Mar 31, 2023
Your Directors take pleasure in presenting the Sixty Eighth Annual Report together with Audited Annual Financial Statements (including Audited Consolidated Financial Statements) of the Company for the Financial Year ended 31 March, 2023.
FINANCIAL RESULTS (Rs. in Crore) |
||||
Particulars |
Standalone |
Consolidated |
||
FY 2022-23 |
FY 2021-22 |
FY 2022-23 |
FY 2021-22 |
|
Revenue from Operations |
6916.00 |
5014.82 |
7275.51 |
5280.95 |
Earnings Before Interest, Taxes, Depreciation, Amortisation and Exceptional Item |
819.04 |
716.45 |
822.49 |
753.65 |
Less: Finance Costs |
272.24 |
185.27 |
285.89 |
194.68 |
Less: Depreciation and Amortisation Expense |
114.02 |
112.58 |
121.20 |
114.68 |
Profit Before Exceptional Item & Tax |
432.78 |
418.60 |
415.40 |
444.29 |
Less: Exceptional Item |
- |
- |
- |
- |
Profit / (Loss) Before Tax |
432.78 |
418.60 |
415.40 |
444.29 |
Less: Tax Expense |
98.02 |
93.00 |
99.17 |
96.72 |
Profit / (Loss) After Tax |
334.76 |
325.60 |
316.23 |
347.57 |
Share of Profit / (Loss) in Associates and Joint Ventures |
- |
- |
- |
- |
Profit / (Loss) After Tax including share of Associate and Joint Ventures |
334.76 |
325.60 |
316.23 |
347.57 |
Attributable to: |
||||
Owners of the Company |
- |
- |
315.80 |
347.28 |
Non-Controlling Interest |
- |
- |
0.43 |
0.29 |
Other Comprehensive Income (Net of Tax) |
(29.16) |
52.20 |
(13.67) |
57.04 |
Total Comprehensive Income |
305.60 |
377.80 |
302.56 |
404.61 |
Attributable to: |
||||
Owners of the Company |
- |
- |
302.13 |
404.32 |
Non-Controlling Interest |
- |
- |
0.43 |
0.29 |
Opening balance in Retained Earnings |
1696.19 |
1396.18 |
1773.28 |
1452.80 |
Closing Balance in Retained Earnings |
1981.09 |
1696.19 |
2038.98 |
1773.28 |
The Directors are pleased to recommend a dividend of Re. 0.90 per Equity Share of face value of Re. 1 each for the Financial Year ended 31 March, 2023. This dividend is subject to the approval of the Members of the Company, at their ensuing Annual General Meeting (''AGM''). If approved, the total outlay on account of dividend for the Financial Year 2022-23 would amount to Rs. 53.51 Crore.
The Company had declared dividend of Re. 0.80 per Equity Share of face value of Re. 1 each for the Financial Year ended 31 March, 2022.
The dividend recommended is in accordance with the Dividend Distribution Policy of the Company. The Dividend Distribution Policy of the Company is also uploaded on the Company''s website: https://www.electrosteel.com/admin/ pdf/1064444546454-Dividend-Distribution-Policy.pdf .
INVESTOR EDUCATION AND PROTECTION FUNDTransfer of Dividend to Investor Education and Protection Fund
In terms of the provisions of Section 124 of the Companies Act, 2013 (''Act''), read together with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 and amendments thereof (''IEPF Rules''), the Company (ECL) has transferred Rs. 14,79,907 (Rupees Fourteen Lakh Seventy-Nine Thousand Nine Hundred and Seven Only) to the IEPF and the SW unit (erstwhile Srikalahasthi Pipes Limited, which got merged with and into Electrosteel Castings Limited) has transferred Rs.10,89,456 (Rupees Ten Lakh Eighty-Nine Thousand Four Hundred and Fifty-Six Only) to the IEPF, during the Financial Year 2022-23, being unpaid/unclaimed dividend amounts relating to the Financial Year 2014-15.
Pursuant to the provisions of the IEPF Rules, the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on 31 March, 2022 (as on the date of closure of previous financial year) on the website of the Company (www.electrosteel.com).
Transfer of Shares to the Demat Account of Investor Education and Protection Fund Authority
In terms of the provisions of Section 124(6) of the Act, read with the relevant Rules made thereunder, 70,287 Equity Shares of ECL and 8,606 Equity Shares of SW Unit (erstwhile Srikalahasthi Pipes Limited, which got merged with and into Electrosteel Castings Limited), in respect of which dividend was unpaid or unclaimed for the Financial Year 201415 and onwards, has been transferred to the Demat Account of the IEPF Authority maintained with National Securities Depository Limited, during the Financial Year 2022-23
Further, the voting rights in respect of shares transferred to the Demat Account of the IEPF Authority shall remain frozen, until the rightful owner claims the shares. Members may note that shares as well as unclaimed dividend transferred to the IEPF Authority can be claimed back. Concerned shareholders are advised to visit http://www.iepf.gov.in/IEPF/refund.html for lodging claim for refund of shares or dividend from the IEPF Authority.
Further, the Company has initiated necessary action for transfer of all shares in respect of which dividend declared for the Financial Year 2015-16 and onwards has not been paid or claimed by the Members for 7 (seven) consecutive years or more. Members are advised to visit the web-link https://www.electrosteel.com/investor/iepf-suspense-account.php.
The Company proposes to retain the entire amount of profit in the Profit & Loss Account.
During the year under review, the production of Ductile Iron (DI) Pipes was 715,129 MT, as against 603,751 MT in the previous year. The production of Cast Iron (CI) Pipes was 26,588 MT in 2022-23 as against 19,049 MT in the previous year.
The Financial year 2022-23 was another challenging year for our Organisation in the perspective of significant increase and fluctuations in input material prices like Coal, Iron Ore and Consumables. On the other hand, old orders of DI Pipes have impacted our profitability as the cost of production went up but the selling prices remained unchanged. However, selling prices for Exports have supported improvement in profitability. All the management cadres, frontline employees and factory workers of the Organisation have put up a strong show to minimise impact of the global crisis.
The Company produced DI Fittings & Accessories of 20,343 MT in 2022-23 as against 20,684 MT in 2021-22. Both Khardah and Haldia Fitting Units have demonstrated a strong performance.
As a standard practice, various initiatives have been taken further for improvement in the current Financial Year, also taking care of variety and quantity of products in both domestic & export markets.
As a continual improvement, the Company is focused on improvement in production of new range of products, productivity, quality, cost reduction, energy conservation and human resource management. Further, to meet and improve upon the expectations of both International and Domestic customers, the Company has continued its activities towards development and to add a number of product variants to its existing product base.
MATERIAL CHANGES AND COMMITMENTS
There has been 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 relate and the date of this Report other than as mentioned in the ''Operations'' section of this Directors'' Report.
There has been no change in the nature of the Company''s business.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report forms an integral part of this Report and gives details of the industry structure, developments, opportunities, threats, performance and state of affairs of the Company''s business, internal controls and their adequacy, risk management systems including a section on ''Risk Management'' and other material developments during the Financial Year 2022-23, and is annexed as Annexure 1.
Since the economic liberalisation in the nineties, the Indian economy is growing at an enviable rate and at present it is one of the fastest growing economies in the world. A steady growth in Gross Domestic Product has been witnessed for more than two decades. This sustained economic growth has led to rapid urbanisation all over India. As a result, villages are turning into towns, towns into cities and cities into megacities. Water, the need of life, is likely to pose the greatest challenge on account of an increased demand with population rise and economic development, and shrinking supplies due to over-exploitation and pollution. The ever growing demand for water supply and disposal is fuelling an increasing demand for pipes and fittings, the basic medium to convey water and waste water.
The growth acceleration for the domestic DI Pipe Industry is largely coming from the water and sewerage infrastructure development in Indian urban, sub-urban and rural sector. With only around 31% of India''s population currently urbanised, along with high population density, India''s urbanisation trends have scope to significantly accelerate and likely to be around 40% by 2030. Further, the country faces immense problems of drinking water supply and has poor transmission and distribution networks for water. Alongside only about one-third of the Indian homes are connected with a sewerage network. Use of DI pipes and fittings in Piped irrigation system is another demand driver. To cater this growing need, the Indian pipe market is growing at the rate of 10%-12% every year for more than a decade now.
The Authorised Share Capital of the Company is Rs. 103,02,00,000/- comprising of 103,02,00,000 Equity Shares of Re. 1.00 each. During the year under review, there has been no change in the Authorised Share Capital of the Company. The Issued, Subscribed and Paid-up Share Capital of the Company is Rs. 59,46,05,247/- comprising of 59,46,05,247 Equity Shares of Re. 1.00 each. During the year under review, the Company has not issued shares with differential voting rights. It has neither issued employee stock options nor sweat equity shares and does not have any scheme to fund its employees to purchase the shares of the Company.
Pursuant to the approval of the Board of Directors at its meeting held on 11 November 2022 and 22 November, 2022 and approval of the members of the Company by way of Postal Ballot on 23 December 2022, upon receipt of 25% of the
issue price of Rs 42.41 per Warrant, the Company has, on 27 December 2022, issued 2,35,79,344 warrants to promoter / promoter group for cash, aggregating to Rs. 24.99 crores, with a right to the Warrant Holders to apply for and be allotted 1 (one) Equity Share of face value of Re. 1/- each of the Company within a period of 18 (Eighteen) months from the date of allotment.
During the year, India Ratings and Research (Ind-Ra) has affirmed the Company''s Long-Term Issuer Rating of ''IND A '' and Short-Term borrowings of "IND A1 ". The Outlook was Stable.
CRISIL Ratings has upgraded its rating on the short-term bank facilities to ''CRISIL A1 '' from ''CRISIL A1'' and reaffirmed its ''CRISIL A '' rating on the long-term bank facilities. The outlook has been revised to ''Positive'' from ''Stable.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS / COURTS / TRIBUNALS
During the year under review, there were no significant or material orders passed by the regulators or courts or tribunals impacting the going concern status and the Company''s operations in future except as mentioned below:
1. In pursuance of the Order dated 24 September, 2014 issued by the Hon''ble Supreme Court of India (the Order) followed by the Ordinance promulgated by the Government of India, Ministry of Law & Justice (legislative department) dated 21 October, 2014 (Ordinance) for implementing the Order, allotment of Parbatpur coal block (coal block/mines) to the Company, had been cancelled w.e.f. 01 April, 2015. In terms of the Ordinance, the Company was allowed to continue the operations in the said block till 31 March, 2015. Accordingly, the said block had been handed over to Bharat Coking Coal Limited (BCCL) as per the direction from Coal India Ltd. (CIL) with effect from 01 April, 2015 and the same had been subsequently allotted to Steel Authority of India Limited (SAIL). The Company understands that SAIL has surrendered the said coal block and handed over the custody back to BCCL. The Ministry of Coal ("MoC") had once again put up the Parbatpur Coal Block in the list of mines to be auctioned (for commercial mining) and JSW Steel Limited has been declared as highest successful bidder for Parbatpur coal block vide notification dated 28 March, 2023. It is significant to note that the Company will receive the compensation amount from the new successful bidder, when it is declared by MoC.
Following a petition filed by the Company, the Hon''ble High Court at Delhi had pronounced its judgement on 09 March, 2017. Accordingly based on the said judgement, the Company had claimed Rs. 1,53,176 lakhs, which was revised to Rs. 1,54,944 lakhs, towards compensation against the said coal block, acceptance whereof is awaited. Aggrieved due to delay in acceptance of claim and on a petition filed by the Company, the Hon''ble High Court had directed the Nominated Authority appointed under Ministry of Coal to determine the compensation. Earlier the Nominated Authority had upheld its decision of compensation of Rs. 8,312 Lakhs already paid and the same was set aside by the Hon''ble High Court with a direction to the Nominated authority to reconsider. The Nominated Authority further passed an order dated 11 November, 2019 awarding an additional compensation of Rs. 180 lakhs and with a further direction to re-determine the value of certain assets by appropriate authority. The newly appointed Nominated Authority had appointed a valuer to determine the value of those specified assets as per the direction of previous Nominated Authority dated 11 November, 2019 and the process of declaration of final valuation is under progress as per the available information. The Company has also approached the newly appointed Nominated Authority, MoC, to similarly reconsider the compensation determined by the previous Nominated Authority, for land and some other major assets, which is pending at the Ministry. Meanwhile, the Company is also exploring other possibilities.
2. Electrosteel Castings Limited (ECL) as a then promoter of Electrosteel Steels Limited (ESL) mortgaged its Factory Land at Elavur for securing debt of ESL availed from SREI Infrastructure Finance Ltd (SREI).
In the month of June, 2017, State Bank of India (SBI), one of the lenders of ESL, filed a petition before National Company Law Tribunal (NCLT), Kolkata, for the initiation of Corporate Insolvency Resolution Process (CIRP) of ESL under the Insolvency and Bankruptcy Code (IBC). Hon''ble NCLT, Kolkata, vide an order dated 21 July, 2017 admitted the petition and initiated CIRP of ESL.
As a part of CIRP, Vedanta Limited (Vedanta) was declared as the successful resolution applicant, as their resolution plan was unanimously voted upon by the Committee of Creditors of ESL. Subsequently, the resolution plan was approved by Hon''ble NCLT, Kolkata vide an order dated 17 April, 2018.
From the stock exchange disclosures of ESL dated: 4 June, 2018, 6 June, 2018 and 21 June, 2018 about the details relating to the implementation of Resolution Plan, it is understood that Vedanta has discharged the entire loan of ESL partly in cash and partly by allotment of equity shares of ESL at the face value i.e. Rs. 10 per share.
After implementation of Resolution Plan of Vedanta, SREI assigned its so-called rights in Factory Land at Elavur to UV Asset Reconstruction Company Ltd (UVARCL).
UVARCL took symbolic possession of Factory Land at Elavur on 19 June, 2019. The Company filed a "Leave to Sue application" at Madras High Court. After hearing ''Leave to Sue application'' Hon''ble High Court opined that DRT has jurisdiction to hear ECL''s application.
Simultaneously, the Company has also filed an application at DRT, Chennai, challenging the Possession Notice. DRT, Chennai, rejected ECL''s application on the ground that DRT has no jurisdiction to hear on the validity of Deed of Assignment.
The Company there upon filed an appeal at Hon''ble Madras High Court for deciding the forum, i.e., Madras High Court or Elavur District Court or DRT who can hear the Company''s application.
The Hon''ble Madras High Court on 13 August, 2021 have opined that since UVARCL has already initiated SARFAESI action by taking symbolic possession of the property hence, the Company should file an application at DRT for undoing such SARFESI actions and again come back to civil court for the release of title deeds.
To avoid multiple proceedings, the Company had filed a Special Leave Petition (SLP) at the Hon''ble Supreme Court of India, for deciding appropriate jurisdiction.
The Hon''ble Supreme Court of India directed the Company to file application under SARFAESI Act, against UVARCL and SREI at DRT, wherein DRT has to decide on two aspects as under:
a. that the assignee cannot be said to be secured creditor so far as the appellant (i.e. Electrosteel Castings Limited) is concerned;
b. that there is no amount due and payable by the plaintiff- appellant (i.e. Electrosteel Castings Limited) herein on the ground that in view of the proceedings under IBC against the corporate debtor (i.e. Electrosteel Steels Limited) and the corporate debtor being discharged after the approved resolution plan, there shall not be any enforceable debt against the appellant.
The Company immediately filed an application before DRT, Chennai.
DRT, Chennai dismissed the Company''s application on 8 April, 2022. The dismissal order was uploaded on website on 27 April, 2022. The Company immediately filed an appeal before DRAT Chennai. On pre-deposit, DRAT, Chennai was of view that at admission stage DRAT cannot go into merits, i.e., validity of debt and validity of demand in demand notice and directed ECL to deposit 50% of SARFAESI Demand Notice amount, i.e., Rs 293.00 Crores (approximately) as pre-deposit with DRAT for the admission of Appeal.
On Pre-deposit, ECL filed revision and Writ application at Madras High Court.
The matter is pending before Madras High Court.
3. In FY:2021-22, UV Asset Reconstruction Company Limited (UVARCL) had filed an application before NCLT, Cuttack for initiation of Corporate Insolvency and Resolution Process (CIRP) against the Company at NCLT, Cuttack. NCLT, Cuttack registry vide email dated 12 June, 2021 informed the Company about such filing. The Company immediately made relevant disclosure to the Stock Exchanges.
UVARCL is assignee to SREI Infrastructure Finance Ltd (SREI), one of the erstwhile lenders of Electrosteel Steels Limited now known as ESL Steel Limited (ESL) to whom the Company mortgaged its Elavur Land for securing debt of ESL. The Company has never extended any Corporate Guarantee for securing such debt, i.e., the Company was acting as third-party security provider to such lender.
ESL has been taken over by Vedanta Limited in the Financial year 2018-19 under IBC. As per approved resolution plan of Vedanta, the entire admitted debt of ESL was paid and discharged in the form of cash and allotment of Equity shares of ESL.
NCLT, Cuttack, vide order dated 24 June, 2022 pronounced its Order in favour of the Company by dismissing the application of UVARCL.
UVARCL has filed an appeal before NCLAT. The matter is pending before NCLAT.
4. In April, 2006 the Company had applied to South Eastern Railway (SER) for investment in the wagons as per the Wagon Investment Scheme (WIS) of Railways. In April, 2007, SER issued NOC for investment in 2 rakes. Agreement for WIS was executed in January, 2008 with SER. Accordingly, the Company was guaranteed with supply of certain minimum number of rakes along with rebate in freight.
Subsequently, Railways changed its policy and the Company being deprived of the availability of the wagons as per WIS had terminated the Agreement with SER. Arbitration award pursuant to the claim for compensation for losses/ damages has been allowed in favour of the Company. SER challenged the said award at Hon''ble Calcutta High Court and the matter is currently pending before Hon''ble High Court.
Pending decision of the Hon''ble High Court, Rs. 252.85 Crores deposited by SER in respect of said award has been allowed to be withdrawn by the Company on submission of Bank Guarantee.
Subsequent to the balance sheet date, the said amount has been withdrawn and kept in fixed deposit.
Members'' attention is invited to Notes on Contingent Liabilities, in the Notes forming part of the Financial Statements. INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
The Internal Financial Controls with reference to the Financial Statements are considered to be commensurate with the size, scale and nature of the operations of the Company. The system encompasses the major processes to ensure reliability of financial reporting, compliance with policies, procedures, laws, and regulations, safeguarding of assets and economical and efficient use of resources. There are Standard Operating Procedures (SOPs) in all functional activities for which key manuals have been put in place. The manuals are updated and validated periodically. Approval of all transactions is ensured through a pre-approved Delegation of Authority (DOA) schedule which is in-built into the SAP system, wherever required. DOA is reviewed periodically by the management and compliance of DOA is regularly checked by the Auditors. The Company''s books of accounts are maintained in SAP and transactions are executed through SAP (ERP) setups to ensure correctness/effectiveness of all transactions and for integrity and reliability of reporting. There is adequate MIS (Management Information System) which is reviewed periodically by functional heads.
The Internal Auditor of the Company monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating system, accounting procedures and policies at all locations of the Company. The
main thrust of internal audit is to test and review controls, appraisal of risks and business processes, besides benchmarking controls with best practices in the industry. Based on the Internal Audit Reports, process owners take corrective actions in their respective areas and thereby strengthen the controls. The Report is presented before the Audit Committee for review at regular intervals.
DETAILS OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES
The Audited Annual Consolidated Financial Statements forming part of the Annual Report have been prepared in accordance with the Companies Act, 2013 (''the Act''), applicable Indian Accounting Standards, notified under Section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time.
The Company had the following Subsidiaries and Joint Ventures as on 31 March, 2023:
Sl. No. |
Name of the Company |
Status |
1. |
Electrosteel Europe, S.A. |
Subsidiary |
2. |
Electrosteel Castings (UK) Limited |
Subsidiary |
3. |
Electrosteel Algerie SPA |
Subsidiary |
4. |
Electrosteel USA, LLC and its wholly owned subsidiary, WaterFab LLC, USA |
Subsidiary |
5. |
Electrosteel Trading, S.A. |
Subsidiary |
6. |
Electrosteel Doha for Trading LLC |
Subsidiary |
7. |
Electrosteel Castings Gulf FZE |
Subsidiary |
8. |
Electrosteel Bahrain Holding W.L.L. and its wholly owned subsidiary, Electrosteel Bahrain Trading WLL |
Subsidiary |
9. |
Electrosteel Brasil Ltda. Tubos e Conexoes Duteis |
Subsidiary |
10. |
North Dhadhu Mining Company Private Limited |
Joint Venture |
11. |
Domco Private Limited |
Joint Venture |
A Report on the highlights of the performance of each of the Company''s subsidiaries, associates and joint ventures, pursuant to the provisions of Section 134(3) of the Act, read with Rule 8 of the Companies (Accounts) Rules, 2014, is given in Annexure 2 to this Report. The statement containing salient features of financial statements of subsidiaries, associate companies and joint ventures in Form AOC-1, for the Financial Year ended 31 March, 2023, pursuant to the said Section, read with Rule 5 of the said Rules, are given along with the Standalone Financial Statements.
In accordance with Section 136 of the Act, the Audited Financial Statements, including the Consolidated Financial Statements and related information of the Company, and Audited Accounts of each of its subsidiaries are available on the website of the Company, www.electrosteel.com. Members who wish to inspect these documents can send an e-mail to [email protected].
REPORT ON CORPORATE GOVERNANCE
Your Company believes in transparent and ethical corporate governance practices. The Company''s approach to Corporate Governance cascades across its business operations and its stakeholders at large to create long term sustainable value.
The Company is committed in maintaining the highest standards of Corporate Governance and adheres to the stipulations prescribed under the Listing Regulations. A Report on Corporate Governance for the year under review, along with the Certificate from the Auditors confirming compliance with the conditions of Corporate Governance, is annexed as Annexure 3, forming part of this Report.
During the Financial Year 2022-23, 4 (four) Board Meetings were held, the details of which are provided in the Corporate Governance Report, forming part of this Report and annexed as Annexure 3.
BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr. Shermadevi Yegnaswami Rajagopalan (DIN: 00067000), Independent Director has resigned from the Board of Directors of the Company, with effect from 31 December, 2022, due to his advanced age. The Board places on record its appreciation and gratitude for the valuable contributions made by him during his tenure as Director on the Board of the Company.
The Members of the Company, based on the recommendation of the Nomination and Remuneration Committee and the Board of Directors at their Meeting held on 14 February, 2023, vide Postal Ballot Notice dated 14 February, 2023, have -
1) re-appointed Mr. Sunil Katial (DIN: 07180348) as the Chief Executive Officer and Whole- time Director of the Company for a term of 3 consecutive years with effect from 1 April, 2023,
2) appointed Mr. Jinendra Kumar Jain (DIN: 00737352) as an Independent Director of the Company, for a term of 5 (five) consecutive years, with effect from 14 February, 2023.
Mr. Ashutosh Agarwal (DIN: 00115092) and Mrs. Radha Kejriwal Agarwal (DIN: 02758092) retire by rotation at the forthcoming AGM and being eligible, have offered themselves for re-appointment.
In compliance with Regulation 36(3) of the Listing Regulations and Secretarial Standard-2 on General Meetings, brief resume and other information of all the Directors proposed to be re-appointed are given in the Notice of the forthcoming AGM.
The Board of Directors has on the recommendation of Nomination & Remuneration Committee (NRC), re-appointed Mr. Uddhav Kejriwal (DIN: 00066077), as the Whole-time Director of the Company for a period of 3 (three) consecutive years with effect from 16 June, 2023, subject to the approval of the Members of the Company.
There were no other changes in the Board and the Key Managerial Personnel during the year.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134 of the Act, the Directors state that:
a) in the preparation of annual accounts for the Financial Year ended 31 March, 2023, the applicable accounting standards have been followed and there were no material departures requiring any explanation;
b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year and of the profit of the Company for that period;
c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) they have prepared the annual accounts on a ''going concern'' basis;
e) they have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and are operating effectively; and
f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
INDEPENDENT DIRECTORS Declaration by Independent Directors
Mr. Pradip Kumar Khaitan, Mr. Binod Kumar Khaitan, Mr. Amrendra Prasad Verma, Dr. Mohua Banerjee, Mr. Rajkumar Khanna, Mr. B K Choudhury, Mr. Vyas Mitre Ralli, Mr. Virendra Sinha and Mr. Jinendra Kumar Jain, Independent Directors, have given declarations that they meet the criteria of independence as laid down in the Act and the Listing Regulations.
