CORPORATE GOVERNANCE
Your Company has fully complied with the requirements of Clause 49 of
the Listing Agreement regarding Corporate Governance. A Report on
Corporate Governance Practices and the Auditors Certificate on
compliance of mandatory requirements thereof is given as annexure to
this report.
BUSINESS RESPONSIBILITY REPORT and CSR
Ministry of Corporate Affairs (MCA), Government of India has, in July
2011, issued National Voluntary Guidelines on Social, Environmental and
Economic Responsibilities of Business (Guidelines). The Guidelines list
out nine principles and core elements on ethics, transparency and
accountability, sustainability, employee well-being, responsiveness
towards stakeholders, promotion of human rights, environment
protection, influencing public policy, inclusive growth and equitable
development, value to customers and consumers. The Companies in India
are advised to follow these Guidelines for reporting their initiatives
and activities relating to corporate social responsibilities (CSR).
The Company''s vision, mission and core values enshrine these principles
which are integral to the business of the Company. The Company engages
in elaborate CSR initiatives, conducts business with transparency and
accountability, looks after well-being and protection of the employees
with a human face, is responsive to the needs of all its stakeholders
and takes care of quality of the products manufactured by it, gives
priority to preservation and protection of environment and prevention
of pollution and believes that business is also a medium to contribute
to the social development. Initiatives undertaken during the year under
report in respect of corporate social responsibility, environment
protection, industrial relations and human resource management etc.
are mentioned in detail in the Management Discussion and Analysis
Report which forms a part of this report as Annexure.
With the Commencement of Section 135 of the Companies Act, 2013 the
provisions of Corporate Social Responsibility are applicable to the
Company. The details of same will be covered in next year''s Director''s
report.
MANAGEMENT DISCUSSIONS AND ANALYSIS
A report on Management discussion and analysis is given as annexure to
this report.
FIXED DEPOSITS
The Company has not accepted any fixed deposit during the period under
review.
DIRECTORS'' RESPONSIBILITY STATEMENT
Your Directors hereby confirm that:
a) in the preparation of annual accounts, containing financial
statements for the year ended March 31, 2014, the applicable accounting
standards have been followed along with proper explanations, wherever
required.
b) the Board had selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year 2013-14 and of the profit
or loss of the Company for that period.
c) the Board has taken proper and sufficient care for the maintenance
of adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safe guarding the assets of the company and for
preventing and detecting any fraud and other irregularities.
d) the annual accounts have been prepared on a going concern basis.
PERSONNEL
Particulars of employees as required under Section 217(2A) of the
Companies Act, 1956 and the Companies (Particulars of Employees) Rules,
1975, as amended, forming a part of this report.
However, pursuant to Section 219(1) (b)(iv) of the Companies Act, 1956,
the Annual Report is being sent to all the members of the Company,
excluding the aforesaid information. Those members desirous of
obtaining such particulars may write to the Company at its registered
office.
"Disposal of complaint under "The Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act, 2013" ("The
Act")
In compliance with the Act, the Company has constituted the "Internal
Complaints Committee" and also framed the redressal policy in case of
sexual harassment at workplace. During the year, the Company has not
received any complainant with respect to sexual harassment at work
place. "
INFORMATION AS PER SECTION 217(1)(e) OF THE COMPANIES ACT, 1956
Information as per Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988 related to conservation of energy,
technology absorption, foreign exchange earnings and outgo are given in
Annexure - ''A'' attached hereto and forming part of this Report.
FINANCIAL STATEMENTS
Pursuant to Clause 41 of the Listing Agreement entered into with the
stock exchanges, the Board of Directors has pleasure in attaching the
Financial Statement prepared in accordance with the Accounting
Standards prescribed by the Institute of Chartered Accountants of
India.
Since your Company does not have any subsidiary, preparation of the
Consolidated Financial Statement is not required.
DIRECTORS
Pursuant to the provisions of 198, 269, 309 and 310 read with Schedule
XIII and other applicable provisions of the Companies Act, 1956, Mr
Rama Shankar Singh was appointed as the Whole Time Director of the
Company by the Board at its meeting held on 6th February 2014 for a
period of 3 (three) years at a remuneration and on such terms and
conditions as decided by the Remuneration Committee at its meeting held
on 6th February 2014. His appointment was also approved by the
Shareholders of the Company by a resolution passed by Postal Ballot and
as announced on 19th March, 2014. The remuneration for the aforesaid
Whole time Director is subject to the approval of the Central
Government which is yet to be received.
Mr. N C Bahl, Whole Time Director of the Company, have resigned from
the Board of your Company with effect from 6th February 2014. The Board
places on record its deep appreciation for the guidance and the
invaluable services rendered by him during the tenure of his office as
Whole Time Director of the Company.
Pursuant to the provisions of the Companies Act, Mr Umang Kejriwal and
Mr Lalit Kumar Singhi, Directors of the Company, retire by rotation at
the ensuing Annual General Meeting and are eligible for re-appointment.
Pursuant to the provisions of Section 149 of the Companies Act, 2013,
Mr. Jinendra Kumar Jain and Mr. Naresh Pachisia were appointed as
Independent Directors of the Company w.e.f 1st April, 2014 for a term
of 5 years subject to approval of Shareholders.
