Mar 31, 2018
The Members
The Directors have pleasure in presenting the 33rd Annual Report on the Business and Operations of the Company, along with the Financial Statements for the Financial Year ended 31st March, 2018.
FINANCIAL RESULTS Rs. in Crore
STAND-ALONE |
CONSOLIDATED |
|||
PARTICULARS |
Year ended 31st March, 2018 |
Year ended 31st March, 2017 |
Year ended 31st March, 2018 |
Year ended 31st March, 2017 |
Gross Sales Turnover |
2622.16 |
4613.08 |
3492.40 |
5535.24 |
Profit / [Loss] before Interest, Tax, Depreciation and Amortization |
24.14 |
265.6 |
150.04 |
288.63 |
Interest |
647.17 |
608.99 |
376.97 |
621.31 |
Profit/(Loss) before Tax, Depreciation and Amortization |
(624.22) |
(343.39) |
(226.93) |
(332.68) |
Depreciation/ Amortization |
258.12 |
285.31 |
654.33 |
286.40 |
Other Income ( /-) |
69.18 |
64.25 |
69.45 |
63.92 |
Exceptional Items ( /-) |
-- |
-- |
||
Profit/(Loss) before Tax |
(881.15) |
(628.70) |
(881.26) |
(619.08) |
FINANCIAL PERFORMANCE
During this year your Company has achieved a turnover of Rs.2622.16 Crore as against Rs.4613.08 Crore in the previous year. Your Company posted a Loss of Rs.881.15 Crore as against Loss (before Tax) of Rs.628.7 Crore in the previous year.
Consolidated turnover of Rs.3492.40 Crore has decreased as against Rs.5535.24 Crore in the previous year. Your Company posted Consolidated Loss of Rs.881.26 Crore as against Loss (before Tax) of Rs.619.08 Crore in the previous year.
Your Company''s performance got severely impacted due to lack of working capital, unfavorable volatility in the foreign exchange rates, absence of support from the supplier and the customers on account of initiation of insolvency proceedings against the Company by financial and operational creditors. Further exports of the company were also negatively affected due to lack of growth in the international market and volatility in politico-economic environment.
Due to this unfavorable situation and slump in the steel market, your Company has defaulted in repayment of the dues of Lenders and hence your Company has declared as NPA (Non-performing Assets) by all the Lenders. Until November, 2017, your Company has held several meetings with the Joint Lender Forum (JLF) wherein it has not only extended its full cooperation in implementing a corrective action plan under the guidelines prescribed by RBI, but has also presented reasonable resolution and debt restructuring plans to the JLF. Additionally, your Company was making payment of tagging amount ie. 2% of collection on daily basis to the Lenders. Despite of all efforts by your Company and due to our misfortune, the JLF has not considered any plan to restructure the debt of the Company and filed the Petition under Insolvency and Bankruptcy Code 2016 on 29th December, 2017 in National Company Law Tribunal (NCLT), Mumbai Bench, against the Company. As on date the said petition is not admitted by the Tribunal.
OPERATIONS
Your Company has been working towards achieving greater operational efficiencies across the different processes to help improve the quality and margins of our products. This has enabled us to secure lower plant operational and fixed costs compared to last year. To tide over the working capital constraints, your Company has entered into a Sale Purchase Arrangement with JSW Coated Products Limited. This arrangement helped your Company to keep the plant operational and cover fixed overheads. Your Company has also started operating on job-work basis with different market parties to improve utilizations with limited working capital availability.
Apart from the cost reduction initiatives, your Company has also focused on various productivity improvement initiatives. During the period under review, we have successfully managed to de-bottleneck our capacity constrained lines and enhanced their Overall Equipment Efficiency (OEE).
In order to drive the margins for the business, your Company has been working towards achieving greater operational efficiency.
MANAGEMENT DISCUSSION AND ANALYSIS
Pursuant to the regulation 34 read with the Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, your Directors wish to report as follows:
(i) Industry Structure & Developments:
The downstream steel industry, consisting of Cold Rolled (CR), Galvanised and Color Coated products (GP & GC), has witnessed strong growth in demand over the recent years. The focus to shift towards light weight, corrosion resistant, durable, high-shine products across industries & applications has driven the demand.
Globally, financial year 2018 saw an average capacity utilization of 68% on cold rolling with excess capacity varying between 20%-30% across China, India, Middle East and Europe. Galvanizing lines saw a higher utilization during the period driven by shift from CR to GP in end use. Across countries, the share of imports/ trade varied between 10-20% of the total domestic consumption with China and India being one of the key exporters of downstream products.
(ii) Opportunities & Threats:
The demand for downstream steel in India is expected to keep growing at a healthy rate of 10-12% driven by a shift towards usage of galvanized materials and strong underlying growth in the auto, construction, appliances and machinery industries.
There is a huge scope for Indian steel makers due to the country''s low per capita steel consumption and positive future outlook due to increase in consumption from construction, automobile and railways sectors.
The ambitious infrastructure projects and the thrust in manufacturing through the "Make in Indiaâ campaign are steps in the right direction. The plan for smart cities, improved road and rail connectivity by building highways, bridges and dedicated freight and superfast rail corridors have huge potential to spur domestic steel demand
While looking at the future planned capacity expansions, it is expected that the capacity utilization for galvanized will exceed 90% over the next five years and we will face a shortage of color coated capacity This will result in healthy margins for the existing players and drive revival of the downstream steel business in India further.
(iii) Segment-wise or Product-wise Performance:
Since your Company operates only in one Segment, segment-wise or product- wise analysis of performance is not applicable.
(iv) Outlook :
Steel industry has been through one of the difficult phase largely due to impact of supply disruptions with many players having to stop operations and your Company was not immune it. However, the demand for the downstream steel products remains strong on back of growth in the construction, auto and appliance sectors in India. The emerging markets showing a strong demand due to infrastructure spending and shift towards usage of coated products. Also with the introduction of GST, multiple new domestic markets will open up to the Company for sale of products at competitive prices. In addition to all, the government has put the resolution of stressed assets on fast track. The positive impact of stable supply will be seen in next financial year.
(v) Risks and Concerns:
Risks, challenges and volatility are part and parcel of any industry and always the point of concerns for the management of the Company. Your Company has subdued it through well planned strategies and actions. Your Company is continuously evolving and improving systems and measures to take care of all the risk exigencies involved in the business. All inherent risks are identified, measured, monitored and regularly reported to the management. The management decides measures required to overcome these risks and ensures implementation of proper risk mitigation plans. The risk report and mitigation plans are presented to the Board of Directors periodically
In accordance with Regulation 17 of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, your Company has duly adopted steps for framing, implementing and monitoring the risk management plan and accordingly your Directors have put in place critical risk management framework across the Company for identification and evaluation of all potential risks.
(vi) Internal Control Systems and their adequacy:
Your Company has an effective Internal Control System to prevent fraud and misuse of Company''s resources and protect shareholders'' interest. The base of Internal Control System lies in the Code of Conduct (''CoC'') and various policies and procedures adopted by your Company. Board Members, Senior managements and every Employees in an organization carries the responsibility for internal control. All employees produce information used in the internal control system or take other actions needed to affect control. Also, all personnel are responsible for communicating to seniors about the problems in operations, non compliances with the code of conduct / applicable laws, or other policy violations or illegal actions.
Your Company has also established and maintained the Internal Financial Control to ensure the orderly and efficiently conduct of its business inter alia adherence to Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.
(vii) Discussion on Financial Performance with respect to Operational Performance and state of Company''s affairs:
The turnover and operating profits of your Company have declined as compared to last year mainly on account of delay in finalising debt resolution for the Company During the financial year, though the Company worked closely with various Banks/ Financial Institutions to arrive at sustainable debt resolution plan, a mutually acceptable scheme could not be finalised.
The position further worsened after adverse media news in market that the Company is being referred to National Company Law Tribunal under Insolvency and Bankruptcy Code 2016. Due to these adverse media reports, the market credit available to your Company was withdrawn which has deteriorated the working capital position of the Company. Operating at sub-optimal capacity has worsened the profitability of the Company. In the meanwhile, the dues of the, Banks / Financial Institutions have increased significantly.
Despite adverse circumstances, the management is making all efforts to improve capacity utilization and to arrive at a satisfactory debt resolution with the Banks. In this regard, an One Time Settlement proposal has been submitted to the Banks which is under consideration.
(viii) Human Resources Development and Industrial Relations:
Your Company endeavors to strive hard to nurture and develop their employees so that the organization and individual employees can accomplish their work goals in service to the end users. Your Company, on its path towards a culture of meritocracy, has put in unprecedented vigor in identifying Key Result Areas, the targets which are identified for each and every employee in accordance with the business objectives. This rigorous approach has directly led to process reengineering and right-sizing, resulting in reduction of overhead costs. Also based on industry best practices, the competency framework which your Company had institutionalized last year has aptly supported in identifying and developing talent in the organization. Your Company is proud of its healthy Industrial Relations record.
Presently, your Company employs more than 900 employees. Your Company has put in place ''Employee Grievance Redressal Committee'' for their employees. Suitable processes and mechanism are in place to ensure that grievance of any employee, is effectively addressed and to ensure that it has been dealt with in a fair and just manner.
Your Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. 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 financial year 2017-18.
RELATED PARTY TRANSACTIONS
The transactions those were entered into with the Related Parties (RPT) during the financial year were on arm''s length basis and in the ordinary course of business and in compliance with the applicable provisions of the Companies Act, 2013 and Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter "Listing Regulationsâ).
During the year, there was no transaction with any Related parties, which exceeds 10% of the annual consolidated turnover of the preceding financial year (material transactions). Hence, the disclosure of material related party transactions in the Form AOC- 2, as referred in Section 188 read with Section 134(3) (h) of the Companies Act, 2013 is not required to be annexed herewith.
CORPORATE GOVERNANCE
A detailed report on Corporate Governance as required under Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulationsâ), forms part of this Annual Report as ''Annexure I''. The Auditors'' Certificate on compliance with the conditions of Corporate Governance requirements by the Company is attached to the Report thereon.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
In accordance with the requirements of Section 135 of Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 as amended from time to time, your Company has duly constituted Corporate Social Responsibility Committee, under the Chairmanship of Shri G S Sawhney and two other Members namely Shri Rajiv Munjal and ShriArvind Kumar Gupta. The Committee has framed the Corporate Social Responsibility Policy of the Company which is available on the Company''s website.
Since there was loss during the financial year ended 31st March, 2017, the Company was not mandatorily required to spend any amount on CSR activities in the financial year 2017-18. Thus no report for CSR activities is required to be annexed herewith.
DIRECTORS & KEY MANAGERIAL PERSONNEL (KMP)
(i) Appointment:
ShriArvind Kumar Gupta (DIN 03203379) and Smt. Jagath Chandra (DIN 07147686) were appointed as an Additional Directors from 19th January, 2018 and 7th April, 2018 respectively. They both will act as NonExecutive and Independent Directors of the Company and shall not be liable to retire by rotation as per provisions of Companies Act, 2013.
The aforesaid Directors have submitted their declaration of Independence, as required under subSection (7) of Section 149 of the Companies Act, 2013 and Regulation 16(1)(b) of the SEBI Listing Regulations stating that they meet the criteria of independence as provided therein.
The Board recommends and seeks your support in confirming the appointment of ShriArvind Kumar Gupta and Smt. Jagath Chandra as the Independent Directors.
(ii) Resignation:
Shri O P Gahrotra and Smt. SwarnaPrabhaSukumar resigned from the post of non-executive Independent Directorship and committees where they were serving as Chairman/ Member. Their resignations were accepted by the Board in their Meeting held on 7th April, 2018. The Board placed on records its appreciation towards the valuable contribution of Shri O P Gahrotra and Smt. SwarnaPrabhaSukumar, during their tenure with the Company.
(iii) Retire by Rotation:
As per the provisions of the Companies Act, 2013, Shri Rajiv Munjal will retire at the ensuing AGM and being eligible, seeks re-appointment. The Board recommends and seeks your support in confirming re-appointment of Shri Rajiv Munjal.
None of the Directors of your Company is disqualified under Section 164(1) of the Companies Act, 2013. As required by law, this position is also reflected in the Auditors'' Report.
