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Directors Report of Manaksia Steels Ltd.

Mar 31, 2015

Dear Shareholders,

The Directors have pleasure in presenting their Fourteenth Annual Report on the business and operations of your Company together with the audited accounts of the Company for the year ended 31st March, 2015 :

FINANCIAL RESULTS : (Rs. in Lacs)

Particulars 2014-15 2013-14

Total Revenue 33559.86 21745.66

Profit Before Tax 1112.63 1543.23

Less: Provisions for Taxation 294.62 491.10

Net Profit 818.01 1052.13

Balance brought forward from previous year 1048.14 (3.99)

Total Amount available for appropriation 1866.15 1048.14

Appropriations:

Dividend on Equity Shares - -

Surplus Carried to Balance Sheet 1866.15 1048.14

Total 1866.15 1048.14

STATE OF COMPANY'S AFFAIRS AND FUTURE OUTLOOK

The Company was the wholly-owned subsidiary of Manaksia Limited. Pursuant to Scheme of Arrangement as sanctoned by the Hon'ble Calcuta High Court the Steel undertaking of Manaksia Limited has been transferred to Manaksia Steels Limited on a going concern basis. The Company is currently carrying on the Steel business.

Steel is the barometer of economic development of a country. Steel demand in the world stems from growth and development of the sectors that are end users of steel such as manufacturing, housing, infrastructure and automobile etc.

The Indian steel industry has entered into a new development stage from 2007-08, riding high on the resurgent economy and rising demand for steel. Rapid rise in production has resulted in India becoming the 3rd largest producer of crude steel in 2015 and the country continues to be the largest producer of sponge iron or DRI in the world.

The Company manufactures and sells value added steel products comprising Cold Rolled Coils used in interior and exterior panels of automobiles, buses and commercial vehicles, Galvanised Corrugated Sheets which find use in the rural housing sector and factory sheds and Galvanised Plain Sheets, used in the manufacture of containers and water tanks and Colour Coated (Pre-painted) Coils and Sheets for sale to construction, housing, consumer durable and other industries.

CHANGES IN THE NATURE OF BUSINESS

There has been no change in the nature of business of the Company during the financial year 2014-15.

DIVIDEND

To conserve the resources for future, the Board has decided not to recommend any dividend for the Financial Year ended 31st March 2015.

TRANSFER TO RESERVES

During the year under review, your Company has not transferred any amount to General Reserve.

SCHEME OF ARRANGEMENT

The Hon'ble Calcutta High Court vide its Order dated 24th March, 2014 has sanctioned the Scheme of Arrangement under the provisions of Sections 391-394 of the Companies Act, 1956 for demerger of Steel Undertaking of Manaksia Limited into Manaksia Steels Limited on a going concern basis. The certified copy of the Order sanctioning the Scheme has been received by the Company on 19th November, 2014 and the Company has duly fled the said Order with the Registrar of Companies, West Bengal, on 23rd November, 2014. The Scheme has become effective on and from the date of fling with the Registrar of Companies. Upon the Scheme being effective, the Company had made application to National Stock Exchange of India Limited and BSE Limited for listing of its equity shares. Accordingly the shares of the Company got listed on both the Stock Exchanges on 30th March, 2015.

SHARE CAPITAL

The Company pursuant to the Scheme of Arrangement as sanctoned by the Hon'ble Calcuta High Court vide its Order dated 24th March, 2014 has issued and alloted to the shareholders of Manaksia Limited, one share of Re 1/- each of the Company, for every one share of Rs 2/- each held by them. The paid-up Equity Share Capital of the Company as at 31st March, 2015 stood at Rs.655.34 Lacs. During the year under review, the Company has neither issued shares with differential voting rights nor has granted any stock options or sweat equity.

DETAILS PERTAINING TO SHARES IN SUSPENSE ACCOUNT

Details of shares held in the demat suspense account as required under Clause 5A I and 5A II of the Listing Agreement forms part of the Corporate Governance Report.

OPERATIONS AND BUSINESS PERFORMANCE

Kindly refer to Management Discussion and Analysis Report, which forms part of the Annual Report.

MANAGEMENT DISCUSSION ANALYSIS REPORT

Management Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement forms part of this Annual Report.

DETAILS RELATING TO MATERIAL VARIATIONS

During the year under review, there is no material variations as no prospectus or letter of offer has been issued.

MATERIAL CHANGES AND COMMITIMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

There is no such material changes and commitments affecting the financial position of the company.

EXTRACT OF ANNUAL RETRUN

The details forming part of the extract of Annual Return in Form MGT-9 required pursuant to Section 92 of the Companies Act, 2013, is marked as Annexure 'A' and forms part of this Director's Report.