Pursuant to the provisions of section 161 of the Companies Act, 2013,
Mr Rajkumar Khanna was appointed as the Additional Independent Director
(Non-Executive) of the Company with effect from May 5, 2014 and will
hold office upto the date of the next Annual General Meeting of the
Company.
Pursuant to the provisions of Section 149 of the Companies Act, 2013,
Mr. Rajkumar Khanna was appointed as Independent Director of the
Company w.e.f 5th May, 2014 for a term of 5 years subject to approval
of Shareholders.
None of the Directors of the Company are disqualified as per section
164(2) of the Companies Act, 2013. The Directors have made necessary
disclosures as required under various provisions of the Act and Clause
49 of the Listing Agreement.
STATUTORY AUDITORS
The Statutory Auditor M/s. B Chhawchharia & Co., Chartered Accountants,
holds office up to the conclusion of the ensuing Annual General Meeting
and being eligible, offer themselves for re-appointment. Certificate
from the Auditors has been received to the effect that their
re-appointment, if made, would be within the limits prescribed under
the Companies Act, 2013. They are proposed to be re-appointed as the
Statutory Auditors of the Company for a term of three financial years
2014-17.
The Notes to Accounts forming part of the financial statements are
self- explanatory and needs no further explanation.
COST AUDITORS
Your Directors have proposed M/s S. G. & Associates, Cost Accountants,
to be appointed as the Cost Auditors of the Company for the year
2014-15, subject to such approvals as may be applicable.
Necessary certificate and consent letter from the said Auditor has been
obtained to the effect that their appointment, if made, would be within
the limits prescribed under the Companies Act, 2013.
APPRECIATION
Your Directors take this opportunity to place on record their gratitude
and thank the Financial Institutions, Bankers, Government Authorities,
Customers, Vendors, Shareholders and Employees for their valuable
guidance, support and continued assistance, cooperation to the Company.
The Directors also commend the continuing commitment and dedication of
the employees at all levels. The Directors also look forward to their
continued support in future.
For and on behalf of the Board of Directors
Place : Kolkata R S Singh Lalit Kumar Singhi
Dated : May 5, 2014 Whole-time Director Director
Mar 31, 2013
Dear Shareholders,
The Directors take pleasure in presenting their Sixth Annual Report
and the Audited Accounts of your Company for the year ended March
31,2013.
FINANCIAL RESULTS
Amount (Rs/Lakhs)
Particulars FY 2012-13 FY 2011-12
i. Gross Turnover 18,329.76 6,714.06
ii. Net Turnover 16,311.01 6,068.75
iii. Other Income 93.39 41.81
iv. Total Revenue 16,404.40 6,110.56
v. Earnings Before Interest,
Depreciation, Taxation and
Amortization (EBIDTA) (8,422.33) (4,560.84)
vi. Interest 13,441.11 8,022.83
vii. Depreciation 6,136.39 2,394.55
viii. Profit before
Taxation (PBT) (27,999.83) (14,978.22)
ix. Tax including Deferred Tax 1.42 3.48
x. Profit after
Taxation (PAT) (28,001.25) (14,981.70)
xi. Profit brought forward
from previous year
xii. Amount available
for appropriation (28,001.25) (14,981.70)
xiii. Transfer to
general reserve
xiv. Surplus/ (Deficit)
carried to Balance Sheet (28,001.25) (14,981.70)
ISSUE OF EQUITY SHARE CAPITAL UNDER PREFERENTIAL ALLOTMENT
During the year the Board of Directors of the Company at its Meeting
held on May 8,2012 and further as approved by the shareholders in its
meeting held on August 7 2012, your Company had issued 15.20 crores
equity shares of Rs 10 each ("Equity Shares") on preferential basis to
the promoters/promoters group of the Company, namely, Electrosteel
Castings Limited as prescribed under the regulations for Preferential
Issues contained in Chapter VII of the Securities and Exchange Board of
India (Issue of Capital and Disclosure) Regulations, 2009 (the "SEBI
Regulations"). The said equity shares also got listed and trading
permission have been granted by Bombay Stock Exchange Limited and
National Stock Exchange of India Limited on September 27,2012 and
September 28,2012 respectively.
DIVIDEND
You will appreciate that since the project is under implementation,
there is not much earnings as of now, hence your Directors are not
recommending any dividend on the Equity Shares of the Company for the
year ended 31st March 2013.
OPERATIONS
As you are aware, that your Company is setting up a 2.51 MTPA
integrated Steel & Ductile Iron (Dl) Pipe project, at Siyaljori
village, in Bokaro District, in the state of Jharkhand, which is about
22 kms from Bokaro city, a well developed industrial town of Jharkhand,
the plant will produce;
Finished Products '' MTPA
Wire rods 0.60
Reinforcement bars
in straight lengths 0.85
Ductile Iron Pipe
Commercial Billets 0.33
Pig Iron 0.40
One of the Blast Furnaces (350 M3) out of the three, has commenced
operation of pig iron in September, 2010. The operation of coke oven
plant is continuing and sinter plant has also started operations.