Pursuant to Section 203 of the Companies Act, 2013, the Key Managerial Personnel of the Company are, ShriAnuj R Miglani- Managing Director & CEO; ShriGursharan Singh Sawhney - Director (Finance) & Group CFO and Shri R Agrawal- President & Company Secretary. During the year, there has been no change in the Key Managerial Personnel.
REMUNERATION OF THE DIRECTORS/ KEY MANAGERIAL PERSONNEL (KMP)/ EMPLOYEES
The Board on recommendation of the Nomination & Remuneration Committee, has adopted, a policy for selection and appointment of Directors, Senior Management and their remuneration. A brief detail of the policy is given in the Corporate Governance Report and also posted on our website www.iittnmanlvn.com
During the year under review the remuneration paid to the Managerial personnel, is well within the ambit of the provisions and compliances under the Companies act, 2013 and Schedule V and rules made thereof.
During the year under review no Employee of the Company other than the Managing Directors has drawn remuneration of Rs.Eight Lakhs and Fifty Thousands per month or more. The information required pursuant to Section 197(12) read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended time to time, in respect to remuneration to the Whole Time Directors and Key Managerial Personnel is prepared separately forming part of this report. Having regard to the provisions of the first proviso of Section 136(1) of the Companies Act, 2013, the Annual Report is being sent to the Members of the Company excluding the aforesaid information. However, the said information is available for inspection at the registered office of the Company on any working days upto the date of the ensuing Annual General Meeting.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act, 2013, the Directors confirm that:
i) In the preparation of the annual accounts, the applicable Accounting Standards have been followed along with the proper explanation relating to material departures.
ii) Appropriate Accounting Policies have been selected and applied consistently. Judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2018 and of the Profit and Loss Account for the Financial Year 2017-18 have been made.
iii) Proper and sufficient care has been taken 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 preventing & detecting fraud and other irregularities.
iv) The Annual Accounts have been prepared on a going concern basis.
v) The Internal Financial Controls were in place and that there are adequate and were operating effectively;
vi) Proper systems are in place to ensure compliance of all laws applicable to the Company and that such systems are adequate and operating effectively.
STATUTORY AUDITORS AND THEIR REPORT
Pursuant to the provisions of Section 139 of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules, 2014, as amended from time to time, M/s. Todarwal& Todarwal, Chartered Accountants (Firm Registration No. 111009W), were appointed as statutory auditors from the conclusion of the 32ndAnnual General Meeting (AGM) held on 19th August, 2017 till the conclusion of the 35th AGM of the Company, subject to the ratification of their appointment at every AGM, if required under law. Accordingly, necessary resolution for ratification of appointment of auditors is included in the Notice for this AGM.
COST AUDITORS AND THEIR REPORT
As per Section 148 of the Act read with Companies (Cost Records and Audits) Rules, 2014, as amended and on the recommendation of the Audit Committee, the Board of Directors of your Company has reappointed M/s. Manisha& Associates, Cost Accountants as "Cost Auditorsâ to conduct Cost Audit for Steel and Power Division of the Company for the Financial Year 2018-19.
As required under the Companies Act, 2013, a resolution seeking Members'' approval for the remuneration payable to the Cost Auditors forms part of the notice of the Annual General Meeting for their ratification.
The Cost Audit Report of the Company for the Financial Year ended 31st March,2017 was duly filed with Central Government within the stipulated time as prescribed under Companies Act, 2013 read with Companies (Cost Records and Audit) Rules, 2014
SECRETARIAL AUDIT
The Secretarial Audit of the Company for the financial year 2017-18, was carried out by M/s. JNG & Co., Practicing Company Secretaries (C.P. No. 8108). The Secretarial Audit Report is annexed hereto and part of the Director''s Report as an ''Annexure II''. The said report does not contain any qualification, reservation or adverse remarks.
SUBSIDIARY & JOINT VENTURE COMPANIES
The Company has 7 Wholly-Owned Subsidiary Companies and 1 step down subsidiary of the Company namely (i) Uttam Galva Holdings Limited in Dubai, (ii) Atlantis International Services Limited in British Virgin Islands, (iii) Uttam Galva Steels Netherlands B.V. in Netherland, (iv) Neelraj International Trade Limited in British Virgin Islands, (v) Uttam Galva Steels BVI Limited in British Virgin Islands and (vi) Uttam Exports BVI Ltd. in British Virgin Islands (vii) Uttam Galva North America, Inc. and (viii) Uttam Galva International, FZE (Step down Subsidiary) in Jebel Ali Free Zone in United Arab Emirates, the subsidiary of Uttam Galva Holdings Limited, Dubai.
Apart from the aforesaid subsidiaries, your Company also has 2 Joint Venture Companies namely (i) Texturing Technology Private Limited and (ii) Moira Madhujore Coal Limited.
The Company has, in accordance with Section 129(3) of the Companies Act, 2013 prepared consolidated financial statements of the Company and all its subsidiaries, which form part of the Integrated Report. Further, the report on the performance and financial position of each of the subsidiary and joint venture and salient features of the financial statements in the prescribed form AOC-1 is annexed to this report as ''Annexure III''.
In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and financial statements of each of the subsidiary will be available on our website www.uttamgalva.com. These documents will also be available for inspection during business hours at the Registered Office of the Company.
During the year, in one of the Subsidiary of the Company namely Uttam Galva Steels BVI Limited, the Lender has appointed receiver due to default in repayment made by that Company.
HEALTH, SAFETY AND ENVIRONMENT
Your Company values environmental protection and safety as the major considerations in its functioning. We have well-versed pollution control devices namely Air Pollution Control device (scrubber followed by fume extraction system and adequate height of chimney) to ensure level of pollutant parameter which are well within the standard norms. Your Company has zero water discharge unit and 100% of Industrial waste water is being recycled and reused in the process which comprises ETP, UF, RO, and MVRE & MEE. Your Company has Sewage Treatment Plant to treat and reuse treated domestic waste water for flushing and gardening. We have also appointed a laboratory which is approved by Ministry of Environment and Forests (MOEF) & National Accreditation Board to monitor the maintenance of environment on monthly basis. Your Company is yearly submitting Hazardous waste return and Environment Statement Report to Maharashtra Pollution Control Board.
The Company is continuously endeavoring to improve the health and quality of life in the communities surrounding its industrial complexes.
DISCLOSURES UNDER THE COMPANIES ACT, 2013
i) Extract of Annual Return:
The details containing the extract of the Annual Return is enclosed in the Form MGT-9 as an ''Annexure IV'' and forms part of this report.
ii) Particulars of Loans, Guarantee or Investment:
Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements. Kindly refer note no. 4 of the stand-alone balance sheet.
iii) Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo:
a) Conservation of Energy
The Company has an Energy Conservation Cell which ensures implementation of the Energy Conservation efforts &Energy Management Policy. Conservation of the energy is a continuous activity and the Company continually strives to conserve energy. During the year under review followings steps has been taken by the Company to conserve energy at its Plant:
- Monitor and Optimize process parameters in the combustion system of all the thermal equipment''s in the Plant. This includes Incinerators, Galvanizing furnace, Annealing furnace, Acid Re-generation Plant, Boilers etc.
- The Company has installed variable speed drive in the Utility System (both water and air) to ensure that energy is conserved.
During the year under review, the Company has not taken any steps for utilizing alternate source of energy.
During this year under review, no capital expenditure has been incurred in energy conservation equipment.
Energy conservation has been carried out by effective process optimization.
b) Technology Absorption
The Company''s products are manufactured by using in-house know how and no outside technology is being used for manufacturing activities. The Company has fully absorbed the technology. The Company constantly strives for maintenance and improvement in quality of its products and entire Research & Development activities are directed to achieve the aforesaid goal.
c) Foreign Exchange Earnings & Outgo
During the year under review, the Company has exported its product in various countries and has also made expenditure in foreign currency. The details of the foreign exchange earnings & outgo are as below:
Rs. in Crore
Particulars |
2017-18 |
2016-17 |
Foreign Exchange Earnings |
176.84 |
1261.73 |
Value of direct Imports |
122.29 |
1089.60 |
Expenditure in Foreign Currency |
15.71 |
61.69 |
iv) General Disclosures:
Your Directors state that no disclosures/ reporting are required since there were no transactions in respect of the following items during the year under review:
a. Details relating to deposits covered under Chapter V of the Act.
b. Significant and material orders passed by the Regulators or the Courts which would impact the going concern status of the Company and its future operations.
c. Issue of Equity shares with differential rights as to dividend, voting or otherwise.
d. Issue of Shares (including sweat equity shares) to employees of the Company under any scheme.
e. Neither the Managing Director not the Whole Time Directors of the Company receive any remuneration or commission from any of its subsidiaries.
f. During the year,ArcelorMittal Netherlands B.V. (Copromoter) sold their entire shareholding (inter-se transfer between the promoters) to the other promoter Group Company and Co-Promotion Agreement between the promoters stands terminated from on 7th February, 2018. The necessary compliances under SEBI (LODR) Regulations have been duly complied with. However, some of the shareholders of the Company filed an appeal with the Hon''ble Securities Appellate Tribunal(SAT) challenging the approval given by National Stock exchange of India and BSE Limited. The matter is pending with the Hon''ble appellate tribunal.
CAUTIONARY STATEMENT
Statements in this Directors'' report and in the Management Discussion and Analysis describing the Company''s objectives, projections, estimates, expectations or predictions and those are forward looking statements within the meaning of applicable laws and regulations. Actual results could differ from those expressed or implied. Important factors that could make a difference to the Company''s operations include raw material availability and its prices, economic conditions affecting demand and supply, price conditions in domestic and international market, change in Government regulations, tax regimes, economic developments and other related and incidental factors.
ACKNOWLEDGEMENT
Your Directors would like to express their appreciation to the Central, State & Local Governments, Authorities, Regulatory Bodies, Financial Institutions, Banks, Customers and the Shareholders of the Company for their continued support and co-operation.
Your Directors also like to place on record their sincere appreciation for the total commitment, dedication and hard work put in by every Member of the Uttam Galva Family. Your Directors are deeply grateful to you Shareholders, for the confidence and trust reposed in us.
For and on behalf of the Board
Sd/-
Rajinder Miglani
Place : Mumbai Chairman
Date: 7th April, 2018 (DIN 00286788)
Mar 31, 2017
To,
The Members
The Directors have pleasure in presenting the 32nd Annual Report on the Business and Operations of the Company, along with the Financial Statements for the Financial Year ended 31st March, 2017.
FINANCIAL RESULTS Rs, in Crore
STAND-ALONE |
CONSOLIDATED |
|||
PARTICULARS |
Year ended 31st March, 2017 |
Year ended 31st March, 2016 |
Year ended 31st March, 2017 |
Year ended 31st March, 2016 |
Turnover |
4613.08 |
7257.19 |
5535.24 |
8670.03 |
Profit / (Loss) before Interest, Tax, Depreciation and Amortization |
265.6 |
53.46 |
288.63 |
62.68 |
Interest |
608.99 |
505.33 |
621.31 |
516.93 |
Profit/(Loss) before Tax, Depreciation and Amortization |
(343.39) |
(451.87) |
(332.68) |
(454.25) |
Depreciation/ Amortization |
285.31 |
281.84 |
286.40 |
282.81 |
Other Income ( /-) |
64.25 |
104.49 |
63.92 |
101.86 |
Exceptional Items ( /-) |
(717.81) |
(717.81) |
||
Profit/(Loss) before Tax |
(628.70) |
(1451.56) |
(619.08) |
(1454.87) |
FINANCIAL PERFORMANCE
During this year your Company has achieved a turnover of Rs, 4613.08 Crore as against Rs, 7257.19 Crore in the previous year. Your Company posted a Loss of Rs, 628.7 Crore as against Loss (before Tax) of Rs, 1451.56 Crore in the previous year.
Consolidated turnover of Rs, 5535.24 Crore has decreased as against Rs, 8670.03 Crore in the previous year. Your Company posted Consolidated Loss of Rs, 619.08 Crore as against Loss (before Tax) of Rs, 1454.87 Crore in the previous year.