Further, in terms of Rule 8(5)(iiia) of the Companies (Accounts) Rules, 2014, as amended, the Board of Directors state that in the opinion of the Board, Mr. Jinendra Kumar Jain, whose appointment as Independent Director of the Company has been approved by the Shareholders during the year, is a person of integrity and possesses relevant expertise and experience. Further, Mr. Jain has successfully qualified the online proficiency self-assessment test conducted by the Indian Institute of Corporate Affairs.
DETAILS OF BOARD COMMITTEES & ADOPTION OF POLICIES
There are 7 Board Committees as on 31 March, 2023, viz., Audit Committee, Nomination and Remuneration Committee, Stakeholders''Relationship Committee, Corporate Social Responsibility Committee, Risk Management Committee, Banking and Authorisation Committee and Governance Committee.
The details of composition, terms of reference and meetings held and attended by the Committee members of Audit Committee, Nomination and Remuneration Committee, Stakeholders'' Relationship Committee, Corporate Social Responsibility Committee and Risk Management Committee are provided in the Corporate Governance Report, annexed as Annexure 3 to this Report.
The Banking and Authorisation Committee comprised of Mr. Binod Kumar Khaitan as the Chairman, with Mr. Shermadevi Yegnaswami Rajagopalan, Mr. Mayank Kejriwal and Mr. Uddhav Kejriwal as its members as on 31 December, 2022. Pursuant to the resignation of Mr. Shermadevi Yegnaswami Rajagopalan with effect from 31 December, 2022, the Banking and Authorisation Committee was reconstituted with Mr. Binod Kumar Khaitan as the Chairman, and Mr. Mayank Kejriwal, Mr. Uddhav Kejriwal and Mr. Ashutosh Agarwal as its members with effect from 14 February, 2023 which remains the same as on 31 March, 2023. The terms of reference for the Committee include taking various decisions pertaining to the opening or closing of bank and demat accounts of the Company, change in authorised signatories for operation of different bank and demat accounts, subscribing/purchasing/selling/dealing in securities of Companies other than related parties and availing broking services, making loans from time to time to Subsidiary Companies/Joint Ventures/Associates for its working capital requirement, giving guarantee or providing security to any bank in connection with fund based/ non-fund based facilities including loan(s) made to Subsidiary Company/Joint Venture/Associate Company by such bank and any other work related to day-to-day operations of the Company.
The Governance Committee comprised of Mr. Binod Kumar Khaitan as the Chairman, with Mr. Sunil Katial and Dr. Mohua Banerjee, as its members as on 31 March, 2023. The terms of reference for the Committee, inter-alia, include formulating a governance policy and recommending it to the Board for approval, assisting the Board in its ongoing oversight of the quality of governance in the Company and its subsidiaries, monitoring the developments in governance practices of the Company and its subsidiaries and report appropriately to the Board, with recommendations, advising the Board or any Committees of the Board of any corporate governance issues in the Company and its subsidiaries, which the Committee determines has a negative impact on the Company''s ability to safeguard or improve shareholder value and carrying out any other function as is decided by the Board of Directors of the Company from time to time.
There have been no instances where the Board has not accepted the recommendations of any of its committees.
Vigil Mechanism Policy
The Company has adopted Whistle Blower Policy and established a Vigil Mechanism in compliance with provisions of
the Act and the Listing Regulations for the Directors and employees to report genuine concerns and grievances and leak/suspected leak of Unpublished Price Sensitive Information. This mechanism provides adequate safeguards against victimisation of employees and Directors and also provides for direct access to the Chairperson of the Audit Committee. The Company oversees the vigil mechanism through the Audit Committee of the Company. The said Policy is available at the Company''s website and can be accessed at https://www.electrosteel.com/admin/pdf/1613636847Vigil-Mechanism-Whistle-Blower-Policy.pdf.
Nomination and Remuneration Policy
The Board has adopted a Nomination and Remuneration Policy recommended by Nomination and Remuneration Committee in terms of the provisions of Section 178 of the Act and Regulation 19 of the Listing Regulations, read with Part D of Schedule II thereto. The Policy governs the criteria for determining qualifications, positive attributes and independence of a Director and lays down the remuneration principles for Directors, Key Managerial Personnel and other employees.
The Policy aims to enable the Company to attract, retain and motivate highly qualified members for the Board, Key Managerial Personnel (KMP) and other employees. It enables the Company to provide a well-balanced and performance-related compensation package, taking into account shareholder interests, industry standards and relevant Indian corporate regulations. The policy ensures that the interests of Board members, KMP & employees are aligned with the business strategy and risk tolerance, objectives, values and long-term interests of the Company and will be consistent with the "pay-for-performance" principle and the remuneration to directors, KMP and employees involve a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the Company and its goals. The policy lays down the procedure for the selection and appointment of Board Members and KMP and also the appointment of executives other than Board Members, compensation structure for Executive Directors, Non-Executive Directors, KMP and other employees.
The Nomination and Remuneration Policy is available at the Company''s website and can be accessed at https://www. electrosteel.com/admin/pdf/1608020082nominationRemunerationPolicy.pdf.
Corporate Social Responsibility Policy
In accordance with the requirements of Section 135 of the Act, read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, the Company has a Corporate Social Responsibility (''CSR'') Committee in place. The CSR Committee has formulated and recommended to the Board, the Corporate Social Responsibility Policy of the Company which has been approved by the Board. The Annual Report on CSR activities/initiatives which includes the contents of the CSR Policy, composition of the Committee and other particulars as specified in Section 135 of the Act, read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, are disclosed in Annexure 4 to this Report.
Policy on Board Diversity and Succession Planning for the Board of Directors and Senior Management
A Policy on Board Diversity and Succession Planning for the Board of Directors and Senior Management as devised by the Nomination and Remuneration Committee is in place, to ensure adequate diversity in the Board of Directors of the Company and for orderly succession for appointments on the Board of Directors and Senior Management.
FORMAL ANNUAL EVALUATION OF PERFORMANCE
The Nomination and Remuneration Committee of the Board has formulated and laid down Criteria and Manner for Evaluation of Performance of the Board, its Committees and individual Directors pursuant to provisions of Section 178 of the Act and Listing Regulations. As per requirements of Section 134 of the Act, the manner in which formal annual evaluation has been made is disclosed below -
A. The Board evaluated the roles, functions and duties performed by the Independent Directors (IDs) of the Company.
Each ID was evaluated by all other Directors but not by the Director being evaluated. The Board also reviewed the manner in which IDs follow guidelines of professional conduct as specified in Schedule IV to the Act. The adherence to Section 149 of the Act, the aforesaid Schedule IV, the Listing Regulations and other applicable provisions of law by the IDs were also reviewed by the Board.
B. Performance review of all the Non-Independent Directors of the Company was made on the basis of the activities undertaken by them, expectations of Board, level of participation, roles played by them, leadership qualities and their overall performance and contribution in the development and growth of the business and operations of the Company.
C. The Board evaluated the performance of its Committees on the basis of the processes and procedures followed by them for discharging their functions & duties as per their respective terms of references and as assigned by the Board and laws applicable, their independence from the Board and on the effectiveness of the suggestions and recommendations made by them to the Board. The Board observed the size, structure and expertise of the Committees to be appropriate and in compliance with the Act and the Listing Regulations.
D. The Board evaluated its own performance on the basis of its composition having the right mix of knowledge, skills and expertise required to drive organisational performance and conduct of its affairs effectively, monitoring of Company''s performance along with the ability to understand and deal with factors having a significant bearing, developing suitable strategies and business plans at appropriate time and monitoring its effectiveness, implementation of policies and procedures for proper functioning of the Company, frequency of its meetings, efforts made by the Board Members to keep themselves updated with the latest developments in areas.
The evaluation of performance of Board, it''s Committees and of individual Directors was found to be satisfactory.
Meeting of Independent Directors: The Independent Directors of the Company have on 14 February, 2023 held a separate meeting without the attendance of Non-Independent Directors and members of the management for evaluation of the performance of Non-Independent Directors, the Board as a whole and Chairman of the Company and for consideration of such other matters as required under the provisions of the Act and the Listing Regulations.
DISCLOSURE RELATING TO REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL (''KMP'') AND PARTICULARS OF EMPLOYEES
The statement pertaining to particulars of employees including their remuneration as required to be reported under the provisions of Section 197(12) of the Act, read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 [including any statutory modification(s) or re-enactment(s) thereof, for the time being in force] (the Rules) are provided in Annexure 5A to this Report. However, as per the provisions of Section 136 of the Act, the Reports and Accounts for the Financial Year 2022-23 are being sent to the Members and others entitled thereto, excluding this statement. The said 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 is interested in obtaining a copy thereof, such member may write to the Company Secretary, whereupon a copy would be sent.
The disclosures as required under Section 197(12) of the Act, read with Rule 5(1) of the Rules are provided in Annexure 5B to this Report.
AUDITORS AND AUDITORS'' REPORT
M/s. Lodha & Co., Chartered Accountants (Firm Registration Number: 301051EE), were appointed as the Statutory Auditors of the Company to hold office from the conclusion of the 67th Annual General Meeting (''AGM'') till the conclusion of the 72nd AGM of the Company.
The para wise responses of the management to the opinion/remarks/observations made in the Independent Auditors'' Report on the financial statements of the Company for the year ended 31 March, 2023 are given below:
1. As regards the Qualified Opinion expressed by the Auditors in their Report under para (a) under the head ''Basis for Qualified Opinion'' and its consequential references made in para nos. 2 (d), (e), (g) and 3 (i) under the head ''Report on Other Legal and Regulatory Requirements'' of their Report and para (I)(b) and (II)(a) of the Annexure A to the Auditors'' Report of even date, attention is drawn to Note no. 48(a) of the Standalone Financial Statements, which are selfexplanatory;
2. With respect to the Qualified Opinion expressed by the Auditors in their Report under para (b) under the head ''Basis for Qualified Opinion, attention is drawn to Note no. 9.1 of the Standalone Financial Statement, which are selfexplanatory; and
3. On the Auditors'' observation made in para (I)(a) of the Annexure A to the Auditors'' Report of even date, your Directors wish to inform that all necessary steps are being taken to regularise the maintenance of proper records for furniture and fixtures.
During the year under review, the Auditors had not reported any fraud under Section 143(12) of the Act, therefore, no detail is required to be disclosed under Section 134(3)(ca) of the Act.
MAINTENANCE OF COST RECORDS AND AUDIT THEREOF
The Company is required to maintain cost records for Pig Iron, DI Pipe, DI Fittings, CI Pipe, Coke, Sponge Iron, Power Generating units and Ferro Alloy Products - Prime Si. Mn and Prime Ferro Silicon for every Financial Year, as specified by the Central Government under Section 148(1) of the Act, and accordingly, such accounts and records are made and maintained in the prescribed manner. Further, pursuant to Section 148 of the Act, read together with the Companies (Cost Records and Audit) Rules, 2014, as amended, the Company is required to carry out audit of the cost accounting records of the Company. M/s. S G & Associates (Firm Registration Number: 000138), Cost Accountants, and M/s. Narasimha Murthy & Co., Cost Accountants (Firm Registration Number: 000042) were appointed as the joint Cost Auditors of the Company for Financial Year 2022-23.
The Cost Audit Report for the Financial Year 2021-22 was filed on 7 September, 2022.
For Financial Year 2023-24, M/s. S G & Associates, Cost Accountants, and M/s. Narasimha Murthy & Co., Cost Accountants have been re-appointed as joint Cost Auditors for all the applicable units and products of the Company. The remuneration proposed to be paid to them for the Financial Year 2023-24 requires ratification of the shareholders of the Company. In view of this, the ratification for payment of remuneration to the Cost Auditors is being sought at the ensuing AGM.
In terms of Section 204 of the Act and Rules framed thereunder, M/s MKB & Associates., Company Secretaries, were appointed to conduct the Secretarial Audit of the Company for the Financial Year 2022-23. The report of the Secretarial Auditor is annexed as Annexure 6 to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
IIn terms of the provisions of Section 138 of the Act, M/s. Chaturvedi & Co. were appointed as the Internal Auditor of the Company for the Financial Year 2022-23. The Audit Committee, in consultation with the Internal Auditor, formulates the scope, functioning, periodicity and methodology for conducting the Internal Audit. The Audit Committee, inter-alia, reviews the Internal Audit Reports.
The Board of Directors of the Company, at their Meeting held on 17 May, 2023 have re-appointed M/s Chaturvedi & Co. as the Internal Auditor of the Company for the Financial Year 2023-24 on the recommendation of the Audit Committee of Directors of the Company under the provisions of Section 138 of the Companies Act, 2013.
During the Financial Year 2022-23, the Company has not accepted any deposit within the meaning of Sections 73 and 76 of the Act, read together with the Companies (Acceptance of Deposits) Rules, 2014.
LOANS, INVESTMENTS, GUARANTEES & SECURITIES
The particulars of loans, guarantees and investments covered under the provisions of Section 186 of the Act are given in Note no. 54.1 to the Standalone Financial Statements of the Company.
Pursuant to Section 92(3), read with Section 134(3)(a), of the Act, a copy of the Annual Return of the Company as on the Financial Year ended 31 March, 2022, in Form No. MGT-7, can be accessed on the website of the Company, at https://www. electrosteel.com/investor/shareholder-information-annual-return.php
Further, pursuant to Section 92(3) of the Act, the Annual Return of the Company as on the Financial Year ended 31 March, 2023, is uploaded on the website of the Company, at https://www.electrosteel.com/investor/shareholder-information-annual-return.php
BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT
The Business Responsibility & Sustainability Report as per Regulation 34 of the Listing Regulations, detailing the various initiatives taken by the Company on the environmental, social and governance front, is annexed as Annexure 7 to this Report.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013
The Company has in place a Policy in line with requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. In compliance with the provisions of the said Act, an Internal Complaints Committee is in place to redress complaints received regarding sexual harassment. The Company has not received any complaint of sexual harassment during the Financial Year 2022-23.
The Company has entered into contracts/arrangements with the related parties during the Financial Year 2022-23, which were in the ordinary course of business and on arm''s length basis. Thus, provisions of Section 188(1) of the Act were not applicable on the Company and the disclosure in Form AOC-2 is not required. However, your attention is drawn to the Related Party disclosure in Note no. 54 of the Standalone Financial Statements.
The Board has approved a policy for Related Party Transactions which has been hosted on the website of the Company. The web-link for the same is electrosteel.com/admin/pdf/1608020034Related-Party-Transaction-Policy.pdf. The Related Party Transactions, wherever necessary, are carried out by the Company as per this Policy.
There were no materially significant related party transactions entered into by the Company during the year, which may have a potential conflict with the interest of the Company at large.
The Company has a well-established Risk Management Policy to identify and evaluate business risks. This framework seeks to create transparency, minimise adverse effect on the business objectives and enhance Company''s competitive
advantage. The key business risks identified by the Company are economic risk, competitor risk, industry risk, environment risk, operational risk, foreign exchange risk, etc., and it has proper mitigation process for the same. The Audit Committee reviews this policy and evaluates the risk management systems of the Company, periodically. A statement indicating development and implementation of Risk Management Policy for the Company including identification of elements of risk, if any, is provided as a part of Management Discussions & Analysis Report at Annexure 1 which forms a part of this Report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO
The prescribed particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings & Outgo required to be disclosed under Section 134 of the Act, read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed as Annexure 8 and forms a part of this Report.
DISCLOSURE ON THE COMPLIANCE OF SECRETARIAL STANDARDS
The Company is compliant with the Secretarial Standards issued by the Institute of Company Secretaries of India on Meetings of the Board of Directors (SS-1) and General Meetings (SS-2).
During the year under review:
i) NCLT Cuttack, dismissed the IBC application of UV Asset Reconstruction Company Ltd (UVARCL) by pronouncing its order in favour of the Company. UVARCL has filed an appeal before NCLAT. The matter is pending before NCLAT and
ii) The Company had not entered into any one-time settlement with any Bank or any Financial Institution. ACKNOWLEDGEMENT
Your Directors record their sincere appreciation for the assistance and co-operation received from the banks, financial institutions, government authorities, and other business associates and stakeholders. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the Company''s executives, staff and workers.
For and on behalf of the Board of Directors
Pradip Kumar Khaitan
Place: Kolkata Chairman
Date: 17 May, 2023 DIN: 00004821
Mar 31, 2018
Dear Members,
The Directors are pleased to present the Sixty Third Annual Report together with Audited Annual Financial Statements (including Audited Consolidated Financial Statements) of the Company for the Financial Year ended 31 March 2018.
FINANCIAL RESULTS (Rs. in Crore)
Particulars |
Standalone |
Consolidated |
||
FY 2017-18 |
FY 2016-17 |
FY 2017-18 |
FY 2016-17 |
|
Revenue from Operations |
1,943.66 |
1,832.08 |
2,185.95 |
2,117.64 |
Earnings Before Interest, Taxes, Depreciation and Amortisation |
305.13 |
373.23 |
337.21 |
388.67 |
Less : Finance Costs |
202.32 |
201.05 |
210.28 |
210.35 |
Less : Depreciation and Amortisation expense |
59.22 |
63.69 |
62.40 |
66.90 |
Profit Before Exceptional Item & Tax |
43.59 |
108.49 |
64.53 |
111.42 |
Exceptional Item |
- |
- |
- |
- |
Profit Before Tax |
43.59 |
108.49 |
64.53 |
111.42 |
Less : Tax Expense |
(3.40) |
31.21 |
(1.08) |
33.79 |
Profit After Tax |
46.99 |
77.28 |
65.61 |
77.63 |
Share of Profit/(Loss) in Associates and Joint Ventures |
- |
- |
58.58 |
66.44 |
Profit After Tax including share of Associate and Joint Ventures |
46.99 |
77.28 |
124.19 |
144.07 |
Attributable to : |
||||
Owners of the Parent |
- |
- |
124.03 |
144.09 |
Non-Controlling Interest |
- |
- |
0.16 |
(0.02) |
Other Comprehensive Income (net of tax) |
1.94 |
0.59 |
(8.75) |
21.72 |
Total Comprehensive Income |
48.93 |
77.87 |
115.44 |
165.79 |
Attributable to : |
||||
Owners of the Parent |
- |
- |
115.28 |
165.80 |
Non-Controlling Interest |
- |
- |
0.16 |
(0.01) |
Opening balance in Retained Earnings |
1,060.75 |
1,055.52 |
552.48 |
480.49 |
Profit for the period |
46.99 |
77.28 |
124.03 |
144.09 |
Re-measurement of defined benefit plans |
0.10 |
(0.67) |
0.10 |
(0.67) |
Dividend including dividend distribution tax |
(21.48) |
(21.48) |
(21.48) |
(21.48) |
Transfer to Debenture Redemption Reserve |
- |
(50.00) |
- |
(50.00) |
Transfer from Debenture Redemption Reserve |
- |
20.10 |
- |
20.10 |
Transfer to Statutory Reserve |
- |
- |
(0.14) |
(0.05) |
Transfer to General Reserve |
- |
(20.00) |
- |
(20.00) |
State capital investment subsidy |
1.50 |
- |
1.50 |
- |
Closing Balance in Retained Earnings |
1,087.86 |
1,060.75 |
656.49 |
552.48 |
DIVIDEND
The Directors are pleased to recommend a dividend of Re.0.30 per Equity Share of face value of Re.1 each for the Financial Year ended 31 March 2018. This dividend is subject to the approval of the Members at the ensuing Annual General Meeting (AGM). If approved, the total outlay on account of dividend for the Financial Year 2017-18 would amount to Rs.12.91 Crore (including Rs.2.20 Crore towards Dividend Distribution Tax).
TRANSFER TO RESERVES
The Company proposes to retain the entire amount of profit in the Profit & Loss Account.
OPERATIONS
The Companyâs Revenue from Operations on standalone basis was reported at Rs.1,943.66 Crore during the year under review as compared to Rs.1,832.08 Crore reported in the previous year. The Export sales increased by around 18% from Rs.506.86 Crore in 2016-17 to Rs.610.22 Crore in 2017-18, due to increase in volume of sales. The Companyâs profit after tax (PAT) for the Financial Year 2017-18 was reported at Rs.46.98 Crore as against Rs.77.28 Crore for Financial Year 2016-17, mainly due to increase in prices of raw materials. Further an amount of Rs.33.63 Crore was received on sale of fixed asset and was included under other income in the Financial Year 2016-17.
The Revenue from Operations on consolidated basis, for the year ended 31 March 2018 marginally increased by 3.23% from Rs.2,117.64 Crore in 2016-17 to Rs.2,185.95 Crore in 2017-18. The consolidated PAT for the year ended 31 March 2018 was Rs.124.19 Crore as against PAT of Rs.144.07 Crore for the previous Financial Year.
During the year under review, the production of Ductile Iron (DI) Pipes was 2,92,714 MT as against 2,80,287 MT in the previous year. The production of Cast Iron (CI) Pipes at Elavur was 18,616 MT as against 34,473 MT in the previous year.
DI Fittings & Accessories produced 9,498 MT of DI Fittings in 2017-18 as against 8,510 MT in 2016-17. Production, productivity, product variety & quality and despatch etc. have been improved at Haldia Fittings Plant. Export despatch of Fittings from Haldia Plant has enhanced. Further improvement is expected in the current Financial Year.
The Company continues to provide special attention towards improvement in production and productivity with higher energy efficiency. Further, to meet and improve upon the expectations of both International and Domestic customers, the Company has added a number of product variants to its existing product base.
MATERIAL CHANGES AND COMMITMENTS
The Company has an investment of Rs.605,92.88 lakh in equity shares of Electrosteel Steels Limited (ESL), an associate company of the Company. ESL was referred to Honâble National Company Law Tribunal (NCLT) for Corporate Insolvency Resolution Process (CIRP). The Resolution Professional appointed by NCLT and the Committee of Creditors of ESL had approved a resolution plan, which has also been approved by NCLT, for the acquisition of ESL by a bidder which has been subsequently challenged by another bidder and status quo has been granted and the matter is pending before the Honâble National Company Law Appellate Tribunal (NCLAT). Pending decision of NCLAT and in absence of any communication of resolution plan as approved above, the Companyâs investment in ESL has been carried forward at its carrying value and no impairment in value thereof has been considered necessary. Further, advances and trade receivables amounting to Rs.21,151.25 lakh receivable from ESL along with mortgage of certain land & building of the Company situated at Elavur, Tamil Nadu, in the favour of one of the lenders of ESL has been carried forward at their carrying value in view of pendency of resolution proceedings.
Excepting the above, there have been 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 relate and the date of this report.
There has been no change in the nature of business.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report forms an integral part of this Report and gives details of the industry structure, developments, opportunities, threats, performance and state of affairs of the Companyâs business, internal controls and their adequacy, risk management systems including a section on âRisk Managementâ and other material developments during the Financial Year 2017-18 is annexed as Annexure 1 forming part of this Report.
FUTURE PROSPECTS
It is known fact that after the economic liberalization in the Nineties, the Indian economy is growing at an enviable rate. A steady growth in Gross Domestic Product has been witnessed for more than two decades now. This sustained economic growth has led to rapid urbanization all over India. As a result villages are turning into towns, towns into cities and cities into megacities. Water, the need of life, is likely to pose the greatest challenge on account of an increased demand with population rise and economic development, and shrinking supplies due to over-exploitation and pollution. The ever growing demand for water supply and disposal is fueling an increasing demand for pipes, the basic medium to convey water and waste water.
Rapid economic development is bringing in more industry and with more industrialization the pipe demand for Industrial water supply is also growing. Growth is also witnessed in the real estate and service industry which in turn requires pipes for conveying water.
India has a seasonal pattern of rainfall with 50% of precipitation falling in just 15 days. Over 90% of river flows for just four months. To ensure food security, this calls for regular irrigation of vast area of land to sustain agricultural activity. Till now irrigation in India was mainly canal based. But due to problems being faced for land acquisition and to minimize transmission loss due to percolation and evaporation, the government is stressing more on piped irrigation, opening huge scope for use of ductile iron pipes in the irrigation sector.
