Mar 31, 2022
The Board of Directors of JSW Ispat Special Products Limited ("the Company") present the 32nd Annual Report along with the audited financial statements for the financial year ended 31 March 2022.
The financial performance (standalone and consolidated) of the Company for the financial year ended 31 March 2022 ("year under review") is as follows:
(''in Crores) |
||||
S Particulars No. |
Standalone Consolidated |
|||
Year ended 31 March 2022 |
Year ended 31 March 2021 |
Year ended 31 March 2022 |
Year ended 31 March 2021 |
|
1 Income from operations |
||||
(a) Sales of products and services |
6,011.54 |
4,150.14 |
6,011.54 |
4,150.14 |
(b) Other operating income |
49.11 |
37.60 |
49.11 |
37.60 |
Total revenue from operations |
6,060.65 |
4,187.74 |
6,060.65 |
4,187.74 |
Other Income |
30.13 |
12.99 |
23.67 |
15.73 |
Total income |
6,090.78 |
4,200.73 |
6,084.32 |
4,203.47 |
2 Expenses |
||||
(a) Cost of materials consumed |
4,387.57 |
2,965.57 |
4,387.57 |
2,965.57 |
(b) Changes in inventories of finished goods, work-inprogress and stock-in-trade |
(95.94) |
4.41 |
(95.94) |
4.41 |
(c) Purchase of traded goods |
13.88 |
- |
13.88 |
- |
(d) Employee benefits expense |
129.72 |
115.58 |
129.72 |
115.58 |
(e) Finance costs |
270.60 |
275.78 |
270.60 |
275.85 |
(f) Depreciation and amortization expense |
223.21 |
227.47 |
223.21 |
228.46 |
(g) Power and fuel |
476.00 |
267.07 |
476.00 |
267.07 |
(h) Other expenses |
676.56 |
449.84 |
677.79 |
451.54 |
Total expenses |
6,081.60 |
4,305.72 |
6,082.83 |
4,308.48 |
3 Profit/ Loss from operations before exceptional items and tax (1-2) |
9.18 |
(104.99) |
1.49 |
(105.01) |
4 Exceptional items |
- |
314.53 |
||
5 Profit / Loss before tax (3-4) |
9.18 |
(104.99) |
1.49 |
209.52 |
6 Tax expense: |
||||
(i) Current tax |
- |
- |
||
(ii) Deferred tax |
- |
- |
||
7 Profit/ Loss for the year (5 6) |
9.18 |
(104.99) |
1.49 |
209.52 |
8 Other comprehensive income/ loss (after tax) |
- |
|||
A. (i) Items that will not be reclassified to profit or loss |
(0.77) |
2.51 |
(0.77) |
2.51 |
(ii) Income tax relating to items that will not be reclassified to profit and loss |
- |
- |
||
B. (i) Items that will be reclassified to profit or loss |
- |
(0.84) |
7.25 |
|
(ii) Income tax relating to items that will be reclassified to profit and loss |
- |
- |
||
9 Total comprehensive income / (loss) for the year (7 8) |
8.41 |
(102.48) |
(0.12) |
219.28 |
Total comprehensive income / (loss) for the year attributable to: |
||||
Owner of the company |
- |
(0.12) |
220.33 |
|
Non-controlling interests |
- |
- |
(1.05) |
|
Total (loss) / income for the year attributable to: |
||||
Owner of the company |
- |
(0.12) |
210.57 |
|
Non-controlling interests |
- |
- |
(1.05) |
|
Other comprehensive (loss) / income for the year attributable to: |
||||
Owner of the company |
- |
(1.61) |
9.76 |
|
Non-controlling interests |
- |
- |
- |
The Company has two manufacturing facilities namely, at Raigarh and Raipur, in the State of Chhattisgarh. The Raipur unit continued with the production of Ferro-Alloys and Commodity products. The Raigarh unit ushered into Special Steel production in FY 2022.
During year under review, the country witnessed highly transmissible and deadly second wave of COVID-19 leading to imposition of fresh restrictions by governments thereby impacting economic activities and disruption in supply chain and logistics. However, despite such a situation, the plants of the Company were largely operating smoothly by following the necessary safety guidelines and Government Protocols.
The Company has stabilized special steel production and also commenced Slab production in FY22. On raw material front, the Company has secured supply of Iron ore from the mines of JSW Steel Limited and Coke conversion through Bhushan Power and Steel Limited (BPSL) and other party. On coal procurement for power plant, the Company entered into coal linkage agreement.
On logistics front, the Company concentrated on maximizing rail movement for both inward and outward movement of material.
Though, the demand for steel products from infrastructure, construction, automobile and real
estate sectors were fluctuating throughout the year, the last quarter of FY22 witnessed improvement in production, demand and prices for the products of the Company. This was also accompanied by increase in raw material prices.
The Company is in the process of increasing the production levels for special steel products both in Long Products and Slabs. The Company focuses on IATF Certification, API Certifications and RDSO (Indian Railway) Certifications. The Management is also preparing for ISO 50001 - Energy Management going forward.
During the financial year under review, the revenue of the Company touched '' 6,061 crores, higher by ~45% over the previous fiscal. The Company''s performance saw significant improvement over the last year''s performance in terms of production with 0.58 million tons of crude steel production registering YoY growth of 53%. The Company has posted EBIDTA of '' 472.86 crores (~23% YoY growth) and generated standalone profits after seven years.
Following is the operational and financial performance of the Company for the financial year under review:
Standalone:
The Company''s operational performance in terms of physical production and sales during the financial year ended on 31 March 2022, is as under:
Production (MT)- |
|||
Particulars |
FY 2022 |
FY 2021 |
Increase / (Decrease) ( )/(-) Variance |
Sponge Iron |
735,661 |
776,639 |
(40,978) |
Billets |
501,306 |
377,757 |
123,549 |
Structural Steel/TMT |
127,159 |
218,448 |
(91,289) |
Ferro Alloys |
40,847 |
22,529 |
18,318 |
Pellets |
1,205,700 |
1,825,681 |
(619,981) |
Slab |
76,503 |
Nil |
76,503 |
Pig Iron |
135,892 |
155,201 |
(19,309) |
Sales Data (MT)- |
|||
Particulars |
FY 2022 |
FY 2021 |
Increase / (Decrease) ( )/(-) Variance |
Sponge Iron |
473,791 |
635,156 |
(161,375) |
Billets |
357,652 |
127,557 |
230,095 |
Structural Steel / TMT |
145,476 |
212,779 |
(67,303) |
Ferro Alloys |
36,460 |
21,106 |
15,354 |
Pellets |
383,263 |
1,026,580 |
(643,317) |
Slabs |
72,432 |
Nil |
72,432 |
Pig Iron |
135,881 |
176,340 |
(40,459) |
During the year under review, the Company''s revenue from operations was '' 6,060.65 crores as against '' 4,187.74 crores in the previous year. The Company''s earnings before interest, tax, depreciation and amortization was '' 472.86 crores for the financial
year ended 31 March 2022 as compared to '' 385.27 crores in the immediately preceding year.
Taking into account depreciation and interest costs, profit before tax (PBT) stood at '' 9.18 crores as against loss before tax (LBT) of '' 104.99 crores
in the previous year and total comprehensive income for the year was '' 8.41 crores as against total comprehensive loss of '' 102.48 crores in the previous financial year.
During the financial year under review, exports of the Company were '' 983.94 crores as compared to '' 292.54 crores in the preceding financial year.
Consolidated:
During the financial year under review, the Company''s consolidated revenue from operations was '' 6,060.65 crores as against '' 4,187.74 crores in the previous year. Further, in the financial year ended 31 March 2022, the Company on consolidated basis made profit before tax of '' 1.49 crores as compared to Profit Before Tax of '' 209.52 crores in the previous year. During the previous year, the Company on consolidated basis had an exceptional gain on settlement of liabilities, forfeiture of advance and reassessment of realizable value of its overseas subsidiaries total amounting to '' 314.53 crores (details mentioned below). There was no exceptional item in the current year.
(i) gain of '' 318.50 crores on settlement of loan outstanding of '' 294.29 crores and interest due thereon of '' 42.60 crores at '' 18.39 crores, pursuant to a settlement agreement entered into with its lenders.
(ii) loss of'' 22.58 crores towards reassessment of realizable value of assets held for sale.
(iii) gain of '' 18.61 crores on forfeiture of advance received from buyer pursuant to cancellation of agreement entered into for the sale of a subsidiary.
The performance and financial position of the subsidiary companies and joint ventures is included in the consolidated financial statement for the financial year under review.
Due to the second wave, the domestic demand and prices of steel and related products witnessed sharp drop in the first quarter of the financial year 2022. National Vaccination drive in the year under review enabled in learning to operate with COVID-19, as vaccination was not just a health response but also a buffer against economic disruptions caused by repeated waves of the pandemic.
The manufacturing operations of the Company are conducted in compliance with the relevant guidelines/ advisory issued by the Government and authorities, for taking necessary measures for the containment of COVID-19, including measures like maintaining social distancing.
The Company has conducted vaccination drive for the employees. This initiative is fueled by our commitment towards ensuring a protected and stronger India.
The Company while assessing the impact of COVID 19 in preparation of the financial Statements, has considered internal and external sources of information, and determined, exercising reasonable estimates and judgement, that the carrying amounts of its assets are recoverable. The impact of COVID 19 may be different from that estimated as at the date of approval of the financial Statements, and the Company will continue to closely monitor the developments.
Scheme of Arrangement
During the year under review, the Board of Directors of the Company on recommendation of the Audit Committee, approved Scheme of Arrangement between the Company ("Transferor Company") and Mivaan Steels Limited ("Transferee Company") and their respective shareholders and creditors with appointed date 31 March 2022 under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 ("the Act") for transfer the Specified Undertaking (defined below), on a going concern basis, by way of a slump sale subject to necessary approvals and terms of the Scheme ("Proposed Transaction").
The "Specified Undertaking" means the business undertaking of the Company pertaining to the manufacturing facilities at Raipur and mining facilities at Kanker and associated coal washery operations at Patherdih and certain other assets and properties.
The manufacturing facilities at Raipur comprises of a sponge iron manufacturing plant with a capacity of 0.3 MTPA, Ferro alloy plant and steel manufacturing plant with a capacity of 0.25 MTPA.
The profile of the products produced at the manufacturing facilities at Raipur pertain to the commodity grade market that caters to the structural and construction sectors with comparatively lower volume of production and serving customers predominantly around its operating area whereas, the focus of the other facility of the Company at Raigarh is on special steel products catering to HT grades, IBR grades, automotive, high manganese grades, cold rolling grades and API grades with comparatively higher volume of production, serving customers in the exports and domestic markets covering Northern, Eastern and parts of Western region of India.
With the transfer of the Specified Undertaking through the Proposed Transaction, the Company will be able to focus on special steel products and explore and develop markets for its special steel products. Accordingly, with a view to inter-alia achieve dedicated management focus on their respective grades of products and customer segments, facilitate strategic opportunities (including fund raising prospects), maximize value, increase efficiencies and enhance administrative control, the Company proposes to transfer the Specified Undertaking to
the Transferee Company which became a wholly owned subsidiary of the Company on 24 February 2022. This is expected to create and enhance stakeholders'' value by unlocking the intrinsic value and growth potential for the respective businesses of the Transferor Company and Transferee Company.
The Scheme was filed with respective Stock Exchanges and The Securities and Exchange Board of India (''SEBI'') for their No Observation Letter during the year under review. The Company proposes to seek approval of creditors and shareholders and file application with Hon''ble National Company Law Tribunal, Mumbai Bench, (''NCLT'') in financial year 2022-23.
3. Material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relates and the date of the Report
There were 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 the report.
4. Dividend and Reserves
In view of inadequacy of profits, the Board of Directors of the Company ("Board") has not recommended any dividend for the year under review and no amount was required to be transferred to the General Reserves.
5. Subsidiaries, Joint Ventures or Associate Companies
As on 31 March 2022, the Company has 3 direct subsidiaries 4 Joint Ventures. During the year under review, the Company acquired 100% equity share capital of Mivaan Steels Limited ("MSL"), a public unlisted company, and MSL has become a wholly owned subsidiary of the Company with effect from 24 February 2022.
The consolidated financial statements presented by the Company and its subsidiaries and joint ventures for the year under review is prepared in compliance with the applicable provisions of the Act, Indian Accounting Standards (Ind-AS) and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations, 2015") which forms part of the Annual Report.
The subsidiaries of the Company had no operations for the financial year ended 31 March 2022 and their performance/contribution to overall performance of the Company is reported in the consolidated financial statement of the Company for the financial year under review. A gist of financial highlights/performance of the
subsidiaries and joint ventures is contained in Form AOC-1 and forms part of this report and annexed as Annexure-1.
The annual financial statements of the subsidiary companies are open for inspection by any shareholder at the Company''s Registered Office and the Company will make available these documents and the related detailed information upon request by any shareholder of the Company or any shareholder of its subsidiaries, joint ventures companies who may be interested in obtaining the same. Also, the standalone financial statements, consolidated financial statements and financial statements of subsidiaries are available on the website of the Company viz www.aionjsw.in.
During the year under review, the entire stake held by Monnet Global Limited (wholly owned subsidiary of the Company) in PT Sarwa Sembada Karya Bumi (''PT Sarwa'') was sold to PT Srinata Mahajati Corpora (''SMC''), a corporation established under laws of Republic of Indonesia, at a net consideration of USD 1.075 million pursuant to binding Sale and Purchase of Shares Agreement executed on 29 March 2022.
6. Share Capital
As on 31 March 2022, the authorized capital of the Company was '' 15,50,00,00,000/- (Rupees one thousand five hundred and fifty crores only) and the paid-up capital stands at '' 9,95,52,75,340/- (Rupees nine hundred and ninety-five crores fifty-two lakhs seventy-five thousand three hundred and forty only) consisting of 46,95,47,534 equity shares of '' 10 (Rupees ten) each and 52,59,80,000 Compulsory Convertible Preference Shares of '' 10 (Rupees ten) each.
There was no change in share capital of the Company during the financial year under review.
7. Debentures
During the financial year under review, the Company has not issued or allotted any Debentures and does not have any outstanding Debentures.
8. Bank Facilities and Credit Rating
During the year under review, CARE Ratings Limited (Formerly known as Credit Analysis S Research Limited) in the month of February 2022 reviewed and reaffirmed the credit ratings of the Company as "A-" Stable for long term bank facilities (term loan and fund based-cash credit) and "A- Stable/A2 " for non-fund based long/short term bank facilities bank guarantees of the Company.
9. Public Deposits
During the year under review, the Company has not accepted any fixed deposits from the public falling under Section 73 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014.
10. Significant and Material Orders passed by the Regulators or Courts or Tribunals
During the year, there were no significant or material orders passed by the Regulators/Courts/Tribunals that could impact the going concern status of the Company and its future operations.
Further, members'' attention is drawn to the statement on contingent liabilities, commitments in the notes forming part of the financial statements.
11. Internal Controls, Audit and Internal Financial Controls
Internal control systems are integral to the Company''s corporate governance. The internal control systems and procedures are designed to assist in the identification and management of risks, the procedure-led verification of all compliances as well as an enhanced control consciousness.
The Board/management are of the opinion that based on the knowledge/information gained by them about affairs of the Company from records of the Company, the Company has effective internal financial control systems and policies and such controls are operating effectively.
The internal control systems include documented policies, checks and balances, guidelines and procedures, that are supplemented by robust internal audit processes and monitored continuously through periodical reviews by management to provide reasonable assurance that all assets are safeguarded; and all transactions entered into by Company are authorized, recorded and reported properly.
Internal Audit plan and execution
The Internal Audit function prepares audit plan which is approved by the Audit Committee. The frequency of the audit is decided by risk ratings of areas/ functions. The audit plan is carried out by the internal audit team and reviewed periodically to include areas that have assumed significant importance in line with the emerging industry trend and the growth of the Company. In addition, the Audit Committee also places reliance on internal customer feedback and other external events for inclusion into the audit plan. Significant observations, if any, of Internal Auditor along with the Action Taken Report are reported to the Audit Committee every quarter.
Internal financial controls
The Company has sound internal controls including internal financial control framework which is commensurate with the size, scale and nature of business of the Company. The framework includes entity-level policies, processes and Standard Operating Procedures (SOP). The Company has SAP ERP system at Raigarh and Dynamics NAV system in Raipur, as a part of strengthening the internal control and internal financial control framework. The Audit
Committee of the Board of Directors, regularly reviews audit plans, significant audit findings, adequacy of internal controls and compliance with Accounting Standards, etc. The Company has also strong internal audit process and the internal auditor reports to the Audit Committee on regular basis with audit findings and the audit plans. The internal audit team has access to all information in the organization and this process is largely facilitated by ERP implementation in the Company.
These Internal controls are reviewed by the Internal Auditor every year. During the financial year under review, the controls were tested and no reportable material weakness in design and effectiveness was observed.
12. Directors and Key Managerial Personnel (KMP)
As on 31 March 2022, the Board of Directors of the Company comprised of 1 Whole-time Director (Executive), 3 Independent Directors and 4 NonExecutive Directors (details of the same are provided in the Corporate Governance Report which forms part of this Annual Report).
During the year under review following changes took place in the Board of Directors:
a) Mrs. Sutapa Banerjee (DIN: 02844650) resigned from the Board of Directors of the Company as the Independent Director with effect from 18 May 2021.
b) The tenure of Mr. Ravichandar Moorthy Dhakshana (Mr. D. Ravichandar) (DIN: 03298700), as Whole-time Director designated as Director (Corporate In-Charge) of the Company ended on 31 May 2021 and accordingly he ceased to hold office of Whole-time director and Key Managerial Personnel (KMP) of the Company with effect from close of business hours of 31 May 2021. The appointment of Mr. D. Ravichandar as the Whole-time Director for the tenure from 31 August 2020 to 31 May 2021 was approved by the Shareholders at the 31st Annual General Meeting held on 28 September 2021. Mr. D. Ravichandar also ceased to hold office as director of the Company with effect from closing of business hours of 31 May 2021.
c) The Board of Directors, upon the recommendation of the Nomination and Remuneration Committee (NRC) at the meeting held on 12 May 2021, appointed Mr. Mohan Babu Thirukkoteeswaran (Mr. T. Mohan Babu) (DIN: 09169018) as the Whole-time Director, for a period of 2 (two) years with effect from 1 June 2021 subject to approval of the shareholders at the 31st Annual General Meeting of the Company.
His appointment for a period of 2 (two) years with effect from 1 June 2021 to 31 May 2023 and remuneration has been approved by the
Shareholders at the 31st Annual General Meeting held on 28 September 2021.
d) The Board of Directors, upon the recommendation of the NRC, at its meeting held on 20 July 2021 approved the appointment of Mr. Krishna Deshika (DIN: 00019307) as an Additional Director (NonExecutive and Independent Director) of the Company with effect from 20 July 2021. His appointment as an Independent Director for a tenure of 5 years with effect from 20 July 2021 to 19 July 2026 was approved by the Shareholders at the 31st Annual General Meeting of the Company held on 28 September 2021.
e) The shareholders of the Company at the 31st Annual General Meeting held on 28 September 2021 approved the appointment (including the terms of appointment) of Mr. Kaushik Subramaniam (DIN: 08190548) as a director of the Company, liable to retire by rotation.
f) Mr. Seshagiri Rao Metlapalli Venkata Satya (DIN: 00029136) resigned from the Board of Directors of the Company as the Non-Executive (Non-Independent) Director with effect from 22 November 2021.
g) The Board of Directors upon the recommendation of the NRC, on 24 December 2021 approved the appointment of Mr. Naresh Kumar Lalwani (DIN: 07587109) as an Additional Director (NonExecutive-Non-Independent) on the Board of Directors of the Company with effect from 24 December 2021 and he is holding office of director upto the date of the ensuing Annual General Meeting.
Retirement by Rotation at ensuing Annual General Meeting
I n accordance with the provision of Section 152 of the Act and Articles of Association of the Company, Mr. Nikhil Gahrotra and Mr. Kaushik Subramanian, Directors, retire by rotation at the forthcoming Annual General Meeting and being eligible have offered themselves for re-appointment.
The Board recommends their re-appointment in the ensuing 32nd Annual General Meeting.
Appointment at ensuing Annual General Meeting
In terms of Section 161 of the Act, Mr. Naresh Kumar Lalwani who is holding the office as director until the date of the ensuing Annual General Meeting and being eligible, offers himself to be appointed as a Director of the Company.
The Board recommends the appointment of Mr. Naresh Lalwani in the category of Non-Executive Director in the ensuing Annual General Meeting and he shall be liable to retire by rotation.
The Company has received a notice under Section 160 of the Act, from member, proposing the candidature of Mr. Naresh Lalwani as Director of the Company. Further, Mr. Naresh Lalwani is not disqualified from being appointed as the Director of the Company by virtue of the provisions of Section 164 of the Act.
The details of profile, experience, other directorships, etc. in respect of Mr. Naresh Lalwani, Mr. Nikhil Gahrotra and Mr. Kaushik Subramaniam who are seeking appointment/ re-appointment as Directors of the Company as required under Regulations 26(4) and 36(3) of the SEBI Listing Regulations, 2015 and Secretarial Standard -2 issued by ICSI, are annexed to the Notice of forthcoming 32nd Annual General Meeting of the Company.
Statement on declaration by Independent Directors
Pursuant to provisions of Section 149 of the Act, Mr. Jyotin Mehta, Mrs. Anuradha Bajpai, and Mr. Krishna Deshika are Independent Directors of the Company. They have submitted a declaration that each of them meet the criteria of independence as provided in Section 149(6) of the Act and Regulation 16(1)(b) 17A, 25 (8) of the SEBI Listing Regulations, 2015. There has been no change in the circumstances affecting their status as Independent Directors during the year. Further, it has been confirmed by them that they are registered with the Independent Directors'' Databank as per the Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019.
Key Managerial Personnel
In terms of Section 203 of the Act, the Key Managerial Personnel of the Company as on 31 March 2022 were: Mr. T Mohan Babu as the Whole-time Director, Mr. J Nagarajan as Chief Financial Officer and Mr. Ajay Kadhao as Company Secretary of the Company.
There were no changes in the Key Managerial Personnel of the Company during the financial year under review other than cessation of Mr. D Ravichandar as the Whole-Time Director and appointment of Mr. T Mohan Babu as the Whole-time Director of the Company.
13. Director''s Responsibility Statement
Pursuant to the requirements under Section 134(3) (c) of the Act, the Board of Directors, to the best of their knowledge and ability, state and confirm that:
(a) I n the preparation of the annual accounts for the financial year ended 31 March 2022, the applicable accounting standards have been followed and a proper explanation has been provided in relation to any material departures;
(b) such accounting policies have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent to give a true and fair view of the state of affairs of the Company at the end of the
financial year ended 31 March 2022 and of the profit of the Company for the year under review;
(c) proper and sufficient care has been taken 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) the annual accounts for the financial year ended 31 March 2022 have been prepared on a going concern basis;
(e) i nternal financial controls were laid down to be followed by the Company and such internal financial controls were adequate and are operating effectively; and
(f) There were proper systems to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively.