Your Company has faced strong challenges due to various micro and macro factors and has tried to mitigate those using its core strengths in robust manufacturing practices and presence in niche market segments:
i. Stand-alone Profit before Interest, Tax, Depreciation, Amortization and Exceptional items has increased due to focus on high margin products and exports.
ii. Interest cost have shot up by 20% due to stretched working cycle and because of sub-optimal trends prevailing in the industry and constrains faced by company from the supplier and customers.
iii. The global and domestic steel market has been experiencing tepid demand at the present price points due to over-capacity and dumping of steel products by steel surplus nations.
OPERATIONS
(i) Export Market:
Your Company has serviced 148 countries since its entry into the export business and is recognized as quality supplier in both developed and emerging markets. Your Company has able to maintain its presence in the International Market in spite of change in regulations in some of the countries.
In US markets, the Anti-dumping duty proceedings were completed last year. An administrative review will follow every 18 months. Your Company has managed one of the lowest duties among peers due to our diligent pricing control. Internally, the teams continue to exercise strong pricing controls.
The global economy expanded during the year 2016-17 at 3.1%. Legacies from the global financial crisis continue to weigh on growth. Economic activity in both advanced economies and EMDEs is forecast to accelerate in 2017
18, with global growth projected to be 3.4% and 3.6%, respectively
Your Company has a commitment to maintain its presence in the US market and co-exist along with their domestic manufacturers. To serve that commitment, your company has developed a Go-To-Market strategy for US market and identified new customers and segments to serve and new products to develop. Among the new segments served in the period under review, steel roofing and doors segment has been the most successful. New products developed include Acrylic coated Galvanised Iron and Paint Line Quality material.
(ii) Domestic Market:
The growth rate of Indian Domestic steel consumption has reduced to 3.4% in 2016-17 from 4.2% in 2015
16, the decrease in growth has been on account of demonetisation drive initiated on 8th November, 2016.
Steel industry has been through one of the difficult phases in the past several years due to weak consumer demand following liquidity crises arising out of demonetisation of high value currency notes. While the government had in February announced INR 6,500 Crores investment on infrastructure development. However, lack of government financing and disappearing private investment have forced a slowdown in steel demand over the last two years.
(iii) Original Equipment Manufacturer (OEM) market:
In the Original Equipment Manufacturer (OEM) market, the Company has continued its focus on high growth, profitable and niche areas including appliances segment compared to our other segments like Automotive, Construction and Electrical Equipment segments. OEM market overall, has been one of the highly profitable segments for your Company during the period under review.
Your Company has made commendable gains in Refrigerators and Washing Machines components with majors like Samsung, Whirlpool and Godrej. Your Company is also working towards development of new products such as VCM refrigerator doors and other doors for our key strategic appliance customers. Your Company is working closely with the global arms of Samsung and Whirlpool for their global supplies and is also working on initiating exports through our strategic customers to other emerging and developed countries.
In the Automotive segment, your Company has witnessed a strong competition. Your Company continues to cater to the requirements of TATA Motors, Bajaj Auto, General Motors and similar others.
In the building and construction segment your Company continues to maintain strong contact with major component manufacturers like Shakti Hormann, NCL Altek and Integrated Cleanroom in this segment.
In the General Engineering segment the Company continues to be an established supplier to Godrej & Boyce, Rittal and other vendors to Siemens.
(iv) Retail Transformation Program:
Your Company''s continuous effort on ''Retail transformation program'' has paid its fruits by establishing the ''Uttam Suraksha'' GC (Galvanised Corrugated Roofing Sheets) brand as the leader in Maharashtra with more than 50% market share and increasing its penetration in rural and urban areas. It is also recognized as one of the major Brands in its segment in other domestic Markets like Kerala, Madhya Pradesh, Gujarat, Andhra Pradesh, Karnataka and Chhattisgarh, etc.
Your Company has come up with many strategic initiatives like the launch of new product -"Brighter Spangled GCâ to differentiate itself from other competitors. During the period under review, your Company has also launched several branding initiatives through radio/print media and enhanced its customer connect through its presence in various exhibitions and fairs across the country
In line with high demand for Colour Coated Roofing products your Company had earlier launched an exclusive range of products under the brand name "UTTAM TARANGâ, which will provide greater value and benefits to the rural consumer. We continue to strengthen our presence in the key colour coated demand centres with a market share of 6% overall. Your Company is in the process of executing multiple product and branding strategies to enhance the brand awareness of our product.
Your Company is evaluating expansion through digital means as well. We believe that this will help us in establishing ourselves as a successful brand in our weaker segments too.
(v) Other strategic initiatives
During the period under review, your Company had ventured into rigorous cost reduction programs and successfully managed to significantly bring down the processing costs. Your Company would continue its focus on cost reduction and strive to achieve best-in-class in operations excellence.
Apart from the cost reduction initiatives, your Company has also focused on various productivity improvement initiatives. During the period under review, we have successfully managed to de-bottleneck our capacity constrained lines and enhanced their Overall Equipment Efficiency (OEE).
MANAGEMENT DISCUSSION AND ANALYSIS
Pursuant to the regulation 34 read with the Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 your Directors wish to report as follows:
(i) Industry Structure & Developments:
The Steel Industry is considered as backbone of the modern society and has direct correlation with the industrial developments. However, in recent years, the global steel industry has been passing through the stress due to significant oversupply in certain geographies, declining demand, falling spreads between steel prices and raw material prices and volatile currency movements.
Indian government has made efforts to revive the steel industry by imposing anti-dumping duty, safeguard duty on imported steel products, supportive government policies. After these initiations, in the recent period the steel sector in India has shown some signs of recovery and the domestic demand have raised. Now the sector is currently poised for its next wave of growth supported by the recent reforms launched by the government, showing a tremendous opportunity for the steel industry to grow exponentially
(ii) Opportunities & Threats:
India is poised to become the 2nd largest steel producing country after China over the next two years, as the country''s steelmakers continue to add capacities. The country''s steel ministry is framing a new steel policy to increase the capacity of steel production to 300 million tonne by 2025.
There is a huge scope for Indian steel makers due to the country''s low per capita steel consumption and positive future outlook due to increase in consumption from construction, automobile and railways sectors. The ambitious infrastructure projects and the thrust in manufacturing through the "Make in Indiaâ campaign are steps in the right direction. The plan for smart cities, improved road and rail connectivity by building highways, bridges and dedicated freight and superfast rail corridors have huge potential to spur domestic steel demand
For the first time in last 3 years, India was a net exporter of steel. Our country''s steel exports grew by 150% to 0.75 million tons, while there has been a decline in imports by 46% to 0.49 million tons.
The increase in demand for steel is still struggling to keep pace with the rise in capacity as well as Global oversupply low global prices, Chinese dumping, High levels of debt and failure to service bank loans are the points of concern for the Steel sector in India.
(iii) Segment-wise or Product-wise Performance:
Since your Company operates only in one Segment, segment-wise or product- wise analysis of performance is not applicable.
(iv) Outlook:
India''s average Gross Domestic Product (GDP) growth has been estimated to grow by 7.1% in 2016-17 and 7.4% in 2017-18, down from 7.93% in 2015-16 on account of demonetization drive effected on 8th November, 2016.
According to World Steel Association, the demand of steel in India is expected to grow by 5.7% in 2017 against a global growth in demand of 0.5% in 2017. Indian economy is one of the fewer economies to have stayed ''resilient'' even during ''global slowdown'' due to its focus on its reforms.
The rising infrastructure in the Country is ultimately going to increase the consumption rate of steel. The announcement of new steel policy is a step towards steering the industry to achieve its future potential and strategy to deal with various impediments like high input cost, availability of raw materials, dependency on imports, financial stress etc. and it will also facilitate India''s annual production to 300 Million Tonne, by giving preference to locally manufactured steel and reducing imports to nil by 2025.
(v) Risks and Concerns:
Risks, challenges and volatility are part and parcel of any industry and always the point of concerns for the management of the Company. Your Company has subdued it through well planned strategies and actions. Your Company is continuously evolving and improving systems and measures to take care of all the risk exigencies involved in the business. All inherent risks are identified, measured, monitored and regularly reported to the management. The management decides measures required to overcome these risks and ensures implementation of proper risk mitigation plans. The risk report and mitigation plans are presented to the Board of Directors periodically
In accordance with Regulation 17 of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, your Company has duly adopted steps for framing, implementing and monitoring the risk management plan and accordingly your Directors have put in place critical risk management framework across the Company for identification and evaluation of all potential risks.
(vi) Internal Control Systems and their adequacy:
Your Company has an effective Internal Control System to prevent fraud and misuse of Company''s resources and protect shareholders'' interest. These systems ensure that transactions are authorized, recorded and reported diligently, to safeguard the assets of the Company. Your Company has an independent Internal Audit Department. Moreover, Internal Audit was conducted by M/s. K S Aiyar & Co.- Chartered Accountants, in various areas of operations of the Company. The internal audit process includes review and evaluation of effectiveness of existing processes, internal controls and compliances. The internal audit report alongwith audit findings and tracking of process improvements & compliances is presented for review to the Audit Committee of Board of Directors.
Your Company has also established and maintained the Internal Financial Control to ensure the orderly and efficiently conduct of its business inter alia adherence to Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.
(vii) Discussion on Financial Performance with respect to Operational Performance and state of Company''s affairs:
The finance cost has significantly increased because of unexpected stretched working capital. The profitability of the Company improved as compared to last year mainly due to imposition of Minimum Import Price (MIP) by the Government and various marketing initiative taken by your Company. However, the margins remained at subdued level due to the lower demand. Majority of the earnings has been used to meet the overdue finance cost and principal repayment obligations towards the banks/ Financial Institutions. However, the earnings were not sufficient to regularize the entire overdue position resulting in increase in overdue position in Meeting the obligations towards the Banks/ Financial institutions, the details of which is specified in the Annexure II of the Independent Auditors'' Report. The focus on credit control, inventory management and extended trade credits from the suppliers has somewhat helped working capital and liquidity management. The Company is working with the Banks/ Financial institutions to find a mutually acceptable solution. In this regard, your Company has submitted its restructuring plan in December, 2016 to the lenders. After evaluation of restructuring plan, the lenders will advise on implementation of the debt restructuring plan in due course of time.
(viii) Human Resources Development and Industrial Relations:
Your Company endeavors to strive hard to nurture and develop their employees so that the organization and individual employees can accomplish their work goals in service to the end users. Your Company, on its path towards a culture of meritocracy, has redefined the Performance Management System (PMS). With renewed vigor on Key Result Areas, the targets are identified for each and every employee in accordance with the business objectives. To support the execution, a cloud based PMS system, Success Factors has also been implemented. Also based on industry best practices, your Company has institutionalized a competency framework to identify and develop talent in the organization. Your Company is proud of its healthy Industrial Relations record.
Presently, your Company employs more than 1250 employees. Your Company has put in place ''Employee Grievance Redressal Committee'' for their employees. Suitable processes and mechanism are in place to ensure that grievance of any employee, is effectively addressed and to ensure that it has been dealt with in a fair and just manner.
Your Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. 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 financial year 2016-17.
RELATED PARTY TRANSACTIONS
All Related Party Transactions (RPT) that were entered into during the financial year were on armâs length basis and in the ordinary course of business and in compliance with the applicable provisions of the Companies Act, 2013 and Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter "Listing Regulationsâ).
During the year, no material transaction (which is ten percent or more of the annual consolidated turnover of the preceding financial year), was entered into by the Company. Hence, the disclosure of material related party transactions in the Form AOC-2 regarding particulars of contract or arrangement with the related parties, as referred in Section 188 read with Section 134(3)(h) of the Companies Act, 2013 is not required to be annexed herewith.
CORPORATE GOVERNANCE
In the interest of all the stakeholders and as matter of good corporate governance, your Company is committed to the timely compliance with all the applicable provisions of the Listing Regulations. In terms of Regulation 34 of the Listing Regulations, a detailed report on Corporate Governance along with a certificate from the Auditors confirming compliance is annexed hereto and forms part of the Directors'' Report as ''Annexure I''.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
In accordance with the requirements of Section 135 of Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 as amended from time to time, your Company has duly constituted Corporate Social Responsibility Committee, under the Chairmanship of Shri Gursharan Singh Sawhney and two other Members namely Shri Anuj R Miglani and Shri O P Gahrotra. The Committee has framed the Corporate Social Responsibility Policy of the Company which is available on the Company''s website.
