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Directors Report of State Trading Corporation Of India Ltd.

Mar 31, 2013

The Board of Directors of your Company is pleased to present the 57th Annual Report and Audited Statement of Accounts for the year ended 31st March 2013, together with the Auditors Report and Comments on the Accounts by the Comptroller and Auditor General (C&AG) of India.

FINANCIAL RESULTS

The overall performance of the Corporation vis-a-vis the previous year is summarized in the table given below: Rs. Crore

2012-13 2011-12

TURNOVER

Exports 1563 344

Imports 17015 29961

Domestic 120 139

GRAND TOTAL 18698 30444

FINANCIALS

Profit Before Tax 14 18

Profit After Tax 18 16.5

DIVIDEND 12 12

Net Worth 590 682

OPERATIONS AND BUSINESS PERFORMANCE

The Corporation achieved a turnover of Rs.18,698 crore during 2012-13 as against Rs.30,444 crore in 2011-12. During the year, the Corporation effected higher exports than any of the preceding three years. The overall turnover was lower mainly due to decline of Rs.9765 crore in the imports of coal and Rs.6647 crore in the imports of bullion. The Profit After Tax (PAT) during the year amounted to Rs.18 crore - 9% higher than the previous year.

DIVIDEND

The Board of Directors have recommended a dividend of Rs.2 per share (i.e 20% of the paid up equity) amounting to Rs.12 crore for the year 2012-13 which is the same as paid during 2011-12. The Dividend payout including dividend distribution tax accounts for 78% of profit after tax for the year 2012-13.

RESERVES

An amount of Rs.622 Crore was available in the Reserves and Surplus of your Company as on 1st April 2012. During the year 2012-13, write-off and provisions of Rs.155.23 crore (net of write-backs) have been made in the accounts as a matter of prudence. However, write off to the extent of Rs.95.96 crore have been offset against transfer from Export/ Import Contingency Reserve. Your Directors have proposed that out of post-dividend profits of Rs.3.91 crore for the year 2012-13, an amount of Rs.1.79 crore be transferred to General Reserves of the Company and balance profit of Rs.2.12 crore be carried forward as retained profits. During the year an amount of Rs.238 crore from General Reserve and Rs.150 crore from Profit Surplus Account was transferred to Export/ Import Contingency Reserve to meet any unforeseen future losses on account of doubtful receivables and advances towards export and import transactions. Accordingly, as on 31st March 2013, the Reserves and Surplus stood at Rs.530 crore.

FOREIGN EXCHANGE EARNINGS/OUTGO

The total foreign exchange earnings of the Corporation by way of exports, trade margins, etc. during the year amounted to Rs.1573 crore while the foreign exchange outgo by way of imports and other expenses amounted to Rs.16391 crore.

RECOGNITIONS EARNED

During the year, the Corporation earned a number of recognitions. These included:

- ''Very Good'' rating by the Department of Public Enterprises in terms of MOU for the year 2011-12.

- 13th rank in terms of net sales among 215 Central Public Sector Enterprises as per Public Enterprises Survey: 2011-12 brought out by the Department of Public Enterprises.

- 32nd rank in terms of total income among top 500 companies by Business Today.

- 50th rank in terms of total income total assets among 500 Biggest Non-Financial Companies by Business Standard (Oct.''2012).

PERFORMANCE OF SUBSIDIARY COMPANY

STCL Ltd. (Formerly Spices Trading Corporation Limited)

STCL, the wholly owned subsidiary of STC based at Bangalore, is involved in trading of spices and other agricultural products.

In view of lack of funds and banking limits, its activities during 2012-13 remained confined mainly to participation in cardamom auctions, issuing NOC for onion exports and supply of fertilizers to tobacco growers.

Annual Accounts of STCL for 2012-13 are under audit. As per the unaudited accounts for 2012-13, STCL has a negative net worth of Rs.2041 crore, due to provisions made towards recoveries outstanding from its business associates and the accumulated interest thereon in merchanting trade transactions undertaken during 2007-08 and earlier.

Your Corporation has not given any corporate guarantee on behalf of STCL and its liability is limited to its investment (Rs.2.82 crore) in the equity of STCL. Due to erosion of entire equity of STCL, provision of entire amount of Rs.2.82 crore has already been made in the Books of Accounts of STC for the year 2011-12. As such, STC has no further liability for the losses of STCL.

The decision of the STCL Board to wind up STCL and introduce a Voluntary Separation Scheme has been approved by the Board of Directors of The State Trading Corporation of India Ltd. and has been referred to Department of Commerce, Ministry of Commerce & Industry on 10.05.2013 for further approval.

HUMAN RESOURCE

Manpower

The Corporation had manpower of 830 as on 31.03.2013. This included 554 managers and 276 staff.

Recruitments

During the year, the Corporation recruited 24 Probationary Officers with MBA/CA qualifications directly from Professional Institutes/Universities. The Corporation also recruited 12 managers at various levels from Deputy Managers to Deputy General Manager depending on the skillsets required and business volumes.

Industrial Relations

During the year, the Corporation continued to maintain harmonious industrial relations. Co-operation between the elected representative bodies of employees and management ensured that no man-days were lost. Personnel policies and welfare schemes were continuously aligned with companyRs.s goals and objectives.

Recruitment of SC/ST/OBC

The Corporation has been implementing the policies and guidelines issued by the Government of India from time to time with regard to recruitment of SC/ST/OBC and physically challenged candidates. During the year, 7 SC/ ST, 11 OBC and 2 candidates from Minority Communities were recruited by the Corporation.