14. Annual Evaluation of Performance of Board, its Committees and Directors
Pursuant to applicable provisions of the Act and the SEBI Listing Regulations, 2015, the Board has formulated a framework containing, inter-alia, the criteria for performance evaluation of the entire Board of the Company, its Committees and individual Directors, including Independent Directors ("the Performance Evaluation Policy").
For the financial year under review, the performance of the Board, each Board Member individually, including each of the Independent Directors, as well as the working of Board Committees was subjected to evaluation. The Board did not deviate from the assessment mechanism adopted in the previous year.
Details of the same are given in the report on Corporate Governance annexed hereto.
15. Number of Meetings of the Board of Directors
During the financial year under review, eight (8) Board Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between these meetings was within the period prescribed under the Act and Regulation 17 of the SEBI Listing Regulations, 2015.
16. Committees of the Board
The Company has duly constituted the Committees required under the Act read with applicable Rules made there under and the SEBI Listing Regulations, 2015.
As on 31 March 2022, the Board had following Committees:
a. Audit Committee
b. Nomination and Remuneration Committee
c. Stakeholders'' Relationship Committee
d. Corporate Social Responsibility Committee
e. Business Responsibility Reporting (BRR) and International Trade Practice Committee
f. Risk Management Committee
g. Finance Committee
The details of composition of each Committee, terms of the reference and number of meetings held during the year under review are given in the Corporate Governance Report, annexed to this report.
17. Nomination and Remuneration Policy
The Company''s Nomination and Remuneration Policy is in conformity with the requirements of Section 178(3) of the Act and SEBI Listing Regulations, 2015.
The Nomination and Remuneration Policy, as approved by the Board of Directors, is hosted on the website of the Company viz:-https://www.aionjsw.in/investors/ policies.
The Policy sets out the guiding principles for the NRC for identifying persons who are qualified to become Directors and persons who may be appointed in Senior Management and Key Managerial positions and also to determine the independence of Directors, while considering their appointment as Independent Directors of the Company. The Policy also sets out the guiding principles for the NRC for recommending to the Board the remuneration of the Directors, Key Managerial Personnel and other employees of the Company. There has been no change in the aforesaid policy during the year.
18. Vigil Mechanism Cum Whistle Blower Policy
i n terms of Section 177(9) of the Act read with the SEBI Listing Regulations, 2015, the Company has adopted a Vigil Mechanism Cum Whistle Blower Policy to deal with instances of fraud and mismanagement, if any.
Through this Policy, the Company seeks to provide a mechanism to the whistleblower to disclose any misconduct, malpractice, unethical and improper practice taking place in the Company for appropriate action and reporting, without fear of any kind of discrimination, harassment, victimization or any other unfair treatment or employment practice being adopted against the whistleblower. No person is denied access to the Chairman of the Audit Committee.
The policy is available on the website of the Company viz:-https://www. aionjsw.in/investors/policies.
19. Related Party Transactions
During the year under review, all related party transactions entered into by the Company, were approved by the Audit Committee and were on an
arm''s length basis and in the ordinary course of business. Prior omnibus approval was obtained for related party transactions which were of repetitive nature and entered in the ordinary course of business and on an arm''s length basis. The statement giving details of all Related Party Transactions were placed before the Audit Committee / the Board for review and approval on a quarterly basis.
During the year under review, the Company has entered into material related party transactions with JSW Steel Limited and Bhushan Power and Steel Limited and in terms of Section 134 of the Act, details of the same are stated in Form AOC-2 in Annexure- 2 of this report. The material related party transactions entered by the Company are within the limits and in terms of the approval accorded by the Shareholders at previous Annual General Meeting. All related party transactions are mentioned in the notes to the accounts. The Company has developed a framework through Standard Operating Procedures for the purpose of identification and monitoring of such Related Party Transactions.
The "Policy on Materiality of Related Party Transactions and also on dealing with Related Party Transactions" (''the Policy''), as amended and approved by the Board of Directors has been uploaded on the website of the Company viz: https://www.aionjsw.in/investors/ policies. The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and Related Parties. This Policy specifically deals with the review and approval of Related Party Transactions, keeping in mind the potential or actual conflicts of interest that may arise because of entering into these transactions.
20. Particulars of Loans, Guarantees or Investments
Details of Investments, Loans and Guarantees as covered under the provisions of Section 186 of the Act are given in the notes to the financial statements.
21. Corporate Social Responsibility
In compliance with Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, the Board of Directors of the Company has a Corporate Social Responsibility ("CSR") Committee. The policy on CSR as approved by the Board of Directors is also hosted on the website of the Company viz. https://www. aionjsw.in/investors/policies.
Pursuant to Section 135 of the Companies Act, 2013 read with CSR policy of the Company, it is required to spend two percent of the average net profit of the Company for three immediately preceding financial year. As the average net profit of the Company during previous three financial years is negative, the
Company is not required to spend any amount for the CSR purpose during the year under review.
Annual Report on mandatory CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, have been annexed as Annexure-3 and forms integral part of this Report. During the year, the Company has undertaken some voluntary CSR activities as stated in the Annexure- 3 of this Report.
22. Auditors
a) Statutory Auditor
At the 29th Annual General Meeting ("AGM") of the Company held on 19th July 2019, members of the Company had approved the appointment of M/s. Deloitte Haskins a Sells LLP, Chartered Accountant, Mumbai, (Registration Number 117366W/W-100018) as the statutory auditor for a period of 5 years with effect from the conclusion of the 29th AGM till the conclusion of 34th AGM of the Company.
The Auditors have audited standalone and consolidated financial statements of the Company for the financial year ended 31 March 2022 and no fraud has been reported by the Auditors under Section 143(12) of the Act requiring disclosure in the Board''s Report. The Report does not contain any qualification, reservation or adverse remark or disclaimer requiring explanation or comments from the Board under Section 134(3) of the Act.
b) Secretarial Auditor
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of the Company, at its meeting held on 12 May 2021 had appointed M/s S. Srinivasan a Co., a Company Secretaries firm, to conduct a secretarial audit of the Company for the financial year 2021-22. The Report of the Secretarial Audit carried out for the financial year 2021-22 is annexed herewith as Annexure -4.
The report does not contain any qualification, reservation or adverse remark or disclaimer requiring explanation or comments from the Board under Section 134(3) of the Act.
The Board of Directors of the Company, at its meeting held on 11 May 2022 has re-appointed M/s S. Srinivasan a Co., as Secretarial Auditor, for conducting Secretarial Audit of the Company for financial year 2022-23.
c) Cost Auditor
Pursuant to Section 148 of the Act read with the Companies (Cost Records and Audit)
Amendment Rules, 2014, the Company is required to get its cost accounting records audited by a Cost Auditor and accordingly such accounts and records are made and maintained by the Company.
Accordingly, the Board, at its meeting held on 12 May 2021, on the recommendation of the Audit Committee, had appointed M/s. Shome & Banerjee, Cost Accountants (Firm Reg. No. 00001) to conduct the audit of the cost accounting records of the Company for financial year 2021-22 and had recommended their remuneration to the shareholders which was ratified at the Annual General Meeting held on September 28, 2021.
Subsequent to the recommendation of the Audit committee, the Board has appointed M/s. Shome & Banerjee, Cost Accountants (Firm Reg. No. 00001) as the Cost Auditors of the Company for the Financial Year 2022-23 at its meeting held on 11 May 2022 and their remuneration is sought to be ratified by the shareholders at the forthcoming Annual General Meeting and is included as an agenda item in the Notice convening the 32nd Annual General Meeting of the Company.
The Cost Audit Report of the Company for the financial year ended 31 March 2021 was filed in XBRL mode on 18 August 2021.
23. Compliance with Secretarial Standards
During the financial year under review, the Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India respectively i.e. SS- 1 and SS- 2 relating to "Meetings of Board of Directors" and "General Meetings" as applicable.
The Company has a Risk Management Policy of the Company duly adopted by the Board of Directors. The Policy is tailored to appropriately appraise the state of the Company''s business risks. Management is empowered to identify, assess and leverage business opportunities and manage risks effectively.
The Company recognizes that the emerging and identified risks need to be managed and mitigated to protect its shareholders and other stakeholder''s interest, achieve its business objective and enable sustainable growth.
The Board oversees the Enterprise Risk Management framework to ensure execution of decided strategies with focus on action and monitoring of risks arising out of unintended consequences of decisions or actions related to performance, operations, compliance, incidents, processes and systems, transactions and
the same are managed appropriately. Further, major risks have been identified by the Company and its mitigation process/measures have been formulated in the areas such as business, production, product quality, market, litigation, logistics, operational, financial, human resources, environment and statutory compliance. These process/ measures are reviewed and updated from time to time as required.
The Board on 12 May 2021, had constituted a separate Risk Management Committee comprising of Mrs. Anuradha Bajpai, Mr. Thirukkoteeswaran Mohan Babu, Mr. Nikhil Gahrotra and Mr. J Nagarajan as its Members.
25. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
In accordance with Section 134(3)(m) of the Act read with the Rule 8(3) of the Companies (Accounts) Rules, 2014, as amended, the information on conservation of energy, technology absorption and foreign exchange earnings and outgo are annexed as Annexure - 5 hereto and forms an integral part of this Report.
26. Particulars of Employees and Related Disclosures
Disclosures pertaining to remuneration and other details of the employees as required under Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, are annexed to this report as Annexure -6.
The details of employee information as required under provisions of Section 197 (12) of the Act read with Rules 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is set out in the annexure to this Report. In terms of the provisions of Section 136 (1) of the Act, the Report is being sent to the members excluding the aforesaid annexure and any shareholder interested in obtaining the copy of the same may write to the Company at [email protected] and the said annexure is also 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.
I n accordance with the provisions of the Act and amendment thereto, the Annual Return of the Company is placed on the website of the Company and is accessible at the web-link https://www. aionjsw.in/investors/.
28. Management Discussion & Analysis Report
A detailed analysis of the Company''s performance is discussed in the Management Discussion and
Analysis Report, which forms part of this Annual Report and annexed as Annexure-7.
Certain statements in the ''Management Discussion and Analysis'' section may be forward-looking and are stated as required by applicable laws and regulations. Many factors may affect the actual results, which would be different from what the Directors envisage in terms of the future performance and outlook. Investors are cautioned that this discussion contains forward looking statement that involve risks and uncertainties including, but not limited to, risks inherent in the Company''s growth strategy, dependence on certain businesses, dependence on availability of qualified and trained manpower and other factors discussed. The discussion and analysis should be read in conjunction with the Company''s financial statements and notes on accounts.
29. Business Responsibilty Reporting
The Business Responsibility Report as stipulated under Regulation 34(2)(f) of SEBI Listing Regulations, 2015, describing the initiatives taken by your Company from an environmental, social and governance perspective, forms part of the Annual Report as Annexure-8.
30. Corporate Governance Report
The Company constantly endeavours to follow the corporate governance guidelines and best practice sincerely and disclose the same transparently. The Board is conscious of its inherent responsibility to disclose timely and accurate information on the Company''s operations, performance, material corporate events as well as on the leadership and governance matters relating to the Company. Your Company has complied with the requirements of SEBI Listing Regulations, 2015 regarding corporate governance.
A report on the Corporate Governance practices followed by the Company, together with certificate(s) regarding compliance is given as Annexure-9 to this report.
31. Disclosure under the Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act, 2013
The Company has laid down Anti Sexual Harassment policy on Gender Equality, Gender Protection, Prevention of Sexual Harassment and Redressal System as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, apprenticeship) are covered under this policy. No complaints pertaining to sexual harassment were received or pending to be resolved by the Company in this respect, during financial year 2021-22.
The Board of Directors wish to place on record their gratitude to the authorities, banks, business associates, shareholder''s customers, dealers, agents, and suppliers for their unstinted support, assistance and co-operation and faith reposed in the Company. The Board of Directors would also place on record their deep appreciation to employees at all levels for their hard work, dedication and commitment.
By order of the Board For JSW Ispat Special Products Limited
(Formerly known as Monnet Ispat and Energy Limited)
Jyotin Mehta
Place: Mumbai Chairman
Date: 11 May 2022 DIN: 00033518
Mar 31, 2019
To the Members,
The Board of Directors present the 29th Annual Report of the Company, along with the financial statements for the financial year ended 31st March, 2019.
In accordance with the applicable provisions of the Insolvency and Bankruptcy Code 2016 ("IBC/Code"), the Corporate Insolvency Resolution Process ("CIRP") of Monnet Ispat and Energy Limited ("Company") was initiated by the Financial Creditor(s) of the Company. The Financial Creditor(s) petition to initiate the CIRP was admitted by the National Company Law Tribunal, Mumbai ("NCLT") on 18th July, 2017 ("Insolvency Commencement Date"). Mr. Sumit Binani was appointed as the Interim Resolution Professional ("IRP") to manage the affairs of the Company, and was subsequently confirmed as the Resolution Professional ("RP") by the Committee of Creditors ("CoC").
Hon''ble NCLT vide its order dated 24th July, 2018 approved the Resolution Plan submitted by consortium of JSW Steel Limited ("JSW Steel") and AION Investments Private II Limited ("AION") (AION together with JSW Steel, the "Consortium"). Thereafter a new Board was constituted w.e.f. 31st August, 2018 ("Reconstituted Board" or "Board") and new management was put in place.
1. FINANCIAL SUMMARY
The financial summary and performance highlights of the Company, for the year under review are as follows:
(Rs, in Crore, except per share data)
Sl Particulars No. |
Standalone |
Consolidated |
||
Year Ended 31.03.2019 |
Year Ended 31.03.2018 |
Year Ended 31.03.2019 |
Year Ended 31.03.2018 |
|
1 Income from Operations |
||||
(a) Gross Sales |
1872.35 |
1410.93 |
1872.35 |
1410.93 |
(b) Other Operating Income |
7.06 |
8.16 |
7.06 |
8.16 |
Total income from operations (net) |
1879.41 |
1419.09 |
1879.41 |
1419.09 |
Other Income |
26.83 |
12.14 |
27.00 |
13.14 |
Total income |
1906.24 |
1431.23 |
1906.41 |
1432.23 |
2 Expenses |
||||
(a) Cost of Materials consumed |
1728.32 |
1096.50 |
1728.32 |
1096.50 |
(b) Changes in inventories of finished goods, work-in-progress anc |
(250.32) |
(24.19) |
(250.32) |
(24.19) |
stock-in-trade |
||||
(c) Employee benefits expense |
89.34 |
80.14 |
90.35 |
84.97 |
(d) Finance Costs |
445.27 |
1181.66 |
445.27 |
1193.26 |
(e) Depreciation and amortization expense |
275.60 |
351.61 |
277.51 |
355.02 |
(f) Excise Duty |
- |
35.83 |
- |
35.83 |
(g) Other expenses(Any item exceeding 10% of the total expenses |
311.22 |
170.11 |
311.85 |
186.61 |
relating to continuing operations) |
||||
Total Expenses |
2599.43 |
2891.66 |
2602.98 |
2928.00 |
3 Profit / (Loss) from operations before exceptional |
(693.19) |
(1460.43) |
(696.57) |
(1495.77) |
items and tax (1-2) |
||||
4 Exceptional Items |
2767.92 |
440.53 |
2855.67 |
263.52 |
5 Profit / (Loss) from ordinary activities before tax (3-4) |
(3461.11) |
(1900.96) |
(3552.24) |
(1759.29) |
6 Tax expense: |
||||
(i) Current tax |
- |
- |
- |
- |
(ii) Deferred tax |
- |
- |
- |
- |
7 Loss after tax for the period (5 6) |
(3461.11) |
(1900.96) |
(3552.24) |
(1759.29) |
8 Other Comprehensive Income (after tax) |
||||
A. (i) Items that will not be reclassified to profit or loss |
(33.04) |
(30.84) |
(33.06) |
(30.84) |
(ii) Income tax relating to items that will not be reclassified to |
- |
- |
- |
- |
profit and loss |
||||
B. (i) Items that will be reclassified to profit or loss |
- |
- |
- |
- |
(ii) Income tax relating to items that will be reclassified to |
- |
- |
9.98 |
(0.69) |
profit and loss |
||||
9 Total Comprehensive Income for the period (7 8) comprising |
(3494.15) |
(1931.80) |
(3575.32) |
(1790.82) |
profit/ (loss) and other comprehensive income for the period. |
||||
10 Paid-up equity share capital (Face Value ''10/- per share fully paid-up) |
469.55 |
200.79 |
469.55 |
200.79 |
11 Reserve excluding Revaluation Reserve as per balance sheet of |
982.27 |
(3278.48) |
698.48 |
(3478.05) |
previous accounting year |
||||
12 Earnings Per Share (EPS) (not annualized) |
||||
(a) Basic |
(94.44) |
(94.68) |
(96.92) |
(87.63) |
(b) Diluted |
(94.44) |
(94.68) |
(96.92) |
(87.63) |
Previous year''s figures have been regrouped/rearranged wherever considered necessary.
2. FINANCIAL AND OPERATIONAL PERFORMANCE
The Company has two manufacturing facilities namely, at Raipur and Raigarh, in the state of Chhattisgarh.
During the year under review post acquisition by the Consortium, the integrated steel production including Blast Furnace, Electrical Furnace (Steel making), Ladle Refinery and continuous Casting of Steel, was re-started at the Raigarh plant of the Company, with effect from 8th February, 2019.
Following is the operational and financial performance of the Company for the financial year under review:
Standalone:
The Company''s operational performance in terms of physical production and sales during the year ended on 31st March, 2019, is as under -
Production (MT) -
Particulars |
FY''19 |
Increase / FY''18 (Decrease) ( )/(-) Variance |
|
Sponge Iron Billets Structural Steel/TMT Ferro Alloys Pellets Pig Iron |
722,371 157,430 108,945 28,358 537,920 73,700 |
611,314 18.17% 145,357 8.31% 111,150 (1.98%) 29,004 (2.23%) - - |
|
Sales (MT) - |
|||
Particulars |
FY''19 |
Increase / FY''18 (Decrease) ( )/(-) Variance |
|
Sponge Iron Billets Structural Steel/TMT Ferro Alloys Pellets Pig Iron |
5,80,240 32,442 98,098 25,173 81647 7,761 |
4,58,332 26.60% 32,861 (1.27%) 100,699 (2.58%) 24,896 1.11% 1,877 313.43% |
|
During the year under review, the Company''s revenue from operations was Rs, 1879.41 crores as against Rs, 1419.09 crores in the previous year. The Company''s Profit Before Depreciation Interest and Tax ("PBDIT") was Rs, 27.68 crores in the financial year ended 31st March, 2019 as opposed to PBDIT of Rs, 72.84 crores in the immediate preceding year.
Taking into account deprecation and interest cost, profit before tax (PBT) stood at (Rs, 3461.11) crores as against (Rs, 1900.96) crores in the previous year and total comprehensive income for the year was (Rs, 3494.15) crores against (Rs, 1931.80) crores in the previous financial year.
During the year under review, there were exceptional items aggregating to Rs, 2767 92 crores as against Rs, 440.53 crores in the year ended on 31st March, 2019. Exceptional items for the year ended 31st March 2019 comprise of:
(a) Impairment/write off of property plant and equipment and capital work in progress amounting to Rs, 2,429.75 crores, which has been recognized based on the recoverable value of these assets.
(b) Impairment/write off of investments, inventories, receivables, current and non-current assets aggregating to Rs, 1,484.95 crores (previous year Rs, 440.53 crores) considered not realizable.
(c) Write back of current and non-current liabilities, aggregating to Rs, (1,173.78) crores.
(d) Plant Startup Expenses of Rs, 27.00 crores which comprise of various one-time revenue expenses incurred for startup of various manufacturing facilities at Raigarh plant of the Company which were non-operational for a long period of time.
Consolidated:
During the year under review, the Company''s revenue from operations was Rs, 1879.41 crores as against Rs, 1419.09 crores in the previous year. Further, in the financial year ended 31st March, 2019, profit before tax (PBT) was Rs, (3552.24) crores as against Rs, (1759.29) crores in the previous year and profit after tax (PAT) was Rs, (3552.24) crores against Rs, (1759.29) crores in the previous financial year.
The performance and financial position of the subsidiary companies and joint ventures is included in the consolidated financial statements of the Company.
3. CORPORATE INSOLVENCY RESOLUTION PROCESS & CHANGE OF MANAGEMENT
As stated above the Hon''ble NCLT approved the Resolution Plan submitted by the Consortium with certain modifications ("Resolution Plan"), on 24th July, 2018 ("IBC/NCLT Order").
Upon implementation of the Resolution Plan, the Resolution Applicants i.e. AION Investments Private II Limited ("AION") and JSW Steel Limited ("JSW") (directly and through their affiliates) took control over the management and ownership of the Company. The reconstituted Board reflects the joint control of the Company''s management by JSW and AION as both the joint venture partners have appointed their nominees and Independent Directors.
Post-Acquisition, a new Board was constituted on 31st August, 2018 ("Reconstituted Board" or "Board") and a new management was put in place. In accordance with the provisions of the IBC and the NCLT order, the approved Resolution Plan is binding on the Company and its employees, members, creditors, guarantors and other stakeholders involved.
Members may kindly note that, for the financial year under review, the Directors of the Reconstituted Board ("Directors") were in office from 31st August, 2018 to which this report primarily pertains. During the CIRP which commenced from 18th July, 2017 to 24th July, 2018, the RP was entrusted with the management of the affairs of the Company.
Prior to the Insolvency Commencement Date, the erstwhile Board of Directors had the oversight on the management of the affairs of the Company. The Reconstituted Board is submitting this report in compliance with the provisions of the Companies Act, 2013, the rules and regulations framed thereunder ("Act") and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015 ("Listing Regulations").
Steering Committee of lenders, pursuant to approval of Resolution Plan by Hon''ble NCLT, Mumbai Bench, appointed an Interim Board on 30th July, 2018 to implement the approved resolution plan. The Interim Board consisted of Mr. Sumit Binani, non-executive Director, Mr. Jyotin Mehta and Mrs. Anuradha Ambar Bajpai as Independent Directors of the Company. Mr. Sumit Binani ceased to be Director of the Interim Board of the Company w.e.f. 31st August, 2018 on conclusion of Corporate Insolvency Resolution Proceedings
On 31st August, 2018, the Board of Directors of the Company was re-constituted and as on date the Board of Directors of the Company consists of the following Directors:
Sl. No. |
Name of Director |
Designation |
1 |
Mrs Anuradha Ambar Bajpai |
Non-Executive Independent Director |
2 |
Mr. Jyotin Mehta |
Non-Executive Independent Director |
3 |
Mr. Kalpesh Pankaj Kikani |
Non-Executive Director |
4 |
Mr. Nikhil Omprakash Gahrotre |
Non-Executive Director |
5 |
Mr. Ravichandar Moorthy Dhakshane |
Whole-Time Director |
6 |
Mr. Sanjay Kumar |
Non-Executive Director |
7 |
Mr. Seshagiri Rao MVS |
Non-Executive Director |
8 |
Mrs. Sutapa Banerjee |
Non-Executive Independent Director |
Salient features of the Resolution Plan approved and implemented during the financial year under review are as follows:
Pursuant to the CIRP under the Insolvency and Bankruptcy Code, 2016 initiated on 18th July 2017, the National Company Law Tribunal (NCLT) on 24th July 2018 (Order date) approved (with modifications), the Resolution Plan (the Plan) submitted by the consortium of JSW Steel Limited and AION Investments Private II Limited, which, inter alia, resulted in the following:
(a) Extinguishment of 5,07,32,841 equity shares of Rs, 10 each and 1,75,00,000 preferences shares of Rs, 100 each held by the erstwhile promoters.