With the specific focus of the Government in drinking water supply, waste water disposal and piped irrigation sector, the growing demand for ductile iron pipes is likely to continue in long term. As a result, the Indian pipe business has witnessed tremendous growth due to increasing demand for pipes. Among the several varieties of pipes available in the market, the demand for ductile iron pipes in particular, is on a rise due to its high dependability and high durability. Ductile iron pipe in view of its inherent features like high ductility and bursting strength, higher corrosion & abrasion resistance, easy laying and long service life is the preferred choice over other types of pipes for water and sewerage transportation.
With the continued focus of the Government in this sector, the growing demand for ductile iron pipes is likely to continue in medium and long term. As such future of the Industry appears to be bright.
SHARE CAPITAL
The Issued, Subscribed and Paid-up Share Capital of the Company is Rs.35,69,55,322/- comprising of 35,69,55,322 Equity Shares of Re.1/- each as on 31 March 2018. During the year under review, the Company has not issued any shares. The Company has not issued shares with differential voting rights. It has neither issued employee stock options nor sweat equity shares and does not have any scheme to fund its employees to purchase the shares of the Company. As on 31 March 2018, none of the Directors of the Company hold instruments convertible into equity shares of the Company.
FINANCE
Debentures
As on 31 March 2018, the Company has the following Secured Redeemable Non-Convertible Debentures (NCDs):
Series of Debentures |
Amount (Rs. in Crore) |
Series IV - 11.00% |
50.00 |
Series VI - 11.75% |
125.00 |
Series VII - 12.00% |
75.00 |
Total |
250.00 |
The Debenture Trustee for each of the aforesaid series of Debentures is as follows:
Axis Trustee Services Limited
Axis House, Bombay Dyeing Mills Compound,
Pandurang Budhkar Marg, Worli, Mumbai 400 025
Contact Person: Chief Operating Officer
Ph: (022) 6226 0075/74, Fax: (022) 4325 3000
E-mail Id: [email protected]
The Company has been regular in payment of interest on its NCDs.
Credit Rating
Credit Analysis & Research Limited (âCAREâ) has reaffirmed the Companyâs credit rating for the long-term borrowings as âCARE BBB â and for short-term borrowings as âCARE A2â.
The Credit Rating for Series IV is âBWR A â from Brickwork Ratings India Pvt. Ltd. and âCARE BBB â from CARE Ratings Limited. Further the Credit Rating for Series VI & Series VII is âIVR Aâ from Infomerics Valuation and Rating Pvt. Ltd. and âBWR A â from Brickwork Ratings India Pvt. Ltd.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
During the year under review, there were no significant or material order passed by the regulators or courts or tribunals impacting the going concern status and the Companyâs operations in future.
However, the Company had filed its claims for compensation for Parbatpur Coal Block, under the Coal Mines (Special Provisions) Act, 2015 and pending the acceptance and recovery of the same, the Company had filed a Writ Petition before the Honâble High Court at Delhi, hearing of which had concluded and the judgment reserved since April 2015. The Company secured interim payments of Rs.82.40 Crore against the claimed amount. Thereafter, on 9 March 2017, the Honâble High Court pronounced the judgment, wherein the contentions raised by the Company have been accepted in-principle. As per the said judgment, Ministry of Coal has to interpret and work the Act in the manner indicated in the judgment. In line with the same, the Company has duly filed a revised claim with Ministry of Coal vide letter dated 4 April 2017 amounting to Rs.1,342.13 Crore (earlier claim being Rs.1,220.70 Crore as on 31 March 2014) towards compensation for mine infrastructure and Rs.189.63 Crore towards compensation for land.
The Ministry of Coal had sought for certain information in prescribed format which has been submitted on 22 February 2018 and Ministry of Coal is yet to take a final decision on the revised compensation in light of judgment dated 9 March 2017.
Membersâ attention is also invited to Notes on Contingent Liabilities, in the notes forming part of the Financial Statements.
INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
The Internal Financial Controls with reference to the Financial Statements are considered to be commensurate with the size, scale and nature of the operations of the Company. There are Standard Operating Procedures (SOPs) in all functional activities for which key manuals have been put in place. The manuals are updated and validated periodically. Approval of all transactions is ensured through a pre-approved Delegation of Authority (DOA) schedule which is in-built into the SAP system wherever required. DOA is reviewed periodically by the management and compliance of DOA is regularly checked by the Auditors. The Companyâs books of accounts are maintained in SAP and transactions are executed through SAP (ERP) setups to ensure correctness/effectiveness of all transactions, integrity and reliability of reporting. There is adequate MIS (Management Information System) which is reviewed periodically with functional heads.
The Internal Auditors of the Company monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating system, accounting procedures and policies at all locations of the Company. The main thrust of internal audit is to test and review controls, appraisal of risks and business processes, besides benchmarking controls with best practices in the industry. Based on the Internal Audit Reports, process owner takes corrective actions in their respective areas and thereby strengthens the controls. The Report is presented before the Audit Committee for review at regular intervals.
DETAILS OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES
The Audited Annual Consolidated Financial Statements forming part of the Annual Report have been prepared, in accordance with Companies Act, 2013 (âthe Actâ), Indian Accounting Standards (Ind AS) 110 -âConsolidated Financial Statementsâ and Indian Accounting Standards (Ind AS) 28 - âInvestments in Associates and Joint Ventures, notified under Section 133 of the Act read with Companies (Indian Accounting Standards) Rules, 2015 and as amended from time to time.
The Company had the following Subsidiaries, Associate Companies and Joint Ventures as on 31 March 2018 :
Sl. No. |
Name of the Company |
Status |
1. |
Electrosteel Algerie SPA |
Subsidiary |
2. |
Electrosteel Castings (UK ) Limited |
Subsidiary |
3. |
Electrosteel Castings Gulf FZE |
Subsidiary |
4. |
Electrosteel Doha for Trading LLC |
Subsidiary |
5. |
Electrosteel Europe S.A. |
Subsidiary |
6. |
Electrosteel Trading, S.A. |
Subsidiary |
7. |
Electrosteel USA, LLC |
Subsidiary |
8. |
Electrosteel Brasil Ltda. Tubos e Conexoes Duteis |
Subsidiary |
9. |
Mahadev Vyapaar Pvt. Ltd. |
Subsidiary |
10. |
Electrosteel Bahrain Holding S.PC. Company |
Subsidiary |
11. |
WaterFab LLC (subsidiary of Electrosteel USA, LLC) |
Subsidiary |
12. |
Electrosteel Bahrain Trading W.L.L (subsidiary of Electrosteel Bahrain Holding S.PC. Company) |
Subsidiary |
13. |
Electrosteel Steels Limited |
Associate Company |
14. |
Electrosteel Thermal Power Limited |
Associate Company |
15. |
Srikalahasthi Pipes Limited |
Associate Company |
16. |
North Dhadhu Mining Company Private Limited |
Joint Venture |
17. |
Domco Private Limited |
Joint Venture |
The Company has formulated a policy on determining material subsidiaries of the Company, which has been uploaded on the Companyâs website at the web-link: http://repository.electrosteelcastings.com/investors/pdf/policy-on-material-subsidiary.pdf
A Report on the highlights of the performance of each of the Companyâs subsidiaries, associates and joint venture of the Company and their contribution to the overall performance of the Company for the Financial Year ended 31 March 2018 pursuant to the provisions of Section 129(3) of the Act read with Rule 8 of Companies (Accounts) Rules, 2014 is given in Annexure 2. The statement containing salient features of financial statement of subsidiaries, associate companies and joint venture for the Financial Year ended 31 March 2018 pursuant to the said Section read with Rule 5 of the said Rules are given in the financial statements.
In accordance with Section 136 of the Act, the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of each of its subsidiaries, are available on the website of the Company www.electrosteelcastings.com. These documents will also be available for inspection during business hours by the Members at the Registered Office of the Company.
STATUS OF AMALGAMATION OF MAHADEV VYAPAAR PVT LTD
The Board of Directors of the Company, at its meeting held on 11 August 2014 had approved the Scheme of Amalgamation (âthe Schemeâ) of its wholly owned subsidiary, Mahadev Vyapaar Pvt Ltd with the Company with effect from 1 April 2014 (âAppointed Dateâ). Mahadev Vyapaar Pvt Ltd had filed an application before the Honâble High Court at Calcutta, which has sanctioned the said Scheme. The application filed by the Company before the Honâble High Court at Orissa will be taken up by the National Company Law Tribunal, Kolkata Bench (âNCLT, Kolkataâ) as per Notification No. S.O. 3677(E) dated 7 December 2016 and Rule 3 of Companies (Transfer of Pending Proceedings) Rules, 2016. However, the application filed before the Honâble High Court at Orissa has not yet been transferred to NCLT, Kolkata.
REPORT ON CORPORATE GOVERNANCE
The Company is committed in maintaining the highest standards of Corporate Governance and adheres to the stipulations prescribed set out under SEBI (Listing Obligations and Disclosures Requirements) Regulation, 2015 (âListing Regulationsâ). A Report on Corporate Governance for the year under review together with the Auditorsâ Certificate thereon is annexed as Annexure 3 forming part of this Report.
MEETINGS OF THE BOARD
The details of Board Meetings held during the Financial Year 2017-18 have been furnished in the Corporate Governance Report forming part of this Report and annexed as Annexure 3.
BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr. Naresh Chandra (DIN: 00015833), Non-Executive Director ceased to be the Director of the Company due to demise on 9 July 2017. The Board expresses their deep condolences and places on record its appreciation and gratitude for the valuable contributions made by him during his tenure as Director on the Board of the Company.
The Board of Directors has on the recommendation of Nomination & Remuneration Committee (NRC) has re-appointed Mr. Uddhav Kejriwal (DIN: 00066077) as the Whole-time Director of the Company for a period of 5 (five) years with effect from 16 June 2018, subject to the approval of the Members.
Mr. Mahendra Kumar Jalan (DIN: 00311883) and Ms. Nityangi Kejriwal (DIN: 071294444), retires by rotation at the forthcoming AGM and being eligible, offer themselves for re-appointment.
Mr. Pradip Kumar Khaitan (DIN: 00004821) and Mr. Binod Kumar Khaitan (DIN: 00128502) was appointed as Independent Directors of the Company for a period of 5 (five) years with effect from 28 August 2014. Their term will expire on 27 August 2019. Pursuant to the provisions of the Act and based on the recommendation of NRC and performance evaluation by NRC and Board at their respective meetings, the Board recommends their re-appointment as the Independent Directors for a second term of 5 (five) consecutive years with effect from 28 August 2019, to the Members of the Company at the 63rd AGM.
In compliance with Regulation 26(4) and 36(3) of the Listing Regulations and Secretarial Standard 2 on General Meetings, brief resume and other information of all the Directors proposed to be re-appointed are given in the Notice for the forthcoming AGM.
DIRECTORSâ RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134 of the Act, the Directors state that:
a) in the preparation of annual accounts for the Financial Year ended 31 March 2018, the applicable accounting standards had been followed and there were no material departures requiring any explanation;
b) they 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 period;
c) they 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;
d) they had prepared annual accounts on a âgoing concernâ basis;
e) they had laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and were operating effectively; and
f) they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
INDEPENDENT DIRECTORS
Declaration by Independent Directors
Mr. Pradip Kumar Khaitan, Mr. Binod Kumar Khaitan, Mr. Ram Krishna Agarwal and Mr. Amrendra Prasad Verma, Independent Directors have given declarations that they meet the criteria of independence as laid down in Section 149(6) of the Act and the Rules made thereunder.
DETAILS OF BOARD COMMITTEES & ADOPTION OF POLICIES
There are 5 Board Committees as on 31 March 2018 viz. Audit Committee, Nomination and Remuneration Committee, Stakeholdersâ Relationship Committee, Corporate Social Responsibility Committee and Banking and Authorisation Committee.
The details of composition, terms of reference and meetings held and attended by the Committee members of Audit Committee, Nomination and Remuneration Committee, Stakeholdersâ Relationship Committee and Corporate Social Responsibility Committee are provided in the Corporate Governance Report annexed as Annexure 3.
The Banking and Authorisation Committee comprises of Mr. Binod Kumar Khaitan as the Chairman with Mr. Shermadevi Yegnaswami Rajagopalan, Mr. Mayank Kejriwal and Mr. Uddhav Kejriwal as the members as on 31 March 2018. The terms of reference for the Committee include taking various decisions pertaining to the opening or closing of bank and demat accounts of the Company, change in authorised signatories for operation of different bank and demat accounts, subscribing/purchasing/selling/dealing in securities of Companies other than related parties and availing broking services, making loans from time to time to subsidiary companies/Joint Ventures/Associates for its working capital requirement, giving guarantee or providing security to any bank in connection with fund based/non-fund based facilities including loan(s) made to Subsidiary Company/Joint Venture/Associate Company by such bank and any other work related to day-to-day operations of the Company.
Vigil Mechanism
The Company has adopted Whistle Blower Policy and established a Vigil Mechanism in compliance with provisions of Section 177(9) of the Act and Regulation 22 of the Listing Regulations for the Directors and employees to report genuine concerns and grievances. This mechanism provides adequate safeguards against victimisation of employees and Directors and also provide for direct access to the Chairperson of the Audit Committee. The Company oversees the vigil mechanism through the Audit Committee of the Company. The said Policy is available at the Companyâs website and can be accessed through a web-link i.e. http://repository.electrosteelcastings.com/investors/pdf/vigil-2016.pdf
Nomination and Remuneration Policy
The Board has adopted a Nomination and Remuneration Policy recommended by Nomination and Remuneration Committee in terms of the provisions of Section 178 of the Act. The Nomination and Remuneration Policy is available at the Companyâs website and can be accessed through a web-link i.e. http://repository.electrosteelcastings.com/investors/ pdf/nominationRemunerationPolicy.pdf
The Nomination & Remuneration Policy aims to enable the Company to attract, retain and motivate highly qualified members for the Board and other executive level. It enables the Company to provide a well-balanced and performance-related compensation package, taking into account shareholder interests, industry standards and relevant Indian corporate regulations. The policy ensures that the interests of Board members, KMPs & all employees are aligned with the business strategy and risk tolerance, objectives, values and long-term interests of the Company and the remuneration to directors, key managerial personnel and employees involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the Company and its goals. The policy lays down the procedure for the selection and appointment of Board Members and KMPs and also the appointment of executives other than Board Members, compensation structure for Executive Directors, Non-Executive Directors and KMPs and the process for performance evaluation of the Board.
Corporate Social Responsibility Policy
In accordance with the requirements of Section 135 of the Act, read with Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company has Corporate Social Responsibility (CSR) Committee in place. The CSR Committee has developed and implemented the Corporate Social Responsibility Policy. A Report on CSR activities/initiatives which includes the contents of the CSR Policy, composition of the Committee and other particulars as specified in Section 135 of the Act read with Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 are disclosed as Annexure 4 to this Report.
Policy on Board Diversity and Succession Plan
A Policy on Board Diversity and Succession Plan was devised by the Nomination and Remuneration Committee to ensure adequate diversity in the Board of Directors of the Company.
FORMAL ANNUAL EVALUATION AND ITS CRITERIA
The Nomination and Remuneration Committee of the Board has formulated and laid down criteria for annual evaluation of Directors pursuant to provisions of Section 178 of the Act and Listing Regulations and as per requirements of Section 134 of the Act, the manner of evaluation is disclosed below -
A. The Board shall evaluate the roles, functions, duties of the Independent Directors (IDs) of the Company. Each ID shall be evaluated by all other Directors but not by the Director being evaluated. The Board shall also review the manner in which IDs follow guidelines of professional conduct as specified in Schedule IV to the Act. The adherence of Section 149 and aforesaid Schedule IV by the IDs shall also be reviewed by the Board.
B. Performance review of all the Non Independent Directors of the Company on the basis of the activities undertaken by them, expectations of Board and level of participation.
C. Performance review of Chairman of the Company in terms of the level of competence of Chairman in steering the Company.
D. The review and assessment of the flow of information by the Company to the Board and the manner in which deliberations take place, the manner of placing Agenda and contents therein.
E. The review of the performance of Directors individually, its own performance as well as evaluation of working of its Committees shall be carried out by the Board.
F. On the basis of performance evaluation, it shall be determined by the Nomination & Remuneration Committee and Board whether to extend or continue the term of appointment of ID subject to all other applicable compliances.
Further, in terms of the requirements of the Act and the Listing Regulations, the Board had carried out an annual evaluation of its own performance, the performance of Directors individually as well as evaluation of the performance and working of its Committees at its meeting based on the criteria formulated by the Nomination & Remuneration Committee.
Meeting of Independent Directors: The Independent Directors of the Company held a separate meeting without the attendance of Non Independent Directors and members of the management for evaluation of the performance of Non Independent Directors, the Board as a whole and Chairman of the Company and for consideration of such other matters as required under the provisions of the Act.
DISCLOSURE RELATING TO REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL (KMP) AND PARTICULARS OF EMPLOYEES
The statement pertaining to particulars of employees including their remuneration as required to be reported under the provisions of Section 197(12) of the Act, read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including any statutory modification(s) or re-enactment(s) thereof for the time being in force) (the Rules) are provided in Annexure 5A to this Report. However, as per the provisions of Section 136 of the Act, the Reports and Accounts for the Financial Year 2017-18 are being sent to the Members and other entitled thereto, excluding this statement. This statement is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard.
The disclosures pertaining to the remuneration of Directors, KMPs and employees as required under Section 197(12) of the Act, read with Rule 5(1) of the Rules are provided in Annexure 5B to this Report.
AUDITORS AND AUDITORSâ REPORT
M/s. Singhi & Co. Chartered Accountants (Firm Registration Number 302049E) were appointed as the Statutory Auditors of the Company to hold office from the conclusion of 62nd Annual General Meeting (AGM) till the conclusion of the 67th AGM of the Company.
The para wise responses of the management to the opinion/remarks/observations made in the Independent Auditorsâ Report on the financial statements of the Company for the year ending 31 March 2018 are given below:
1. With respect to the Qualified Opinion expressed by the Auditors in their Report and its consequential references made under the head âbasis of qualified opinion, attention is drawn to Note Nos. 7.2 and 7.4 of the Standalone Financial Statement, which are self-explanatory;
2. As regards the Qualified Opinion expressed by the Auditors in their Report and its consequential references made in para nos. (d), (e), (g) and (i)(i) of their Report and para (I)(b), (I)(c) and (II)(a) of the Annexure to the Auditorsâ Report of even date, attention is drawn to Note No. 46 of the Standalone Financial Statement, which are self-explanatory;
3. On the Auditorsâ observation made in para (i)(a) of the Annexure to the Auditorsâ Report of even date, your Directors wish to inform that all necessary steps are being taken to regularise the maintenance of proper records for furniture and fixtures;
4. On the Auditorsâ observation made in para (ix) of Annexure to the Auditorsâ Report of even date, your Directors have to clarify that External Commercial Borrowings (ECB) funds are being used as per the progress of the respective project(s) for which these amounts were borrowed and pending the completion of the project(s), the balance amounts could only be parked with Authorised Dealer Bank as per the terms of ECB. Hence, the funds were kept in current account with AD Bank for an interim period.
During the year under review, the Auditors had not reported any matter under Section 143(12) of the Act, therefore no detail is required to be disclosed under Section 134(3)(ca) of the Act.
COST AUDITORS
Pursuant to Section 148 of the Act read together with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, the Company is required to carry out audit of the cost accounting records of the Company relating to Pig Iron, DI Pipe, DI Fittings, CI Pipe, Coke, Sponge Iron & Power Generating units for every Financial Year.
The Cost Audit Report and a Compliance Report for the Financial Year 2016-17 were filed on 30 August 2017.
M/s. S. G. & Associates (Firm Registration Number 000138), Cost Accountants, Kolkata, has been re-appointed as Cost Auditors for Financial Year 2018-19 for all the applicable units and products of the Company. The remuneration proposed to be paid to them for the Financial Year 2018-19 requires ratification of the shareholders of the Company. In view of this, the ratification for payment of remuneration to the Cost Auditors is being sought at the ensuing AGM.
SECRETARIAL AUDITORS
In terms of Section 204 of the Act and Rules framed thereunder, M/s. S. M. Gupta & Co., Practicing Company Secretaries were appointed Secretarial Auditors of the Company for the Financial Year 2017-18. The report of the Secretarial Auditorsâ is annexed as Annexure 6 to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
INTERNAL AUDITORS
In terms of the provisions of Section 138 of the Act, M/s. Ernst & Young, LLP were appointed as Internal Auditors of the Company for the Financial Year 2017-18. The Audit Committee in consultation with the Internal Auditors formulates the scope, functioning, periodicity and methodology for conducting the Internal Audit. The Audit Committee inter-alia reviews Internal Audit Reports.
The Board has re-appointed M/s. Ernst & Young LLP, as Internal Auditors for the Financial Year 2018-19 under the provisions of Section 138 of the Act.
PUBLIC DEPOSITS
During the Financial Year 2017-18, the Company has not accepted any deposit within the meaning of Sections 73 and 76 of the Act, read together with the Companies (Acceptance of Deposits) Rules, 2014.
LOANS, INVESTMENTS, GUARANTEES & SECURITIES
The particulars of loans, guarantees and investments covered under the provisions of Section 186 of the Act are given in Note no. 54.3 to the Standalone Financial Statements of the Company.
EXTRACT OF ANNUAL RETURN
Pursuant to Section 92(3) of the Act and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return as on the Financial Year ended 31 March 2018 in Form MGT 9 is annexed as Annexure 7 to this Report.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013
The Company has in place a Policy in line with requirements, inter-alia, of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committees have been set up to redress complaints received regarding sexual harassment. The Company has not received any complaint of sexual harassment during the Financial Year 2017-18.
RELATED PARTY TRANSACTIONS
The Company has entered into contracts/arrangements with the related parties during the Financial Year 2017-18 which were in the ordinary course of business and on armâs length basis. Thus provisions of Section 188(1) of the Act are not applicable and the disclosure under AOC 2 is not required. However, your attention is drawn to the Related Party disclosure in Note no.54 of the Standalone Financial Statements.
The Board has approved a policy for Related Party Transactions which has been hosted on the website of the Company. The web-link for the same is http://repository.electrosteelcastings.com/investors/pdf/related-party-transaction-policy-ver3.pdf. The Related Party Transactions, wherever necessary, are carried out by the Company as per this Policy.
There were no materially significant related party transactions entered into by the Company during the year, which may have a potential conflict with the interest of the Company at large. There were no pecuniary relationship or transactions entered into by any Independent Director with the Company during the year under review.
RISK MANAGEMENT POLICY
The Company has a well-established Risk Management Policy to identify, and evaluate business risks. This framework seeks to create transparency, minimise adverse effect on the business objectives and enhance Companyâs competitive advantage. The key business risks identified by the Company are economic risk, competitor risk, industry risk, environment risk, operational risk, foreign exchange risk etc. and it has proper mitigation process for the same. The Audit Committee reviews this policy periodically. A statement indicating development and implementation of Risk Management Policy for the Company including identification of elements of risk, if any, is provided as a part of Management Discussions & Analysis Report at Annexure 1 which forms a part of this Report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO
The prescribed particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings & Outgo required to be disclosed under Section 134 of the Act, read with Rule 8 of Companies (Accounts) Rules, 2014 is annexed as Annexure 8 and forms a part of this Report.
DISCLOSURE ON THE COMPLIANCE OF SECRETARIAL STANDARDS
The Company is in compliance with the Secretarial Standards issued by the Institute of Company Secretaries of India on Meetings of the Board of Directors (SS - 1) and General Meetings (SS - 2).
ACKNOWLEDGEMENT
Your Directors record their sincere appreciation for the assistance and co-operation received from the banks, financial institutions, government authorities, and other business associates and stakeholders. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the Companyâs executives, staff and workers.
For and on behalf of the Board of Directors
Pradip Kumar Khaitan
Place : Kolkata Chairman
Date : 15 May 2018 DIN :00004821
Mar 31, 2017
Dear Members,
The Directors are pleased to present the Sixty Second Annual Report together with Audited Annual Financial Statements (including Audited Consolidated Financial Statements) of the Company for the Financial Year ended 31 March 2017.