Human Resource Development

During the year, a Training and Learning Policy for all employees of the Corporation was evolved. The main objective of the policy is to identify training needs of the employees and provide for their systematic knowledge improvement. During the year 2012-13, adequate opportunities were provided to employees through in- house and external training programmes to enable them to develop their talents and improve performance.

A total of 267 employees of the Corporation were nominated to 34 external and 8 in-house training programmes arranged on varied subjects. Also a visit to Mundra port was organized for 20 young professionals to enable them to acquire first hand knowledge of port operations, customs procedures, shipping etc. In addition, interactive sessions were also arranged at the port.

The Corporation''s excellence in HR was recognized by India Human Capital Summit 2012 by bestowing HR Leadership Award on STC.

OFFICIAL LANGUAGE

In compliance with the Government''s Policy on Official Language, continuous efforts were made for propagating and progressively increasing the use of Hindi in Official work . Every year, Hindi Diwas & Rajbhasa week/fortnight are organised in the Corporate Office as well as in the Branch Offices of the Corporation. During these events, employees doing exemplary work in Hindi in their day-to- day official tasks are felicitated.

In recognition of the efforts made by the Corporation in implementation of Government''s Policy on official language, Ministry of Commerce felicitated STC at Hindi Salahakar Samiti organized in August 2012 at Delhi.

The employees of the Corporation won various prizes in Hindi Competitions organized by Town Official Language Implementation Committees (TOLIC) at Delhi, Mumbai and Agra.

STC''s efforts in propagating use of Hindi in Official work were appreciated by the Parliamentary Committee on Official Language during its inspection of Jalandhar Branch Office.

VIGILANCE ACTIVITIES

During the year, a number of activities were undertaken as part of preventive vigilance. As a major step in this direction, a Whistle Blower Policy was introduced in the Corporation. Presentations were made in the Branch Managers'' Conferences to sensitize the senior managers of the Corporation about the need of preventive and punitive vigilance in day to day activities. Also, a seminar on ''Transparency in Public Procurement'' was organized at the Corporate Office in which eminent personalities shared their valuable views on the subject.

The concept of Integrity Pact has been introduced in the Corporation. Two Independent External Monitors (IEMs) have been appointed by the Corporation for this purpose.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The detailed Management Discussion and Analysis Report forms part of this Report and is placed at Annexure-I.

PARTICULARS OF EMPLOYEES

The particulars of employees under section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 is annexed to this report at Annexure-II.

RIGHT TO INFORMATION

In order to promote transparency and accountability, an appropriate mechanism has been set up in the Corporation to provide information to citizens under the provisions of Right to Information (RTI) Act, 2005. For this purpose, the Company has, in line with the RTI Act, nominated Central Public Information Officers at all its Divisions at New Delhi and at Branch Offices across the country. First Appellate Authority has also been nominated for considering the appeals of information seekers against the orders of Public Information Officers.

CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABLE DEVELOPMENT

In furtherance of its commitment towards Corporate Social Responsibility and Sustainable Development, the Corporation undertook following initiatives during 2012-13 for the welfare of the community and environment protection:

- Rehabilitation of physically challenged BPL persons in J&K and Ahmedabad by providing them with artificial limbs, calipers, crutches, wheel-chairs, hand-paddled tricycles, etc.

- Vocational Training Programme for slum women.

- Installation of bore wells in Hamirpur District, Himachal Pradesh.

- Supporting needy students of fine arts through scholarship programme.

- Promoting biodiversity by planting trees in Garhi Mandu Wilderness Area, Delhi.

RESEARCH & DEVELOPMENT

In compliance with the guidelines on Research & Development (R&D) notified by the Department of Public Enterprises, the Corporation formulated the R&D Policy and R&D Plan and the same were approved by its Board of Directors. Also, during the year, a study was commissioned to identify investment opportunity in Kenya / Malawi / Mozambique by an external agency for cultivation of pulses.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, ETC.

The information required to be disclosed in accordance with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is ''Nil'' as the Company is mainly engaged in trading activities.

FINANCIAL ACCOUNTING

The Financial Statements have been prepared in accordance with the Generally Accepted Accounting Principles (GAAP) and in compliance with all applicable Accounting Standards issued by The Institute of Chartered Accountants of India (ICAI) and provisions of the Companies Act, 1956.

CORPORATE GOVERNANCE

Your Company believes that Corporate Governance is at the root of the shareholders value creation.

Pursuant to clause 49 of the Listing Agreement with the Stock Exchanges and Guidelines on Corporate Governance for CPSEs issued by the Department of Public Enterprises (DPE), a report on Corporate Governance for the year 2012-13 forms part of this report (Annexure-III).

The Statutory Auditors of the Company have examined and certified your Company''s compliance with respect to the conditions enumerated in Clause 49 of the Listing Agreement and DPE guidelines on Corporate Governance for CPSEs. The certificate forms part of this report and is placed at Annexure -IV.

STATUTORY AUDITORS

M/s Chandiok and Guliani, Chartered Accountants were appointed as Statutory Auditors for the financial year 2012-13 by the Comptroller & Auditor General of India (C&AG). Their report, along with replies of the Management, is attached and forms part of this report.