(b) Reduction in the face value of the balance 36,52,33,620 equity shares (including the equity shares issued under (c) and (d) below) held by the non- promoter equity shareholders to Rs, 3.30 per share and their consolidation into 12,05,27,534 equity shares of Rs, 10 each
(c) Settlement of debts of financial creditors amounting to Rs, 10,247.86 crores, partly by issue of 20,00,56,892 equity shares of Rs, 10 each, partly by cash payment of Rs, 2,457.00 crores, and partly by the effective purchase of the remaining debt, (on deemed conversion into Optionally Convertible Preference shares), for a sum of Rs, 199.85 crores by a Company of the consortium, Milloret Steel Limited (MSL).
(d) Settlement of corporate guarantees issued to financial creditors amounting to Rs, 767.05 crores, partly by issue of 1,51,41,327 equity shares of Rs, 10 each and payment of Rs, 20.07 crores.
(e) Settlement of operational creditors, (other than employees and workmen), for a sum of Rs, 25 crores payable by the Company within one year from the NCLT Order date and extinguishment of other current and non-current liabilities standing as on the commencement of CIRP
(f) Extinguishment of all contingent liabilities, commitment and other claims and obligations including all taxes and other government dues standing as on the effective date (i.e. 31st August, 2018).
(g) Merger of MSL into the Company, resulting in the extinguishment of the deemed Optionally Convertible Preference shares, contemporaneously with (c) above. The shareholders of MSL were issued 34,90,20,000 equity shares of Rs, 10 each and 52,59,80,000 Compulsorily Convertible preference shares of Rs, 10 each.
Fractional entitlements of equity shares of the Company resulting from such consolidation of the equity shares have been consolidated into equity shares having a face value of Rs, 10 each and were held by a Director of the Company as a trustee ("Trustee") on behalf of the equity shareholders of the Company entitled to such fractional entitlements for the purpose of sale in the open market. The sale proceeds realized by the Trustee from such sale (less the costs incurred by the Trustee to carry out such sale) have been distributed to the original equity shareholders entitled to such fractional entitlements in the same proportion as their respective fractional entitlements.
Further, in terms of NCLT Order, every retail shareholder of the Company holding 3 (three) or less equity shares of the Company as on the date of NCLT order, i.e., 24th July, 2018, has been allotted one equity share.
4. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATES AND THE DATE OF THE REPORT
There were 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 the report.
5. DIVIDEND AND RESERVES
In view of the losses incurred by the Company, the Board of Directors of the Company has not recommended any dividend for the financial year under review. As the Company has incurred losses during the year, no amount has been transferred to Reserves.
6. SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES
As on 31st March, 2019, the Company has six subsidiary Companies (including 2 step-down subsidiaries), four joint ventures and one associate Company. During the financial year under review, the name of Monnet Enterprise PTE Ltd., Singapore, a non-operative and non-material subsidiary of the Company was voluntarily struck off from the register of Accounting and Corporate Regulatory, Singapore with effect from 4th December 2018. There has been no change in the nature of business during the year under review. The consolidated financial statements presented by the Company include financial information of its subsidiaries, joint ventures and associate companies and prepared in compliance with applicable Ind AS. The consolidated financial statement does not include financials of Monnet Power Company Limited (MPCL), an associate of the Company, since MPCL is under CIRP as per IBC and the Company has written off its investment in MPCL during the year under review.
A gist of financial highlights/performance of these Companies is contained in Form AOC-1 and forms part of this report and annexed as Annexure-1. The separate audited/unaudited financial statements of these subsidiaries, as case may be, are available on the website of the Company, www.aionisw.in.
The annual financial statements of the subsidiary companies are open for inspection by any shareholder at the Company''s Registered Office situated at Monnet Marg, Mandir Hasaud, Raipur, Chhattisgarh -492101 and the Company will make available these documents and the related detailed information upon request by any shareholder of the Company or any shareholder of its subsidiaries, joint ventures and associate companies who may be interested in obtaining the same. Also, the standalone financial statements, consolidated financial statements and financial statements of subsidiaries are available on the website of the Company www.aionisw.in
Further, the consolidated financial statements of the Company and its subsidiaries, joint ventures and associate company for the year under review is prepared in compliance with the applicable provisions of the Companies Act, 2013, Indian Accounting Standards (Ind AS) and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended ("SEBI Listing Regulations, 2015") which forms part of the Annual Report.
7. SHARE CAPITAL
Authorized Share Capital of the Company as on 1st April, 2018 was '' 3,86,00,00,000/- (Rupees three hundred eighty-six crore only), divided into 21,10,00,000 (Twenty-one crores ten lacs) equity shares of '' 10/- (Rupees ten) each and 1,75,00,000 (One crore seventy-five lacs) Preference Shares of '' 100/-(Rupees one hundred) each.
Pursuant to the implementation of the Resolution Plan sanctioned by the NCLT, authorized share capital of the Company has been increased to Rs, 15,50,00,00,000 (Rupees one thousand five hundred and fifty crore only) comprising of 82.50.00.000 (Eighty two crore fifty lakh only) Equity Shares of Rs, 10/- (Rupees ten) each and 55,00,00,000 (Fifty five crore only) Preference Shares of Rs, 10/- (Rupees ten) each and 1.75.00.000 (One crore seventy five lakh) Preference Shares of Rs, 100/- (Rupees hundred) each.
Further, post implementation of the Resolution Plan the paid up capital stands at 46,95,47,534 equity shares of Rs, 10 (Rupees ten) each and 52,59,80,000 Compulsory Convertible Preference Shares of Rs, 10 (Rupees ten) each.
During the financial year under review, the members of the Company at the 28th Annual General meeting held on 27th December, 2018 approved the reclassification of authorized capital into Rs,15,50,00,00,000 (Rupees one thousand five hundred and fifty crores only) comprising 1.00.00.00.000 (Rupees one hundred crore only) Equity Shares of Rs, 10/- (Rupees ten) each and 55,00,00,000 (Fifty-five crore only) Preference Shares of Rs, 10/- (Rupees ten).
As on 31st March 2019, post implementation of the resolution plan the authorized capital of the Company stands Rs, 15,50,00,00,000/- (Rupees one thousand five hundred and fifty crores only) and the paid up capital stands at Rs, 9,95,52,75,340/- (Rupees nine hundred and ninety-five crores fifty-two lakhs seventy five thousand three hundred and forty only) consisting of 46,95,47,534 equity shares of Rs, 10 (Rupees ten) each and 52,59,80,000 Compulsory Convertible Preference Shares of Rs,10 (Rupees ten) each.
8. NON-CONVERTIBLE DEBENTURES
As on 01st April, 2018, the Company had 9200 Secured Redeemable Non-Convertible Debentures (NCDs) of Rs, 10,00,000/- each aggregating to Rs, 920.00 crores.
As on 31st March 2019, the Company does not have any outstanding NCD. Pursuant to the implementation of the Resolution Plan as approved by the Hon''ble NCLT, debts of eligible financial creditors were also paid in the manner provided in the approved Resolution Plan. The said NCDs have been extinguished from the records of National Securities Depository Limited and Central Depository Services (India) Limited, respectively and the Company is in process of delisting the same from BSE Limited.
9. CREDIT RATING
CARE Ratings Limited (Formerly known as Credit Analysis & Research Limited) has assigned the credit rating of "A-" Stable for long term bank facilities (term loan & fund based-cash credit) and "A- Stable/A2 " for non-fund based long/short term bank facilities bank guarantees of the Company. The agency has given a stable outlook for the facilities of the Company.
10. PUBLIC DEPOSITS
The Company has not accepted or renewed any public deposits during the period under review. It has not accepted any deposits from the public within the meaning of the provisions of Section 73 of the Companies Act, 2013 and Rules made thereunder. Therefore, it is not required to furnish information in respect of outstanding deposits under non-banking, non-financial Companies (Reserve Bank) Directions, 1966 and Companies (Accounts) Rules, 2014.
11. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
During the year, there are no significant or material orders passed by the Regulators/ Courts/ Tribunals that could impact the going concern status of the Company and its future operations except on 24th July, 2018, the NCLT vide its order approved the Resolution Plan.
Further, members'' attention is drawn to the statement on contingent liabilities, commitments in the notes forming part of the financial statements.
The nominated authority, Ministry of Coal Head, vide their letter dated 30th December, 2017 ("The Letter") issued for termination of coal mines development and production agreement and vesting order in respect of Gare Palma IV/7 coal mine, and the termination is effective on completion of notice period of 15 business days as stated in the letter i.e. on 19th January, 2018. The Hon''ble National Company Law Appellate Tribunal ("NCLAT") vide its order dated 08th February, 2018 has restrained the Nominated Authority Ministry of Coal, Government of India from allotting the mine in question, in favour of any person, without the permission of the Hon''ble NCLAT. The appeal before Hon''ble NCLAT against termination of vesting Order and CMDPA was dismissed vide Order dated 30th November, 2018 and keeping in view the commercial feasibility of the mine, it has been decided to be handed over to the Government.
12. INTERNAL CONTROLS, AUDIT AND INTERNAL FINANCIAL CONTROLS
Internal control systems are integral to the Company''s corporate governance. The internal control systems and procedures are designed to assist in the identification and management of risks, the procedure-led verification of all compliances as well as an enhanced control consciousness.
The reconstituted Board / management are of the opi nion that based on the knowledge/ information gained by them about affairs of the Company in a limited period of time from records of the Company, the Company has effective internal financial control systems and policies and such controls are operating effectively. The reconstituted management is taking steps for further strengthening of internal financial controls.
The internal control systems include documented policies, checks and balances, guidelines and procedures, that are supplemented by robust internal audit processes and monitored continuously through periodical reviews by management to provide reasonable assurance that all assets are safeguarded; and all transactions entered into by Company are authorized, recorded and reported properly.
Audit plan and execution
The Internal Audit function prepares audit plan which is approved by the Audit Committee. The frequency of the audit is decided by risk ratings of areas/functions. The audit plan is carried out by the internal team and reviewed periodically to include areas that have assumed significant importance in line with the emerging industry trend and the aggressive growth of the Company. In addition, the Audit Committee also places reliance on internal customer feedback and other external events for inclusion into the audit plan. Significant observations, if any, of internal auditor are reported to the Audit Committee every quarter.
Internal financial controls
Post-acquisition, the Reconstituted Board/Management has reviewed the internal controls framework of the Company with an objective to have a robust internal control framework commensurate with the size, scale and nature of business of the Company. The reconstituted management has initiated steps to implement the robust internal control framework. This framework includes entity-level policies, processes and Standard Operating Procedures (SOP).
13. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)
Directors
Pursuant to approval of Resolution Plan of the Company vide order dated 24th July, 2018 of the Hon''ble NCLT, Mumbai, erstwhile Directors of the Company Mr. Sandeep Kumar Jajodia, Mr. Jagdamba Prasad Lath and Mr. Kunal Sharma were deemed to have resigned.
During the financial year under review, Mr. Sumit Binani who was appointed as the Director of Interim Board resigned as the Resolution Professional on 29th July, 2019 and as the Director of Interim Board on 31st August, 2018
On 31st August 2018, the composition of Board of Directors of the Company was re-constituted and as on date of this report, as stated also in item No. 3 of this report, the Board of Directors of the Company consists 1 Whole-time Director (Executive), 3 Independent Directors and 4 Non- Executive Directors of the Company, the details of which are given in the Corporate Governance Report which forms part of this Annual Report
At the 28th Annual General meeting held on 27th December 2018 members of the Company have considered and approved the respective appointments of said Directors.
Mr. Ravichandar Moorthy Dhakshana, Whole-time Director and Mr. Seshagiri Rao MVS, Director, whose office of directorship are liable to retire by rotation at the ensuing 29th Annual General Meeting and being eligible and having offered themselves for reappointment. The Board of Directors has proposed to the shareholders for their respective reappointment as Directors liable to retire by rotation, pursuant to section 152 of the Companies Act, 2013.
Key Managerial Personnel
During the year under review, the following changes took place in Key Managerial Personnel of the Company;
a) Post implementation of the Resolution Plan, Mr. Sandeep Kumar Jajodia ceased as the Chairman & Managing Director and Mr. Ravichandar Moorthy Dhakshana was appointed as the Whole Time Director of the Company with effect from 31st August 2018
b) Relinquishment of position by Mr. Sanjay Garodia, as the Chief Financial Officer of the Company and Mr. Hardeep Singh, as the Company Secretary and Compliance Officer of the Company, w.e.f. 21st January, 2019.
c) Appointment of Mr. J Nagarajan as Chief Financial Officer of the Company with effect from 21st January 2019.
d) Appointment of Mr. Ajay Kadhao as the Company Secretary and Compliance Officer of the Company with effect from 21st January 2019.
14. DIRECTORS âRESPONSIBILITY STATEMENT
Members may kindly note that, the Directors of the Reconstituted Board were not in office for the part of the period to which this report primarily pertains. During the CIRP Process (i.e. between 18th July, 2017 to 24th July, 2018), RP and prior to the Insolvency Commencement date, the erstwhile Board of Directors were entrusted with and responsible for the management of the affairs of the Company.
As pointed out above, the reconstituted Board of Directors have been in office only since 31st August, 2018. The reconstituted Board is submitting this report in compliance with the Act and Listing Regulations and the Directors, as on date, are not to be considered responsible for the fiduciary duties discharged with respect to the oversight on financial and operational health of the Company and performance of the management for the period prior to the acquisition.
Accordingly, as required under Section 134 (5) of the Act, the reconstituted Board of Directors, based on the knowledge/ information gained by them about the actions of the erstwhile Directors of the Company (i.e the Directors of the Company prior to the Acquisition) and the affairs of the Company in a limited period of time from the records of the Company, state that:
(a) in the preparation of the annual accounts for the financial year ended 31st March, 2019, the applicable accounting standards have been followed and a proper explanation has been provided in relation to any material departures;
(b) such accounting policies have been applied consistently and made judgments and estimates that are reasonable and prudent so as to give a reasonably true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March, 2019 and of the profit or loss of the Company for that period;
(c) the Reconstituted Board 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) the annual accounts for the financial year ended 31st March, 2019 have been prepared on a going concern basis.
(e) the Reconstituted Board had laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and are operating effectively; and
(f) the Reconstituted Board had devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.
15. ANNUAL EVALUATION OF PERORMANCE OF BOARD, ITS COMMITTEES AND DIRECTORS;
Pursuant to applicable provisions of the Companies Act, 2013 and the SEBI Listing Regulations 2015, the Board has formulated a framework containing, inter-alia, the criteria for performance evaluation of the entire Board of the Company, its Committees and individual Directors, including Independent Directors ("the Performance Evaluation Policy"). During the year under review, the said policy was amended by the Board on the recommendation of the Nomination and Remuneration Committee in compliance with the SEBI Listing Regulations 2015.
For the financial year under review, the performance evaluation of all the Directors was carried out by the Nomination and Remuneration Committee. The performance evaluation of the Chairman and the Non-Independent Directors was carried out by the Independent Directors. The Board carried out an annual performance evaluation of its own performance, the performance of the Independent Directors individually as well as the evaluation of the working of the Committees of the Board.
Details of the same are given in the report on Corporate Governance annexed hereto.
16. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS
After commencement of CIRP, Mr. Sumit Binani was appointed as Interim Resolution Professional ("IRP"), who was later on confirmed as Resolution Professional ("RP") by the Committee of Creditors. As per Section 17 of the Insolvency and Bankruptcy Code 2016, upon appointment of the IRP the powers of the Board of Directors stands suspended and, thereafter, such powers are exercised by the IRP/ RP appointed for the Company.
During the financial year, after the Reconstitution of Board of Directors on 31st August, 2018, three (3) Board Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between these Meetings was within the period prescribed under the Companies Act, 2013 and Regulations 17 of the Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulation, 2015.
17. COMMITTEES OF THE BOARD
Your Company has duly constituted the Committees as required under the Companies Act, 2013 read with applicable Rules made thereunder and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
During the year under review, pursuant to the Resolution Plan approved by the Hon''ble NCLT, the Composition of Board of Directors of the Company and their Committees were re-constituted.
At present following are the Committees of the Board;
a. Audit Committee
b. Nomination and Remuneration Committee
c. Stakeholders Relationship Committee
d. Corporate Social Responsibility Committee
e. Finance Committee
f. International Trade Practices and Corporate Governance Committee
The details of composition of each Committee, terms of the reference and number of meetings held during the year under review are given in the Corporate Governance Report, annexed to this report.
18. STATEMENT ON DECLARATION BY INDEPENDENT DIRECTORS
The Company has received the necessary declaration from each Independent Directors who are part of reconstituted Board confirming that he/she meets the criteria of Independence as laid out in Section 149(6) of the Companies Act, 2013 read with the Schedules, rules made thereunder and Regulation 25 of SEBI Listing Regulations, 2015.
19. NOMINATION AND REMUNERATION POLICY
During the financial year under review, pursuant to the SEBI Listing Regulations 2015 read with SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations,
2018, the Board of Directors, on the recommendation of the Nomination and Remuneration Committee amended the Nomination and Remuneration policy of the Company.
The details of this policy are explained in the Corporate Governance Report which forms part of this Annual Report.
The Nomiation and Remuneration Policy, as approved by the Board of Directors, is also hosted on the website of the Company viz:- https://www.aionjsw.in/investors/policies.
20. VIGIL MECHANISM CUM WHISTLE BLOWER POLICY
The Company has a vigil mechanism named as Vigil Mechanism Cum Whistle Blower Policy, to deal with instances of fraud and mismanagement, if any. Details of the same are given in the Corporate Governance Report. The policy is available on the website of the Company viz: - https:// www.aionjsw.in/investors/policies.
21. RELATED PARTY TRANSACTIONS
All Related Party Transactions (RPT) that were entered into by the Company during the financial year under review were on an arm''s length basis and in the ordinary course of business and hence disclosure in Form AOC-2 in terms of Section 134 of the Companies Act, 2013 is not required and does not form part of this report.
The policy on "Policy on Materiality of Related Party Transactions and also on dealing with Related Party Transactions" (''the Policy''), as approved and amended by the Board of Directors has been uploaded on the website of the Company viz : https://www.aionjsw.in/investors/policies. The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and Related Parties. This Policy specifically deals with the review and approval of RPT, keeping in mind the potential or actual conflicts of interest that may arise because of entering into these transactions. All RPT are placed before the Audit Committee for review and approval.
Prior omnibus approvals are obtained for related party transactions that are of repetitive nature and / or entered in the ordinary course of business and are at arm''s length, in compliance with applicable provisions.
22. CORPORATE SOCIAL RESPONSIBILITY
In compliance with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, the Board of the Company has formed Corporate Social Responsibility ("CSR") Committee. The policy on CSR as approved by the Board of Directors is also hosted on the website of the Company i.e. https://www.aionjsw.in/investors/policies.
Pursuant to Section 135 of the Companies Act, 2013 read with CSR policy of the Company, it is required to spend two percent of the average net profit of the Company for three immediately preceding financial year. As the average net profit of the Company during previous three financial years is negative, the Company is not required to spend any amount for the CSR purpose during the year under review.
Annual Report on mandatory CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, have been annexed as Annexure-2 and forms integral part of this Report.
23. AUDITORS
a) Statutory Auditor
Members of the Company at the Annual General Meeting ("AGM") held on 28th September, 2017, approved the appointment of M/s. APAS & Co., Chartered Accountants (FRN No. 000340C) as the statutory auditor from the conclusion of the 27th AGM till the conclusion of the 32nd AGM
The Auditors have audited standalone and consolidated financial statements of the Company for the financial year ended 31st March 2019 and no fraud has been reported by the Auditors under Section 143(12) of the Companies Act, 2013 requiring disclosure in the Board''s Report. The Report does not contain any qualification, reservation or adverse remark or disclaimer requiring explanation or comments from the Board under Section 134(3) of the Companies Act, 2013.
Existing statutory auditors APAS & Co. have tendered their resignation to the Company, on account of their other assignments due to which they will not be able to devote sufficient time for audit of the Company. They have informed the Company that their resignation will be effective from the conclusion of the ensuing 29th AGM of the Company.
The existing statutory auditor also noted that pursuant to the provisions of the Resolution Plan submitted by the Consortium, as approved by the Hon''ble NCLT, vide its order dated 24th July 2018, the Resolution Applicants have the right to seek appointment of the statutory auditors of the Company and the existing statutory auditors has conveyed their no objection to the same. Accordingly, M/s APAS & Co., will continue as the statutory auditors of the Company till conclusion of the ensuing 29th AGM.
The Board of Directors at its meeting held on 17th May 2019 has taken on record the said resignation letter tendered by M/s APAS & Co as the statutory auditors.
In view of resignation of the statutory auditors, the Board of Directors at the said meeting held on 17th May 2019, on recommendation of the Audit Committee, subject to approval of the shareholders, approved and recommended to the shareholders, the proposal of appointment of M/s. Deloitte Haskins & Sells LLP, Chartered Accountant, Mumbai, (Registration Number 117366W/W-100018) as the statutory auditors, for a period of 5 years with effect from the conclusion of the ensuing 29th AGM till the conclusion of 34th AGM of the Company.
In terms of provisions of section 139 of the Companies Act, 2013, M/s. Deloitte Haskins & Sells LLP, Chartered Accountant, Mumbai, have furnished a certificate that their appointment, if made, will be within the limits prescribed under the said section of the Act. As required under Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, they have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.
b) Secretarial Auditor
Post-implementation of Resolution Plan, pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board, at its meeting held on 15th October, 2018 has appointed M/s S. Srinivasan & Co., a Company Secretaries firm to conduct a secretarial audit of the Company for the financial year 2018-19. The Report of the Secretarial Audit carried out for the financial year 2018-19 is annexed herewith as Annexure -3.
The report does not contain any qualification, reservation or adverse remark or disclaimer requiring explanation or comments from the Board under Section 134(3) of the Companies Act, 2013. During the period under review, the Company has complied with the applicable Secretarial Standards notified by the Institute of Company Secretaries of India.
The Board, at its meeting held on 17th May 2019 has re-appointed M/s S. Srinivasan & Co., a Company Secretaries Firm of Practicing Company Secretaries, as Secretarial Auditor, for conducting Secretarial Audit of the Company for financial year 2019-20.
c) Cost Auditor
Pursuant to Section 148(2) of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, your Company is required to get its cost accounting records audited by a Cost Auditor.