FINANCIAL RESULTS (Rs. in Crore)
Particulars |
Standalone |
Consolidated |
||
FY 2016-17 |
FY 2015-16 |
FY 2016-17 |
FY 2015-16 |
|
Revenue from Operations |
1834.18 |
2016.15 |
2119.75 |
2204.23 |
Earnings Before Interest, Taxes, Depreciation and Amortisation |
373.23 |
305.95 |
409.84 |
300.01 |
Less : Finance Costs |
201.05 |
169.08 |
210.35 |
180.33 |
Less : Depreciation and Amortisation expense |
63.69 |
64.88 |
66.90 |
67.25 |
Profit Before Exceptional Item & Tax |
108.49 |
71.99 |
132.59 |
52.43 |
Exceptional Item |
- |
- |
- |
- |
Profit Before Tax |
108.49 |
71.99 |
132.59 |
52.43 |
Less : Tax Expense |
31.21 |
16.12 |
33.79 |
16.92 |
Profit After Tax |
77.28 |
55.87 |
98.80 |
35.51 |
Share of Profit/(Loss) in Associates and Joint Ventures |
- |
- |
66.44 |
(62.93) |
Profit After Tax including share of Associate and Joint Ventures |
77.28 |
55.87 |
165.24 |
(27.42) |
Attributable to : |
||||
Owners of the Parent |
- |
- |
165.25 |
(27.42) |
Non-Controlling Interest |
- |
- |
(0.01) |
0.00 |
Other Comprehensive Income (net of tax) |
0.59 |
(6.05) |
0.55 |
(6.14) |
Total Comprehensive Income |
77.87 |
49.82 |
165.79 |
(33.56) |
Attributable to : |
||||
Owners of the Parent |
- |
- |
165.80 |
(33.56) |
Non-Controlling Interest |
- |
- |
(0.01) |
- |
Opening balance in Retained Earnings |
1056.88 |
1019.04 |
744.68 |
790.30 |
Profit for the period |
77.28 |
55.87 |
165.25 |
(27.42) |
Dividend including dividend distribution tax |
(21.48) |
(27.93) |
(21.48) |
(27.93) |
Transfer to Debenture Redemption Reserve |
(50.00) |
- |
(50.00) |
- |
Transfer from Debenture Redemption Reserve |
20.10 |
34.90 |
20.10 |
34.90 |
Transfer to Statutory Reserve |
- |
- |
(0.05) |
(0.17) |
Transfer to General Reserve |
(20.00) |
(25.00) |
(20.00) |
(25.00) |
Closing Balance in Retained Earnings |
1062.78 |
1056.88 |
838.50 |
744.68 |
Note : The above figures are extracted from the Standalone and Consolidated Financial Statements as per the Indian Accounting Standards (Ind AS). For the purpose of transition to Ind AS, the Company has followed the guidance prescribed in Ind AS 101, First-Time Adoption of Indian Accounting Standards, with 1 April 2015 as the transition date and IGAAP as the previous GAAP.
DIVIDEND
The Directors are pleased to recommend a dividend of Re.0.50 per Equity Share of face value of Re.1 each, i.e. 50%, for the Financial Year ended 31 March 2017. This dividend is subject to the approval of the Members at the ensuing Annual General Meeting (AGM). If approved, the total outlay on account of dividend for the Financial Year 2016-17 would amount to Rs.17.85 Crore (including Rs.3.63 Crore towards Dividend Distribution Tax).
TRANSFER TO RESERVES
The Company proposes to transfer an amount of Rs.20 Crore and Rs.50 Crore to the General Reserve and Debenture Redemption Reserve respectively. An amount of Rs.1,062.78 Crore is proposed to be retained in the Statement of Profit and Loss. On redemption of debentures, the proportionate Debenture Redemption Reserve of Rs.20.10 Crore was transferred to General Reserve.
OPERATIONS
The Companyâs Revenue from Operations on standalone basis was reported lower at Rs.1,834.18 Crore during the year under review as compared to Rs.2,016.15 Crore reported in the previous year. The Export sales decreased by around 53.52% from Rs.778.13 Crore in 2015-16 to Rs.506.86 Crore in 2016-17, due to slow down of world economy, antidumping/anti-subsidy duties on Indian DI pipes by European Commission. The Companyâs profit after tax (PAT) for the Financial Year 2016-17 was reported at Rs.77.28 Crore as against Rs.55.87 Crore for Financial Year 2015-16, mainly due to optimum utilisation of resources, procurement planning and increase in Other Income.
The Revenue from Operations on consolidated basis, for the year ended 31 March 2017 was down by 3.83% from Rs.2,204.23 Crore in 2015-16 to Rs.2,119.75 Crore in 2016-17. The consolidated PAT for the year ended 31 March 2017 was Rs.165.24 Crore as against loss after tax of Rs.27.42 Crore for the previous Financial Year.
During the year under review, the production of Ductile Iron (DI) Pipes was 2,80,287 MT as against 2,92,467 MT in the previous year. The production of Cast Iron (CI) Pipes at Elavur was 34,473 MT as against 33,639 MT in the previous year.
DI Fittings & Accessories produced 8,510 MT of DI Fittings in 2016-17 as against 6,572 MT in 2015-16. Further, improvement in productivity, product variety & quality etc. is expected at Haldia Fittings Plant in current financial year.
The Company continues to provide special attention towards improvement in production and productivity with higher energy efficiency. Further, to meet and improve upon the expectations of both International and Indian customers, the Company has added a number of product variants to its existing product base.
There have been 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 relate and the date of this report and there has been no change in the nature of business.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report forms an integral part of this Report and gives details of the overall industry structure, developments, opportunities, threats, performance and state of affairs of the Companyâs business, internal controls and their adequacy, risk management systems including a section on âRisk Managementâ and other material developments during the Financial Year 2016-17 is annexed as Annexure 1 forming part of this Report.
FUTURE PROSPECTS
India is growing at a fast rate. The growth in Gross Domestic Product of the country is sustaining steadily. With economic upliftment, rapid urbanization is taking place all over India, where villages are being transformed to towns, towns into cities and cities into megacities. So the future need for water in India is enormous. The solution is piped supply of surface water in usable form. At the same time disposal need of used water is also growing simultaneously, warranting more investment in the sewerage and waste water sector.
Moreover, India has a highly seasonal pattern of rainfall, with 50% of precipitation falling in just 15 days and over 90% of river flows in just four months. This calls for regular irrigation of vast area of land to sustain agricultural activity. Till now irrigation in India was mainly canal based. But due to problems being faced for land acquisition and to minimize transmission loss due to percolation and evaporation, the government is stressing more on piped irrigation, throwing huge scope for use of ductile iron pipes.
The pipe demand for Industrial water supply is also growing with more industrialization. The real estate industry has also seen rapid growth in recent years.
As a result, the Indian pipes business has been growing rapidly due to increasing demand for pipes. Among the several varieties of pipes available in the market, the demand for ductile iron pipes in particular, is on a rise due to its high dependability and high durability. Ductile iron pipe in view of its inherent features like high ductility and bursting strength, higher corrosion & abrasion resistance, easy laying and long service life is the preferred choice over other types of pipes for water and sewerage transportation.
With the continued focus of the Government in this sector, the growing demand for ductile iron pipes is likely to continue in medium and long term. As such future of the Industry appears to be bright.
SHARE CAPITAL
The Issued, Subscribed and Paid-up Share Capital of the Company is Rs.35,69,55,322/- comprising of 35,69,55,322 Equity shares of Re.1/- each as on 31 March 2017.
FINANCE Debentures
During the period under review, the Company had on 7 September 2016 made premature redemption of the 3rd and final instalment of 10.75% Secured Redeemable Non-Convertible Debentures (Series III). Further, in order to meet the long term working capital and/or general corporate purpose requirements, the Company had on 7 March 2017 allotted 125 No. Unlisted Secured Redeemable Non-Convertible Debentures of Rs.1,00,00,000 each (Series VI) and 75 No. Unlisted Secured Redeemable Non-Convertible Debentures of Rs.1,00,00,000 each (Series VII) aggregating to Rs.200,00,00,000 (Rupees Two Hundred Crore Only) on Private Placement basis.
The Company had been regular in payment of interest on its NCDs.
As on 31 March 2017, the Company has the following Secured Redeemable Non-Convertible Debentures (NCDs):
Series of Debentures |
Amount (Rs. in Crore) |
Series IV - 11.00% |
50.00 |
Series VI - 11.75% |
125.00 |
Series VII - 12.00% |
75.00 |
Total |
250.00 |
The Debenture Trustee for each of the aforesaid series of Debentures is as follows:
Axis Trustee Services Limited,
Axis House, Bombay Dyeing Mills Compound,
Pandurang Budhkar Marg, Worli, Mumbai 400 025
Contact Person : Chief Operating Officer Phone : (022) 6226 0075/74 Fax : (022) 4325 3000
Email Id : [email protected]
Credit Rating
Credit Analysis & Research Limited (âCAREâ) has revised the Companyâs credit rating for the long-term borrowings from âCARE Aâ to âCARE BBB â and for short-term borrowings from âCARE A1â to âCARE A2â.
Global Depositary Receipts (GDRs)
The Company had issued Global Depositary Receipts (GDRs) representing the equity shares and had executed the Deposit Agreement on 5 October 2005 with Citibank N.A. New York, the Depositary. Each GDR was equivalent to one underlying equity share of the Company. During the year under review, Citibank N.A., gave notice to the Company of its resignation as depositary. As the number of GDRs were minimal, the Company did not appoint another depositary and Citibank N.A. proceeded with the termination of the Deposit Agreement. The GDR holders instructed Citibank N.A. to sell their shares on 1 March 2017. During the week ended 10 March 2017, all the GDRs have been sold. As on 31 March 2017, there were no outstanding GDRs.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
During the year under review, there were no significant or material order passed by the regulators or courts or tribunals impacting the going concern status and the Companyâs operations in future.
However, the Company had filed its claims for compensation for Parbatpur Coal Block, under the Coal Mines (Special Provisions) Act, 2015 and pending the acceptance and recovery of the same, the Company had filed a Writ Petition before the Honâble High Court at Delhi, hearing of which had concluded and the judgment reserved since April 2015. During the year under review, the Company secured interim payments of Rs.82.40 Crore against the claimed amount. Thereafter, on 9 March 2017, the Honâble High Court pronounced the judgment, wherein the contentions raised by the Company have been accepted in-principle and it has been clarified that (1) the definition of âmine infrastructureâ as per the Act is an inclusive definition, i.e. it includes other similar assets also, even though it may not be mentioned by name in the definition of mine infrastructure in the Act, (2) the valuation of the mine infrastructure should be done as on the date of execution of the vesting order or the allotment order, as the case may be, and not up to 2014 (as was originally done by the Ministry of Coal, Government of India) and; (3) land should be valued equal to or very close to the market price.
As per the said judgment, Ministry of Coal has to interpret and work the Act in the manner indicated in the judgment. In line with the same, the Company has duly filed a revised claim with Ministry of Coal vide letter dated 4 April 2017 amounting to Rs.1,342.13 Crore (earlier claim being Rs.1,220.70 Crore as on 31 March 2014) towards compensation for mine infrastructure and Rs.189.63 Crore towards compensation for land.
Membersâ attention is also invited to Notes on Contingent Liabilities, in the notes forming part of the Financial Statements.
INTERNAL FINANCIAL CONTROLS
The Internal Financial Controls with reference to the Financial Statements are considered to be commensurate with the size, scale and nature of the operations of the Company. There are Standard Operating Procedures (SOPs) in all functional activities for which key manuals have been put in place. The manuals are updated and validated periodically. Approval of all transactions is ensured through a pre-approved Delegation of Authority (DOA) schedule which is inbuilt into the SAP system wherever required. DOA is reviewed periodically by the management and compliance of DOA is regularly checked by the Auditors. The Companyâs books of accounts are maintained in SAP and transactions are executed through SAP (ERP) setups to ensure correctness/effectiveness of all transactions, integrity and reliability of reporting. There is adequate MIS (Management Information System) which is reviewed periodically with functional heads.
The Internal Auditors of the Company monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating system, accounting procedures and policies at all locations of the Company. The main thrust of internal audit is to test and review controls, appraisal of risks and business processes, besides benchmarking controls with best practices in the industry. Based on the Internal Audit Reports, process owner takes corrective actions in their respective areas and thereby strengthens the controls. The Report is presented before the Audit Committee for review at regular intervals.
DETAILS OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES
The Audited Annual Consolidated Financial Statements forming part of the Annual Report have been prepared, in accordance with Companies Act, 2013, Indian Accounting Standards (Ind AS) 110 -âConsolidated Financial Statementsâ and Indian Accounting Standards (Ind AS) 28 - âInvestments in Associates and Joint Venturesâ notified under Section 133 of Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules, 2015 and as amended from time to time.
The Company had the following Subsidiaries, Associate Companies and Joint Ventures as on 31 March 2017 :
Sl. No. |
Name of the Company |
Status |
1. |
Electrosteel Algerie SPA |
Subsidiary |
2. |
Electrosteel Castings (UK ) Limited |
Subsidiary |
3. |
Electrosteel Castings Gulf FZE |
Subsidiary |
4. |
Electrosteel Doha for Trading LLC |
Subsidiary |
5. |
Electrosteel Europe S.A. |
Subsidiary |
6. |
Electrosteel Trading S.A, Spain |
Subsidiary |
7. |
Electrosteel USA, LLC |
Subsidiary |
8. |
Electrosteel Brasil Ltda. Tubos e Conexoes Duteis |
Subsidiary |
9. |
Mahadev Vyapaar Pvt Ltd |
Subsidiary |
10. |
Electrosteel Bahrain Holding S.P.C. Company |
Subsidiary |
11. |
WaterFab LLC (subsidiary of Electrosteel USA, LLC) |
Subsidiary |
12. |
Electrosteel Bahrain Trading W.L.L (subsidiary of Electrosteel Bahrain Holding S.P.C. Company) |
Subsidiary |
13. |
Electrosteel Steels Limited |
Associate Company |
14. |
Electrosteel Thermal Power Limited |
Associate Company |
15. |
Srikalahasthi Pipes Limited |
Associate Company |
16. |
Domco Private Limited |
Joint Venture |
17. |
North Dhadhu Mining Company Private Limited |
Joint Venture |
The Company has formulated a policy on determining material subsidiaries of the Company, which has been uploaded on the Companyâs website at the web link: http://repository.electrosteelcastings.com/investors/pdf/policy-on-material-subsidiary.pdf.
A Report on the highlights of the performance of each of the Companyâs subsidiaries, associates and joint ventures of the Company and their contribution to the overall performance of the Company for the Financial Year ended 31 March 2017 pursuant to the provisions of Section 129(3) of the Companies Act, 2013 (the Act) read with Rule 8 of Companies (Accounts) Rules, 2014 is given in Annexure 2. The statement containing salient features of financial statement of subsidiaries, associate companies and joint ventures for the financial year ended 31 March 2017 pursuant to the said Section read with Rule 5 of the said Rules are given in the financial statements.
In accordance with Section 136 of the Act, the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of each of its subsidiaries, are available on the website of the Company www.electrosteelcastings.com. These documents will also be available for inspection during business hours by the Members at the Registered Office of the Company.
STATUS OF AMALGAMATION OF MAHADEV VYAPAAR PVT LTD
The Board of Directors of the Company, at its meeting held on 11 August 2014 had approved the Scheme of Amalgamation (âthe Schemeâ) of its wholly owned subsidiary, Mahadev Vyapaar Pvt Ltd with the Company with effect from 1 April 2014 (âAppointed Dateâ). Mahadev Vyapaar Pvt Ltd had filed an application before the Honâble High Court at Calcutta, which has sanctioned the said Scheme. The application filed by the Company before the Honâble High Court at Orissa is still pending. As per Notification no. S.O. 3677(E) dated 7 December 2016 and Rule 3 of Companies (Transfer of Pending Proceedings) Rules, 2016, the matter will now be taken by the National Company Law Tribunal, Kolkata Bench (âNCLT, Kolkataâ). However, the application filed before the Honâble High Court at Orissa has not yet been transferred to NCLT, Kolkata.
REPORT ON CORPORATE GOVERNANCE
The Company is committed in maintaining the highest standards of Corporate Governance and adheres to the stipulations prescribed set out under SEBI (Listing Obligations and Disclosures Requirements) Regulation, 2015. A Report on Corporate Governance for the year under review together with the Auditorsâ Certificate thereon is annexed as Annexure 3 forming part of this Report.
MEETINGS OF THE BOARD
The details of Board Meetings held during the Financial Year 2016-17 have been furnished in the Corporate Governance Report forming part of this Report and annexed as Annexure 3.
BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
Dr. Jamshed Jiji Irani (DIN: 00311104), Independent Director resigned from the Board of the Directors of the Company with effect from 4 October 2016. The Board places on record its appreciation and gratitude for the valuable contributions made by him during his tenure as an Independent Director on the Board of the Company.
Mr. Amrendra Prasad Verma (DIN: 00236108) has been appointed as the Additional Director (Independent) on the Board of the Company with effect from 22 December 2016 for a period of 5 (five) years, subject to the approval of appointment and regularization by the Members in the ensuing AGM of the Company. A declaration has been received from Mr. Verma that he satisfies the criteria of independence as per Section 149(6) of the Act. The Company has also received a notice under Section 160 of the Act from a Member proposing his appointment as an Independent Director of the Company and the same has been included in the notice of the forthcoming AGM.
At the meeting held on 28 January 2017, the Board of Directors had re-appointed Mr. Umang Kejriwal (DIN: 00065173) as the Managing Director of the Company for a period of 5 (five) years with effect from 1 April 2017. His re-appointment is subject to the approval of the Members and the said re-appointment together with the remuneration and terms and conditions are proposed in the notice for the forthcoming AGM for your approval.
Further the Board of Directors on 28 January 2017 had re-appointed Mr. Mayank Kejriwal (DIN: 00065980) as the Joint Managing Director of the Company for a period of 5 (five) years with effect from 1 April 2017. His re-appointment is subject to the approval of the Members and the said re-appointment together with the remuneration and terms and conditions are proposed in the notice for the forthcoming AGM for your approval.
Mr. Shermadevi Yegnaswami Rajagopalan and Mr. Vyas Mitre Ralli, retires by rotation at the forthcoming AGM and being eligible, offer themselves for re-appointment.
In compliance with Regulation 26(4) and 36(3) of the Listing Regulations and Secretarial Standard 2 on General Meetings, brief resume and other information of all the Directors proposed to be appointed/re-appointed are given in the Notice for the forthcoming AGM.
DIRECTORSâ RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134 of the Act, the Directors state that:
a) in the preparation of annual accounts for the Financial Year ended 31 March 2017, the applicable accounting standards had been followed and there were no material departures requiring any explanation;
b) they 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 period;
c) they 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;
d) they had prepared annual accounts on a âgoing concernâ basis;
e) they had laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and were operating effectively; and
f) they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
INDEPENDENT DIRECTORS
Declaration by Independent Directors
Mr. Pradip Kumar Khaitan, Mr. Binod Kumar Khaitan, Mr. Ram Krishna Agarwal and Mr. Amrendra Prasad Verma, Independent Directors have given declarations that they meet the criteria of independence as laid down in Section 149(6) of the Act and the Rules made thereunder.
DETAILS OF BOARD COMMITTEES & ADOPTION OF POLICIES
There are 5 Board Committees as on 31 March 2017 viz. Audit Committee, Nomination and Remuneration Committee, Stakeholdersâ Relationship Committee, Corporate Social Responsibility Committee and Banking and Authorisation Committee.
The details of composition, terms of reference and meetings held and attended by the Committee members of Audit Committee, Nomination and Remuneration Committee and Stakeholdersâ Relationship Committee are provided in the Corporate Governance Report annexed as Annexure 3.
The Banking and Authorisation Committee comprises of Mr. Binod Kumar Khaitan as the Chairman, Mr. Shermadevi Yegnaswami Rajagopalan, Mr. Mayank Kejriwal and Mr. Uddhav Kejriwal as the members as on 31 March 2017. The terms of reference for the Committee include taking various decisions pertaining to the opening or closing of bank and demat accounts of the Company, changing the signatories of the Bank Accounts, subscribing/purchasing/selling/ dealing in shares and securities and availing broking services, making loans from time to time to subsidiary companies/ Joint Ventures/Associates for its working capital requirement, giving guarantee or providing security to any bank in connection with fund based/non-fund based facilities including loan(s) made to Subsidiary Company/Joint Venture/ Associate Company by such bank and any other work related to day-to-day operations of the Company.
Vigil Mechanism
The Company has adopted Whistle Blower Policy and established a Vigil Mechanism in compliance with provisions of Section 177(9) of the Act and Regulation 22 of the Listing Regulations for the Directors and employees to report genuine concerns and grievances. This mechanism provides adequate safeguards against victimisation of employees and directors and also provide for direct access to the Chairperson of the Audit Committee. The said Policy is available at the Companyâs website and can be accessed through a web-link i.e. http://repository.electrosteelcastings.com/ investors/pdf/vigil-2016.pdf.
Nomination and Remuneration Policy
The Board has adopted a Nomination and Remuneration Policy recommended by Nomination and Remuneration Committee in terms of the provisions of Section 178 of the Act. The Nomination and Remuneration Policy has been annexed to this Report as Annexure 4. The criteria of making payments to non-executive directors of the Company forms part of the Nomination & Remuneration Policy.
Corporate Social Responsibility Policy
In accordance with the requirements of Section 135 of the Act, read with Companies (Corporate Social Responsibility Policy) Rules, 2014, your Company has a Corporate Social Responsibility Committee and developed and implemented the Corporate Social Responsibility Policy. A Report on CSR activities/initiatives which includes the contents of the CSR Policy, composition of the Committee and other particulars as specified in Section 135 of the Act read with Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 are disclosed as Annexure 5 to this Report.
Policy on Board Diversity and Succession Plan
A Policy on Board Diversity and Succession Plan was devised by the Nomination and Remuneration Committee to ensure adequate diversity in the Board of Directors of the Company.
FORMAL ANNUAL EVALUATION AND ITS CRITERIA
The Nomination and Remuneration Committee of the Board has formulated and laid down criteria for annual evaluation of Directors pursuant to provisions of Section 178 of the Companies Act, 2013 and Listing Regulations and as per requirements of Section 134 of the Act, the manner of evaluation is disclosed below -
A. The Board shall evaluate the roles, functions, duties of the Independent Directors (IDs) of the Company. Each ID shall be evaluated by all other Directors but not by the Director being evaluated. The Board shall also review the manner in which IDs follow guidelines of professional conduct as specified in Schedule IV to the Act. The adherence of Section 149 and aforesaid Schedule IV by the IDs shall also be reviewed by the Board.
B. Performance review of all the Non Independent Directors of the Company on the basis of the activities undertaken by them, expectations of Board and level of participation.
C. Performance review of Chairman of the Company in terms of the level of competence of Chairman in steering the Company.
D. The review and assessment of the flow of information by the Company to the Board and the manner in which deliberations take place, the manner of placing Agenda and contents therein.
E. The review of the performance of Directors individually, its own performance as well as evaluation of working of its Committees shall be carried out by the Board.
F. On the basis of performance evaluation, it shall be determined by the Nomination & Remuneration Committee and Board whether to extend or continue the term of appointment of ID subject to all other applicable compliances.
Further, in terms of the requirements of the Act and the Listing Regulations, the Board had carried out an annual evaluation of its own performance, the performance of Directors individually as well as evaluation of the performance and working of its Committees at its meeting based on the criteria formulated by the Nomination & Remuneration Committee.
Meeting of Independent Directors: The Independent Directors of the Company held a separate meeting without the attendance of Non Independent Directors and members of the management for evaluation of the performance of Non Independent Directors, the Board as a whole and Chairman of the Company and for consideration of such other matters as required under the provisions of the Act.
DISCLOSURE RELATING TO REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL (KMP) AND PARTICULARS OF EMPLOYEES
The statement pertaining to particulars of employees including their remuneration as required to be reported under the provisions of Section 197(12) of the Act, read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including any statutory modification(s) or re-enactment(s) thereof for the time being in force) (the Rules) are provided in Annexure 6A to this Report. However, as per the provisions of Section 136 of the Act, the Reports and Accounts for the Financial Year 2016-17 are being sent to the Members and other entitled thereto, excluding this statement. This statement is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard.