COMMENTS OF C&AG

The comments of C&AG under Section 619 (4) of the Companies Act, 1956 on the accounts of the Corporation for the year 2012-13 and replies of the management thereto are attached and form part of this Report.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement under section 217(2AA) of the Companies Act, 1956, in relation to Directors'' Responsibility Statement, it is hereby confirmed that:

(i) In the preparation of annual accounts for the year ended 31st March 2013, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) The Directors 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 as at the end of the financial year and of the profit or loss of the company for the year under review;

(iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) The Directors have prepared the annual accounts of the Company for the year ended 31st March 2013 on a "going concern basis".

BOARD OF DIRECTORS

On attaining superannuation, Shri N.K. Mathur relinquished charge as a member of the Board of Directors and Chairman & Managing Director of the Corporation on 30.11.2012. Shri J.S. Deepak Additional Secretary, Department of Commerce held the post of Chairman & Managing Director, STC in addition to his own duties w.e.f. 01.12.2012 to 12.08.2013, when Shri Khaleel Rahim was appointed as Chairman & Managing Director of the Corporation.

The Board places on record its deep appreciation for the valuable contributions of Shri N.K. Mathur and Shri J.S. Deepak as members of the Board and CMDs of the Corporation.

Since the last AGM, Shri Manoj Mishra and Shri Rajiv Chopra have been appointed as Director (Finance) and Director (Marketing) on the Board of STC w.e.f. 15.10.2012 and 01.01.2013 respectively.

Pursuant to the provisions of Section 255 and 256 of the Companies Act, 1956 and in terms of provisions of article 79 (2) of the Articles of Association of the Corporation, Shri Naresh Dayal, Prof. R.H. Dholakia, Shri Uday N. Abhyankar and Shri S.C. Tripathi would retire by rotation at the ensuing Annual General Meeting and being eligible, have offered themselves for re-appointment.

Brief resume of all Directors seeking appointment/ re- appointment are given in the notice convening the 57th Annual General Meeting of the Company as stipulated under Clause 49 of the Listing Agreement with the stock exchanges and form part of the Annual Report.

CODE OF CONDUCT

Pursuant to the requirements of clause 49 of the Listing Agreement and DPE guidelines on Corporate Governance for CPSEs, the Board Members and Senior Management Personnel have affirmed compliance with the Code of Conduct for the financial year ended 31st March 2013.

ACKNOWLEDGEMENTS

The Board of Directors places on record its appreciation of the continued patronage and the confidence posed by business associates and customers during the year.

The Board expresses its gratitude for the continued co-operation and support provided by Government of India, in particular the Ministry of Commerce and Industry, Ministry of Food, Consumer Affairs and Public Distribution, Ministry of Chemicals and Fertilizers, various state governments, financial institutions, banks, railways, ports, regulatory and statutory authorities, shareholders, legal advisers and consultants from time to time.

The Board also acknowledges the constructive suggestions received from Comptroller & Auditor General of India, Statutory Auditors and Internal Auditors.

Last but not the least, the Board places on records its appreciation for the hard work and dedication of the employees of the Corporation.

For and on behalf of Board of Directors

Sd/-

New Delhi (Khaleel Rahim)

Date : 13.08.2013 Chairman & Managing Director


Mar 31, 2012

The Board of Directors of your Company is pleased to present the 56th Annual Report and Audited Statement of Accounts for the year ended 31st March 2012, together with the Auditors Report and Comments on the Accounts by the Comptroller and Auditor General (C&AG) of India.

FINANCIAL RESULTS

The overall performance of the Corporation vis-a-vis the previous year is summarized in the table given below:

Rs. Crore

2011-12 2010-11

TURNOVER

Exports 344 492

Imports 29961 18938

Domestic 139 555

GRAND TOTAL 30444 19985

FINANCIAL

Profit Before Tax 18 80

Profit After Tax 16 56

DIVIDEND 12 18

Net Worth 682 679

OPERATIONS AND BUSINESS PERFORMANCE

The Corporation achieved an all time high turnover of over Rs.30,000 Crore during 2011-12 thereby exceeding the previous year performance by 52%. The Profit Before Tax during the year amounted to Rs.18 Crore, which is lower than the previous year mainly on account of high interest costs and provisions/write-offs in certain cases. The higher turnover was the result of sustained efforts by the company in increasing its business in moderate risk areas.

DIVIDEND

The Board of Directors have recommended a dividend of Rs.2 per share (20% of equity) amounting to Rs.12 Crore for the year 2011-12. The Dividend payout including dividend distribution tax accounts for 85% of profit after tax for the year 2011-12.

RESERVES

An amount of Rs.619 Crore was available in the Reserves and Surplus of your company as on 1st April 2011. Your Directors have proposed that out of available profits for the year 2011-12, an amount of Rs.1.65 Crore be transferred to General Reserves of the Company and balance profit of Rs.0.87 Crore be carried forward as retained profits. Accordingly, as on 31st March 2012, the Reserves and Surplus stood at Rs.622 Crore.

FOREIGN EXCHANGE EARNINGS/OUTGO

The total foreign exchange earnings of the Corporation by way of exports, trade margins, etc. during the year amounted to Rs.303 Crore while the foreign exchange outgo by way of imports and other expenses amounted to Rs.18235 Crore.

RECOGNITIONS EARNED

During the year, the Corporation earned a number of recognitions. These included :

- 'Very Good' rating by the Department of Public Enterprises in terms of MOU for the year 2010-11.

- 14th rank in terms of net sales among 208 PSUs as per Public Enterprises Survey : 2010-11 brought out by the Department of Public Enterprises.