Accordingly, the Board, at its meeting held on 17th May, 2019, on the recommendation of the Audit Committee, has appointed M/s. Shome & Banerjee, Cost Accountants (Firm Reg. No. 00001) to conduct the audit of the cost accounting records of the Company for Financial Year 2019-20 on a remuneration of '' 3,00,000/- plus taxes as applicable and reimbursement of actual travel and out-of-pocket expenses. The remuneration is subject to the ratification of the Members in terms of Section 148 read with Rule 14 of the Companies (Audit and Auditors) Rules, 2014 and is accordingly placed for your ratification.
The due date for filing the Cost Audit Report of the Company for the Financial Year ended 31st March 2018 was 31st December 2018 and the Cost Audit Report was filed in XBRL mode on 14th November, 2018.
24. COMPLIANCE WITH THE PROVISIONS OF SECRETARIAL STANDARDS
The Company has in place proper systems to ensure compliance with the provisions of the applicable secretarial standards issued by the Institute of Company Secretaries of India and such systems are adequate and operating effectively. During the financial under review the Company was in compliance with Secretarial Standards i.e. SS- 1 and SS- 2 relating to "Meetings of Board of Directors" and "General Meetings" respectively.
25. RISK MANAGEMENT
The reconstituted Board/ management has reviewed the risk management framework of the Company and has adopted revised Risk Management framework of the Company.
The Company recognizes that the emerging & identified risks need to be managed and mitigated to -
- protect its shareholders and other stakeholder''s interest,
- achieve its business objective and
- enable sustainable growth.
The Board oversees the Enterprise Risk Management framework to ensure -
1) execution of decided strategies with focus on action;
2) monitoring risks arising out of unintended consequences of decisions or actions related to performance, operations, compliance, incidents, processes and systems, transactions and the same are managed appropriately.
26. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
In accordance with Section 134(3)(m) of the Companies Act, 2013, read with the Rule 8(3) of the Companies (Accounts) Rules, 2014, as amended, the information on conservation of energy, technology absorption and foreign exchange earnings and outgo are annexed as Annexure - 4 hereto and forms an integral part of this Report.
27. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
Disclosures pertaining to remuneration and other details of the employees as required under Section 197(12) of the Companies Act 2013, read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, are annexed to this report as Annexure -5 and 6.
28. EXTRACT OF ANNUAL RETURN
In accordance with the provisions of the Companies Act, 2013 and amendment thereto, the extract of the annual return in Form No. MGT - 9 is annexed as Annexure - 7 and same is hosted on the website of the Company viz https:// www.aionisw.in/investors/mgt9.
29. MANAGEMENT DISCUSSION & ANALYSIS REPORT
A detailed analysis of the Company''s performance is discussed in the Management Discussion and Analysis Report, which forms part of this Annual Report and annexed as Annexure-8.
Certain Statements in the ''Management Discussion and Analysis'' section may be forward-looking and are stated as required by applicable laws and regulations. Many factors may affect the actual results, which would be different from what the Directors envisage in terms of the future performance and outlook. Investors are cautioned that this discussion contains forward looking statement that involve risks and uncertainties including, but not limited to, risks inherent in the Company''s growth strategy, dependence on certain businesses, dependence on availability of qualified and trained manpower and other factors discussed. The discussion and analysis should be read in conjunction with the Company''s financial statements and notes on accounts.
30. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186
Details of Investments, Loans and Guarantees as covered under the provisions of Section 186 of the Companies Act, 2013 are given in the note nos. 5, 6 and 34 respectively, to the financial statements.
31. CORPORATE GOVERNANCE REPORT
The Company constantly endeavours to follow the corporate governance guidelines and best practices sincerely and disclose the same transparently. The Board is conscious of its inherent to disclose timely and accurate information on the Company''s operations, performance, material corporate events as well as on the leadership and governance matters relating to the Company. Your Company has complied with the requirements of Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015 regarding corporate governance.
A report on the Corporate Governance practices followed by the Company, together with a certificate from the Practicing Company Secretary regarding compliance are given as an Annexure-9 to this report.
32. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013.
The Company has laid down Anti Sexual Harassment policy on Gender Equality, Gender Protection, Prevention of Sexual Harassment and Redressal System as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, apprenticeship) are covered under this policy. No complaints pertaining to sexual harassment were received or pending to be resolved by the Company in this respect, during financial year 2018-19.
33. OTHER DISCLOSURES / REPORTING
Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions pertaining to these items during the year under review:
1. Issue of equity shares with differential rights as to dividend, voting or otherwise.
2. Issue of shares (including sweat equity shares) to employees of the Company under any scheme or ESOPs.
4. Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries.
34. ACKNOWLEDGEMENT
The Directors wish to place on record their gratitude to the Authorities, Banks, Business Associates, and Shareholders for their unstinted support, assistance and co-operation. The Directors place on record their deep appreciation to employees at all levels for their hard work, dedication and commitment.
By order of the Board
For Monnet Ispat and Energy Limited
Jyotin Mehta
Place: Mumbai Chairmar
Date: 17th May, 2019 DIN: 00033518
Mar 31, 2018
To the Members,
The Reconstituted Board of Directors present the Twenty Eighth Annual Report of the Company, along with the financial statements for the financial year ended 31st March, 2018.
1. FINANCIAL SUMMARY
The financial summary and performance highlights of the Company, for the year under review are as follows:
(Rs. in Crores)
Standalone |
Consolidated |
||||
S. No. |
Particulars |
Year Ended |
Year Ended |
Year Ended |
Year Ended |
31.03.2018 |
31.03.2017 |
31.03.2018 |
31.03.2017 |
||
Audited |
Audited |
Audited |
Audited |
||
1 |
Income from Operations (a) Net Sales/ Income from operations |
1410.93 |
1372.80 |
1410.93 |
1375.08 |
(b) Other Operating Income |
8.16 |
2.28 |
8.16 |
0.00 |
|
2 |
Total income from operations (net) |
1419.09 |
1375.08 |
1419.09 |
1375.08 |
3 |
Other Income |
12.14 |
33.54 |
13.14 |
37.29 |
4 |
Total income (2 3) |
1431.23 |
1408.62 |
1432.23 |
1412.37 |
5 |
Expenses (a) Cost of Materials consumed |
1144.79 |
943.43 |
1144.79 |
943.28 |
(b) Purchase of stock-in-trade |
- |
- |
- |
- |
|
(c) Changes in inventories of finished g oods, |
(24.19) |
130.47 |
(24.19) |
130.47 |
|
work-in-progress and stock-in-trade (d) Employee benefits expense |
94.07 |
101.55 |
98.89 |
108.76 |
|
(e) Finance Costs |
1181.66 |
1110.45 |
1193. 26 |
1133.83 |
|
(f) Depreciation and amortization expense |
351.61 |
356.36 |
355.02 |
359.66 |
|
(g) Excise Duty |
35.83 |
137.05 |
35.83 |
137.05 |
|
(h) Other expenses |
107.89 |
14 8.21 |
124.40 |
463.60 |
|
Total Expenses |
2891.66 |
2927.52 |
2928.00 |
3276.65 |
|
6. |
Profit / (Loss) from operations before |
(1460.43) |
(1518.90) |
(1495.77) |
(1864.28) |
7 |
exceptional items and tax (4-5) Exceptional Items |
440.53 |
209.90 |
263 .52 |
262.98 |
8 |
Profit / (Loss) from ordinary activities before |
(1900.96) |
(1728.80) |
(1759.29) |
(2127.26) |
Oâ S |
extraordinary item and tax (6 7) Extraordinary Items Profit / (Loss) from ordinary activities before tax |
(1900.96) |
(1728.80) |
(1759.29) |
(2127.26) |
11 |
(8 ±9) Tax expense: (i) Current tax |
5.06 |
5.06 |
||
(ii) Deferred tax |
- |
- |
- |
- |
12 |
Net Profit / (Loss) from continuing operations (10 |
(1900.96) |
(1733.86) |
(1759.29) |
(2132.32) |
13H |
11) Profit/ (loss) from discontinued operations |
- |
- |
- |
- |
14 |
Tax expense of discontinued operations |
- |
- |
- |
- |
15 |
Profit/ (loss) from discontinued operations (after |
- |
- |
- |
- |
16 |
tax)(13-14) Profit/ (loss) for the period (12 15) |
(1900.96) |
(1733.86) |
(1759.29) |
(2132.32) |
17 |
Other Comprehensive Income (after tax) A. (i) Items that will not be reclassified to |
(30.84) |
(4.09) |
(30.84) |
(3.67) |
profit or loss (ii) Income tax relating to items that will |
|||||
not be reclassified to profit and loss B. (i) Items that will be reclassified to profit or |
(0.69) |
||||
loss (ii) Income tax relating to items that will be |
|||||
18 |
reclassified to profit and loss Total Comprehensive Income for the period |
(1931.80) |
(1737.95) |
(1790.82) |
(2135.99) |
19 |
(16 17) comprising profit/ (loss) and other comprehensive income for the period. Paid-up equity share capital |
200.79 |
200.79 |
200.79 |
200.79 |
20 |
(Face Value Rs.10/- per Share fully paid-up) Reserve excluding Revaluation Reserve as per |
(3278.48) |
(1346.68) |
(3277.25) |
(1601.67) |
21 |
balance sheet of previous accounting year Earnings Per Share (EPS) (being same before and after extraordinary items) of Rs. 10/- each (not Annualized) (for continuing operations) (a) Basic |
(94.68) |
(86.39) |
(87.63) |
(106.39) |
(b) Diluted |
(94.68) |
(86.39) |
(87.63) |
(106.39) |
|
22 |
Earnings per share (for discontinued operations) (a) Basic |
||||
(b) Diluted |
- |
- |
- |
- |
|
23 |
Earnings per share (for discontinued &continuing operations) (a) Basic |
(94.68) |
(86.39) |
(87.63) |
(106.39) |
(b) Diluted |
(94.68) |
(86.39) |
(87.63) |
(106.39) |
Previous yearâs figures have been regrouped/ rearranged wherever considered necessary.
2. FINANCIAL AND OPERATIONAL PERFORMANCE
The Financial Statements for the financial year (âFYâ or âthe Yearâ) under review was approved by the Resolution Professional (âRPâ) pursuant to the powers vested in RP under CIRP process as defined later.
In so far as the business operations are concerned, the Company has two facilities namely, one at Raipur and the other at Raigarh. Raipur was running DRI Plant as also other facilities including Captive Power Plant and Ferro Alloys. However, the companyâs bigger facility at Raigarh which houses an integrated steel plant, was operating DRI Plant only, due to lack of working capital resources.
STANDALONE
The companyâs operational performance in terms of physical production and sales during the year ended on March 31, 2018, is as under -
Production Data are a ; under -
Particulars |
FYâ18 |
FYâ17 |
Increase / (Decrease) |
MT |
MT |
/(-) Variance [MT] |
|
Sponge Iron |
6,11,3 14 |
5,93,226 |
18,088 |
Billets |
2,56,508 |
2,85,420 |
(28,9 12) |
Structural Steel |
1,06,1 76 |
1,62,086 |
(55,9 10) |
Ferro Alloys |
29,004 |
26,171 |
2,833 |
Pig Iron |
Nil |
69,169 |
(69,169) |
Sales Data are as under-
Particulars |
FYâ18 |
FYâ17 |
Increase / (Decrease) |
MT |
MT |
/(-) Variance [MT] |
|
Sponge Iron |
4,58,332 |
4,93,1 06 |
(34,774) |
Billets |
32,861 |
44,9 88 |
(12,126) |
Structural Steel |
1,00,699 |
89,6 91 |
11,00 9 |
Ferro Alloys |
24,896 |
19,5 17 |
5,379 |
Pig Iron |
1,877 |
68,279 |
(66,402) |
During the year under review, the Companyâs revenue from operations was Rs.1,419.09 crores as against Rs 1375.08 crores in the previous year. The Companyâs Earning Before Interest Depreciation and Tax (âEBIDTAâ) was Rs.72.84 crores in the Financial Year ended 31st March, 2018 as opposed to EBITDA loss of Rs. 52.09 crores in immediately preceeding year due to better market conditions as also efficient operational performance.
As the EBITDA earned during the year was not sufficient to cover depreciation and interest costs, profit before tax (PBT) was negative and stood at Rs. (-)1900.96 crores as against Rs. (-)1728.80 crores in the previous year and profit after tax (PAT) was Rs. (-)1900.96 crores against Rs. (-)1733.86 crores in the previous financial year.
During the year under review, there were exceptional items aggregating to Rs.(-) 440.53 crores as against Rs.(-) 209.90 crores in the year ended on March 31, 2017. The exceptional items include -
1. Rs.47.62 crores of certain non-recoverable advances written off;
2. Rs. 19.33 crores of inventory write-down and write-off based on physical verification of inventory and technical evaluation of inventory in non-operational divisions of the Company;
3. Rs. 196.57 crores towards impairment of investments in Monnet Power Company Ltd. (MPCL) as MPCL has been admitted to the Corporate Insolvency Resolution Process under the provisions of the Insolvency and Bankruptcy Code 2016;
4. Rs. 177.01 crores towards loss incurred due to appropriation of shares of Odisha Sponge Iron & Steel Limited pledged with the financial creditors of the Company.
CONSOLIDATED
During the year under review, the Companyâs revenue from operations was Rs. 1,419.09 crores as against Rs. 1375.08 crores in the previous year. Further, in the financial year ended 31stMarch, 2018, profit before tax (PBT) was negative and stood at Rs.(-)1759.29 crores as against Rs.(-)2127.26 crores in the previous year and profit after tax (PAT) was Rs.(-)1759.29 crores against Rs.(-)2132.32 crores in the previous financial year.
Further, there has been no change in the nature of business during the year under review.
3. MATERIAL CHANGES AND COMMITMENTS. IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT CORPORATE INSOLVENCY RESOLUTION PLAN & CHANGE OF MANAGEMENT
During the year under review, in accordance with the applicable provisions of the Insolvency and Bankruptcy Code 2016 (âIBCâ), the Corporate Insolvency Resolution Process (âCIRPâ or âCIRP Processâ) of Monnet Ispat& Energy Limited (âCompanyâ) was initiated by the Financial Creditors of the Company. The Financial Creditors petition to initiate the CIRP Process was admitted by the National Company Law Tribunal (âNCLTâ), Mumbai Bench on July 18, 2017 (âInsolvency Commencement Dateâ). Mr. Sumit Binani was appointed as the Interim Resolution Professional (âIRPâ) to manage the affairs of the Company. Subsequently, Mr. Sumit Binani was confirmed as the Resolution Professional (âRPâ) by the Committee of Creditors (âCoCâ). On appointment of the IRP/RP, the powers of the Board of Directors of the Company were suspended and were exercised by the IRP/RP.
The RP invited expressions of interest and submission of a resolution plan in accordance with the provisions of the IBC. The CoC approved the resolution plan submitted by the Consortium of AION Investment Private II Limited and JSW Steel Limited. The RP submitted the CoC approved resolution plan to the NCLT on April 12, 2018 for its approval and the NCLT approved the resolution plan submitted by the Consortium with certain modifications (âApproved Resolution Planâ), on July 24, 2018 (âNCLT Orderâ).
Upon implementation of the Resolution Plan, the Resolution Applicants i.e. Consortium of AION Investments Private II Limited (âAIONâ) and JSW Steel Limited (âJSWâ)(directly and through their affiliates) took control over the management and ownership of the Company. The reconstituted Board reflects the joint control of the companyâs management by AION and JSW Steel as both the joint venture partners have appointed their nominees apart from the appointment of Independent Directors.
Post-Acquisition, a new Board was constituted in the current financial year i.e. on August 31, 2018 (âReconstituted Boardâ or âBoardâ) and a new management was put in place. In accordance with the provisions of the IBC and the NCLT order, the approved resolution plan is binding on the Company and its employees, members, creditors, guarantors and other stakeholders involved.
Members may kindly note that, the Directors of the Reconstituted Board (âDirectorsâ) were not in office for the period to which this report primarily pertains. During the CIRP Process (i.e. between July 18, 2017 to July 24, 2018), the RP was entrusted with the management of the affairs of the Company. Prior to the Insolvency Commencement Date, the erstwhile Board of Directors had the oversight on the management of the affairs of the Company. The Reconstituted Board is submitting this report in compliance with the provisions of the Companies Act, 2013, the rules and regulations framed thereunder (âActâ) and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015 (âSEBI Listing Regulationsâ).
IBC is a new legislation in India and the Approved Resolution Plan of the Company is one of the few such resolution plans approved under the IBC. Members are requested to read this report in light of the fact that the Reconstituted Board and the new management is currently implementing the resolution plan.
Steering Committee of lenders, pursuant to approval of Resolution Plan by Honâble NCLT, Mumbai Bench, appointed an Interim Board on 30th July, 2018 to implement the approved resolution plan. The Interim Board consisted of Mr. Sumit Binani, non-executive Director, Mr. Jyotin Kantilal Mehta and Mrs. Anuradha Ambar Bajpai as Independent Directors of the Company. Mr. Sumit Binani ceased to be director of the Interim Board of the Company w.e.f. 31st August, 2018 on conclusion of Corporate Insolvency Resolution Proceedings.
On 31st August, 2018, the composition of Board of Directors of the Company was re-constituted and as on date the Board of Directors of the Company consists of the following Directors:
Sl. No |
Name of Director |
Designation |
1 |
Mrs. Anuradha Ambar Bajpai |
Non-Executive Independent Director |
2 |
Mr. Jyotin Kantilal Mehta |
Non-Executive Independent Director |
3 |
Mr. Kalpesh Pankaj Kikani |
Non-Executive Director |
4 |
Mr. Nikhil Omprakash Gahrotra |
Non-Executive Director |
5 |
Mr. Ravichandar Moorthy Dhakshana |
Whole-time Director |
6 |
Mr. Sanjay Kumar |
Non-Executive Director |
7 |
Mr. Seshagiri Rao MVS |
Non-Executive Director |
8 |
Mrs. Sutapa Banerjee |
Non-Executive Independent Director |
Salient features of the Resolution Plan approved and implemented during the current financial year (2018-19 ) are as follows:
Pursuant to the corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016 initiated on 18 July 2017, the NCLT on 24 July 2018 (Order date) approved (with modifications), the Resolution Plan (the Plan) submitted by the consortium of AION Investments Private II Limited and JSW Steel Limited, which, inter alia, resulted in the following :
(a) Extinguishment of 5,07,32,841 equity shares of Rs. 10 each and 1,75,00,000 preference shares of Rs. 100 each held by the erstwhile promoters.
(b) Reduction in the face value of the balance 36,52,33,620 equity shares (including the equity shares issued under (c) and (d) below) held by the non- promoter equity shareholders to Rs. 3.30 per share and their consolidation into 12,05,27,534 equity shares of Rs. 10 each.
( c) Settlement of debts of financial creditors amounting to Rs. 10,247.86 crores, partly by issue of 20,00,56,892 equity shares of Rs. 10 each, partly by cash payment of Rs. 2,457.00 crores, and partly by the effective purchase of the remaining debt, (on deemed conversion into Optionally Convertible Preference shares), for a sum of Rs. 199.85 crores by a company of the Consortium, namely Milloret Steel Limited (âMSLâ).
(d) Settlement of corporate guarantees issued to financial creditors amounting to Rs 767.05 crores, partly by issue of 1,51,41,327 equity shares of Rs. 10 each and cash payment of Rs. 20.07 crores.
(e) Settlement of operational creditors, (other than employees and workmen), amounting to Rs. 114.81 crores for a sum of Rs. 25 crores payable by the Company within one year from the NCLT Order date.
(f) Extinguishment of other current and non-current liabilities amounting to Rs. 128.36 crores standing as on the NCLT Order date.
(g) Extinguishment of all contingent liabilities, commitments and other claims and obligations including all taxes and other government dues standing as on the effective date (i.e. 31 August 2018).
(h) Merger of MSL into the Company, resulting in the extinguishment of the deemed Optionally Convertible Preference Shares, contemporaneously with (c) above. The shareholders of MSL were issued 34,90,20,000 equity shares of Rs. 10 each and 52,59,80,000 Compulsorily Convertible Preference Shares of Rs. 10 each. The compulsorily convertible preference shares issued to the shareholders of Milloret Steel Limited pursuant to the merger have a term of 20 (twenty) years and can be converted by the holders into an equivalent numbers of equity shares of the company at any time during their term.
Fractional entitlements of equity shares of the Company resulting from such consolidation of the equity shares has been consolidated into equity shares having a face value of INR 10 each and has been held by a director of the Company as a trustee (âTrusteeâ) on behalf of the equity shareholders of the Company entitled to such fractional entitlements for the purpose of sale in the open market. The sale proceeds realized by the Trustee from such sale (less the costs incurred by the Trustee to carry out such sale) shall be distributed to the original equity shareholders entitled to such fractional entitlements in the same proportion as their respective fractional entitlements. Further, in terms of NCLT Order, every retail shareholder of the Company holding 3 (three) or less equity shares of the Company as on the date of NCLT order, i.e., July 24, 2018, has been allotted one Equity Shares.
4. SHARE CAPITAL
Authorised Share Capital of the Company as on 31stMarch, 2018 was Rs. 386,00,00,000/- (Rupees Three Hundred Eighty Six Crores Only), divided into 21.10.00.000 (Twenty One Crores Ten Lacs) equity shares of Rs. 10/- (Rupees Ten) each and 1,75,00,000 (One Crore Seventy Five Lacs) Preference Shares of Rs. 100/-(Rupees One Hundred) each.
Pursuant to the implementation of the Resolution Plan sanctioned by the NCLT, Authorized Share Capital of the Company has since been increased to Rs. 1550.00.00.000 (Rupees One thousand five hundred and fifty crore only) comprising 82,50,00,000 (Eighty Two Crore Fifty lakh only) Equity Shares of Rs. 10/-(Rupees Ten) each and 55,00,00,000 (Fifty Five Crore only) Preference Shares of Rs. 10/- (Rupees Ten) each and 175,00,000 (One Crore Seventy five Lakh) Preference Shares of Rs 100/- (Rupees Hundred) each.
Further, post implementation of the resolution plan the paid up capital stands at 46,95,47,534 equity shares of Rs. 10 (Rupees Ten) each and 52,59,80,000 Compulsory Convertible Preference Shares of Rs. 10 (Rupees Ten) each.
Considering the business plans and fund requirements of the Company, it is proposed to reclassify the Authorised Share Capital of the Company from the existing Authorised capital to Rs. 1550,00,00,000 (Rupees One thousand five hundred and fifty crore only) comprising 100,00,00,000 (One Hundred Crore only) Equity Shares of Rs. 10 (Rupees Ten) each and 55.00.00.000 (Fifty Five Crore) Preference Shares of Rs. 10/- (Rupees Ten) each.
The Company has sought the approval of members of the Company in respect of the aforesaid reclassification in ensuing Annual General Meeting.
