Mar 31, 2018
To, The Shareholders (Members),
The Board of Directors of the Company hereby present the Thirty-second (32nd) Annual Report together with the Audited Financial Statements for the year 2017-2018 ended 31st March 2018.
The financial year 2017-2018 ended 31st March 2018 under review, witnesses reasonable increase in demand for the Companyâs products, which is mainly due to growth in Automobile and Auto Component sector coupled with better sales realization, improved plant utilization and process improvements, all that have been resulted in achieving 8.58% PBT margin as against 4.93% in the corresponding previous financial year. EBIDTA margins have improved to 11.82% as compared to 8.90% in the corresponding previous financial year. The continuous efforts by the Companyâs Management towards strict cost reduction, better financial and working capital management, has also helped to improve the overall financial performance of the Company.
1. FINANCIAL RESULTS
The summarised financial results for the year are as follows (Rs. in Lakh except EPS)
Sr. No. |
Particulars |
For the financial year ended |
||
31â March 2018 |
31â March 2017 |
|||
1 |
Total Income |
214,612 |
172,098 |
|
2 |
Total Expenditure |
189,234 |
156,782 |
|
3 |
Gross Profit |
25,378 |
15,316 |
|
4 |
Finance Cost |
3,549 |
3,506 |
|
5 |
Profit before Depreciation |
21,829 |
11,810 |
|
6 |
Depreciation |
3,413 |
3,319 |
|
7 |
Profit before exceptional and extraordinary items and Tax |
18,416 |
8,491 |
|
8 |
Tax Expenses and Provisions |
5,549 |
1,974 |
|
9 |
Profit After Tax |
12,867 |
6,517 |
|
10 |
Earnings Per Share (EPS) (Basic and Diluted) in Rupees |
7.14 |
3.62 |
2. FINANCE
Your Company has ended the financial year 2017-2018 ended 31st March 2018 with a profit after tax of Rs. 12,867 Lakhs. After taking into account the brought forward profit of Rs.48,760 Lakhs, your Company has carried forward an amount of Rs.61,627 Lakhs to the Balance Sheet of the Company as at 31st March 2018.
3. DIVIDEND
The Company is in need of more funds through internal accruals to cope up with the terms and conditions of the lending banks financing the ongoing capital projects under the expansion programme, which will enable future growth of the Company.
As such, the Board of Directors feels appropriate and are pleased to recommend a Dividend @5% (i.e. Rs. 0.50/-) per Equity Share on the equity shares in the capital of the Company for the financial year 2017-2018 ended 31st March 2018, subject to approval of the Shareholders (Members) in the ensuing Thirty-second (32nd)Annual General Meeting of the Company.
4. SHARE CAPITAL
During the financial year 2017-2018 ended 31st March 2018 under review, there is no change in the capital structure of the Company and accordingly, the issued, subscribed and paid-up share capital of the Company stand at Rs. 1,802,194,480/- divided into 180,219,448 equity shares of face value ofRs. 10/- each, as on 31st March 2018.
5. MARKET SCENARIO
Due to better GDP growth and good monsoon in current financial year, the Automobile and Auto Component Industry is expected to perform well with a growth rate of 18%. Sunflag Steel also expect an enhancement in its sales by entering into new markets and products, apart from development of high value products and more approvals ofvarious OEMâs, with demand is expected to remain strong in near future. However, we need to prepare ourselves to face long term challenges that might be presented due to the advent of Electric Vehicles in Indian Markets.
6. COMPANYâS OPERATIONS OR OVERALL WORKING PERFORMANCE
During the financial year 2017-2018 ended 31st March 2018 under review, the operational (production) details of the Company are as under
production in MT and Power in Lakh kWh
Sr No |
Particulars |
Financial Year 2017-2018 |
Financial Year 2016-2017 |
|
1 |
Direct Reduction Plant (I II) |
131,293 |
114,233 |
|
2 |
Steel Melt Shop |
384,269 |
342,181 |
|
3 |
Rolled products |
381,905 |
366,417 |
|
4 |
Mini Blast Furnace (Hot Metal)/Pig Iron |
319,598 |
264,063 |
|
5 |
Coal (Belgaon Coal Block) |
270,000 |
153,015 |
|
6 |
Power Plant (Lakh kWh) |
1793.49 |
1674.59 |
7. PROJECTS Steel Plant:-
With a view to utilize the full potential of Rolling Mill at Blooming Mill, the Company has undertaken expansion of this unit to produce Rolled Products demanding a higher degree of reduction ratio from bigger size blooms as far as possible by rolling with a single heating, and thus reducing energy, cost & scale loss and inventory of intermediate products.
Also, the Company is expanding its existing Steel Melt Shop to produce high quality clean steel. This will enable the Company to diversify its products.
Overall capital outlay for these projects are estimated atRs. 450.00 Croresand shall be executed over a period of 24 months.
Subsidiary Companies:-
Sunflag Power Limited [CIN-U 31200 UR2003PLC 027802]:-
There were no specific developments or updates for reporting to the Members and the process of obtaining necessary approvals were continued for implementation and commencement of operations of Hydro Power Project of the Company at Hanol-Tuini in the State of Uttarakhand.
Sunflag Special Steels Limited [CIN - U 27102 OR2003 PLC 007099]:-
The Company, in absence of viability to continue, has voluntarily made an application on 27th March 2017 and submitted requisite documents for strike-off (closure) of name of the Company and a confirmation from the Office of the Registrar of Companies, Odisha, Cuttack about the Striking-off of its Name pursuant to Section 248 of the Companies Act, 2013. In response to Companyâs subject application, the Company has received an Order dated 7th February 2018, from the Office of the Registrar of Companies, Odisha, Cuttack stating that effective 7th February 2018, the name of the Company has been struck-off from their records and accordingly, the Company stands dissolved.
Khappa Coal Company Private Limited [CIN- U 10100 MH 2009 PTC 191907]:-
ln view of order of the Honâble Supreme Court of India dated 24th September 2014, Khappa & Extâ Coal Block which was allocated to Khappa Coal Company Private Limited, stands de-allocated with immediate effect. The closure of the said Company solely depends upon the outcome of final decision regarding bank guarantee and compensation from the appropriate authorities.
Sunflag Foundation [CIN - U 74999 MH 2017 NPL 289961]:-
Sunflag Foundation, a Section 8 Company (not for profits) was incorporated on 27th January 2017 as a Wholly-owned Subsidiary of Sunflag Iron and Steel Company Limited. The said Company was appointed as an Implementing Agency to carry out the Corporate Social Responsibility (CSR) activities as perCSR Policy of the Company within the framework of applicable provisions of law.
Joint Venture (JV) Companies:-
Madanpur (North) Coal Company Private Limited [CIN -U 10101 CT2007 PTC 020161]:-
ln view oforder of the Honâble Supreme Court of India dated 24th September 2014, the Coal Block which was allocated to Madanpur (North) Coal Company Private Limited in the State of Chhattisgarh stands de-allocated with immediate effect. The closure of the said Company solely depends upon the outcome of final decision regarding bank guarantee and compensation from the appropriate authorities.
C T Mining Private Limited [CIN - U 10100 JH 2008 PTC 013329]:-
ln view of order of the Honâble Supreme Court of India dated 24th September 2014, the Coal Block which was allocated to C T Mining Private Limited in the State of Jharkhand, stands de-allocated with immediate effect. The closure of the said Company solely depends upon the outcome of final decision regarding bank guarantee and compensation from the appropriate authorities.
Daido D.M.S. India Private Limited [CIN -U 28113 HR2015 FTC054839]:-
Its a Joint Venture (JV) Company between Sunflag, Daido Steel Co. Ltd., Japan and Daido Die and Mold Steel Solutions Co. Ltd., Japan. Sunflag has made an investment of INR 36,000,000/- (INR Three crores sixty lakhs) constituting twenty percent (20%) of the issued, subscribed and paid-up share capital of the said JV Company. The said JV Company is engaged in the business of manufacturing, import, export and distribution indie, mould steel (tool steel and other metallic materials), processed products and mould parts.
Ramesh Sunwire Private Limited [CIN - U 28999 MH 2016 PTC 287281]:-
Sunflag jointly with Stumpp Schuele & Somappa Springs Private Limited, Bengaluru has formed and incorporated a Joint Venture (JV) Company namely Ramesh Sunwire Private Limited on 31st October 2016 in the State of Maharashtra. Sunflag has contributed a sum of Rs. 22,050,000/- towards subscription to share capital of the said JV Company - namely Ramesh Sunwire Private Limited constituting 49% of its equity shareholding. The main object of the said JV Company is manufacturing high quality of alloy steel wire for automobile and auto component industries both in domestic and export markets. Further during the financial year 2017-2018 ended 31st March 2018 under review, Sunflag has contributed an additional sum ofRs. 1,50,00,000 for issue and allotment of shares of the said JV Company.
The CAPEX orders placed by the said JV Company are in transit and expected to reach during the second quarter (Q-2) of financial year 2018-2019. The plant is under erection stage and expected to be commissioned by the end of December 2018.
Present Status of Coal and Minerals Mines:-
SN |
Name of Mine |
Area in (Ha.) |
Mineral |
Present Status |
1 |
Belgaon Coal Mine, at Village, Balgoan (Deshpande), Tah.Warora, Dist. Chandrapur, Maharashtra |
383.56 |
Coal |
Underground Coal mine having estimated reserves of 8 millions tons (MT) with extractable balance of about 6.23 MT |
2 |
Navegaon Manganese Mine at Village Navegaon, Tah. Mohadi, Dist. Bhandara, Maharashtra |
15.90 |
Manganese Ore |
Open cast mine with reserves of about 30,000 tons |
48.78 |
Manganese Ore |
Application for conversion of Prospecting Licence into Mining Lease is under process |
3 |
Warpani Manganese Ore Block at Village Warpani, Tah. Saoner, Dist. Nagpur, Maharashtra |
1419.65 |
Manganese Ore |
Application for conversion of Prospecting Licence into Mining Lease over an area of 460 Ha is under process |
4 |
Bande Iron Ore block, at Village Bande, Tah. Ettapalli, Dist. Gadchiroli, Maharashtra |
236.75 |
Iron Ore |
Application for conversion of Prospecting Licence into Mining Lease over an area of 205.75 Ha is under process |
5 |
Kodalibad Iron and Manganese Ore Mine Village - Kodalibad, Tah - Noamundi, Dist. - Singhbhum / Jharkhand |
120.00 |
Iron and Manganese Ore |
Mining Lease is yet to be executed |
8. NATURE OF BUSINESS ACTIVITIES AND CHANGES THEREOF
During the financial year 2017-2018 ended 31st March 2018 under review, the Board of Directors, though exploring addition to existing business and commercial activities, had neither been explored any change in nature of business and commercial activities for the Company nor there is a change in nature of business and commercial activities of the Company. As such, no specific details regarding change in nature of business activities are required to be given or provided.
9. PUBLIC DEPOSITS
During the financial year 2017-2018 ended 31st March 2018 under review, the Company has neither invited nor accepted any public deposits within the meaning of Section 73 and 74 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 (as amended). As such, no specific details prescribed in Rule 8(1) of the Companies (Accounts) Rules, 2014 (as amended) are required to be given or provided.
10. DIRECTORS AND KEY MANAGERIAL PERSONNEL
The changes amongst the Board of Director/s including the Executive Director/s and Key Managerial Personnel during the period are as follows:-
I. CHANGES AMONGST THE PROMOTER DIRECTOR:-
Mr. Suhrit Bhardwaj (DIN -02318190), who was appointed, as an Additional Director [Category - Promoter, Non-executive & NonIndependent] of the Company, effective 27th March 2017, has been appointed, as a Director [Category - Promoter, Non-executive & Non-Independent] of the Company, by the Shareholders (Members) of the Company at their Thirty-first (31st) Annual General Meeting of the Company held on 28th September 2017.
II CHANGES AMONGST THE EXECUTIVE DIRECTOR/S:-
a) The Board of Directors at its 164th meeting held on 14th August 2017, based on the recommendations vide resolution passed by the Nomination & Remuneration Committee at its 33rd meeting held on 14th August 2017, has approved and re-appointed, Mr. Surendra Kumar Gupta (DIN - 00054836), as the Deputy Managing Director, [Category - Non-Promoter & Executive], designated Key Managerial Personnel (KMP) of the Company, for a further period of three (3) years effective 30th July 2017.
The Shareholders (Members) of the Company, at their Thirty-first (31st) Annual General Meeting held on 28th September 2017, has approved, the re-appointment of Mr. Surendra Kumar Gupta, (DIN - 00054836), as the Deputy Managing Director, [Category - Non-Promoter & Executive], designated Key Managerial Personnel (KMP) of the Company, for a further period of three (3) years effective 30th July 2017.
b) The Board of Directors at its 164th meeting held on 14th August 2017, based on the recommendations vide resolution passed by the Nomination & Remuneration Committee at its 33rd meeting held on 14th August 2017, has approved and appointed, CA R. Muralidhar (DIN -00982212), as an Additional Director [Category - Non-Promotor & Executive], effective 14th August 2017, and also, the Whole-time Director, designated as the Executive Director (Finance) [Category - Non-Promoter & Executive] & CFO, designated Key Managerial Personnel (KMP) of the Company, for a period of three (3) years effective 14th August 2017.
The Shareholders (Members) of the Company, at their Thirty-first (31st) Annual General Meeting held on 28th September 2017, has approved, the appointment of CA R. Muralidhar (DIN - 00982212), as the Whole-time Director, designated as Executive Director (Finance), [Category - Non-Promoter & Executive] & CFO, designated Key Managerial Personnel (KMP) of the Company, fora period of three (3) years effective 14th August 2017.
c) The Board of Directors at its 164th meeting held on 14,hAugust 2017, based on the recommendations vide resolution passed by the Nomination & Remuneration Committee at its 33rd meeting held on 14th August 2017, has approved and appointed, Mr. Ramchandra Vasant Dalvi (DIN - 00012065), as an Additional Director [Category - Non-Promoter & Executive], effective 14th August 2017, and also, the Whole-time Director, designated as an Executive Director (Works), designated Key Managerial Personnel (KMP) of the Company, for a period of three (3) years effective 14th August 2017.
The Shareholders (Members) of the Company, at their Thirty-first (31st) Annual General Meeting held on 28th September 2017, has approved, the appointment of Mr. Ramchandra Vasant Dalvi (DIN -00012065), as the Whole-time Director, designated as Executive Director (Works), [Category - Non-Promoter & Executive], designated Key Managerial Personnel (KMP) of the Company, fora period of three (3) years effective 14th August 2017.
III. CHANGES AMONGST KEY MANAGERIAL PERSONNEL(KMP):-
Apartfrom change/s referred to in (II) above, there is no other change/s in the Key Managerial Personnel (KMP) of the Company and accordingly, Mr. Pranav Bhardwaj [Managing Director], Mr. Surendra Kumar Gupta [Deputy Managing Director], CA R. Muralidhar [Executive Director (Finance) & CFO], Mr. Ramchandra Vasant Dalvi [Executive Director (Works)] and CS Pranab Panigrahi [Company Secretary] of the Company, continued to act as the Key Managerial Personnel (KMP) of the Company pursuant to the provisions of Section 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (as amended).
IV. CHANGES AMONGST THE INDEPENDENT DIRECTOR/S:-
The Shareholders (Members) of the Company, at their Thirty-first (31st) Annual General Meeting held on 28th September 2017, has approved the followings:-
a) the appointment of Dr. E. R. C. Shekar (DIN -00013670), Director [Category - Non-executive, Independent] of the Company, for a fixed second term of consecutive five (5) years i.e. from the conclusion of Thirty-first (31st) Annual General Meeting up to the conclusion of Thirty-sixth (36th) Annual General Meeting of the Company to be held for the financial year 2021-2022.
b) the appointment of Mr. Kumar Jitendra Singh (DIN - 00626836), Director [Category - Non-executive, Independent] of the Company, for a fixed second term of consecutive five (5) years i.e. from the conclusion of Thirty-first (31st) Annual General Meeting up to the conclusion of Thirty-sixth (36th) Annual General Meeting of the Company to be held for the financial year 2021-2022.
c) the appointment of Mr. S. Gajendran (DIN -00250136), Director [Category - Non-executive, Independent] of the Company, fora fixed second term of consecutive two (2) years i.e. from the conclusion of Thirty-first (31st) Annual General Meeting up to the conclusion of Thirty-third (33rd) Annual General Meeting of the Company to be held for the financial year 2018-2019.
d) the appointment of CAJayesh M. Parmar (DIN-00802843), Director [Category-Non-executive, Independent] of the Company, for a fixed second term of consecutive two (2) years i.e. from the conclusion of Thirty-first (31st) Annual General Meeting up to the conclusion of Thirty-third (33rd) Annual General Meeting of the Company to be held for the financial year 2018-2019.
Apart, from the aforesaid change/s in the Independent Director/s of the Company,
a) the Board of Directors at its 165th meeting held on 28th September 2017, based on the recommendations vide resolution passed by the Nomination & Remuneration Committee at its 34th meeting held on 28th September 2017, has approved and appointed, Mr. Rooshad Russi Patel, (DIN - 00473945), as an Additional Director, [Category - Non-executive, Independent], of the Company, effective 29th September 2017, to hold the office till the conclusion of Thirty-second (32nd) Annual General Meeting of the Company.
b) Mrs. Neelam Naresh Kothari, (DIN -06709241), Director [Category - Non-executive, Independent] of the Company continued to be a Director on the Board of the Company.
V. DIRECTOR - RETIREMENT BY ROTATION:-
Pursuantto Section 152 of Companies Act, 2013 read with the Companies [Appointment and Qualification of Directors] Rules, 2014 (as amended), Mr. Surendra Kumar Gupta (DIN -00054836) Deputy Managing Director [Category - Non-Promoter & Executive] of the Company, retires by rotation and being eligible, offers himself for re-appointment. The Board recommends his re-appointment as a Director (with existing designation and category) of the Company in the interest of the Company.
VI. PROPOSED CHANGES AMONGST DIRECTOR/S PLACED BEFORE THE MEMBERS FOR THEIR APPROVAL:-
The term of Mr. Rooshad Russi Patel, (DIN - 00473945), as an Additional Director [Category - Non-executive, Independent], of the Company, expiring at the conclusion of the ensuing Thirty-second (32nd) Annual General Meeting of the Company.
The Board recommends appointment of Mr. Rooshad Russi Patel, (DIN - 00473945), as a Director, [Category - Non-executive, Independent] of the Company, to hold the office for a fixed first term of consecutive five (5) years, i.e. from the conclusion of Thirty-second (32nd) Annual General Meeting to be held for the financial year 2017-2018, up to the conclusion of Thirty-seventh (37th) Annual General Meeting of the Company to be held for the financial year 2022 - 2023, in the interest of the Company.
The Company has received a Notice in writing under Section 160 of the Companies Act, 2013 from a Member proposing the candidature of Mr. Rooshad Russi Patel, (DIN -00473945), for the office of a Director of the Company.
The Company has also received the self-declaration/s from Mr. Rooshad Russi Patel, (DIN -00473945), to the effect that, (i) he was oris not disqualified from being appointed as a Director of the Company in terms of the provisions of Section 164 of the Companies Act, 2013 and have submitted his consent to act as a Director of the Company; (ii) he was oris not debarred from holding the office of a Director pursuant to any order of the SEBI or such other authority in terms of SEBIâs Circular No. LIST/COMP/14/2018-19 dated 20th June 2018 on the subject âEnforcement of SEBI Orders regarding appointment of Directors by listed companiesâ; and, (iii) he meets the criteria of independence as provided in Section 149(6) of the Act and Regulation 16(1)(b) and 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended) [âListing Regulationsâ].
[Brief profile of all the Dlrector/s Including those seeking appointment or re-appolntment Is given In the Corporate Governance Report]
11. PROPOSED CHANGE/S PURSUANT TO THE SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) (AMENDMENT) REGULATIONS, 2018, PLACED BEFORE MEMBERS FOR THEIR APPROVAL:-
a) Based on the Report of the Committee on Corporate Governance chaired by Mr. Uday Kotak, the Securities and Exchange Board of India (SEBI) amended the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 [âListing Regulationsâ], vide SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018 published in the Official Gazette on 9th May 2018. Save as otherwise specifically provided for in these regulations, they shall come into force from 1st April 2019. According to the new provisions, a person who has attained the age of seventy-five (75) years can continue directorship in a listed company as a non-executive director only after the concerned listed company has taken the approval of its shareholders (members) by way of a special resolution. The said provision comes into effect fromlstApril 2019.
Mr. Ravi Bhushan Bhardwaj, [DIN-00054700], Non-executive Chairman of the Company, [DOB -23rd October 1943], is attaining the age of seventy-five (75) years, on 23rd October 2018, whereas, Dr. Edayathimangalam Ramnath Chandra Shekar, commonly known as Dr. E. R. C. Shekar, [DIN -00013670], Non-executive & Independent Director of the Company, [DOB-20th April 1932], has already attained the age of seventy-five (75) years and is now 86 years old.
The Nomination & Remuneration Committee and in turn, the Board of Directors of the Company at their respective meeting/s held on 13th August 2018 has, unanimously approved and recommended to the Shareholders (Members) of the Company for their approval at the ensuing Thirty-second (32nd) Annual General Meeting of the Company, by way of Special Resolution, the continuation of Mr. Ravi Bhushan Bhardwaj [DIN - 00054700], as the Non-executive Chairman of the Company, on attaining the age of seventy-five(75) years on 23rd October 2018, beyond 1st April 2019, till the cessation as a Director of the Company, and also, the continuation of Dr. E. R. C. Shekar, [DIN-00013670], who has already attained the age of seventy-five (75) years, as a Nonexecutive & Independent Director of the Company, beyond 1st April 2019, till the expiry of existing tenure, as an Independent Director, of the Company, (till the conclusion of Thirty-sixth (36th) Annual General Meeting of the Company to be held for the financial year 2021-2022.
b) Based on the Report of the Committee on Corporate Governance chaired by Mr. Uday Kotak, the Securities and Exchange Board of India (SEBI) amended the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 [âListing Regulationsâ], vide SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018 published in the Official Gazette on 9th May 2018. Save as otherwise specifically provided for in these regulations, they shall come into force from 1st April 2019. According to the new provisions, the approval of shareholders (members) by special resolution shall be obtained every year, in which the annual remuneration payable to a single non-executive director exceeds fifty per cent of the total annual remuneration payable to all non-executive directors, giving details of the remuneration thereof. The said provision comes into effect from 1st April 2019.