RebarMill is also operational. Operation of Steel Melt Shop (SMS) has
also begun which has resulted into production of billet and Re-bars.
The lists of un its under operations and under test are given in the
Management Discussion and Analysis chapter as annexed to this report.
Presently your Company is selling pig iron, and TMT bars in the open
market.
Company''s plant is at its advance stage of completion and its
operations are currently in a nascent stage. Due to a variety of
technical reasons, the plant has undergone improvements and changes
which will in turn benefit the operations of the Company in the long
run.
The target completion date of the balance facilities have been extended
by few months. The main reason for the delay was due to sudden decrease
in availability of Chinese manpower on account of change in guidelines
issued by the Central Government of India on Visa Policy, restricting
the Chinese manpower with work visa. This was beyond the control of
Company''s management. However, the Company made significant efforts to
mitigate the effect of this Force Majeure situation with the following
alternative plans;
- Appointment of local Sub-contractors underthe supervision of Chinese
Contractors.
- Reducing the scope of Chinese Contractors and offloading the same to
Indian Contractors.
Subsequently, the Central Government of India has allowed work permits
to a specified number of Chinese manpower, since then the work at the
site is going on smoothly. Your Company is confident of achieving the
revised completion target in the current financial year.
In addition to the above the delay in tie-up of additional loans from
the bankers delayed the implementation of various modules.
Yourcompany is pursuingfollowingtwo loan proposals:
1) Loan against Securitization of Receivables for Rs. 2,200 Crores Your
Company has applied for Securitisation Loan in 1st week of September
2011 and envisaged to complete the same by March 2012. However, the
Company received the full sanction from the Lenders in February 2013.
Your Company had raised this loan from various banks by Securitizing
future receivables from the sale of Dl Pipes and Pig Iron. A part of
the proceeds from the said loan has been utilized towards payment of
installments to the lenders and part towards the Project.
2) Capacity Enhancement Loan of Rs. 824 Crores - Your Company had
approached to various lenders for the capacity enhancement Loan in
November 2011. Your Company has received over 80% of sanctions under
the said loan and has executed the Common Loan Agreement pending full
tie up. The proposals for the sanction of balance loan are at an
advance stage of approval with other banks and the Company is hopeful
of completion of the same very soon. The proceeds from the said loan
would be utilized towards completion of the balance facilities.
Your Company is hopeful that the entire production facility will be
operational soon.
LISTING
The equity shares of the Company continue to be listed on Bombay Stock
Exchange Limited (BSE) and National Stock Exchange of India Limited
(NSE). Both these stock exchanges have nation-wide terminals and
therefore, shareholders/ investors are not facing any difficulty in
trading in the shares of the Company from any part of the Country. The
Company had paid annual listing fees for the financial year 2013-14 to
BSE & NSE and also the annual custodian fees to National Securities
Depository Limited (NSDL) and Central Depository Services (India)
Limited (CDSL).
CORPORATE GOVERNANCE
Your Company has fully complied with the requirements of Clause 49 of
the Listing Agreement regarding Corporate Governance. A Report on
Corporate Governance Practices and the Auditors Certificate on
compliance of mandatory requirements thereof is given as annexure to
this report.
BUSINESS RESPONSIBILITY REPORT
Ministry of Corporate Affairs (MCA), Government of India has, injuly
2011, issued National Voluntary Guidelines on Social, Environmental and
Economic Responsibilities of Business (Guidelines). The Guidelines list
out nine principles and core elements on ethics, transparency and
accountability, sustainability, employee well being, responsiveness
towards stakeholders, promotion of human rights, environment
protection, influencing public policy, inclusive growth and equitable
development, value to customers and consumers. The Companies in India
are adviced to follow these Guidelines for reporting their initiatives
and activities relating to corporate social responsibilities (CSR). The
Company''s vision, mission and core values enshrine these principles
which are integral to the business of the Company. The Company engages
in elaborate CSR initiatives, conducts business with transparency and
accountability, looks after well being and protection of the employees
with a human face, is responsive to the needs of all its stakeholders
and takes care of quality of the products manufactured by it, gives
priority to preservation and protection of environment and prevention
of pollution and believes that business is also a medium to contribute
to the social development. Initiatives undertaken during the year under
report in respect of corporate social responsibility, environment
protection, industrial relations and human resource management etc.
are mentioned in detail in the Management Discussion and Analysis
Report which forms a part of this report as Annexure.
MANAGEMENT DISCUSSIONS AND ANALYSIS
A report on Management discussion and analysis is given as annexure to
this report.
FIXED DEPOSITS
The Company has not accepted any fixed deposit during the period under
review.
DIRECTORS'' RESPONSIBILITY STATEMENT
Your Directors hereby confirm that:
a) in the preparation of annual accounts, containing financial
statements for the year ended March 31, 2013, the applicable accounting
standards have been followed along with proper explanations, wherever
required.
b) the Board had selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company for that period.
c) the Board has taken proper and sufficient care for the maintenance
of adequate accounting records in accordance with provisions of the
Companies Act, 1956 for safe guarding the assets of the company and for
preventing and detecting any fraud and other irregularities.
d) the annual accounts have been prepared on a going concern basis.