5. CREDIT RATING
The Company was undergoing the CIRP under the provisions of the IBC. The Insolvency commencement date was July 18, 2017. During the said process, no credit rating was carried out for the FY 2017-18. Post implementation of the resolution plan, the Company is currently in the process of obtaining a credit rating.
6. NON-CONVERTIBLE DEBENTURES
As on 31stMarch, 2018, the Company had 9200 Secured Redeemable Non-Convertible Debentures (NCDs) of Rs. 10,00,000/- each aggregating to Rs. 920 crores, the details of which are given in Note No 16(b) of the Standalone Financial Statement.
As on the date of report, the Company does not have any outstanding debentures.
Pursuant to the implementation of the Resolution Plan sanctioned by the NCLT, debts of eligible financial creditors were also paid in the manner provided in the Approved Resolution Plan.
7. DIVIDEND AND RESERVES
The RP, in view of the losses incurred by the Company has not recommended any Dividend for the year under review. As the Company has incurred losses during the year, no amount has been transferred to Reserves.
8. PUBLIC DEPOSITS
The Company has not accepted or renewed any fixed deposits during the period under review. It has not accepted any deposits from the public within the meaning of the provisions of Section 73 of the Companies Act, 2013 and Rules made thereunder.
9. SUBSIDIARIES. JOINT VENTURES OR ASSOCIATE COMPANIES
As on 31stMarch, 2018, the Company has seven subsidiary Companies (including 2 step-down subsidiaries), four joint ventures and an associate Company. The consolidated financial statements presented by the Company include financial information of its subsidiaries, joint ventures and associate companies and prepared in compliance with applicable Ind AS.
Further, during the year under review, Monnet Power Company Limited, ceased to be a subsidiary of the Company, however it continues to be an associate of the Company. Further, during the financial year under review, Odisha Sponge Iron and Steel Limited ceased to be an associate of the Company.
A gist of financial performance of these companies is contained in form AOC-1 and forms part of this report and annexed as Annexure 1. The separate unaudited financial statements of these subsidiaries are available on the website of the Company.
The annual accounts of the subsidiary companies are open for inspection by any Shareholder at the Companyâs Registered Office situated at Monnet Marg, Mandir Hasaud, Raipur, Chhattisgarh -492101 and the Company will make available these documents and the related detailed information upon request by any Shareholder of the Company or any Shareholder of its subsidiaries, joint ventures and associate companies who may be interested in obtaining the same. Also, the standalone financial statements, consolidated financial statements and financial statements of subsidiaries are available on the website of the Company www.aionjsw.in
Further, the consolidated financial statements of the Company and all its subsidiaries, joint ventures and associate company for the year under review is prepared in compliance with the applicable provisions of the Companies Act, 2013, Ind AS and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âSEBI Listing Regulation, 2015â) which forms part of the Annual Report.
10. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
With the commencement of CIRP, no significant and material order was passed by any regulator or court or tribunal impacting the going concern status and its operations in future. However, Members attention is drawn to the statement of contingent liabilities, commitments in the note forming part of financial statement.
The Resolution Plan approved by Honâble NCLT provides for extinguishment of the pending litigation by and against the Company.
The Nominated Authority, Ministry of Coal Head, vide their letter dated 30th December, 2017 (âThe Letterâ) issued for termination of coal mines development and production agreement and vesting order in respect of Gare Palma IV/7 coal mine, and the termination is effective on completion of notice period of 15 business days as stated in the letter i.e. on 19th January, 2018. The Honâble National Company Law Appellate Tribunal (âNCLATâ) vide its order dated 08th February, 2018 has restrained the Nominated Authority Ministry of Coal, Government of India from allotting the mine in question, in favour of any person, without the permission of the Honâble NCLAT. As on date of this Report the matter is sub-judice and the mine is in possession of the Company.
11. INTERNAL FINANCIAL CONTROLS
The Reconstituted Board/ Management believes that based on the knowledge/ information gained by them about affairs of the company in a limited period of time from records of the company, the Company has effective internal financial control systems and policies and such controls are operating effectively. The internal control systems include documented policies, checks and balances, guidelines and procedures that are supplemented by robust internal audit processes and monitored continuously through periodical reviews by management to provide reasonable assurance that all assets of the company are safeguarded; and all transactions entered into by company are authorized, recorded and reported properly. Post acquisition, the Reconstituted Board/ Management is in the process reviewing the internal controls framework of the company with an objective to have a robust internal control framework commensurate with the size, scale and nature of business of the company.
12. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)
With effect from the Insolvency Commencement Date, Mr. Sumit Binani was appointed as the Interim Resolution Professional (âIRPâ) to manage the affairs of the Company. Subsequently, Mr. Sumit Binani was confirmed as the Resolution Professional (âRPâ) by the Committee of Creditors (âCoCâ). On appointment of the IRP/RP, the powers of the Board of Directors of the Company were suspended and were exercised by the IRP/RP.
Resignations During the year
During the year under review IDBI Bank Ltd. Withdrew its Nominee Director Mr. Shantanu Prasad and accordingly Mr. Shantanu Prasad ceased to be a Director w.e.f. 05.08.2017. The Independent Directors of the erstwhile Board Ms. Ankita Wadhawan and Mr. Suman Jyoti Khaitan ceased to be Director w.e.f. 29.12.2017 and 06.02.2018 respectively.
Appointments
Upon approval of the Resolution Plan by the Honâble NCLT Mumbai, the then existing Board of Directors of the Company was deemed to have resigned and as provided in the approved Resolution Plan, a new Interim Board had been constituted for the purpose of implementation of the Resolution Plan. Subsequently, on the effective date of the Plan the Interim Board has been reconstituted and the present composition of the Board of Directors consists of:
Sl. No |
Name of Director |
Designation |
1 |
Mrs. Anuradha Ambar Bajpai |
Non-Executive Independent Director |
2 |
Mr. Jyotin Kantilal Mehta |
Non-Executive Independent Director |
3 |
Mr. Kalpesh Pankaj Kikani |
Non-Executive Director |
4 |
Mr. Nikhil Omprakash Gahrotra |
Non-Executive Director |
5 |
Mr. Ravichandar Moorthy Dhakshana |
Whole-time Director |
6 |
Mr. Sanjay Kumar |
Non-Executive Director |
7 |
Mr. Seshagiri Rao MVS |
Non-Executive Director |
8 |
Mrs. Sutapa Banerjee |
Non-Executive Independent Director |
All the Directors have been appointed as Additional Directors and shall hold office until the date of forthcoming Annual General Meeting. The Company has received notices under Section 160 of the Companies Act, 2013 from shareholders signifying intention to propose their candidature as Directors of the Company.
The Board recommends their appointment at the forthcoming Annual General Meeting.
The Brief Resume/Profile of each Director recommended by the Board for appointment is attached with the Notice for the ensuing Annual General Meeting.
Key Managerial Personnel
During the year under review, in terms of the provisions of Section 2(51) and 203 of the Companies Act, 2013, the Key Managerial Personnel (KMP) of the Company were as under: -
1. Mr. Sandeep Kumar Jajodia - Chairman & Managing Director
2. Mr. Sanjay Kumar Garodia- Chief Financial Officer
3. Mr. Hardeep Singh - Company Secretary
Post implementation of the resolution plan, the following are the Key Managerial Personnel, appointed by the Board of Directors of the Company:
1. Mr. Ravichandar Moorthy Dhakshana- Whole Time Director
2. Mr. Sanjay Kumar Garodia - Chief Financial Officer
3. Mr. Hardeep Singh - Company Secretary
13. DIRECTORSâ RESPONSIBILITY STATEMENT
Members may kindly note that, the Directors of the Reconstituted Board were not in office for the period to which this report primarily pertains. During the CIRP Process (i.e. between July 18, 2017 to July 24, 2018), RP and prior to the Insolvency Commencement Date, the erstwhile Board of Directors were entrusted with and responsible for the management of the affairs of the Company.
The Reconstituted Board is submitting this report in compliance with the Act and Listing Regulations and the Directors, as on date, are not to be considered responsible for the fiduciary duties discharged with respect to the oversight on financial and operational health of the Company and performance of the management for the period prior to the acquisition.
As pointed out above, the Reconstituted Board of Directors have been in office only since August 31, 2018. Consequently, the Reconstituted Board has only a limited overview of the effectiveness of the internal financial and other controls of the Company since then.
Accordingly, as required under Section 134 (5) of the Act, the Reconstituted Board of Directors, based on the knowledge/ information gained by them about the actions of the erstwhile directors of the Company (i.e. the directors of the Company prior to the Acquisition) and the affairs of the Company in a limited period of time from the records of the Company, state that:
(a) in the preparation of the annual accounts for the financial year ended March 31, 2018, the applicable accounting standards have been followed and a proper explanation has been provided in relation to any material departures;
(b) Such accounting policies have been applied consistently and made judgments and estimates
that are reasonable and prudent so as to give a reasonably true and fair view of the state of affairs of the Company at the end of the financial year ended March 31, 2018 and of the profit or loss of the Company for that period;
(c) the erstwhile directors of the Company (i.e. the directors of the Company prior to the Acquisition) 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) The annual accounts for the financial year ended March 31, 2018 have been prepared on a going concern basis;
(e) the erstwhile directors of the Company (i.e. the directors of the Company prior to the Acquisition) had laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and are operating effectively; and
(f) the erstwhile directors of the Company (i.e. the directors of the Company prior to the Acquisition) had devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.
14. BOARD PERFORMANCE EVALUATION
Pursuant to applicable provisions of the Companies Act, 2013 and the SEBI Listing Regulations, the Board has formulated a framework containing, inter-alia, the criteria for performance evaluation of the entire Board of the Company, its Committees and individual Directors, including Independent Directors.
Schedule IV to the Companies Act, 2013 also provides for the performance evaluation of Independent Directors by the entire Board of Directors, excluding the Directors being evaluated.
Since post appointment of Interim/Resolution Professional, there was no meeting of Directors, hence annual performance evaluation of the Board and its committees has not been carried out.
15. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS
During the year, till 18th July, 2017, i.e. commencement of Corporate Insolvency Resolution Process (âCI RPâ), only 2(Two) Board Meetings were duly convened and held, the details of which are given in the Corporate Governance Report which forms part of this Annual Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 and the SEBI Listing Regulations.
After commencement of CIRP, Mr. Sumit Binani was appointed as Interim Resolution Professional (âIRPâ), who was later on confirmed as Resolution Professional (âR Pâ) by the Committee of Creditors. As per Section 17 of the Insolvency & Bankruptcy Code 2016, upon appointment of the IRP, the powers of the Board of Directors stands suspended and, thereafter, such powers are exercised by the IRP/ RP appointed for the Company.
16. COMMITTEES OF THE BOARD
Pursuant to the Resolution Plan approved by the Honâble NCLT, the Composition of Board of Directors of the Company and their committees were re - constituted.
AUDIT COMMITTEE
Only two meetings of the Audit Committee prior to commencement of CIRP were held during the year.
Post implementation of the resolution plan, the Audit Committee has been re-constituted, in accordance with the provisions of Companies Act, 2013 & SEBI Listing Regulations, with effect from 31st August, 2018, as detailed below:
1. Mr. Jyotin Kantilal Mehta, Non-Executive Independent Director - Chairman
2. Mr. Nikhil Omprakash Gahrotra, Non-Executive Director - Member
3. Mrs. Anuradha Ambar Bajpai, Non-Executive Independent Director - Member
The composition, terms of the reference and number of meetings of the Audit Committee during the year is covered in the Corporate Governance Report.
NOMINATION & REMUNERATION COMMITTEE:
Post implementation of the resolution plan, the Nomination and Remuneration Committee was reconstituted in accordance with Section 178 of the Act & SEBI Listing Regulations, w.e.f August 31, 2018, as under:-
1. Mrs. Anuradha Ambar Bajpai, Non-Executive Independent Director - Chairperson
2. Nikhil Omprakash Gahrotra, Non-Executive Director- Member
3. Mr. Jyotin Kantilal Mehta, Non-Executive Independent Director - Member
The composition, terms of the reference and number of meetings of the Nomination and Remuneration Committee during the year is covered in the Corporate Governance Report.
STAKEHOLDERSâ RELATIONSHIP COMMITTEE:
Post implementation of the resolution plan, the Stakeholderâs Relationship Committee was reconstituted in accordance with Section 178 of the Act & SEBI Listing Regulations, w.e.f August 31, 2018, as under:-
1. Mrs. Anuradha Ambar Bajpai, Non Executive Independent Director - Chairperson
2. Mr. Nikhil Omprakash Gahrotra, Non-executive Director - Member
3. Mr. Jyotin Kantilal Mehta, Independent Directors -Member
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE:
Post implementation of the resolution plan, the Corporate Social Responsibility Committee was reconstituted in accordance with Section 135 of the Act & SEBI Listing Regulations, w.e.f August 31, 2018, as under:-
1. Mr. Nikhil Omprakash Gahrotra, Non Executive Director - Chairman
2. Mrs. Sutapa Banerjee, Independent Director -Member
3. Mr. Ravichandra Moorthy Dhakshana, Whole-Time Director - Member
The composition, terms of the reference and details on meetings of the Corporate Social Responsibility Committee during the year is covered in the Corporate Governance Report.
FINANCE COMMITTEE
Post implementation of the resolution plan, the Finance Committee was re-constituted w.e.f August 31, 2018 as under:-
1. Mr. Ravichandra Moorthy Dhakshana - Member
2. Mr. Seshagiri Rao MVS- Member
3. Mr. Kalpesh Pankaj Kikani- Member
INTERNATIONAL TRADE PRACTICES AND CORPORATE GOVERNANCE COMMITTEE
Post implementation of the resolution plan, the International Trade Practices and Corporate Governance Committee has been re-constituted w.e.f August 31, 2018 as under:-
1. Mrs. Anuradha Ambar Bajpai- Chairperson
2. Mr. Ravichandra Moorthy Dhakshana- Member
3. Mr. Nikhil Omprakash Gahrotra - Member
The details of the Committees along with their composition, number of meetings held during the year under review, terms of reference and attendance of members at the meetings are provided in the Corporate Governance Report which forms part of this Annual Report. Further, during the year under review, the Board has accepted all the recommendations of the Audit Committee.
17. STATEMENT ON DECLARATION BY INDEPENDENT DIRECTORS
Post implementation of Approved Resolution Plan, the Company has received the necessary declaration from each Independent Director who are part of reconstituted Board confirming that he/she meets the criteria of Independence as laid out in Section 149(6) of the Companies Act, 2013 read with the Schedules, rules made thereunder and Regulation 25 of SEBI Listing Regulations, 2015.
18. NOMINATION AND REMUNERATION POLICY
Pursuant to applicable provisions of Companies Act, 2013 & SEBI Listing Regulations, 2015, the erstwhile Board of Directors has framed a policy which lays down a framework in relation to remuneration of Directors, Key Managerial Personnel and Senior Management of the Company. This policy also lays down criteria for selection and appointment of Board Members. The details of this policy are explained in the Corporate Governance Report which forms part of this Annual Report.
The Nomination and Remuneration Policy, as approved by the erstwhile Board of Directors, has also been uploaded on the website of the Company viz:-https://www.aionjsw.in/documents/default.aspx?f=in vestor-relations/nomination-remuneration--board-diversity-policy-46.pdf
The reconstituted Board is in process of reviewing the policy and would carry out necessary changes as may be required in due course of time.
19. VIGIL MECHANISM Cum WHISTLE BLOWER POLICY
The Company has a vigil mechanism named Vigil Mechanism Cum Whistle Blower Policy, framed by erstwhile Board of the Company, to deal with instances of fraud and mismanagement, if any. Details of the same are given in the Corporate Governance Report.
The same has also been disclosed on the website of the Company viz : -
https://www.aionjsw.in/documents/default.aspx?f=investor-relations/vigil-mechanism-cum-whistle-blower-policy-50.pdf
The reconstituted Board is in process of reviewing the policy and would carry out necessary changes as may be required in due course of time.
20. RELATED PARTY TRANSACTIONS
There were no material related party transactions nor any related party transactions which are not on arms length basis between the Company and related parties during the year under review and hence disclosure in Form AOC-2 in terms of Section 134 of the Companies Act, 2013 is not required and does not form part of this report. The necessary disclosures for related party transactions as required by the Ind AS has been made in the notes to the accompanying Financial Statements. The secretarial auditor has made certain observations relating to related party transactions in their Secretarial Audit report. These observations pertain to period prior to commencement of CIRP process. Pursuant to the Acquisition and the IBC Order dated July 24, 2018 passed by the NCLT, there has been a change in the Board and the management of the Company. Given that the observations pertain to the prior period, the Board does not have any additional comments on the said observations.
The policy on Related Party Transactions as approved by the Board of Directors has been uploaded on the website of the Company viz https://www.aionjsw.in /documents/default.aspx?f=investor-relations/ material-related-party-policy-49.pdf
The reconstituted Board is currently in a process of reviewing the policy and carrying out necessary changes as may be required in due course of time.
21. CORPORATE SOCIAL RESPONSIBILITY
In compliance with Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, the erstwhile Board of the Company has formed Corporate Social Responsibility (âCSRâ) Committee. Details of CSR Committee along with their composition, number of meetings, terms of reference and attendance of members at the meetings are provided in the Corporate Governance Report. The policy on CSR as approved by the erstwhile Board of Directors is also uploaded on the website of the Company i.e. www.aionjsw.in.
Pursuant to Section 135 of the Companies Act, 2013 read with CSR policy of the Company, it is required to spend two percent of the average net profit of the Company for three immediately preceding financial years. As the average net profit of the Company during previous three financial years is negative, the company is not required to spend any amount for the CSR purpose during the year under review.
Annual Report on CSR activities as required under the Companies (Corporate Social Responsibility Policy)Rules, 2014, as amended, have been annexed as Annexure -2 and forms integral part of this Report.
The reconstituted Board is in process of reviewing the policy and would carry out necessary changes as may be required in due course of time.
22. AUDITORS
a) Statutory Auditor
Members of the Company at the Annual General Meeting (âAGMâ) held on September 28, 2017, approved the appointment of M/s. APAS & Co., Chartered Accountants (FRN No. 000340C) as the statutory auditor from the conclusion of the 27thAGM till the conclusion of the 32ndAGM.
The Statutory Auditors have in their report drawn attention to Note no 47 and 48 and certain matters relating to investments made in Monnet Power Company Limited of the Standalone and Consolidated Financial Statements of the Company. The notes on financial statements referred to in the Auditors Report are self-explanatory and do not call for any further comments.
Pursuant to the acquisition and the NCLT Order dated July 24, 2018 passed by the NCLT, there has been a change in the Board and the management of the Company. Given that the emphasis of matter pertains to the prior period, the reconstituted Board does not have any additional comments on the said matter. The Board is however working towards analyzing the financial and operational affairs of the Company and will take steps to address the relevant issues, if any.
b) Secretarial Auditor
Section 204 of the Act inter-alia requires every listed company to annex with its Boardâs report, a secretarial audit report given by a Company Secretary in practice, in the prescribed form. The erstwhile Board had appointed M/s Sanjay Grover & Associates, practicing Company Secretaries, as secretarial auditor to conduct a secretarial audit of the Company for the financial year 2017-18. The secretarial auditor has made certain observations in their report on certain non compliances. Pursuant to the NCLT Order dated July 24, 2018, there has been a change in the Board and the management of the Company. Given that the observations pertain to the prior period, the Board does not have any additional comments on the said observations and in the process of addressing these observations . The composition of Reconstituted Board is in accordance with applicable law and comprises of women directors and sufficient number of Independent Directors as required under the Act and SEBI Listing Regulations.
The Secretarial Audit report for financial year ended 31st March, 2018 is annexed to this report (Annexure -3). Post-implementation of resolution plan, the Board, at its meeting held on October 15, 2018 has appointed M/s S. Srinivasan & Co., a Company Secretaries Firm to conduct a secretarial audit of the Company for the financial year 2018-19.
c) Cost Auditor
In terms of Section 148 of the Act, the Company is required to maintain cost records and have the audit of its cost records conducted by a cost accountant. Cost records are made and maintained by the Company as required under Section 148(1) of the Act. The Board of Directors at its meeting held on May 30, 2017 appointed M/s. N. K. Jain and Associates (Firm Registration Number: 101952), Cost Auditors to conduct the Cost Audit for the Financial Year 20172018.
For the financial year ending March 31, 2019, the Board of Directors of the Company has, on the recommendation of the Audit Committee, approved the appointment of M/s Shome & Banerjee, Cost Accountants (Firm Reg. No. 00001) as the cost auditors of the Company. M/s Shome & Banerjee, Cost Accountants (Firm Reg. No. 00001) have vast experience in the field of cost audit.
In accordance with the provisions of Section 148(3) of the Act read with Rule 14 of the Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the cost auditors as recommended by the Audit Committee and approved by the Board has to be ratified by the members of the Company.
Accordingly, an appropriate resolution for the proposed remuneration of Rs. 3,00,000 per annum plus applicable taxes and out-of-pocket expenses payable to the cost auditors for the Financial Year ending March 31, 2019, forms part of the notice of ensuing Annual General Meeting for ratification.
23. OTHER INFORMATION
a) Details in respect of frauds reported by Auditors other than those which are reportable to the Central Government
The Statutory Auditors, Secretarial Auditors, Cost Auditors or Internal Auditors of the Company have not reported any frauds to the Audit Committee or to the Board of Directors under Section 143(12) of the Companies Act, 2013, including rules made thereunder.
b) Stock Options Scheme
The Company does not have any Scheme of Stock Option for its employees, Directors etc.
c) Disclosure under Section 43(a)(iii) and Section 54(1)(d) of the Companies Act, 2013
During the year under review, the Company has not issued any shares with differential voting rights and sweat equity shares and hence, no information as required under Section 43(a)(iii) & Section 54(1)(d) of the Companies Act, 2013 read with applicable rules is required to be disclosed.
d) Risk Management
The Reconstituted Board/ management is reviewing the Risk management framework of the Company. The Company would put in place a suitable enterprise risk management framework for identifying and evaluating risks and opportunities that may have bearing on the organization. The Company recognises that these risks needs to be managed and mitigated to protect the shareholders and other stakeholders interest.
e) Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and outgo
In accordance with Section 134(3)(m) of the Companies Act, 2013, read with the Rule 8(3) of the Companies (Accounts) Rules, 2014, as amended, the information on conservation of energy, technology absorption and foreign exchange earnings and outgo are annexed as Annexure - 4 hereto and forms an integral part of this Report.
f) Particulars of Employees and Related Disclosures
Disclosures pertaining to the remuneration and other details of the employees as required under Section 197(12) of the Companies Act 2013, read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, are annexed to this report as Annexure -5.
g) Extract of Annual Return
In accordance with the provisions of the Companies Act, 2013 and amendments thereto, the extract of the annual return in Form No. MGT - 9 placed on the website of the Company and web link of the same is given below.
https://www.aionjsw.in/investors/mgt9
h) Management Discussion & Analysis Report
A detailed analysis of the Companyâs performance is discussed in the Management Discussion and Analysis Report, which forms part of this Annual Report and annexed as Annexure-6
i) Particulars of Loans, Guarantees or Investments under Section 186
Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the note no 5, 6 & 12 to the Financial Statements.
j) Corporate Governance Report
The Company has complied with requirements of Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. A report on the Corporate Governance practices followed by the Company, together with a certificate from the Practicing Company Secretary regarding compliance are given as an Annexure 7 to this report.
k) Disclosure under the Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act, 2013.