The Nomination & Remuneration Committee and in turn, the Board of Directors of the Company, at their respective meeting/s held on13th August 2018, noted and considered, to change or modify the methodology for payment of remuneration by way of commission to Non-executive Director/s of the Company in line with the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018.
Accordingly, the Nomination & Remuneration Committee and in turn, the Board of Directors of the Company, at their respective meeting/s held on 13th August 2018, has, unanimously approved and recommended to the Shareholders (Members) of the Company for their approval at the ensuing Thirty-second (32nd) Annual General Meeting of the Company, by way of Ordinary Resolution, the payment of remuneration by way of commission, not exceeding a sum equivalent to one percent (1%) of net profits of the Company per annum, calculated in accordance with the provisions of Section198 of the Act, be paid to, and be distributed amongst all the Non-executive Director/s of the Company, as may be determined by the Board of Directors of the Company, from time to time, in compliance of the applicable provisions of the CompaniesAct, 2013 read with the rules made thereunder and the Listing Regulations, (as amended), subject to, no single Non-executive Directorof the Company, be paid, a sum exceeding fifty percent (50%) of total annual remuneration payable to all Non-executive Director/s of the Company, for the time being in force, fora period of five (5) financial years, effective financial year 2018-2019 till the financial year 2022-2023.
12. NUMBER OF MEETINGS OF THE BOARD
Six (6) meetings of the Board of Directors of the Company were held on (i) 4th May 2017, (ii) 26th May 2017, (iii) 14th August 2017, (iv) 28th September 2017, (v) 11th November 2017 and (vi) 12th February 2018 during the financial year2017-2018 ended 31st March 2018 under review.
13. DIRECTORSâ RESPONSIBILITY STATEMENT
The Board of Directors confirms:-
i. That in the preparation of the Annual Accounts (Financial Statements), the applicable Accounting Standards had been followed along with properexplanation, relating to material departures;
ii. That the Directors 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 and of the profit of the Company for that financial year;
Hi. That the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv. That the Directors had prepared the Annual Accounts (Financial Statements) on a going concern basis;
v. That the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls were adequate and operating effectively; and
vi. That the Directors had devised proper system to ensure compliance with the provisions of all applicable laws and regulations and that such systems were adequate and operating effectively.
14. COSTRECORDS
Pursuant to recent amendments to the Companies (Accounts) Rules, 2014 vide MCAâs Notification dated 31st July 2018, the Board of Directors do confirm that the maintenance of cost records as specified by the Central Government under Sub-section (1) of Section 148 of the CompaniesAct, 2013, is required by the Company and accordingly, such cost accounts and records are made and maintained by the Company for the financial year 2017-2018 ended 3151 March 2018.
15. COMMITTEE(S) OF THE BOARD
The Company has constituted all the requisite Committee(s) of the Board, namely Audit Committee, Nomination & Remuneration Committee, Stakeholdersâ Relationship Committee, Corporate Social Responsibility (CSR) Committee, Share Transfer Committee, Risk Management Committee and Project Monitoring Committee, pursuant to the provisions of the CompaniesAct, 2013 read with the rules made there under and Listing Regulations. The details of its constitution, objective or terms of reference and other related information has been provided under the Corporate Governance Report, which forms part and parcel of the Boardâs Report.
16. AUDITORS
I. STATUTORY AUDITORS AND THEIR REPORT:-
lt may be recalled that the Shareholders (Members) of the Company at its Thirtieth (30th) Annual General Meeting held on 23rd September 2016, has approved and appointed, M/s. S. S. Kothari Mehta & Co., Chartered Accountants, New Delhi, (ICAI Firm Registration No. 000756N, Peer Review Certificate No. 008927), as the Statutory Auditors of the Company, for a fixed first term of two (2) financial years from the conclusion of Thirtieth (30th) Annual General Meeting until the conclusion of Thirty-second (32nd)
Annual General Meeting of the Company, to be held for the financial year 2017-2018, subject to ratification by the Shareholders (Members) of the Company, at every subsequent Annual General Meeting of the Company.
Accordingly, the fixed first term of M/s. S.S. Kothari Mehta & Co., Chartered Accountants, New Delhi (ICAI Firm Registration No.000756N, Peer Review Certificate No. 008927), as the Statutory Auditors of the Company, is expiring at the ensuing Thirty-second (32nd) Annual General Meeting of the Company.
The provisions of Section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014 (as amended) regarding rotation of Statutory Auditors are applicable to the Company.
Accordingly, the Company may consider the re-appointment of M/s. S.S. Kothari Mehta & Co., Chartered Accountants, New Delhi (ICAI Firm Registration No.000756N, Peer Review Certificate No.008927), as the Statutory Auditors of the Company, for a fixed second term of not more than five (5) consecutive financial years.
Moreover, the Company is not required to place the matter relating to appointment including re-appointment of the Statutory Auditors of the Company, for ratification, by the Shareholders (Members), at every subsequent Annual General Meeting of the Company, in terms of deletion of First Proviso to Section139(1) of Companies Act, 2013vide the Companies (Amendment) Act, 2017 effective 7th May 2018.
Messers S.S.Kothari Mehta & Co., Chartered Accountants, New Delhi (ICAI Firm Registration No. 000756N, Peer Review Certificate No. 008927), the Statutory Auditors have furnished a Certificate of their consent, qualification and eligibility for appointment including re-appointment under Section 139 and 141 of the Companies Act, 2013 read with the rules and regulations made thereunder.
Accordingly, the Audit Committee at its 69th Meeting held on 13th August 2018, and in turn, on the basis of their recommendations, the Board of Directors of the Company at its 169th Meeting held on 13th August 2018, has duly noted, considered, reviewed, approved and recommended, the appointment including payment of remuneration, of M/s. S.S. Kothari Mehta & Co., Chartered Accountants, New Delhi (ICAI Firm Registration No.000756N, Peer Review Certificate No.008927), as the Statutory Auditors of the Company, for a consecutive two (2) financial years, i.e. to hold office from the conclusion of this Thirty-second (32nd) Annual General Meeting till the conclusion of the Thirty-fourth (34th) Annual General Meeting of the Company to beheld for the financial year 20192020, to the Shareholders (Members) at their Thirty- second (32nd) Annual General Meeting of the Company, for their approval thereof.
The Auditorsâ Report submitted by Messers S. S. Kothari Mehta & Co., Chartered Accountants, New Delhi (ICAI Firm Registration No. 000756N, Peer Review Certificate No. 008927), the Statutory Auditors, to the Shareholders (Members) of the Company, for the financial year 2017-2018 ended 31st March 2018 do not contain any qualification. The observations made by the Statutory Auditors in their report are self-explanatory and have also been further amplified in the Notes to the financial statements and as such, do not call for any explanation/s by the Company.
During the financial year 2017-2018 ended 3151 March 2018 under review:-
a) there is no fraud occurred, noticed and/or reported by the Statutory Auditors under Section 143(12) of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014 (as amended);
b) the observations made by the Statutory Auditors on the financial statements for the financial year 2017-2018 ended 31st March 2018 under review including the affairs of the Company are self-explanatory and do not contain any qualification, reservation, adverse remarks or disclaimer thereof.
As such, no specific information, details or explanations required to be given or provided by the Board of Directors of the Company.
II. COST AUDITORS AND THEIR REPORT:-
Pursuant to Section 148 of the Companies Act 2013, the Board of Directors, on the recommendations of the Audit Committee, of the Company, has approved and re-appointed, M/s. G. R. Paliwal & Company, Cost Accountants, Nagpur, (Membership No. 7815), as the Cost Auditors of the Company for the financial year 2018-2019 ending 31st March 2019 and also recommended their remuneration to the Shareholders (Members) for their ratification at the ensuing Thirty-second (32nd) Annual General Meeting of the Company.
The said Cost Auditors have furnished a Certificate of their eligibility for appointment including re-appointment pursuant to Section 141(3)(g), Section 148(5) of the Companies Act, 2013 read with the rules made there under, Certificate for independence and armsâ length relationship with the Company and have confirmed about their not being disqualified for such appointment including re-appointment within the meaning of Section 141(3) of the Companies Act, 2013.
Pursuant to the applicable provisions of the Act read with the rules made there under, the Statements, Annexures, Proforma, annexed to the Cost Audit Report in Form No. CRA-3, to be submitted by the said Cost Auditors with the Central Government in e-Form No. CRA-4, for the financial year 2016-2017 ended 31st March 2017, was filed vide SRN G52121639 dated 5th September 2017.
Moreover, the Statements, Annexures, Proforma, annexed to the Cost Audit Report in Form No. CRA-3, to be submitted by the said Cost Auditors with the Central Government in e-Form No. CRA-4, for the financial year 2017-2018 ended 31st March 2018, do not contain any adverse remarks and qualifications, is self-explanatory and do not call for any further explanation/s by the Company.
III. SECRETARIAL AUDITORS AND THEIR REPORT:-
M/s. Mukesh Parakh & Associates, Company Secretaries, Nagpur, [Membership No. FCS-4343 & Certificate of Practice No. 13693], were appointed as the Secretarial Auditors of the Company, for the financial year 2017-2018 ended 3151 March 2018.
The Secretarial Audit Report in Form No. MR-3 submitted by the said Secretarial Auditors is attached herewith as an Annex - B and forms part and parcel of the Boardâs Report, do not contain any adverse remarks and qualifications, is self-explanatory and do not call for any further explanation/s by the Company.
Further, the Board of Directors of the Company at its 169th meeting held on 13th August 2018, on the recommendations of the Audit Committee, of the Company, has approved and re-appointed, M/s. Mukesh Parakh &Associates, Company Secretaries, Nagpur, [Membership No. FCS-4343 & Certificate of Practice No. 13693], as the Secretarial Auditors of the Company for the financial year 2018-2019 ending 31st March 2019.
IV. INTERNAL AUDITORS AND THEIR REPORT:-
M/s. AKMK & Associates, Chartered Accountants, Surat [ICAI Firm Registration No.136206W] and M/s. Nitin Alshi & Associates, Chartered Accountants, Nagpur, [ICAI Firm Registration No.116875W] were appointed as the Internal Auditors and Joint Internal Auditors, respectively, of the Company, for the financial year 2017-2018 ended 31st March 2018, pursuant to the provisions of Section 138 of the Companies Act, 2013 read with Rule 13 of the Companies (Accounts) Rules, 2014 and relevant SEBI Regulations including the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended).
The Internal Audit finding/s and report/s submitted by the said Internal Auditor/s, from time to time, during the financial year 2017 2018 ended 31st March 2018, to the Audit Committee and Board of Directors of the Company, do not contain any adverse remarks and qualifications, is self-explanatory and do not call for any further explanation/s by the Company.
M/s. AKMK & Associates, Chartered Accountants, Surat, [ICAI Firm Registration No. 136206W] will continue to act as the Internal Auditors of the Company, as approved and appointed, on the recommendations of the Audit Committee of the Company, by the Board of Directors of the Company, at its 153rd meeting held on 12th August 2015, for a period of five (5) financial year/s, from the financial year 2015-2016 to the financial year 2019-2020 ending 31st March 2020.
Further, the Board of Directors of the Company, on the recommendations of the Audit Committee of the Company, at its 169th meeting held on 13th August 2018, has approved and appointed, M/s. Nitin Alshi & Associates, Chartered Accountants, Nagpur, [ICAI Firm Registration No.116875W], as the Joint Internal Auditors of the Company, for the financial year 2018-2019 ending 31st March 2019.
17. PERSONNEL/ PARTICULARS OF EMPLOYEES
The information required to be provided pursuant to the provisions of Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (as amended), are given below:-
a) The ratio of the remuneration of each Executive Director to the median remuneration of the Employees of the Company for the financial year 2017-2018 ended 31st March 2018:-
Executive Directors |
Ratio to Median remuneration |
Mr. Pranav Bhardwaj - Managing Director |
24.85:1 |
Mr. Surendra Kumar Gupta - Deputy Managing Director |
17.30:1 |
Mr. R. Muralidhar - Director (Finance) & CFO |
14.72:1 |
Mr. Ramchandra Vasant Dalvi - Whole-time Director |
11.70:1 |
b) The percentage increase in remuneration of each Director, Chief Executive Officer, Chief Financial Officer, Company Secretary in the financial year 2017-2018 ended 3151 March 2018:-
Directors, Chief Executive Officer, Chief Financial Officer and Company Secretary |
% Increase In remuneration over previous financial year |
Mr. Pranav Bhardwaj - Managing Director |
10.96 |
Mr. Surendra Kumar Gupta - Deputy Managing Director |
13.06 |
CA R. Muralidhar - Executive Director (Finance) & Chief Financial Officer (CFO) |
11.48 |
Mr. Ramchandra Vasant Dalvi - Executive Director (Works) |
7.38 |
CS Pranab Panigrahi - Company Secretary |
3.17 |
c) The percentage increase in the median remuneration of employees in the financial year 2017-2018 ended 31st March 2018: 8.40%
d) The number of permanent employees on the rolls of Company as on 31st March 2018:1,235
e) The average percentile increase already made in the salaries of employees other than the managerial personnel in the lastfinancial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:
- The average annual increase was about 8.40%. During the financial year, the total increase is approximately 3.77% after accounting for promotions and other event based compensation revisions.
- The increase in the managerial remuneration for the financial year 2017-2018 ended 31st March 2018 was around 10.51%, other than commission based on net profit as per the terms of their appointment.
f) Affirmation : The remuneration paid to Director/s, Key Managerial Personnel and Employees of the Company is as per the remuneration policy of the Company.
g) The details or information as per Section 197 of the Companies Act, 2013 (âthe Actâ) read with Rule 5(2) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 (as amended), forms part of this report. However, in terms of Section 136(1) of the Act, the Report and Financial Statements are being sent to all the Shareholders (Members) and others entitled to receive the same, excluding the statement of particulars of employees. The statement is available for inspection by the Shareholders (Members) at the Registered Office of the Company during business hours on any working day up to the date of the ensuing Thirty-second (32nd) Annual General Meeting. If any Shareholder (Member) interested in obtaining a copy thereof, such Shareholder (Member) may write to the Company Secretary, whereupon a copy would be sent to the concerned Shareholder (Member) of the Company.
18. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGES EARNINGS AND OUTGO
The particulars relating to energy conservation, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 134(3)(m) of the CompaniesAct, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are given in the Annex - C to this report.
19. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDERSECTION 186 OF THE COMPANIES ACT, 2013
Name of the related party and nature of relationship |
Nature of contracts/ arrangements/ transactions |
Duration ofcontracts/ arrangements/ transactions |
Salient terms of the contracts/ arrangements / transactions, including the value, if any |
Dates of approval by the Board, ifany |
Amount paid as advance, ifany |
Sunflag Power Limited -Wholly-owned subsidiary |
Interest Free Unsecured Loan |
Continuing |
Not Applicable |
26.05.2017 and ratified on 28.05.2018 |
Rs. 12,93,841 for the financial year 2017-2018 |
Ramesh Sunwire Private Limited -Associate (JV) Company |
Additional Investment in Equity Share Capital |
Not Applicable |
Not Applicable |
26.05.2017, 11.11.2017 and ratified on 28.05.2018 |
Rs. 1,50,00,000 during the financial year 2017-2018 |
20. PARTICULARS OF CONTRACTS ORARRANGEMENTS WITH RELATED PARTIES UNDERSECTION 188 OF THE COMPANIESACT, 2013
a) Details of contracts or arrangements or transactions not at armâs length basis:-There are no such transactions and hence not applicable.
b) Details of contracts or arrangements or transactions at armâs length basis:-
The details of contracts or arrangements or transactions in the ordinary course of business and at armâs length basis are as given below:-
Form No. AOC - 2
Pursuant to clause (h) of sub-section (3) of Section 134 of the CompaniesAct, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014(asamended):-
Name of the related party and nature of relationship |
Nature ofcontracts/ arrangements/ transactions |
Duration of contracts/ arrangements/ transactions |
Salient terms of the contracts / arrangements/ transactions, including the value, ifany |
Dates of approval by the Board, if any |
Amount paid as advance, if any |
Haryana Television Limited |
Ordinary Course of Business and at Armâs length |
Continuing |
Refundable Security deposit |
26.05.2017 and ratified on 28.05.2018 |
Rs. 21,07,573 as on 31st March 2018 |
Haryana Television Limited |
Ordinary Course of Business and at Armâs length |
Continuing |
Rent paid for Companyâs Godown at Faridabad |
26.05.2017 and ratified on 28.05.2018 |
Rent:Rs. 49,50,750 for the financial year 2017-2018 |
Mr. Suhrit Bhardwaj |
Ordinary Course of Business and at Armâs length |
Continuing |
Refundable Security deposit |
26.05.2017 and ratified on 28.05.2018 |
Rs. 10,00,000 as on 31st March 2018 |
Mr. Suhrit Bhardwaj |
Ordinary Course of Business and at Armâs length |
Continuing |
Rent paid for Companyâs Transit House |
26.05.2017 and ratified on 28.05.2018 |
Rent: Rs.5,17,500 for the financial year 2017-2018 |
21. LISTING OF SHARES
The Equity Shares in the capital of the Company continued to be listed with and actively traded on the BSE Limited (BSE) and National Stock Exchange of India Limited (NSE). The listing fees for the financial year 2018-2019 ending 31st March 2019 have been paid to both the Stock Exchanges (BSE & NSE) within the normal stipulated time.
22. DEMATERIALISATION OF SHARES
As on 31st March 2018, there were approximately 1104.97 lakhs Equity Shares dematerialised through depositories viz. National Securities Depository Limited and Central Depository Services (India) Limited, which represents about 61.3127% of the total issued, subscribed and paid-up capital of the Company.
23. EXTRACT OF THE ANNUAL RETURN
The extract of the Annual Return for the financial year 2017-2018 ended and as on 31st March 2018 pursuant to the provisions of Section 92(3) of the CompaniesAct, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 (as amended) is furnished in the Annex - D attached to this report, which forms an integral part of the Boardâs Report of the Company.
24. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND
The detailed information related to the dividend declared by the Company in the previous year/s together with the amount remained unpaid or unclaimed, its transfer to the Investor Education and Protection Fund are provided in Notes annexed to the Notice convening the Thirty-second (32nd) Annual General Meeting of the Company. To avoid repetition, the Shareholders (Members) of the Company are advised to refer the said Notes for detailed information on the subject matter.
25. TRANSFER OF SHARES PERTAINING TO UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF) Ministry of Corporate Affairs(MCA) has notified âInvestor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016â (the Rules) effective 7th September 2016. The said Rules, amongst other matters, contain provisions for transfer of all shares in respect of which dividend has not been claimed for seven (7) consecutive years or more, in the name of âIEPF Demat Accountâ. Accordingly, the Company has transferred 30,91,699 Equity Shares constituting about 1.716% of the total issued, subscribed and paid-up share capital, including of 28,050 Equity Shares of âUnclaimed Suspense Accountâ, which was created pursuant to Regulation 39 of the SEBI (LODR) Regulations, 2015 effective 3rd August 2015. The voting rights on these shares shall remain frozen till the rightful owner of such shares claim the Equity Shares from the IEPF Authority. The IEPF Authority has laid down the detailed procedure for claiming both Dividend as well as Equity Shares, by the Shareholders (Members) or Investors of the Company.
26. CORPORATE GOVERNANCE
The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance practices or requirements as set out in the Listing Regulations by the SEBI enforced through the Stock Exchange/s (BSE & NSE). The Company has also implemented several best Corporate Governance practices as prevalent globally.
Your Board of Directors are pleased to report that your Company has complied with the SEBI Guidelines on Corporate Governance for the financial year 2017-2018 ended & as of 31st March 2018 relating to the Listing Regulations. ACertificate from M/s. Mukesh Parakh & Associates, Company Secretaries, Nagpur, (Membership No. FCS-4343, Certificate of Practice No. 13693) confirming compliance with conditions as stipulated under Listing Regulations is annexed to the Corporate Governance Report, which forms an integral part of the Boardâs Report of the Company.
27. CORPORATE SOCIAL RESPONSIBILITY(CSR)
The Companyâs Steel plant is located at Bhandara Road, Village Warthi, Tahsil Mohadi, District Bhandara, in the State of Maharashtra. It is located at a distance of about 12 kilometers from the Bhandara District Headquarters. The unit is surrounded by about three (3) villages in the radius of 5 Kms. The Company is having its captive Coal Mines at Belgaon, Village Belgaon, Tahsil Warora, District Chandrapur, in the State of Maharashtra. The Companyâs CSR activities as per its CSR Policy are strictly implemented in all the area/s close to the manufacturing facilities (Steel Plant) and Coal Mines of the Company.
All the activities and programmes covered under SISCO CSR are being monitored by the CSR Committee and are implemented by the CSR Sub-committee of the Company.
Sunflag Foundation [CIN - U74999MH2017NPL289961] - a Section 8 Company (not for profits) was incorporated on 27th January 2017 as a Wholly-owned Subsidiary of Sunflag Iron and Steel Company Limited. The said Company was appointed as an Implementing Agency to carry out the Corporate Social Responsibility (CSR) activities as per CSR Policy of the Company within the framework of applicable provisions of law.
Accordingly, Sunflag Foundation is implementing, monitoring all the CSR activities, budget and accounts for the same, the manner in which the CSR amount has been spent and/or to be spent, and in turn shall furnish its report to the Company on regular basis. As required, the details pertaining to the Corporate Social Responsibility (CSR) activities together with details of expenditure is enclosed herewith as an Annex-A which forms an integral part of Boardâs Report of the Company.