CORPORATE GOVERNANCE REPORT

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, Report on the Corporate Governance along with a certificate from the Auditors of the Company confirming compliance with the conditions of the Corporate Governance is annexed as Annexure 'B'.

NUMBER OF MEETINGS OF THE BOARD

The details of the number of meetings of the Board held during the financial year 2014-15 forms part of the Corporate Governance Report.

DIRECTORS' RESPONSIBILITY STATEMENT

Directors of your Company, hereby confirm, pursuant to the provisions of Section 134 (3) (c) of the Companies Act, 2013, in respect of financial year under review :

a) That in the preparation of the annual accounts for the year ended 31st March, 2015, all the applicable accounting standards prescribed by the Institute of Chartered Accountants of India have been followed along with proper explanations relating to material departures, if any;

b) That the Directors have adopted such accounting policies and have applied them consistently and have made judgements and estimates in a reasonable and prudent manner so as to give a true and fair view of the state of affairs of the Company as at the end of the Financial Year 2014-15 and of the profit of the Company for the year ended 31st March, 2015.

c) That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

d) That the annual accounts have been prepared on a going concern basis.

e) That the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively.

f) That the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

DECLARATION BY INDEPENDENT DIRECTORS

During the year under review, the Company at its Extra ordinary General Meeting held on 17th November 2014 appointed Mr. Ajay Kumar Chakraboty, Dr Kali Kumar Chaudhuri and Mrs Smita Khaitan, as Independent Directors of the Company for a period 5 (five) years and shall hold office upto the conclusion of the Annual General Meeting of the Company to be held in the Calendar year 2019.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

In accordance with the provisions of Section 152(6) of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Mrinal Kant Pal, Director of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment.

During the year under review, the Company has appointed following persons as Key Managerial Personnel of the Company :

Sl. No. Name of the Person Designation

1 Mr Suresh Kumar Agrawal Managing Director

2 Mr Ajay Sharma Company Secretary

3 Mr Rajesh Singhania Chief Financial Officer

4 Mr. Varun Agrawal Whole-Time Director

The Board has changed the terms of appointment of Mr Suresh Kumar Agrawal in its meeting held on 23rd November, 2014, subject to the approval of shareholders in the ensuing Annual General Meeting of the Company.

Apart from the Managerial Remuneration the Managing Director and Whole-time Directors of the Company are not entitled to any commission as prescribed under the provisions of Section 197(14) of the Companies Act, 2013.

The brief Resume/ Profile of the Directors recommended by the Board for appointment/ re-appointment forms part of the Notice convening the 14th Annual General Meeting.

STATUTORY AUDITORS & AUDITORS' REPORT

At the 13th Annual General Meeting held on 10th September, 2014 the members approved appointment of Messer S. K. Agrawal & Co., Chartered Accountants, (Registration No. 306033E) to hold office from the conclusion of the 13th Annual General Meeting until the conclusion of the 18th Annual General Meeting, (subject to ratification of the appointment by the members, at every Annual General Meeting held after the 13th Annual General Meeting) on such remuneration as may be fixed by the Shareholders, apart from reimbursement of out of pocket expenses as may be incurred by them for the purpose of audit.

In accordance with Section 139 of the Act, members are requested to ratify the appointment of the Auditors to hold office from the conclusion of the 14th Annual General Meeting till the conclusion of the 15th Annual General Meeting.

There are no observations (including any qualification, reservation, adverse remarks or disclaimer) of the Auditors in their Audit Report that may call for any explanation from the Directors. The specific notes forming part of the accounts referred to in Auditor's Report are self- explanatory and give complete information.

SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of the Company had appointed M/s. Vinod Kothari & Company, Practising Company Secretaries to conduct secretarial audit of the Company for the Financial Year 2014-15.

The Secretarial Audit Report for the Financial Year ended 31st March, 2015, forms part of the Directors Report and annexed as Annexure 'C'.

The Secretarial Auditors Report addressed to the Shareholders of the Company, does not contain any qualification.

COST AUDITORS

The provisions of Section 148 of the Companies Act, 2013 and the relevant rules made thereunder are not applicable to your Company.

FRAUD REPORTING

There was no fraud reported by the Auditors of the Company to the Audit Committee or the Board of Directors during the year under review.

PARTICUALRS OF LOANS, GUARANTEES OR INVESTIMENTS

The Company has not given any loan, made any investments or given any guarantee as stipules under the provisions of Section 186 of the Companies Act, 2013 during the financial year 2014-15.