- 32nd rank in terms of net sales among top 500 companies by Business Standard (Mar.'2012).

- 39th rank in terms of net sales among top 1000 companies by The Financial Express (Feb.'2012).

PERFORMANCE OF SUBSIDIARY COMPANY

STCL Ltd. (Formerly Spices Trading Corporation Limited) STCL, the wholly owned subsidiary of STC based at Bangalore, is involved in trading of spices and other agricultural products.

In view of lack of funds and banking limits, its activities during 2011-12 remained confined mainly to participation in cardamom auctions, undertaking onion exports and supply of fertilizers to tobacco growers.

Annual Accounts of STCL for 2011-12 are under audit. As per the provisional unaudited accounts for 2011-12, STCL has a negative net worth of Rs.1800 Crore, due to provisions made towards recoveries outstanding from its business associates and the accumulated interest thereon in merchanting trade transactions undertaken during 2007- 08 and earlier.

STC has not given any corporate guarantee to/on behalf of STCL and STC's liability is limited to its investment (Rs.2.82 Crore) in the equity of STCL. Due to erosion of entire equity of STCL, provision for entire amount of Rs.2.82 Crore has been made in the Books of Accounts of STC for the year 2011-12. As such, STC has no further liability for the losses of STCL.

HUMAN RESOURCE

Manpower

The Corporation had a manpower strength of 844 as on 31.03.2012. This included 554 managers and 290 staff.

Recruitments

In order to strengthen its cadre of professionals, the Corporation recruited 37 officers including 32 Probationary Officers in finance, marketing, HR and legal disciplines, from reputed Central Universities / Professional Institutes during the year 2011-12.

Industrial Relations

The year saw further strengthening of the bonds of employer - employee relationship. During the year, a positive Industrial Relations atmosphere prevailed in the Corporation as the employees' bodies as well as the management appreciated each others' concerns and benefited by mutual trust and understanding. During the period, Joint Council Meetings were held in a structured manner, thus, promoting Union/Association's participation in management. No man days were lost in this year standing testimony to the prevalence of a good working culture. As a welfare measure, a new pension scheme was introduced in the Corporation which will go a long way in providing the much needed financial security to the employees after their retirement. A Complaints Committee is in existence in the Corporation to look into the complaints of sexual harassment, if any.

Recruitment of SC/ST/OBC

The Corporation has been implementing the policies and guidelines issued by the Government of India from time to time with regard to recruitment of SC/ST/OBC and physically challenged candidates. During 2011-12, the Corporation recruited 3 SC, 2 ST and 8 OBC Probationary Officers with professional qualifications.

Human Resource Development

The Corporation, in its endeavor towards attainment of the corporate objectives, continued to lay emphasis on training and development of the employees. Training initiatives have been stepped up. During the year 2011-12, a total of 25 in-house training programmes were conducted covering 662 employees whereas 112 employees were nominated to external seminars / conferences on different subjects. The main focus in this period was on nurturing commitment, competency and culture building. Besides training programmes in functional areas, it also organized induction programmes for new recruits. The programmes for enhancing behavioural competencies were also organized. During the year, 21 executives were imparted training in project management. The Corporation, in association with Administrative Staff College of India (ASCI), Hyderabad organized a customized Management Development Programme on International Trade and Finance for its junior / middle management executives. In all, 93 executives were exposed to at least three day long training programmes. In order to enhance problem solving skills of the young executives of the Corporation, they were given the opportunity to represent STC in various National Level managerial events and competitions.

OFFICIAL LANGUAGE

The Corporation makes best efforts to implement the Official Language Policy of the Govt. of India and promotes the use of Hindi in its day to day working in line with the directions of the Ministry of Home Affairs. During the year, meetings of the Departmental Official Language Implementation Committee and Hindi Workshops were organized from time to time. On the occasion of Hindi Divas, awards were given to selected employees / divisions at Corporate Office and branches for outstanding work in Official Language.

In appreciation of the Official Language work done by the Corporation, Ministry of Commerce has felicitated STC with the 1st prize many a time. In February 2012, efforts of STC were appreciated by Hindi Advisory Committee in a meeting held at New Delhi. The employees of the Corporation have won prizes in various Hindi competitions organized by Town Official Language Implementation Committees (TOLIC) in Delhi, Mumbai and Agra. The Official Language related work at STC's Corporate Office and Branches has also been examined and appreciated by the Parliamentary Committee on Official Language from time to time.

VIGILANCE ACTIVITIES

With a view to sensitise the senior management of the Corporation, presentations on 'Preventive Vigilance' and 'Participative Vigilance' were made by the CVO at the Branch Managers' conferences held in May 2011 and November 2011 respectively.

Vigilance Awareness Week was observed in STC's Corporate Office and Branch Offices from 31st October to 5th November 2011. As part of observance of the week, a seminar on 'Participative Vigilance', a 2-day training programme on 'Management of Discipline and Departmental Proceedings' and 1-day training programme on 'Financial Frauds and Prevention' were also organized. A discourse on 'Integrity of Body, Mind and Soul through Meditation and Yoga' by Yogi Anoop from Chaitanya Foundation was also organized. Besides, various programmes relating to vigilance awareness and anti- corruption were also organized at the Branch Offices.

PARTICULARS OF EMPLOYEES

A statement of the employees of the company drawing remuneration exceeding the limit laid down under provisions of section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is placed at Annexure-I.