PERSONNEL
Particulars of employees as required under Section 217(2A) of the
Companies Act, 1956 and the Companies (Particulars of Employees) Rules,
1975, as amended, forming a part of this report.
However, pursuant to Section 219(1)(b)(iv) of the Companies Act, 1956,
the Annual Report is being sent to all the members of the Company,
excluding the aforesaid information. Those members desirous of
obtaining such particulars may write to the Company at its registered
office.
INFORMATION AS PER SECTION 217(1)(e) OF THE COMPANIES ACT, 1956
Information as per Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988 related to conservation of energy,
technology absorption, foreign exchange earnings and outgo are given in
Annexure - ''A'' attached hereto and forming part of this Report.
FINANCIAL STATEMENTS
Pursuant to Clause 41 of the Listing Agreement entered into with the
stock exchanges, the Board of Directors has pleasure in attaching the
Financial Statement prepared in accordance with the Accounting
Standards prescribed by the Institute of Chartered Accountants of
India.
Since your Company does not have any subsidiary, preparation of the
Consolidated Financial Statement is not required.
DIRECTORS
Pursuant to the provisions of section 260 of the Companies Act, 1956
and the Articles of Association of the Company, Mr Jinendra Kumar Jain
was appointed as the Additional Independent Director (Non Executive) of
the Company with effect from May 6,2013 and will hold office upto the
date of the next Annual General Meeting of the Company.
Mr Amrendra Prasad Verma, was appointed as the Nominee Director of the
Company on behalf of the Lenders, with effect from May 6,2013.
Pursuant to the provisions of 198, 269 and 309 read with Schedule XIII
and other applicable provisions of the Companies Act, 1956 and the
Articles of Association of the Company, Mr Nigam Chander Bahl was
re-appointed as the Wholetime Director of the Company by the Board in
its meeting held on 8 May 2012 for a period of 3 (three) years at a
remuneration and on such terms and conditions as decided by the
Remuneration Committee in its meeting held on 8 May 2012. His
re-appointment was also approved by the Shareholders of the Company in
their Meeting held on 7 August, 2012. The remuneration for the
aforesaid Wholetime Director is subject to approval of the Central
Government which is yet to be received and till then he is being paid
on the basis of the earlier approval as received from Central
Government, Ministry of Corporate Affairs vide their letter dated 6 May
2010.
Mr. Binod Kumar Khaitan, Non- Executive Independent Chairman of the
Company, have resigned from the Board of your Company with effect from
May 6, 2013. The Board places on record its deep appreciation for the
guidance and the invaluable services rendered by him during the tenure
of his office as Director of the Company.
Pursuant to the provisions of Section 255 & 256 and other applicable
provisions, if any, of the Companies Act, 1956, Mr Umang Kejriwal and
Mr Lalit Kumar Singhi, Directors of the Company, retire by rotation at
the ensuing Annual General Meeting and are eligible for re-appointment.
None of the Directors of the Company are disqualified as per section
274(1)(g) of the Companies Act, 1956. The Directors have made necessary
disclosures as required under various provisions of the Act and Clause
49 of the Listing Agreement.
STATUTORY AUDITORS
The Statutory Auditor M/s. B Chhawchharia & Co., Chartered Accountants,
holds office upto the conclusion of the ensuing Annual General Meeting
and being eligible, offer themselves for re-appointment. Certificate
from the Auditors has been received to the effect that their
re-appointment, if made, would be within the limits prescribed under
section 224(1 B) of the Companies Act, 1956. They are proposed to be
re-appointed as the Statutory Auditors of the Company for the financial
year 2013-14.
The Notes to Accounts forming part of the financial statements are self
explanatory and needs no further explanation.
COST AUDITORS
Consequent upon the notification of the Product or Activity Group
classification published vide S.O. 1747(E) dated 7th August, 2012 and
in suppression of the earlier Orders issued vide even number dated 2nd
May 2011, 3rd May 2011, 30th June 2011 and 24th January 2012, the
Ministry of Corporate Affairs, Cost Audit Branch, Government of India
issued the order no. F No. 52/26/CAB-2010 dated November 6, 2012, your
Directors have proposed M/s S. G. & Associates, Cost Accountants, to
be appointed as the Cost Auditors of the Company for the year 2013-14,
subject to such approvals as may be applicable.
Necessary certificate and consent letter from the said Auditor has been
obtained to the effect that their appointment, if made, would be within
the limits prescribed under section 224(1 B) of the Companies Act,
1956.
SECRETARIAL AUDIT/COMPLIANCE REPORT
The Secretarial Compliance Certificate confirms that the Company had
complied with all the applicable provisions of the Companies Act, 1956,
Listing Agreements with the Stock Exchanges, Securities Contract
(Regulation) Act, 1956, and all the other Regulations of SEBI as
applicable to the Company, including the SEBI (Substantial Acquisition
of Shares and Takeovers) Regulations, 2011 (as amended) and the SEBI
(Prohibition of Insider Trading) Regulations, 1992.