The Company has laid down Anti Sexual Harassment policy on Gender Equality, Gender Protection, Prevention of Sexual Harassment and Redressal System in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, Apprenticeship) are covered under this policy. The following is a summary of sexual harassment complaints received and disposed of during the year under review-
- No. of complaints received: Nil
- No. of complaints disposed off : NA
l) Secretarial Standards
The Company has in place proper systems to ensure compliance with the provisions of the applicable secretarial standards issued by the Institute of Company Secretaries of India and such systems are adequate and operating effectively.
24. CAUTIONARY NOTE
Certain Statements in the âManagement Discussion and Analysisâ section may be forward-looking and are stated as required by applicable laws and regulations. Many factors may affect the actual results, which would be different from what the Directors envisage in terms of the future performance and outlook. Investors are cautioned that this discussion contains forward looking statement that involve risks and uncertainties including, but not limited to, risks inherent in the Companyâs growth strategy, dependence on certain businesses, dependence on availability of qualified and trained manpower and other factors discussed. The discussion and analysis should be read in conjunction with the Companyâs financial statements and notes on accounts.
25. ACKNOWLEDGEMENT
The Directors wish to place on record their gratitude to the Authorities, Banks, Business Associates, Debenture holders and Shareholders for their unstinted support, assistance and co-operation. The Directors place on record their deep appreciation to employees at all levels for their hard work, dedication and commitment.
The Board acknowledges the contribution made by Mr. Sumit Binani, RP during the CIRP Process.
By order of the Board
For Monnet Ispat and Energy Limited
Jyotin Kantilal Mehta
Place: Mumbai Chairman
Date: 15 October, 2018 DIN: 00033518
Mar 31, 2015
The Directors are pleased to present the Twenty-Fifth Annual Report on
the business and operations of the Company together with the audited
accounts for the financial year ended 31st March, 2015.
1. FINANCIAL SUMMARY
Financial Summary and performance Highlights of your Company, for the
financial year ended March 31, 2015 are as follows:
(Rs. in crores)
Particulars Stand Alone Consolidated
31.03.15 31.03.14 31.03.15 31.03.14
Gross Sales & Other Income 3,258.41 2,360.83 3,306.82 2,378.20
Profit Before Interest
Depreciation & Tax 198.52 475.24 148.60 463.02
Depreciation & Amortisation 281.44 138.73 288.41 143.77
Interest 652.87 239.38 670.46 249.48
Profit/Loss From Operations (735.80) 97.13 (810.27) 69.78
Exceptional Items 252.91 - 252.92 -
Share Of Profit Transferred
To Minority - - 12.38 (0.28)
Provision for Taxation (192.83) 30.49 (193.88) 32.46
Profit/Loss After Tax (795.87) 66.63 (856.93) 37.04
Balance of P & L Account
B/F 1,450.97 1,412.00 1,373.69 1,339.09
Amount Available For
Appropriation - - - -
Balance of P & L Account C
/F to Next 655.10 1,450.97 516.76 1,373.69
Year
Reserve & Surplus 1,776.85 2,598.80 1,825.70 2,710.88
Previous year's figures have been regrouped/ rearranged wherever
considered necessary.
FINANCIAL AND OPERATIONAL PERFORMANCE
During the year under review your Company's gross turnover and net
turnover was Rs.3435.45 Crores and Rs.3185.62 Crores respectively. The
operating EBITDA was Rs.198.52 Crores. The Company had incurred a loss of
Rs. 795.87 Crores after considering exceptional items of Rs. 252.91Crores
as compared to profit of Rs. 66.63 Crores during the previous year.
Further, there has been no change in the nature of business during the
period under review.
2. DIVIDEND
In view of the losses incurred by the company, Board has not
recommended any Dividend for the Financial Year 2014-15.
3. MATERIAL CHANGES AND COMMITMENTS
No material changes and commitments have taken place between the end of
financial year of the Company to which balance sheet relates and date of
report, which affects the financial position of the Company.
4. SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES
Your Company has sixteen subsidiary companies including subsidiaries of
subsidiaries, three joint ventures and one associate company. The
consolidated financial statements presented by the Company include
financial information of its subsidiaries, Joint Ventures and associate
companies and prepared in compliance with applicable Accounting
Standards. For further details of these subsidiaries, please refer Note
1 [I] of Consolidated Financial Statements. The Annual Accounts of the
subsidiary Companies are open for inspection by any Shareholder at the
Company's Registered Office at Monnet Marg, Mandir Hasaud, Raipur,
Chhattisgarh-492101 and the Company will make available these documents
and the related detailed information upon request by any Shareholder of
the Company or any Shareholder of its subsidiaries, Joint ventures and
associate Companies who may be interested in obtaining the same.
A separate statement in form AOC-1, containing the salient features of
the financial statement of its subsidiaries, Joint Ventures and
associate companies is attached as
Annexure  1.
Further, Black Sea Natural Resources, Abkhazia and Black Sea Natural
Resources, Moscow became subsidiaries of the company the during the
year under review and Company wound-up its subsidiary Monnet Global
Mali S.A. during the year.
The Company had entered into separate JV agreements for the development
of Coal Block. While the coal blocks were under development, the
Hon'ble Supreme Court of India cancelled the allocation of coal blocks
by the Government of India to state and private sectors. Consequently,
the allocation of coal blocks alloted to the company and of these three
JVs stood cancelled.
5. DIRECTORS RESPONSIBILITY STATEMENT
As required under Section 134(5) of the Companies Act, 2013, your
directors hereby state and confirm that:
a. In the preparation of the annual accounts, the applicable
accounting standards had been followed along with proper explanation
relating to material departures;
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 and loss
of the Company for that period;
c. They have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 2013 for 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 control are adequate and were
operating effectively; and
f. They have devised proper systems to ensure compliance with the
provisions of all applicable laws and such systems are adequate and
operating effectively.
6. COMMENTS BY THE BOARD ON AUDIT QUALIFICATION
There are no qualifications, reservations or adverse remarks or
disclaimers made by Statutory Auditors, in their report. However, the
Secretarial Audit Report for the Financial year ended March 31, 2015
contains certain reservation and remarks which are given along with the
management reply for the same:
- Due to losses incurred by the Company, remuneration paid to its
managing director was in excess of the limit prescribed under Schedule
V to the Company and the Company is in process of fling application
before the Central Government for seeking waiver of excess remuneration
paid during the financial year 2014-15:
In this regard, the Company wishes to inform that Company is in the
process of flling of application before the Central Government for
seeking waiver of excess remuneration paid to managing director during
the financial year 2014-15
- Few e-form(s) were fled with the Registrar of Companies, Chhattisgarh
beyond their due dates:
In this regard, the Company wishes to inform that delay in fling of
some forms was mainly due to ambiguity and uncertainty in the
provisions of the Companies Act, 2013.
- Annual return on foreign liabilities and assets has not been fled by
the Company.:
In this regard, the Company wishes to inform that Company is in the
process of filling of Annual return on foreign liabilities and assets
with Reserve Bank of India.
7. RISK MANAGEMENT
Your Company's Risk Management Policy is backed by strong internal
control systems. The risk management framework consists of policies and
procedures framed at management level and strictly adhered to and
monitored at all levels. The risk policy defines the risk management
handling system vis-Ã -vis role of various entities. The profiling, a
continuously ongoing and evolving process, is done for each risk. The
process involves prioritizing, modeling and assigning mitigation
process to each type of risk model. The management periodically issues
the policies to its divisions. These divisions modify these to make it
suitable. A corporate level independently constituted team and a sound
internal audit system is in place. The internal audit team
periodically visits the divisions and carries out audit. The findings
are periodically reviewed by the Board and Audit Committee with
emphasis on maintaining its effectiveness in dynamic business
environment.
8. ORDERS PASSED BY THE REGULATORS OR COURTS, IF ANY
Except the cancellation of operational coal mine by Hon'ble Supreme
Court at Raigarh which has impacted the operation of the company, their
is no significant and material orders were passed by the Regulators,
Courts or Tribunals impacting the going concern status and Company's
operations in future.
9. INTERNAL CONTROLS & INTERNAL FINANCIAL CONTROLS
Internal Control systems are an integral part of company's corporate
governance. Your Company has effective internal control environment.
Control systems have documented policies, checks and balances,
guidelines and procedures that are supplemented by robust internal
audit processes and monitored continuously by periodical reviews by
management which provides reasonable assurance that all assets are
safeguarded; transactions are authorized, recorded and reported
properly. Your Company has an independent MIS and Audit Department to
oversee the day-to-day functioning of the Company. The Company has
proper budgeting system and the actual performance is continuously
evaluated and the corrective measures are taken from time to time. The
internal control system is designed to ensure that all financial and
other records are reliable for preparing financial statements, other
data and for maintaining accountability of assets.
10. SHARE CAPITAL
There was no change in the Company's share capital during the year
under review.
The Company's paid up share capital is Rs. 2,40,84,29,224/- comprising of
6,58,25,681 equity shares of Rs. 10 each and 1,75,00,000 6.5% Cumulative
Non Convertible redeemable preference shares of Rs. 100 each and shares
foresighted amount of Rs. 172,414/-.
11. DECLARATION BY INDEPENDENT DIRECTORS
The company has received the necessary declaration from each director
in accordance with Section 149(6) of the Companies Act, 2013 that
he/she meets the criteria of Independence as laid out in Section 149(6)
of the Companies Act, 2013 and clause 49 of the listing agreement.
12. BOARD EVALUATION
Pursuant to the provisions of the Companies Act, 2013 and clause 49 of
the listing agreement, the Board evaluated the effectiveness of its
functioning and that of Committees, Key Managerial Personnel &
individual Directors by seeking their inputs on various aspects of
Board/ Committee Governance. Further, the Independent Directors at
their meeting reviewed the performance of Board, Chairman of the Board
and Non- executive Directors.
13. PARTICULARS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)
APPOINTED OR RESIGNED DURING THE FINANCIAL YEAR ENDED MARCH 31, 2015.
In accordance with the provisions of Section 149(2) of the Companies
Act,2013 your company is required to appoint one women Director.
Accordingly Ms. Bhavna Thakur was appointed as Independent women
Director of the Company on 31.03.2015 and Mr. Suman Jyoti Khetan was
appointed as an independent director on 14.8.2015. They will hold the
Office till the next AGM. Further, Mr. Suresh Kishin Chand Khatanhar
was appointed nominee director of IDBI Bank on 29.05.2015.
During the period beginning from the date of last Directors report Mr.
Vikram Deswal and Mr. Amulya Charan, Directors ceased to be Directors
of the company.
In accordance with the provisions of section 152 of the companies Act,
2013 and In terms of Articles of Association of the company, Mr.C.P.
Baid, Director retires by rotation at the forthcoming Annual General
Meeting and being eligible, offers himself for re- appointment.
During the period under review the following KMP changes took place-
Mr. Raj Kumar Ralhan was appointed as Chief Financial Officer on
14.11.2014 and Mr. Hardeep Singh, was appointed as company secretary on
31.03.2015. Mr. M.P. Kharbanda, Company Secretary resigned from the
post of Company Secretary on 22.01.2015.
As per clause 49 IV(G) of the Listing Agreement, the required details
of the Directors appointed/ Reappointed during the year is given in
"Annexure-2"
14. RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the
financial year were on arm's length basis and were in the ordinary
course of business. Further, there have been no materially significant
related party transactions between the Company and the Directors, the
management, the subsidiaries or the relatives except for those
disclosed in the financial statements. Accordingly, particulars of
contracts or arrangements with related parties referred to in Section
188(1) along with the justification for entering into such contract or
arrangement in Form AOC-2 does not form part of the report.
15. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
In compliance with Section 135 of the Companies Act, 2013 read with the
Rules made thereunder, the Company has formed Corporate Social
Responsibility (CSR) Committee. The policy on Corporate Social
Responsibility as approved by the Board of Directors is uploaded on the
website of the Company i.e. www. monnetgroup.com.
The composition of the Corporate Social Responsibility Committee is as
under:
Name of DIN Composition of the
Members CSR Committee
Mr. Sandeep 00082869 Chairman
Jajodia
Mr. Amulya 00007370 Member
Charan *
Mr. J.P. Lath 00380076 Member
Mr. Suman 00023370 Member
Jyoti Khaitan
**
* Resigned during the period.
** Appointed on 14.08.2015.
The disclosure as per Rule 9 of Companies (Corporate Social
Responsibility Policy) Rules, 2014 is annexed to this Report as
Annexure "3".
16. AUDITORS
STATUTORY AUDITOR
M/s. O.P. Bagla & Co., Chartered Accountants (Firm Registration No.
000018N) have been appointed as the Statutory Auditors of the Company
in the 24th Annual General Meeting of the Company held on Sept 27,
2014, to hold the Office till the conclusion of 27th Annual General
Meeting of the Company, subject to the ratification of shareholders at
every Annual General Meeting.
Further, the ratification in respect with the appointment of M/s. O.P.
Bagla & Co. Chartered Accountants as the Statutory Auditors of the
Company is proposed in the Notice of 25th Annual General Meeting of the
Company.
SECRETARIAL AUDITOR
Pursuant to Section 204 of the Companies Act, 2013, the Company had
appointed M/s Sanjay Grover & Associates, Practicing Company
Secretaries, New Delhi as its Secretarial Auditor to conduct the
Secretarial Audit of the Company for FY 2014-2015. The Report of
Secretarial Auditor (Form MR-3) for the FY 2014-2015 is annexed to the
report as Annexure  4.
COST AUDITOR
On the recommendation of Audit Committee, the Board of Directors in its
meeting held on May 29, 2015 has appointed M/s. N. K. Jain &
Associates, Cost Accountants as the Cost Auditor of the Company for the
financial year 2015-16 on the aggregate remuneration of Rs. 3,00,000/-
(Rupees Three Lakhs only) plus taxes, as applicable and out of pocket
expenses, in accordance with the provisions under Section 148 of the
Companies Act, 2013 read with rules made there under.
The remuneration payable to the Cost Auditor of the Company has been
proposed for the ratification by the members of the Company and form
part of the notice of 25th Annual General Meeting.
17. PUBLIC DEPOSITS
Your Company has not accepted any deposits covered under Chapter V of
the Companies Act, 2013.
18. DISCLOSURES
NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS
During the year, six Board Meetings were convened and held, the details
of which are given in the Corporate Governance Report. The intervening
gap between the Meetings was within the period prescribed under the
Companies Act, 2013.
EXTRACT OF ANNUAL RETURN
In accordance with the provisions of Section 134(3) (a) of the
Companies Act, 2013, the extract of the annual return in Form No. MGT Â
9 is annexed as Annexure  5 hereto and forms a part of this report.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186
Details of Investments, Loans and Guarantees covered under the
provisions of Section 186 of the Companies Act, 2013 are given in the
note no 12 and 13 and 30 to the Financial Statements.
STATUTORY DISCLOSURES
i) A declaration signed by Chairman & Managing Director as required
under Clause 49 (I) (D) of the Listing Agreement is enclosed in the
Annual Report.
ii) The Chairman & Managing Director and Chief Financial Officer have
given a certificate to the Board of Directors, as required under Clause
49 (V) of the Listing Agreement, for the year ended 31st March, 2015
NOMINATION AND REMUNERATION POLICY
The Board has, on the recommendation of the Nomination and Remuneration
Committee framed a policy for selection and appointment of Directors,
Key Managerial personnel and their remuneration as well as policy on
other employees remuneration. The Brief terms of policy is stated in the
Corporate Governance Report.
AUDIT COMMITTEE
The Company complies with the provisions related to Audit Committee, as
provided under Clause 49 of the Listing Agreement and Section 177 of
the Companies Act, 2013. The composition of the Audit Committee is as
under:
Name of DIN Composition
Members of the Audit
Committee
Mr. Amulya Charan* 00007370 Chairman,
Mr. Amit Dixit 01798942 Member
Mr. J.P. Lath 00380076 Member
Mr. Suman Jyoti
Khai- 00023370 Member
tan **
* Resigned during the period.
** Appointed on 14.08.2015.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has a vigil mechanism named Vigil Mechanism Cum Whistle
Blower Policy to deal with instances of fraud and mismanagement, if
any. Details of the same are given in the Corporate Governance Report.
The same has also been displayed on the website of the Company and the
link for the same is http://www.monnetgroup.com
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE
(PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013.
The Company has in place a policy on Gender Equality, Gender
Protection, Prevention of Sexual Harrasment and Redressal System in
line with the requirements of the Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act, 2013. An
Internal Complaints Committee (ICC) has been set up to redress
complaints received regarding sexual harassment. All employees
(permanent, contractual, temporary, trainees) are covered under this
policy.
No complaints pertaining to sexual harassment were received during FY
2014-15.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
Disclosures pertaining to remuneration and other details as required
under Section 197(12) of the Act, read with Rule 5(1) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 are
annexed to this report as Annexure 6.
In terms of the provisions of Section 197(12) of the Companies Act,
2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules,2014, a statement showing
the names and other particulars of employees drawing remuneration in
excess of the limits set out in the said Rules forms part of the Report
.However,
having regard to the provisions of the frst proviso of Section 136(1)
of the Companies Act 2013, the Annual Report excluding the aforesaid
information is being sent to the members of the Company. The said
information is available for inspection at Registered Office of the
Company during working hours, any member interested in obtaining said
such information may write to the Company Secretary, at the registered
Office and the same will be furnished on request.
19. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO
Information under Section 134(3)(m) of the Companies Act, 2013, read
with rule 8(3) of the Companies (Accounts) Rules, 2014 is given below:
A. Conservation of Energy
The Company has taken a number of steps to improve the conservation of
energy by increasing the efficiency of raw material inputs in power
generation and by reducing/eliminating consumption wastages.
Conservation of energy and improving the efficiency of existing
resources are continuing processes and form an integral part of
responsibilities of departmental heads. Various steps taken in this
direction are as follows:-
1. SMS- Charge mix change Hot metal: DRI from 55:45 to 80:20. Energy
saving 330 kwh/mt.
2. Sinter plant- Using claimed lime reduced coke consumption from 110
kg.mt to 85 kg/mt.
3. Blast furnace- by using single blower in spite of two blower, steam
consumption reduced by 65 mt/hr to 45 mt/hr.
4. Bar mill- By using gas fired furnace ( earlier Furnace oil based) ,
furnace oil consumption in bar mill stopped
B. TECHNOLOGY ABSORPTION
i. Efforts are being made in technology absorption: the Raigarh plant
is using 85 % efficient TPH CFBC Boiler Technology in place of
conventional 80 % efficient AFBC Boiler Technology.
ii. Benefits derived as a result of the above efforts: the efficient
Bioler Technology has resulted in saving of coal which is a scarce
mineral.
iii. Details of technology imported during last five years: NA
iv. Expenditure incurred on Research and Development.: NA
C. FOREIGN EXCHANGE EARNINGS AND OUTGO
The Foreign Exchange earned in terms of actual inflows and the Foreign
Exchange outgo in terms of actual outflows, during financial year 2014-15
are as follow :-
1. Activities relating to exports The efforts initiatives taken to
increase amraede. being exports development of new export markets for
products and services and export plans.
2. Total Foreign Exchange used and earned
(In Crores)
2014-15 2013-14
- Used 173.24 273.34
- Earned 217.13 185.36
20. MANAGEMENT DISCUSSION & ANALYSIS REPORT - Pursuant to clause 49 of
the Listing Agreement the Management Discussion and Analysis Report is
enclosed in this Directors Report in Annexure-7
21. CORPORATE GOVERNANCE
The Company has complied with requirements of Clause 49 of the Listing
Agreement regarding Corporate Governance. A report on the Corporate
Governance practices, the Auditors' Certificate on compliance of
mandatory requirements thereof are form part of this report.
22. LISTING OF SHARES
Presently the Equity Shares of the Company are listed on BSE Limited
and National Stock Exchange of India Limited. The Listing Fees for the
financial year 2015-16 has been paid.
CAUTIONARY NOTE
Certain statements in the 'Management Discussion and Analysis' section
may be forward-looking and are stated as required by applicable laws
and regulations. Many factors may affect the actual results, which
would be different from what the Directors envisage in terms of the
future performance and outlook. Investors are cautioned that this
discussion contains forward looking statement that involve risks and
uncertainties including, but not limited to, risks inherent in the
Company's growth strategy, dependence on certain businesses, dependence
on availability of qualified and trained manpower and other factors
discussed. The discussion and analysis should be read in conjunction
with the Company's financial statements and notes on accounts.
ACKNOWLEDGEMENT
Your Directors take this opportunity to offer their sincere thanks to
the various Departments of the Central and State Government, Financial
Institutions, Bankers to the Company, all Customers, Suppliers and
contractors for their continued valued assistance and support. Your
Directors also wish to place on record their appreciation for dedicated
services rendered by all Officers, staff and workers of the Company at
all levels.
By Order of the Board
For Monnet Ispat & Energy Limited
Place: New Delhi
Date : 14.08.2015
Sd/-
Sandeep Jajodia
Chairman & Managing Director
DIN: 00082869
Mar 31, 2014
Dear Members,
For the financial year ended 31st March, 2014
The Directors submit their report for the financial year ended 31st
March, 2014.
Sales, Profits, Dividends & Retention
[Rs. in Crores]
2014 2013
Sales (Net of Excise) & Other Income 2,360.83 2,028.27
Profit before Depreciation 235.86 427.31
Depreciation and amortization expenses 138.73 88.90
Profit before taxes 97.13 338.41
Tax Expense 30.49 88.09
Profit after Tax 66.63 250.32
Cash Profit 232.13 354.84
Profit brought forward from previous year 1,412.00 1,198.04
Profit available for appropriation 1,478.63 1,448.36
Dividend: 10% (2012-13 : 15%) 6.58 9.56
Dividend on Preference Shares 11.38 0.06
Tax on Dividend 3.05 1.64
Dividend paid (including taxes thereon) 21.01 11.26
Transfer to General Reserve 6.66 25.10
Surplus carried to Balance Sheet 1,450.96 1,412.00
Status of Expansions
Steel
Post Commercial Operation of steel facility, stabilization of various
modules was a challenge which has successfully been met and the company
is now steadily ramping-up the capacity utilization. Operating cash
flows of the Company are showing a definitive ascending trend from
month to month. The Company is penetrating new markets and developing
a customer base for its value added products successfully. The efforts
of the Company are supplemented by the revival of overall steel
markets.
The Company''s production strategy is primarily driven by the marketing
strategy which involves the opportunities of encashing product mixes
with higher profitability and relative ease of salability. We have been
fairly successful in our approach and are now gradually pushing our
main products in the market. Based on the response, we are not facing
major challenge and concerns to create a market base for our products.