Due to loss of Rs, 1510.18 crore in financial year 2015-16, your Company was not mandatorily required to spend any amount for the CSR activities in the financial year 2016-17. Thus no report for CSR activities is required to attach herewith.
DIRECTORS & KEY MANAGERIAL PERSONNEL (KMP)
The Board of Directors of your Company has appointed Shri Rajiv Munjal (DIN 05195651) as Additional Director in the capacity of Non-Executive and Non-Independent Director with effect from 9th February, 2017.
Shri Gursharan Singh Sawhney (DIN 02339467) has reappointed as Whole Time Director designated as Director (Finance) & Group CFO, for a period of three years effective from 30th May, 2017 to 29th May, 2020, subject to the approval of Members in this Annual General Meeting. Pursuant to the provisions of the Section 152 of the Companies Act, 2013 and as per the Articles of Association of the Company, Shri Rajinder Miglani- Chairman retires by rotation and being eligible, has offered himself for reappointment.
The brief profiles of the Chairman, Shri Munjal and Shri Sawhney are given in the Corporate Governance report which is part of this report.
The Independent Directors have submitted the declaration of Independence, as required under subSection (7) of Section 149 of the Companies Act, 2013 and Regulation 16(1)(b) of the Listing Regulations stating that they meet the criteria of independence as provided therein.
None of the Directors of your Company is disqualified under Section 164(1) of the Companies Act, 2013. As required by law, this position is also reflected in the Auditors'' Report.
The following persons are Key Managerial Personnel of the Company.
Shri Anuj R Miglani : Managing Director Shri Gursharan Singh : Director (Finance) & Sawhney Group CFO
Shri R Agrawal : President & Company
Secretary
During the year there is no change in KMP or in their respective responsibilities.
REMUNERATION OF THE DIRECTORS/ KEY MANAGERIAL PERSONNEL (KMP) / EMPLOYEES
Your Company has framed a Remuneration Policy which lays down a framework in relation to the Directors, Key Managerial Personnel and Senior Management of the Company. The Policy also lays down the criteria for selection and appointment of Independent Directors. The details of the policy are explained in the Corporate Governance Report.
During the year under review no Employee of the Company other than the Managing Directors has drawn remuneration of '' Eight Lakhs and Fifty Thousands per month or more. The information required pursuant to Section 197(12) read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended time to time, in respect to remuneration to the Whole Time Directors and Key Managerial Personnel is prepared separately forming part of this report. Having regard to the provisions of the first proviso of Section 136(1) of the Companies Act, 2013, the Annual Report is being sent to the Members of the Company excluding the aforesaid information. However, the said information is available for inspection at the registered office of the Company on any working days up to the date of the ensuing Annual General Meeting. DIRECTORS'' RESPONSIBILITY STATEMENT Pursuant to Section 134(5) of the Companies Act, 2013, the Directors confirm that:
i) In the preparation of the annual accounts, the applicable Accounting Standards have been followed along with the proper explanation relating to material departures.
ii) Appropriate Accounting Policies have been selected and applied consistently. Judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2017 and of the Profit and Loss Account for the Financial Year 2016-17 have been made.
iii) Proper and sufficient care has been taken 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 preventing & detecting fraud and other irregularities.
iv) The Annual Accounts have been prepared on a going concern basis.
v) The Internal Financial Controls were in place and that there are adequate and were operating effectively;
vi) Proper systems are in place to ensure compliance of all laws applicable to the Company and that such systems are adequate and operating effectively.
STATUTORY AUDITORS AND THEIR REPORT
M/s. Todarwal & Todarwal, Chartered Accountants (Firm Registration No. 111009W), Statutory Auditors of the Company, will hold office till the conclusion of ensuing Annual General Meeting and are eligible for reappointment as per the Section 139 of the Companies Act, 2013.
M/s. Todarwal & Todarwal expressed their willingness for reappointment as the Statutory Auditors of the Company and has furnished a certificate of their eligibility under Section 141 of the Companies Act, 2013 read with the rules made there under. In terms of the Listing Regulations, they have confirmed vide their letter dated 24th April, 2017 that they hold a valid certificate issued by the Peer Review Board of the ICAI. The Audit Committee has reviewed independence, performance and effectiveness audit process of the M/s. Todarwal & Todarwal, Chartered Accountants. Thereafter, Audit committee recommended to the Board, the reappointment as Statutory Auditors of the Company for the term of three years at the ensuing Annual General Meeting, in pursuance to MCA circular dated 30th June, 2016.
Notes to the accounts as referred in the Auditor''s Report are self-explanatory and does not contain any qualification and therefore, do not call for any further comments or explanations.
COST AUDITORS AND THEIR REPORT
As per Section 148 of the Act read with Companies (Cost Records and Audits) Rules, 2014, as amended and on the recommendation of the Audit Committee, the Board of Directors of your Company has reappointed M/s. Manisha & Associates, Cost Accountants as "Cost Auditorsâ to conduct Cost Audit for Steel and Power Division of the Company for the Financial Year 2017-18. As required under the Companies Act, 2013, a resolution seeking Members'' approval for the remuneration payable to the Cost Auditors forms part of the notice of the Annual General Meeting for their ratification.
Pursuant to the provisions of Section 148 of the Companies Act, 2013, the Report on Cost Audit for the Financial Year 2015-16 has been received and duly furnished to the Central Government within prescribed time.
SECRETARIAL AUDIT
The Secretarial Audit of the Company for the financial year 2016-17, was carried out by M/s. JNG & Co., Practicing Company Secretaries (C.P. No. 8108). The Secretarial Audit Report is annexed hereto and part of the Director''s Report as an ''Annexure II''. The said report does not contain any qualification, reservation or adverse remarks.
SUBSIDIARY & JOINT VENTURE COMPANIES
There are Seven Wholly-Owned Subsidiary Companies and one step down subsidiary of the Company namely
(i) Uttam Galva Holdings Limited in Dubai, (ii) Atlantis International Services Limited in British Virgin Islands,
(iii) Uttam Galva Steels Netherlands B.V. in Netherland,
(iv) Neelraj International Trade Limited in British Virgin Islands, (v) Uttam Galva Steels BVI Limited in British
Virgin Islands and (vi) Uttam Exports BVI Ltd. in in British Virgin Islands (vii) Uttam Galva North America, Inc and (viii) Uttam Galva International, FZE (Step down Subsidiary) in Jebel Ali Free Zone in United Arab Emirates, the subsidiary of Uttam Galva Holdings Limited, Dubai.
Apart from the aforesaid subsidiaries, your Company also has two Joint Venture Companies namely (i) Texturing Technology Private Limited and (ii) Moira Madhujore Coal Limited.
A separate statement containing the salient features of the Financial Statement for the financial year ended 31st March, 2017 of the aforesaid Subsidiaries Companies and Joint Venture Companies are included in the Annual Report as Form AOC-1 as ''Annexure III''. The Financial statements of the said Subsidiary Companies and Joint Venture Companies are available for inspection by the Shareholders at the registered office of your Company Your Company undertakes that the financial statements of the Subsidiary Companies and Joint Venture Companies shall be made available to the Shareholders of the Company on demand.
The consolidated financial statements of your Company for the financial year ended 31st March, 2017, have been prepared on the basis of audited financial statements of the Company, its subsidiaries and joint ventures as per in compliance with applicable provisions of the Companies Act, 2013 and Listing Regulations.
ENVIRONMENT AND SOCIAL OBLIGATION
Your Company values environmental protection and safety as the major considerations in its functioning. We have well-versed pollution control devices namely Air Pollution Control device (scrubber followed by fume extraction system and adequate height of chimney) to ensure level of pollutant parameter which are well within the standard norms. Your Company has zero water discharge unit and 100% of Industrial waste water is being recycled and reused in the process which comprises ETP, UF, RO, MVRE & MEE. Your Company has Sewage Treatment Plant to treat and reuse treated domestic waste water for flushing and gardening. We have also appointed a laboratory which is approved by Ministry of Environment and Forests (MOEF) & National Accreditation Board to monitor the maintain ace of environment on monthly basis. Your Company is yearly submitting Hazardous waste return and Environment Statement Report to Maharashtra Pollution Control Board.
The Company is continuously endeavoring to improve the health and quality of life in the communities surrounding its industrial complexes.
DISCLOSURES UNDER THE COMPANIES ACT, 2013
i) Extract of Annual Return:
The details containing the extract of the Annual Return is enclosed in the Form MGT-9 as an "Annexure IV" and forms part of this report.
ii) Particulars of Loans, Guarantee or Investment:
Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements. Kindly refer note no. 4 of the stand-alone balance sheet.
iii) Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo:
a) Conservation of Energy
The Company has an Energy Conservation Cell which ensures implementation of the Energy Conservation efforts &Energy Management Policy. Conservation of the energy is a continuous activity and the company continually strives to conserve energy. During the year under review followings steps has been taken by the Company to conserve energy at its Plant:
- Monitor and Optimize process parameters in the combustion system of all the thermal equipment''s in the Plant. This includes Incinerators, Galvanizing furnace, Annealing furnace, Acid Re-generation Plant, Boilers etc.
- The Company has installed variable speed drive in the Utility System (both water and air) to ensure that energy is conserved.
During the year under review, the Company has not taken any steps for utilizing alternate source of energy.
During this year under review, no capital expenditure has been incurred in energy conservation equipment. Energy conservation has been carried out by effective process optimization.
b) Technology Absorption
The Company''s products are manufactured by using in-house know how and no outside technology is being used for manufacturing activities. The Company has fully absorbed the technology. The Company constantly strives for maintenance and improvement in quality of its products and entire Research & Development activities are directed to achieve the aforesaid goal.
c) Foreign Exchange Earnings & Outgo:
During the year under review, the Company has exported its product in various countries and has also made expenditure in foreign currency. The details of the foreign exchange earnings & outgo are as below:
Rs,in Crore
Particulars |
2016-17 |
2015-16 |
Foreign Exchange Earnings |
1261.73 |
2839.20 |
Value of direct Imports |
1089.60 |
3781.84 |
Expenditure in Foreign Currency |
61.69 |
170.04 |
iv) General Disclosures:
Your Directors state that no disclosures/ reporting are required since there were no transactions in respect of the following items during the year under review:
a. Details relating to deposits covered under Chapter V of the Act.
b. Significant and material orders passed by the Regulators or the Courts which would impact the going concern status of the Company and its future operations.
c. Issue of Equity shares with differential rights as to dividend, voting or otherwise.
d. Issue of Shares (including sweat equity shares) to employees of the Company under any scheme.
e. Neither the Managing Director not the Whole Time Directors of the Company receive any remuneration or commission from any of its subsidiaries.
CAUTIONARY STATEMENT
Statements in this Directors'' report and in the Management Discussion and Analysis describing the Company''s objectives, projections, estimates, expectations or predictions and those are forward looking statements within the meaning of applicable laws and regulations. Actual results could differ from those expressed or implied. Important factors that could make a difference to the Company''s operations include raw material availability and its prices, economic conditions affecting demand and supply, price conditions in domestic and international market, change in Government regulations, tax regimes, economic developments and other related and incidental factors.
ACKNOWLEDGEMENT
Your Directors would like to express their appreciation to the Central, State & Local Governments, Authorities, Regulatory Bodies, Financial Institutions, Banks, Customers and the Shareholders of the Company for their continued support and co-operation.
Your Directors also like to place on record their sincere appreciation for the total commitment, dedication and hard work put in by every Member of the Uttam Galva Family. Your Directors are deeply grateful to you Shareholders, for the confidence and trust reposed in us.
For and on behalf of the Board
Sd/-
Rajinder Miglani
Place : Mumbai Chairman
Date: 28th April, 2017 (DIN 00286788)
Mar 31, 2015
The Members
The Directors have pleasure in presenting the 30th Annual Report on
the business and operations of the Company, along with the Financial
Statement for the Financial Year ended 31st March, 2015.