RIGHT TO INFORMATION

In order to promote transparency and accountability, an appropriate mechanism has been set up in the Corporation to provide information to citizens under the provisions of Right to Information (RTI) Act, 2005. For this purpose, the company has, in line with the RTI Act, nominated Central Public Information Officers at all its Divisions at New Delhi / Branch offices across the country.

CORPORATE SOCIAL RESPONSIBILITY

The Corporation is conscious of its Corporate Social Responsibility (CSR) and strives to implement societal betterment programmes. In line with the guidelines issued by Department of Public Enterprises on the subject, the following CSR projects were undertaken during 2011-12 :

- Construction of recreation centre in Education-cum- Vocational Training Centre for autistic children and young adults for enhancing their skills and employability.

- Rehabilitation of physically challenged below poverty line persons by supplying artificial limbs, callipers, crutches, wheel-chairs, hand pedalled tricycles, etc.

- Vaccination for prevention of cervical cancer for women belonging to economically weaker sections.

- Mid-day meal programme for underprivileged children of schools of Delhi/NCR.

- Detoxification and rehabilitation of drug addicted persons to enable them lead a healthy and drug free future life while also improving their employability.

- Workshops on legal rights (Mera Haq) to make women from downtrodden background aware of their legal rights.

The planning and execution of CSR projects was monitored by various committees at and below Board level.

SUSTAINABLE DEVELOPMENT

Appreciating the need for conservation and sustainability of natural resources, the Corporation undertook the following initiatives during the year in line with the guidelines on Sustainable Development (SD) notified by the Department of Public Enterprises:

- Provision of uninterrupted drinking water facility in the village Sogathorai in Coonoor district.

- Solar Electrification of a Village in Rajasthan.

- Tree Plantation in Bangalore & Chennai.

RESEARCH & DEVELOPMENT

In compliance with the guidelines on Research & Development (R&D) notified by the Department of Public Enterprises requiring all CPSEs to undertake R&D activities, facilities were upgraded at the Corporate Office for online fixation of bullion prices and timely remittances and settlement of associates' accounts.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, ETC.

The information required to be disclosed in accordance with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is 'nil' as the company is mainly engaged in trading activities.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In terms of clause 49(IV) (F) of the Listing Agreement with the Stock Exchanges and Guidelines on Corporate Governance for Central Public Sector Enterprises(CPSEs) issued by the Department of Public Enterprises, Government of India, a Management Discussion and

Analysis Report is placed at Annexure-II and forms part of the Annual Report of the Company.

FINANCIAL ACCOUNTING

The Financial Statements have been prepared in accordance with the Generally Accepted Accounting Principles (GAAP) and in compliance with all applicable Accounting Standards issued by The Institute of Chartered Accountants of India (ICAI) and provisions of the Companies Act, 1956.

CORPORATE GOVERNANCE

In terms of clause 49 of the Listing Agreement with the Stock Exchanges and Guidelines on Corporate Governance for CPSEs issued by Department of Public Enterprises, a report on Corporate Governance for the year 2011-12 is placed at Annexure - III and forms part of this report.

The Statutory Auditors of the Company have examined and certified your Company's compliance with respect to conditions enumerated in Clause 49 of the Listing Agreement and DPE guidelines on Corporate Governance for CPSEs. The certificate forms part of this report and is placed at Annexure -III.

STATUTORY AUDITORS

M/s Chandiok and Guliani, Chartered Accountants were appointed as Statutory Auditors for the financial year 2011-12 by the Comptroller & Auditor General of India (C&AG). Their report, along with replies of the Management, is attached and forms part of this report.

COMMENTS OF C&AG

The comments of C&AG under Section 619 (4) of the Companies Act, 1956 on the accounts of the Corporation for the year 2011-12 are attached and form part of this Report.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under section 217 (2AA) of the Companies Act, 1956, with respect to Directors' Responsibility Statement, it is hereby confirmed that:

(i) In the preparation of annual accounts, the applicable accounting standards have been followed, along with proper explanation relating to material departures;

(ii) The Directors 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 as at 31st March 2012 and of the profit or loss of the company for the year ended on that date;

(iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) The Directors have prepared the annual accounts of the Company on a 'going concern basis'.

BOARD OF DIRECTORS

Since the last AGM, Shri Madhusudan Prasad, Additional Secretary, Department of Commerce, Ministry of Commerce and Industry was appointed as Part-time Official Director on the Board of STC vice Shri P.K. Chaudhery w.e.f. 12.01.2012. Smt. Anita Agnihotri, Additional Secretary and Financial Advisor, Ministry of Commerce was appointed as Part-time Official Director on the Board of STC vice Shri Rajan S. Katoch w.e.f. 30.05.2012. Your Directors place on record their deep appreciation for the valuable contributions made by Shri P.K. Chaudhery and Shri Rajan S. Katoch during their tenures.

Shri N.K. Nirmal, Director (Finance) and Shri S.S. Roy Burman, Director (Marketing) ceased to be the Directors of the Corporation w.e.f. 12.12.2011 and 30.04.2012 respectively. Your Directors place on record their deep appreciation for the valuable services rendered by them as member of the Board.

Since the last AGM, three new Independent Directors have been appointed on the Board of the Corporation. Shri S.C. Tripathi and Shri Uday N. Abhyankar joined the Board of STC w.e.f. 14.10.2011 and 10.10.2011 respectively while Shri S.C. Saraf joined w.e.f. 28.03.2012, as Part-time non- official (Independent) Directors.