The disclosures pertaining to the remuneration of Directors, KMPs and employees as required under Section 197(12) of the Act, read with Rule 5(1) of the Rules are provided in Annexure 6B to this Report.
AUDITORS AND AUDITORSâ REPORT
The Statutory Auditors of the Company, M/s. Lodha & Co. Chartered Accountants (Firm Registration Number 301051E) holds office till the conclusion of the ensuing AGM of the Company.
The Board has placed on record its appreciation for the services rendered by M/s. Lodha & Co, Chartered Accountants, as Statutory Auditors of the Company.
The Board of Directors on the recommendation of the Audit Committee has proposed the appointment of M/s. Singhi & Co., Chartered Accountants (Firm Registration Number 302049E) as Statutory Auditors of the Company from the conclusion of the 62nd AGM till the conclusion of the 67th AGM, for approval of Members of the Company (subject to ratification by Members at every AGM, if required, under the prevailing law at that time).
The proposed Auditors have confirmed their willingness and eligibility in terms of provisions of Section 139, 141 and other relevant provisions of the Act, the Chartered Accountants Act, 1949 and the Rules and Regulations made thereunder. As required under Regulation 33 of the Listing Regulations, M/s. Singhi & Co., have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.
M/s. Singhi & Co., Chartered Accountants have in the past handled audit of companies with large scale operations and have maintained high level of governance, rigour and quality in audit and audit process.
The para wise responses of the management to the opinion/remarks/observations made in the Independent Auditorsâ Report on the financial statements of the Company for the year ending 31 March 2017 are given below:
1. As regards the Qualified Opinion expressed by the Auditors in their Report and its consequential references made in para nos. (d), (e), (h) and (i)(i) of their Report and para (i)(b), (i)(c) and (ii)(a) of the Annexure to the Auditorsâ Report of even date, attention is drawn to Note Nos. 46a and 47 of the Standalone Financial Statement, which are self-explanatory;
2. On the Auditorsâ observation made in para (i)(a) of the Annexure to the Auditorsâ Report of even date, your Directors wish to inform that all necessary steps are being taken to regularise the maintenance of proper records for furniture and fixtures;
3. On the Auditorsâ observation made in para (ix) of Annexure to the Auditorsâ Report of even date, your Directors have to clarify that External Commercial Borrowings (ECB) funds are being used as per the progress of the respective project(s) for which these amounts were borrowed and pending the completion of the project(s), the balance amounts could only be parked with Authorised Dealer Bank as per the terms of ECB.
During the year under review, the Auditors had not reported any matter under Section 143(12) of the Act, therefore no detail is required to be disclosed under Section 134(3)(ca) of the Act.
COST AUDITORS
Pursuant to Section 148 of the Act read together with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, the Company is required to carry out audit of the cost accounting records of the Company relating to Pig Iron, DI Pipe, DI Fittings, CI Pipe, Coke, Dolomite, Sponge Iron & Power Generating units for every Financial Year.
The Cost Audit Report and a Compliance Report for the Financial Year 2015-16 were filed on 6 October 2016.
M/s. S. G. & Associates (Firm Registration Number 000138), Cost Accountants, Kolkata, has been re-appointed as Cost Auditors for Financial Year 2017-18 for all the applicable units and products of the Company. The remuneration proposed to be paid to them for the Financial Year 2017-18 requires ratification of the shareholders of the Company. In view of this, your ratification for payment of remuneration to the Cost Auditors is being sought at the ensuing AGM.
SECRETARIAL AUDITORS
In terms of Section 204 of the Act and Rules framed thereunder, M/s. S. M. Gupta & Co., Practicing Company Secretaries were appointed Secretarial Auditors of the Company for the Financial Year 2016-17. The report of the Secretarial Auditorsâ is annexed as Annexure 7 to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
INTERNAL AUDITORS
In terms of the provisions of Section 138 of the Act, M/s. Chaturvedi & Company, an independent firm of Chartered Accountants were appointed as Internal Auditors of the Company for the Financial Year 2016-17. The Audit Committee in consultation with the Internal Auditors formulates the scope, functioning, periodicity and methodology for conducting the Internal Audit. The Audit Committee inter-alia reviews Internal Audit Reports.
The Board has appointed M/s. Ernst & Young LLP, as Internal Auditors for the Financial Year 2017-18 under the provisions of Section 138 of the Act.
PUBLIC DEPOSITS
During the Financial Year 2016-17, the Company has not accepted any deposit within the meaning of Sections 73 and 76 of the Act, read together with the Companies (Acceptance of Deposits) Rules, 2014.
LOANS, INVESTMENTS, GUARANTEES & SECURITIES
The particulars of loans, guarantees and investments covered under the provisions of Section 186 of the Act are given in Note no. 55.3 to the Standalone Financial Statements of the Company.
EXTRACT OF ANNUAL RETURN
Pursuant to Section 92(3) of the Act and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return as on the Financial Year ended 31 March 2017 in Form MGT 9 is annexed as Annexure 8 to this Report.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013
The Company has in place a Policy in line with requirements, inter-alia, of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committees have been set up to redress complaints received regarding sexual harassment. The Company has not received any complaint of sexual harassment during the Financial Year 2016-17.
RELATED PARTY TRANSACTIONS
The Company has entered into contracts/arrangements with the related parties during the Financial Year 2016-17 which were in the ordinary course of business and on armâs length basis. Thus provisions of Section 188(1) of the Act are not applicable and the disclosure under AOC 2 is not required. However, your attention is drawn to the Related Party disclosure in Note no. 55 of the Standalone Financial Statements.
The Board has approved a policy for Related Party Transactions which has been hosted on the website of the Company. The web-link for the same is http://repository.electrosteelcastings.com/investors/pdf/related-party-transaction-policy-ver3.pdf. The Related Party Transactions, wherever necessary, are carried out by the Company as per this Policy.
There were no materially significant related party transactions entered into by the Company during the year, which may have a potential conflict with the interest of the Company at large. There were no pecuniary relationship or transactions entered into by any Independent Director with the Company during the year under review.
RISK MANAGEMENT POLICY
The Company has a well-established Risk Management Policy to identify, and evaluate business risks. This framework seeks to create transparency, minimise adverse effect on the business objectives and enhance Companyâs competitive advantage. The key business risks identified by the Company are economic risk, competitor risk, industry risk, environment risk, operational risk, foreign exchange risk etc. and it has proper mitigation process for the same. The Audit Committee reviews this policy periodically. A statement indicating development and implementation of Risk Management Policy for the Company including identification of elements of risk, if any, is provided as a part of Management Discussions & Analysis Report at Annexure 1 which forms a part of this Report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO
The prescribed particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings & Outgo required to be disclosed under Section 134 of the Act, read with Rule 8 of Companies (Accounts) Rules, 2014 is annexed as Annexure 9 and forms a part of this Report.
ACKNOWLEDGEMENT
Your Directors record their sincere appreciation for the assistance and co-operation received from the banks, financial institutions, government authorities, and other business associates and stakeholders. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the Companyâs executives, staff and workers.
For and on behalf of the Board of Directors
Pradip Kumar Khaitan
Place : Kolkata Chairman
Date:19 May 2017 DIN :00004821
Mar 31, 2015
Dear Members,
The Directors are pleased to present the Sixtieth Annual Report
together with Audited Annual Financial Statements (including Audited
Consolidated Financial Statements) of the Company for the Financial
Year ended 31 March 2015.
FINANCIAL RESULTS (Rs. in Crores)
Particulars Standalone
FY 2014-15 FY 2013-14
Revenue from Operations 2153.78 2186.88
Other Income 30.81 19.70
Total Revenue 2184.59 2206.58
Profit before Tax (PBT) 96.34 135.97
Less : Tax including Deferred Tax 23.67 35.41
Profit after Tax (PAT) 72.67 100.56
Add : Share of Profit/(Loss) in Associates - -
Add/(Less) : Share of Unrealised Profit - -
Net Profit/(Loss) before Minority Interest 72.67 100.56
Minority Interest - -
Net Profit/(Loss) for the year 72.67 100.56
Add:Profit brought forward from
previous year 182.10 186.69
Less : Earlier year adjustment - -
Amount available for appropriation 254.77 287.25
Appropriations :
Less : Transfer to Debenture
Redemption Reserve 3.50 54.00
Less : Transfer to General Reserve 25.00 25.00
Less : Proposed Dividend including
tax thereon 27.92 26.15
Less : Amount Transferred to Legal Reserve - -
Total 56.42 105.15
Surplus carried to Balance Sheet 198.35 182.10
FINANCIAL RESULTS (Rs. in Crores)
Pirticulars Consolidated
FY 2014-15 FY 2013-14
Revenue from Operations 2401.83 2459.16
Other Income 62.18 28.16
Total Revenue 2464.01 2487.82
Profit before Tax (PBT) 143.51 119.57
Less: Tax including Deferred Tax 27.23 38.07
Profit after Tax (PAT) 116.28 81.50
Add: Share of Profit/(Loss)in Associates (232.06) (96.61)
Add/(Less): Share of Unerealised Profit (0.18) (0.05)
Net Profit/(Loss) before Minority Interest(115.96) (15.16)
Minority Interest (0.13) (0.77)
Net Profit/(Loss) for the year (116.09) (15.93)
Add: Profit brought forward from
Previous year (59.91) 61.26
Less: Earlier year adjustment 0.68 -
Amount available for appropriation (176.68) 45.33
Appropriations:
Less: Transfer to Debenture Redemption
Reserve 3.50 54.00
Less: Transfer toGeneral Reserve 25.00 25.00
Less: Proposed Dividend including
tax thereon 27.92 26.15
Less: Amount Transferred to Legal
Reserve 0.08 0.09
Total 56.50 105.24
Surplus carried to Balance Sheet (233.18) (59.91)
DIVIDEND
The Directors are pleased to recommend a dividend of Re.0.65 per Equity
Share of face value of Re.1 each, i.e. 65%, for the Financial Year
ended 31 March 2015. This dividend is subject to the approval of the
Members at the ensuing Annual General Meeting (AGM). If approved, the
total outlay on account of dividend for the Financial Year 2014-15
would amount to Rs.27.92 Crores (including Rs.4.72 Crores towards
Dividend Distribution Tax) as compared to Rs.26.15 Crores (including
Rs.3.80 Crores towards Dividend Distribution Tax) paid for the
Financial Year 2013-14.
TRANSFER TO RESERVES
The Company proposes to transfer an amount of Rs.3.50 Crores to
Debenture Redemption Reserve Account and an amount of Rs.25.00 Crores
to the General Reserve. An amount of Rs.198.35 Crores is proposed to be
retained in the Statement of Profit and Loss.
OPERATIONS
The Company's Revenue from Operations on standalone basis decreased
marginally by around 1.51% from Rs.2,186.88 Crores in 2013-14 to
Rs.2,153.78 Crores in 2014-15. Export Sales decreased by around 23.83%
from Rs.989.21 Crores in 2013-14 to Rs.753.46 Crores in 2014-15, due to
stiff competition faced by the products of the Company in the overseas
markets. The Company's profit (PAT) for the Financial Year was Rs.72.67
Crores as against Rs.100.56 Crores for the previous Financial Year due
to additional Coal levy of Rs.13 Crores being charged to the Profit and
higher depreciation of Rs.16 Crores due to change in rates under
Schedule II of the Companies Act, 2013. An additional levy at the rate
of Rs.295 per ton of Coal extracted has been paid as per the terms of
the Ordinance promulgated by Government of India, Ministry of Law &
Justice dated 21 October 2014 in pursuance of the Order dated 24
September 2014 issued by Hon'ble Supreme Court of India cancelling the
allocation of Parbatpur Coal Block to the Company with effect from 31
March 2015.
The Revenue from Operations on consolidated basis, for the year ended
31 March 2015 was marginally down by 2.33% from Rs.2,459.16 Crores in
2013-14 to Rs.2,401.83 Crores in 2014-15. The consolidated loss after
tax increased to Rs.116.09 Crores for the Financial Year as against
Rs.15.93 Crores in the previous year mainly on account of losses of
associates.
During the year under review, the production of Ductile Iron (DI) Pipes
was 2,77,317 MT as against 2,81,239 MT in the previous year. Production
of DI Fittings during the year was 6,027 MT as compared to 5,992 MT in
the previous year. The production of Cast Iron (CI) Pipes at Elavur was
32,041 MT as against 25,848 MT in the previous year.
During the last quarter of the financial year 2014-15, the Company
partly commissioned its new DI Fittings Plant at Haldia. The operations
are expected to stabilise during the current financial year.
The Company continues to provide special attention towards improvement
in production and productivity with higher energy efficiency. Further,
to delight both International and Indian customers, the Company has
added a number of product variants to its existing product base during
the year 2014-15.
There have been 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
relate and the date of this report and there has been no change in the
nature of business.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report forms an integral part of
this Report and gives details of the overall industry structure,
developments, performance and state of affairs of the Company's
business, international operations, internal controls and their
adequacy, risk management systems including a section on 'Risk
Management' and other material developments during the financial year
2014-15 is annexed marked as Annexure 1 forming part of this Report.
FUTURE PROSPECTS
Demand for Ductile Iron Pipes and Fittings in the domestic market
continues to be bullish. The Company continues to maintain its dominant
position in the market against competitors. The Company, after
entrenching itself in the prestigious Western European markets, is
looking to expand in Eastern Europe. The European Commission has
started Anti-Dumping and Anti Subsidy investigation on import of
Ductile Iron Pipes manufactured in India, which the Company is stoutly
defending. New markets are being opened up in South America and Africa.
The Company will continue to maintain its emphasis on the Gulf markets
where it has a historically strong presence.
SHARE CAPITAL
In order to meet the working capital requirements of the Company and
for general corporate use for the Company's growth, the Company had
issued and allotted 1,31,38,000 Equity Shares of face value of Re.1/-
each at a premium of Rs.18.03 per Equity Shares on preferential basis
to the Promoter Companies during the year under review. These Equity
Shares rank pari passu in all respect with the existing Equity Shares
of the Company.
The Issued, Subscribed and Paid up Share Capital of the Company
consequently, stood at Rs.35,69,55,322/-, comprising of 35,69,55,322
Equity shares of Re.1/- each as on 31 March 2015.
FINANCE
Global Depository Receipts
Global Depository Receipts (GDRs) of the Company were delisted from
London Stock Exchange on 26 February 2015, as the trading volume of
GDRs was minimal. A total of 21,05,000 GDRs are outstanding as on 31
March 2015.
Debentures
As on 31 March 2015, the Company has the following Secured Redeemable
Non-Convertible Debentures (NCDs) listed on the National Stock Exchange
of India Limited:
Series of Debentures Amount
(Rs. in Crore)
10.75% 120
11.00% 50
12.50% 100
Total 270
The Debenture Trustee for each of the aforesaid Series of Debentures is
as follows:
M/s. Axis Trustee Services Limited,
2nd Floor, Axis House, Bombay Dyeing Mills Compound,
Pandurang Budhkar Marg, Worli, Mumbai 400 025
Contact Person : Chief Operating Officer
Phone : (022) 2425 5202
Fax : (022) 2425 4200
Email Id: [email protected]
The Company has paid interest on the aforesaid debentures on time and
nothing is payable as on date. There was a partial redemption of 10.75%
Series of NCD's amounting to Rs.39.60 Crores after the close of the
financial year ended 31 March 2015 as per the terms of issue of these
NCDs.
Warrants
The Company had issued 3,35,68,312 Warrants in the year 2010 entitling
the holders to convert into one Equity Share of Re.1/- each at an
exercise price of Rs.59.58 per share till 7 February 2015. However, all
these outstanding warrants expired on 7 February 2015 due to
non-exercise of options by the warrant holders within the tenure of the
warrants.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
The Company was allotted Parbatpur Coal Block on 7 July 2005 by the
Ministry of Coal.
The Company was also allotted North Dhadhu Coal Block on 13 January
2006 by the Ministry of Coal and according to the terms of allocation,
the Company entered into a joint venture agreement with Adhunik Alloys
& Power Limited, Jharkhand Ispat Pvt. Limited and Pawanjay Steel &
Power Limited for mining of coal.
During the year under review, in pursuance of the Order dated 24
September 2014 issued by Hon'ble Supreme Court of India (the Order)
followed by the Ordinance promulgated by the Government of India,
Ministry of Law & Justice (legislative department) dated 21 October
2014 (the Ordinance) for implementing the Supreme Court Order,
allotment of Parbatpur Coal Block (coal block/mines) to the Company
which was under advanced stage of implementation, has been cancelled
with effect from 1 April 2015. In terms of the Ordinance, the Company
was allowed to continue the operations in the said Block till 31 March
2015. Accordingly, the coal block/mine was handed over to Bharat Coking
Coal Ltd as per the directions from Coal India Ltd with effect from 1
April 2015.
The claim for compensation amounting to Rs.1,220.71 Crores till 31
March 2014 and Rs.68.13 Crores during the year under review till the
handing over the mines is yet to be received by the Company. The
Company, pending acceptance and recovery of the claim, has filed a
petition before the Hon'ble High Court at Delhi, hearing whereof has
concluded and judgement is awaited.
Further in terms of the aforesaid Hon'ble Supreme Court Order, North
Dhadhu Coal Block allotted in joint venture with other companies, has
also been cancelled w.e.f. 24 September 2014. The Company barring
initial contribution of Rs.8.23 Crores has not made any further
investments in the said joint venture company. In view of the
management, the compensation to be received in terms of the Ordinance
is expected to cover the cost incurred by the joint venture companies.
INTERNAL FINANCIAL CONTROLS
The Internal Financial Controls with reference to the Financial
Statements are considered to be commensurate with the size, scale and
complexity of the operations of the Company. All operations are
executed through Standard Operating Procedures (SOPs) in all functional
activities for which key manuals have been put in place. The manuals
are updated and validated periodically. Approval of all transactions is
ensured through a preapproved Delegation of Authority (DOA) Schedule
which is in-built into the SAP system. DOA is reviewed periodically by
the management and compliance of DOA is regularly checked and monitored
by the Auditors. The Company's books of accounts are maintained in SAP
and transactions are executed through SAP (ERP) setups to ensure
correctness/ effectiveness of all transactions, integrity and
reliability of reporting.
The Internal Auditors of the Company, M/s. Chaturvedi & Company, an
independent firm of Chartered Accountants, monitors and evaluates the
efficacy and adequacy of internal control system in the Company, its
compliance with operating system, accounting procedures and policies at
all locations of the Company. Based on the Internal Audit Reports,
process owner takes corrective actions in their respective areas and
thereby strengthens the controls. The Report is presented before the
Audit Committee for review at regular intervals.
DETAILS OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES
The Company had the following Subsidiaries, Associate Companies and
Joint Ventures as on 31 March 2015:
Sl. No. Name of the Company Status
1. Electrosteel Algerie SPA Subsidiary
2. Electrosteel Castings (UK) Limited Subsidiary
3. Electrosteel Castings Gulf FZE Subsidiary
4. Electrosteel Doha for Trading LLC Subsidiary
5. Electrosteel Europe S.A. Subsidiary
6. Electrosteel Trading S.A, Spain Subsidiary
7. Electrosteel USA, LLC Subsidiary
8. Electrosteel Brasil Ltda. Tubos
e Conexoes Duteis Subsidiary
9. Mahadev Vyapaar Pvt Ltd Subsidiary
10. Electrosteel Bahrain Holding S.PC. Company Subsidiary
11. WaterFab LLC (subsidiary of Electrosteel
USA, LLC) Subsidiary
S. No. Name of the Company Status
12. Electrosteel Steels Limited Associate Company
13. Electrosteel Thermal Power Limited Associate Company
14. Srikalahasthi Pipes Limited Associate Company
(Formerly, Lanco Industries Limited)
15. Domco Private Limited Joint Venture
16. North Dhadhu Mining Company Private Limited Joint Venture
M/s. Electrosteel Bahrain Holding S.P.C. Company, Bahrain was
incorporated as a subsidiary of the Company and M/s. Singardo
International Pte Ltd., Singapore ceased to be the subsidiary during
the year under review. The Company has formulated a policy on
determining material subsidiaries of the Company, which has been
uploaded on the Company's website at the web link:
http://www.electrosteelcastings.com/
investors/pdf/policy-on-material-subsidiary.pdf.
A Report on performance and financial position of each of the Company's
subsidiaries, associate companies and joint ventures for the financial
year ended 31 March 2015 pursuant to the provisions of Section 129(3)
of the Companies Act, 2013 (the Act) read with Rule 8 of Companies
(Accounts) Rules, 2014 is given in Annexure - 2. The statement
containing salient features of financial statement of subsidiaries,
associate companies and joint ventures for the financial year ended 31
March 2015 pursuant to the said Section read with Rule 5 of the said
Rules are given in the financial statements.
STATUS OF MERGER OF MAHADEV VYAPAAR PVT LTD
The Board of Directors of the Company on 11 August 2014 approved the
Scheme of Amalgamation ("the Scheme") between the Company and M/s.
Mahadev Vyapaar Pvt Ltd., a wholly owned subsidiary of the Company with
effect from 1 April 2014 ("Appointed Date") to obtain operational
synergies and also to pool resources of both the companies for growth
and development of business. The Company has received Observation
letters from both BSE Limited and the National Stock Exchange of India
Limited dated 26 February 2015. Separate applications made in this
regard by the Company and the subsidiary are pending before Hon'ble
High Court of Orissa, Cuttack and Hon'ble Calcutta High Court,
respectively.
REPORT ON CORPORATE GOVERNANCE
The Company is committed to maintain the highest standards of Corporate
Governance and adheres to the Corporate Governance requirements as
stipulated in Clause 49 of the Listing Agreement. A Report on Corporate
Governance & Shareholder Information for the year under review together
with the Auditors' Certificate thereon is annexed as Annexure 3 forming
part of this Report.
The Company had also adopted a "Code of Conduct", as required under
Clause 49 of the Listing Agreement and all Directors and Senior
Management have affirmed compliance with the Code for 2014-15. A
certificate, signed by the Managing Director, affirming compliance of
Directors & Senior Management, forms part of the Report on Corporate
Governance.
MEETINGS OF THE BOARD
The details of Board Meetings held during the financial year 2014-15
have been furnished in the Corporate Governance Report forming part of
this Report and annexed at Annexure 3.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr. Pradip Kumar Khaitan, Mr. Binod Khaitan, Mr. Naresh Chandra, Dr.
Jamshed Jiji Irani and Mr. Bhaskara Nageswararao Mandavilli were
appointed as Independent Directors of the Company for tenure of five
years with effect from 28 August 2014. The status of Mr. Naresh Chandra
had changed from an Independent Director to a Non Executive and Non
Independent Director with effect from 10 September 2014. Mr. Bhaskara
Nageswararao Mandavilli, an Independent Director resigned from the
Board with effect from 27 March 2015. The Board places on record its
sincere appreciation for the valuable contributions made by Mr.
Bhaskara Nageswararao Mandavilli during the tenure of his office as a
Director of the Company.
Mr. Vyas Mitre Ralli and Mr. Mahendra Kumar Jalan were appointed as
Whole-time Directors of the Company for a period of 5 years with effect
from 21 December 2014 and 22 January 2015, respectively and they are
liable to retire by rotation as per the provisions of Section 152 of
the Act.
Mr. Mahendra Kumar Jalan, retires by rotation at the forthcoming Annual
General Meeting (AGM) and being eligible, offer himself for
re-appointment.
Mr. Rama Shankar Singh, Director of the Company resigned from the close
of business hours on 31 March 2015 and Ms. Nityangi Kejriwal was
appointed as a Director from the close of business hours on 31 March
2015 to fill the casual vacancy caused by the resignation of Mr. Singh.
The Board places on record its sincere appreciation for the
contributions made by Mr. Rama Shankar Singh during the tenure of his
office as a Director of the Company.
Ms. Kejriwal holds office only upto this AGM pursuant to the provisions
of Section 161(4) of the Act since Mr. Singh would have retired by
rotation at this AGM if he had not resigned from his office. The
Company has received a notice under Section 160 of the Act from a
Member proposing her appointment as a Director of the Company and the
same has been included as an item in the notice of AGM for
consideration of the Members.