APPRECIATION
Your Directors take this opportunity to place on record their gratitude
and thank the Financial Institutions, Bankers, Government Authorities,
Customers, Vendors, Shareholders and Employees for their valuable
guidance, support and continued assistance, cooperation to the Company.
The Directors also commend the continuing commitment and dedication of
the employees at all levels. The Directors also look forward to their
continued support in future.
For and on behalf of the Board of Directors
Place: Kolkata N C Bhal Lalit Kumar Singhi
Dated : May 6,2013 Director Director
Mar 31, 2012
The Directors take pleasure in presenting their Fifth Annual Report
and the Audited Accounts of your Company for the year ended March 31,
2012.
FINANCIAL RESULTS Amount (Rs/Lakhs)
Particulars FY 2011-12 FY 2010-11
i. Gross Turnover 6,424.12 814.81
ii. Net Turnover 6,068.76 743.19
iii. Other Income 41.81 22.00
iv. Total Revenue 6,110.57 765.19
v. Earnings Before Interest, Depreciation,
Taxation and Amortization (EBIDTA) (4,560.84) (351.25)
vi. Interest 8,022.83 157.78
vii. Depreciation 2,394.55 104.32
viii. Profit before Taxation (PBT) (14,978.22) (613.35)
ix. Tax including Deferred Tax 3.48 -
x. Profit after Taxation (PAT) (14,981.70) (613.35)
xi. Profit brought forward from
previous year - -
xii. Amount available for appropriation (14,981.70) (613.35)
xiii. Transfer to general reserve - -
xiv. Surplus/ (Deficit) carried to
Balance Sheet (14,981.70) (613.35)
OPERATIONS
As you are aware, that your Company is setting up a 2.2 MTPA integrated
steel & Ductile Iron (DI) Pipe project, at Siyaljori village, in Bokaro
District, in the state of Jharkhand, which is about 22 kms from Bokaro
city, a well developed industrial town of Jharkhand.
During the project implementation process, some modifications were
suggested by the technical experts to meet the technical superiority
and efficiency improvement of the plant. Hence, for better balancing of
the product with optimized product mix and better value addition, your
Company is contemplating to enhance the plant capacity from 2.2 MTPA to
2.51 MTPA. The enhanced capacity of the plant is based on Blast Furnace
(BF) - Basic Oxygen Furnace (BOF) - Billet Caster & Hot Rolling Route.
The enhanced capacity of the plant will produce;
Finished Products MTPA
Wire rods 0.60
Reinforcement bars in straight lengths 0.85
Ductile Iron Pipe 0.33
Commercial Billets 0.33
Pig Iron 0.40
One of the Blast Furnaces (350 M3) out of the three, has commenced
operation of pig iron in September, 2010. The Company has taken shut
down of the above Blast Furnace for synchronization with other
facilities and the same was restarted subsequently. Currently, the said
furnace is giving sales to your Company. Your Company has also started
production of Ductile Iron Pipes from its plant.
The Company's plant is at its advance stage of completion and its
operations are currently in a nascent stage. Due to a variety of
technical reasons, the plant has undergone improvements and changes,
which will in turn benefit the operations of the Company in the long
run.
The target completion date of the balance facilities have been extended
by few months. The main reason for the delay was due to sudden decrease
in availability of Chinese manpower, due to guidelines issued by the
Central Government of India on Visa Policy restricting the Chinese
manpower with work visa. This was beyond the control of Company's
management. However, the Company made significant efforts to mitigate
the effect of this Force Majeure situation with the following
alternative plans;
- Appointment of local Sub-contractors under the supervision of
Chinese Contractors.
- Reducing the scope of Chinese Contractors and offloading the same
to Indian Contractors.
Subsequently, the Central Government of India has allowed work permits
to a specified number of Chinese manpower, since then the work at the
site is going on smoothly. Your Company is confident in achieving the
revised completion target in the current financial year.
The project cost for the earlier 2.2 MTPA plant was Rs 7,262 crores and
the revised project cost for the 2.51 MTPA plant is estimated at Rs
9,562 crores. The revised cost of the project has been verified by
Lenders Independent Engineer and vetted by Mecon Limited. The estimated
additional capital expenditure required for capacity enhancement would
be around Rs 1,236 crores and for infrastructural/other facilities &
efficiency improvement Rs 1,064 crores. The above additional cost of Rs
1,236 crores is proposed to be funded in the debt to equity ratio of
2:1. Out of the above debt requirement of Rs 824 crores, our Lead
Banker, State Bank of India has sanctioned Rs.250 crores with a
provision of interim disbursement of 40% of the sanctioned amount.
Proposal with other banks is at an advance stage and we are hopeful to
complete the same very soon.
Your Company had also proposed to raise Rupee Term Loan of around Rs
2,200 crores by securitizing the future receivables from the sale of Di
pipe and Pig iron with various banks. For securitisation of the above,
your Company has entered into an Off-take agreement with Stemcor India
Private Limited and Electrosteel Castings Limited for off- taking DI
Pipes and Pig Iron for a period of 12 years. Out of the above
requirement, State Bank of India has sanctioned Rs. 600 crores and also
disbursed 40% of the sanctioned amount as interim disbursement pending
full tie-up. The proposal with other banks is at an advance stage and
we are hopeful to complete it very soon. A part of the proceeds from
the securitization of future receivables will be utilised in meeting
expenditure towards other capital expenditures/implementing systems,
ensuring efficiency improvement and redundancies improvement in Feeder
sections like Sinter Plant, Pellet Plant, Coke Oven, Control Systems,
Material Handling & other allied facilities.