The terms of appointment of Dr. (Smt.) B. Kinnera Murthy and Shri J.N. Shah as Part-time non-official (Independent) Directors expired on 07.1 2.201 1 and 30.1 1.201 1 respectively. However, both of them were re-appointed as Part-time non-official (Independent) Directors on the Board of STC w.e.f.18.04.2012.

Pursuant to the provisions of Section 255 and 256 of the Companies Act, 1956 and in terms of provisions of article 79 (2) of the Articles of Association of the Corporation, Shri Khaleel Rahim and Shri Proshanto Banerjee, Directors would retire by rotation at the ensuing Annual General Meeting (AGM) and being eligible, have offered themselves for re-appointment.

Brief resumes of all Directors seeking Appointment / Re- Appointment, as stipulated under Clause 49 of the Listing

Agreement with the stock exchanges, are given in the notice convening the 56th Annual General Meeting of the Company, and form part of the Annual Report.

CODE OF CONDUCT

In line with the requirements of Clause 49 of the Listing Agreement and guidelines on Corporate Governance for CPSEs issued by the Department of Public Enterprises, the Board Members and Senior Management Personnel have affirmed compliance with the Code of Business Conduct & Ethics for Board Members and Senior Management for the financial year ending 31st March 2012.

ACKNOWLEDGEMENTS

The Board of Directors places on record its appreciation of the continued patronage and the confidence reposed by business associates and customers during the year.

The Board expresses its gratitude for the valuable guidance and support provided by Government of India, in particular the Ministry of Commerce and Industry, Ministry of Food, Consumer affairs and Public Distribution, Ministry of Chemicals and Fertilizers, various State Governments, Financial Institutions, Banks, Railways, Ports, regulatory and statutory authorities, Shareholders, legal advisers and consultants from time to time.

The Board acknowledges the constructive suggestions received from Comptroller & Auditor General of India, Statutory Auditors and Internal Auditors and are grateful for their consistent support and cooperation.

Last but not the least, the Board places on record its appreciation for the sincere efforts made by all the employees in taking the Company forward.

For and on behalf of Board of Directors

Sd/-

(N.K. MATHUR)

Chairman & Managing Director

New Delhi

Date :13.08.2012


Mar 31, 2011

Dear Members,

It gives me pleasure to present, on behalf of the Board of Directors, the 55th Annual Report on the working of the Corporation and Audited Statement of Accounts for the year ended 31st March 2011, together with the Auditors' Report and Comments on the Accounts by the Comptroller and Auditor General of India (C & AG).

FINANCIAL RESULTS

The overall performance of the Corporation vis-a-vis the previous year is summarized in the table given below:

Rs. Crores

2010-11 2009-10

TURNOVER

Exports 492 1504

Imports 18938 19049

Domestic 555 956

GRAND TOTAL 19985 21509

FINANCIAL

Trading Profit 178 145

Interest Income (Net) 18 138

Profit Before Tax (PBT) 80 171

Profit After Tax (PAT) 56 107

DIVIDEND 18 28.5

Net Worth 679 644

OPERATIONS AND BUSINESS PERFORMANCE

The Corporation achieved a turnover of the order of Rs. 20,000 crore during 2010-11 with a trading profit of Rs. 178 crore. The achievement is all the more significant as the same has been achieved despite a number of factors beyond the control of the Corporation adversely hampering trade.

The Profit Before Tax (PBT) during the year amounted to Rs. 80 crore.

DIVIDEND

The Board of Directors have recommended declaration of dividend @ Rs. 3 per share (30% of equity capital) amounting to Rs. 18 crore for the year 2010-11.

RESERVES

An amount of Rs. 584 crore was available in the Reserves and Surplus of your Company as on 1st April 2010. Your Directors have proposed that out of available profits for the year 2010-11, after payment of dividend and tax thereon, an amount of Rs. 6 crore be transferred to General Reserves of the Company, Rs. 19.18 crore be transferred to Export/Import Contingency Reserve and balance profit of Rs. 10.33 crore be carried forward as retained profits. Accordingly, as on 31st March 2011, the Reserves and Surplus stood at Rs. 619 crore.

FOREIGN EXCHANGE EARNINGS/OUTGO

The total foreign exchange earnings of the Corporation by way of exports, trade margins, etc. during the year amounted to Rs. 386 crore while the foreign exchange outgo by way of imports and other expenses amounted to Rs. 19516 crore.

RECOGNITIONS EARNED/AWARDS WON

During the year, the Corporation earned a number of recognitions and awards. These included :

- 14th rank in terms of net sales among 206 PSUs as per Public Enterprises Survey : 2009-10 brought out by the Department of Public Enterprises.

- 22nd rank in terms of net sales among Top 500 Companies by The Financial Express (Feb.'2010).

- 25th rank in terms of net sales among Top 1000 Companies by Business Standard (Feb.'2010).

- Won 1st prize under the category of agencies supplying gold to exporters against replenishment during 2009-10 from the Gems & Jewellery Export Promotion Council in October 2010.

- Won award for Gentle Giant Miniratna - I (Largest Non- Manufacturing Company) at the Third DSIJ PSU Awards 2011 ceremony held at New Delhi.

- Won Greentech HR Excellence Award 2010 from Greentech Foundation, New Delhi for outstanding achievement in innovation in employee retention strategies.

- Won Asia's Best Employer Brand Award 2010 for Talent Management.