28. CODES OF CONDUCT OF BUSINESS PRINCIPLES & ETHICS AND PREVENTION OF INSIDER TRADING AND OTHER CODES I POLICIES
The Board of Directors are pleased to report that your Company has complied with the:-
i) Code of Conduct of Business Principles and Conduct;
ii) Code of Prevention of Insider Trading in Sunflag Securities by the designated persons [Insider] (as amended from time to time);
iii) Code for Vigil Mechanism-Whistle Blower Policy;
iv) Code for Independent Directors;
v) Corporate Social Responsibility (CSR) Policy;
vi) Risk Management Policy;
vii) Policy on Document Preservations (Regulation 9 of the SEBI (LODR) Regulations, 2015);
viii) Policy for determining ofâmaterialâSubsidiary (Regulation 16 of the SEBI (LODR) Regulations, 2015);
ix) Policy on materiality of related party transaction/s and on dealing with related party transaction/s (Regulation 23 of the SEBI (LODR) Regulations, 2015); and
x) Policy for determination of materiality, based on specified criteria and accordingly, grant authorisation for determination of materiality of events (Regulation 30 of the SEBI (LODR) Regulations, 2015).
The aforesaid code(s) and policy(ies) are available on the Companyâs Website www.sunflagsteel.com.
29. MATERIAL DEVELOPMENT IN HUMAN RESOURCES HUMAN RESOURCES
An improvement in employee productivity is the key focus area for the Company, whereby achieving benchmark performance in this area, year on year, is a major goal for the Company led by its Human Resource Department.
The emphasis on the people of the organisation stems from the belief that human resource is the key factor to achieve success in any business. Sunflag Steel has always been a front runner in its human resource practices with many pioneering policies in the area of human resources. Our human resource practices are based on the values of Sunflag Steel with emphasis on respect, dignity, unity and fostering a culture of togetherness.
Employeesâ competencies and skills were enhanced by exposing them to several internal and external training programmes. Various measures were taken to improve motivation level of each employees. As a result, many improvements were seen, where initiatives were undertaken to bring about a change in culture and mind set of the workforce of the Company.
SEXUAL HARASSMENT OF WOMEN ATTHE WORKPLACE
Sunflag Iron and Steel Company Limited (âthe Companyâ) has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees, etc.) are covered underthis Policy.
Pursuant to recent amendment to the Companies (Accounts) Rules, 2014 vide MCAâs Notification dated 31st July 2018, the Board of Directors do confirm that the Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 [14 of 2013],
The Certificate by the Deputy Managing Director and Chairman, Audit Committee of the Company, to that effect is enclosed herewith as an Annex - E and forms an integral part of the Boardâs Report of the Company.
HEALTHANDSAFETY
Health and safety remains the Companyâs highest priority and Sunflag Steel aspires to be the steel industry benchmark in health & safety. The Health & Safety of the workforce is of utmost importance and hence the need was felt for the same to percolate from the top leadership in theform of learning and experience-sharing.
Several initiatives were undertaken during the financial year to improve health & safety standards of the Company. Steps were taken to improve competency and capability for hazard identification and risk management. Further, departmental safety co-ordinator/s are at place for monitoring & training on safety related matters at shop-floor. The Safety Committee and Apex Committee are available for periodical review on health, safety & environment of all department/s of the Company. As a part of regular assignment, training programs on safety are being organised for New Joinee, as well as for regular employees and contract labour/s, and as a part of this, mock-drills are conducted for practical exposure to meet emergency need on quarterly basis. The Hand book on safety awareness are distributed to all employees of the Company as well as it is displayed at Notice Board/s at the Works and Offices of the Company.
30. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has in place adequate internal control systems and procedures commensurate with the size and nature of business. These procedures are designed to ensure:-
(a) that all assets and resources are used efficiently and are adequately protected;
(b) that all the internal policies and statutory guidelines are complied with; and
(c) the accuracy and timing of financial reports and management information is maintained.
31. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY
During the financial year 2017-2018 ended 31st March 2018 under review, there are no material changes and commitments, 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 relates and the date of this Boardâs Report. As such, no specific details are required to be given or provided.
32. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYâS OPERATIONS IN FUTURE
During the financial year 2017-2018 ended 31st March 2018 under review, no significant and material order is passed by any of the Regulators or Courts or Tribunals impacting the going concern status and the Companyâs operations in future. As such, no specific details are required to be given or provided.
33. OTHER DISCLOSURES
The details regarding Board and its Committee Meeting/s, Evaluation of Board performance, Self-Declaration by the Independent Director/s, Remuneration policy for Director/sand KMPâs, Induction, training and familiarisation programmes for the Director/s including Independent Director/s and such other related information has been provided under the Corporate Governance Report, which forms an integral part of the Boardâs Report of the Company.
34. ENCLOSURES
a) Annex-A : Annual Report on Corporate Social Responsibility (CSR) activities together with expenditure details;
b) Annex-B : Secretarial Auditors Report in Form No. MR-3;
c) Annex-C : Report on Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo;
d) Annex-D : Extract of Annual Return for the financial year 2017-2018 ended & as of 31st March 2018 in the prescribed Form No. MGT-9;and
e) Annex-E : Certificate pursuant to Section 22 & 28 of the Sexual Harassment of Women at Workplace(Prevention, Prohibition and Redressal) Act, 2013.
35. ACKNOWLEDGMENT
The Board of Directors acknowledge with thanks, co-operation and assistance received by the Company from the Shareholders (Members), Consortium and other Banks or Lenders, Central, State Government and Local Authorities, and other external agencies involved in the overall business operations of the Company.
The Board of Directors also record their appreciation of the dedication of all the employees of the Company for their support and commitments to ensure that the Company continues to grow.
For and on behalf of the Board
Dr. E.R.C.Shekar Surendra Kumar Gupta
Nagpur Director Deputy Managing Director
13.08.2018 DIN-00013670 DIN-00054836
Mar 31, 2017
To
The Shareholders
The Board of Directors of the Company hereby present the Thirty-first (31st) Annual Report together with the Audited Financial Statements for the year 2016-2017 ended 31st March 2017.
During the financial year under review, the profitability of Steel industry was under stress due to drop in the sales realizations as a result of reduction in demand. Even though, there was some reductions in the prices of few raw materials but the overall gap between the realizations and cost of production has increased resulting in the slight reduction of profit. However, with the continuous efforts by the Companyâs Management towards strict cost reduction and better financial / working capital management, has helped to improve its overall performance in order to survive in the difficult market conditions.
1. FINANCIAL RESULTS
The summarized financial results for the year are as follows : (Rs, in |_akh)
Sr. |
Particulars |
For the financial year ended |
|
No. |
31st March 2017 |
31st March 2016 (#) |
|
1 |
Total Income |
172,098 |
180,116 |
2 |
Total Expenditure |
156,782 |
161,388 |
3 |
Gross Profit |
15,316 |
18,728 |
4 |
Finance Cost |
3,506 |
6,495 |
5 |
Profit before Depreciation |
11,810 |
12,233 |
6 |
Depreciation |
3,319 |
3,564 |
7 |
Profit before exceptional and extraordinary items and Tax |
8,491 |
8,669 |
(#) The figures pertaining to the financial year 2015-2016 are after giving effect of the Ind AS adjustments.
2. FINANCE
Your Company has ended the financial year with a profit after tax of Rs, 6,517 Lakhs. After taking into account the brought forward profit of Rs, 42,243 Lakhs, your Company has carried forward an amount of Rs, 48,760 Lakhs to the Balance Sheet.
3. DIVIDEND
There is a continuous need of capital to upgrade product and its process with latest technology. The Company is always in the process of upgrading its facilities with certain capital projects either through renovation, addition, expansion or modernisation. Simultaneously, the Company is required to infuse its internal accruals to comply with the requirements of the lending banks financing for such capital projects.
As such, the Board of Directors does not recommend any dividend on the equity shares for the financial year 2016-2017 ended 31st March 2017.
4. SHARE CAPITAL
During the financial year under review, there is no change in the capital structure of the Company and accordingly, the issued, subscribed and paid-up share capital of the Company stand at Rs, 1,802,194,480 as on 31st March 2017.
5. MARKET SCENARIO
Despite various initiatives of the Indian Government, domestic steel companies are facing stiff competition due to dumping from China, Korea and Japan. Moreover, there was no substantial increase in demand from automobile and auto component industries. However, it is expected to improve the current market scenario in the days to come, particularly in view of implementation of GST. SUNFLAE STEEL is continuing to develop new high value grades of alloy steel to cater the needs of domestic as well as international markets in addition to existing ones.
6. COMPANYâS WORKING / OPERATIONS
During the financial year under review, the operational (production) details of the Company are as under (Production in MT and Power in Lakh kWh) :
Sr No |
Particulars |
Financial Year 2016 - 2017 |
Financial Year 2015 - 2016 |
1 |
Direct Reduction Plant (I II) |
114,233 |
98,092 |
2 |
Steel Melt Shop |
342,181 |
334,991 |
3 |
Rolled products |
366,417 |
322,504 |
4 |
Mini Blast Furnace (Hot Metal) / Pig Iron |
264,063 |
265,468 |
5 |
Coal (Belgaon Coal Block) |
153,015 |
165,013 |
6 |
Power Plant (Lakh kWh) |
1674.59 |
1598.54 |
7. PROJECTS Steel Plant :
The Company has taken up installation of certain balancing equipment viz., (i) Pulverized Coal Injection System (ii) Refurbishing of Mini Blast Furnace (iii) Capacity Enhancement of Sinter Plant, and (iv) Conversion of Heat Recovery Boiler of DRP-I to Dual Operation of FBC and WHRB. These projects have been initiated with a view to reduce cost of production and improve productivity. The estimated capital outlay was Rs, 113 Crores, of this the Company have already incurred an amount of Rs, 45.00 Crores, during the year under review. Pulverized Coal Injection and boiler is expected to be commissioned in financial year 2017-2018 and others are expected by 1st quarter of financial year 2018-2019.
Subsidiary Companies :
Sunflag Power Limited :
There were no specific developments or updates for reporting to the members and the process of obtaining necessary approvals were continued for implementation and commencement of operations of Hydro Power Project of the Company at Hanol-Tuini in the State of Uttarakhand.
Sunflag Special Steels Limited :
The Company, in absence of viability to continue, has made an application and submitted requisite documents for strike-off (closure) of name of the Company on 27th March 2017 and a confirmation from the Office of the Registrar of Companies, Odisha at Cuttak about the Striking-off of its Name pursuant to Section 248 of the Companies Act, 2013 is awaited.
Khappa Coal Company Private Limited :
In view of order of the Honâble Supreme Court of India dated 24th September 2014, the Khappa & Extn coal block which was allocated to Khappa Coal Company Private Limited, stands de-allocated with immediate effect. The closure of the said Company solely depends upon the outcome of final decision regarding bank guarantee and compensation from the appropriate authorities. Sunflag Foundation
Sunflag Foundation (U74999MH2017NPL289961) - a Section 8 Company (a Company not for profits) was incorporated on 27th January 2017 as a Wholly owned Subsidiary of Sunflag Iron and Steel Company Limited The said Company was appointed as an implementing Agency to carry out the Corporate Social Responsibility (CSR) activities as per CSR Policy of the Company within the framework of applicable provisions of law.
Joint Venture (JV) Companies :
Madanpur (North) Coal Company Private Limited and C T Mining Private Limited :
In view of order of the Honâble Supreme Court of India dated 24th September 2014, the coal block(s) which were allocated to Madanpur (North) Coal Company Private Limited in the state of Chhattisgarh and to C T Mining Private Limited in the state of Jharkhand, stands de-allocated with immediate effect. The closure of the said Company solely depends upon the outcome of final decision regarding bank guarantee and compensation from the appropriate authorities.
Daido D.M.S. India Private Limited :
A Joint Venture (JV) Company between Sunflag, Daido Steel Co. Ltd., Japan and Daido Die and Mold Steel Solutions Co. Ltd., Japan. Sunflag has made an investment of INR 36,000,000/- (INR Three crores sixty lakhs) constituting Twenty percent (20%) in the capital of the said JV Company. The JV Company is engaged in the business of manufacturing, import, export and distribute in die, mould steel (tool steel and other metallic materials), processed products and mould parts.
Ramesh Sunwire Private Limited :
Sunflag jointly with Stumpp Schuele & Somappa Springs Private Limited, Bengaluru has formed and incorporated a Joint Venture (JV) Company - Ramesh Sunwire Private Limited on 31st October 2016 in the state of Maharashtra. The Company has contributed an amount of '' 220,50,000/- towards subscription to share capital in a joint venture company viz. Ramesh Sunwire Private Limited constituting 49% of its equity share holding. The main object of the Company is manufacturing high quality of alloy steel wire for automobile and auto component industries both in domestic and export market.
Present Status of Coal and Minerals Mines :
S N |
Name of Mine |
Area in (Ha.) |
Mineral |
Present Status |
|
1 |
Belgaon Coal Mine, at Village, Balgoan (Deshpande), Tah.Warora, Dist. Chandrapur, Maharashtra |
383.56 |
Coal |
Underground Coal mine having estimated reserves of 8 millions tons (MT) with extractable balance of about 6.5 MT |
|
2 |
Navegaon Manganese Mine at Village Navegaon, Tah. Mohadi, |
15.90 |
Manganese Ore |
Open cast mine with reserves of about 30,000 tons |
|
Dist. Bhandara, Maharashtra |
48.78 |
Manganese Ore |
Application for conversion of Prospecting Licence into Mining Lease is under process |
||
3 |
Warpani Manganese Ore Block at Village Warpani, Tah. Saoner, Dist. Nagpur, Maharashtra |
1419.65 |
Manganese Ore |
Application for conversion of Prospecting Licence into Mining Lease over an area of 439 Ha is under process |
|
4 |
Bande Iron Ore block, at Village Bande, Tah. Ettapalli, Dist. Gadchiroli, Maharashtra |
236.75 |
Iron Ore |
Application for conversion of Prospecting Licence into Mining Lease over an area of 205.75 Ha is under process |
|
5 |
Kodalibad Iron and Manganese Ore Mine Village - Kodalibad, Tah - Noamundi, Dist. - Singhbhum / Jharkhand |
120.00 |
Iron and Manganese Ore |
Mining Lease is yet to be executed |
8. NATURE OF BUSINESS ACTIVITIES AND CHANGES THEREOF
During the financial year 2016-2017 under review, the Board of Directors, though exploring addition to existing business and commercial activities, had neither been explored any change in nature of business and commercial activities for the Company nor there is a change in nature of business and commercial activities of the Company. As such, no specific details regarding change in nature of business activities are required to be given or provided.
9. PUBLIC DEPOSITS
During the financial year 2016-2017 under review, the Company has neither invited nor accepted any public deposits within the meaning of Section 73 and 74 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 (as amended). As such, no specific details prescribed in Rule 8(1) of the Companies (Accounts) Rules, 2014 (as amended) are required to be given or provided.
10. DIRECTORS AND KEY MANAGERAIL PERSONNEL
The changes amongst the Directors including the Executive Directors and Key Managerial Personnel during the period are as follows :-
I. CHANGES AMONGST THE PROMOTER DIRECTOR/S :
a) Mr. Suhrit Ravi Bhushan Bhardwaj (DIN : 02318190), who had been appointed as an Alternate Director to Mr. Ravi Bhushan Bhardwaj (DIN : 00054700) on the Board effective 7th November 2015, ceased to be an Alternate Director effective 28th May
2016, as the Original Director returned to India.
b) Mr. P. B. Bhardwaj, (DIN : 00136076) ceased to be a Director (Category - Promoter, Non-executive Chairman) of the Company due to death In London on 6th November 2016. The Board places on records its appreciation for wide contributions of Late Mr. P. B. Bhardwaj since inception of the Company.
c) Mr. Vinod Kumar Kapur (DIN : 05256912), who was appointed as an Alternate Director to Mr. P. B. Bhardwaj, (DIN : 00136076), Director (Category - Promoter, Non-executive Chairman) of the Company, effective 8th February 2016, ceased to be a Alternate Director effective 6th November 2016 due to death of an Original Director.
d) In view of (b) above, the Board of Directors at its 159th meeting held on 12th December 2016 has appointed Mr. Ravi Bhushan Bhardwaj, (DIN : 00054700), Director (Category - Promoter, Non-executive Vice-Chairman) of the Company as a Director (Category - Promoter, Non-executive Chairman) of the Company effective 12th December 2016.
e) The Board of Directors at its 161th meeting held on 27th March 2017, based on the recommendations vide resolution passed by the Nomination and Remuneration Committee at its 31st meeting held on 26th March 2017, has appointed Mr. Suhrit Ravi Bhushan Bhardwaj (DIN : 02318190) as an Additional Director (Category - Promoter, Non-executive, Nonindependent) of the Company effective 27th March 2017.
II CHANGES AMONGST THE EXECUTIVE DIRECTOR/S :
a) The Board of Directors at its 164th meeting held on 14th August 2017, based on the recommendations vide resolution passed by the Nomination and Remuneration Committee at its 33rd meeting held on 14th August 2017, has appointed Mr. Surendra Kumar Gupta (DIN : 00054836), as the Deputy Managing Director, designated Key Managerial Personnel, of the Company for a further period of three (3) years effective 30th July 2017.
b) The Board of Directors at its 164th meeting held on 14th August 2017, based on the recommendations vide resolution passed by the Nomination and Remuneration Committee at its 33rd meeting held on 14th August 2017, has appointed CA R. Muralidhar (DIN : 00982212), as an Additional Director effective 14th August 2017 and also, the Whole-time Director, designated as the Executive Director (Finance) & CFO, designated Key Managerial Personnel, of the Company for a period of three (3) years effective 14th August 2017.
c) The Board of Directors at its 164th meeting held on 14th August 2017, based on the recommendations vide resolution passed by the Nomination and Remuneration Committee at its 33rd meeting held on 14th August 2017, has appointed Mr. Ramchandra Vasant Dalvi (DIN : 00012065), as an Additional Director effective 14th August 2017 and also, the Wholetime Director, designated as an Executive Director (Works), designated Key Managerial Personnel, of the Company for a period of three (3) years effective 14th August 2017.
III. CHANGES AMONGST KEY MANAGERIAL PERSONNEL (KMP)
Apart from change referred to in (II) above, there is no other change in the Key Managerial Personnel (KMP) of the Company and accordingly, Mr. Pranav Bhardwaj (Managing Director), Mr. Surendra Kumar Gupta (Deputy Managing Director), CA R. Muralidhar (Executive Director (Finance) & CFO), Mr. Ramchandra Vasant Dalvi (Executive Director (Works) and CS Pranab Panigrahi (Company Secretary) continued to act as the Key Managerial Personnel (KMP) of the Company pursuant to the provisions of Section 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (as amended).
IV. CHANGES AMONSGT THE INDEPENDENT DIRECTORS :
Pursuant to Section 149, 152 of and Schedule IV to the Companies Act, 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014 (as amended) and the SEBI (LODR) Regulations, the first term of Dr. E.R.C. Shekar, Mr. S. Gajendran, CA Jayesh M. Parmer and Mr. Kumar Jitendra Singh, Director/s (Category - Non-executive, Independent) of the Company, for a consecutive three (3) years, expiring at the conclusion of the ensuing Thirty-first (31st) Annual General Meeting of the Company.
V. DIRECTOR - RETIREMENT BY ROTATION :
Pursuant to Section 152 of Companies Act, 2013 read with the Companies (Appointment and Qualification of Directors)
Rules, 2014 (as amended), Mr. Ravi Bhushan Bhardwaj (DIN : 00054700), Director (Category - Non-executive Chairman) of the Company, retires by rotation and being eligible, offers himself for re-appointment. The Board recommends his re-appointment as a Director (Category - Non-executive Chairman) of the Company in the interest of the Company.