DIVIDEND
You will appreciate that since the project is under implementation and
only one Blast Furnace had commenced operation, there is no much
earnings as of now, hence your Directors are not recommending any
dividend on Equity Shares for the year ended 31st March 2012.
CORPORATE GOVERNANCE
Your Company has fully complied with the requirements of Clause 49 of
the Listing Agreement regarding Corporate Governance.
A Report on Corporate Governance Practices and the Auditors Certificate
on compliance of mandatory requirements thereof is given as annexure to
this report.
MANAGEMENT DISCUSSIONS AND ANALYSIS
A report on Management discussion and analysis is given as annexure to
this report.
FIXED DEPOSITS
The Company has not accepted any fixed deposit during the period under
review.
DIRECTORS' RESPONSIBILITY STATEMENT
Your Directors hereby confirm that:
a) in the preparation of annual accounts, containing financial
statements for the year ended March 31, 2012, the applicable accounting
standards have been followed along with proper explanations, wherever
required.
b) the Board had selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company for that period.
c) the Board has taken proper and sufficient care for the maintenance
of adequate accounting records in accordance with provisions of the
Companies Act, 1956 for safe guarding the assets of the company and for
preventing and detecting any fraud and other irregularities.
d) the annual accounts have been prepared on a going concern basis.
PERSONNEL
Particulars of employees as required under Section 21 7(2A) of the
Companies Act, 1956 and the Companies (Particulars of Employees) Rules,
1975, as amended, forming a part of this report.
However, pursuant to Section 219(1)(b)(iv) of the Companies Act, 1956,
the Annual Report is being sent to all the members of the Company,
excluding the aforesaid information. Those members desirous of
obtaining such particulars may write to the Company at its registered
office.
INFORMATION AS PER SECTION 217(1)(e) OF THE COMPANIES ACT, 1956
Information as per Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988 related to conservation of energy,
technology absorption, foreign exchange earnings and outgo are given in
Annexure - 'A' attached hereto and forming part of this Report.
FINANCIAL STATEMENTS
Pursuant to Clause 41 of the Listing Agreement entered into with the
stock exchanges, the Board of Directors has pleasure in attaching the
Financial Statement prepared in accordance with the Accounting
Standards prescribed by the Institute of Chartered Accountants of
India.
Since your Company does not have any subsidiary, preparation of the
Consolidated Financial Statement is not required.
DIRECTORS
Pursuant to the provisions of section 260 of the Companies Act, 1956
and the Articles of Association of the Company, Mr Lalit Kumar Singhi
was appointed as the Additional Independent Director (Non Executive) of
the Company with effect from February 6, 2012 and will hold office upto
the date of the next Annual General Meeting of the Company.
Mr. Sanjoy Tekriwal, Non- Executive Independent Director of the
Company, have resigned from the Board of your Company with effect from
February 6, 2012. The Board places on record its deep appreciation for
the guidance and the invaluable services rendered by him during the
tenure of his office as Director of the Company.
Mr Naresh Pachisia and Mr Nigam Chander Bahl, Directors of the Company,
retire by rotation at the ensuing Annual General Meeting and are
eligible for re-appointment.
None of the Directors of the Company are disqualified as per section
274(1)(g) of the Companies Act, 1956. The Directors have made necessary
disclosures as required under various provisions of the Act and Clause
49 of the Listing Agreement.
STATUTORY AUDITORS
The Statutory Auditor M/s. B Chhawchharia & Co., Chartered Accountants,
retire at the conclusion of the forthcoming Annual General Meeting and
being eligible, offer themselves for re-appointment. Certificate from
the Auditors has been obtained to the effect that their re-appointment,
if made, would be within the limits prescribed under section 224(1 B)
of the Companies Act, 1956.
The Notes to Accounts forming part of the financial statements are self
explanatory and needs no further explanation. There are no
qualifications or adverse remarks in the Auditors' Report which require
any clarification/ explanation.
COST AUDITORS
Pursuant to the notification of the Companies (Cost Accounting Records)
Rules, 2011 published vide GSR 429(E) dated June 3, 2011, and in
reference to the order FNo. 52/26/CAB-2010 dated June 30, 2011 issued
by Ministry of Corporate Affairs, Cost Audit Branch, Government of
India, your Directors in their meeting held on July 27, 2011, have
proposed M/s S. G. & Associates, Cost Accountants, to be appointed as
the Cost Auditors of the Company for the year 2011-12, subject to such
approvals as may be applicable.
Necessary certificate and consent letter from the said Auditor has been
obtained to the effect that their appointment, if made, would be within
the limits prescribed under section 224(1 B) of the Companies Act,
1956.