1. FINANCIAL RESULTS (Stand-alone & Consolidated)
(Rs in Crore)
STAND-ALONE CONSOLIDATED
PARTICULARS Year ended Year ended Year ended Year ended
31st March, 31st March, 31st March,31st March,
2015 2014 2015 2014
Turnover 7376.59 5754.56 8856.98 5758.64
PBITDA 530.94 552.90 543.18 557.98
Less : Interest 262.13 289.09 277.94 304.02
PBTDA 268.81 263.81 265.24 253.96
Less: Depreciation/ 223.94 214.82 225.15 215.70
Amortization
Add : Other 10.46 32.27 5.13 37.78
Income /
Exceptional Items
PBT 55.34 81.26 45.22 76.04
Less: Provision for 24.60 45.94 25.45 46.37
taxation
PAT 30.74 35.32 19.77 29.67
2. FINANCIAL PERFORMANCE (Stand-alone & Consolidated):
During this year, your Company has achieved a turnover of Rs. 7376.59
Crore as against Rs. 5754.56 Crore in the previous year. Your Company
posted Profit before Tax of Rs. 55.34 Crore as against Rs. 81.26 Crore in
the previous year. The gross revenue has increased mainly on account of
merchandise export and Profit before Tax has come down mainly due to
falling steel prices and low demand.
Consolidated turnover of Rs. 8856.98 Crore has increased as against Rs.
5758.64 Crore in the previous year and Consolidated Profit before Tax
has come down to Rs. 45.22 Crore as against Rs. 76.04 Crore in the previous
year.
In view of the current steel scenario, the Board of Directors are of
the opinion that Cash flow should be conserved and hence decided to
plough back the entire profit earned by the Company and have not
recommended any dividend.
Your Company has always emphasized on achieving operational excellence
and continues to focus on customer satisfaction and delight. Backed by
strong fundamentals and robust plans your Company is fully prepared to
face current challenges and benefit from expected medium and long term
growth in Indian economy.
3. OPERATIONS:
(i) Export Market:
The Indian Steel markets have witnessed a de-growth in the export
segment. Steel Exports from Indian market dropped by 8.1% during the
period under review whereas Import of the Steel surged by almost 71%
due to sharper fall in international steel prices than domestic prices.
The exports volume was lower by 17 % during the year as compared to
2013-14, the prices being under incessant pressure especially in the
second half of the year in the wake of increased low price supplies
from China. During the year your Company has, however, increased its
volume in some markets like Africa by 77% and has almost doubled the
volume in Latin America compare to last year.
Your Company has serviced 148 countries since its entry into the export
business and is recognized as quality supplier in both developed and
emerging markets. Your Company has maintained its presence in the
International Market in spite of the currency crises and change in
regulations in some of the countries.
Your Company has been successful in negating the initiation of anti
dumping laws for our products in Australia in 2014 which has
consequently opened up this market. However, possible initiation for
the same for US markets is a matter of concern in the future.
The global economy expanded during the financial year at a moderate and
uneven pace. Legacies from the global financial crisis continue to
weigh on growth. The economy is expected to grow 3.1 per cent in 2015
compared with an estimated growth of 2.6 per cent in 2014. Emerging
and developing economies are expected to grow by 5.4 percent which is
a positive trend in line with our expectation. This is expected to
provide a wider base to our international business.
(ii) Domestic Market:
Growth rate of Indian Domestic steel consumption has improved to 3.1%
in 2014-15 from 0.6% in 2013-14. With the construction sector, which
accounts for about 60% of the total steel demand in India, is yet to
witness an on-the-ground recovery, the automobile sector is expected to
be the growth engine for domestic steel demand in the near term.
In the Original Equipment Manufacturer (OEM) market, the Company has
been focusing on high growth, profitable and niche areas especially in
the Home Appliances, Automotive, Construction and Electrical Equipment
segments and has thus moved up the value chain in these markets.
Your Company has achieved a volume growth of 22.2% in the Appliance
segment over the last fiscal and has made commendable gains in
establishing the product for Refrigerators and Washing Machines
components with majors like Whirlpool, Samsung, Videocon Group and
Godrej. As a first mover advantage your Company has developed the VCM
refrigerator Door for the first time in India as a substitution for
their critical high value import requirements. Your Company has also
been working constantly towards import substitution of other steel
components required by Appliance manufacturers. Your Company has also
been approved by Samsung and Whirlpool for their global supplies. For
Vizi coolers and freezers, the products are firmly established with
Bluestar, Voltas, Frigoglass and Western Refrigeration.
In the Automotive segment, your Company has achieved growth of 8%
inspite of de-growth in this segment in the western markets. Your
Company has not only been able to retain its market share but also
increase the same in the two, three and four wheeler segments. Your
Company's products are firmly established in western India and continue
to cater to the requirements of Bajaj Auto, Mahindra
& Mahindra, Force Motors, Eicher and also vendors of TATA Motors, Bajaj
Auto, General Motors, Piaggio, and others. Your Company is also a major
supplier to reputed coach manufacturers like Tata Marcopolo, ACGL and
Volvo.
In the building and construction segment your Company's products are
well established with major Pre-Engineered Building (PEB) manufacturers
like Tata Bluescope, Pennar, Everest, Interarch and Zamil and also
major component manufacturers like Shakti Hormann and NCL Seccolor.
In the General Engineering segment the Company continues to be an
established supplier to Godrej & Boyce, Karad Projects, Otis Elevators,
Sudhir Gensets, Nucleus Satellite and vendors to Siemens.
Continuous effort has been made in establishing the "Uttam Suraksha"
GC (Galvanised Corrugated Roofing Sheets) brand firmly in the
Construction segment and increasing its penetration in rural and urban
areas. It is recognised as one of the major Brands in its segment in
Domestic Markets like Maharashtra, Madhya Pradesh, Gujarat, Andhra
Pradesh, Karnataka, Chattisgarh etc.
In line with surge in demand for Color Coated Roofing products your
Company has launched an exclusive range of products under the brand
name "UTTAM TARANG", which will provide greater value and benefits to
the rural consumer. However, sales have been lower than expected due to
cheap imports from China.
5. CORPORATE GOVERNANCE:
Your Company is committed to principles of good corporate governance.
The Board of Directors ensures that the Company is in compliance with
all the applicable provisions of the Clause 49 (as amended) of the
Listing Agreement pertaining to Corporate Governance. A detailed report
on Corporate Governance along with a certificate from the Auditors
confirming compliance is annexed hereto and forms part of the
Directors' Report as 'Annexure V'.
6. CORPORATE SOCIAL RESPONSIBILITY (CSR):
Your Company has constituted the Corporate Social Responsibility (CSR)
Committee as per the requirement of the Section 135 of the Companies
Act, 2013 read with the Companies (Corporate Social Responsibility
Policy) Rules, 2014 as amended time to time, under the Chairmanship of
Shri G S Sawhney and two other members namely Shri Anuj R Miglani and
Shri O P Gahrotra. The Committee has framed the Corporate Social
Responsibility Policy of the Company which is placed on the Company's
website. A detailed report on the CSR activities as required under
section 135 of the Companies Act, 2013, is annexed hereto as 'Annexure
I' and forms part of the Directors' Report as CSR Report.
Your Company has retained collective focus on the various areas of
rural infrastructure development that impact people, environment and
the society at large. Founded on the philosophy that society is not
just another stakeholder in its business, but the prime purpose of it,
the Company, across its various operations is committed to making a
positive contribution.
7. RISK MANAGEMENT POLICY:
As required by Clause 49 of the Listing Agreement, the Company has
framed the Risk Management Policy. The Main objective of this policy is
to ensure sustainable business growth with stability and to promote
proactive approach and to identifying, evaluating and resolving risks
associated with the business. In order to achieve the key objective,
the policy establishes structured and disciplined approach to risk
management in order to guide decisions on risk related issues.
Under the current challenging and competitive environment the strategy
for mitigating inherent risk in accomplishing the growth plan of the
Company is imperative. The Common risk interalia are regulatory risk, competition, financial risk, technology obsolescence, human resources
risk, political risks, investments, retention of talents, expansion of facilities and product price risk.
8. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP):
Shri Ankit Miglani (DIN 00444956) - Dy. Managing Director of the
Company has conveyed his desire to devote most of his time and efforts
to develop International Operations of the Company. Since he will be
required to travel extensively out of India, he has requested the
Company to relieve him from the responsibility of Dy. Managing Director
effective from 1st April, 2015. However, he will continue to be
Non-Executive Director on the Board of the Company.
Shri S G Tudekar (DIN 00138678) has resigned from the Board with effect
from 27th October, 2014 due to expiry of his term as Whole Time
Director. Shri P G Kakodkar (DIN 00027669) has resigned from the Board
with effect from 30th May, 2014 due to his ill health. Your Directors
wish to take this opportunity to express their gratitude and sincere
appreciation for their immense and invaluable contribution to the
Company during their tenures as Director on the Board.
Smt. Swarna Prabha Sukumar (DIN 01327918) has vacated the office of
Nominee Director representing Life Insurance Corporation of India (LIC)
on 3rd November, 2014 as LIC has withdrawn her nomination since all the
outstanding dues together with the interest have been re-paid by the
Company. The Board placed on record their sincere appreciation for her
invaluable contribution to the Company during her tenure as Nominee
Director on the Board.
The Board recommends appointment of Smt. Swarna Prabha Sukumar (DIN
01327918) as an Independent Director on the Board of the Company not
liable to retire by rotation for 5 (five) consecutive years for a term
upto 3rd November, 2019. Her appointment on the Board shall also
fulfill the requirement of a Woman Director on the Board of the Company
as required under the Companies Act, 2013 and clause 49 of the Listing
Agreement.
The Independent directors have submitted the declaration of
Independence, as required under sub-section (7) of Section 149 of the
Companies Act, 2013 and clause 19 of the Listing Agreement with the
Stock Exchanges stating that they meet the criteria of independence as
provided therein. Pursuant to the provisions of the Section 152 of the
Companies Act, 2013 and as per the Articles of Association of the
Company, Shri Rajinder Miglani retires by rotation and being eligible
has offered himself for reappointment. The Board of Directors recommend
his reappointment.
None of the Directors of your Company is disqualified under Section 162
(2) of the Companies Act, 2013. As required by law, this position is
also reflected in the Auditors' Report.
The following persons are Key Managerial Personnel of the Company:
Shri Anuj R Miglani : Managing Director
Shri G S Sawhney : Director (Finance) & Group CFO
Shri R Agrawal : President & Company Secretary
During the year there is no change in the role of the aforesaid KMP.
9. PERFORMANCE EVALUATION OF BOARD:
In Compliance with the Companies Act, 2013 and amended clause 49 of the
Listing Agreement, a structured questionnaire was prepared after
considering the various aspects of the Board functioning, composition
of the Board/committees, culture, execution and performance of specific
duties, obligation and governance.
10. REMUNERATION OF THE DIRECTORS/KEY MANAGERIAL PERSONNEL (KMP) /
EMPLOYEES: Your Company has framed a Remuneration Policy which lays
down a framework in relation to the Directors, Key Managerial Personnel
and Senior Management of the Company. The Policy also lays down the
criteria for selection and appointment of Independent Directors. The
details of the policy are explained in the Corporate Governance Report.
The information required pursuant to Section 197 (12) read with Rule 5
of the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014, in respect to remuneration to the Whole time directors and
Key Managerial Personnel, is prepared separately forming part of
this report. No Employee of the Company has drawn remuneration of Rs.
Five lacs per month or more in the year under review.
Having regard to the provisions of the first proviso of Section 136(1)
of the Companies Act, 2013, the Annual Report is being sent to the
Members of the Company excluding the aforesaid information. However,
the said information is available for inspection at the Registered
office of the Company before 21 days of the ensuing Annual General
Meeting during business hours on working days.
11. DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuant to Section 134 (5) of the Companies Act, 2013, the Directors
confirm that:
i) In the preparation of the annual accounts, the applicable Accounting
Standards have been followed along with the proper explanation relating
to material departures.
ii) Appropriate Accounting Policies have been selected and applied
consistently. Judgments and estimates that are reasonable and prudent
so as to give a true and fair view of the state of affairs of the
Company as at 31st March, 2015 and of the Profit and Loss Account for
the Financial Year 2014-2015 have been made.
iii) Proper and sufficient care has been taken 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
preventing & detecting fraud and other irregularities.
iv) The Annual Accounts have been prepared on a going concern basis.
v) The policies and procedures adopted by the Company for ensuring the
orderly and efficient conduct of its business, including adherence to
Company's policies, the safeguarding of its assets, prevention &
detection of frauds/ errors, accuracy and completeness of the
accounting records, and the timely preparation of reliable financial
information (Internal Financial Controls), are adequate and were
operating effectively.
vi) Proper systems are in place to ensure compliance of all laws
applicable to the Company and that such systems are adequate and
operating effectively.
12. STATUTORY AUDITORS AND THEIR REPORT:
M/s. Todarwal & Todarwal, Chartered Accountants (Registration No.
111009W) is proposed to be appointed, subject to approval of the
Members, as Statutory Auditor of Company to hold office upto the
conclusion of 31st Annual General Meeting in place of M/s. Prakkash
Muni & Associates (Registration No. 111792W) who do not seek their
reappointment at the ensuing Annual General Meeting.
M/s. Todarwal & Todarwal has furnished written consent and a
certificate of their eligibility obtained as required under second
proviso of Section 139(1) of the Companies Act, 2013 read with the
rules made thereunder. In terms of the Listing Agreement, they have
confirmed that they hold a valid certificate issued by the Peer Review
Board of the ICAI.
Your Directors take this opportunity to express their deep sense of
gratitude and sincere appreciation to Shri Prakkash Muni & his team for
their valuable services rendered to the Company during their
association as Statutory Auditor of the Company. Notes to the accounts
as referred in the Auditor's Report are self-explanatory and does not
contain any qualification and therefore, do not call for any further
comments or explanations.
13. COST AUDITORS AND THEIR REPORT:
Your Board of Directors, on the recommendation of the Audit Committee
has appointed M/s. Manisha & Associates, Cost Accountants as "Cost
Auditors" to conduct Cost Audit for Steel and Power Bussiness of the
Company for the Financial Year 2015-16 and has recommended their
remuneration to the Shareholders for their ratification at the ensuing
Annual General Meeting.
Pursuant to the provisions of Section 148 of the Companies Act, 2013,
the Report on cost Audit for the Financial Year 2013-14 has been
received and duly furnished to the Central Government within prescribed
time.
14. SECRETARIAL AUDITORS AND THEIR REPORT:
Pursuant to the provisions of the Section 204 of the Companies, Act,
2013 read with the rules made thereunder, the Board has appointed M/s.
JNG & Co., Practicing Company Secretaries, to carry out the Secretarial
Audit of the Company for the financial year 2014-15. The Secretarial
Audit Report, is annexed hereto and part of the Director's Report as
an 'Annexure II'. The said report does not contain any adverse remark
and hence does not call for any further comments.
15. DEPOSITS:
Your Company has not accepted Deposits from Public or Members under
Chapter V of the Companies Act, 2013 and the Companies (Acceptance of
Deposits) Rules, 2014 for the year under review.
16. SUBSIDIARY & JOINT VENTURE COMPANIES: There are Seven wholly-owned
Subsidiary Companies and one step down subsidiary of the Company namely
(I) Uttam Galva Holdings Limited in Dubai, (II) Atlantis International
Services Limited in British Virgin Islands, (III) Uttam Galva Steels
Netherlands B.V. in Netherland, (IV) Neelraj International Trade
Limited in British Virgin Islands, (V) Uttam Galva Steels BVI Limited
in British Virgin Islands and (VI) Uttam Exports BVI Ltd. in British
Virgin Islands (VII) Uttam Galva North America, Inc in USA and (VIII)
Uttam Galva International, FZE (Step down Subsidiary) in Jebel Ali free
zone in United Arab Emirates, the subsidiary of Uttam Galva Holdings
Limited, Dubai.
During the year, the Company has incorporated two new foreign
subsidiaries namely Uttam Exports BVI Ltd. in British Virgin Island &
Uttam Galva North America, Inc in USA. One Step down subsidiary namely
Uttam Galva International, FZE in Jebel Ali free zone in United Arab
Emirates has become subsidiary of Uttam Galva Holdings Limited, i.e.
wholly owned subsidiary of the Company. Uttam Galva Steels FZE which
was incorporated in Ras Al Khaimah is no longer subsidiary of the
Company. Apart from the aforesaid subsidiaries, your Company also has
two Joint venture Companies namely, Texturing Technology Private
Limited and Moira Madhujore Coal Limited. There is no change in status
of the Joint venture Companies of the Company, during the year under
review.
A separate statement containing the salient features of the Financial
Statement for the financial year ended 31st March, 2015 of the
aforesaid Subsidiaries Companies and Joint Venture Companies are
included in the Annual Report as Form AOC-1 as an 'Annexure VI'. The
Financial statements of the said Subsidiaries Companies and Joint
Venture Companies are available for
inspection by the Shareholders at the Registered office of your
Company. Your Company undertakes that the Financial statements of the
Subsidiaries Companies and Joint Venture Companies shall be made
available to the Shareholders of the Company on demand.
The consolidated financial statements of your Company for the financial
year 2014-15, are prepared in compliance with applicable provisions of
the Companies Act, 2013, Accounting Standards and Listing Agreement as
prescribed by the Securities and Exchange Board of India (SEBI). The
consolidated financial statements have been prepared on the basis of
audited financial statements of the Company, its subsidiaries and joint
ventures.
17. ENVIRONMENT AND SOCIAL OBLIGATION:
The Company's plants comply with all norms set up for clean and better
environment by the competent authorities. The Company undertakes
regular checks / inspections including certification for the
maintenance of the environment. The Company values environmental
protection and safety as the major considerations in its functioning.
The Company has adequate effluent Treatment Plants to prevent
pollution. The Company is continuously endeavoring to improve the
health and quality of life in the communities surrounding its
industrial complexes.
18. DISCLOSURES UNDER THE COMPANIES ACT, 2013:
i. Extract of Annual Return :
The details containing the extract of the Annual return is enclosed in
the Form MGT- 9 as an Annexure III' and forms part of this report.
ii) Particulars of Loans, Guarantee or Investment :
Details of Loans, Guarantees and Investments covered under the
provisions of Section 186 of the Companies Act, 2013 are given in the
notes to the Financial Statements. Kindly refer Note no. 13 of the
stand-alone balance sheet.
iii) Conservation of Energy, Technology Absorption, Foreign Exchange
Earnings and Outgo:
Your Company ensures that the manufacturing operations are conducted in
the manner whereby optimum utilization and maximum
possible savings of energy is achieved. No specific investment has
been made for reduction in energy consumption by your Company as the
impact of measures taken for conservation and optimum utilization of
energy are not quantitative. Hence its impact on cost cannot be stated
accurately.
The detailed information on Conservation of energy, technology
absorption, foreign exchange earnings and outgo as required to be
disclosed under section 134 of the Companies Act, 2013 read with the
Companies (Accounts) Rules, 2014 is annexed hereto as an 'Annexure IV'
and forms part of this report.
iv) General Disclosures:
Your Directors state that no disclosures are required since as there
were no transactions in respect of the following items during the year
under review:
a. Significant and material orders passed by the Regulators or the
Courts which would impact the going concern status of the Company and
its future operations
b. Issue of Equity shares with differential rights as to dividend,
voting or otherwise.
c. Issue of Shares (including sweat equity shares) to employees of the
Company under any scheme.
d. Neither the Managing Director not the whole time Directors of the
Company receive any remuneration or commission from any of its
subsidiaries.
19. ACKNOWLEDGEMENT:
Your Directors would like to express their appreciation to the Central,
State & Local Governments, Authorities, Regulatory Bodies, Financial
Institutions, Banks, Customers and the Shareholders of the Company for
their continued support and co-operation.
Your Directors also like to place on record their sincere appreciation
for the total commitment, dedication and hard work put in by every
member of the Uttam Galva Family. Your directors are deeply grateful to
you Shareholders, for the confidence and trust reposed in us.
For and on behalf of the Board
Place : Mumbai Rajinder Miglani
Date: 22nd May, 2015 Chairman
DIN:00286788
Mar 31, 2013
To, The Members
The Directors have pleasure in presenting the 28th Report on the
business and operations of the Company, along with the Audited
Statement of Accounts for the Financial Year ended 31st March, 2013.
1. FINANCIAL RESULTS (Stand-alone Basis):
(Rs. in Crores)
PARTICULARS Year ended Year ended
31st March, 31st March,
2013 2012
Gross Revenue from 6252.34 5475.38
Operations
Earning before Interest, 588.59 528.05
Tax, Depreciation and
Amortization (EBIDTA)
Finance Cost 304.64 267.32
Depreciation 182.58 127.37
Profit Before Tax (PBT) 135.32 141.00
Provision for Tax 73.77 63.04
Profit After Tax (PAT) 61.55 77.96
2. OPERATIONS:
Your Company has achieved a turnover of Rs. 6252.34 Crores as against
Rs. 5475.38 Crores in the previous year and at the same time your
Company posted the Profit before Tax of Rs. 135.32 Crores as against
Rs. 141.00 Crores in the previous year. The decline in the Profit
before Tax was due to combined effect of higher Finance Cost and
Depreciation cost incurred during the Year.
Your Company has envisaged the various projects and also looking for
the expansion and the modernization of current projects. Consequently
in view of the Capex requirement for proposed expansion projects of the
Company, the Board of Directors are in opinion that Cash flow should be
conserved and hence decided to plough back the entire profit earned by
the Company and have not recommended any dividend.
3. EXPORTS:
Your Company has registered growth in exports volume by 18% and has
added 3 more new countries -Martinique, Bahamas and Kyrgyzstan which
makes now total list of countries serviced to 148. Your Company has
maintained its presence in the International Market in spite of the
Global slowdown and currency crises in some of the countries.
The Global Economic situation has shown signs of marginal growth in USA
and Russia where your Company''s products are well established and
recognized as quality supplier. The sales growth in these 2 countries
are recorded as 28% and 16% respectively compared to last year. Growth
in emerging market and developing economies is also showing double
digit and positive trends in line with expectation. This is expected to
provide wide base to our international business.
Your Company has been the recipient of 17 EEPC Awards from the Ministry
of Commerce and Industry, Government of India for its outstanding
exports performance.
4. DOMESTIC MARKET:
In the Original Equipment Manufacturer (OEM) market, the Company has
been focusing on high growth, profitable and niche areas especially in
the Home Appliances, Automotive, Construction and Electrical Equipment
segments and has thus moved up the value chain in these markets.
Your Company has achieved a volume growth of 21% in the Appliance
segment over the last fiscal and has made commendable gains in
establishing the product for Refrigerators and Washing Machines
components with majors like Whirlpool, Videocon Group, Samsung and
Haier. For Vizi coolers and freezers the products are firmly
established with Bluestar, Voltas, Frigoglass and Western
Refrigeration.
In the Automotive segment, though volume growth has been marginal due
to depressed markets in the west, your Company has achieved growth of
36% in value added products in this segment over the last fiscal. This
has been achieved through an aggressive product development programme
for special grades for automotive and electrical equipment industry.
Your Company has firmly established itself in the two and four wheeler
(Passenger and Commercial) market in Western India and continues to
cater to the requirements of Mahindra & Mahindra, Bajaj Auto, Force
Motors, Eicher and also vendors of TATA Motors, Bajaj Auto, General
Motors, Piaggio, and others.
In the General Engineering segment, the Company continues to be an
established supplier to Godrej & Boyce, BHEL, Crompton Greaves and
Hematic Motors.
Continuous effort has been made in establishing the ''Uttam Suraksha''
GC (Galvanised Corrugated Roofing Sheets) brand firmly in the
Construction segment and increase its penetration in rural and urban
areas. It is recognised as one of the major Brands in its segment in
Domestic Markets like Maharashtra, Madhya Pradesh, Gujarat, Andhra
Pradesh, Karnataka, Chattisgarh etc.
Your Company has launched the 5 Feet wide GC which is the Widest Width
for Roofing and Cladding for the first time in India in December 2012.
The profile provides more value and substantial savings to the
consumer.
With high lending rates, slowdown in consumption, the industrial growth
in the near future is expected to be sluggish. However, the Company''s
special focus on niche areas and products will set the trend for high
growth.