VI. PROPOSED CHANGES AMONGST DIRECTOR/S PLACED BEFORE THE MEMBERS FOR THEIR APPROVAL :
a) The term of Mr. Suhrit Ravi Bhushan Bhardwaj (DIN : 02318190), as an Additional Director (Category - Promoter, Nonexecutive, Non-independent) of the Company expiring at the conclusion of the ensuing Thirty-first (31st) Annual General Meeting of the Company. The Board recommends his appointment as a Director (Category - Promoter, Non-executive, Non-independent) of the Company in the interest of the Company.
b) The term of CA R. Muralidhar (DIN : 00982212), as an Additional Director (Category - Non-Promoter, Executive) of the Company expiring at the conclusion of the Thirty-first (31st) Annual General Meeting of the Company. The Board recommends his appointment as a Director (Category - Non-Promoter, Executive) of the Company in the interest of the Company.
c) The term of Mr. Ramchandra Vasant Dalvi (DIN : 00012065), as an Additional Director (Category - Non-Promoter, Executive) of the Company expiring at the conclusion of ensuing Thirty-first (31st) Annual General Meeting of the Company The Board recommends his appointment as a Director (Category - Non-Promoter, Executive) of the Company in the interest of the Company.
d) The Board recommends the re-appointment of Mr. Surendra Kumar Gupta (DIN : 00054836), as the Deputy Managing Director (Category - Non-Promoter, Executive), designated Key Managerial Personnel, of the Company for a further period of three (3) years effective 30th July 2017, in the interest of the Company.
e) The Board of Directors at its 164th meeting held on 14th August 2017, based on the recommendations vide resolution passed by the Nomination and Remuneration Committee at its 33rd meeting held on 14th August 2017, has appointed CA R. Muralidhar (DIN : 00982212) as the Whole-time Director, designated as the Executive Director (Finance) & CFO, designated Key Managerial Personnel, of the Company for a period of three (3) years effective 14th August 2017, subject to approval of the Shareholders (Members) of the Company at the ensuing Thirty-first (31st) Annual General Meeting of the Company. The Board recommends his appointment as the Whole-time Director, designated as the Executive Director (Finance) & CFO, designated Key Managerial Personnel, of the Company for a period of three (3) years effective 14th August 2017 in the interest of the Company.
f) The Board of Directors at its 164th meeting held on 14th August 2017, based on the recommendations vide resolution passed by the Nomination and Remuneration Committee at its 33rd meeting held on 14th August 2017, has appointed Mr. Ramchandra Vasant Dalvi (DIN : 00012065) as the Whole-time Director, designated as the Executive Director (Works), designated Key Managerial Personnel, of the Company, for a period of three (3) years effective 14th August 2017, subject to approval of the Shareholders (Members) of the Company at the ensuing Thirty-first (31st) Annual General Meeting of the Company. The Board recommends his appointment as the Whole-time Director, designated as the Executive Director (Works), designated Key Managerial Personnel, of the Company for a period of three (3) years effective 14th August 2017 in the interest of the Company.
g) The Board of Directors at its 164th meeting held on 14th August 2017, based on the recommendations vide resolution passed by the Nomination and Remuneration Committee at its 33rd meeting held on 14th August 2017, has approved and recommended the re-appointment of Dr. E. R. C. Shekar (DIN : 0001367) as a Director (Category - Non-executive, Independent) of the Company, to hold the office for a fixed second term of consecutive five (5) years i.e. from the conclusion of Thirty-first (31st) Annual General Meeting up to the conclusion of Thirty-sixth (36th) Annual General Meeting of the Company to be held in the calendar year 2022.
h) The Board of Directors at its 164th meeting held on 14th August 2017, based on the recommendations vide resolution passed by the Nomination and Remuneration Committee at its 33rd meeting held on 14th August 2017, has approved and recommended the re-appointment of Mr. Kumar Jitendra Singh (DIN : 00626836) as a Director (Category - Nonexecutive, Independent) of the Company, to hold the office for a fixed second term of consecutive five (5) years i.e. from the conclusion of Thirty-first (31st) Annual General Meeting up to the conclusion of Thirty-sixth (36th) Annual General Meeting of the Company to be held in the calendar year 2022.
i) The Board of Directors at its 164th meeting held on 14th August 2017, based on the recommendations vide resolution passed by the Nomination and Remuneration Committee at its 33rd meeting held on 14th August 2017, has approved and recommended the re-appointment of Mr. S. Gajendran (DIN : 00250136) as a Director (Category - Non-executive, Independent) of the Company, to hold the office for a fixed second term of consecutive two (2) years i.e. from the conclusion of Thirty-first (31st) Annual General Meeting up to the conclusion of Thirty-third (33rd) Annual General Meeting of the Company to be held in the calendar year 2019.
j) The Board of Directors at its 164th meeting held on 14th August 2017, based on the recommendations vide resolution passed by the Nomination and Remuneration Committee at its 33rd meeting held on 14th August 2017, has approved and recommended the re-appointment of CA Jayesh M. Parmar (DIN : 00802843) as a Director (Category - Nonexecutive, Independent) of the Company, to hold the office for a fixed second term of consecutive two (2) years i.e. from the conclusion of Thirty-first (31st) Annual General Meeting up to the conclusion of Thirty-third (33rd) Annual General Meeting of the Company to be held in the calendar year 2019.
The Company has received a Notice in writing under Section 160 of the Companies Act, 2013 from a member proposing the candidatures of Mr. Suhrit Ravi Bhushan Bhardwaj, CA R. Muralidhar, Mr. Ramchandra Vasant Dalvi, Dr. E. R. C. Shekar, Mr. Kumar Jitendra Singh, Mr. S. Gajendran and CA Jayesh M Parmar for the office of the Director/s of the Company Except the above, there is no change in the composition of the Board of Directors during the period under review.
[Brief profile of Director/s seeking appointment / re-appointment is given in the Corporate Governance Report]
11. NUMBER OF MEETINGS OF THE BOARD
Five (5) meetings of the Board of Directors of the Company were held during the financial year 2016-2017 under review on 28th May 2016, 19th August 2016, 12th December 2016, 28th January 2017 and 27th March 2017.
12. DIRECTORS'' RESPONSIBILITY STATEMENT The Board of Directors confirms :
i. That in the preparation of the Annual Financial Accounts, the applicable Accounting Standards had been followed along with proper explanation, relating to material departures;
ii. That the Directors 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 and of the profit of the Company for that financial year;
iii. That the Directors had taken proper and sufficient care for the maintenance of adequate Accounting records in accordance with the provisions of this Act for safeguarding the Assets of the Company and for preventing and detecting fraud and other irregularities;
iv. That the Directors had prepared the Annual Financial Statements on a going concern basis;
v. That the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls were adequate and operating effectively; and
vi. That the Directors had devised proper system to ensure compliance with the provisions of all applicable laws and regulations and that such systems were adequate and operating effectively.
13. COMMITTEE(S) OF THE BOARD
The Company has constituted all the requisite Committee(s) of the Board, namely Audit Committee, Nomination and Remuneration Committee, Stakeholdersâ Relationship Committee, Corporate Social Responsibility (CSR) Committee, Share Transfer Committee, Risk Management Committee and Project Monitoring Committee, pursuant to the provisions of the Companies Act, 2013 read with the rules made there under and Listing Agreement or Listing Regulations (to the extent applicable). The details of its constitution, objective or terms of reference and other related information has been provided under the Corporate Governance Report, which forms part and parcel of the Boardâs Report.
14. AUDITORS
I. STATUTORY AUDITORS AND THEIR REPORT :
Messers S. S. Kothari Mehta & Co., Chartered Accountants, New Delhi (ICAI Firm Registration No. 000756N) have been recommended by the Audit Committee and subsequently, also approved and recommended by the Board of Directors of the Company, has been appointed as the Statutory Auditors of the Company at the Thirtieth (30th) Annual General Meeting to hold office of the Statutory Auditors for a period of two (2) years from the conclusion of Thirtieth (30th) Annual General Meeting until the conclusion of Thirty-second (32nd) Annual General Meeting, subject to ratification by the members at the ensuing Thirty-first (31st) Annual General Meeting of the Company.
The Statutory Auditors have furnished a Certificate of their consent, qualification and eligibility for appointment including reappointment under Section 139 and 141 of the Companies Act, 2013 read with the rules and regulations made there under. The Auditorsâ Report submitted by Messers S. S. Kothari Mehta & Co., Chartered Accountants, New Delhi (ICAI Firm Registration No. 000756N), the Statutory Auditors and Messers Patel, Shah & Joshi, Chartered Accountants, Mumbai (ICAI Firm Registration No. 107768W) the joint Statutory Auditors of the Company to the shareholders for the financial year 2016-2017 ended 31st March 2017 do not contain any qualification. The observations made by the Statutory Auditors and Joint Statutory Auditors in their report are self-explanatory and have also been further amplified in the Notes to the financial statements and as such, do not call for any explanations.
During the financial year 2016-2017 under review :
a) there is no fraud occurred, noticed and/or reported by the Statutory Auditors under Section 143(12) of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014 (as amended);
b) the observations made by the Statutory Auditors on the financial statements for the financial year 2016-2017 under review including the affairs of the Company are self explanatory and do not contain any qualification, reservation, adverse remarks or disclaimer thereof.
As such, no specific information, details or explanations required to be given or provided by the Board of Directors of the Company.
II. COST AUDITORS AND THEIR REPORT :
Pursuant to Section 148 of the Companies Act 2013, the Board of Directors, on the recommendations of the Audit Committee, of the Company, has appointed M/s. G. R. Paliwal & Company (Membership No. 7815), Cost Accountants, Nagpur as the Cost Auditors of the Company for the financial year 2016-2017 and has also recommended their remuneration to the shareholders for their ratification at the ensuing Thirty-first (31st) Annual General Meeting.
The said Cost Auditors have furnished a Certificate of their eligibility for appointment pursuant to Section 141 (3)(g), Section 148(5) of the Companies Act, 2013 read with the rules made there under, Certificate for independence and arms length relationship with the Company and have confirmed about their not being disqualified for such appointment including re-appointment within the meaning of Section 141(3) of the Companies Act, 2013.
Pursuant to the applicable provisions of the Act read with the rules made there under, the Cost Audit Report for the financial year 2015-2016 was filed vide SRN : G11418647 dated 15th September 2016.
III. SECRETARIAL AUDITORS AND THEIR REPORT :
M/s. Mukesh Parakh & Associates, Company Secretaries, Nagpur (Membership No. FCS-4343 & Certificate of Practice No. 13693), were appointed as the Secretarial Auditors of the Company for the financial year 2016-2017 ended 31st March 2017. The Secretarial Audit Report in Form No. MR-3 submitted by the said Secretarial Auditors is attached herewith as an Annex - B and forms part and parcel of the Boardâs Report, do not contain any adverse remarks and qualifications, is self explanatory and do not call for any further explanations by the Company.
Further, the Company has re-appointed M/s. Mukesh Parakh & Associates, Company Secretaries, Nagpur (Membership No. FCS-4343 & Certificate of Practice No. 13693), as the Secretarial Auditors of the Company for the financial year 2017-2018 ending 31st March 2018.
15. PERSONNEL / PARTICULARS OF EMPLOYEES
The information required under Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:
a) The ratio of the remuneration of each Executive Director to the median remuneration of the employees of the Company for the financial year :
Executive Directors |
Ratio to Median remuneration |
Mr. Pranav Bhardwaj - Managing Director |
24.28 : 1 |
Mr. Surendra Kumar Gupta - Deputy Managing Director |
16.59 : 1 |
b) The percentage increase in remuneration of each Director, Chief Executive Officer, Chief Financial Officer, Company Secretary in the financial year 2016-2017 :
Directors, Chief Executive Officer, Chief Financial Officer and Company Secretary |
% increase in remuneration in the financial year |
Mr. Pranav Bhardwaj - Managing Director |
4.36% |
Mr. Surendra Kumar Gupta - Deputy Managing Director |
7.31% |
CA R. Muralidhar - Chief Financial Officer |
5.96% |
CS Pranab Panigrahi - Company Secretary |
9.28% |
c) The percentage increase in the median remuneration of employees in the financial year : 5%
d) The number of permanent employees on the rolls of Company as on 31st March 2017 : 1321
e) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:
The average annual increase was about 5%. During the financial year, the total increase is approximately 1.81% after accounting for promotions and other event based compensation revisions.
Increase in the managerial remuneration for the financial year was around 6%, other than commission based on net profit as per the terms of their appointment.
f) Affirmation : Remuneration paid to Director/s, Key Managerial Personnel and Employees of the Company is as per the remuneration policy of the Company.
g) Information as per Section 197 of the Companies Act, 2013 (âthe Actâ) and Rule 5(2) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 (as amended), forms part of this report. However, in terms of Section 136(1) of the Act, the Report and Financial Statements are being sent to all the shareholders and others entitled to receive the same, excluding the statement of particulars of employees. The statement is available for inspection by the members at the Registered Office of the Company during business hours on any working day up to the date of the ensuing Annual General Meeting. If any member interested in obtaining a copy thereof, such member may write to the Company Secretary, whereupon a copy would be sent.
16. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGES EARNINGS AND OUTGO
The particulars relating to energy conservation, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of The Companies (Accounts) Rules, 2014 are given in the Annex - C to this report.
17. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013
Name of the related party and nature of relationship |
Nature of contracts / arrangements / transactions |
Duration of contracts / arrangements / transactions |
Salient terms of the contracts / arrangements / transactions, including the value, if any |
Dates of approval by the Board, if any |
Amount paid as advance, if any |
Sunflag Power Limited - Wholly owned subsidiary |
Interest Free Unsecured Loan |
Continuing |
N.A. |
28.05.2016 and ratified on 26.05.2017 |
'' 12,12,405 for the financial year 2016-2017 |
Daido D.M.S. India Pvt. Ltd. Associate (JV) Company |
Investment in Equity Share Capital |
N.A. |
N.A. |
30.05.2016 and ratified on 28.05.2017 |
'' 36,000,000 in the capital of the Company |
Ramesh Sunwire Pvt. Ltd. - Associate (JV) Company |
Investment in Equity Share Capital |
N.A. |
N.A. |
19.08.2016 and ratified 26.05.2017 |
'' 2,20,50,000 in the capital of the Company |
18. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES UNDER SECTION 188 OF THE COMPANIES ACT, 2013
a) Details of contracts or arrangements or transactions not at armâs length basis :
There are no such transactions and hence not applicable.
b) Details of contracts or arrangements or transactions at armâs length basis :
The details of contracts or arrangements or transactions in the ordinary course of business and at arm''s length basis are as given below :
Form No. AOC - 2
Pursuant to clause (h) of sub-section (3) of Section 134 of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014 (Amended) :
Name of the related party and nature of relationship |
Nature of contracts / arrangements / transactions |
Duration of contracts / arrangements / transactions |
Salient terms of the contracts / arrangements / transactions, including the value, if any |
Dates of approval by the Board, if any |
Amount paid as advance, if any |
Haryana Television Limited |
Ordinary Course of Business and at Arm''s length |
Continuing |
Refundable Security deposit |
28.05.2016 and ratified on 26.05.2017 |
'' 21,07,573 as on 31st March 2017 |
Haryana Television Limited |
Ordinary Course of Business and at Arm''s length |
Continuing |
Rent paid for Companyâs Godown at Faridabad |
28.05.2016 and ratified on 26.05.2017 |
Rent : '' 48,26,500 for the financial year 2016 - 2017 |
Mr. Suhrit Ravi Bhushan Bhardwaj |
Ordinary Course of Business and at Arm''s length |
Continuing |
Refundable Security deposit |
28.05.2016 and ratified on 26.05.2017 |
'' 10,00,000 as on 31st March 2017 |
Mr. Suhrit Ravi Bhushan Bhardwaj |
Ordinary Course of Business and at Arm''s length |
Continuing |
Rent paid for Companyâs Transit House |
28.05.2016 and ratified on 26.05.2017 |
Rent : '' 20,68,500 for the financial year 2016 - 2017 |
19. LISTING OF SHARES
The Equity shares of the Company continued to be listed with and actively traded on the BSE Limited (BSE) and The National Stock Exchange of India Limited (NSE). The listing fees for the financial year 2017-2018 have been paid to both the Stock Exchanges (BSE & NSE).
20. DEMATERIALISATION OF SHARES
As on 31st March 2017, there were approximately 1075 lakh equity shares dematerialized through depositories viz. National Securities Depository Limited and Central Depository Services (India) Limited, which represents about 59.64% of the total issued, subscribed and paid-up capital of the Company.
21. EXTRACT OF THE ANNUAL RETURN
The extract of the Annual Return as on 31st March 2017 pursuant to the provisions of Section 92(3) of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 (as amended) is furnished in the Annex - D attached to this report, which forms an integral part of this report.
22. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND
The detailed information related to the dividend declared by the Company in the previous years together with amount remained unpaid or unclaimed, its transfer to the Investor Education and Protection Fund are provided in Notes annexed to the Notice convening the Thirty-first (31st) Annual General Meeting of the Company.
23. CORPORATE GOVERNANCE
The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by the SEBI through Listing Agreement and Listing Regulations (to the extent applicable) executed with the stock exchange/s. The Company has also implemented several best corporate governance practices as prevalent globally.
Your Directors are pleased to report that your Company has complied with the SEBI Guidelines on Corporate Governance as of 31st March 2017 relating to the Listing Regulations. A Certificate from M/s. Mukesh Parakh & Associates, Company Secretaries, Nagpur (Membership No. FCS-4343, Certificate of Practice No. 13693) confirming compliance with conditions as stipulated under Listing Agreement and Listing Regulations is annexed to the Corporate Governance Report.
24. CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Companyâs steel plant is located at Bhandara Road, Village Warthi, Tahsil Mohadi, District Bhandara. It is located at a distance of 12 kilometers from the district place Bhandara. The unit is surrounded by about 3 villages in the radius of 5 Kms. The Company is having its captive coal mines at Belgaon, near Village Aathmurdi in Chandrapur district. The residents of these localities are directly or indirectly associated with the Company.
All the activities / programmes covered under SISCO CSR are being monitored by the CSR Committee and are implemented by the CSR Sub-committee.
Sunflag Foundation :
Sunflag Foundation (U74999MH2017NPL289961) - a Section 8 Company (A Company not for profits) was incorporated on 27th January 2017 as a Wholly-owned Subsidiary of Sunflag Iron and Steel Company Limited. The said Company was appointed as an implementing Agency to carry out the Corporate Social Responsibility (CSR) activities as per CSR Policy of the Company within the framework of applicable provisions of law.
Accordingly, Sunflag Foundation will implement, monitor all CSR activities, budget and accounts for the same, the manner in which the CSR amount has been spent / to be spent etc and in turn shall furnish its report to the Company on regular basis.
As required, the details pertaining to the Corporate Social Responsibility (CSR) activities together with details of expenditure is enclosed herewith as an Annex - A and the same is attached to this Report.
25. CODES OF CONDUCT OF BUSINESS PRINCIPLES & ETHICS AND PREVENTION OF INSIDER TRADING AND OTHER CODES / POLICIES
Your Directors are pleased to report that your Company has complied with the :
i) Code of Conduct of Business Principles and Conduct;
ii) Code of Prevention of Insider Trading in Sunflag securities by the designated persons (insider) (as amended from time to time);
iii) Code for Vigil Mechanism - Whistle Blower Policy ;
iv) Code for Independent Directors;
v) Corporate Social Responsibility Policy;
vi) Risk Management Policy;
vii) Policy on Document Preservations (Regulation 9 of the SEBI (LODR) Regulations, 2015);
viii) Policy for determining of âmaterialâ Subsidiary (Regulation 16 of the SEBI (LODR) Regulations, 2015);
ix) Policy on materiality of related party transaction/s and on dealing with related party transactions (Regulation 23 of the SEBI (LODR) Regulations, 2015); and
x) Policy for determination of materiality, based on specified criteria and accordingly, grant authorization for determination of materiality of events (Regulation 30 of the SEBI (LODR) Regulations, 2015).
The aforesaid code(s) and policy(ies) are available on the Companyâs website www.sunflagsteel.com
26. MATERIAL DEVELOPMENT IN HUMAN RESOURCES INDUSTRIAL RELATIONS
During the financial year under review, industrial relations remained cordial. Employeesâ competencies and skills were enhanced by exposing them to several internal and external training programmes. Various measures were taken to improve motivation level of employees. Additional efforts are continued to be implemented with a view to obtain commitment and loyalty towards the organization.
SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE
Sunflag Iron and Steel Company Limited (âthe Companyâ) has in place an Anti Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013 and Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees etc) are covered under this Policy. The Certificate by Deputy Managing Director and Chairman, Audit Committee of the Company to that effect is enclosed herewith as an Annex - E and forms part of this report.
HEALTH AND SAFETY
Departmental safety coordinators are identified for monitoring & training on safety related matter at shop-floor. Safety Committee and Apex Committee are available for periodical review on safety, health & environment of all departments.
Regular Training on Safety is being organized for New Joinee, regular employees & contract labour. Mock-drills are conducted for practical exposure to meet emergency need on quarterly basis.
Hand book on safety awareness are distributed to all employees.
27. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has in place adequate internal control systems and procedures commensurate with the size and nature of business. These procedures are designed to ensure :-
(a) that all assets and resources are used efficiently and are adequately protected;
(b) that all the internal policies and statutory guidelines are complied with; and
(c) the accuracy and timing of financial reports and management information is maintained.
28. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY
During the financial year 2016-2017 under review, there are no material changes and commitments, 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 relates and the date of this report. As such, no specific details are required to be given or provided.
29. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYâS OPERATIONS IN FUTURE
During the financial year 2016-2017 under review, no significant and material order is passed by any of the Regulators or Courts or Tribunals impacting the going concern status and Companyâs operations in future. As such, no specific details are required to be given or provided.
30. OTHER DISCLOSURES
The details regarding Board and its Committee meetings, Evaluation of Board performance, Declaration by Independent Directors, Remuneration policy for Directors and KMPâs, Induction, training and familiarization programmes for Directors including Independent Directors and such other related information has been provided under the Corporate Governance Report, which forms part and parcel of the Boardâs Report.
31. ENCLOSURES
a) Annex - A : Annual Report on Corporate Social Responsibility (CSR) activities together with expenditure details;
b) Annex - B : Secretarial Auditors Report in Form No. MR-3;
c) Annex - C : Report on Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo;
d) Annex - D : Extract of Annual Return as of 31st March, 2017 in the prescribed Form No. MGT-9; and
e) Annex - E : Certificate on Sexual Harassment of Women at the Workplace and its Prevention, Prohibition & Redressal.
32. ACKNOWLEDGEMENT
The Directors acknowledge with thanks co-operation and assistance received by the Company from the Members, Central & State Government and Banks.
The Directors also record their appreciation of the dedication of all the employees of the Company for their support and commitment to ensure that the Company continues to grow.
For and on behalf of the Board
Dr. E.R.C. Shekar Surendra Kumar Gupta
Nagpur Director Deputy Managing Director
14.08.2017 DIN : 00013670 DIN : 00054836
Mar 31, 2015
The Shareholders,
The Board of Directors hereby present the 29th Annual Report together
with the Audited Financial Statements for the year ended 31st March,
2015. During the year under review, the Steel Industry as well as
Automobile and Auto component sectors continued to remain in the market
with sluggish demand in addition to this there is a sudden surge in
import of iron ore and coal, resulted in the high input costs, which
have adversely affected the profitability resulting into lesser margin.
However, with the continuous efforts by the Company's Management
towards strict cost reduction and better financial /working capital
management, has helped to improve its overall performance in order to
survive in the difficult market conditions.
1. FINANCIAL RESULTS
Summarised financial results for the year are as follows : in |_acs)
Sr For the financial year ended
S Particulars
No 31st March 2015 31st March 2014
1 Total Income 176,259 159,090
2 Total Expenditure 158,731 143,841
3 Gross Profit 17,528 15,249
4 Finance Cost 7,144 7,299
5 Profit before Depreciation 10,384 7,950
6 Depreciation 5,113 6,118
7 Profit / (Loss) before Tax 5,271 1,832
2. FINANCE
Your Company has ended the financial year with a profit after tax of Rs.
2,441 Lacs. After taking into account the brought forward profit of Rs.
33,849 Lacs, your Company has carried forward an amount of Rs. 36,290
Lacs.
3. DIVIDEND
The Company is in need of more funds through internal accruals to cope
with the terms and conditions of the lending banks financing ongoing
capital projects under expansion programmes, which will enable future
growth of the Company. As such, Board of Directors does not recommend
dividend on the equity share of the Company for the Financial Year 2014
- 2015.