The Board had appointed Mr. Jinendra Kumar Jain as Additional Director
(Independent) with effect from 18 June 2015. However, Mr. Jain resigned
from his office with effect from 30 July 2015. The Board appointed Mr.
Ram Krishna Agarwal, as an Additional Director (Independent) with
effect from 30 July 2015 for a term of 5 years, subject to the approval
of Members. A declaration has been received from Mr. Agarwal that he
satisfies the criteria of independence as per Section 149(6) of the
Act. The Company has also received a notice from a Member proposing his
appointment as an Independent Director of the Company and the same has
been included in the notice of ensuing AGM.
Brief resume of the Directors who are subject to
appointment/re-appointment at the ensuing AGM, nature of their
expertise in their specific functional areas, details of directorships
in other companies and the membership of Committees of the Board, as
stipulated under Clause 49 of the Listing Agreement with the Stock
Exchanges are given in the Notice for the forthcoming AGM.
The Board, at its meeting held on 12 May 2015, had appointed Mr. Gautam
Jhunjhunwala as the Chief Financial Officer of the Company under the
provisions of Section 2(51) and 203 of the Act read with Rules made
thereunder.
Mr. Prem Kumar Bafana has been appointed as Company Secretary of the
Company with effect from 15 December 2014. Ms. Kavita Bhaysar has
resigned from the post of Company Secretary with effect from 6 December
2014. The Board also places on record its appreciation for the
contributions made by Ms. Kavita Bhaysar during the tenure of her
office as the Company Secretary of the Company.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134(3)(c) and 134(5) of the Act,
the Directors state that :
a) in the preparation of annual accounts for the Financial Year ended
31 March 2015, the applicable accounting standards had been followed
and there were no material departures requiring any explanation;
b) they 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 period;
c) they 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;
d) they had prepared annual accounts on a 'going concern' basis;
e) they had laid down internal financial controls to be followed by the
Company and such internal financial controls are adequate and were
operating effectively; and
f) they had devised proper systems to ensure compliance with the
provisions of all applicable laws and that such systems are adequate
and operating effectively.
INDEPENDENT DIRECTORS
Declaration by Independent Directors
Mr. Pradip Kumar Khaitan, Mr. Binod Khaitan, Dr. Jamshed Jiji Irani and
Mr. Ram Krishna Agarwal, Independent Directors have given declarations
that they fulfil the criteria of independence as laid down in Section
149(6) of the Act and the Rules made thereunder and Clause 49 of the
Listing Agreement.
Familiarisation Programme for the Independent Directors
The Company, on 9 February 2015 had conducted a Familiarisation
Programme for the Independent Directors of the Company in order to
familiarise them with their toles, rights, responsibilities in the
Company. The Familiarisation Program is hosted on the website of the
Company and the web link for the same is
http://www.electrosteelcastings.com/
investors/pdf/familiarisation¬independent.pdf.
DETAILS OF BOARD COMMITTEES & ADOPTION OF POLICIES
There are 5 Board Committees as on 31 March 2015 viz., Audit Committee,
Nomination and Remuneration Committee, Stakeholders' Relationship
Committee, Corporate Social Responsibility Committee and Banking and
Authorisation Committee.
The details of composition, terms of reference and meetings held and
attended by the Committee members of Audit Committee, Nomination and
Remuneration Committee and Stakeholders' Relationship Committee are
provided in the Corporate Governance Report annexed as Annexure 3.
The Banking and Authorisation Committee comprises of Mr. Binod Khaitan
as the Chairman, Mr. Shermadevi Yegnaswami Rajagopalan, Mr. Mayank
Kejriwal and Mr. Uddhav Kejriwal as members as on 31 March 2015. The
terms of reference for the Committee include taking various decisions
pertaining to the opening or closing of bank accounts of the Company,
changing the signatories of the Bank Accounts,
subscribing/purchasing/selling/dealing in shares and securities and
availing broking services, making loans from time to time to subsidiary
companies/Joint Ventures/Associates for its working capital requirement
and any other work related to day-to-day operations of the Company.
Vigil Mechanism
The Company has established a Vigil Mechanism and adopted Whistle
Blower Policy in compliance with provisions of Section 177(9) of the
Act and Clause 49 of the Listing Agreement for the Directors and
employees to report genuine concerns and grievances. This mechanism
provides adequate safeguards against victimisation of employees and
directors and also provide for direct access to the Chairperson of the
Audit Committee. The said Policy is available at the Company's website
and can be accessed through a web link i.e.
http://www.electrosteelcastings.com/investors/pdf/vigil.pdf.
Nomination and Remuneration Policy
The Board has adopted a Nomination and Remuneration Policy recommended
by Nomination and Remuneration Committee in terms of the provisions of
Section 178 of the Act and Clause 49 of the Listing Agreement. The
Nomination and Remuneration Policy has been annexed to this Report as
Annexure 4.
Corporate Social Responsibility Policy
The Board has constituted a Corporate Social Responsibility (CSR)
Committee on 10 May 2014 as per the provisions of Section 135 of the
Act, read with Companies (Corporate Social Responsibility Policy)
Rules, 2014. The Board has adopted a Corporate Social Responsibility
Policy (CSR Policy) formulated by the CSR Committee in accordance with
the provisions of the Act. A Report on CSR activities/initiatives which
includes the contents of the CSR Policy, composition of the Committee
and other particulars specified in Annual Report on CSR as per Section
135 of the Act read with Rule 8 of Companies (Corporate Social
Responsibility Policy) Rules, 2014 are disclosed as Annexure 5 to this
Report.
Policy on Board Diversity and Succession Plan
In compliance with the provisions of Clause 49 of the Listing
Agreement, a Policy on Board Diversity and Succession Plan was devised
by the Nomination and Remuneration Committee to ensure adequate
diversity in the Board of Directors of the Company.
FORMAL ANNUAL EVALUATION AND ITS CRITERIA
The Nomination and Remuneration Committee of the Board has formulated
certain criteria for annual evaluation of Directors pursuant to Clause
49 of the Listing Agreement and as per requirements of Section 134 of
the Act are disclosed below -
A. The Board shall evaluate the roles, functions, duties of the
Independent Directors (IDs) of the Company. Each ID shall be evaluated
by all other Directors but not by the Director being evaluated. The
Board shall also review the manner in which IDs follow guidelines of
professional conduct as specified in Schedule IV to the Act. The
adherence of Section 149 and aforesaid Schedule IV by the IDs shall
also be reviewed by the Board.
B. Performance review of all the Non Independent Directors of the
Company on the basis of the activities undertaken by them, expectations
of Board and level of participation.
C. Performance review of Chairman of the Company in terms of the level
of competence of Chairman in steering the Company.
D. The review and assessment of the flow of information by the Company
to the Board and the manner in which deliberations take place, the
manner of placing Agenda and contents therein.
E. The review of the performance of Directors individually, its own
performance as well as evaluation of working of its Committees shall be
carried out by the Board.
F. On the basis of performance evaluation, it shall be determined by
the Nomination & Remuneration Committee & Board whether to extend or
continue the term of appointment of ID subject to all other applicable
compliances.
Meeting of Independent Directors : The Independent Directors of the
Company held a separate meeting on 9 February 2015 without the
attendance of Non Independent Directors and members of management for
evaluation of the performance of Non Independent Directors, the Board
as a whole and Chairman of the Company and for consideration of such
other matters as required under the provisions of the Act and Clause 49
of the Listing Agreement.
Further, pursuant to the provisions of Section 134(3)(p) of the Act,
the Board had carried out an annual evaluation of its own performance,
the performance of Directors individually as well as evaluation of the
performance and working of its Committees at its meeting.
DISCLOSURE RELATING TO REMUNERATION OF DIRECTORS, KEY MANAGERIAL
PERSONNEL AND PARTICULARS OF EMPLOYEES
The statement pertaining to particulars of employees including their
remuneration as required to be reported under the provisions of Section
197(12) of the Act, read with Rules 5(2) and 5(3) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 (the
Rules) are provided in Annexure 6A to this Report. However, as per the
provisions of Section 136 of the Act, the Reports and Accounts for the
Financial Year 2014-15 are being sent to the Members and other entitled
thereto, excluding this statement. This statement is available for
inspection by the Members at the Registered Office of the Company
during business hours on working days of the Company. If any Member is
interested in obtaining a copy thereof, such Member may write to the
Company Secretary in this regard.
The disclosures pertaining to the remuneration of Directors, KMP and
employees as required under Section 197(12) of the Act, read with Rule
5(1) of the Rules are provided in Annexure 6B to this Report.
PREVENTION OF INSIDER TRADING & CODE OF CONDUCT FOR FAIR DISCLOSURE
The Company has adopted a Code of Conduct for Regulating, Monitoring
and Reporting Trading by Insiders in securities of the Company. The
Code requires pre-clearance for dealing in the Company's securities and
prohibits the purchase or sale of securities of the Company by the
Directors and the designated employees while in possession of
unpublished price sensitive information in relation to the Company and
during the period when the Trading Window is closed.
The Company has also adopted a Code of Practices and Procedures for
Fair Disclosure and Conduct of Unpublished Price Sensitive Information
to formulate a stated framework and policy for prompt and fair
disclosure of events and occurrences that could impact price discovery
in the market for securities of the Company.
AUDITORS AND AUDITORS' REPORT
M/s. Lodha & Co., Chartered Accountants, (Firm Registration No.301051E)
were appointed as Auditors of the Company for a tenure of three years
i.e. from the conclusion of the 59th Annual General Meeting (AGM) till
the conclusion of the 62nd AGM of the Company. This appointment is
subject to ratification by the Members at every AGM held after
appointment during their tenure of office.
As required under Section 139 of the Act, the Company has received a
written consent from the Auditors to such continued appointment and
also a certificate from them to the effect that their appointment, if
ratified, would be in accordance with the conditions prescribed under
the Act and the Rules made thereunder, as may be applicable. The
necessary resolution is being placed for Members ratification at the
ensuing AGM.
The para wise responses of the management to the
opinion/remarks/observations made in the Independent Auditors' Report
are given below :
1. As regards the Qualified Opinion expressed by the Auditors in their
Report and its consequential references made in para nos. (d), (e), (g)
and (h)(i) of their Report, attention is drawn to Note nos. 2.33a and
2.33b of the Standalone Financial Statement, which are
self-explanatory;
2. On the Auditors' observation made in para (i)(a) of the Annexure to
the Auditors' Report, your Directors wish to inform that all necessary
steps are being taken to regularise the maintenance of proper records
for furniture and fixtures;
3. On the Auditors' observation made in para (xi) of Annexure to the
Auditors' Report, your Directors have to clarify that External
Commercial Borrowings (ECB) funds are being used as per the progress of
the respective project(s) for which these amounts were borrowed and
pending the completion of the project(s), the balance amounts could
only be parked in fixed deposits as per the terms of ECB.
COST AUDITORS
The Companies (Cost Records and Audit) Amendment Rules, 2014 as
published in Official Gazette on 31 December 2014 pursuant to
sub-sections (1) and (2) of Section 469 and Section 148 of the Act,
requires audit of the cost accounting records of the Company relating
to Pig Iron, DI Pipe, DI Fittings, CI Pipe, Coke, Dolomite, Sponge Iron
& Power Generating units for every Financial Year.
The Cost Audit Report and a Compliance Report for the Financial Year
2013-14 were filed on 8 September 2014 which was within stipulated due
date.
M/s. S. G. & Associates (FRN 000138), Cost Accountants, Kolkata, has
been re-appointed as Cost Auditors for Financial Year 2015-16 for all
the applicable units and products of the Company with an intimation to
the Ministry of Corporate Affairs. The remuneration proposed to be paid
to them for the Financial Year 2015-16 requires ratification of the
shareholders of the Company. In view of this, your ratification for
payment of remuneration to Cost Auditors is being sought at the ensuing
AGM.
SECRETARIAL AUDITORS
In terms of Section 204 of the Act and Rules framed thereunder, M/s. S.
M. Gupta & Co., Practicing Company Secretaries were appointed
Secretarial Auditors of the Company for the financial year 2014-15. The
report of the Secretarial Auditors is enclosed as Annexure 7 to this
Report. An observation made by the Secretarial Auditors that the
Company is yet to appoint Chief Financial Officer, to which the
Directors wish to inform that Mr. Gautam Jhunjhunwala has been
appointed as the Chief Financial Officer with effect from 12 May 2015.
INTERNAL AUDITORS
In terms of the provisions of Section 138 of the Act, M/s. Chaturvedi &
Company, an independent firm of Chartered Accountants were appointed as
Internal Auditors for the financial year 2014-15. The Audit Committee
in consultation with the Internal Auditors formulates the scope,
functioning, periodicity and methodology for conducting the Internal
Audit. The Audit Committee inter-alia reviews Internal Audit Reports.
The Board has re-appointed M/s. Chaturvedi & Company as Internal
Auditors for the financial year 2015-16 under the provisions of Section
138 of the Act.
PUBLIC DEPOSITS
During the financial year 2014-15, your Company has not accepted any
deposit within the meaning of Sections 73 and 76 of the Act, read
together with the Companies (Acceptance of Deposits) Rules, 2014.
LOANS, INVESTMENTS, GUARANTEES & SECURITIES
The particulars of loans given, investments made, guarantees given or
securities provided along with the purpose for which the loan or
guarantee or security is/was proposed to be utilised by the recipient
as per the provisions of Section 186(4) of the Act are given in Note
nos. 2.38.1 to the Standalone Financial Statements.
EXTRACT OF ANNUAL RETURN
Pursuant to Section 92(3) of the Act and Rule 12(1) of the Companies
(Management and Administration) Rules, 2014, an extract of annual
return as on the Financial Year ended 31 March 2015 in Form MGT 9 as
prescribed under the said Rules is annexed as Annexure 8 to this
Report.
AWARDS AND ACCOLADES
EEPC INDIA, Eastern Region has given "AWARD FOR EXPORT EXCELLENCE" to
Electrosteel Castings Limited for star performers as large enterprise
in the product group of "Sanitary and Industrial Castings" for its
outstanding contribution to engineering exports during the year
2012¬13.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
(PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013
The Company has in place a Policy in line with requirements,
inter-alia, of The Sexual Harassment of Women at Workplace (Prevention,
Prohibition & Redressal) Act, 2013. Internal Complaints Committees have
been set up to redress complaints received regarding sexual harassment.
The Company has not received any complaint of sexual harassment during
the financial year 2014-15.
RELATED PARTY TRANSACTIONS
The Company has entered into contracts/arrangements with the related
parties during the Financial Year 2014-15 which were in the ordinary
course of business and on arm's length basis. Thus provisions of
Section 188(1) of the Act are not applicable and the disclosure under
AOC 2 is not required. However, your attention is drawn to the Related
Party disclosure in Note no 2.38 of the Standalone Financial
Statements.
The Board has approved a policy for Related Party Transactions which
has been hosted on the website of the Company. The web-link for the
same is http://www.electrosteelcastings.com/investors/pdf/
related-party-transaction-policy.pdf. The Related Party Transactions,
wherever necessary, are carried out by the Company as per this Policy.
There were no materially significant related party transactions entered
into by the Company during the year, which may have a potential
conflict with the interest of the company at large. There were no
pecuniary relationship or transactions entered into by any Independent
Director with the Company during the year under review.
RISK MANAGEMENT POLICY
The Company has a well-established Risk Management Policy to identify
and evaluate business risks. This framework seeks to create
transparency, minimise adverse effect on the business objectives and
enhance Company's competitive advantage. The key business risks
identified by the Company are economic risk, competitor risk, industry
risk, environment risk, operational risk, foreign exchange risk etc.
and it has proper mitigation process for the same. The Audit Committee
reviews this policy periodically. A statement indicating development
and implementation of Risk Management Policy for the Company including
identification of elements of risk, if any, is provided as a part of
Management Discussions & Analysis Report at Annexure 1 which forms a
part of this Report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS & OUTGO
The prescribed particulars of Conservation of Energy, Technology
Absorption and Foreign Exchange Earnings & Outgo required to be
disclosed under Section 134 the Act, read with Rule 8 of Companies
(Accounts) Rules, 2014 is annexed as Annexure 9 and forms a part of
this Report.
ACKNOWLEDGEMENT
Your Directors record their sincere appreciation for the assistance and
co-operation received from the banks, financial institutions,
government authorities, and other business associates and stakeholders.
Your Directors also wish to place on record their deep sense of
appreciation for the committed services by the Company's executives,
staff and workers.
For and on behalf of the Board of Directors
Pradip Kumar Khaitan
Chairman
DIN : 00004821
Place : Kolkata
Date : 30 July 2015
Mar 31, 2014
Dear Members,
The Directors take pleasure in presenting their Fifty Ninth Annual
Report and Audited Annual Accounts of the Company for the Financial
Year ended March 31, 2014.
Financial Results
The Company''s financial performance, for the Financial Year ended March
31, 2014 is summarized as below :
(Rs. in Crores)
Sl Particulars FY2013-14 FY2012-13
i. Revenue from operations 2186.88 1934.55
ii. Other Income 19.70 95.05
iii. Total Revenue 2206.58 2029.60
iv. Profit before Taxation (PBT) 135.96 120.98
v. Less:TaxincludingDeferredTax 35.41 23.75
vi. Profit after Taxation (PAT) 100.55 97.23
vii. Add : Profit brought forward frompreviousyear 186.70 113.58
viii. Add : Transfer from Debenture Redemption - 50.00
Reserve
ix. Amount available for appropriation 287.25 260.81
Appropriation
Add : Transfer to Debenture Redemption Reserve 54.00 10.00
Less : TransfertoGeneralReserve 25.00 45.00
Less : Proposed Dividend including tax thereon 26.15 19.11
Total 105.15 74.11
x. SurpluscarriedtoBalanceSheet 182.10 186.70
Dividend
Your Directors recommend a dividend of Re.
0.65 per Equity share of face value of Re. 1 each, i.e. 65% for the
Financial Year ended March 31, 2014.
The Dividend, subject to approval of Members at the Annual General
Meeting on 28th August, 2014, will be paid to the Members whose names
appear in the Register of Members, as on the date of book closure, i.e.
from Friday, 22nd August, 2014 to Thursday, 28th August, 2014
(inclusive of both dates).The dividend, on approval by members, will
absorb Rs. 26.15 crore (approx.), inclusive of tax of Rs. 3.80 crore
(approx.) on distribution of dividend.
Fixed Deposits
The Company has not accepted any fixed deposits and, as such, no amount
of principal or interest was outstanding as of the Balance Sheet date.
Operations
The Company''s Revenue from operations has increased from Rs. 1,934.55
crores in 2012-13 to Rs. 2,186.88 crores in 2013-14. Export sales
showed an increase from Rs. 936.68 crores to Rs.989.21 crores, an
increase of 5.60% due to higher realisation in the export market. The
Company''s profit (PAT) for the financial year was Rs.100.55 crores as
against Rs. 97.23 crores of previous financial year which is a nominal
increase of 3.42% since last financial year.
During the year production of Ductile Iron (DI) pipes was 2,81,239 MT
as against 2,84,849 MT in the previous year. Production of DI Fittings
during the year was 5,992 MT as compared to
6,063 MT in previous year. The production of Cast Iron (CI) pipes at
Elavur was 25,848 MT as against 24,451 MT in the previous year.
Special attention has been given not only to increase energy efficiency
but also for improvement in production and productivity. Further,
product variety has been added to meet newer requirements from
international and enlightened Indian customers.
Future Prospects
Demand for Ductile Iron Pipes and Fittings in the domestic market is
bullish. Your Company continues to maintain its dominant position in
the market against competitors. In the Export market, market shares
have increased in the European markets even with the crisis in Europe.
Your Company, after entrenching itself in the prestigious West European
markets, is looking to expand in Eastern Europe. New markets are being
opened up in South America and Africa. We will maintain our emphasis
in the Gulf markets where we have a historically strong presence.
Directors
Mr. Rama Shankar Singh, a Director of the Company had tendered his
resignation from the post of Wholetime Director with effect from 5th
February, 2014. However, Mr. Singh continues to be a Non-Executive
Director of the Company.
Upon the Companies Act, 2013, coming into effect from 1st April, 2014,
Mr. Pradip Kumar Khaitan became an Independent Director and Mr.
Shermadevi Yegnaswami Rajagopalan ceased to be an independent Director
of the
Company. However, Mr. Rajagopalan continues to be a Non-Executive
Director of the Company.
Mr. Rajagopalan and Mr. Vyas Mitre Ralli, Directors, retire by rotation
at the ensuing Annual General Meeting (AGM) and are eligible for
re-appointment at the ensuing AGM.
Further, the period of directorship of Mr. Ralli and Mr. Mahendra
Kumar Jalan Wholetime Directors of the Company would expire on 20th
December, 2014 and 21st January, 2015 respectively. They have given
their consent for re- appointment.
As per Section 149 of the Companies Act, 2013, an Independent Director
shall hold office for a term up to five consecutive years on the Board
of a company, but shall be eligible for reappointment on passing of a
special resolution by the company.
In line of the above mentioned provision, all the Independent Directors
of the Company needs to be re-appointed for a term of five years. Hence
approval of the members is sought for the appointment of all the
Independent Directors for a term of 5 years with effect from 28th
August, 2014 to 27th August, 2019 at the ensuing AGM.
A brief resume of the Directors being appointed and reappointed at the
ensuing AGM, their nature of expertise in specific functional areas and
names of the companies in which they hold directorships and/or
memberships/ chairmanships of Committees of the respective Boards,
shareholding and relationship between directors inter se as stipulated
under Clause 49 of the Listing Agreement with the Stock Exchanges in
India, is given in the Notice convening AGM.
Directors'' Responsibility Statement
Your Directors hereby confirm :
a) that in the preparation of annual accounts, containing financial
statements for the Financial Year ended March 31, 2014 the applicable
accounting standards have been followed and there were no material
departures there from requiring any explanation;
b) that the directors have selected such accounting policies and
applied them consistently and made judgments and estimates that are
reasonable and prudent to give a true and fair view of the state of
affairs of the Company and the profit for that period;
c) that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956, for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
d) that the annual accounts have been prepared on a ''going concern''
basis.
Consolidated Financial Statements
Pursuant to Clause 41 of the Listing Agreement entered into with the
stock exchanges, the Board of Directors take pleasure in attaching the
Consolidated Financial Statements prepared in accordance with the
Accounting Standard
(AS)-21 on Consolidated Financial Statements read with AS-23 on
Accounting for Investments in Associates and AS-27 on Financial
Reporting of Interests in Joint Ventures as prescribed by the Institute
of Chartered Accountants of India.
Auditors and Auditors'' Report Statutory Auditors
M/s. Lodha and Co., Chartered Accountants, Statutory Auditors of the
Company, retire at the conclusion of the 59th Annual General Meeting of
the Company. They have offered themselves for re-appointment as
Statutory Auditors for next term of three consecutive years and
confirmed that their reappointment, if made, will be within the
prescribed limits under section 141(3) of the Companies Act, 2013.
There are no qualifications or adverse remarks in the Auditors''
Report which require any clarification/explanation. The Notes on
Financial Statements are self explanatory and need no further
explanation.
Cost Auditors
The Central Government''s directions vide their Order dated 6th
November, 2012 and pursuant to Section 148B of the Companies Act, 2013,
requires audit of the cost accounting records of the Company relating
to Pig Iron, DI Pipe, DI Fittings, CI Pipe, Coke, Dolomite, Paint,
Sponge Iron & Power Generating units for every financial year.
Activities related to mines will come under purview of this audit on &
from the date when commercial production will start.
The Cost Audit Report and a Compliance Report for the financial year
2012-13 were filed on 19th September, 2013.
M/s. S. G. & Associates, partnership firm of Cost Accountants in
Kolkata, has been re-appointed as Cost Auditors for Financial Year
2014-15 for all the applicable units and products of the Company
subject to the approval of Central Government, if any required.
Cost Audit Report for the financial year 2013-14 will be filed within
the due date.
Subsidiary, Associate Companies and Joint Ventures
As on March 31 2014, your Company has the following Subsidiaries,
Associate Companies and Joint Ventures.