The company is hopeful of making the current year a much better
performing year both in terms of top line and bottom line.
Power (Monnet Power Company Limited)
Monnet Power Company Limited (MPCL) is a subsidiary of MIEL and is at
an advanced stage of implementation of the 1050 MW pit-head coal based
Thermal Power Project at Angul, Odisha. The Project was started in the
right earnest in June 2009 with the award of the BTG package to BHEL.
However, the pace of project implementation got affected due to delays
in receipt of various Government approvals and disbursement of loan
from the banks. The Environmental Clearance, which is the important
approval from the Project perspective, was received in June 2010
instead of June 2009 due to Angul being included as High Pollution
Area.
The Company obtained all the requisite Loan sanctions by January 2010
but the lenders started their disbursement in December 2010 only. The
Company faced the impact of high cost of debt from the first
disbursement itself due to the change in the interest rate regime in
the country. The rate of interest which was envisaged as 11.50% p.a. in
the loan documents shot up considerably and have hovered around 14%
p.a. ever since.
The Power Sector has been facing multiple challenges over the past few
years which generally has resulted in time and cost over-runs in most
of the projects. MPCL too has faced similar challenges of delayed
disbursals, late approvals and the issue of land acquisition in the
beginning resulting in time & cost over-run of the project. The revised
Cost of Project is pegget at Rs. 7117 crores instead of Rs. 5092 crores
earlier. Similarly, the COD of the Project has been revised to
September 2015 instead of December 2012 earlier, with unit-I expected
to be commissioned by March 2015 and unit-II by September 2015.
Despite the multiple hurdles being faced by corporates in this sector
MPCL has managed to freeze its Revised Cost of Project and has also
arranged the required funding for the cost overrun so as to complete
the project within the revised time lines.
The project implementation is at a very advance stage with 65% of the
overall project having been completed. Individually, Unit-I is
progressing faster and much ahead in terms of completion which as per
the latest external monitoring report is around 75% complete. As
against this, Unit-II as per the same report is 60% completed. In terms
of completion Unit-I is expected to be completed within 8 months and
Unit-II is expected to be completed within 13 months from the date the
funds, both equity and debt, are made available to the Project.
Risk Management
Your Company''s Risk Management Policy is backed by strong internal
control systems. The risk management framework consists of policies and
procedures framed at management level and strictly adhered to and
monitored at all levels. The risk policy defines the risk management
handling system vis-Ã -vis role of various entities. The profiling, a
continuously ongoing and evolving process, is done for each risk. The
process involves prioritizing, modeling and assigning mitigation
process to each type of risk model. The management periodically issues
the policies to its divisions. These divisions modify these to make it
suitable. A corporate level independently constituted team and a sound
internal audit system is in place. The internal audit team periodically
visits the divisions and carries out audit. The findings are
periodically reviewed by the Board and Audit Committee with emphasis on
maintaining its effectiveness in dynamic business environment.
Note on Subsidiaries
Your Company has sixteen subsidiary companies including subsidiaries of
subsidiaries. The consolidated financial statements presented by the
Company include financial information of its subsidiaries prepared in
compliance with applicable Accounting Standards. For further details of
these subsidiaries, please refer Note 1 [I] of Consolidated Financial
Statements on page 83. The Ministry of Corporate Affairs, Government of
India vide its Circular No. 5/12/2007-CL-III dated 08-02-2011 has
granted general exemption under Section 212(8) of the Companies Act,
1956, from attaching the balance sheet, profit and loss account and
other documents of the subsidiary companies required to be attached
under Section 212 (1) of the Companies Act, 1956 to the Balance Sheet
of the Company. Accordingly, the said documents are not being attached
with the Balance Sheet of the Company. A gist of financial performance
of subsidiary companies is contained in the Report as Annexure VI. The
Annual Accounts of the subsidiary Companies are open for inspection by
any Shareholder at the Company''s Registered Office at Monnet Marg,
Mandir Hasaud, Raipur, Chhattisgarh-492101 and the Company will make
available these documents and the related detailed information upon
request by any Shareholder of the
Company or any Shareholder of its subsidiary Companies who may be
interested in obtaining the same.
Consolidated Financial Statements
The audited Standalone and Consolidated Financial Statements of your
Company, which form part of the Annual Report, have been prepared
pursuant to Clause 41 of the Listing Agreement entered into with the
Stock Exchanges, in accordance with the provisions of the Companies
Act, 1956, the Accounting Standard (AS-21) on Consolidated Financial
Statements, the Accounting Standard (AS-23) on Accounting for
Investments in Associates and Accounting Standard (AS-27) on Financial
Reporting of Interests in Joint Ventures, prescribed by the Companies
(Accounting Standards) Rules, 2006.
Dividend
The Board of Directors recommends a dividend of Rs. 1.00/- per share
(10%) on 65825681 equity shares of face value of Rs. 10/- each for FY
2013-14 (Rs. 1.50 per share (15%) in the previous year) subject to
approval of the shareholders in the ensuing Annual General Meeting. The
total outgo on account of dividend including Dividend Distribution Tax
works out to Rs. 11.26 Crore as against Rs. 18.65 Crore in the previous
year.
Necessary information with respect to entitlement is being given in
detail in the Notice calling Annual General Meeting.
Depository System
As on 31st March, 2014, about 99.33% of the shares of your Company are
held in dematerialized form.
The shares of the Company are available for trading in the
dematerialized form under both the Depository Systems in India  NSDL
and CDSL. The International Securities Identification Number (ISIN)
allotted to the Company''s shares under the Depository System is
INE743C01013. The annual custody fee for the financial year 2014-15 has
been paid to NSDL and CDSL, the Depositories.
During the year, 10408 shares of the Company, covered in 68 requests,
were dematerialized. Out of 65825681 equity shares being the paid-up
capital of the Company as on 31st March, 2014, a total of 65386775
shares constituting 99.33% of the paid-up share Capital stand
dematerialized.
Directors
During the period beginning after the date of last Directors'' Report,
Shri Ajay Relan, and Shri G.C. Mrig, Directors ceased to be directors
from the Board of w.e.f. 3rd December, 2013 and 24th January, 2014
respectively. Shri Ajay Relan had to resign from the Board owing to
mandate of the Funds he was advising not to stay on the Boards of the
Listed Companies. Shri G.C. Mrig has crossed the age of 75 years and
opted to step down on health grounds. The Board places on record its
appreciation of valuable guidance rendered by them during their tenure.
Pursuant to sub-section (4) of Section 161 of the Companies Act, 2013,
the Board has filled the casual vacancy resulted from the resignation
of Shri Ajay Relan by appointing Shri Amulya Charan in his place w.e.f.
11th June, 2014. Shri Amulya Charan shall hold the office of director
only up to the date up to which Shri Ajay Relan would have held the
office of director in case he would not have resigned.
The nature of composition of the Board member is being recast to make
it compliant with the provisions of the Companies Act, 2013 with
respect to appointment of independent directors for a fixed term during
which period, they shall neither retire by rotation nor shall be
counted in the Total strength of the Board. However, two-third of these
Total strength of the Board shall comprise of the directors who shall
be liable to retire by rotation. For this purpose, requisite
resolutions have been incorporated in the Notice of the 24th Annual
General Meeting and the Explanatory Statement contains the detailed
reasons therefor. Consequently, Shri J.P. Lath being the only director
liable to retire by rotation, shall retire at the ensuing Annual
General Meeting. He has conveyed his willingness to be re-appointed as
a director liable to retire by rotation.
As per Clause 49 (IV) (G) of the Listing Agreement, the required detail
of directors appointed/reappointed during the year is given in
Annexure-V.
Independent Directors
Pursuant to Section 149 of the Companies Act, 2013 (new Act) read with
the Rules made thereunder, the Independent Directors can hold office
for a period of up to 5 consecutive years and shall not be liable to
retire by rotation. They may be appointed for a maximum of two
consecutive terms of up to 5 years each. In terms of revised clause 49
of the listing agreement which will be applicable from 1st October,
2014, in case the Independent Director has already served for 5 or more
years, he can be appointed for only one term of 5 years. However, under
the new Act and Clause 49 of listing agreement, they may be appointed
afresh with a fixed period of up to 5 years. As per sub-section (5) of
said Section 149, the compliance is to be made within one year from the
date of commencement of the new Act.
Presently, Shri Amulya Charan, Shri Amit Dixit and Shri Vikram Deswal
are the Independent Directors of the Company in terms of Section 149.
As per their existing terms of appointment, all of them are liable to
retire by rotation. The Board considered the appointment of the above
mentioned Directors in terms of Section 149 and Schedule IV to the
Companies Act, 2013 and Clause 49 of the listing agreement and was of
the view that these independent directors fulfill the conditions
specified in the Act and the rules made thereunder and that the
proposed directors are independent of the management and can be
appointed for a term of three years during which period, they shall not
be liable to retire by rotation. These directors possess requisite
qualifications, appropriate skills, experience and knowledge in one or
more fields of finance, law management, marketing, administration,
technical operations and other disciplines related to Company''s
business, the educational / professional qualifications, working
experience, expertise in line with Company''s business, positive
attributes.
Responsibility Statement
In terms of Section 217 (2AA) of the Companies Act, 1956, your
directors confirm having:
(i) followed in the preparation of Annual Accounts, the applicable
accounting standards, with proper explanation relating to material
departures, if any;
(ii) selected such accounting policies and applied them consistently
and made judgments and estimates that were 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 or loss of the Company
for the year under review ;
(iii) 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 ;
(iv) prepared the accounts on a going concern basis.
Management Discussion & Analysis
Pursuant to clause 49 of the Listing Agreement with Stock Exchanges, a
separate section titled "Management Discussion & Analysis" has been
included in this annual report and is given in Annexure-II and forms an
integral part of this report.
Corporate Governance Report
Pursuant to clause 49 of the Listing Agreement with stock exchanges, a
separate section titled "Compliance Report on Corporate Governance" has
been included in this annual report and is given in Annexure-III along
with a certificate of compliance from the Auditors and forms an
integral part of this report.
Statutory Disclosures
i) A declaration signed by Chairman & Managing Director as required
under Clause 49 (I) (D) of the Listing Agreement is enclosed as
Annexure-IV.
ii) The Chairman & Managing Director and Chief Financial Officer have
given a certificate to the Board of Directors, as required under Clause
49 (V) of the Listing Agreement, for the year ended 31st March, 2014.
Consolidated Financial Statements
In accordance with Accounting Standard 21 - Consolidated Financial
Statements prepared on the basis of audited financial statements
received from subsidiary companies as approved by their respective
boards form part of this Report & Accounts.
Audit Committee
The Audit Committee of Board of Directors constituted in terms of
Clause 49 of the Listing Agreement and Section 177 of the Companies
Act, 2013 consists of Shri Amulya Charan as its Chairman and Shri Amit
Dixit and Shri J.P. Lath as its members.
Auditors
The Auditors'' Report and Notes to the Accounts as referred in the
Auditors'' Report are self-explanatory and therefore, do not call for
any further comments or explanation.
M/s. O.P. Bagla & Co., Chartered Accountants, New Delhi, Auditors of
the Company, hold the office till the conclusion of 24th Annual General
Meeting and are eligible for reappointment. A Certificate from the
auditors has been received to the effect that their re-appointment, if
made, would be within the prescribed limits under Section 139 (1) of
the Companies Act, 2013.
Fixed Deposits
The Company has not invited or accepted any deposits during the year
from the Public under Section 73 of the Companies Act, 2013.
Conservation of Energy, Technology Absorption, Foreign Exchange
Earnings & Outgo
As required under the Companies (Disclosure of Particulars in the
Report of Board of Directors) Rules, 1988 the relevant data is enclosed
as Annexure-I forming part of this report.
Personnel
Information as per Section 217(2A) of the Companies Act, 1956 read with
the Companies (Particulars of Employees) Rules, 1975, as amended from
time to time, forms part of this Report. However, as per the provisions
of Section 219 (1) (b) (iv) of the Companies Act, 1956 the Report and
Accounts are being sent to all the members and other entitled thereto
excluding the statement containing the particulars of employees to be
provided under Section 217(2A) of the Companies Act, 1956. Any member
interested in obtaining such particulars may inspect the same at the
Registered Office of the Company or write to the Company Secretary at
the Corporate Office of the Company for a copy.
Corporate Social Responsibility
Monnet is already sharing a percentage of its profits for discharging
its societal responsibility. During the year under report, the Company
has contributed 6.04% of its profits (previous year 7.28% to Monnet
Foundation. Monnet Foundation was formed in the year 2007 by the
Company and is governed by the Board of Trustees drawn from the senior
management of the Group. During the seven years period, Monnet
Foundation has done a lot of developmental and social work for the
populace living around its Units / Operations in Raipur, Raigarh etc.
Monnet Foundation is predominantly engaged in woman empowerment,
education, vocational training, health, sanitation and hygiene, road
development, creating facilities for availability of hygienic and
potable drinking water besides financial help to the needy or
deserving. Monnet Foundation also conducts awareness campaigns. The
Company has formed CSR Committee and has appointed E&Y as consultants
for the purpose of formulation of CSR Policy and other matters related
thereto. Presently, the Committee has Shri Amulya Charan as its
Chairman and Shri J.P. Lath and Shri Sandeep Jajodia as its members.
Your company is already committed to spend a minimum of 2% of its
average net profits of preceding three financial years.
Acknowledgments
Your Directors take this opportunity to offer their sincere thanks to
the various Departments of the Central and State Government, Financial
Institutions, Bankers to the Company, all Customers, Suppliers and
contractors for their continued valued assistance and support. Your
Directors also wish to place on record their appreciation for dedicated
services rendered by all officers, staff and workers of the Company at
all levels.
For and on behalf of Board of Directors
Place: New Delhi (Sandeep Jajodia)
Date: 11th August, 2014 Chairman & Managing Director
Mar 31, 2012
The Directors submit their report for the financial year ended 31st
March, 2012.
Sales, Profits, Dividends & Retention
[Rs. in Crore]
2012 2011
Sales (Net of Excise) & Other Income 1897.38 1,573.05
Profit before Depreciation 451.13 435.40
Depreciation and amortization expenses 74.11 73.86
Profit before taxes 377.02 361.54
Current Tax 78.90 71.08
Deferred Tax 9.26 9.30
Profit after Tax 288.86 281.16
Cash Profit 372.23 364.32
Profit brought forward from previous year 988.32 806.75
Profit available for appropriation 1,277.18 1,087.91
Dividend: 25% (2010-11 : 50%) 16.04 32.17
Tax on Dividend 2.60 5.22
Dividend paid (including taxes thereon) 0.00 2.50
Transfer to General Reserve 28.90 28.20
Transfer to Debenture Redemption Reserve 31.59 31.50
Surplus carried to Balance Sheet 1198.04 988.32
Company Performance
During the year under report, various divisions reported the production
as below:
[Rs. in Crore]
Production Unit 2012 2011 Increase/
(Decrease)
Sponge Iron MT 742194 692096 7.24
M.S./S.S. Products MT 89061 41956 112.27
Structural Steel MT 81204 39289 106.68
Ferro Alloys MT 8993 8606 4.50
Coal MT 850505 951930 (10.65)
Power Units in '000 858238 969075 (11.44)
Status of Expansions
Steel
The steel expansion at Raigarh is progressing as per schedule. 80 MW
Power Plant is completed and commenced. Facilities like Blast Furnace,
Sinter Plant, Rebar Mill etc. are getting commenced during the year and
Pellet Plant and Coke Oven Plant will get completed in the 1st half of
next financial year.
Power (Monnet Power Company Limited)
The Power Project of 1050 MW being set up in MPCL a subsidiary Company
at Angul is also progressing with major milestones like boiler drum
lifting and TG deck casting having been completed for both unit 1 and
unit 2. TG Building structure is in progress. The Company is well
placed with work order on other modules like power evacuation system,
cooling tower, intake water system besides two-third of chimney height
having been erected. Boiler light-up is proposed in July 2013 with
synchronization proposed in Sep-Oct 2013 for Unit 1 and December 2013
for Unit 2.
Risk Management
Your Company's Risk Management Policy is backed by strong internal
control systems. The risk management framework consists of policies and
procedures framed at management level and strictly adhered to and
monitored at all levels. The Company also has a sound internal audit
system in place. The audit consists of an independently constituted
team in the Company and outside auditors appointed for the purpose.
The risk policy and Internal Audit Reports are periodically reviewed by
the Board and Audit Committee with emphasis on maintaining its
effectiveness in dynamic business environment.
Note on Subsidiaries
Your Company has fifteen subsidiary companies including subsidiaries of
subsidiaries. The consolidated financial statements presented by the
Company include financial information of its subsidiaries prepared in
compliance with applicable Accounting Standards. For further details of
these subsidiaries, please refer Note 1 [ I ] [a] of Consolidated
Financial Statements on page [82]. The Ministry of Corporate Affairs,
Government of India vide its Circular No. 5/12/2007-CL-III dated
08-02-2011 has granted general exemption under Section 212(8) of the
Companies Act, 1956, from attaching the balance sheet, profit and loss
account and other documents of the subsidiary companies to the balance
sheet of the Company, provided certain conditions are fulfilled. The
information in accordance with para (iv) of the circular dated
08-02-2011 is appended at the beginning of Consolidated Financial
Statements on pages [77] and [78]. Further, annual accounts of the
subsidiary companies and the related detailed information will be made
available to the holding and subsidiary companies' investors seeking
such information at any point of time. The annual accounts of the
subsidiary companies will also be kept for inspection by any investor
at Company's Corporate Office in Delhi and at the Registered Offices of
subsidiary companies concerned.
Buyback
During the year under review, your Company had launched buyback scheme
of its own equity shares pursuant to Section 77A of the Companies Act,
1956 and the SEBI (Buyback of Securities) Regulations, 1998. The
buyback scheme was opened on 21-03-2012 and is continuing. However, the
actual buyback commenced from 21-05-2012 and so far, the Company has
bought back a total of 231483 equity shares till the date of signing of
Board's Report. The maximum offer size of the buyback is Rs.100 Crore and
the maximum offer price is Rs.500/- per share. The total amount of
buyback is Rs.79.95 Crore. All the equity shares bought back are being
extinguished periodically as prescribed under the said regulations.
Dividend
The Board of Directors recommends a dividend of Rs.2.5/- per share on
64175673 equity shares of Rs.10/- each for the financial year ended
31-03-2012 subject to approval of the shareholders in the ensuing
Annual General Meeting. The total outgo on account of dividend
including corporate dividend tax works out to Rs.18.65 Crore as against
Rs.39.89 Crore in the previous year. However, in view of continuing buy
back scheme, the actual payout shall differ and shall be based on
actual share capital as on the date of book closure of the Company on
22nd September and approval by the shareholders.
Necessary information with respect to entitlement is being given in
detail in the Notice calling Annual General Meeting.
Depository System
As on 31-03-2012, about 99.28% of the shares of your Company are held
in dematerialized form. The percentage wise decline in dematerialized
shares is due to ongoing buyback scheme in which only dematerialized
shares have been bought back so far.
The shares of the Company are available for trading in the
dematerialized form under both the Depository Systems in India - NSDL
and CDSL. The International Securities Identification Number (ISIN)
allotted to the Company's shares under the Depository System is
INE743C01013. The annual custody fee for the financial year 2012-13 has
been paid to NSDL and CDSL, the Depositories.
During the year, 42739 shares of the Company, covered in 174 requests
and constituting 0.07% of the paid-up Share Capital of the Company,
were dematerialized and 1 shares of the Company, covered in 1 requests
and constituting 0.00% of the paid-up Share Capital of the Company,
were rematerialized. As on 31-03-2012, 63873685 shares of the Company
constituting 99.28% of the issued and subscribed share Capital stand
dematerialized. The Company's market capitalization stood at Rs.3010
Crore on 31-03-2012.
Directors
During the period beginning after the date of last Directors' Report,
Shri M.S. Gujral, Chairman of the Board left for heavenly abode on
04-05-2012. Shri M.S. Gujral had remained the Chairman of Indian
Railway Board from 17-11-1980 to 6th February, 1983 and of Coal India
Limited from 1983 to 1985 apart from holding senior bureaucratic
positions in various capacities with Government of India. Shri Gujral
made immense contribution as a member of the Board on operations and
strategic matters from time to time. His stature and reputation
elevated the profile of the Board. He was a member of the Board from
the inception of the Company and was elevated as a Chairman of the
Board from 29-11-2002. Shri Gujral, though having left for heavenly
abode, shall continue to remain a guiding light and the source of
inspiration.
Shri Amit Dixit and Shri Vikram Deswal were inducted as additional
directors on the Board of the Company w.e.f. 14-05-2012 and hold
office upto the date of ensuing Annual General Meeting. The Company has
received notices u/s 257 of the Companies Act, 1956 proposing their
names for the directorship along with a fee of Rs.500/- each.
Shri K.K. Khanna, Executive Director resigned from the Board of
Directors w.e.f. 13-08-2012 due to his personal commitments. The Board
places on record its appreciation of the valuable guidance rendered by
him during his tenure as Executive Director. Further, Shri N.C. Jha,
who is Ex-Chairman of Coal India Limited, had joined the Company as
Chief Executive Officer (Mining Business) on 10-05-2012 and has been
elevated as Whole-time Director of the Company w.e.f. 14-08-2012 for a
period of three years.
Pursuant to Section 255 of the Companies Act, 1956, Shri Ajay Relan,
Director, retires by rotation on the day of ensuing Annual General
Meeting of the Company and, being eligible, offers himself for
re-election. As per Clause 49 (IV) (G) of the Listing Agreement, the
details of above directors are given in Annexure-V.
Responsibility Statement
In terms of Section 217 (2AA), your directors confirm having: -
(i) followed in the preparation of Annual Accounts, the applicable
accounting standards, with proper explanation relating to material
departures, if any;
(ii) selected such accounting policies and applied them consistently
and made judgments and estimates that were 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 or loss of the Company
for the year under review;
(iii) 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;
(iv) prepared the accounts on a going concern basis.
Management Discussion & Analysis
Pursuant to clause 49 of the Listing Agreement with Stock Exchanges, a
separate section titled "Management Discussion & Analysis" has been
included in this annual report and is given in Annexure-II and forms an
integral part of this report.
Corporate Governance Report
Pursuant to clause 49 of the Listing Agreement with stock exchanges, a
separate section titled "Compliance Report on Corporate Governance" has
been included in this annual report and is given in Annexure-III along
with a certificate of compliance from the Auditors and forms an
integral part of this report.
Statutory Disclosures
i) A declaration signed by Chairman & Managing Director as required
under Clause 49 (I) (D) of the Listing Agreement is enclosed as
Annexure-IV.
ii) The Chairman & Managing Director and Chief Financial Officer have
given a certificate to the Board of Directors, as required under Clause
49 (V) of the Listing Agreement, for the year ended 31-03-2012.
Consolidated Financial Statements
In accordance with Accounting Standard 21 - Consolidated Financial
Statements prepared on the basis of audited financial statements
received from subsidiary companies as approved by their respective
boards form part of this Report & Accounts.