4. SHARE CAPITAL
During the year under review, the authorised share capital of the
Company was reclassified, with creation of additional 40,000,000 (Four
crore) equity shares of Rs. 10/- (Rs. Ten) each, against cancellation of
4,000,000 (Forty lacs) 10% cumulative preference shares of Rs. 100/- (Rs.
One hundred) each, lying unissued and forming part of the authorised
share capital of the Company and consequent amendments to the capital
clause of the Memorandum and Articles of Association of the Company
under Section 13, 14, 61 and 64 of the Act.
Further, during the year under review, the Company has issued and
allotted 18,021,945 equity shares of face value of Rs. 10/- (Rs. Ten) each,
at a premium of Rs. 21/- (Rs. Twenty one) each to Non-promoter foreign body
corporate namely M/s Daido Steel Co. Ltd., Japan on preferential
allotment basis on 11th September 2014.
Accordingly, the issued, subscribed and paid-up share capital of the
Company increased from Rs. 1,621,975,030 to Rs. 1,802,194,480 as on 31st
March, 2015.
5. MARKET SCENARIO
During the year under review, there was no substantial increase of
demand in Automobile and Auto Component Industries. However,
SUNFLAESTEEL is continuing to develop new high value grades of alloy
steel to cater the needs of other domestic as well as international
markets than its present market. There is no significant change in
current market scenario however it is expected to improve in the days
to came after slow down in the past previous year/s.
6. COMPANY'S WORKING / OPERATIONS
During the year under review, the production details of Plants are as
under : (Production : MT)
Sr Particulars Financial Year 2014 - Financial
No 2015 Year 2013 - 2014
1 Direct Reduction Plant
(I II) 130,762 114,026
2 Steel Melt Shop 319,969 296,702
3 Rolled products 312,839 296,564
4 Mini Blast Furnace / Pig Iron 234,841 219,980
5 Sinter Plant 295,794 339,301
6 Coal (Belgaon Coal Block) 196,380 148,000
7 Power Plant (Lacs-kWh) 1609.56 1573.13
7. The details of significant and material orders passed by the
regulators or courts or tribunals impacting the going concern status
and company's operations in future :
No such orders passed during the year, hence not applicable.
8. BELGAON COAL BLOCK
During the year 2005 - 2006, the Company was allocated Belgaon coal
block in the State of Maharashtra for captive use at the Company's
steel plant at Bhandara in the State of Maharashtra.
As per the order of the Hon'ble Supreme Court of India dated 24th
September 2014, the Belgaon coal block which was allocated to the
Company stand de-allocated effective 31st March, 2015 with an
additional levy of Rs. 295/- per ton on the quantity of coal extracted
from the said Coal Block.
Further, as per decision, the Nominated Authority, Ministry of Coal,
Government of India have auctioned the coal block/s so cancelled
including the Belgaon coal block. Your Company has participated in the
e-auction and was declared as a successful bidder for re-allocation of
the said coal block at a Final Price Offer (FPO) of Rs. 1785/- per MT.
9. PROJECTS Steel Plant :
As reported in previous year the Company has undertaken to commission
the online inspection system for hot rolled round bars. The project
consists of ultrasonic testing machine and 2 Roll straightening
machine. The project is expected to be in operation in the current
financial year 2015 - 2016.
Further, the Company has undertaken alloy feeding system in Ladle
re-heating furnace - 2 of Steel Melt Shop wherein alloy materials will
be weighted and fed through automatic process in to steel ladle in
re-heating process. The project is expected to be commissioned in the
current financial year 2015 - 2016.
Subsidiary Companies :
Sunflag Power Limited : Requisite approvals are being sought for the
implementation of Hydro Power Project at Hanol-Tuini in the state of
Uttarakhand.
Sunflag Special Steels Limited : The management is exploring the
business opportunities for the Company.
Khappa Coal Company Private Limited : As per the order of the Hon'ble
Supreme Court of India dated 24th September 2014, the Khappa & Extn
coal block which was allocated to Khappa Coal Company Private Limited,
being at initial stage and non-operating one, stand de-allocated with
immediate effect. The management will take appropriate steps once the
final decision regarding fate of bank guarantee is resolved.
Joint Venture Companies (JVC) :
Madanpur (North) Coal Company Private Limited and C T Mining Private
Limited :
As per the order of the Hon'ble Supreme Court of India dated 24th
September 2014, the coal block/s which were allocated to Madanpur
(North) Coal Company Private Limited in the state of Chhattisgarh and
to C T Mining Private Limited in the state of Jharkhand, being at
initial stage and non-operating ones, stand de-allocated with immediate
effect. The management will take appropriate steps once the final
decision regarding fate of bank guarantee is resolved.
Gujarat State Mining and Resources Corporation Limited : In absence of
allocation of coal block to the JVC and non-viability of integrated
coke oven project, the board of directors of the Company at its meeting
held on 19th March, 2015 unanimously resolved to strike-off the name of
the JV Company subject to requisite approval/s.
Daido D.M.S. India Private Limited : Your Company has formed and
incorporated a joint venture Company at Faridabad in the National
Capital Territory of Delhi with two JV partners namely Daido Steel Co.
Ltd., Japan and Daido Die & Mold Steel Co. Ltd., Japan on 10th March,
2015. The JVC is in the process of commencement of its proposed
business and commercial activities. The object of the Company is to
carry on the business as manufacture (processing, heat treatment,
surface treatment), import, export, distribute or otherwise deal in die
and mold steel (tool steel and other metallic materials), processed
products thereof and mold parts.
10. DEMATERIALISATION OF SHARES
As on 31st March, 2015, there were approximately 1072 lacs equity
shares dematerialised through depositories viz. National Securities
Depository Limited and Central Depository Services (India) Limited,
which represents about 59.49% of the total paid-up capital of the
Company.
11. LISTING OF SHARES
During the year, 18,021,945 equity shares in the capital of the Company
issued and allotted on 11th September, 2014 to Daido Steel Co. Ltd.,
Japan were got listed, subject to lock in period of one (1) year, with
BSE Limited (BSE) and The National Stock Exchange of India Limited
(NSE) effective 9th October, 2014.
The Equity shares of your company continued to be listed with / traded
on the BSE Limited (BSE) and The National Stock Exchange of India
Limited (NSE). The listing fees have been paid to both Stock Exchanges
(BSE & NSE) for the financial year 2015 - 2016.
12. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGES
EARNINGS AND OUTGO
The particulars relating to energy conservation, technology absorption,
foreign exchange earnings and outgo, as required to be disclosed under
Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the
Companies (Accounts) Rules, 2014 are given in the Annex - C to this
report.
13. DIRECTORS & KEY MANAGERIAL PERSONNEL
I. APPOINTMENT & CESSATION OF KEY MANAGERIAL PERSONNEL (KMP)
a) The existing managerial personnel of the Company namely, Mr. Ravi
Bhushan Bhardwaj (DIN : 00054700), Vice-Chairman & Managing Director;
Mr. Pranav Bhardwaj (DIN : 00054805), Joint Managing Director and Mr.
Surendra Kumar Gupta, Whole-time Director, designated as Director & CEO
of the Company have been re-classified (recognised) as the key
managerial personnel (KMP) of the Company effective 1st April, 2014.
b) Mr. Ravi Bhushan Bhardwaj ceased to be the Managing Director & Key
Managerial Personnel (KMP) of the Company effective 12th August, 2015.
However, continued as a Non-Executive Vice-Chairman of the Company.
c) Mr. Pranav Bhardwaj, Joint Managing Director is re-designated as
Managing Director of the Company effective 12th August, 2015.
d) Mr. Surendra Kumar Gupta, Whole-time Director designated as Director
& CEO is re-designated as Deputy Managing Director of the Company
effective 12th August, 2015.
e) Mr. R. Muralidhar, Executive Director (Finance) of the Company was
appointed as the Key Managerial Personnel (KMP) of the Company
effective 1st April, 2014.
CS Mukesh D Parakh (ICSI Membership No. FCS-4343) Company Secretary was
also re-classified (recognised) as the Key Managerial Personnel (KMP)
of the Company effective 1st April, 2014. f ) CS Mukesh D Parakh,
(Membership No. FCS-4343) Company Secretary of the Company has resigned
and in his place, CS Pranab Panigrahi (Membership No. ACS-16186) was
appointed as the Company Secretary & Compliance Officer of the Company
effective 5th August, 2014.
II. RETIREMENT BY ROTATION
Pursuant to Section 152 of Companies Act, 2013 read with the Companies
(Appointment and Qualification of Directors) Rules, 2014, Mr. Pranav
Bhardwaj (DIN : 00054805), Managing Director retire by rotation and,
being eligible, offers himself for re-appointment. The Board recommends
his re-appointment in the interest of the Company.
III. NOMINATION & CESSATION OF NOMINEE DIRECTOR
IDBI Bank Limited has withdrawn nomination of Mr. Sonam Bodh (DIN -
06731687) from the Board and instead appointed Mr. P. K. Das (DIN -
06593113) (Chief General Manager - RBG, IDBI Bank Limited, Nagpur),
effective 12th December, 2014. Further, IDBI Bank Limited has also
withdrawn nomination of Mr. P. K. Das (DIN - 06593113), effective 11th
February, 2015. The Board places on record its appreciation for
valuable services and wide contributions made by Mr. Sonam Bodh and Mr.
P. K. Das during their respective tenure as a Nominee Director/s of
the Company.
IV. APPOINTMENT OF INDEPENDENT DIRECTOR
Pursuant to Section 149, 152, Schedule IV of the Companies Act, 2013
read with the Companies (Appointment and Qualification of Directors)
Rules, 2014 and Clause 49 of the Listing Agreement/s, Mrs. Neelam
Kothari (DIN - 06709241) was appointed as an Additional Director
(Non-executive, Independent Director) effective 29th September, 2014
and her term is expiring at the conclusion of ensuing Annual General
Meeting of the Company.
The Company has received a notice in writing under Section 160 of the
Companies Act, 2013 from a member proposing her candidature for office
of the Director (Non-executive, Independent Director) of the Company.
The Board recommends her appointment as a Non-executive, Independent
Director for a fixed term of consecutive five (5) years i.e. from the
conclusion of 29th Annual General Meeting up to the conclusion of 34th
Annual General Meeting of the Company in the calendar year 2020.
Except the above, there is no change in the composition of Board of
Directors including Key Managerial Personnel during the period under
review.
14. EVALUATION OF BOARD'S PERFORMANCE
In compliance with the provisions of the Companies Act, 2013 and Clause
49 of the Listing Agreement entered with the Stock Exchange/s, the
performance evaluation of the Board was carried out during the year
under review, the details of which are given in the Corporate
Governance Report, forms an integral part of this report.
15. BOARD MEETINGS
Details about Board Meetings held during the Financial Year 2014 - 2015
are given in the Corporate Governance Report, which forms an integral
part of this report.
16. DECLARATION BY INDEPENDENT DIRECTORS
The Independent Directors have confirmed that they meet the criteria of
'Independence' as stipulated under Section 149(6) of the Companies
Act, 2013 and Clause 49 of the Listing Agreement/s with the Stock
Exchanges.
17. REMUNERATION POLICY
Details about the remuneration policy are given in the Corporate
Governance Report, which forms an integral part of this report.
18. PUBLIC DEPOSITS
During the year under review, the Company has not accepted any Public
Deposits within the meaning of the Companies Act, 2013 read with rules
made there under.
19. PERSONNEL / PARTICULARS OF EMPLOYEES
The information required under Section 197 of the Act read with rule
5(1) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 are given below:
a) The ratio of the remuneration of each director to the median
remuneration of the employees of the Company for the financial year
2014 - 2015 :
Executive Directors Ratio to Median remuneration
Mr. Ravi Bhushan Bhardwaj - Vice-
Chairman & Managing Director 12.86%
Mr. Pranav Bhardwaj - Joint
Managing Director 12.50%
Mr. Surendra Kumar Gupta - Whole-time
Director designated as Director & CEO 7.97%
b) The percentage increase in remuneration of each director, chief
executive officer, chief financial officer, company secretary in the
financial year :
Directors, Chief Executive Officer, Chief % increase in remuneration
Financial officer and Company Secretary in
the financial year
Mr. Ravi Bhushan Bhardwaj - Vice
Chairman & Managing Director 14.75%
Mr. Pranav Bhardwaj - Joint Managing Director 16.97%
Mr. Surendra Kumar Gupta - Whole-time
Director designated as Director & CEO 15.14%
Mr. R. Muralidhar - Chief Financial Officer --
CS Mukesh D Parakh - Company Secretary --
CS Pranab Panigrahi - Company Secretary --
c) The percentage increase in the median
remuneration of employees in the financial year : 11.11%
d) The number of permanent employees on the rolls
of Company as on 31st March, 2015 : 1440
e) The explanation on the relationship between average increase in
remuneration and Company performance :
On an average, employees received an annual increase of 10% in India.
The individual increments varied from 5% to 20%, based on individual
performance. In order to ensure that remuneration reflects company
performance, the performance pay is also linked to organization
performance, apart from an individual's performance.
Employees outside India receiving wage increase : Not Applicable
f) Comparison of the remuneration of the key managerial personnel
against the performance of the Company of the financial year 2014 -
2015 :
Aggregate remuneration of key managerial personnel (KMP) - Rs. 46,422,199
Revenue - Rs. 17,625,913,853
Remuneration of KMPs (as % of revenue) - 0.26%
Profit before Tax (PBT) - Rs. 527,126,080
Remuneration of KMP (as % of PBT) - 8.80%
g) Variations in the market capitalisation of the Company, price
earnings ratio as at the closing date of the current financial year and
previous financial year :
Particulars 31st March, 2015 31st March, 2014 % Change
Market Capitalization
(Rs. in lacs) 40,639.48 34,548.07 17.63
Price Earnings Ratio # 15.88 15.89 -0.06
# Based on the official market price quoted at BSE
h) Percentage increase or decrease in the market quotations of the
shares of the Company in comparison to the rate at which the Company
came out with the last public offer :
Particulars 31st March, 2015 IPO Date / first IPO Price
(Rs.) listing date (Rs.)
Market Price (BSE) 22.55 29.03.1988 10.00
Market Price (NSE) 23.70 29.03.1988 10.00
Particulars Adjusted IPO Price %
by considering CA * Change
Market price BSE N.A. 125
MARKET price NSE N.A. 137
* Adjusted for Corporate Action (CA)
i) Average percentile increase already made in the salaries of
employees other than the managerial personnel in the last financial
year and its comparison with the percentile increase in the managerial
remuneration and justification thereof and point out if there are any
exceptional circumstances for increase in the managerial remuneration :
The average annual increase was around 10%. However, during the course
of the year, the total increase is approximately 10%, after accounting
for promotions and other event based compensation revisions.
Increase in the managerial remuneration for the year was 11.11%.
j) Comparison of each remuneration of the key managerial personnel
against the performance of the Company :
Particulars Mr. Ravi Bhushan Mr. Pranav Mr. Surendra Kumar
Bhardwaj, Bhardwaj Gupta, Whole-time
Vice-Chairman & Joint Managing Director designated
Managing Director Director as Director & CEO
Remuneration
(Rs.) 12,903,968 12,539,720 7,993,461
Revenue (Rs.) 17,625,913,853 17,625,913,853 17,625,913,853
Remuneration
as % of 0.073 0.071 0.045
revenues
Profit before
Tax (PBT) (Rs.) 527,126,080 527,126,080 527,126,080
Remuneration
(as % of PBT) 2.448 2.379 1.516
Particulars Mr. R. Muralidhar CS Mukesh D CS Pranab
Chief Financial Parakh Panigrahi
Officer Company Company
Secretary Secretary
Remuneration (Rs.) 6,326,400 2,057,079* 1,501,328*
Revenue (Rs.) 17,625,913,853 17,625,913,853 17,625,913,853
Remuneration as %
of revenues 0.036 0.012* 0.009*
Profit before Tax
(PBT) (Rs.) 527,126,080 527,126,080 527,126,080
Remuneration (as %
of PBT) 1.200 0.390* 0.285*
* Not Comparable as figures pertains to part of the financial year
k) The key parameters for any variable component of remuneration
availed by the directors :
Variable component of remuneration was based on the prevailing policy
of the Company.
l ) The ratio of the remuneration of the highest paid director to that
of the employees who are not directors but receive remuneration in
excess of the highest paid director during the year : NIL, Hence Not
Applicable
m) Affirmation that the remuneration is as per the remuneration policy
of the Company :
The Company affirms remuneration is as per the remuneration policy of
the Company.
n) Information as per Section 197 of the Companies Act, 2013 ("the
Act") and 5(2) of the Companies (Appointment & Remuneration of
Managerial Personnel) Rules 2014, as amended, forms part of this
report. However, in terms of Section 136(1) of the Act, the Report and
Accounts are being sent to all the shareholders and others entitled to
receive the same, excluding the Statement of Particulars of Employees.
The Statement is available for inspection by the members at the
Registered Office of the Company during business hours on working days
up to the date of the ensuing Annual General Meeting. If any member
interested in obtaining a copy thereof, such member may write to the
Company Secretary, whereupon a copy would be sent.
20. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION
FUND
The dividend declared by the Company which remains unpaid / unclaimed
for a period of seven (7) years is required to be transferred to the
Investor Education & Protection Fund (IEPF) established by the Central
Government pursuant to Section 125 of the Companies Act, 2013.
Therefore, Dividend declared / paid at the 22nd Annual General Meeting
held on 23rd September, 2008 and remaining unpaid / unclaimed for Seven
(7) years will liable to be transferred to the credit of IEPF Account
on 22nd September, 2015. The members are requested to claim their
unpaid / unclaimed dividends, if any.
The details of dividends declared and transferred to the credit of IEPF
for the earlier financial years is as under :
S Particulars of Dividend Due Date of Transfer Amount Credited
No to IEPF to IEPF (Rs.)
1 Dividend for financial year
2005 - 2006 - Twentieth (20th) 27.09.2013 1,592,685.00
Annual General Meeting held
on 28th September, 2006
2 Dividend for financial year
2006 - 2007 - Twenty-first (21st) 24.09.2014 1,171,767.00
Annual General Meeting held
on 25th September, 2007
21. CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company's steel plant is located at Bhandara Road, Warthi
Village, Tahsil Mohadi, District Bhandara. It is located at a distance
of about 12 kilometers from the district place Bhandara. The unit is
surrounded by about 3 villages in the radius of about 5 Kms. The
Company is having its captive coal mines at Belgaon, near village
Aathmurdi in Chandrapur district. The residents of these localities are
directly or indirectly associated with the Company. The Company has
primarily focused on the development of the residents of these
localities.
All the activities / programmes are covered under SISCO CSR are being
monitored by the CSR Committee and are implemented by the delegated CSR
Sub-committee.
As required, the Annual Report on Corporate Social Responsibility (CSR)
activities together with details of expenditure is enclosed herewith as
Annex - A attached to this Report.
22. ANNUAL RETURN
The extracts of Annual Return pursuant to the provisions of Section 92
read with Rule 12 of the Companies (Management and Administration)
Rules, 2014 is furnished in Annex D attached to this Report, which
forms an integral part of this report.
23. AUDITORS
I. STATUTORY AUDITORS AND THEIR REPORT :
M/s. Patel, Shah & Joshi, Chartered Accountants, Mumbai (Firm
Registration No. 107768W) - the Statutory Auditors of the Company are
eligible and recommended for re-appointment as the Statutory auditors
from the conclusion of this meeting untill the conclusion of next
Annual General Meeting.
The Statutory Auditors have furnished a Certificate of their
eligibility for re-appointment under Section 139 of the Companies Act,
2013 read with rules and regulations made there under and are not
disqualified for such re-appointment within the meaning of Section 139
and Section 141 of the Companies Act, 2013.
The Auditors' Report to the shareholders for the year under review do
not contain any qualification. The observations made by the Auditors in
their report are self-explanatory and have also been further amplified
in the Notes to the Accounts and do not call for any explanation
II. COST AUDITORS AND THEIR REPORT :
Pursuant to Section 148 of the Companies Act 2013, the Board of
Directors of the Company on the recommendations of the Audit Committee,
appointed M/s. G. R. Paliwal & Company (Membership No. 7815), Cost
Accountants, Nagpur as the Cost Auditors of the Company for the
financial year 2015-2016 and has recommended their remuneration to
shareholders for their ratification at the ensuing Annual General
Meeting.
The Cost Auditors have furnished a Certificate of their eligibility for
appointment pursuant to Sub-section 3(g) of Section 141 read with
Sub-section (5) of Section 148 of the Companies Act, 2013, Certificate
for independence and arms length relationship with the Company and are
not disqualified for such appointment within the meaning of Section
141(3) of the Companies Act, 2013. Pursuant to Cost audit (Report)
Rules 2001, the Cost Audit Report for the financial year 2013-2014 was
filed vide SRN : S31210669 dated 16th September, 2014.
III. SECRETARIAL AUDITORS AND THEIR REPORT :
CS Mukesh D Parakh (Membership No. FCS-4343 & Certificate of Practice
No.13693), Practicing Company Secretary has been appointed as the
Secretarial Auditors of the Company for the financial year 2014-2015.
The Secretarial Audit Report given by Secretarial Auditor is annexed
herewith as an Annex - B, which is self explanatory and do not call for
any further explanation. Further, the said Report do not contain any
qualification.
24. AUDIT COMMITTEE
The Audit Committee of the Board is under Chairmanship of Dr. E.R.C.
Shekar, Non-executive, Independent Director of the Company and consists
of CA Jayesh Madhavji Parmar & Mr. S. Gajendran, Non-executive,
Independent Directors and Mr. Sonam Bodh (upto 12th December 2014),
Nominee Director of IDBI Bank Limited, as the Members, as a practice of
good Corporate Governance. Secretary : CS Mukesh D Parakh - Company
Secretary (up to 05.08.2014)
Secretary : CS Pranab Panigrahi - Company Secretary (effective
05.08.2014)
25. NOMINATION AND REMUNERATION COMMITTEE
Chairman : Dr. E.R.C. Shekar, Independent - Non-executive Director
Members : Mr. S. Gajendran and CA Jayesh M Parmar, (Independent,
Non-executive Directors) and Mr. Sonam Bodh (Nominee - IDBI Bank
Limited) (up to 12.12.2014) and Executive Directors viz Mr. Ravi
Bhushan Bhardwaj, Vice Chairman & Managing Director and Mr. S. K.