PERFORMANCE OF SUBSIDIARY COMPANY

STCL Ltd. (Formerly Spices Trading Corporation Limited)

STCL, the wholly owned subsidiary of STC, based at Bangalore, is involved in import, export and domestic trading of spices and other agricultural products.

In view of lack of funds or banking limits, its activities during 2010-11 remained confined mainly to issuing NOC in respect of onion exports and undertaking cardamom auctions.

Annual Accounts of STCL for 2010-11 are yet to be finalised.

As per the accounts for 2009-10, STCL has a negative net worth of Rs. 1342 crore, due to provisions made towards recoveries outstanding from its business associates in merchanting trade transactions undertaken during 2007- 08 and earlier.

PERSONNEL

The Corporation had a manpower of 864 as on 31.03.2011. This included 536 managers and 328 staff.

During the year, the Corporation recruited 17 Probationary Officers with MBA/CA qualifications directly from the Professional Institutes/Universities.

Industrial Relations

During the year, the Corporation continued to maintain cordial and harmonious industrial relations. No man-days were lost. Mutual trust and understanding between the Management and employees was maintained through regular consultations held with the representatives of employees. This helped in arriving at amicable resolution of personnel issues in line with the company's goals and objectives. During the year, the Corporation introduced some new welfare schemes and modified certain rules and policies for achieving overall productivity.

Human Resource Development

The Corporation appreciates that Human Resource Development is vital for the growth and economic development both at micro and macro levels and therefore the Corporation continuously strives to provide maximum opportunities to its employees by way of training and field exposures enabling them to achieve organizational as well as individual goals. During the year, about 620 employees were imparted training in 20 in-house training programmes organized by the Corporation while 66 employees were nominated to various external seminars/ conferences. The areas of training covered functional, technical as well as behavioural aspects such as International Trade, Tax Laws, Finance, Computer Operations, Corporate Governance, Vigilance, Attitude Building, Stress Free Living and Work Life Balance. For the first time, the Corporation organized specially customized Management Development programmes on 'International Trade and Finance' in association with Administrative Staff College of India (ASCI) for the benefit of senior and middle level managers. STC is conscious of the need to nurture the talents of young executives so as to help them face the challenges in the future. Under a comprehensive and custom-built induction programme organized by STC at IIFT, New Delhi, all the new Probationary officers who joined the Corporation during the year were given exposure to the intricacies of International Trade. The young executives were also given an opportunity to represent STC at the National level game competitions.

Recruitment of SC/ST/OBC and Physically Challenged Persons

The Corporation has been implementing the policies and guidelines issued by the Government of India from time to time with regard to recruitment of SC/ST/OBC and physically challenged candidates. During the year, 3 SC, 1 ST, 3 OBC and 1 physically challenged (PH) candidates were recruited.

OFFICIAL LANGUAGE

The Corporation makes best efforts to implement the Official Language Policy of the Govt. of India and promotes use of Hindi in its day to day working in line with the directions of the Ministry of Home Affairs. During the year, meetings of the Departmental Official Language Implementation Committee and Hindi Workshops were organized from time to time. On the occasion of Hindi Divas, awards were given to selected employees / divisions at Corporate Office and Branches for outstanding work in Official Language.

In appreciation of the progress of Official Language work in the Corporation, Ministry of Commerce has felicitated it with 1st prize many a time. In this series, STC was awarded Rajbhasha Shield by the Hon'ble President of India for outstanding work in Official Language during 2009-10. The Official Language related work at STC's Corporate Office and Branches is examined by the Parliamentary Committee on Official Language from time to time. The Third Sub-Committee of the Parliamentary Committee on Official Language inspected STC's Corporate Office last year and appreciated the performance of its Official Language related work. STC always endeavours to propagate and increase the use of Official Language under the Official Language Policy of the Govt. of India.

VIGILANCE ACTIVITIES

The Vigilance Division of the Corporation performed the following Vigilance functions during the year:

- With a view to creating greater awareness, amongst employees, of the need for eradication of corruption and maintenance of high standards of integrity, Vigilance Awareness Week was observed in STC's Corporate Office and Branch Offices from 25th October to 1st November 2010. As part of observance of the week, a seminar on 'Preventive Vigilance' was organized in the Corporate Office during which a presentation on 'Risk Management in the context of International Trade' was made by the CVO. An interactive session on 'System Improvement in STC to Minimize Risks' was also conducted with the senior officials of STC. Besides, various programmes relating to vigilance awareness and anti-corruption were also organized at the Branch Offices.

- In-house training programme was organized on 'Vigilance Role and Mechanism' for Probationary Officers.

- Complaints received from various agencies / sources were duly investigated.

- Departmental inquiries having vigilance angle were handled.

- Constant liaison was maintained with various agencies for ensuring preventive vigilance and providing details/ inputs to regulatory agencies as per statutory requirements.

- Inspection of the Branch Offices of the Corporation was conducted thereby bringing various aspects to the attention of top management for taking corrective/ preventive action.

PARTICULARS OF EMPLOYEES

A statement of the employees of the company drawing remuneration exceeding the limit laid down under provisions of section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended is placed at Annexure-I.

CORPORATE SOCIAL RESPONSIBILITY

During the year, your Corporation undertook a number of CSR activities in fulfilment of its obligations in terms of the guidelines on Corporate Social Responsibility (CSR) notified by the Department of Public Enterprises, as per details in Management Discussion & Analysis Report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, ETC.