Audit Committee
The Audit Committee of Board of Directors constituted in terms of
Clause 49 of the Listing Agreement and Section 292A of the Companies
Act, 1956 consists of Shri G.C. Mrig as its Chairman and Shri Ajay
Relan and Shri J.P Lath as its members.
Auditors
The Auditors' Report and Notes to the Accounts as referred in the
Auditors' Report are self-explanatory and therefore, do not call for
any further comments or explanation.
M/s. O.P Bagla & Co., Chartered Accountants, New Delhi, Auditors of the
Company, hold the office till the conclusion of 22nd Annual General
Meeting and are eligible for reappointment. A Certificate from the
auditors has been received to the effect that their re-appointment, if
made, would be within the prescribed limits under Section 224(1B) of
the Companies Act, 1956.
Fixed Deposits
The Company has not invited or accepted any deposits during the year
from the Public under Section 58A of the Companies Act, 1956.
Conservation of Energy, Technology Absorption, Foreign Exchange
Earnings & Outgo
As required under the Companies (Disclosure of Particulars in the
Report of Board of Directors) Rules, 1988 the relevant data is enclosed
as Annexure-I forming part of this report.
Personnel
Information as per Section 217(2A) of the Act, read with the Companies
(Particulars of Employees) Rules, 1975, as amended from time to time,
forms part of this Report. However, as per the provisions of Section
219 (1) (b) (iv) of the Act, the Report and Accounts are being sent to
all the members excluding the statement containing the particulars of
employees to be provided under Section 217(2A) of the Act. Any member
interested in obtaining such particulars may inspect the same at the
Registered Office of the Company or write to the Company Secretary at
the Corporate Office of the Company for a copy.
Acknowledgments
Your Directors take this opportunity to offer their sincere thanks to
the various Departments of the Central and State Government, Financial
Institutions, Bankers to the Company, all Customers, Suppliers and
contractors for their continued valued assistance and support. Your
Directors also wish to place on record their appreciation for dedicated
services rendered by all officers, staff and workers of the Company at
all levels.
For and on behalf of Board of Directors
New Delhi (Sandeep Jajodia)
Date : 14-08-2012 Chairman & Managing Director
Mar 31, 2011
Directors' Report for the Year Ended 31st March, 2011
The Directors submit their report for the financial year ended 31st
March, 2011.
Sales, Profits, Dividends & Retention
[Rs. in Crores]
2011 2010
Sales (Net of Excise) & Other Income 1602.37 1512.45
Profit before Depreciation 435.39 402.97
Depreciation 73.86 71.67
Profit for the year 361.53 331.30
Mat Credit Entitlement (1.91) (12.35)
Provision for taxation 72.28 54.74
Provision for deferred taxation 9.30 17.98
Provision for FBT 0.00 0.00
Income Tax Adjustment 0.70 1.83
Profit after taxation 281.16 269.10
Cash Profit 364.32 358.75
Profit brought forward from previous year 806.75 603.66
Balance B/F on Amalgamation 0.00 11.64
Profit available for appropriation 1087.91 884.40
Dividend: 50% (2009-10 : 50%) 32.17 28.59
Differential Dividend on Equity Shares 2.50 0.00
Tax on Dividend 5.22 4.86
Transfer to General Reserve 28.20 27.00
Transfer to Debenture Redemption Reserve 31.50 17.20
Surplus carried to Balance Sheet 988.32 806.75
Company Performance
During the year under report, various divisions reported the production
as below:
Production Unit 2011 2010 Increase/
(Decrease)
Sponge Iron MT 692096 710044 -2.53
M.S./S.S. Products MT 41956 115325 -63.62
Structural Steel MT 39289 90714 -56.69
Ferro Alloys MT 8606 0 NA
Coal MT 951930 1000119 -4.82
Power Units in'000 969075 1020661 -5.05
During the year, there have been no capacity additions at the plant.
The production in all segments of the business were more or less in
line with the previous year except steel where the Company chose to
sell power rather than making steel. The power sales generated better
profitability therefore, the lower production of steel does not
manifest a decline in the performance of the Company.
Status of Expansions
Steel
The Steel expansion at Raigarh gearing to make a total capacity of 1.50
million tons is progressing in all the modules viz. additional power
capacity of 80 MW, Blast Furnace, Sinter Plant, Rebar Mill, Steel
Melting Shop and Plate Mill. The project is as per the schedule and is
likely to be commissioned as per the dates published by the Company on
its website.
Power (MPCL)
The work on power plant of 1050 MW being set up in MPCL is also
progressing after initial delay owing to delayed receipt of
environmental clearance and sorting out of problems in some parcels of
the land procurement. The site is mobilized both by BHEL and Indure,
the two EPC contractors of the project. The project has also tied up
the sale and evacuation of the power. The progress on the mines which
will supply the coal to the power plant is satisfactory and the mines
are expected to be ready well before the commercial operation of the
power project.
New Joint Venture
Your Company has formed a Joint Venture Company namely Monnet
Ecomaister Enviro Private Limited with Ecomaister Co., Ltd. of Korea
having 50:50 partnership. A Slag Handling Plant is being setup within
Company's Plant. This facility will be environmentally protective and
commercially profitable. Using molten slag which is otherwise a waste
by-product, the technology will first recover metal content from the
slag and the remainder will be converted into a valuable industrial
product that finds variety of uses in Korea and European Countries.
Risk Management
Your Company's Risk Management Policy is backed by strong internal
control systems. The risk management framework consists of policies and
procedures framed at management level and strictly adhered to and
monitored at all levels. The Company also has a sound internal audit
system in place. The audit consists of an independently constituted
team in the company and outside auditors appointed for the purpose. The
risk policy and internal Audit Reports are periodically reviewed by the
Board and Audit Committee with emphasis on maintaining its
effectiveness in dynamic business environment.
Note on Subsidiaries
Your company has twelve subsidiary companies including subsidiaries of
subsidiaries. The consolidated financial statements presented by the
Company include financial information of its subsidiaries prepared in
compliance with applicable Accounting Standards. For further details of
these subsidiaries, please refer Note 22 (A) (1) (i) of Consolidated
Financial Statements on page 79. The Ministry of Corporate Affairs,
Government of India vide its Circular No. 5/1 2/2007-CL-lll dated 8th
February, 201 1 has granted general exemption under Section 212(8) of
the Companies Act, 1 956, from attaching the balance sheet, profit and
loss account and other documents of the subsidiary companies to the
balance sheet of the Company, provided certain conditions are
fulfilled. The information in accordance with para (iv) of the circular
dated 8th February, 201 1
is appended at the beginning of Consolidated Financial Statements on
pages 67 and 68. Further, annual accounts of the subsidiary companies
and the related detailed information will be made available to the
holding and subsidiary companies' investors seeking such information at
any point of time. The annual accounts of the subsidiary companies will
also be kept for inspection by any investor at Company's Head Office in
Delhi and at the head offices of subsidiary companies concerned.
Allotments and Conversions
During the year under review, the Company has allotted 2657255 equity
shares upon conversion of FCCBs. The second tranche of warrants were
converted and 4700000 equity shares were allotted to the holders
thereof. During the year, the merger of Mounteverest Trading &
Investment Limited was completed and 4722539 equity shares were
allotted to the shareholders thereof in terms of Scheme of
Amalgamation.
Dividend
The Board of Directors recommends a dividend of Rs.5/- per share on
64337807 equity shares of Rs.10/- each for the financial year ended
31st March, 2011 subject to approval of the shareholders in the ensuing
Annual General Meeting. The total outgo on account of dividend
including corporate dividend tax and differential dividend works out to
Rs.39.89 crores as against Rs.33.45 crores in the previous year.
Necessary information with respect to entitlement is being given in
detail in the Notice calling Annual General Meeting.
Awards
Star Brands (India), a research oriented summation across industries
from Indian consumers to select strongest brands on each industry, has
reckoned your company among top 200 companies that have created huge
brand recall amongst the business consumers.
Depository System
As on 31st March, 201 1, about 99.31% of the shares of your Company are
held in dematerialized form.
The shares of the Company are available for trading in the
dematerialised form under both the Depository Systems in India - NSDL
and CDSL. The International Securities Identification Number (ISIN)
allotted to the Company's shares under the Depository System is
INE743C0101 3. The annual custody fee for the financial year 201 1 -1 2
has been paid to NSDL and CDSL, the Depositories.
During the year, 1 86390 shares of the Company, covered in 1 161
requests and constituting 0.29% of the paid-up Share Capital of the
Company, were dematerialised. As on 31st March, 201 1, 63830947 shares
of the Company constituting 99.21% of the issued and subscribed share
Capital stand dematerialised. The Company's market capitalisation stood
at 3287 crores on 31st March, 2011.
Directors
During the period beginning after the date of last Directors' Report,
Shri V.N. Kedia and Shri RL Nene resigned from the Board w.e.f.
18-1-2011 and 24-3-2011 respectively. The Board places on record its
appreciation of valuable guidance rendered by Shri VN. Kedia and Shri
RL. Nene during their tenure of appointment. Further, Shri Gopal Tiwari
was inducted as additional director on the Board of the Company w.e.f
29- 3-201 1 through a resolution passed by circulation and holds office
upto the date of ensuing Annual General Meeting. The company has
received a notice u/s 257 of the Companies Act, 1 956 proposing his
name for the directorship along with a fee of Rs. 500/-. The Company is
in the process of making further appointments in the Board.
Pursuant to Section 255 of the Companies Act, 1956, Shri G.C. Mrig,
Director, retires by rotation on the day of ensuing Annual General
Meeting of the Company and, being eligible, offers himself for
re-election. As per Clause 49 (IV) (G) of the Listing Agreement, the
details of above directors are given in Annexure-V.
Responsibility Statement
In terms of Section 217 (2AA), your directors confirm having:
(i) followed in the preparation of Annual Accounts, the applicable
accounting standards , with proper explanation relating to material
departures, if any;
(ii) selected such accounting policies and applied them consistently
and made judgments and estimates that were 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 or loss of the Company
for the year under review ;
(iii) 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 ;
(iv) prepared the accounts on a going concern basis.
Management Discussion & Analysis
Pursuant to clause 49 of the Listing Agreement with Stock Exchanges, a
separate section titled "Management Discussion & Analysis" has been
included in this annual report and is given in Annexure-ll and forms an
integral part of this report.
Corporate Governance Report
Pursuant to clause 49 of the Listing Agreement with stock exchanges, a
separate section titled "Compliance Report on Corporate Governance" has
been included in this annual report and is given in Annexure-lll along
with a certificate of compliance from the Auditors and forms an
integral part of this report.
Statutory Disclosures
i) A declaration signed by Executive Vice Chairman & Managing Director
as required under Clause 49 (I) (D) of the Listing Agreement is
enclosed as Annexure-IV.
ii) The Executive Vice Chairman & Managing Director and Chief Financial
Officer have given a certificate to the Board of Directors, as required
under Clause 49 (V) of the Listing Agreement, for the year ended 31st
March, 2011.
Consolidated Financial Statements
In accordance with Accounting Standard 21 - Consolidated Financial
Statements prepared on the basis of audited financial statements
received from subsidiary companies as approved by their respective
boards form part of this Report & Accounts.
Audit Committee
The Audit Committee of Board of Directors constituted in terms of
Clause 49 of the Listing Agreement and Section 292A of the Companies
Act, 1956 consists of Shri M.S. Gujral as Chairman, Shri G.C. Mrig and
Shri Gopal Tiwari as its members.
Auditors
The Auditors' Report and Notes to the Accounts as referred in the
Auditors' Report are self explanatory and therefore, do not call for
any further comments or explanation.
M/s. O.R Bagla & Co., Chartered Accountants, New Delhi, Auditors of the
Company, hold the office till the conclusion of 21st Annual General
Meeting and are eligible for reappointment. A Certificate from the
auditors has been received to the effect that their re-appointment, if
made, would be within the prescribed limits under Section 224(1 B) of
the Companies Act, 1956.
Fixed Deposits
The Company has not invited or accepted any deposits during the year
from the Public under Section 58A of the Companies Act, 1956.
Conservation of Energy, Technology Absorption, Foreign Exchange
Earnings & Outgo.
As required under the Companies (Disclosure of Particulars in the
Report of Board of Directors) Rules, 1 988 the relevant data is
enclosed as Annexure-I forming part of this report.
Personnel
Information as per Section 217(2A) of the Act, read with the Companies
(Particulars of Employees) Rules, 1975, as amended from time to time,
forms part of this Report. However, as per the provisions of Section
219 (1) (b) (iv) of the Act, the Report and Accounts are being sent to
all the members excluding the statement containing the particulars of
employees to be provided under Section 217(2A) of the Act. Any member
interested in obtaining such particulars may inspect the same at the
Registered Office of the Company or write to the Company Secretary at
the Corporate Office of the Company for a copy.
Acknowledgments
Your Directors take this opportunity to offer their sincere thanks to
the various Departments of the Central and State Government, Financial
Institutions, Bankers to the Company, all Customers, Suppliers and
contractors for their continued valued assistance and support. Your
Directors also wish to place on record their appreciation for dedicated
services rendered by all officers, staff and workers of the Company at
all levels.
For and on behalf of Board of Directors
Place: New Delhi (M.S. Gujral)
Date : 20th August, 2011 Chairman
Mar 31, 2010
The Directors submit their report for the financial year ended 31st
March, 2010.
Sales, Profits, Dividends & Retention
[Rs. in Crores
2010 2009
Sales (Net of Excise) & Other Income 1512.81 1596.39
Profit before depreciation 402.97 336.02
Depreciation 71.67 65.30
Profit for the year 331.30 270.72
Provision for taxation 54.74 30.61
Provision for deferred taxation 5.63 23.10
Provision for FBT 0.00 1.27
Income Tax Adjustment (1.83) 0.26
Profit after taxation 269.10 216.00
Cash Profit 346.40 304.40
Profit brought forward from previous year 603.65 443.43
Balance B/F on Amalgamation 11.64 0.00
Profit available for appropriation 884.39 659.43
Dividend: 50% (2008-09 : 50%) 28.58 23.98
Tax on Dividend 4.86 4.08
Transfer to General Reserve 27.00 22.00
Transfer to Debenture Redemption Reserve 17.20 5.72
Surplus carried to Balance Sheet 806.75 603.65
Company Performance
During the year under report, various divisions reported the production
as below:
Production Unit 2010 2009 %age Increase/(Decrease)
Sponge Iron MT 710044 600431 18.26
M.S./S.S. Products MT 115325 136495 (15.51)
Structural Steel MT 90714 80584 12.57
Ferro Alloys MT 0 15911 NA
Coal MT 1000119 989111 1.11
Power Units in 000 1020661 689533 48.02
During the year under review, the profit after tax rose to 269.10
crores (previous year Rs. 216.00 crores) registering a growth of 24.58%
in-spite of decline in sales by 4.39% to 1480.70 crores as a result of
Companys continuing efforts to reduce its cost of production. However,
your Company had to discontinue the operations of its Ferro Alloys
Division since the cost of production has gone higher than the market
price. Ferro Alloys production is highly power intensive and
consequently, your company was able to sell the surplus power in the
open market yielding high returns.
Expansion Plans
The Company is implementing a steel project to produce 1.5 MTPA of Flat
and Long products in equal proportions. Besides, additional capacity of
power is also being implemented to fully support the power requirement
of expanded capacity. The steel expansion has been designed to be fully
integrated to raw materials like coal & iron ore. Raw material risk
arrangement in terms of pricing volatility is mitigated through captive
availability from Mines and Backward integration facilities. Steel
production would be
A highly value added & improve the operating margins.
Merger of Mounteverest Trading & Investment Ltd. into the Company
It was proposed to merge Mounteverest Trading & Investment Limited
(MTIL), a Group Company, into Monnet Ispat & Energy Limited. The
reasons for the merger are that MTIL A
has made investment in a Company which has similar line of activity as
of MIEL Therefore, it was thought prudent from the point of view of the
interest of various^ stakeholders and in compliance with the best
practices of Corporate A Governance to bring the investment under the
Balance Sheet of Monnet | Ispat & Energy Ltd.
The Honble High Court of Chhattisgarh has approved the merger on 9th
November, 2010 and making the merger effective from 01.04.2009.
Accordingly, the Company is presenting the merged Annual Accounts for
the year ended on 31st March, 2010. Other post merger formalities have
commenced.
Risk Management
Your Companys Risk Management Policy is backed by strong internal
control systems. The risk management framework consists of policies and
procedures framed at management level and strictly adhered to and
monitored at all levels. The Company also has a sound internal audit
system in place. The audit consists of an independently constituted
team in the company and outside auditors appointed for the purpose. The
risk policy and internal Audit Reports are periodically reviewed by the
Board and Audit Committee with emphasis on maintaining its
effectiveness in dynamic business environment.
Note on Subsidiaries
Your company is having two wholly owned subsidiaries incorporated in
Jabel Ali Free Trade Zone Dubai, in UAE , one wholly owned subsidiary
of Monnet Global Limited incorporated in Indonesia and one wholly owned
subsidiary of Monnet Overseas Limited incorporated in Dubai and four
subsidiaries in India two of which are wholly owned. The following may
be read in conjunction with the Consolidated Financial Statements
enclosed with the Accounts, prepared in accordance with Accounting
Standard 21.
Your company has obtained the exemption from Central Government under
section 212(8) of the Companies Act, 1956, for attaching a copy of the
balance sheet, Profit & Loss Accounts, Directors Report and Auditors
Report of the subsidiary companies and other documents required to be
attached under section 212(1) of the Act to the Balance sheet of the
Company. Accordingly, the said documents are not being attached with
the Balance sheet of the Company. A gist of the financial performance
of the subsidiaries is contained in the report. The Annual Accounts of
the subsidiary Companies are open for inspection by any member/investor
and the Company will make available these documents/details upon
request by any Member of the Company or its subsidiaries interested in
obtaining the same.
Allotments
During the year under review, your company had allotted 9000000
warrants to promoters on preferential basis. The Company has allotted
4300000 equity shares pursuant to exercise of option by the warrant
holders to convert equal number of warrants.
Dividend
The Board of Directors recommends a dividend of Rs. 5/- per share on
52452785 equity shares of Rs. 10/- each for the financial year ended
31st March, 2010 subject to approval of the shareholders in the ensuing
Annual General Meeting. The total outgo on account of dividend
including dividend tax works out to Rs. 28.59 crores as against Rs.
23.98 crores in the previous year.
Necessary information with respect to entitlement is being given in
detail in the Notice calling Annual General Meeting.
Depository System
As on 31st March, 2010, about 99.09% of the shares (including 4300000
shares allotted on 31-3-2010 and pending for corporate action) of your
Company are held in dematerialized form.
Directors
During the period beginning after the date of last Directors Report,
Shri Ajay Relan has been appointed as additional director on the Board
of Directors of the Company w.e.f. 9th August, 2010 and holds office
upto the date of ensuing Annual General Meeting. The company has
received a notice u/s 257 of the Companies Act, 1956 proposing his name
for the directorship along with a fee of Rs. 500/-.
The Board of Directors, subject to approval of the shareholders in the
ensuing Annual General Meeting, has re-appointed Shri Sandeep Jajodia
as Executive Vice Chairman & Managing Director for a period of five
years commencing 1st April, 2010. The Board has also appointed Shri
K.K. Khanna as Executive Director w.e.f. 31st October, 2009 and Shri
C.P. Baid as Dy. Managing Director w.e.f. 8th November, 2010.
Pursuant to Section 255 of the Companies Act, 1956, Shri V.N. Kedia and
Shri J.P. Lath, Directors, retire by rotation on the day of ensuing
Annual General Meeting of the Company and, being eligible, offer
themselves for re-election. As per Clause 49 (IV) (G) of the Listing
Agreement, the details of above directors are given in Annexure-V
Management Discussion & Analysis
Pursuant to clause 49 of the Listing Agreement with Stock Exchanges, a
separate section titled "Management Discussion & Analysis" has been
included in this annual report and is given in Annexure-II and forms an
integral part of this report.
Corporate Governance Report
Pursuant to clause 49 of the Listing Agreement with stock exchanges, a
separate section titled "Compliance Report on Corporate Governance" has
been included in this annual report and is given in Annexure-III along
with a certificate of compliance from the Auditors and forms an
integral part of this report.
Statutory Disclosures
i) A declaration signed by Executive Vice Chairman & Managing Director
as required under Clause 49 (I) (D) of the Listing Agreement is
enclosed as Annexure-IV.
ii) The Executive Vice Chairman & Managing Director and Chief Financial
Officer have given a certificate to the Board of Directors, as required
under Clause 49 (V) of the Listing Agreement, for the year ended 31st
March, 2010.
Consolidated Financial Statements
In accordance with Accounting Standard 21 - Consolidated Financial
Statements prepared on the basis of audited financial statements
received from subsidiary companies as approved by their respective
boards form part of this Report & Accounts.
Audit Committee
The Audit Committee of Board of Directors constituted in terms of
Clause 49 of the Listing Agreement and Section 292A of the Companies
Act, 1956 consists of Shri M.S. Gujral as Chairman, Shri P.L. Nene,
Shri G.C. Mrig and Shri V.N. Kedia, as its members.
Auditors
The Auditors Report and Notes to the Accounts as referred in the
Auditors Report are self explanatory and therefore, do not call for
any further comments or explanation.
M/s. O.P. Bagla & Co., Chartered Accountants, New Delhi, Auditors of
the Company, hold the office till the conclusion of 20th Annual General
Meeting and are eligible for reappointment. A Certificate from the
auditors has been received to the effect that their re-appointment, if
made, would be within the prescribed limits under Section 224(1B) of
the Companies Act, 1956.
Fixed Deposits
The Company has not invited or accepted any deposits during the year
from the Public under Section 58A of the Companies Act, 1956.
Conservation of Energy, Technology Absorption, Foreign Exchange
Earnings & Outgo
As required under the Companies (Disclosure of Particulars in the
Report of Board of Directors) Rules, 1988 the relevant data is enclosed
as Annexure-I forming part of this report.
Personnel
Information as per Section 217(2A) of the Act, read with the Companies
(Particulars of Employees) Rules, 1975, as amended from time to time,
forms part of this Report. However, as per the provisions of Section
219 (1) (b) (iv) of the Act, the Report and Accounts are being sent to
all the members excluding the statement containing the particulars of
employees to be provided under Section 217(2A) of the Act. Any member
interested in obtaining such particulars may inspect the same at the
Registered Office of the Company or write to the Company Secretary at
the Corporate Office of the Company for a copy.
Acknowledgments
Your Directors take this opportunity to offer their sincere thanks to
the various Departments of the Central and State Government, Financial
Institutions, Bankers to the Company, all Customers, Suppliers and
contractors for their continued valued assistance and support. Your
Directors also wish to place on record their appreciation for dedicated
services rendered by all officers, staff and workers of the Company at
all levels.
For and on behalf of Board of Directors
Place : New Delhi (M.S. Gujral)
Date : 25th November, 2010 Chairman
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