Gupta, Whole-time Director, designated as Director & CEO of the
Company. Secretary : CS Mukesh D. Parakh - Company Secretary (up to
05.08.2014)
Secretary : CS Pranab Panigrahi - Company Secretary (effective
05.08.2014)
26. VIGIL MECHANISAM - WHISTLE BLOWER POLICY
With the rapid expansion of business in terms of volume, value and
geography, various risks associated with the business have also
increased considerably. One such risk identified is the risk of fraud /
misconduct. The Audit Committee is committed to ensure fraud-free work
environment and to this end the Committee has laid down the Whistle
Blower Policy providing a platform to all the employee, vendors and
customers to report any suspected or confirmed incident of fraud /
misconduct through any of the following reporting protocols :
The details about Vigil Mechanism- Whistle Blower Policy are given in
the Corporate Governance Report, which is forms an integral part of
this report.
The Whistle Blower Policy is also available at the Company's website
www.sunflagsteel.com
27. RISK MANAGEMENT POLICY
The revised Clause 49 of the Listing Agreement mandates constitution of
the Risk Management Committee (RMC) by the Company. The Committee is
required to lay down the procedures to inform to the Board about the
risk assessment and minimization procedures and the Board shall be
responsible for framing, implementing and monitoring the risk
management plan of the Company.
The Business Risk Evaluation and Management (BREM) is an ongoing
process within the organization. The Company has a robust risk
management framework to identify, monitor and minimize risks as also
identify business opportunities. The details viz objectives and scope,
committee member and their attendance, are given in the Corporate
Governance Report which is forming part of the Annual Report. The Risk
Management Policy is also available at the Company's website
www.sunflagsteel.com
29. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES UNDER
SECTION 188 OF THE COMPANIES ACT, 2013
a) Details of contracts or arrangements or transactions not at arm's
length basis :
There are no such transactions and hence not applicable.
b) Details of contracts or arrangements or transactions at arm's
length basis :
30. CORPORATE GOVERNANCE
The Company is committed to maintain the highest standards of corporate
governance and adhere to the corporate governance requirements set out
by SEBI through listing agreement executed with the stock exchanges/s.
The Company has also implemented several best corporate governance
practices as prevalent globally.
Your Directors are pleased to report that your Company has complied
with the SEBI Guidelines on Corporate Governance as of 31st March, 2015
relating to Clause 49 of the Listing Agreement with concerned Stock
Exchange(s). A Certificate from Statutory Auditors - M/s Patel, Shah &
Joshi, Chartered Accountants (Firm Registration No. 107768W),
confirming compliance with conditions as stipulated under Clause 49 is
annexed to the Corporate Governance Report, which forms an integral
part of this report.
31. CODES OF CONDUCT OF BUSINESS PRINCIPLES & ETHICS AND PREVENTION OF
INSIDER TRADING AND OTHER CODES / POLICIES
Your Directors are pleased to report that your Company has complied
with the :
1. Code of Conduct of Business Principles and Conduct and Policy on
Material Subsidiary
2. Code of Prevention of Insider Trading in Sunflag securities by the
designated persons / officers (insider) (as amended from time to time)
3. Code for Whistle Blower Policy
4. Risk Management Policy
5. Code for Independent Directors; and
6. Code for Corporate Social Responsibility
The aforesaid policies are also available on the Company's website
www.sunflagsteel.com
32. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has in place adequate internal control systems and
procedures commensurate with the size and nature of business. These
procedures are designed to ensure :
a) that all assets and resources are used efficiently and are
adequately protected;
b) that all the internal policies and statutory guidelines are complied
with; and
c) the accuracy and timing of financial reports and management
information is maintained.
33. Material changes and commitments, 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 are no such material changes during this period, hence not
applicable.
34. DIRECTORS' RESPONSIBILITY STATEMENT
The Board of Directors confirms :
1. that in the preparation of the Annual Financial Accounts, the
applicable Accounting Standards had been followed along with proper
explanation, relating to material departures;
2. that the Directors 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 and of the financial year and of the profit of
the Company for that financial year;
3. that the Directors had taken proper and sufficient care for the
maintenance of adequate Accounting records in accordance with the
provisions of this Act for safeguarding the Assets of the Company and
for preventing and detecting fraud and other irregularities;
4. that the Directors had prepared the Annual Financial Statements on a
going concern basis;
5. that the Directors had laid down internal financial controls to be
followed by the Company and that such internal financial controls were
adequate and operating effectively; and
6. that the Directors had devised proper system to ensure compliance
with the provisions of all applicable laws and regulations and that
such systems were adequate and operating effectively.
35. MATERIAL DEVELOPMENT IN HUMAN RESOURCES INDUSTRIAL RELATIONS
During the year under review, industrial relations remained cordial.
Employees' competencies and skills were enhanced by exposing them to
several internal and external training programmes. Various measures
were taken to improve motivation level of employees. Additional efforts
are continued to be implemented with a view to obtain commitment and
loyalty towards the organization.
SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE
Sunflag Iron and Steel Company Limited ("the Company") has in place
an Anti Sexual Harassment Policy in line with the requirements of the
Sexual Harassment of Women at the workplace (Prevention, Prohibition &
Redressal) Act, 2013 and Internal Complaints Committee (ICC) has been
set up to redress complaints received regarding sexual harassment. All
employees (permanent, contractual, temporary, trainees etc) are covered
under this Policy. The Certificate by Managing Director and Deputy
Managing Director to that effect is enclosed herewith Annex E and forms
part of this report.
HEALTH AND SAFETY
Departmental safety coordinators are identified for monitoring &
training on safety related matter at shop-floor. Safety Committee and
Apex Committee are available for periodical review on safety, health &
environment of all departments.
Regular Training on Safety is being organized for new joinee, regular
employees & contract labour. Mock-drills are conducted for practical
exposure to meet emergency need on quarterly basis.
Hand book on safety awareness are distributed to all employees
36. ENCLOSURES
a) Annex - A : Annual Report on Corporate Social Responsibility (CSR)
Activities together with expenditure details as Annex-I
b) Annex - B : Secretarial Auditors Report
c) Annex - C : Report on Energy Conservation, Technology Absorption and
Foreign Exchanges Earnings and Outgo
d) Annex - D : Extract of Annual Return as of 31st March, 2015 in the
prescribed Form MGT-9
e) Annex - E : Certificate on Sexual Harassment of Women at the
Workplace and its Prevention, Prohibition & Redressal
37. ACKNOWLEDGEMENT
The Directors acknowledge with thanks co-operation and assistance
received by the Company from the Members, Central & State Government
and Banks. The Directors also record their appreciation of the
dedication of all the employees of the Company for their support and
commitment to ensure that the Company continues to grow.
For and on behalf of the Board
Pranav Bhardwaj Surendra Kumar Gupta
Nagpur Managing Director Deputy Managing Director
12th August, 2015 DIN : 00054805 DIN : 00054836
Mar 31, 2014
The Shareholders,
The Board of Directors hereby present the 28th Annual Report together
with the Audited Financial Statements for the year ended 31st March
2014. During the year under review, the Steel Industry as well as
Automobile and Auto component sectors continued to remain in the market
with sluggish demand. Further, the high input costs have adversely
affected the profitability resulting into lesser margin. However, with
the continuous efforts by the Company''s Management towards strict cost
reduction and better financial / working capital management, has helped
to improve its overall performance in order to survive in the difficult
market conditions.
1. FINANCIAL RESULTS
Summarised financial results for the year are as follows :
(Rs. in Lacs)
For the financial year ended
Sr. Particulars
No. 31st March 2014 31st March 2013
a) Total Income 159,090 157,713
b) Total Expenditure 143,841 145,085
c) Gross Profit 15,249 12,628
d) Finance Cost 7,299 8,233
e) Profit before Depreciation 7,950 4,395
f) Depreciation 6,118 5,645
g) Profit/(Loss) before Tax 1,832 (1,250)
2. FINANCE
Your Company has ended the financial year with a profit after tax of Rs.
2,168 Lacs. After taking into account the brought forward profit of Rs.
31,681 Lacs, your Company has carried forward an amount of Rs. 33,849
Lacs.
3. DIVIDEND
The Company is in need of more funds through internal accruals to cope
with the terms and conditions of the lending banks financing ongoing
capital projects under expansion programmes, which will enable future
growth of the Company. As such, Board of Directors do not recommend
Dividend on the Equity Shares of the Company for the Financial Year
2013-2014.
4. MARKET SCENARIO
During the year under review, no substantial increase of demand was
seen in Automobile and Auto Component Industries. The profitability of
the steel industry have been affected due to high input cost of basic
raw materials viz Iron Ore and Coal and also due to Government policies
on these basic raw materials. However, SUNFLAE STEEL is continuing to
develop new high value grades of alloy steel to cater the needs of
other domestic as well as international markets than its present
market. The current market scenario is expected to be favorable to
Steel Industries after slow down in the previous year/s.
5. OPERATIONS
i. During the financial year under review :
a) The total production for Direct Reduction Plant (I II) was 114,026
MT as against 118,030 MT of the previous financial year.
b) The total production of 296,702 MT in Steel Melt Shop as against
269,152 MT of the previous financial year.
c) The total production of Rolled products was 296,564 MT as against
273,019 MT of the previous financial year.
d) The total production of Mini Hot Metal / Pig Iron was 219,980 MT as
against 193,200 MT of the previous financial year.
e) The total production of Sinter Plant was 339,301 MT as against
340,389 MT of the previous financial year.
ii. The power plant generated 1,573.13 Lacs kWh as compared to 1,601.03
Lacs kWh of the previous financial year. iii. The total coal
production at Belgaon Coal Block is 148,000 as against 248,350 MT of
the previous financial year.
6. PROJECTS
Project under Construction :
The Company has undertaken to commission Online Inspection system. The
project consists of Ultrasonic Testing Machine and Roll Straighteners
together with hot rolled black bar handling equipment. This facility is
proposed to be installed at finished product unit to verify the
material for defect free. This will eliminate the customer rejections
on quality issues. Also,SUNFLAESTEEL will continue to retain major auto
giants.
Subsidiary Companies :
Sunflag Power Limited : Requisite approvals are being sought for the
implementation of Hydro Power Project at Hanol Tuini in the state of
Uttarakhand.
Sunflag Special Steels Limited : The management is exploring the
business opportunities for the Company.
Khappa Coal Company Private Limited : The Ministry of Coal, Government
of India pursuant, to its order bearing no. 13016/56/ 2008-CA-I dated
6th January 2014, conveyed its decision to de-allocate the Khappa &
Extension Coal Block in the State of Maharashtra.
Sunflag Iron and Steel Company Limited, thereafter filed a writ
petition before the High Court of Judicature at Bombay, Nagpur Bench
against the order of de-allocation. The High Court, through an order
dated 24th January 2014, has granted an ad-interim relief that "no
coercive steps be taken against the petitioner".
Joint Venture Companies (JVC) :
Madanpur (North) Coal Company Private Limited : The Ministry of Coal,
Government of India, pursuant to its order bearing no.
13016/76/2006-CA-I (Part-I) dated 17th February 2014, conveyed its
decision to de-allocate the Madanpur (North) Coal Block in the State of
Chhattisgarh.
Madanpur (North) Coal Company Private Limited, thereafter filed a writ
petition against the order of de-allocation before Delhi High Court at
New Delhi. The High Court of Delhi has passed an interim order dated
17th February 2014 directing that "since the coal block is stated to
have been de-allocated by the Government, the respondent shall maintain
status quo till the next date of hearing and no further steps shall be
taken by the Government to re-allocate the coal block nor shall any
third party interest be created therein till further orders".
C T Mining Private Limited : The Ministry of Coal, Government of India,
pursuant to its order bearing no. 38011/4/2006-CA-I dated 22nd November
2012, conveyed its decision to de-allocate the Choritand-Taliya Coal
Block in the State of Jharkhand.
Sunflag Iron and Steel Company Limited, thereafter filed a writ
petition against the order of de-allocation before the High Court of
Jharkhand at Ranchi. The High Court of Jharkhand has passed an interim
order in 12th December 2012 that "no coercive steps be taken against
the petitioners pursuant to the impugned order".
Gujarat State Mining and Resources Corporation Limited : In absence of
allocation of coal block to the JVC, the proposed integrated coke oven
project in the state of Gujarat is under active consideration of the
Management.
7. DEMATERIALISATION OF SHARES
As on 31st March 2014, there were approximately 891 lacs equity shares
dematerialised through depositories viz. National Securities Depository
Limited and Central Depository Services (India) Limited, which
represents about 54.916% of the total paid- up capital of the Company.
8. LISTING OF SHARES
The equity shares of your Company continued to be listed with / traded
on the Bombay Stock Exchange Limited (BSE) and The National Stock
Exchange of India Limited (NSE). The listing fees have been paid to
both Stock Exchanges (BSE & NSE) for the financial year 2013-2014.
9. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
The particulars relating to energy conservation, technology absorption,
foreign exchange earnings and outgo, as required to be disclosed under
Section 217(1)(e) of the Companies Act, 1956 read with the Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules,
1988 are given in the Annex to this report.
10. SUBSIDIARY COMPANIES
In pursuance of general circular issued by the Ministry of Corporate
Affairs, Government of India and on compliance of terms and condition
for availing the general exemption U/s. 212(8) of the Companies Act,
1956, the audited Financial Statements of the subsidiary companies are
not attached with the annual report of the Company. The audited
Financial Statements of these subsidiary companies are available for
inspection at the Registered Office of the Company. Any shareholder
interested in obtaining a copy of accounts of subsidiary company may
write to the Company Secretary of the Company.
11. DIRECTORS
i. IDBI Bank Limited has withdrawn nomination of Mr. B.W. Ramteke from
the Board and instead appointed Mr. Sonam Bodh (Deputy General
Manager-CBG, IDBI Bank Limited, Mumbai), effective 24th October 2013.
The Board places on record its appreciation for Mr. B.W. Ramteke''s
valuable services and wide contributions made during his tenure of
Directorship of the Company.
ii. Pursuant to Section 152 of Companies Act, 2013 read with the
Companies (Appointment and Qualification of Directors) Rules, 2014, Mr.
P.B.Bhardwaj, Non-executive Chairman retire by rotation and, being
eligible, offered himself for re-appointment.
iii. Pursuant to Section 152 of Companies Act, 2013, read with
Companies (Appointment and Qualification of Directors) Rules, 2014, Mr.
Ravi Bhushan Bhardwaj, Vice-Chairman and Managing Director retire by
rotation and, being eligible, offered himself for re-appointment.
iv. Pursuant to Section 149, 152, Schedule IV of the Companies Act,
2013 read with the Companies (Appointment and Qualification of
Directors) Rules, 2014 and pursuant to Listing Agreement/s, Dr. E R C
Shekar, Mr. S Gajendran and CA Jayesh M Parmar, Non-executive,
Independent Directors, in respect of whom the Company has received a
notice in writing under Section 160 of the Companies Act, 2013 from a
member proposing their candidature for office of the Director have been
recommended for appointment as Non-executive, Independent Director for
a fixed term of consecutive three (3) years i.e. from the conclusion of
28th Annual General Meeting up to the conclusion of 31st Annual General
Meeting of the Company in the calendar year 2017.
v. Pursuant to Section 149, 152, Schedule IV of the Companies Act, 2013
read with the Companies (Appointment and Qualification of Directors)
Rules, 2014 and pursuant to Listing Agreement/s, Mr Kumar Jitendra
Singh has been appointed as an Additional
Director (Non-executive, Independent) of the Company effective 5th
August 2014 and his term is expiring at the conclusion of ensuing
Annual General Meeting. The Company has received a notice in writing
under Section 160 of the Companies Act, 2013 from a member proposing
his candidature for office of the Director have been recommended for
appointment as Non-executive, Independent Director for a fixed term of
consecutive three (3) years i.e. from the conclusion of 28th Annual
General Meeting up to the conclusion of 31st Annual General Meeting of
the Company in the calendar year 2017.
vi. Subject to approval of the Central Government, the Board of
Directors recommends for approval of the Members, payment of
remuneration over and above minimum remuneration as provided under
Schedule XIII to the Companies Act, 1956 and waiver of excess
remuneration paid during the financial year 2013-2014 to the managerial
personnel/s of the Company.
vii. Except the above, there is no change in the composition of Board
of Directors during the period under review.
12. INDUSTRIAL RELATIONS
During the year under review, industrial relations remained cordial.
Employees'' competencies and skills were enhanced by exposing them to
several internal and external training programmes. Various measures
were taken to improve motivation level of employees. Additional efforts
are continued to be implemented with a view to obtain commitment and
loyalty towards the organisation.
13. PERSONNEL / PARTICULARS OF EMPLOYEES
Information as per Section 217(2A) of the Companies Act, 1956 read with
Companies (Particulars of Employees) Rules, 1975, as amended, forms
part of this report. However, as permitted by Section 219(1)(b)(iv) of
the Companies Act, 1956, the report and accounts are being sent to all
shareholders excluding the statement of particulars of employees under
Section 217(2A) of the Companies Act, 1956. Any shareholder interested
in obtaining a copy of this statement may write to the Company
Secretary at the Registered Office of the Company.
14. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND
PROTECTION FUND
The dividend declared by the Company which remains unpaid / unclaimed
for a period of seven (7) years is required to be transferred to the
Investor Education & Protection Fund (IEPF) established by the Central
Government pursuant to Section 205C of the Companies Act, 1956.
As such, the dividend for the financial year 2005-2006 declared at
Twentieth (20th) Annual General Meeting held on 28th September 2006 and
remaining unpaid / unclaimed for Seven (7) years amounting to Rs.
1,592,685/- had been transferred to the credit of IEFP Account on 27th
September 2013. The members are requested to claim their unpaid /
unclaimed dividends, if any.
15. AUDITOR''S REPORT
The observations made by the Auditors in their report are
self-explanatory and have also been further amplified in the Notes to
the Accounts.
16. AUDITORS
i. M/s. Patel, Shah & Joshi, Chartered Accountants, Mumbai - the
Statutory Auditors of the Company are eligible and recommended for
re-appointment as the Statutory auditors till the conclusion of the
next Annual General Meeting.
The Statutory Auditors have furnished a Certificate of their
eligibility for re-appointment under Section 139 of the Companies Act,
2013 and Rules and Regulations made thereunder and are not disqualified
for such appointment within the meaning of Section 139 and Section 141
of the Companies Act, 2013.
ii. M/s. G. R. Paliwal & Company, Cost Accountants, Nagpur has been
appointed by the Board of Directors of the Company on the
recommendations of the Audit Committee, as the Cost Auditors of the
Company for the financial year 2014-2015.
The Cost Auditors have furnished a Certificate of their eligibility for
appointment pursuant to Sub-section 3(g) of Section 141 read with
Sub-section (5) of Section 148 of the Companies Act, 2013, Certificate
for independence and arms length relationship with the Company and are
not disqualified for such appointment within the meaning of Section
141(3) of the Companies Act, 2013.
The Board recommends his remuneration to members for ratification at
the 28th Annual General Meeting of the members of the Company.
17. AUDIT COMMITTEE
The Audit Committee of the Board is under Chairmanship of Dr. E. R. C.
Shekar, Non-executive, Independent Director of the Company and consists
of CA Jayesh Madhavji Parmar & Mr. S. Gajendran, Non-executive,
Independent Directors and Mr. B. W. Ramteke (Upto 24th October 2013)
and Mr. Sonam Bodh (effective 11th November 2013), Nominee Director of
IDBI Bank Limited, as the Members, as a practice of good Corporate
Governance.
18. CORPORATE GOVERNANCE REPORT
The Company is committed to maintain the highest standards of corporate
governance and adhere to the corporate governance requirements set out
by SEBI. The Company has also implemented several best corporate
governance practices as prevalent globally.
Your Directors are pleased to report that your Company has complied
with the SEBI Guidelines on Corporate Governance as of 31st March 2014
relating to Clause 49 of the Listing Agreement with concerned Stock
Exchange(s). A Certificate from Statutory Auditors  M/s Patel, Shah &
Joshi, Chartered Accountants, confirming compliance with conditions as
stipulated under Clause 49 is annexed to the Corporate Governance
Report.
19. CODES OF CONDUCT OF BUSINESS PRINCIPLES & ETHICS AND PREVENTION OF
INSIDER TRADING
Your Directors are pleased to report that your Company has complied
with the :
i. Code of Conduct of Business Principles and Conduct; and
ii. Prevention of Insider Trading in Sunflag securities by the
designated persons / officers (insider)
20. DIRECTORS'' RESPONSIBILITY STATEMENT
The Board of Directors confirms :
i. that in the preparation of the Annual Financial Statements, the
applicable Accounting Standards had been followed along with proper
explanation, relating to material departures;
ii. that the Directors 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 and of the financial year and of the
profit of the Company for that financial year;
iii. that the Directors had taken proper and sufficient care for the
maintenance of adequate Accounting records in accordance with the
provisions of this Act for safeguarding the Assets of the Company and
for preventing and detecting fraud and other irregularities;
iv. that the Directors had prepared the Annual Financial Statements on
a going concern basis.
21. ACKNOWLEDGEMENT
The Directors acknowledge with thanks co-operation and assistance
received by the Company from the Members, Central & State Government
and Banks. The Directors also record their appreciation of the
dedication of all the employees of the Company for their support and
commitment to ensure that the Company continues to grow.