SECRETARIAL AUDIT / COMPLIANCE REPORT
The Secretarial Compliance Certificate confirms that the Company had
complied with all the applicable provisions of the Companies Act, 1956,
Listing Agreements with the Stock Exchanges, Securities Contract
(Regulation) Act, 1956, and all the other Regulations of SEBI as
applicable to the Company, including the SEBI (Substantial Acquisition
of Shares and Takeovers) Regulations, 2011 (as amended) and the SEBI
(Prohibition of Insider Trading) Regulations, 1992.
APPRECIATION
Your Directors take this opportunity to thank the Financial
Institutions, Bankers, Government Authorities, Customers, Vendors,
Shareholders and Employees for their continued assistance, cooperation
and support to the Company.
For and on behalf of the Board of Directors
Place : Kolkata Binod Khaitan N C Bhal
Dated : May 8, 2012 Chairman Wholetime Director
Mar 31, 2011
The Directors take pleasure in presenting their Fourth Annual Report
and the Audited Accounts of your Company for the year ended March
31,2011.
FINANCIAL RESULTS Amount
(Rs/Lakhs)
Particulars FY 2010-11
i. Gross Turnover 814.81
ii. Net Turnover 738.72
iii. Other Income 26.47
iv. Total Revenue 765.19
v. Earnings Before Interest, Depreciation, Taxation
and Amortisation (EBIDTA) (352.67)
vi. Interest 156.36
vii. Depreciation 104.32
viii. Profit before Taxation (PBT) (613.35)
ix. Tax including Deferred Tax --
x. Profit after Taxation (PAT) (613.35)
xi. Profit brought forward from previous year --
xii. Amount available for appropriation (613.35)
xiii. Transfer to general reserve --
xiv. Total --
xv. Surplus/(Deficit) carried to Balance Sheet (613.35)
* Since this is the first year of operation, the corresponding figures
for the year 2009-10 are not given.
OPERATIONS
As you are aware, the Company is setting up a 2.2 MTPA integrated steel
& Dl Pipe project, at Siyaljori village, in Bokaro District, in the
state of Jharkhand, which is about 22 kms from Bokaro city, a well
developed industrial town of Jharkhand.
The plant is based on Blast Furnace (BF) - Basic Oxygen Furnace (BOF) -
Billet Caster & Hot Rolling Route and will produce 1.2 MTPA of long
steel products, comprising 0.5 MTPA of wire rods and 0,7 MTPA of
reinforcement bars in straight lengths. The plant will have a 0.33 MTPA
Dl pipe production facilities in the same complex. The plant will also
have production facilities for 0.27 MTPA of Commercial Billets and 0.40
MTPA of Pig Iron.
The Company had engaged reputed international companies for the supply
of equipments and construction of the Project. Significant milestones
like land acquisition, land leveling, basic engineering, detailed
engineering, placement of orders for equipments and major civil
constructions have already been achieved. The Company has put in place
an excellent project team comprising of professionals from respective
areas with an extensive project management and execution skills. To
ensure continued & uninterrupted supply of major raw materials, long
term agreements for the supply of iron ore and coking coal have been
entered into with Electrosteel Castings Limited.
We are pleased to inform that, one of the Blast Furnaces (350 M3) out
of the three, has commenced operation of pig iron in September, 2010.
The Company has taken shut down of the above Blast Furnace for
synchronization with other facilities and the same has been restarted
in March 2011.
The target completion date of the balance facilities have been extended
by few months. The main reason for the delay is sudden decrease in
availability of Chinese manpower, due to guidelines issued by the
Central Government of India on Visa Policy restricting the Chinese
manpower with work visa. This was beyond the control of Companys
management. However, the Company made significant efforts to mitigate
the effect of this Force Majeure situation with the following
alternative plans;
- Appointment of local Sub-contractors under the supervision of Chinese
Contractors.
- Reducing the scope of Chinese Contractors and offloading the same to
Indian Contractors
Subsequently, the Central Government of India has allowed work permits
to a specified number of Chinese manpower, since then the work at the
site is going on in full swing. Your Company is confident in achieving
the revised completion target in the current financial year.
INITIAL PUBLIC OFFER (IPO)
Your Company had raised funds by issuing equity in the month of
September 2010 through the Initial Public Offer (IPO) of 25,93.44 lacs
equity shares (including Green Shoe Option "GSO" of 3,38.27 lacs equity
shares) of Rs. 10/- each at a premium of Rs 1 /- per share aggregating
to Rs 28,527.80 lacs.
Your Company had received appx 94,000 applications in total from all
categories of investors, which was subscribed by appx 8.23 times of the
total issue size. Your Company has completed all the necessary
formalities of IPO.
Your Directors take immense pleasure to announce that the Company got
listed for trading in the equity shares of the Company from 8th
October, 2010 with the Bombay Stock Exchange Limited (BSE) and National
Stock Exchange of India Limited (NSE).
Out of the net funds of Rs 24,828.78 lacs received through IPO, a sum
of approx. Rs 23,001.89 lacs is being utilized for the Project after
netting of IPO related expenses of Rs 1,826.89 lacs.