5. CORPORATE GOVERNANCE:
Your Company is committed to principles of good governance, and it
firmly believes that good corporate governance is the adoption of best
practices. The Board of Directors ensure that the Company is in
compliances with all the applicable provisions of the Clause 49 (as
amended) of the Listing Agreement pertaining to the Corporate
Governance. A detailed report on Corporate Governance along with a
certificate from the Auditors confirming the compliance is annexed
hereto and forms part of the Directors'' Report as Annexure-III.
6. CORPORATE SOCIAL RESPONSIBILITY:
Your Company is socially committed not only in compliances of all the
statutory laws and regulations but also actively participates in the
improvement of quality of life of the people in the society. Your
Company has a strong sense of community responsibility.
Your Company follows the policy which is more and more beneficial to
the society at large by promoting and encouraging economic, social and
educational development and also giving active support to local
initiatives around it through upliftment in different areas.
Your Company has retained collective focus on the various areas of
corporate sustainability that impact people, environment and the
society at large. Founded on the philosophy that society is not just
another stakeholder in its business, but the prime purpose of it, the
Company, across its various operations is committed to making a
positive contribution.
7. DIRECTORS:
Pursuant to the Companies Act, 1956 and as per the Articles of
Association of the Company, Shri S P Talwar and Shri S T Parikh retire
by rotation and being eligible have offered themselves for
re-appointment. The Board of Directors recommends their re-appointment.
Shri A K Mahendru has resigned from the Board as a Whole time Director
with effect from 24th May, 2013. The Board placed on record its
sincere appreciation for his invaluable & immense contribution rendered
during his tenure as Director on the Board of the Company.
Shri D L Rawal has joined the Board of your Company with effect from
24th May, 2013 as an Additional Director of the Company. In terms of
Section 260 of the Companies Act, 1956, Shri D L Rawal would hold
office only upto the forthcoming Annual General Meeting of the Company.
The Company has received a notice under Section 257 of the Companies
Act, 1956 along with the requisite fees proposing appointment of Shri D
L Rawal as a Director of the Company at the said Annual General
Meeting.
None of the Directors of your Company is disqualified under Section
274(l)(g) of the Companies Act, 1956. As required by law, this
position is also reflected in the Auditors'' Report.
8. PARTICULARS OF EMPLOYEES U/S 217 (2A) OF THE COMPANIES ACT, 1956:
The Information required under Section 2l7(2A) of the Companies Act,
l956 and the Rules there under, in respect of the employees of the
Company, is provided in the Annexure - II.
9. DIRECTORS'' RESPONSIBILITY STATEMENT:
Pursuant to Section 2l 7(2AA) of the Companies (Amendment) Act, 2000,
the Directors confirm that:
i) In the preparation of the annual accounts, the applicable Accounting
Standards have been followed.
ii) Appropriate Accounting Policies have been selected and applied
consistently. Judgments and estimates that are reasonable and prudent
so as to give a true and fair view of the state of affairs of the
Company as at 31st March, 2013 and of the Profit and Loss Account for
the Financial Year 2012-2013 have been made.
iii) Proper and sufficient care has been taken 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
preventing and detecting fraud and other irregularities.
iv) The Annual Accounts have been prepared on a going concern basis.
v) Proper systems are in place to ensure compliance of all laws
applicable to the Company.
10. AUDITORS'' REPORT:
Notes to the Accounts as referred in the Auditors'' Report are self -
explanatory and therefore, do not call for any further comments or
explanations.
11. STATUTORY AUDITOR:
M/s. Prakkash Muni & Associates, Chartered Accountants, the retiring
Auditor is eligible for re- appointment. The Company has received
necessary certificates from the Auditor pursuant to Section 224(1 B) of
the Companies Act, 1956, regarding their eligibility for
re-appointment. Accordingly, the approval of the Shareholders for the
re-appointment of M/s. Prakkash Muni & Associates, Chartered
Accountants as Auditors of the Company is being sought at the ensuing
Annual General Meeting. Your Board recommends the appointment of M/s.
Prakkash Muni & Associates, Chartered Accountants as Auditors of the
Company.
12. COST AUDITOR:
M/s. S. K. Agarwal & Associates, Cost Accountants (Membership No. 7880)
has been re-appointed as Cost Auditors of the Company to audit the cost
accounts for the year ended 31st March, 2013. Cost accounting records
for the year ended 3lst March, 2013 were maintained as per the
Companies (Cost Audit Report) Rules, 201 1. The Cost Auditor shall
submit the report along with their observations and suggestions, and
Annexure to the Central Government wihin stipulated time period.
13. FIXED DEPOSITS:
Your Company has not accepted deposits from Public under Section 58A of
the Companies Act, 1956 and Companies (Acceptance of Deposits) Rules,
1975.
14. INSURANCE:
Your Company has taken adequate insurance cover for all its assets.
15. ISSUE OF SHARES TO QUALIFIED INSTITUTIONAL BUYERS:
During the year, your Company has issued and allotted 2,00,00,000
Equity Shares of Rs. 10/- each at Rs. 80/- each aggregating to Rs. 160
Crores to the Qualified Institutional Buyers through Qualified
Institutional Placement after obtaining the requisite approvals from
the Members, Reserve Bank of India, Stock Exchanges and Registrar of
Companies, Maharashtra.
Your Company has complied with all the necessary compliances of Stock
Exchanges, Reserve Bank of India and Registrar of Companies to give
effect to the aforesaid issue of Shares and obtained all the necessary
permissions.
16. LISTING OF SECURITIES:
The Company''s Equity Shares are listed on the BSE Limited (BSE) and the
National Stock Exchange of India Limited (NSE). The Company''s Secured,
Redeemable, Non-Convertible Debentures are listed on the Wholesale Debt
Market (WDM) segment of the BSE.
The Company has paid the applicable listing fees for the Financial Year
2013-2014 to BSE and NSE.
17. DEMAT OF SECURITIES:
Nearly 84.81% of total Equity Share Capital is held in dematerialized
form with NSDL/CDSL. While the Secured, Redeemable, Non-Convertible
Debentures are entirely held in dematerialized form.
18. SUBSIDIARY & JOINT VENTURE COMPANY:
There are six wholly-owned subsidiary companies of the Company namely
(I) Uttam Galva Holdings Limited in Dubai, (II) Atlantis International
Services Limited in British Virgin Islands, (III) Uttam Galva Steels
Netherlands B.V in Netherland, (IV) Neelraj International Trade Limited
in British Virgin Islands and (V) Uttam Galva Steels BVI Limited in
British Virgin Islands (VI) Uttam Galva Steels FZE in Ras Al Khaimah.
Further, Uttam Galva Holdings Limited has incorporated a downstream
wholly owned Subsidiary Company namely Ferro Zinc International FZE in
Jebel Ali Free Zone in United Arab Emirates.
As per the terms of the General Circular no. 2/2011, a statement
containing brief financials information for the financial year ended
31st March, 2013 of the aforesaid Subsidiaries are included in the
Annual Report. Also the accounts of all the aforesaid companies are
kept for inspection by any shareholders at the registered office of
your Company. Your Company further undertakes that the Annual Accounts
of the Subsidiary Companies and the related detailed information shall
be made available to shareholders of the Company on demand.
Apart from the aforesaid subsidiaries, your Company also has two joint
venture companies namely, Texturing Technology Private Limited and
Moira Madhujore Coal Limited.
The Consolidated Audited Annual Accounts of your Company together with
its subsidiaries and joint venture companies for the Financial Year
2012-2013 are being published pursuant to Clause 32 of the Listing
Agreement.
19. DISCLOSURES:
Information on conservation of energy, technology absorption, foreign
exchange earnings and outgo required to be given pursuant to Section
217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of
Particulars in the Report of the Board of Directors) Rules, 1988 is
annexed hereto (Annexure - I) and forms part of this report.
20. ACKNOWLEDGEMENT:
Your Directors would like to express their appreciation to the Central,
State & Local Governments, Authorities, Regulatory Bodies, Financial
Institutions, Banks, Customers and the Shareholders of the Company for
their continued support and co-operation.
Your Directors also place on record their sincere appreciation for the
total commitment, dedication and hard work put in by every member of
the Uttam Galva Family.
For and on behalf of the Board
Place : Mumbai Rajinder Miglani
Date: 24th May, 2013 Chairman
Mar 31, 2012
The Directors have pleasure in presenting the Twenty Seventh Report on
the business and operations of the Company, along with the Audited
Statement of Accounts for the Financial Year ended 31st March, 2012.
1. FINANCIAL RESULTS (Stand-Alone Basis):
(Rs in Crores)
Year Year
PARTICULARS ended ended
31st March, 31st March,
2012 2011
Gross Revenue from Operations 5475.38 5329.84
Earning before Interest, Tax, 505.94 441.26
Depreciation andAmortisation ( EBITDA )
Finance Cost 245.21 212.24
Depreciation 127.37 119.41
Profit Before Tax ( PBT ) 141.00 113.54
Provision for Tax 63.04 36.77
Profit After Tax ( PAT ) 77.96 76.77
2. OPERATIONS:
Your Company has achieved a turnover of Rs 5475.38 Crores as against Rs
5329.84 Crores in the previous year and has recorded Profit before Tax
of Rs 141.00 Crores as against Rs 113.54 Crores in the previous year.
Your Company has embarked on modernization and an expansion program of
the existing facilities and it is also exploring various opportunities
in the different business verticals in which it operates. In this
endeavor, it is necessary to conserve the resources to meet investment
opportunities, which your Board believes would enhance the
shareholder's value in the long term. Accordingly, your Board has not
recommended any dividend for the Financial Year 2011-2012.
3. CAPTIVE POWER PLANT:
During the year your Company has successfully commissioned its Captive
Power Plant (CPP) having 2 x 30 MW capacity. The commercial production
commenced w.e.f. 1st March, 2012. The CPP is running at full capacity
and the steam and the power generated by CPP is consumed by Uttam Galva
Steels Limited (UGSL) to the extent required while the balance power is
sold.
4. EXPORTS:
Your Company now exports its products to 145 countries across the globe
and continues to expand its reach. Your Company has maintained its
presence in the International Market inspite of the Global slowdown.
This year, your Company has serviced 240 export customers
internationally in 62 countries.
The Global Economic situation has shown signs of revival in USA ,
Russia , and CIS countries. This has provided a marginal boost to
international business. Your company has recorded a sales growth of 6%
and has moved up the value chain with 28% growth in Construction and
Engineering segments.
Your Company's exclusive marketing and sales arrangements with M/s.
ArcelorMittal International for Africa, Middle East, Latin America,
Russia and other CIS countries has yielded positive results and the
benefits of the same will continue to accrue in the following years.
Your Company has been the recipient of 16 EEPC Awards (15th consecutive
year) from the Ministry of Commerce and Industry, Government of India
for its outstanding exports performance.
5. DOMESTIC MARKET:
The Company has focused on the Domestic Market for the last 4 years and
has achieved leadership position. Domestic turnover has risen to 76%
of the total sales volume in 2011-2012.
Continuous effort has been made in establishing the "Uttam Suraksha" GC
(Galvanised Corrugated Roofing Sheets) brand firmly in the Construction
segment and increase its penetration in rural and urban areas. It is
recognised as one of the major Brands in its segment in Domestic
Markets like Maharashtra, Madhya Pradesh, Gujarat, Andhra Pradesh,
Karnataka, Chattisgarh etc. Your Company has achieved volume growth of
30% sales in this segment over last fiscal.
In the Original Equipment Manufacturer (OEM) market, the Company has
been focusing on high growth and profitable segments such as Automotive
and Appliances and has thus moved up the value chain in these markets.
Your Company has achieved volume growth of 9% in the Automotive segment
over the last fiscal and firmly established itself in the two and four
wheeler (Passenger and Commercial) market in western India. Your
Company has been catering to the requirements of Mahindra & Mahindra,
Force Motors, Eicher and vendors of TATA Motors, Bajaj Auto, General
Motors, Piaggio, Volkswagen and others.
In the Appliance segment your Company has achieved volume growth of 60%
over the last fiscal and has established itself as a supplier to
BlueStar, Voltas, Samsung, Hitachi, Videocon group Companies,
Whirlpool, Carrier and others.