For and on behalf of the Board
Nagpur Ravi Bhushan Bhardwaj
5th August 2014 Vice-Chairman & Managing Director
Mar 31, 2013
To The Members of Sunflag Iron and Steel Company Limited
The Board of Directors hereby present the Twenty-seventh (27th) Annual
Report together with the audited accounts for the financial year ended
31st March 2013. During the year under review, the Steel industry as
well as Automobile and Auto component sectors witnessed stagnant
demand. At SUNFLAG STEEL, the high input cost of basic raw materials
coupled with lower sales realisation have reduced the profits
considerably resulting into the losses. Still, the unstinted efforts by
the Company''s management continued for strict cost reduction and better
financial / working capital management helped to restrict its overall
performance in order to sustain minimum damage to survive in the
difficult market conditions.
1. FINANCIAL RESULTS
Summarised financial results for the year are as follows : ^ in Lacs)
Sr For the financial year ended
Particulars
No. 31st March
2013 31st March 2012
a) Total Income 157,713 162,346
b) Total Expenditure 145,085 149,782
c) Gross Profit 12,628 12,564
d) Finance Cost 8,233 5,305
e) Profit before
Depreciation 4,395 7,259
f) Depreciation b 5,645 4,244
g) Profit / (Loss)
before Tax (1,250) 3,015
2. FINANCE
During the financial year under review, the net turnover is lower by
about 3% as compared to corresponding previous financial year. Your
Company has ended the financial year with a loss after tax of ? 1,250
Lacs. After taking into account the brought forward profit of ? 32,931
Lacs, your Company has carried forward an amount of ? 31,681 Lacs.
3. DIVIDEND
Due to losses incurred and further decrease in the cash accruals, there
is an increased pressure on the cash flows in the financial year under
review. Also, due to the additional borrowings made for implementing
the capital projects under expansion, there is an increase in the
commitments towards repayments to the lending banks. As such, the Board
of Directors feels appropriate not to recommend any dividend for the
financial year 2012-2013.
4. MARKET SCENARIO
The current market scenario is not favourable to Steel Industry as well
as Automobile and Auto component sectors due to general slow down in
Indian and Global ecomony coupled with policies of Government.
However,SUNFLAGSTEEL is continuing to develop new high value grades of
alloy steel to cater the needs of domestic as well as international
markets.
5. OPERATIONS
i. During the financial year under review :
a) The total production for Direct Reduction Plant (I II) was 118,030
MT as against 142,444 MT of the previous financial year.
b) The total production of 269,152 MT in Steel Melt Shop as against
302,532 MT of the previous financial year.
c) The total production of Rolled products at BSM & ASM was 273,019 MT
as against 303,732 MT of the previous financial year. (Previous year
production includes outside conversion of 7,624 MT).
d) The total production of Hot Metal / Pig Iron was 189,640 MT as
against 205,089 MT of the previous financial year.
e) The total production of Sinter Plant was 340,389 MT as against
339,900 MT of the previous financial year.
f) The total production of Blooming Mill was 30,206 MT including semis.
The production for the previous year nil as it was commissioned in the
financial year under review.
ii. The power plant generated 1,601.03 Lacs kWh as compared to 1,714.21
Lacs kWh of the previous financial year. iii. The total coal
production at Belgaon Coal Block is 248,350 as against 159,905 MT of
the previous financial year.
6. PROJECTS Steel Plant :
The Company has commissioned commercial production of Blooming Mill
during the financial year. Additionally, the Company is in the process
of installation of Variable Reduction Mill (VRM) which will give close
dimension, tolerance and good surface finish. Also, the Company is in
process of installation of Bar Conditioning system.
These new projects will add wider product range, value addition and
more competitive products and in particular, in achieving economy in
the cost of production.
Also, the Company had installed Fume Extraction System in its Steel
Melt Shop area as a measure of reducing the pollution.
Subsidiary Companies :
Sunflag Power Limited : Requisite approvals are being sought and
underway for implementation of Hydro Power Project at
Hanol Tuini in the state of Uttarakhand. Recent disaster in the state
of Uttarakhand may delay the progress of implementation of
Company''s Hydro Power Project at Hanol Tuini.
Sunflag Special Steels Limited : The management is exploring the
business opportunities for the Company.
Khappa Coal Company Private Limited : The Company has initiated various
activities well in time and is striving harder to pave its way to
success. The activities to be initiated by the Company are almost over
and different matters are pending with various departments of
Government of Maharashtra and Government of India. The operations of
the Khappa & Extension Coal Block will depend on delay in execution of
project approvals and clearances, for hich regular follow up action is
being taken by the
Company.
Joint Venture Companies :
Madanpur (North) Coal Company Private Limited : Earlier, the project
was declared as ''No Go Area'' which was later withdrawn by the Ministry
of Environment & Forest, Government of India for the purpose of forest
clearances. As such, various approvals / clearances are being sought
from the concerned authorities for effective implementation of the
Madanpur (North) Coal Project in the state of Chhattisgarh.
C T Mining Private Limited : The Ministry of Coal, Government of India
vide its order dated 22nd November 2012 de-allocated the Coal Block
allocated to the Joint Venture Company. The said joint venture company
together with the promoter companies viz., M/s Sunflag Iron & Steel
Company Limited and M/s Rungta Mines Limited have separately filed Writ
Petition/s before the Hon''ble High Court of Jharkhand at Ranchi and got
stay order on 12th December 2012. The matter is now sub-judice before
the Hon''ble High Court of Jharkhand at Ranchi.
Gujarat State Mining and Resources Corporation Limited : The management
efforts are underway for getting allocation of coal block for
development of integrated coke oven plant in the state of Gujarat.
7. DEMATERIALISATION OF SHARES
As on 31st March 2013, there were 88,971,299 equity shares (which
represents 54.854% of the total paid-up capital of the Company)
dematerialised through depositories viz. National Securities Depository
Limited and Central Depository Services (India) Limited.
8. LISTING OF SHARES
The equity shares of your Company continued to be listed with / traded
on the Bombay Stock Exchange Limited (BSE) and The National Stock
Exchange of India Limited (NSE). The listing fees have been paid to
both Stock Exchanges (BSE & NSE) for the financial year 2013-2014.
9. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
The requisite particulars required to be disclosed under the Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules,
1988 are given in the Annex to this report.
10. SUBSIDIARY COMPANIES
In pursuance of general circular issued by the Ministry of Corporate
Affairs, Government of India and on compliance of terms and condition
for availing the general exemption U/s. 212(8) of the Companies Act
1956, the audited accounts of the subsidiary companies are not attached
with the annual report of the Company. The audited accounts of these
subsidiary companies are available for inspection at the registered
office of the Company. Any shareholder interested in obtaining a copy
of accounts of subsidiary company may write to the Company Secretary of
the Company.
11. DIRECTORS
i. Pursuant to Article 151 of the Articles of Association of the
Company, Mr. S. Gajendran retires by rotation and, being eligible,
offered himself for re-appointment. ii. Subject to approval of the
Central Government, the Board of Directors recommends for approval of
the Members, viz.,
a) payment of remuneration over and above minimum remuneration as
provided under Schedule XIII till the existing tenure of appointment /
re-appointment, but not exceeding three (3) years, and waiver of excess
remuneration paid during the financial year 2012-2013 to the managerial
personnel/s of the Company
b) the re-appointment of and payment of existing remuneration to Mr.
Ravi Bhushan Bhardwaj as the Vice-Chairman & Managing Director of the
Company for a further period of three (3) years effective 14th November
2013.
Except the above, there is no change in the composition of Board of
Directors during the period under review.
12. INDUSTRIAL RELATIONS
During the year under review, industrial relations remained cordial.
Employees'' competencies and skills were enhanced by exposing them to
several internal and external training programmes. Various measures
were taken to improve motivation level of employees. Additional efforts
are continued to be implemented with a view to obtain commitment and
loyalty towards the organisation.
13. PERSONNEL / PARTICULARS OF EMPLOYEES
Information as per Section 217(2A) of the Companies Act 1956 read with
Companies (Particulars of Employees) Rules 1975, as amended, forms part
of this report. However, as permitted by Section 219(1)(b)(iv) of the
Companies Act 1956, the report and accounts are being sent to all
shareholders excluding the statement of particulars of employees under
Section 217(2A) of the Comapies Act 1956. Any shareholder interested in
obtaining a copy of this statement may write to the Company Secretary
at the registered office of the Company.
14. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND
PROTECTION FUND
The dividend declared by the Company which remains unpaid / unclaimed
for a period of seven (7) years is required to be transferred to the
Investor Education & Protection Fund (IEPF) established by the Central
Government pursuant to Section 205C of the Companies Act 1956.
As such, the dividend for the financial year 2005-2006 declared at 20th
Annual General Meeting held on 28th September 2006 remaining unpaid /
unclaimed is due for transfer to Investor Education and Protection Fund
on 27th September 2013.
The members are requested to claim their unpaid / unclaimed dividend,
if any, declared and paid for the financial year 2005-2006 together
with for the financial years 2006-2007, 2007-2008, 2008-2009, 2009-2010
and 2010-2011.
15. AUDITOR''S REPORT
The observations made by the Statutory Auditors in their report are
self-explanatory and have also been further amplified in the Notes to
the Accounts.
16. AUDITORS
i. M/s. Patel, Shah & Joshi, Chartered Accountants, Mumbai - the
statutory auditors of the Company are eligible and recommended for
re-appointment as the statutory auditors till the conclusion of the
next Annual General meeting.
The statutory auditors have furnished a certificate of their
eligibility for re-appointment U/s. 224(1-B) of the Companies Act, 1956
and are not disqualified for such appointment within the meaning of
section 226 of the Companies Act, 1956.
ii. M/s. G R. Paliwal & Company, Cost Accountants, Nagpur has been
appointed by the Board of Directors of the Company on the
recommendations of the audit committee, as the cost auditors of the
Company for the financial year 2013-2014.
The cost auditors have furnished a Certificate of their eligibility for
appointment U/s. 224(1-B) of the Companies Act, 1956, Certificate for
independence and arms length relationship with the Company and are not
disqualified for such appointment within the meaning of section 226 /
233B(5) of the Companies Act, 1956.
17. AUDIT COMMITTEE
The audit committee of the Board is under chairmanship of Dr. E. R. C
Shekar, an independent, non-executive director of the Company and
consisting of other independent, non-executive directors viz. Mr. S
Gajendran, CA Jayesh Madhavji Parmar and IDBI Nominee - Mr. Naresh
Gwalani (till 28th May 2012) & Mr. B. W. Ramteke (effective 29th May
2012), as the members, as a practice of good corporate governance.
18. CORPORATE GOVERNANCE REPORT
Your directors are pleased to report that your Company has complied
with the SEBI guidelines on Corporate Governance as of 31st March 2013
relating to clause 49 of the listing agreement with concerned stock
exchange(s). A certificate from statutory auditors - Messers Patel,
Shah & Joshi, Chartered Accountants, confirming compliance with
conditions as stipulated under the aforesaid clause 49 is annexed to
this report.
19. CODES OF CONDUCT OF BUSINESS PRINCIPLES & ETHICS AND PREVENTION OF
INSIDER TRADING
Your Directors are pleased to report that your Company has complied
with :
1. the code of conduct of business principles and conduct; and
2. the prevention of insider trading in Sunflag securities by the
designated persons / officers (insider).
20. DIRECTORS'' RESPONSIBILITY STATEMENT
The Board of Directors confirms :
i. That in the preparation of the annual accounts, the applicable
accounting standards had been followed along with proper explanation
relating to material departure;
ii. That the Directors 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 and of the
profit of the Company for that year;
iii. That the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities;
iv. That the Directors had prepared the annual accounts on a going
concern basis.
21. ACKNOWLEDGEMENT
The Directors acknowledge with thanks co-operation and assistance
received by the Company from the shareholders, central and state
government, financial institutions and banks. The directors also record
their appreciation of the dedication of all the employees of the
Company for their support and commitment to ensure that the Company
continues to grow.
For and on behalf of the Board
Nagpur Ravi Bhushan Bhardwaj
3rd August 2013 Vice Chairman & Managing Director
Mar 31, 2012
To, The Members of Sunflag Iron and Steel Company Limited,
The Board of Directors hereby present the 26th Annual Report together
with the Audited Statement of Accounts for the financial year ended
31st March 2012. During the year under review, the Steel Industry as
well as Automobile and Auto component sectors witnessed stagnant demand
and the high input costs have reduced the profits considerably. The
unstinted efforts by the Company's Management continued for strict cost
reduction and better financial / working capital management helped to
maintain its overall performance in order to survive in the difficult
market conditions.
1. FINANCIAL RESULTS
Summarised financial results for the year are as follows :
Rs. in Lacs
Sr. For the financial year ended
Particulars
No 31st March 2012 31st March 2011
a) Total Income 162,346 154,967
b) Total Expenditure 149,782 138,177
c) Gross Profit 12,564 16,790
d) Interest 5,305 3,744
e) Profit before Depreciation 7,259 13,046
f) Depreciation 4,244 3,964
g) Profit before Tax 3,015 9,082
2. FINANCE
Your Company has ended the financial year with a profit after tax of Rs.
1,937 Lacs. After taking into account the brought forward profit of Rs.
30,994 Lacs, your Company has carried forward an amount of Rs. 32,931
Lacs.
3. DIVIDEND
Due to the reduced profits and the decrease in the cash accruals, there
is an increased pressure on the cash flows. Also, due to the
additional borrowings made for implementing the capital projects under
expansion, there is an increase in the commitments towards repayments
to the lending banks. As such, Board of Directors feel appropriate not
to recommend any dividend for the Financial Year 2011-2012.
4. MARKET SCENARIO
SUNFLABSTEEL is continuing to develop new high value grades of alloy
steel to cater to the needs of domestic as well as international
markets. During the financial year under review, the growth in the net
turnover is about 5% as compared to previous financial year.
5. OPERATIONS
i. During the year under review :
a) A new Direct Reduction Plant (DRP-II) was commissioned on 24th June
2011. The total production of Direct Reduction Plant (I II) was 142,444
MT as against 92,774 MT of the previous year.
b) The total production was 302,532 MT in Steel Melt Shop as against
304,936 MT of the previous year.
c) The total production of Rolled products was 303,732 MT as against
311,131 MT of the previous year. (These production includes outside
conversion of 7,624 MT of the current year and 19,219 MT of the
previous year).
d) The total production of Hot Metal / Pig Iron was 205,089 MT as
against 193,992 MT of the previous year.
e) The total production of Sinter Plant was 339,900 MT as against
333,201 MT of the previous year.
ii. The power plant generated 1,714.21 Lacs kWh as compared to
1,276.20 Lacs kWh of the previous year.
iii. The total coal production at Belgaon Coal Block was 159,905 MT as
against 114,000 MT of the previous year.
6. PROJECTS Steel Plant :
The Company has commissioned its Direct Reduction Plant (DRP-II) with a
capacity of 350 TPD together with WHRGS boiler to generate 8 MW power
for captive consumption. Besides, the commercial production of
Blooming Mill was commissioned on 1st April 2012.
These new projects will add wider product range, value addition and
more competitive products and in particular, achieve economy in the
cost of production.
Subsidiary Companies :
Sunflag Power Limited : Requisites approvals are being sought for the
implementation of Hydro Power Project at Hanol-Tuini in the state of
Uttarakhand.
Sunflag Special Steels Limited : The management is exploring the
business opportunities for the Company. Khappa Coal Company Private
Limited : The Company has initiated various ancillary activities and
applied for various government approvals in accordance with the
schedule itemized in the allocation letter issued by the Ministry of
Coal. The Company has procured plots of land for the purpose of
incline drivage and other civil construction. The Company is striving
harder to pave its way to success and the operations of the Khappa &
Extension Coal Block in the state of Maharashtra are expected to start
within the scheduled time line.
Joint Venture Companies :
Madanpur (North) Coal Company Private Limited : Various approvals /
clearances are being sought from the concerned authorities for
effective implementation of the Madanpur (North) Coal project in the
state of Chhattisgarh.
C T Mining Private Limited : Various approvals / clearances are being
sought from the concerned authorities for effective implementation of
the Choritand - Taliya Coking Coal project in the state of Jharkhand.
Gujarat State Mining and Resources Corporation Limited : Requisite
approval is sought from the concerned authorities for allocation of
Coal Block for development of integrated coke oven plant in the state
of Gujarat.
7. DEMATERIALISATION OF SHARES
As on 31st March 2012, there were approximately 887 lacs equity shares
dematerialised through depositories viz. National Securities
Depository Limited and Central Depository Services (India) Limited,
which represents about 54.702% of the total paid-up capital of the
Company.
8. LISTING OF SHARES
The equity shares of your Company continued to be listed with / traded
on the Bombay Stock Exchange Limited (BSE) and The National Stock
Exchange of India Limited (NSE). The listing fees have been paid to
both Stock Exchanges (BSE & NSE) for the financial year 2012-2013.
9. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
The requisite particulars required to be disclosed under the Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules,
1988 are given in the Annex to this report.
10. ANNUAL ACCOUNTS OF SUBSIDIARY COMPANIES
In pursuance of General Circular of the Ministry of Corporate Affairs,
Government of India and on compliance of terms and conditions for
availing the general exemption Under Section 212(8) of the Companies
Act, 1956, the Annual Accounts of the Subsidiary Companies, are not
attached with the Annual Report of the Company. The Annual Accounts of
these Subsidiary Companies are available for inspection at the
Registered Office of the Company. Any shareholder interested in
obtaining a copy of accounts of subsidiary companies may write to the
Company Secretary of the Company.
11. DIRECTORS
i. Pursuant to Article 151 of the Articles of Association of the
Company, Dr. E.R.C. Shekar retires by rotation and being eligible,
offers himself for re-appointment.
ii. IDBI Bank Limited has withdrawn nomination of Mr. Naresh J.
Gwalani from the Board and instead appointed Mr. B.W. Ramteke (General
Manager, Management Information System Department, IDBI Bank Limited,
Mumbai) effective 28th May 2012. The Board places on record its
appreciation for Mr. Naresh J. Gwalani's valuable services and wide
contributions made during his tenure of Directorship of the Company.
iii. The Board of Directors recommends for approval of the members, the
re-appointment of Mr. Surendra Kumar Gupta as the Whole-time Director,
designated as Director & CEO, of the Company for a further period of
five (5) years effective 30th July 2012.
Except the above, there is no change in the constitution of the Board
of Directors during the period under review.
12. INDUSTRIAL RELATIONS
During the year under review, industrial relations remained cordial.
Employees' competencies and skills were enhanced by exposing them to
several internal and external training programmes. Various measures
were taken to improve motivation level of employees. Additional efforts
are continued to be implemented with a view to obtain commitment and
loyalty towards the organisation.
13. PERSONNEL / PARTICULARS OF EMPLOYEES
Information as per Section 217(2A) of the Companies Act, 1956 read with
Companies (Particulars of Employees) Rules, 1975, as amended, forms
part of this report. However, as permitted by Section 219(1 )(b)(iv) of
the Companies Act 1956, the report and accounts are being sent to all
shareholders excluding the statement of particulars of employees under
Section 217(2A) of the Companies Act, 1956. Any shareholder interested
in obtaining a copy of this statement may write to the Company
Secretary at the Registered Office of the Company.
14. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND
PROTECTION FUND
The dividend declared by the Company which remain unpaid / unclaimed
for a period of Seven (7) years from the date they became due for
payment are required to be transferred to the Investor Education and
Protection Fund (IEPF) established by the Central Government pursuant
to Section 205C of the Companies Act, 1956.
The Members are requested to claim their unpaid / unclaimed
Dividend(s), if any, declared and paid for the financial years
2005-2006, 2006-2007, 2007-2008, 2008-2009, 2009-2010 and 2010-2011.
15. AUDITOR'S REPORT
The observations made by the Statutory Auditors in their report are
self-explanatory and have also been further amplified in the Notes to
the Accounts.
16. AUDITORS
i. M/s. Patel, Shah & Joshi, Chartered Accountants, Mumbai - the
Statutory Auditors of the Company are eligible and recommended for
re-appointment as the Statutory auditors till the conclusion of the
next Annual General Meeting. The Statutory Auditors have furnished a
Certificate of their eligibility for re-appointment Under Section 224(1
-B) of the Companies Act, 1956 and are not disqualified for such
appointment within the meaning of Section 226 of the Companies Act,
1956.
ii. M/s. G. R. Paliwal & Company, Cost Accountants, Nagpur has been
appointed by the Board of Directors of the Company on the
recommendations of the Audit Committee, as the Cost Auditors of the
Company for the financial year 2012-2013.
The Cost Auditors have furnished a Certificate of their eligibility for
appointment Under Section 224(1-B) of the Companies Act 1956,
Certificate for independence and arms length relationship with the
Company and are not disqualified for such appointment within the
meaning of Section 226 / 233-B(5) of the Companies Act, 1956.
17. AUDIT COMMITTEE
The Audit Committee of the Board is under Chairmanship of Dr. E. R. C.
Shekar, an Independent, Non-executive Director of the Company and
consisting of other Independent, Non-executive Directors viz. CA Jayesh
Madhavji Parmar, Mr. S. Gajendran and Mr. Naresh Gwalani (up to 28th
May 2012) & Mr. B.W. Ramteke (effective 28th May 2012) as the Members,
as a practice of good Corporate Governance.
18. CORPORATE GOVERNANCE REPORT
Your Directors are pleased to report that your Company has complied
with the SEBI Guidelines on Corporate Governance as of 31st March 2012
relating to Clause 49 of the Listing Agreement with concerned Stock
Exchange(s). A Certificate from Statutory Auditors - Messers Patel,
Shah & Joshi, Chartered Accountants, confirming compliance with
conditions as stipulated under Clause 49 is annexed to the Corporate
Governance Report.
19. CODES OF CONDUCT OF BUSINESS PRINCIPLES & ETHICS AND PREVENTION OF
INSIDER TRADING
Your Directors are pleased to report that your Company has complied
with :
i. the Code of Conduct of Business Principles and Conduct; and
ii. the Prevention of Insider Trading in Sunflag Securities by the
designated persons / officers (insider).
20. DIRECTORS' RESPONSIBILITY STATEMENT The Board of Directors
confirms :
i. that in the preparation of the Annual Accounts, the applicable
Accounting Standards have been followed along with proper explanation
relating to material departure;
ii. that the Directors had selected such Accounting Policies and
applied them consistently and made judgements 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 and of the
Profit of the Company for that financial year;
iii. that the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the Assets of the Company and
for preventing and detecting fraud and other irregularities;
iv. that the Directors had prepared the Annual Accounts on a going
concern basis.