Sl Name of the Company Status
1. Electrosteel Algerie SPA Subsidiary
2. Electrosteel Castings (UK) Limited Subsidiary
3. Electrosteel Castings Gulf FZE Subsidiary
4. Electrosteel Doha for Trading LLC Subsidiary
5. Electrosteel Europe S.A. Subsidiary
6. Electrosteel Trading S.A, Spain Subsidiary
7. Electrosteel USA, LLC Subsidiary
8. Singardo International Pte Limited Subsidiary
9. Electrosteel Brasil Ltda. Subsidiary
Tubos e Conexoes Duteis
10. Mahadev Vyapaar Private Limited Subsidiary
11. WaterFabLLC Stepdown subsidiary
(subsidiary of
Electrosteel USA, LLC)
12. Electrosteel Steels Limited Associate Company
13. Electrosteel Thermal Power Ltd. Associate Company
14. Lanco Industries Limited Associate Company
15. Domco Private Limited Joint Venture
16. North Dhadhu Mining Joint Venture
Company Private Limited
The statement pursuant to Section 212 of the Companies Act 1956, in
respect of the above mentioned subsidiaries are attached to and forms
part of this Annual Report.
In terms of the general exemption granted by Government of India,
Ministry of Corporate Affairs, vide General Circular No. 2/2011 dated
February 8, 2011, the Board of Directors of your Company at its meeting
held on 10th May, 2014 has given its consent for not attaching the
Balance Sheet, Statement of Profit and Loss, and Reports of the Board
of Directors and the Auditors'' thereon of these subsidiary/step down
subsidiary companies for the Financial Year ended March 31, 2014.
However, a statement containing brief financial details of the
Company''s subsidiaries for the Financial Year ended March 31, 2014is
included in the Annual Report, as to comply with the terms of the
general exemption. The Company undertakes that annual accounts of the
subsidiary companies and the related detailed information shall be made
available to the shareholders of the Company and subsidiary
companies seeking such information at any point of time. Moreover, the
annual accounts of the subsidiary companies will also be kept for
inspection for members at the Company''s Head Office and at the Head
Office of the subsidiary company concerned.
Credit Rating
Your Company has been rated as "CARE AA- (Double A minus)" for
long-term/medium term debt and various Bank facilities, including the
Non-Convertible Debentures (NCDs) of the Company (outstanding Rs. 270
Crores as at March 31,2014). "CARE AA-(Double A minus)" rating
indicates high degree of safety regarding timely servicing of financial
obligation and lower credit risk.
The rating for the short-term debt/facilities sanctioned and/or availed
by the Company has been assigned as "CARE A1 (A One Plus)" which
is the highest rating in the category and indicates a strong capacity
for timely payment of short-term debt obligations and lowest credit
risk.
Your Company has also been rated "BWR AA (Double A)" by Brickwork
Rating for Non- Convertible Debentures (NCDs) (Outstanding Rs. 150
crore out of Rs. 270 Crore as on 31.03.2014). "BWR AA (Double A)"
signifies that the NCDs have high degree of safety regarding timely
servicing of financial obligations and carries very low credit risk.
Awards
EEPC INDIA, Eastern Region has given "AWARD FOR EXPORT EXCELLENCE" to
Electrosteel Castings Limited for star performers as large enterprise
in the product group of sanitary and Industrial Castings for its
outstanding contribution to engineering exports during the year 2011-
12.
Disposal of complaint under "The Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act, 2013" ("The
Act")
In compliance with the Act, the Company has constituted the "Internal
Complaints Committee" and also framed the redressal policy in case of
sexual harassment at workplace. During the year, the Company has not
received any complaint with respect to sexual harassment at work place.
Increase in Paid-up Equity Share Capital
During the year ended March 31, 2014, the Company has allotted
1,70,64,617 Equity Shares of Re. 1/- (Rupee one) each at an issue price
of Rs 13.85 per Equity share on November 27, 2013 to the Promoters on
preferential basis and accordingly the paid-up Equity share capital
stands increased to Rs. 34,38,17,322 divided into 34,38,17,322 Equity
shares of Re. 1/- (Rupee one) each.
Preferential Issue :
The Company had sought approval of shareholders by way of evoting vide
notice dated 11th April, 2014, the results of which will be declared on
12th May, 2014 for issue of 1,31,38,000 Equity shares of Re.1 each on
Preferential basis to G. K. & Sons Private Limited and Electrocast
Sales India Limited, two Promoter Companies of the Company at a price
of Rs.19.03 per Equity Share.
Debentures :
As on March 31, 2014, the Company has the following Non-Convertible
Debentures (NCD) listed on National Stock Exchange of India Limited :
Type of Debentures Amount (Rs. in Crore)
10.75% 120
11.00% 50
12.50% 100
The Debenture Trustee for the aforesaid Debentures is as follows :
Axis Trustee Services Limited
2nd Floor, Axis House, Bombay Dyeing Mills Compound, Pandurang Budhkar
Marg Worli, Mumbai - 400 025 Contact Person : Chief Operating Officer
Phone : (022) 2425 5202, Fax : (022) 2425 4200 Email Id :
[email protected]
Energy, Technology and Foreign Exchange Earnings and Outgo
Statement containing necessary information as required under the
Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988 is annexed hereto as annexure ''A'' and forms part
of this Report.
Reports on Corporate Governance and Management Discussion and Analysis
Your Company has fully complied with the requirements of Clause 49 of
the Listing Agreement regarding Corporate Governance. Report on
Corporate Governance Practices, the Auditors'' Certificate on compliance
of mandatory
requirements thereof and Report on Management Discussion and Analysis
are given as annexure and form part of this report.
Particulars of Employees
Having regard to the provisions of Section 219(1)(b)(iv) of the
Companies Act, 1956, the Annual Report excluding the information
pursuant to the provisions of Section 217(2A) of the Companies Act,
1956 read with the Companies (Particulars of Employees) Rules, 1975 and
the Companies (Particulars of Employees) Amendment Rules, 2011, is
being sent to all the members of the Company and others entitled
thereto. Any member interested in obtaining such particulars may write
to the Company Secretary at the Registered Office of the Company.
The Board of Directors expresses its appreciation for the cordial
relations and outstanding contribution made by the employees of the
Company.
Acknowledgement
Your Directors would like to express their appreciation for the
assistance and co-operation received from the Financial institutions,
Banks, Government authorities, Customers, Vendors and members during
the year under review. Your Directors also wish to place on record
their deep sense of appreciation for the committed services by the
Company''s executives, staff and workers.
On behalf of the Board of Directors
May 10, 2014 P. K. Khaitan
Kolkata Chairman
Mar 31, 2013
To, The Members
The Directors take pleasure in presenting their Fifty Eighth Annual
Report and Audited Annual Accounts of the Company for the financial
year ended March 31, 2013.
Financial Results Rs. in Crores
Sl.no. Particulars FY2012-13 FY2011-12
i. Revenue from operations 1934.55 1916.66
ii. Other Income 95.05 70.77
iii. Total Revenue 2029.60 1987.43
iv. Profit before Taxation (PBT) 120.98 22.58
v. Less:Tax including Deferred Tax 23.75 (19.80)
vi. Profit after Taxation (PAT) 97.23 42.38
vii. Add : Profit brought forward
from previous year 113.58 86.19
viii. Add : Transfer from Debenture
Redemption Reserve 50.00 25.00
ix. Amount available for appropriation 260.81 153.57
Appropriation
Less : Transfer to Debenture
Redemption Reserve 10.00 16.00
Less : Transfer to General Reserve 45.00 5.00
Less : Proposed Dividend including tax
thereon 19.11 18.99
Total 74.11 39.99
x. Surplus carried to Balance Sheet 186.70 113.58
Dividend
Your Directors recommend a dividend of Rs.0.50 per equity share i.e.
50% for the financial year ended March 31, 2013.The dividend, on
approval by members, will absorb Rs.19.11 crores, inclusive of tax of
Rs.2.78 crores on distribution of dividend.
Operations
The Company''s Revenue from operations has increased from Rs.1916.66
crores in 2011-12 to Rs.1934.55 crores in 2012-13. Export sales showed
an increase from Rs.822.69 crores to Rs.936.68 crores, an increase of
14% due to higher proportion of sales in the export market. The
Company''s profit (PAT) for the financial year was Rs.97.23 crores as
against Rs.42.38 crores of previous financial year which is an increase
of 129.42% since last financial year.
During the year Ductile Iron (DI) pipes production was 2,84,849 MT as
against 2,70,168 MT in the previous year, showing a marginal increase
in production. Production of DI Fittings during the year was 6,214 MT
as compared to 6,063 MT in previous year. The production of Cast Iron
(CI) pipes at Elavur was 24,451 MT as against 19,177 MT in the previous
year.
Apart from improvement in Production and Productivity, special
attention has been given to increase Energy efficiency. Further,
Product variety has been added to meet newer requirements from
International and enlightened Indian customers.
Future Prospects
Demand for Ductile Iron Pipes and Fittings in the domestic market
remains stable. Your Company continues to maintain its dominant
position in the market against competitors. In the Export market,
market shares have increased in the European markets even after the
crisis in Europe. A new office and stockyard has been set up in Germany
and it should start initial business in the current fiscal. Initial
business has also started with government orders in Brazil and other
South American markets. We will maintain our emphasis in the Gulf
markets where we have opened subsidiaries in Qatar and UAE.
Directors
Mr. M. B. N. Rao, Mr. Naresh Chandra and Dr. Jamshed Jiji Irani,
Directors, retire by rotation at the ensuing Annual General Meeting
(AGM) and are eligible for re-appointment at the ensuing AGM.
A brief resume of the Directors retiring by rotation at the ensuing
AGM, nature of expertise in specific functional areas and names of the
companies in which they hold directorships and/or memberships/
chairmanships of Committees of the respective Boards, share- holding
and relationship between directors inter se as stipulated under Clause
49 of the Listing Agreement with the Stock Exchanges in India, is given
in the Notice convening AGM.
Directors'' Responsibility Statement
Your Directors hereby confirm :
a) that in the preparation of annual accounts, containing financial
statements for the financial year ended March 31, 2013 the applicable
accounting standards have been followed and there were no material
departures therefrom requiring any explanation;
b) that the directors have selected such accounting policies and
applied them consistently and made judgments and estimates that are
reasonable and prudent to give a true and fair view of the state of
affairs of the Company and the profit for that period;
c) that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
d) that the annual accounts have been prepared on a ''going concern''
basis.
Consolidated Financial Statements
Pursuant to Clause 41 of the Listing Agreement entered into with the
stock exchanges, the Board of Directors has pleasure in attaching the
Consolidated Financial Statements prepared in accordance with the
Accounting Standards prescribed by the Institute of Chartered
Accountants of India.
Auditors and Auditors'' Report
Statutory Auditors
M/s. Lodha and Co., Chartered Accountants, Statutory Auditors of the
Company, retire at the conclusion of the ensuing Annual General Meeting
of the Company. They have offered themselves for reappointment as
Statutory Auditors and confirmed that their reappointment, if made,
will be within the prescribed limits under section 224(1B) ofthe
Companies Act, 1956.
There are no qualifications or adverse remarks in the Auditors'' Report
which require any clarification/explanation. The Notes on Financial
Statements are self explanatory and need no further explanation.
Cost Auditors
The Central Government''s directions vide their Order dated 2nd May,
2011 & 30th June, 2011 pursuant to Section 233B of the Companies Act,
1956, requires audit of the cost accounting records of the Company
relating to Pig Iron, DI Pipe, DI Fittings, CI Pipe, Sponge Iron &
Power Generating units for every financial year on & from 2011-12. The
mines related activities will come under purview of this audit on &
from the date when commercial production will start. Subject to the
approval of Central Goverment. M/s. S. G. & Associates, partnership
firm of Cost Accountants in Kolkata, has been reappointed as Cost
Auditors for Financial Year 2013-14 for all the applicable units and
products of the Company.
Cost Audit Report for the financial year 2012- 13 will be filed within
due date.
The Cost Audit Report for the financial year 2011-12 was filed on 24th
December, 2012 within the due date of 28th February, 2013.
Besides the audit, the Company has to submit a ''Compliance Report'' for
the cost accounting records of the Company as a whole including all its
activities duly certified by a Cost Accountant. For this purpose, the
Company has appointed a qualified Cost Accountant for the financial
year 2013-14. The Compliance Certificate for Financial Year 2011-12 was
filed by the Company on 25th December, 2012, due date for the same
being 28th February, 2013.
Subsidiary, Associate Companies and Joint Ventures
As on March 31, 2013, your Company has the following Subsidiaries,
Associate Companies and Joint Ventures :-
S.
No. Name of the Company Status
1. Electrosteel Algerie SPA Subsidiary
2. Electrosteel Castings (UK) Limited Subsidiary
3. Electrosteel Castings Gulf FZE Subsidiary
4. Electrosteel Dohafor Trading LLC Subsidiary
5. Electrosteel Europe S.A. Subsidiary
6. Electrosteel Trading S.A, Spain Subsidiary
7. Electrosteel USA, LLC Subsidiary
8. Singardo International Pte Limited Subsidiary
9. Electrosteel Brasil Ltda. Subsidiary
Tubose Conexoes Duteis
10. Mahadev Vyapaar Private Limited Subsidiary
11. WaterFab LLC Step down subsi
diary
(subsidiary of
Electrosteel
USA, LLC)
12. Electrosteel Steels Limited Associate Company
13. Electrosteel Thermal Power Ltd. Associate Company
14. Lanco Industries Limited Associate Company
15. Domco Private Limited Joint Venture
16. North Dhadhu Mining Company Joint Venture
Private Limited
As required, the statement pursuant to Section 212 of the Companies Act
1956, in respect of the above mentioned subsidiaries are attached to
and forms part of this Annual Report.
In terms of the general exemption granted by Government of India,
Ministry of Corporate Affairs, vide General Circular No. 2/2011 dated
8th February, 2011, the Board of Directors of your Company at its
meeting held on 10th May, 2013 has given its consent for not attaching
the Balance Sheet, Statement of Profit and Loss, and Reports of the
Board of Directors and the Auditors'' thereon of these subsidiary/ step
down subsidiary companies for the financial year ended 31st March,
2013. However, a statement containing brief financial details of the
Company''s subsidiaries for the financial year ended 31st March, 2013 is
included in the Annual Report, as to comply with the terms of the
general exemption. The Company undertakes that annual accounts of the
subsidiary companies and the related detailed information shall be made
available to the shareholders of the Company and subsidiary companies
seeking such information at any point of time. Moreover, the annual
accounts of the subsidiary companies will also be kept for inspection
for members at the Company''s Head Office and at the Head Office of the
subsidiary company concerned.
Credit Rating
Your Company has been rated as "CARE AA- (Double A minus)" for
long-term/medium term debt and various Bank facilities as including the
Non-Convertible Debentures (NCDs) of the Company (outstanding Rs. 120
Crores as at 31st March, 2013). "CARE AA- (Double A minus)" rating
indicates high degree of safety regarding timely servicing of financial
obligation and lower credit risk.
The rating for the short-term debt/facilities sanctioned and/or availed
by the Company has been assigned as "CARE A1 (A One Plus)" which is
the highest rating in the category and indicates a strong capacity for
timely payment of short-term debt obligations and lowest credit risk.
Awards
EEPC INDIA, Eastern Region has given "AWARD FOR EXPORT EXCELLENCE" for
star performers as large enterprise in the product group of sanitary
and Industrial Castings for our outstanding contribution to engineering
exports during the year 2010-11.
Energy, Technology and Foreign Exchange Earnings and Outgo
Statement containing necessary information as required under the
Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988 is annexed hereto as annexure ''A'' and forms part
of this Report.
Reports on Corporate Governance and Management and Discussion Analysis
Your Company has fully complied with the requirements of Clause 49 of
the Listing Agreement regarding Corporate Governance.
Report on Corporate Governance Practices, the Auditors'' Certificate on
compliance of mandatory requirements thereof and Report on Management
Discussion and Analysis are given as annexure and form part of this
report.
Particulars of Employees
Having regard to the provisions of Section 219(1)(b)(iv) of the
Companies Act, 1956, the Annual Report excluding the information
pursuant to the provisions of Section 217(2A) of the Companies Act,
1956 read with the Companies (Particulars of Employees) Rules, 1975 and
the Companies (Particulars of Employees) Amendment Rules, 2011, is
being sent to all the members of the Company and others entitled
thereto. Any member interested in obtaining such particulars may write
to the Company Secretary at the Registered Office of the Company.
The Board of Directors expresses its appreciation for the cordial
relations and outstanding contribution made by the employees of the
Company.
Acknowledgement
Your Directors take this opportunity to thank the Financial
Institutions, Banks, Government Authorities, Customers, Shareholders,
Investors and other stakeholders for their continued trust and support
to the Company.
On behalf of the Board of Directors
May 10, 2013 P. K. Khaitan
Kolkata Chairman
Mar 31, 2012
The Directors take pleasure in presenting their Fifty Seventh Annual
Report and Audited Accounts of the Company for the year ended March 31,
2012.
Financial Results Rs. in Crores
Sl.no. Particulars FY2011-12 FY2010-11
i. Revenue from operation 1916.66 1709.53
ii. Other Income 70.77 101.75
iii. Total Revenue 1987.43 1811.28
iv. Profit before Taxation (PBT) 22.58 214.89
v. Tax including Deferred Tax (19.80) 60.25
vi. Profit after Taxation (PAT) 42.38 154.64
vii. Profit brought forward
from previous year 86.19 101.02
viii. Transfer from Debenture
Redemption Reserve 25.00 -
ix. Amount available for appropriation 153.57 255.66
Appropriation
Transfer to Debenture Redemption Reserve 16.00 22.00
Transfer to General Reserve 5.00 100.00
Proposed Dividend including tax thereon 18.99 47.47
Total 39.99 169.47
x. Surplus carried to Balance Sheet 113.58 86.19
Dividend
Your Directors recommend a dividend @ Rs 0.50 per share i.e.50% for the
year ended March 31, 2012.The dividend, on approval by members, will
absorb Rs. 18.99 crores, inclusive of tax of Rs 2.65 crores on
distribution of dividend.
Operations
F.Y. 2011-12 was a challenging year with a moderate growth of business
due to turbulent economic environment. There was a slowdown in global
economy activities across major part of the world and India was also
affected to a larger extent coupled with domestic factors such as
inflation, decelerating growth and widening current account deficit.
Despite these constraints and the challenging environment, the Company
performed reasonably well and sustained its production and sales in
quantitative terms. The Company's Revenue from operation has increased
from Rs. 1709.53 crores in 2010-11 to Rs. 1916.66 crores in 2011-12
representing an increase of 12.12 %. Export sales showed an increase
from Rs. 566.33 crores to Rs. 822.69 crores, an increase of 45.27 % due
to higher proportion of sales in the export market. The Company's
profit (PAT) for the year was Rs. 42.38 crores as against Rs. 154.64
crores. The decline was due to steep rise in raw materials prices
mainly of iron ore & coal and sharp depreciation of INR against dollar.
During the year D.I.pipes production was 2,70,168 MT as against
2,70,327 MT in the previous year, showing marginally decreases. This
year more product varieties have been added in the said production to
satisfy our customers. Production of D.I.fittings was higher by 23.34%
over the previous year (from 5,038 MT to 6,214 MT).
The production of C.I. pipes at Elavur was 19,177 MT as against 30,199
MT in the previous year due to the customer's preference for DI Pipes
over CI Pipes.
Credit Rating
Your Company continues to enjoy the rating for long-term/medium term
debt and various Bank facilities as "CARE AA "(Double A ) including the
Non-Convertible Debentures (NCDs) of the Company (outstanding Rs. 200
crores as at 31.03.2012). "CARE AA" rating indicates high safety for
timely servicing of debt obligations and very low credit risk.
The rating for the short-term debt/facilities sanctioned and/or availed
by the Company has been assigned as "CARE A1 ( A One Plus)" which is
the highest rating in the category and indicates a strong capacity for
timely payment of short-term debt obligations and lowest credit risk.
Future Prospects
Government's thrust on the infrastructure facilities is already showing
continuous increasing demand for D. I. pipes in the domestic market.
However, additional capacity installed by new entrants and peer group
companies may intensify the competition in the domestic market. There
is constant endeavor by your Company for increasing the share in
existing foreign markets and enter new countries. Your Company has
opened a new office in Italy with two stockyards. There are plans to
set up an office and stockyard in Germany this fiscal. A branch office
is also being opened shortly in Morocco to service the West African
market where we have already started getting projects. Approvals have
been obtained in Brazil and other South American markets and initial
businesses obtained. In short, we see an exciting year ahead.
Corporate Governance
Your Company has fully complied with the requirements of Clause 49 of
the Listing Agreement regarding Corporate Governance.
A report on Corporate Governance Practices, the Auditors' Certificate
on compliance of mandatory requirements thereof and Management
Discussion and Analysis are given as annexure to this report.
Directors' responsibility statement
Your Directors hereby confirm :
a) that in the preparation of annual accounts, containing financial
statements for the year ended March 31, 2012 the applicable accounting
standards have been followed.
b) that the stated accounting policies have been consistently followed
to give a true and fair view of the state of affairs of the Company and
the profit for that period.
c) that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities.
d) that the annual accounts have been prepared on a 'going concern'
basis.
Cost Audit
The Central Government's directions vide their Order dated 2nd May,2011
& 30th June,2011 pursuant to Section 233B of the Companies Act, 1956,
requires audit of the cost accounting records of the Company relating
to Pig Iron, DI Pipe, DI Fittings, CI Pipe, Sponge Iron & Power
Generating units for every financial year on & from 2011-12. The mines
related activities will come under purview of this audit on & from when
commercial production will start. Besides the audit, ECL has to submit
a 'Compliance Report' for the Company as a whole including all its
activities duly certified by a Cost Accountant. M/s. S. G. &
Associates, a partnership firm of Cost Accountants in Kolkata, has been
appointed as Statutory Cost Auditor for FY 2011-12. The Cost Audit
report (by Cost Auditor) and Compliance Report (by the Company) shall
be submitted within 180 days from the close of Company's financial
year.
Energy, Technology and Foreign Exchange
Statement containing necessary information as required under the
Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988 is annexed hereto as annexure 'A'.
Employees
The Board of Directors expresses its appreciation for the cordial
relations and outstanding contribution made by the employees of the
Company.
Particulars of employees as required under Section 217(2A) of the
Companies Act, 1956 and the Companies (Particulars of Employees) Rules,
1975, as amended, form part of this report. However, pursuant to
Section 219(1) (b) (iv) of the Companies Act, 1956, the Annual Report
is being sent to all the shareholders of the Company, excluding the
aforesaid information. Those members desirous to obtain such
particulars may write to the Company Secretary at the registered office
of the Company.
Subsidiary, Joint Venture and Associate Companies
As on March 31 2012, your Company has the following Subsidiaries, Joint
Ventures and Associate Companies.
S.
No. Name of the Company STATUS
1. Electrosteel Castings (UK) Limited Subsidiary
2. Electrosteel Europe S.A. Subsidiary
3. Electrosteel Algerie SPA Subsidiary
4. Singardo International Pte Limited Subsidiary
5. Electrosteel USA, LLC Subsidiary
6. Mahadev Vyapaar Private Limited Subsidiary
7. Electrosteel Trading S.A, Spain Subsidiary
8. WaterFab LLC Subsidiary
9. North Dhadhu Mining Company Pvt Ltd Joint Venture
10. Domco Private Limited Joint Venture
11. Lanco Industries Limited Associate
12. Electrosteel Steels Limited Associate
13. Electrosteel Thermal Power Limited Associate
The statement pursuant to Section 212 of the Companies Act 1956, in
respect of the above mentioned subsidiaries are attached in the Annual
Report.
In terms of the general exemption granted by Government of India,
Ministry of Corporate Affairs, vide General Circular No. 2/2011 dated
February 08, 2011, the Board of Directors of your Company in its
meeting held on May 28, 2012 has given consent for not attaching the
copies of the balance sheet, profit and loss account, reports of the
Board of Directors and the Auditors' Reports of the subsidiary
companies for the year ended March 31, 2012. However, a statement
containing brief financial details of the Company's subsidiaries for
the year ended March 31, 2012 is included in the Annual Report, as to
comply with the terms of the exemption letter. The Company undertakes
that annual accounts of the subsidiary companies and the related
detailed information shall be made available to members of the Company
and subsidiary companies seeking such information at any point of time.