The information required to be disclosed in accordance with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is 'nil' as the company is mainly engaged in trading activities.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In terms of clause 49(IV) (F) of the Listing Agreement with the Stock Exchanges and Guidelines on Corporate Governance for Central Public Sector Enterprises (CPSEs) issued by the Department of Public Enterprises, Govt. of India, a Management Discussion and Analysis Report is placed at Annexure - II which forms part of the Annual Report of the Company.

FINANCIAL ACCOUNTING

The Financial Statements have been prepared in accordance with the Generally Accepted Accounting Principles (GAAP) and in compliance with all applicable Accounting Standards (AS-1 to AS-29) issued by The Institute of Chartered Accountants of India (ICAI) and provisions of the Companies Act, 1956.

CORPORATE GOVERNANCE

Your Company remains committed and dedicated to adoption of best corporate governance practices, aiming at greater transparency, accountability, performance orientation, honesty and integrity.

In terms of Clause 49 of the Listing Agreement and Guidelines on Corporate Governance for CPSEs issued by the Department of Public Enterprises in May 2010, a report on Corporate Governance for the year 2010-11, supported by a certificate from the Company's Auditors confirming compliance of conditions, forms part of this report (Annexure - III).

STC complies with the requirements stipulated under DPE guidelines for Corporate Governance for CPSEs and clause 49 of the Listing Agreement with Stock Exchanges except the Clause 49 (1A) of the listing agreement and para 3.1.4 of the DPE guidelines for Corporate Governance regarding number of Independent Directors on Board. Action in this regard is being taken by the Ministry of Commerce & Industry and the process of appointment of requisite number of Independent Directors is already on.

AUDITORS

M/s Chandiok and Guliani, Chartered Accountants were appointed as Statutory Auditors for the financial year 2010- 11 by the Comptroller & Auditor General of India (C&AG). Their report, along with replies of the Management, is attached as addendum forming part of this report.

COMMENTS OF C&AG

The comments of C&AG under Section 619 (4) of the Companies Act, 1956 on the accounts of the Corporation for the year 2010-11 are attached and form part of this Report.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under section 217 (2AA) of the Companies Act, 1956, with respect to Directors' Responsibility Statement, it is hereby confirmed that:

- In the preparation of annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

- The Directors 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 as at 31st March, 2011 and of the profit or loss of the company for the year ended on that date;

- The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

- The Directors have prepared the annual accounts of the Company on a 'going concern' basis.

BOARD OF DIRECTORS

During the year, Shri Saurabh Chandra, Additional Secretary & Financial Adviser, Ministry of Commerce was appointed as Part-time Official Director on the Board of STC vice Dr. Sutanu Behuria w.e.f. 10.11.2010. Subsequently, Dr. Rajan Katoch, Additional Secretary & Financial Adviser, Ministry of Commerce, was appointed as Part-time Official Director on the Board of STC vice Shri Saurabh Chandra w. e. f. 15.12.2010. Your Directors place on record their deep appreciation for the valuable contributions made by Shri Sutanu Behuria and Shri Saurabh Chandra during their tenures.

Dr. Rajan Katoch, who was appointed as Additional Director after the last AGM, holds office up to the ensuing AGM. Also, three new independent Directors, namely, Sh. Proshanto Banerjee, Prof. R.H. Dholakia and Sh. Naresh Dayal have been appointed as Additional Directors on the Board w.e.f. 24.06.2011. They will hold office upto the ensuing AGM.

Pursuant to the provisions of Section 255 and 256 of the Companies Act, 1956 and in terms of provisions of article 89 (2) of the Articles of Association of the Corporation, Shri S.S. Roy Burman and Shri M.M. Sharma would retire by rotation at the ensuing Annual General Meeting (AGM) and being eligible, have offered themselves for re- appointment.

Brief resumes of all Directors seeking Appointment/ Re- Appointment, as stipulated under Clause 49 of the Listing Agreement with the stock exchanges are given in the Annexure to notice convening the 55th Annual General Meeting of the Company, and form part of the Annual Report.

CODE OF CONDUCT

Pursuant to clause 49 (1) (d) of the Listing Agreement signed with the Stock exchanges and Guidelines on Corporate Governance for CPSEs issued by the Department of Public Enterprises, a detailed Code of Conduct for Board Members and Senior Management Personnel has been laid down and hosted on the website of the Company. All Board Members and Senior Management Personnel, to whom the said Code is applicable, have affirmed compliance of the same for the year ended 31st March 2011.

ACKNOWLEDGEMENTS

The Board of Directors places on record its appreciation of the continued patronage and the confidence posed by business associates and customers during the year. The Board is grateful for the continued guidance and support received from the Ministry of Commerce & Industry, Ministry of Food, Consumer affairs & Public Distribution, Ministry of Chemicals and Fertilizers, different State Governments, various Govt. Departments and Agencies, Banks and Financial Institutions, Railways, Ports, Legal Advisers, Consultants and Shareholders. The Board also acknowledges with thanks the suggestions received from Comptroller & Auditor General of India, Statutory Auditors and Internal Auditors.

Last but not the least, the Board also acknowledges the unstinting efforts and contribution made by the employees at all levels without which it would not have been possible for your company to achieve such high volumes of business on a sustained basis.

For and on behalf of Board of Directors

Sd/-

(N.K. MATHUR)

Chairman & Managing Director

New Delhi

Date : 02.08.2011

 
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