PARTICULARS OF CONTRACT OR ARRANGEMENTS WITH RELATED PARTIES

All transactions entered with Related Parties during the year under review, were on arm's length basis and in the ordinary course of business and that the provisions of Section 188 read with the Companies (Meetings of Board and its Powers) Rules, 2014 are not attracted. Thus, disclosure in Form AOC-2 is not required. Further there are no related party transactions during the year under review with the Promoters, Directors or Key Managerial Personnel which could be considered material in accordance with the policy of the Company on materiality of related party transaction.

All Related Party Transactions are approved by the Audit Committee prior to the transaction. Related Party Transactions of repetitive nature are approved by the Audit Committee on omnibus basis for one year at a time. All omnibus approvals are reviewed by the Audit Committee on a quarterly basis.

The policy on Related Party Transactions as approved by the Board of Directors of the Company may be accessed on the Company's website at the link htp://www.manaksia.com/corp_policy_steels.php

DETAILS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO

The details required pursuant to the provisions of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earning and Outgo forms part of this Directors Report and marked as Annexure 'D'.

RISK MANAGEMENT

Risk Management is the process of identification, assessment and prioritization of risks followed by coordinated efforts to minimize, monitor and mitigate the probability and/ or impact of unfortunate events or to maximize the realisation of opportunities.

The Company has structured Risk Management Policy, designed to safeguard the organization from various risks through adequate and timely actions. The Company manages, monitors and reports on its risks and uncertainties that can impact its ability to achieve its objectives.

AUDIT COMMITTEE

The Company pursuant to the requirement of the provisions of Section 177 of the Companies Act, 2013 read with the provisions of Clause-49 has constituted the Audit Committee comprising of 4 (Four) Directors, Mr. Ajay Kumar Chakraborty-Independent Director (Chairman), Dr. Kali Kumar Chaudhuri-Independent Director, Mr. Suresh Kumar Agrawal-Executive Director and Mrs. Smita Khaitan-Independent Director. The detailed terms of reference of the Committee is provided in the Corporate Governance Report. The Board has accepted all the recommendations made by the Audit Committee.

NOMINATION & REMUNERATION COMMITTEE

As required by the provisions of Section 178(1) of the Companies Act, 2013 read with the provisions of Clause 49 of the Listing Agreement the Company has constituted the Nomination & Remuneration Committee comprising of 4 (Four) Directors, Mr. Ajay Kumar Chakraborty- Independent Director (Chairman), Dr Kali Kumar Chaudhuri-Independent Director, Mr. Vineet Agrawal-Non Executive Director and Mrs. Smita Khaitan-Independent Director. The detailed terms of reference of the Committee is provided in the Corporate Governance Report.

The Company pursuant to provisions of Section 178 of the Companies Act, 2013 and Clause 49 of the Listing Agreement and upon recommendation of Nomination & Remuneration Committee has devised a policy on Remuneration of Directors and Key Managerial Personnel. The said policy forms part of the Directors Report and marked as Annexure 'E'.

The Company got listed on 30th March, 2015 and is in the process of finalisation of criteria for evaluation of performance of all the Directors based on the recommendation of Nomination & Remuneration Committee.

Familiarisation programme undertaken for Independent Directors is provided at the weblink www.manaksia.com/management -team- manaksia-steels.php.

STAKEHOLDERS RELATIONSHIP COMMITTEE

As required by the provisions of Section 178(5) of the Companies Act, 2013 read with the provisions of Clause 49 of the Listing Agreement the Company has constituted the Stakeholders Relationship Committee comprising of 3 (Three) Directors, Dr. Kali Kumar Chaudhuri-Independent Director (Chairman), Mr. Suresh Kumar Agrawal-Executive Director and Mr. Varun Agrawal-Executive Director. The detailed terms of reference of the Committee is provided in the Corporate Governance Report.

CORPORATE SOCIAL RESPONSIBILITY

The Company was a wholly owned subsidiary of Manaksia Limited. Pursuant to the Scheme of Arrangement (Scheme) as sanctioned by the Hon'ble Calcuta High Court vide its Order dated 24th March 2014, the Company got demerged from Manaksia Limited with effect from 23rd November 2014, being the date of fling of the Order with Registrar of Companies on a going concern basis. The Company got listed at BSE-Limited and National Stock Exchange of India Limited on 30th March 2015.

As per the Scheme, the appointed date is October 01, 2013. During the pendency of the Scheme the accounts for the financial year ended March 31, 2014 was prepared without giving any effect to the terms of the Scheme. Pursuant to the said financial accounts the Company does not meet the requirements as envisaged under Section 135 of the Companies Act, 2013 and accordingly does not qualify to make Corporate Social Responsibility spending as per the said section read with its allied rules. Therefore, the Company has not made any spending under section 135 of the Companies Act, 2013 for the financial year 2014-2015. Since the effective date of the Scheme is 23rd November 2014, for the purpose of preparing accounts for financial year ending March 31, 2015, the Company will have to give effect to the accounting terms of the Scheme as per paragraph 7 of the Scheme and accordingly will have to recast its previous year's figures for financial year ended March 31, 2014 only for the limited purpose of giving effect to the provisions of the Scheme as and from the appointed date being October 01, 2013.