Moreover, the annual accounts of the subsidiary companies will also be
kept for inspection for members at the Company's Corporate office and
at the corporate office of the subsidiary companies concerned.
Greenfield Project by an Associate Company, M/s Electrosteel Steels
Limited (ESL)
As you are aware, ESL is setting up a 2.2 MTPA integrated steel &
Ductile Iron (DI) Pipe project, at Siyaljori village, in Bokaro
District, in the state of Jharkhand, which is about 22 kms from Bokaro
city, a well developed industrial town of Jharkhand.
During the project implementation process, some modifications were
suggested by the technical experts to meet the technical superiority
and efficiency improvement of the plant. Hence, for better balancing of
the product with optimized product mix and better value addition, ESL
is contemplating to enhance the plant capacity from 2.2 MTPA to 2.51
MTPA.
The ESL plant is at its advance stage of completion and its operations
are currently in a nascent stage. Due to a variety of technical
reasons, the plant has undergone improvements and changes, which will
in turn benefit the operations in the long run.
Awards
EEPC INDIA, Eastern Region has given "AWARD FOR EXPORT EXCELLENCE" for
star performers as large enterprise in the product group of sanitary
and Industrial Castings for our outstanding contribution to engineering
exports during the year 2009-10.
Consolidated Financial Statements
Pursuant to Clause 41 of the Listing Agreement entered into with the
stock exchanges the Board of Directors has pleasure in attaching the
Consolidated Financial Statement prepared in accordance with the
Accounting Standards prescribed by the Institute of Chartered
Accountants of India.
Auditors and Auditor's Report
M/s. Lodha and Company, Chartered Accountants, statutory auditors of
the Company, retire at the conclusion of the ensuing Annual General
Meeting of the Company. They have offered themselves for reappointment
as statutory auditors and confirmed that their appointment, if made,
will be within the prescribed limits under section 224(1B) of the
Companies Act, 1956.
There are no qualifications or adverse remarks in the Auditors' Report
which require any clarification/explanation. The Notes to Accounts
forming part of the financial statements are self explanatory and needs
no further explanation. The Schedule VI of the Companies Act, 1956 has
been revised by the Ministry of Corporate Affairs vide its notification
dated February 28, 2011. The notification is in force and is applicable
for all Balance Sheets and Statement of Profit and Loss to be prepared
for the financial year commencing on or after April 1, 2011. Therefore,
the previous period figures have been regrouped/ re-cast wherever
necessary.
Directors
Mr. M.K.Jalan, Mr.R.S.Singh and Mr. S. Y. Rajagopalan, Directors,
retire by rotation at the ensuing Annual General Meeting and are
eligible for re-appointment.
Acknowledgement
Your Directors take this opportunity to thank the Financial
Institutions, Banks, Government Authorities, Customers, Shareholders,
Investors, employees and other stakeholders for their continued trust
and support to the Company.
On behalf of the Board
May 28, 2012 P. K. Khaitan
Kolkata Chairman
Mar 31, 2011
The Directors take pleasure in presenting their Fifty Sixth Annual
Report and Audited Accounts of the Company for the year ended March 31,
2011.
Financial Results Rs. in Crores
Sl.
no. Particulars FY 2010-11 FY 2009-10
i. Gross Turnover 1749.67 1466.64
ii. Net Turnover 1711.43 1428.77
iii.Other Income 70.33 125.42
iv. Total Revenue 1781.76 1554.19
v. Earning Before Interest,
Depreciation, Taxation and
Amortisation (EBITDA) 316.98 404.29
vi Interest (Net) 47.68 44.07
vii Depreciation 54.41 52.30
viii.Profit before Taxation (PBT) 214.89 307.92
ix. Tax including Deferred Tax 60.25 101.63
x. Profit after Taxation (PAT) 154.64 206.29
xi. Profit brought forward from previous year 101.02 87.60
xii.Amount available for appropriation 255.66 293.89
Appropriation
Transfer to Debenture Redemption Reserve 22.00 27.00
Transfer to General Reserve 100.00 118.24
Proposed Dividend including tax thereon 47.47 47.63
Total 169.47 192.87
xiii. Surplus carried to Balance Sheet 86.19 101.02
Dividend
Your Directors recommend a dividend @ Rs.1.25 per share i.e.125% for
the year ended March 31,2011.The dividend, on approval by members, will
absorb Rs. 47.47 crores, inclusive of tax of Rs. 6.62 crores on
distribution of dividend.
Operations
The Companys turnover has increased from Rs. 1466.64 crores in 2009-10
to Rs. 1749.67 crores in 2010-11 representing an increase of 19.30 %.
Export sales showed an increase from Rs. 507.15 crores to Rs. 623.06
crores, an increase of 22.86% owing to higher proportion of sales in
the export market. The increase in turnover is mainly due to increase
in sales quantity of DI Pipes by 13.46%. Successful commissioning of
Blast Furnace has contributed to increase in availability of liquid
metal by 15.78%. The Companys profit (PBT) for the year was Rs. 214.89
crores as against Rs. 307.92 crores. The decline was due to steep rise
in raw materials prices mainly of iron ore & coal.
During the year D.I. Pipes production was 2,70,327 MT as against
2,35,463 MT in the previous year, showing an increase of 14.81%. This
is highest ever exceeding the earlier best by about 7%. Production of
D.I. fittings was higher by 7.58% over the previous year (from 4,683 MT
to 5,038 MT).
The production of CI Pipes at Elavur was 30,199 MT as against 40,651 MT
in the previous year due to the customers preference for DI Pipes over
CI Pipes.
Cost reduction and backward integration
Blast Furnace - Productivity of Blast Furnace has been improved after
relining. Usage of Sintered product has been increased successfully
to reduce the dependency on Lump Ore. Coal injection system in the
Blast Furnace has been improved to reduce Coke rate.
Coke oven plant -Production improved to meet the Blast Furnace
requirement. Your Company is now self sufficient. Import of Coke is not
required.
Pipe & Fittings - Apart from increase in Production and Productivity,
special attention has been given to increase Energy efficiency.
Further Product variety has been added to meet newer requirements from
International and enlightened Indian customers.
Credit Rating
Your Company continues to enjoy the rating for long-term/medium term
debt and various Bank facilities as "CARE AA "(Double A ) including the
Non-Convertible Debentures (NCDs) of the Company (outstanding Rs. 300
crores as at 31.03.2011). "CARE AA" rating indicates high safety for
timely servicing of debt obligations and very low credit risk.
The rating for the short-term debt/facilities sanctioned and/or availed
by the Company has been assigned as "PR1 +" which is the highest rating
in the category and indicates a strong capacity for timely payment of
short-term debt obligations and lowest credit risk.
Future Prospects
Governments thrust on the infrastructure facilities is already showing
continuous increasing demand for D. I. Pipes in the domestic market.
However, additional capacity installed by new entrants and peer group
companies may intensify the competition in the domestic market. There
is constant endeavor by your Company for increasing the share in
existing foreign markets and enter new countries.
Corporate Governance
Your Company has fully complied with the requirements of Clause 49 of
the Listing Agreement regarding Corporate Governance.
A report on Corporate Governance Practices, the Auditors Certificate
on compliance of mandatory requirements thereof and Management
Discussion and Analysis are given as annexure to this report.
Directors responsibility statement
Your Directors hereby confirm:
a) that in the preparation of annual accounts, containing financial
statements for the year ended March 31, 2011 the applicable accounting
standards have been followed.
b) that the stated accounting policies have been consistently followed
to give a true and fair view of the state of affairs of the Company and
the profit for that period.
c) that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act for safeguarding the assets of the
Company and for preventing and detecting fraud and other
irregularities.
d) the annual accounts have been prepared on a going concern basis.
Energy, Technology and Foreign Exchange
Statement containing necessary information as required under the
Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988 is annexed hereto as annexure A.
Employees
The Board of Directors expresses its appreciation for the cordial
relations and outstanding contribution made by the employees of the
Company.
Particulars of employees as required under Section 217(2A) of the
Companies Act, 1956 and the Companies (Particulars of Employees) Rules,
1975, as amended, form part of this report. However, pursuant to
Section 219(l)(b) (iv) of the Companies Act, 1956, the Annual Report is
being sent to all the shareholders of the Company, excluding the
aforesaid information. Those members desirous to obtain such
particulars may write to the Company Secretary at the Registered Office
of the Company.
Subsidiary, Joint Venture and Associate Companies
As on March 31, 2011, your Company has the following Subsidiaries,
Joint Ventures and Associate Companies.
S.
No. Name of the Company STATUS
1. Electrosteel Castings (UK) Limited Subsidiary
2. Electrosteel Europe S.A. Subsidiary
3. Electrosteel Algerie SPA Subsidiary
4. Singardo International Pte Limited Subsidiary
5. Electrosteel USA,LLC Subsidiary
6. WaterFab LLC Subsidiary
7. North Dhadhu Mining Company Pvt Ltd Joint Venture
8. Domco Pvt Limited Joint Venture
9. Lanco Industries Limited Associate
10. Electrosteel Steels Limited
(Formerly Electrosteel Integrated Ltd.) Associate
11. Electrosteel Thermal Power Limited Associate
The statement pursuant to Section 212 of the Companies Act 1956, in
respect of the above mentioned subsidiaries are attached in the Annual
Report.
In terms of the general exemption granted by Government of India,
Ministry of Corporate Affairs, vide General Circular No. 2/2011 dated
February 08, 2011, the Board of Directors of your Company in its
meeting held on May 12, 2011 given consent for not attaching the copies
of the balance sheet, profit and loss account, reports of the Board of
Directors and the Auditors Reports of the subsidiary companies for the
year ended March 31, 2011. However, a statement containing brief
financial details of the Companys subsidiaries for the year ended
March 31, 2011 is included in the Annual Report, as to comply with the
terms of the exemption letter. The Company undertakes that annual
accounts of the subsidiary companies and the related detailed
information shall be made available to members of the Company and
subsidiary companies seeking such information at any point of time.
Moreover, the annual accounts of the subsidiary companies will also be
kept for inspection for members at the Companys Corporate Office and
at the Corporate Office of the subsidiary companies concerned.
Greenfield Project by an Associate Company Ms Electrosteel Steels
Limited (Formerly Electrosteel Integrated Limited) (ESL)
ESL is setting up a 2.2 MTPA Integrated Steel & D I Pipe project at
Siyaljuri in Bokaro District in the State of Jharkhand. The project
envisages production of 1.20 MTPA long steel products viz. bar & rods,
0.33 MTPA of D I pipes and balance 0.677 MTPA of other steel products.
The project is appraised by the State Bank of India as the lead bank.
The ESL plant will be based on Blast Furnace Route and would have
various technological facilities including of Sinter Plant, Coke Oven
Plant, Pellet Plant, Blast Furnace, Basic Oxygen Furnace, Billet
Casters, Rebar & Wire Rod Mill.
Implementation of the project is progressing satisfactorily and ESL has
acquired the required land, received all statutory clearances, and
placed almost all the orders for supply of plant & machinery. One of
the Blast Furnaces of the Company was commissioned in September, 2010,
which was temporarily shut down for the purpose of synchronization with
other units and has since restarted in March, 2011. The construction
work of the other facilities at site is in full swing.
Awards
JIPM-Japan has given AWARD FOR EXCELLENCE IN CONSISTENT TPM COMMITMENT
for the year 2010 in recognition of your Companys outstanding
achievement.
EEPC INDIA, Eastern Region has given "AWARD FOR EXPORT EXCELLENCE" for
star performers as large enterprise in the product group of sanitary
and Industrial Castings for our outstanding contribution to engineering
exports during the year 2008-09.
Consolidated Financial Statements
Pursuant to Clause 41 of the Listing Agreement entered into with the
stock exchanges, the Board of Directors has pleasure in attaching the
Consolidated Financial Statement prepared in accordance with the
Accounting Standards prescribed by the Institute of Chartered
Accountants of India.
Auditors and Auditors Report
M/s. Lodha and Company, Chartered Accountants, statutory auditors of
the Company, retire at the conclusion of the ensuing Annual General
Meeting of the Company. They have offered themselves for reappointment
as statutory auditors and confirmed that their appointment, if made,
will be within the prescribed limits under section 224(1B) of the
Companies Act, 1956.
There are no qualifications or adverse remarks in the Auditors Report
which require any clarification/explanation. The Notes to Accounts
forming part of the financial statements are self explanatory and needs
no further explanation.
Directors
Mr. Pradip Kumar Khaitan, Mr. Binod Khaitan. Mr. Uddhav Kejriwal and
Mr. Vyas Mitre RalL Directors, retire by rotation at the ensuing Annual
General Meeting and are eligible for re- appointment.
Acknowledgement
Your Directors take this opportunity to thank the Financial
Institutions, Banks, Government Authorities, Customers, Shareholders,
Investors, employees and other stakeholders for their continued trust
and support to the Company.
On behalf of the Board
UMANG KEJRIWAL
Managing Director
UDDHAV KEJRIWAL
Wholetime Director
Kolkata May 12, 2011
Mar 31, 2010
The Directors take pleasure in presenting their Fifty Fifth Annual
Report and Audited Accounts of the Company for the year ended March 31,
2010.
Financial Results Rs. in Cores
Sl.no. Particulars FY 2009-10 FY 2008-09
i. Gross Turnover 1466.64 1895.58
ii. Net Turnover 1428.77 1838.04
iii. Other Income 127.75 89.92
iv. Total Revenue 1556.52 1927.96
v. Earning Before Interest,
Depreciation, Taxation and
Amortisation(EBITDA) 406.62 358.43
vi. Interest 46.40 97.26
vii. Depreciation 52.30 52.12
viii. Profit before Taxation (PBT) 307.92 209.05
ix. Tax including Deferred
Tax & Fringe 101.63 68.65
Benefit tax
x. Profit after Taxation (PAT) 206.29 140.40
xi. Profit brought forward
from previous year* 87.60 59.99
xii. Transfer from Debenture
Redemption Reserve -- 45.00
xiii. Amount available for
appropriation 293.89 245.39
Appropriation
Transfer to debenture
redemption reserve 27.00 10.00
Transfer to general reserve 118.24 100.00
Proposed Dividend
including tax thereon 47.63 45.74
Total 192.87 155.74
xiv. Surplus carried to balance sheet 101.02 89.65
* Net of Rs. 2.05 crores (previous year Rs 0.02 crores) relating to
payment of dividend on the shares allotted after the balance sheet
date.
Dividend
Your Directors recommend a dividend @ Rs.1.25 per share i.e. 125% for
the year ended March 31,2010.The dividend, on approval by members, will
absorb Rs.47.63 crores, inclusive of tax of Rs 6.78 crores on
distribution of dividend.
Operations
The Companys turnover has decreased from Rs. 1895.58 crores in 2008-09
to Rs. 1466.64 crores in 2009-10 representing a decrease of 22.63 %.
Export sales showed a marginal increase from Rs. 479.20 crores to Rs.
507.15 crores, an increase of 5.83 % owing to higher proportion of
sales in the export market. The decrease in turnover is mainly due to
lower turnover from trading activities and lower projects executed on
turnkey basis. Further, the planned shut down of Blast Furnace for its
relining and repairing in the last quarter of 2009-10 also contributed
in lower sales of D.I.pipes by approximately 7.00%. However, inspite of
above. your Company has achieved highest ever Profit Before Tax(PBT)
of Rs. 307.92 crores during the year, representing an increase of
47.30% as compared to Rs. 209.05 in the previous year. The increase in
profit is mainly on account of decrease in raw material prices, lower
interest cost and better foreign exchange management.
During the year D.I.pipes production was 2,35,463 MT as against
2,51,823 MT in the previous year, showing decrease of 6.5%. The
decrease in production was mainly due to planned shut-down of Blast
Furnace for its relining and repairing in the last quarter of 2009-10.
Production of D.I.fittings was higher by 10.71% over the previous year
(from 4,230 MT to 4,683 MT).
The production of C.I. pipes at Elavur was 40,651 MT as against 39,831
MT in the previous year.
Cost reduction and backward integration
Sinter plant- Working of Sinter plant has been further improved by
improving capability of using different raw materials.
Coke oven plant - With the commissioning of 2nd additional battery in
September 09, Company is now fully self sufficient and not dependent
on imported Coke.
Railway siding - Your Company is constructing railway sidings at Haldia
and Barajamda to create facility for smooth movement of materials from
the forthcoming coal mine at Parbatpur. Jharkhand and iron ore mine at
Kodolibad. Jharkhand. The projects are in advance stage of completion.
Finance
During the year, your Company raised Rs.210.07 crores by issue of 2,000
numbers of Secured Non Convertible Debentures along with 3,35,68,312
numbers of warrants through Qualified Institutions Placement basis for
augmenting its long term resources and general corporate purposes.
Further to augment the long term resources required for expansion and
other business purposes, your Company raised Rs. 28.98 crores being 90%
of the total amount due against conversion of 1,40,00,000 warrants
(issued in previous years to Promoters/ Promoter Group Companies) into
140 lakhs equity shares of Re. 1 each at a price of Rs. 23.00 per
share.
In addition to above, your Company has availed the balance disbursement
of Rs 100 crores of Rupee Term Loan from EXIM Bank and USD 57.50
million from lenders towards ECB.
Credit Rating
The rating for long-term/medium term debt and various Bank facilities
sanctioned and/or availed by your Company has been upgraded by Credit
Analysis & Research Ltd. (CARE) as from "CARE AA -"(Double A Minus) to
"CARE AA" (Double A) including the Non-Convertible Debentures (NCDs) of
the Company (outstanding Rs. 300 crores as at 31.03.2010). "CARE AA"
rating indicates high safety for timely servicing of debt obligations
and very low credit risk.
The rating for the short-term debtffacilities sanctioned and/or availed
by the Company has been assigned as "PR1 +" which is the highest rating
in the category and indicates a strong capacity for timely payment of
short-term debt obligations and lowest credit risk.
Future Prospects
Governments thrust on the infrastructure facilities is already showing
continuous increasing demand for D. I. pipes in the domestic market.
However, additional capacity installed by new entrants and peer group
companies may intensify the competition in the domestic market. There
is constant endeavor by your Company for increasing the share in
existing foreign markets and enter new countries. It has been noticed
recently that the price of basic inputs are going up.
Corporate Governance
Your Company has fully complied with the requirements of Clause 49 of
the Listing Agreement regarding Corporate Governance.
A report on Corporate Governance Practices. the Auditors Certificate
on compliance of mandatory requirements thereof and Management
Discussion and Analysis are given as annexure to this report.
Directors responsibility statement
Your Directors hereby confirm:
a) that in the preparation of annual accounts. containing financial
statements for the year ended March 31, 2010 the applicable accounting
standards have been followed.
b) that the stated accounting policies have been consistently followed
to give a true and fair view of the state of affairs of the Company and
the profit for that period.
c) that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act for safeguarding the assets of the
Company and for preventing and detecting fraud and other
irregularities.
d) the annual accounts have been prepared on a going concern basis.
Energy, Technology and Foreign Exchange
Statement containing necessary information as required under the
Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988 is annexed hereto as annexure A.
Employees
The Board of Directors expresses its appreciation for the cordial
relations and outstanding contribution made by the employees of the
Company.
Particulars of employees as required under Section 217(2A) of the
Companies Act, 1956 and the Companies (Particulars of Employees) Rules,
1975, as amended, form part of this report. However, pursuant to
Section 219(1) (b) (iv) of the Companies Act, 1956, the Annual Report
is being sent to all the shareholders of the Company, excluding the
aforesaid information. Those members desirous to obtain such
particulars may write to the Company Secretary at the registered office
of the Company
Subsidiary, Joint Venture and Associate Companies
As on March 31, 2010, your Company has the following Subsidiaries,
Joint Ventures and Associate Companies.
S.No. Name of the Company STATUS
1 Electrostal Castings (UK) Limited Subsidiary
2 Electrostal Europe S.A. Subsidiary
3 ElectrosteelAlgerieSPA Subsidiary
4 Singardo International Pte Limited Subsidiary
5 ElectrosteelUSA,LLC Subsidiary
6 WaterFabLLC Subsidiary
7 North Dhadhu Mining Company Pvt Ltd Joint Venture
8 Domco Pvt Limited Joint Venture
9 Lanco Industries Limited Associate
10 Electrosteel Steels Limited Associate
(Formerly Electrosteel Integrated Limited)
11 Electrosteel Thermal Power Limited Associate
The statement pursuant to Section 212 of the Companies Act 1956, in
respect of the above mentioned subsidiaries are attached in the annual
report.
In terms of the approval granted by the Central Government under
Section 212 (8) of the Companies Act, 1956, vide its letter number
47/85/2010-CL-III dated March 22, 2010, the copies of the balance
sheet, profit and loss account, reports of the Board of Directors and
the Auditors Reports of the subsidiary companies for the year ended
March 31, 2010 are not attached to the Balance Sheet of the Company.
However, a statement containing brief financial details of the
Companys subsidiaries for the year ended March 31, 2010 is included in
the Annual Report, as to comply with the terms of the exemption letter.
The Company will furnish the annual accounts and other related detailed
information of the subsidiaries upon request by any member of the
Company. Moreover, the annual accounts of the subsidiary companies will
also be kept for inspection for members at the Companys Registered
Office.
Greenfield Project by an Associate Company Ms Electrosteel Steels
Limited (Formerly Electrosteel Integrated Limited) (ESL)
ESL is setting up a 2.2 MTPA integrated steel project at a capital
outlay of Rs. 7,262 crores at Siyaljuri in Bokaro District in the
industrially backward state of Jharkhand. The project cost would be
financed in the debt equity ratio of 3:1. The project envisages
production of 1.20 MTPA long steel products viz. bar & rods, 0.33 MTPA
of D I pipes and balance 0.677 MTPA of other steel products. The
project is appraised by the State Bank of India as the lead bank. The
ESL plant will be based on Blast Furnace Route and would have various
technological facilities including of Sinter Plant, Coke Oven Plant,
Pellet Plant, Blast Furnace, Basic Oxygen Furnace, Billet Casters,
Rebar & Wire Rod Mill.
Implementation of the project is progressing satisfactorily and ESL has
acquired the required land, received all statutory clearances and
placed almost all the orders for supply of plant & machinery. The
construction work at site is in full swing.
Awards
In May 2009, your Company was awarded by EEPC-ER (Engineering Export
Promotion Council, Eastern Region) for Star Performance as Large
Enterprise in the Product Group of Sanitary & Industrial Castings for
its outstanding contribution to Engineering exports during the year
2006-07.
Consolidated Financial Statements
Pursuant to Clause 41 of the Listing Agreement entered into with the
stock exchanges the Board of Directors has pleasure in attaching the
Consolidated Financial Statement prepared in accordance with the
Accounting Standards prescribed by the Institute of Chartered
Accountants of India.
Auditors and Auditors Report
M/s. Lodha and Company, Chartered Accountants, statutory auditors of
the company, retire at the conclusion of the ensuing Annual General
Meeting of the Company. They have offered themselves for reappointment
as statutory auditors and confirmed that their appointment. if made,
will be within the prescribed limits under section 224(1B) of the
Companies Act, 1956.
There are no qualifications or adverse remarks in the Auditors Report
which require any
clarification/ explanation. The Notes to Accounts forming part of the
financial statements are self explanatory and needs no further
explanation.
Directors
Mr. N.C.Bahl, Wholetime Director resigned with effect from 23.10.2009.
The Board placed on record its appreciation of the valuable
contribution made to the Company by Mr. N.C.Bahl.
Mr. V.M. Ralli was appointed as Wholetime Director on 21.12.2009. Mr.
M.K. Jalan and Mr. R.S.Singh were appointed as Wholetime Directors on
22.01.2010. Mr. S.Y. Rajagopalan and Mr. M.B.N. Rao were appointed as
Additional Directors on 22.01.2010. Your approval for their appointment
as Directors has been sought in the Notice convening the Annual General
Meeting of the Company.
Mr. Naresh Chandra and Dr. J.J.Irani, Directors. retire by rotation at
the ensuing Annual General Meeting and are eligible for re-appointment.
Acknowledgement
Your Directors take this opportunity to thank the Financial
Institutions, Banks, Government Authorities, Customers, Shareholders,
Investors, employees and other stakeholdersfor their continued trust
and support to the Company.
On behalf of the Board
Kolkata R K. KHAITAN
May 14, 2010 Chairman