21. ACKNOWLEDGEMENT
The Directors acknowledge with thanks co-operation and assistance
received by the Company from the Members, Central & State Government
and Banks. The Directors also record their appreciation of the
dedication of all the employees of the Company for their support and
commitment to ensure that the Company continues to grow.
For and on behalf of the Board
Nagpur Ravi Bhushan Bhardwaj
27th July 2012 Vice Chairman & Managing Director
Mar 31, 2011
The Shareholders,
The Board of Directors hereby present the 25th Annual Report together
with the Audited Statement of Accounts for the financial year ended
31st March 2011. During the year under review, though the Steel
Industry as well as Automobile and Auto component sectors witnessed
better demands in the improved market conditions, high input costs have
reduced the profits considerably. The unstinted efforts by the
Company's Management continued for strict cost reduction and better
financial / working capital management helped to maintain its overall
performance.
1. FINANCIAL RESULTS
Summarised financial results for the year are as follows :
Rs. in Lacs
For the financial year ended
Sr. Particulars 31st March 2011 31st March 2010
No.
a. Total Income 154,967 135,459
b. Total Expenditure 138,177 115,857
c. Gross Profit 16,790 19,602
d. Interest 3,744 3,004
e. Profit before
Depreciation 13,046 16,598
f . Depreciation 3,964 3,788
g. Profit before Tax 9,082 12,810
2. FINANCE
Your Company has ended the financial year with a profit after tax of
Rs. 7,053 Lacs. After taking into account the brought forward profit of
Rs. 24,884 Lacs and appropriations of Rs. 943 Lacs, your Company has
carried forward an amount of Rs. 30 994 Lacs.
3. DIVIDEND
The Company is in need of additional funds through internal accruals to
meet requirement of the lending banks financing ongoing capital
projects under expansion programme, which will enable future growth of
the Company. As such, Board of Directors feel appropriate to recommend
Dividend @ 5% i.e. Rs. 0.50 per equity share of the Company for the
Financial Year 2010-2011, subject to approval of the members in the
ensuing 25th Annual General Meeting of the Company.
4. MARKET SCENARIO
SUNFLAG STEEL continues to develop new high value grades of alloy steel
to cater the needs of domestic as well as international markets. During
the financial year under review, the growth in the net turnover is
about 14.24% as compared to previous financial year.
5. OPERATIONS
i. During the year under review :
a.Direct Reduction Plant during the year under review produced 92,774
MT as against 126,336 MT in the previous year.
b.The total production of Billets was 304,936 MT in our Steel Melt
Shop as against 326,141 MT of the previous year.
c.The total production of Rolled products was 311,131 MT as against
309,596 MT of the previous year.
d.The total production of Pig Iron was 193,992 MT as against the
previous year production of 205,502 MT.
e.The total production of Sinter Plant was 333,201 MT as against
191,385 MT previous year.
ii.The power plant generated 1,276.20 Lacs kWh as compared to 1,461.03
Lacs kWh in the corresponding previous year.
iii. The total coal production at Belgaon Coal Block is 114,000 MT as
against 140,147 MT in the previous year.
6. PROJECTS
Steel Plant :
The Company has taken effective steps for the implementation of the
Blooming Mill and Sponge Iron Plant II with WHRGS projects. The same
are under installation stage and expected to be commissioned for their
commercial production during the year 2011-2012.
Subsidiary Companies :
Sunflag Power Limited : The necessary approvals are being sought for
the implementation of Hydro Power Project at Hanol-Tuini, in the state
of Uttarakhand
Sunflag Special Steels Limited : The management is exploring the
business opportunities for the Company.
Khappa Coal Company Private Limited : In respect of Khappa & Extn Coal
Block in the state of Maharashtra, the Company has taken effective
steps for getting various approvals / clearances viz. mining and
closure plan from Coal Ministry, terms of references from Forest &
Environment Ministry, reports of subsidence prediction study and survey
from CIMFR, etc. Further, the procurement of land for incline drivage
and other infrastructure has commenced. Certain applications have been
made to concerned authorities and their approvals and clearances are
awaited.
Joint Venture Companies :
Madanpur (North) Coal Company Private Limited : Various approvals /
clearances are being sought from the concerned authorities for
effective implementation of the Madanpur (North) Coal project in the
state of Chhattisgarh.
C T Mining Private Limited : Various approvals / clearances are being
sought from the concerned authorities for effective implementation of
the Choritand - Taliya Coking Coal project in the state of Jharkhand.
Gujarat State Mining and Resources Corporation Limited : A State
Government Company by virtue of subsidiary of GMDC Limited, wherein the
share of the Company is 49%, was formed during the period under review,
for development of integrated coke oven plant in the state of Gujarat.
7. DEMATERIALISATION OF SHARES
As on 31st March 2011, there were 88,450,719 equity shares, which
represents 54.533% of the total paid-up capital of the company,
dematerialised through depositories viz., National Securities
Depository Limited (NSDL) and Central Depository Services (India)
Limited (CDSIL).
8. LISTING OF SHARES
The equity Shares of your Company continued to be listed with / traded
on the Bombay Stock Exchange Limited (BSE) and The National Stock
Exchange of India Limited (NSE). The listing fees have been paid to
both Stock Exchanges (BSE & NSE) for the current financial year 2011 -
2012.
9 . ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGES
EARNINGS AND OUTGO
The requisite particulars required to be disclosed under the Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules,
1988 are given in the Annex to this report.
10. SUBSIDIARY COMPANIES
In pursuance of General Circular No. 2/2011 dated 8th February 2011
issued by the Ministry of Corporate Affairs, Government of India and on
compliance of terms and condition for availing the general exemption
Under Section 212(8) of the Companies Act, 1956, the Annual Accounts of
the Subsidiary Companies, viz. 'Sunflag Power Limited', 'Sunflag
Special Steels Limited' and 'Khappa Coal Company Private Limited' are
not attached with the Annual Report of the Company. The Annual Accounts
of these Subsidiary Companies are available for inspection at the
Registered Office of the Company. Any shareholder interested in
obtaining a copy of subsidiary Company's accounts, may write to the
Company Secretary at the Registered Office of the Company.
11. DIRECTORS
i. Pursuant to Article 151 of the Articles of Association of the
Company, CA Jayesh M. Parmar retire by rotation and being eligible,
offered himself for re-appointment.
ii. During the period under review, the Board of Directors has
appointed Mr. Kailash Chander Vijh and Mr. Suhrit Bhardwaj as
Additional Directors of the Company effective 27th July 2011. The Board
recommends for the approval of the members, the appointment of Mr.
Kailash Chander Vijh and Mr. Suhrit Bhardwaj as Directors of the
Company.
Except the above, there is no change in the constitution of the Board
of Directors of the Company during the period under review.
12. PAYMENT OF REMUNERATION TO NON-EXECUTIVE DIRECTOR/S
The members are requested to approve, by way of Special Resolution as
set out in Item No. 7 of the Notice, the payment of remuneration by way
of commission @1% of net profits to Non-executive Director/s of the
Company for a period of five (5) years effective from the financial
year 2011-2012.
13. INDUSTRIAL RELATIONS
During the year under review, industrial relations remained cordial.
Employees' competencies and skills were enhanced by exposing them to
several internal and external training programmes. Various measures
were taken to improve motivation level of employees. Additional efforts
are continued to be implemented with a view to obtain commitment and
loyalty towards the organisation.
14. PERSONNEL / PARTICULARS OF EMPLOYEES
Information as per Section 217(2A) of the Companies Act, 1956 read with
Companies (Particulars of Employees) Rules, 1975, as amended, forms
part of this report. However, as permitted by Section 219(1)(b)(iv) of
the Companies Act 1956, the report and accounts are being sent to all
shareholders excluding the statement of particulars of employees under
Section 217(2A) of the Companies Act, 1956. Any shareholder interested
in obtaining a copy of this statement may write to the Company
Secretary at the Registered Office of the Company.
15. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND
PROTECTION FUND
The Dividend declared by the Company which remain unpaid / unclaimed
for a period of Seven (7) years are required to be transferred to the
Investor Education and Protection Fund (IEPF) established by the
Central Government pursuant to Section 205C of the Companies Act, 1956.
The Members are requested to claim their unpaid/unclaimed Dividend(s),
if any, declared and paid for the financial years 2005-2006, 2006-2007,
2007-2008, 2008-2009 and 2009-2010.
16. AUDITOR'S REPORT
The observations made by the Statutory Auditors in their report are
self-explanatory and have also been further amplified in the Notes to
the Accounts.
17. AUDITORS
i. M/s. Patel, Shah & Joshi, Chartered Accountants, Mumbai - the
Statutory Auditors of the Company are eligible and recommended for
re-appointment as the Statutory auditors till the conclusion of the
next Annual General Meeting.
The Statutory Auditors have furnished a Certificate of their
eligibility for re-appointment Under Section 224(1-B) of the Companies
Act, 1956 and are not disqualified for such appointment within the
meaning of Section 226 of the Companies Act, 1956.
ii. M/s. G. R.Paliwal & Company, Cost Accountants, Nagpur has been
appointed by the Board of Directors of the Company on the
recommendations of the Audit Committee, as the Cost Auditors of the
Company for the financial year 2011-2012.
The Cost Auditors have furnished a Certificate of their eligibility for
appointment Under Section 224(1-B) of the Companies Act, 1956,
Certificate for independence and arm length relationship with the
Company and are not disqualified for such appointment within the
meaning of Section 226 / 233-B(5) of the Companies Act, 1956.
Accordingly, the Company has made an application in E-form No. 23C to
the Central Government for their approval to the appointment of Cost
Auditors of the Company.
18. AUDIT COMMITTEE
The Audit Committee of the Board is under Chairmanship of Dr. E. R. C.
Shekar, an Independent, Non-executive Director of the Company and
consisting of other Independent, Non-executive Directors viz. CA Jayesh
Madhavji Parmar, Mr. Naresh Gwalani (Nominee - IDBI Bank Limited,
Mumbai) and Mr. S. Gajendran as the Members, as a practice of good
Corporate Governance.
19. CORPORATE GOVERNANCE REPORT
Your Directors are pleased to report that your Company has complied
with the SEBI Guidelines on Corporate Governance as of 31st March 2011
relating to Clause 49 of the Listing Agreement with concerned Stock
Exchange(s). A Certificate from Statutory Auditors - Messers Patel,
Shah & Joshi, Chartered Accountants, confirming compliance with
conditions as stipulated under the aforesaid Clause 49 is annexed to
the Corporate Governance Report.
20. CODES OF CONDUCT OF BUSINESS PRINCIPLES & ETHICS AND PREVENTION OF
INSIDER TRADING
Your Directors are pleased to report that your Company has complied
with :
i.The Code of Conduct of Business Principles and Conduct; and
ii.The Prevention of Insider Trading in Sunflag Securities by the
designated persons/officers (insider).
21.DIRECTORS' RESPONSIBILITY STATEMENT
The Board of Directors confirms :
i.That in the preparation of the Annual Accounts, the applicable
Accounting Standards have been followed along with proper explanation
relating to material departure;
ii.That the Directors had selected such Accounting Policies and
applied them consistently and made judgements 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 and of the
Profit of the Company for that financial year;
iii.That the Directors had taken proper and sufficient care for the
maintenance of adequate Accounting records in accordance with the
provisions of this Act for safeguarding the Assets of the Company and
for preventing and detecting fraud and other irregularities;
iv.That the Directors had prepared the Annual Accounts on a going
concern basis.
22. ACKNOWLEDGEMENT
The Directors acknowledge with thanks co-operation and assistance
received by the Company from the Shareholders, Central and State
Government, Financial Institutions and Banks. The Directors also record
their appreciation of the dedication of all the employees of the
Company for their support and commitment to ensure that the Company
continues to grow.
For and on behalf of the Board
Ravi Bhushan Bhardwaj
Vice-chairman & Managing Director
Nagpur
27th July 2011
Mar 31, 2010
The Board of Directors hereby present the 24th Annual Report together
with the Audited Statement of Accounts for the financial year ended on
31st March 2010. During the year under review, the market recovered
from the recessionary conditions prevailing in the Global as well as
Indian Steel market in the previous year. The Automobile and Auto
component sectors also shown improved demands. The unstinted efforts by
the Board of Directors continued for effective cost reduction and
better financial / working capital management, your Company was able to
show the following financial results.
1. FINANCIAL RESULTS
Summarised financial results for the year are as follows :
(Rs. in Lacs)
For the financial year ended
Particulars 31st March 2010 31st March 2009
Total Income 135,459.08 110,742.07
Total Expenditure 115,857.27 98,816.25
Gross Profit 19,601.81 11,925.82
Interest 3,004.03 3,043.92
Profit before Depreciation 16,597.78 8,881.90
Depreciation 3,788.35 3,093.74
Profit before Tax 12,809.43 5,788.16
2. FINANCE
Your Company has ended the financial year with a profit before tax of
Rs. 12,809.43 Lacs. After taking into account the brought forward
profit of Rs. 16,342.45 Lacs, your Company has carried forward an
amount of Rs. 24,883.95 Lacs.
3. DIVIDEND
The Company is in need of more funds through internal accruals to cope
up with the terms and conditions of the lending banks financing the
ongoing capital projects under the expansion programme, which will
enable for future growth of the Company.
As such, the Board of Directors feel appropriate to recommend Dividend
@5% for the Financial Year 2009-2010, subject to approval of the embers
in the ensuing 24th Annual General Meeting of the Company.
4. MARKET SCENARIO SUNFLAG STEEL is continuing to develop new high
value grades of alloy steel to cater the needs of domestic as well as
international markets. During the financial year under review, the
growth in the net turnover is about 23% as compared to previous
financial year.
5. OPERATIONS
i. During the year under review :
a. The Direct Reduction Plant produced 126,336 MT as against of
115,299 MT in the previous year, which is about 9.6% higher than the
previous year.
b. The Steel Melt Shop produced 326,141 MT as against of 207,757 MT in
the previous year, which is about 57% higher than the previous year.
c. The total production of Rolled products was 309,596 MT, which is
about 52% higher than the previous year production of 203,663 MT.
d. The total production of Hot Metal / Pig Iron was 205,502 MT which
is about 62% higher than the Previous Year production of 127,002 MT.
e. Sinter Plant commenced its operation on 4th September 2009 and
produced 191,385 MT in the period under review. ii. During the year
under review, the Power plant generated 1,461.03 Lacs kWh as compared
to 1,500.02 Lacs kWh in the corresponding previous year. iii. During
the year under review, the total coal production at Belgaon Coal Block
is 140,147 MT as against of 51,234.41 MT in the previous year, which is
about 174% higher than the previous year.
6. PROJECTS
The Company is in the process of executing various new projects for
wider product range, value additions and to make its products more
competitive. The Company is implementing the following projects :
a. Blooming Mill Project
The Blooming Mill is a part of expansion plans which is underway and
will produce 200,000 tpa of heavy rounds of alloy steels. The Blooming
Mill will produce in the range of 75 mm dia to 160 mm dia thus widening
the product range and making Sunflag, a Company offering a wide range
of alloy steels products from 5.5 mm dia to 160 mm dia.
b. Direct Reduction Plant
In view of additional product range and increased steel making
capacity, there is a gap between availability and require- ment of
sponge iron for the Company itself. Apart, there is a good demand
potential for the sponge iron in the domestic markets. To cope up with
this, the Company started implementing to install Sponge Iron plant II
with a capacity of 350 TPD together with WHRSG as a part of its
expansion programme.
c. Mining Projects
The Company has initiated its efforts for due implementation of the
mining projects allocated to the Company either independently or
jointly with others for development and exploration of coal and other
minerals.
7. DEMATERIALISATION OF SHARES
As on 31st March 2010, there were approximately 880 Lacs Equity Shares
dematerialised through Depositories viz. National Securities Depository
Limited and Central Depository Services (India) Limited, which
represents 54.244% of the total Paid-up Capital of the Company.
8. LISTING OF SHARES
Equity Shares of your Company continued to be listed with / traded on
the Bombay Stock Exchange Limited (BSE) and The National Stock Exchange
of India Limited (NSE). The listing fees have been paid to both Stock
Exchanges (BSE & NSE) for the current financial year 2010 - 2011.
9. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGES
EARNINGS AND OUTGO
The requisite particulars required to be disclosed under the Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules,
1988 are given in the Annex to this report.
10. SUBSIDIARY COMPANIES
The Annual Reports of the Subsidiary Companies viz. Sunflag Power
Limited, Sunflag Special Steels Limited and Khappa Coal Company
Private Limited are attached in accordance with Section 212 of the
Companies Act, 1956.
11. DIRECTORS
i. The Board of Directors recommends for approval of the Members, the
re-appointment of Mr. Pranav Bhardwaj as the Joint Managing Director of
the Company for a further period of 5 (five) years effective 17th
January 2011.
ii. Pursuant to Article 151 of the Articles of Association of the
Company, Mr. S. Gajendran retires by rotation and, being eligible,
offered himself for re-appointment.
iii. CA Jayesh Madhavji Parmar, Non-executive Independent Director has
been inducted on the Board as an Additional Director with effect form
23rd June 2009 liable to retire by rotation. Moreover, his appointment
as a Director of the Company was duly approved by the Members at the
23rd Annual General Meeting of the Company.
Except the same, there is no change in the constitution of the Board of
Directors of the Company during the period under review.
12. INDUSTRIAL RELATIONS
During the year under review, industrial relations remained cordial.
Employees competencies and skills were enhanced by exposing them to
several internal and external training programmes. Various measures
were taken to improve motivation level of employees. Additional efforts
are continued to be implemented with a view to obtain commitment and
loyalty towards the organisation.
13. PERSONNEL / PARTICULARS OF EMPLOYEES
Information as per Section 217(2A) of the Companies Act, 1956 read with
Companies (Particulars of Employees) Rules, 1975, as amended, forms
part of this report. However, as permitted by Section 219(1)(b)(iv) of
the Companies Act 1956, the report and accounts are being sent to all
shareholders excluding the statement of particulars of employees under
Section 217(2A) of the Companies Act, 1956. Any shareholder interested
in obtaining a copy of this statement may write to the Company
Secretary at the Registered Office of the Company.
14. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION & PROTECTION
FUND
The Dividends declared by the Company which remain unpaid / unclaimed
for a period of Seven (7) years are required to be transferred to the
Investor Education & Protection Fund (IEPF) established by the Central
Government pursuant to Section 205C of the Companies Act, 1956. The
Members are requested to claim their unpaid/unclaimed Dividend, if any,
declared and paid for the financial years 2005-2006, 2006-2007,
2007-2008 and 2008-2009.
15. AUDITORS REPORT
The observations made by the Statutory Auditors in their report are
self-explanatory and have also been further amplified in the Notes to
the Accounts.
16. AUDITORS
i. Messers Patel, Shah & Joshi, Chartered Accountants, Mumbai - the
Statutory Auditors of the Company are eligible and recommended for
re-appointment as the Statutory Auditors till the conclusion of the
next Annual General Meeting. The Statutory Auditors have furnished a
Certificate of their eligibility for re-appointment Under Section
224(1-B) of the Companies Act, 1956 and are not disqualified for such
appointment within the meaning of Section 226 of the Companies Act,
1956.
ii. Messers G. R. Paliwal & Company, Cost Accountants, Nagpur has been
appointed by the Board of Directors of the Company on the
recommendations of the Audit Committee, as the Cost Auditors of the
Company for the financial year 2010 - 2011.
The Cost Auditors have furnished a Certificate of their eligibility for
appointment Under Section 224(1-B) of the Companies Act, 1956 and are
not disqualified for such appointment within the meaning of Section 226
/ 233B(5) of the Companies Act, 1956.
17. AUDIT COMMITTEE
The Audit Committee of the Board is under Chairmanship of Dr. E. R. C.
Shekar, an Independent, Non-Executive Director of the Company and
consisting of Other Independent, Non-Executive Directors viz. CA Jayesh
Madhavji Parmar, Mr. Naresh Gwalani (Nominee - IDBI Bank Limited) and
Mr. S. Gajendran as the Members, as a practice of Good Corporate
Governance.
18. CORPORATE GOVERNANCE REPORT
Your Directors are pleased to report that your Company has complied
with the SEBI Guidelines on Corporate Governance as of 31st March 2010
relating to Clause 49 of the Listing Agreement with concerned Stock
Exchange(s). A Certificate from Statutory Auditors Messers Patel, Shah
& Joshi, Chartered Accountants, confirming compliance with conditions
as stipulated under the aforesaid Clause 49 is annexed to the Corporate
Governance Report.
19. CODES OF CONDUCT OF BUSINESS PRINCIPLES & ETHICS AND PREVENTION OF
INSIDER TRADING
Your Directors are pleased to report that your Company has complied
with :
i. the Code of Conduct of Business Principles and Conduct; and
ii. the Prevention of Insider Trading in Sunflag Securities by the
designated persons/officers (insider).
20. DIRECTORS RESPONSIBILITY STATEMENT The Board of Directors
confirms :
i. that in the preparation of the Annual Accounts, the applicable
Accounting Standards had been followed along with proper explanation
relating to material departure;
ii. that the Directors had selected such Accounting Policies and
applied them consistently and made judgements 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 and of the
Profit of the Company for that financial year;
iii. that the Directors had taken proper and sufficient care for the
maintenance of adequate Accounting records in accordance with the
provisions of this Act for safeguarding the Assets of the Company and
for preventing and detecting fraud and other irregularities;
iv. that the Directors had prepared the Annual Accounts on a going
concern basis.
21. ACKNOWLEDGEMENT
The Directors acknowledge with thanks co-operation and assistance
received by the Company from the Shareholders, Central and State
Government, Financial Institutions and Banks. The Directors also record
their appreciation of the dedication of all the employees of the
Company for their support and commitment to ensure that the Company
continues to grow.
For and on behalf of the Board
Nagpur Dr. E. R. C. Shekar Surendra Kumar Gupta
19th July 2010 Director Whole-time Director