PERFORMANCE EVALUATION OF BOARD AND COMMITTEES

Pursuant to requirement of the provisions of Section 134(3)(p) of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Nomination & Remuneration Committee of the Board has laid down the criteria for evaluation of the Executive Directors, Non-Executive Directors, Board as a whole and the Committees of the Board, in a structured questionnaire form after taking into consideration various aspects of the Board functioning, composition of the Board and its Committees, culture, execution, diligence, integrity, awareness and performance of specific laws, duties, obligations and governance.

DEPOSITS

The Company has not accepted or continued any public deposits as contemplated under Chapter V of the Companies Act, 2013.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS, COURTS AND TRIBUNALS

No significant and material order has been passed by the Regulators, Courts and Tribunals impacting the going concern status and Company's operation in future.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS

The Company has in place adequate internal financial controls with reference to financial statements. To commensurate the internal financial control with its size, scale and complexities of its operations the Company on the recommendation of Audit Committee has appointed M/s Namita Kedia & Associates, Chartered Accountants, as Internal Auditors of the Company.

The Audit Committee reviews the report submitted by the Internal Auditors and also ascertain the views of Statutory Auditors on the financial statements, including the financial reporting system and compliance to Accounting Policies and procedures followed by the Company.

The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of the internal control systems with regard-to- 1. Systems have been laid to ensure that all transactions are executed in accordance with management's general and specific authorization. There are well-laid manuals for such general or specific authorization.

2. Systems and procedures exist to ensure that all transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles or any other criteria applicable to such statements and to maintain accountability for aspects and the timely preparation of reliable financial information.

3. Access to assets is permitted only in accordance with management's general and specific authorization. No assets of the Company are allowed to be used for personal purposes, except in accordance with terms of employment or except as specifically permitted.

4. The existing assets of the Company are verified/ checked at reasonable intervals and appropriate action is taken with respect to any differences, if any.

5. Proper systems are in place for prevention and detection of frauds and errors and for ensuring adherence to the Company's policies.

WHISTLE BLOWER POLICY/ VIGIL MECHANISM

In Compliance with the provisions of Section 177(9) of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Company has framed a Whistle Blower Policy to establish a vigil mechanism for Directors and employees to report genuine concerns about actual or suspected unethical behavior, malpractce, wrongful conduct, discrimination, sexual harassment, fraud, violation of the Company polices including Code of Conduct without fear of reprisal/retaliation. The Whistle Blower Policy/Vigil Mechanism has also been uploaded on Company's website www.manaksia.com.

DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITON & REDRESSAL) ACT, 2013

There has been no such case fled/pending during the year under review.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The disclosure pertaining to Remuneration and other details as required under the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of the Directors Report and marked as Annexure 'F'.

During the period under review, no employee of the Company drew Remuneration in excess of the limits specified under the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and hence no disclosure required under this Section has been made in the Annual Report.

CREDIT RATING

The Company was awarded 'A ' rating by CARE for its long term loans and 'A1 ' (A ONE PLUS) rating for short term loans and 'A1 ' (A ONE PLUS) for proposed commercial paper. The Company was awarded 'A1' (A ONE) rating for commercial paper and 'A' rating for working capital facilities by ICRA, which represent high security for timely servicing of debt instruments and carrying very low credit risk. The Company's financial discipline and prudence are reflected from the good Credit ratings by leading agencies.

ACKNOWLEDGEMENT

Your Company continues its relentless focus on strengthening competition in all its businesses. It is the endeavour of your Company to deploy resources in a balanced manner so as to secure the interest of the shareholders in the best possible manner in the short, medium and long terms.

Your Directors convey their grateful appreciation for the valuable patronage and co-operation received and goodwill enjoyed by the Company from its esteemed customers, commercial associates, banks, financial institutions, Government Authorities, other stakeholders and the media.

Your Directors also wish to place on record their deep sense of appreciation to all the employees at all levels for their commendable team- work, professionalism and enthusiastic contribution towards the working of the Company during the year under review.

Your Directors look forward to the future with hope and conviction.

For and on behalf of the Board of Directors

Ajay Kumar Chakraborty

Place : Kolkata Chairman

Date : 3rd August, 2015 DIN : 00133604

 
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