The net gain of Rs 5,077,536/- on account of equity shares purchased
from the market for the purpose of stabilization of post-listing price
of the equity shares of the Company, was remitted by the stabilising
agent to the investor protection fund maintained by BSE in compliance
with the Securities and Exchange Board of India (Issue of capital and
disclosure requirements) Regulations 2009,
DIVIDEND
You will appreciate that since the project is under implementation and
only one Blast Furnace had commenced operation, there is not much
earnings as of now, hence your Directors are not recommending any
dividend on Equity Shares for the year ended 31 st March 2011.
CORPORATE GOVERNANCE
Your Company has fully complied with the requirements of Clause 49 of
the Listing Agreement regarding Corporate Governance.
A Report on Corporate Governance Practices and the Auditors Certificate
on compliance of mandatory requirements thereof is given as annexure to
this report.
MANAGEMENT DISCUSSIONS AND ANALYSIS
A report on Management discussion and analysis is given as annexure to
this report.
FIXED DEPOSITS
The Company has not accepted any fixed deposit during the period under
review. DIRECTORS RESPONSIBILITY STATEMENT Your Directors hereby
confirm that:
a) in the preparation of annual accounts, containing financial
statements for the year ended March 31, 2011, the applicable accounting
standards have been followed along with proper explanations, wherever
required.
b) the board had selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company for that period.
c) the Board has taken proper and sufficient care for the maintenance
of adequate accounting records in accordance with provisions of the
Companies Act, 1956 for safe guarding the assets of the company and for
preventing and detecting any fraud and other irregularities.
d) the annual accounts have been prepared on a going concern basis.
PERSONNEL
Particulars of employees as required under Section 217(2A) of the
Companies Act, 1956 and the Companies (Particulars of Employees) Rules,
1975, as amended is forming a part of this report.
However, pursuant to Section 219(1)(b)(iv) of the Companies Act, 1956,
the Annual Report is being sent to ail the members of the Company,
excluding the aforesaid information. Those members desirous of
obtaining such particulars may write to the Company at its registered
office.
INFORMATION AS PER SECTION 217(1 )(e) OF THE COMPANIES ACT, 1956
Information as per Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988 related to conservation of energy,
technology absorption, foreign exchange earnings and outgo are given in
Annexure A attached hereto and forming part of this Report.
FINANCIAL STATEMENTS -
Pursuant to Clause 41 of the Listing Agreement entered into with the
stock exchanges, the Board of Directors has pleasure in attaching the
Financial Statement prepared in accordance with the Accounting
Standards prescribed by the Institute of Chartered Accountants of
India.
Since your Company does not have any subsidiary, preparation of the
Consolidated Financial Statement is not required.
DIRECTORS
Pursuant to the provisions of section 260 of the Companies Act, 1956
and the Articles of Association of the Company, Mr Binod Khaitan was
appointed as the Additional Independent Director (Non Executive) cum
Chairman of the Company with effect from April 22, 2011 and will hold
office upto the date of the next Annual General Meeting of the Company.
Mr. Vilas Vishnu Jamnis, Wholetime Director and Mr Anil Kumar Sinha,
Director and Chairman of the Company, have resigned from the Board of
your Company with effect from 10th August, 2010 and 15th November, 2010
respectively. The Board places on record its deep appreciation for the
guidance and the invaluable services rendered by them during the tenure
of their office as Directors of the Company.
Mr Umang Kejriwal and Mr Sanjoy Tekriwal, Directors of the Company,
retire by rotation at the ensuing Annual General Meeting and are
eligible for re-appointment.
None of the Directors of the Company are disqualified as per section
274(1 )(g) of the Companies Act, 1956. The Directors have made
necessary disclosures as required under various provisions of the Act
and Clause 49 of the Listing Agreement.
AUDITORS
The Statutory Auditor M/s. B Chhawchharia & Co., Chartered Accountants,
retire at the conclusion of the forthcoming Annual General Meeting and
being eligible, offer themselves for re-appointment. Certificate from
the Auditors has been obtained to the effect that their re-appointment,
if made, would be within the limits prescribed undersection 224(1 B) of
the CompaniesAct, 1956.
The Notes to Accounts forming part of the financial statements are self
explanatory and needs no further explanation. There are no
qualifications or adverse remarks in the Auditors Report which require
any clarification/ explanation.
SECRETARIAL AUDIT/ COMPLIANCE REPORT
The Secretarial Compliance Certificate confirms that the Company had
complied with ail the applicable provisions of the Companies Act, 1956,
Listing Agreements with the Stock Exchanges, Securities Contract
(Regulation) Act, 1956, and all the other Regulations of SEBI as
applicable to the Company, including the SEBI (Substantial Acquisition
of Shares and Takeovers) Regulations, 1997 and the SEBI (Prohibition of
Insider Trading) Regulations, 1992.
APPRECIATION
Your Directors take this opportunity to thank the Financial
Institutions, Bankers, Government Authorities, Customers, Vendors,
Shareholders and Employees for their continued assistance, cooperation
and support to the Company.
For and on behalf of the Board of Directors
Place: Kolkata N C Bahl Sanjoy Tekriwal
Dated: April 22,2011 Director Director