In the General Engineering segment the Company has established itself
as a major supplier to Otis, Godrej & Boyce, Crompton Greaves and
Hematic Motors.
The demand drivers, which include rapid increase in urbanization,
improved & growing per capita income level, increased availability of
Bank Finances and need for improvement of public transport particularly
in semi-urban & rural areas, are very encouraging for your Company.
6. MANAGEMENT DISCUSSION AND ANALYSIS:
Pursuant to Clause 49 (IV) (B) & (F) of the Listing Agreement your
Directors wish to report as follows:
a) Industry Structure & Development
The demand for steel across the world is still lean but has picked up
pace in the last quarter. In India demand is growing steadily in line
with the economic growth. With increase in spend by the Government and
Private Sector, on Infrastructure, Power, Capital Goods coupled with
Positive Growth in demand from the consumer segments like Automotive
and Appliances, the surge in demand for flat steel products in the
domestic markets is expected to continue.
b) Opportunities & Threats
Your Company will continue to maintain & grow its presence in the
Export Markets while retaining its focus on value added products in
Domestic Market. Your Company is ready to cater to customers' stringent
specifications and demands which will ultimately improve the
Bottom-line. The overall presence in the Conventional, Construction &
Infrastructure Segments will continue.
c) Segment - wise Performance
Since your Company operates only in one Segment, segment-wise or
product-wise analysis of performance is not applicable.
d) Outlook
The domestic flat steel consumption in the relevant business segments
is estimated to grow at 10-12%. The need, however, for value added and
niche products is likely to surge and has been identified as major
focus area for the Company.
The international market has also demonstrated positive trends. Though
the growth in the Euro Area and US has been marginal, the same,
however, in Latin American Countries, Middle East & Africa has been
positive and encouraging and has been identified as a major opportunity
area for the Company.
e) Risks and Concerns
Your Directors have put in place critical risk management framework
across the Company. Your Company is continuously evolving and
improving systems and measures to take care of all the risk exigencies
involved in the business.
f) Internal Control Systems and their adequacy
Effective internal operational control systems and regular internal
audit mechanisms to monitor and review the same under the overall
control and supervision of the Audit Committee of Directors are in
place and functioning well. Efforts for continued improvements are
being consistently made in this regard.
All the certifications under ISO: 9001-2008, ISO: 14001-2004, ISO/TS
16949:2009 and OHSAS 18001-2007 for Quality Management, Environ- ment
Management, Technical Specifications and Occupational Health & Safety
Management respectively, are being maintained by the Company after
periodical surveillance audits.
g) Discussion on Financial Performance with respect to Operational
Performance
Your Company has achieved the highest ever Earning before Interest,
Tax, Depreciation and Amortisation ( EBITDA ) Rs 505.94 Crores, which is
an improvement of 11.1% over the Previous Year. Cost of Funds has gone
up due to increase in Interest rates and therefore eroded the
Operational Gains.
Though the Company is covered under Minimum Alternate Tax (MAT), yet
the total Income Tax Provision is 45% as against the normal Income Tax
rate of 33% due to Provision for higher Deferred Tax.
h) Material Development in Human Resources / Industrial Relations
Front, including Number of People Employed
Implementation of healthy HRD practices for overall development of
human resources, induction of professionally qualified & skilled
manpower, conduct of regular internal & external training programmes
are consistent & continuous processes followed by your Company.
Presently, your Company employs more than 1500 employees. Your Company
is proud of its healthy Industrial Relations record.
i) Material Financial and Commercial Transactions with related parties
There are no materially significant financial and commercial
transactions with the related parties conflicting with the interest of
the Company during the financial year under review. The Promoters and
the Directors are not dealing in the Equity Shares of the Company.
7. CORPORATE GOVERNANCE:
Your Company has implemented all the mandatory requirements pursuant to
Clause 49 (as amended) of the Listing Agreement. A detailed report on
Corporate Governance along with a certificate from the Auditors
confirming the compliance is annexed hereto and forms part of the
Directors' Report as Annexure-III.
8. CORPORATE SOCIAL RESPONSIBILITY:
As a socially responsible Company, your Company has a strong sense of
community responsibility.
As its operations have expanded, your Company has retained a collective
focus on the various areas of corporate sustainability that impact
people, environment and the society at large. Founded on the philosophy
that society is not just another stakeholder in its business, but the
prime purpose of it, the Company, across its various operations is
committed to making a positive contribution.
As a policy, your Company promotes and encourages economic, social and
educational development within its communities while providing active
support to local initiatives for upliftment of society in general.
9. DIRECTORS:
Your Directors regret to inform about the sad and sudden demise of Dr.
N. S Datar on 21st December, 2011. Your Directors wish to take this
opportunity to express their gratitude and sincere appreciation to Dr.
N. S. Datar for his immense & invaluable contribution to the Company
during his tenure of 25 years as Director on the Board since inception
of the Company.
IDBI Bank has withdrawn the nomination of Smt. Lalita Sharma as their
Nominee Director from the Board with effect from 13th August, 2011 as
all the outstanding dues together with the interest have been re-paid
by the Company. Your Directors wish to take this opportunity to place
on record their sincere appreciation and thanks to Smt. Lalita Sharma
for her valuable guidance and support to the Company during her tenure
as Director on the Board.
Shri O. P. Gahrotra has joined the Board of your Company with effect
from 21st January, 2012 as an Additional Director of the Company. With
his induction on the Board of Directors, your Company will be immensely
benefited by his vast and diverse experience of more than 40 years. His
brief profile is given in Report of Corporate Governance attached
hereto.
Shri Rajinder Miglani and Shri P. G. Kakodkar retire by rotation and
being eligible have offered themselves for re-appointment. The Board of
Directors recommends their re-appointment.
10. PARTICULARS OF EMPLOYEES U/S 217 (2A) OF THE COMPANIES ACT, 1956:
The Information required under Section 217(2A) of the Companies Act,
1956 and the Rules there under, in respect of the employees of the
Company, is provided in the Annexure - II.
11. DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuant to Section 217(2AA) of the Companies (Amendment) Act, 2000,
the Directors confirm that:
i) In the preparation of the annual accounts, the applicable Accounting
Standards have been followed.
ii) Appropriate Accounting Policies have been selected and applied
consistently. Judgments and estimates that are reasonable and prudent
so as to give a true and fair view of the state of affairs of the
Company as at 31st March, 2012 and of the Profit and Loss Account for
the Financial Year 2011-2012 have been made.
iii) Proper and sufficient care has been taken 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
preventing and detecting fraud and other irregularities.
iv) The Annual Accounts have been prepared on a going concern basis.
v) Proper systems are in place to ensure compliance of all laws
applicable to the Company.
12. AUDITORS' REPORT:
Notes to the Accounts as referred in the Auditors' Report are self -
explanatory and therefore, do not call for any further comments or
explanations.
13. STATUTORY AUDITOR:
M/s. Prakkash Muni & Associates, Chartered Accountants, the retiring
Auditor is eligible for re-appointment. The Company has received
necessary Certificates from the Auditor pursuant to Section 224(1 B) of
the Companies Act, 1956, regarding their eligibility for
re-appointment. Accordingly, the approval of the Shareholders for the
re-appointment of
M/s. Prakkash Muni & Associates, Chartered Accountants as Auditor of
the Company is being sought at the ensuing Annual General Meeting. Your
Board recommends the appointment of M/s. Prakkash Muni & Associates,
Chartered Accountant as Auditor of the Company.
14. COST AUDITOR:
As per the General Circular No. 15/2011 dated 11th April, 2011 and
Order no. 52/26/CAB-2010 dated 3rd May, 2011 and modified Order dated
30th June,
2011 issued by Ministry of the Corporate Affairs, it has become
mandatory to appoint Cost Auditor for conducting the cost audit of the
Company.
M/s. S. K. Agrawal & Associates, Cost Accountant (Membership No. 7880)
has been appointed as Cost Auditor of the Company to audit the cost
accounts for the year ended 31st March, 2012. Cost accounting records
for the year ended 31st March, 2012 were maintained as per the
Companies (Cost Audit Report) Rules, 2011. The Cost Auditor shall
submit the report along with their observations and suggestions, and
Annexure to the Central Government within stipulated time period.
15. FIXED DEPOSITS:
Your Company has not accepted Deposits from Public under Section 58A of
the Companies Act, 1956 and Companies (Acceptance of Deposits) Rules,
1975.
16. INSURANCE:
Your Company has taken adequate insurance cover for all its assets.
17. LISTING OF SECURITIES:
The Company's Equity Shares are Listed on the Bombay Stock Exchange
(BSE) and the National Stock Exchange (NSE). The Company's Secured,
Redeemable, Non-Convertible Debentures are listed on the Wholesale Debt
Market (WDM) segment of the BSE.
The Company has paid the applicable listing fees for the Financial Year
2012-2013 to BSE and NSE.
18. DEMAT OF SECURITIES:
Nearly 95.68% of total Equity Share Capital is held in dematerialized
form with NSDL/CDSL. The Secured, Redeemable, Non-Convertible
Debentures are entirely held in Dematerialized Form.
19. SUBSIDIARY & JOINT VENTURE COMPANIES:
There are four wholly-owned Subsidiary Companies of the Company namely
(I) Uttam Galva Holdings Limited in Dubai, (II) Atlantis International
Services Limited in British Virgin Islands, (III) Uttam Galva
Steels Netherlands BV in Netherland and (IV) Neelraj International
Trade Limited in British Virgin Island. Further, Uttam Galva Holdings
Limited has incorporated a downstream wholly owned Subsidiary Company
namely Ferro Zinc International FZE in Jebel Ali Free Zone in United
Arab Emirates.
As per the terms of the General Circular no. 2/2011 of Ministry of
Corporate Affairs, a statement containing brief financial information
for the Financial Year ended 31st March, 2012 of the aforesaid
Subsidiaries are included in the Annual Report. Also the accounts of
all the aforesaid Companies are kept for inspection by any shareholders
at the head office of your Company. Your Company further undertakes
that the Annual Accounts of the Subsidiary Companies and the related
detailed information shall be made available to shareholders of the
Company on demand.
Apart from the aforesaid subsidiaries, your Company also has two joint
venture Companies namely, Texturing Technology Private Limited and
Moira Madhujore Coal Limited.
The Consolidated Audited Annual Accounts of your Company together with
its subsidiaries and joint venture companies for the Financial Year
2011-2012 are being published pursuant to Clause 32 of the Listing
Agreement.
20. DISCLOSURES:
Information on conservation of energy, technology absorption, foreign
exchange earnings and outgo required to be given pursuant to section
217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of
Particulars in the Report of the Board of Directors) Rules, 1988 is
annexed hereto (Annexure - I) and forms part of this report.
21. ACKNOWLEDGEMENT:
Your Directors would like to express their appreciation to the Central,
State & Local Governments, Authorities, Regulatory Bodies, Financial
Institutions, Banks, Customers and the Shareholders of the Company for
their continued support and co-operation.
Your Directors also place on record their sincere appreciation for the
total commitment, dedication and hard work put in by every member of
the Uttam Family.
For and on behalf of the Board
Rajinder Miglani
Chairman
Place : Mumbai
Date : 9th May, 2012
Mar 31, 2011
The Members
The Directors have pleasure in presenting the Twenty Sixth Report on
the business and operations of the Company, along with the Audited
Statement of Accounts for the Financial Year ended 31st March, 2011.
1. FINANCIAL RESULTS (Stand Alone Basis):
PARTICULARS Year ended Year ended
31st March, 2011 31st March, 2010
(Rs. in Crores) (Rs in Crores)
Gross Sales 5323.82 4673.87
Gross Profit before 441.84 450.56
Depreciation and Interest
Less : Interest & Financial
Charges 208.90 185.39
Cash Profit 232.94 265.17
Less : Depreciation 119.41 112.70
Profit before Tax 113.53 152.47
Less : Provision for Tax 36.76 57.98
Add : MAT Credit Entitlement 0.00 7.98
Profit after tax 76.77 102.47
Balance Carried to Balance Sheet 624.95 566.80
2. OPERATIONS :
Your Company has achieved a turnover of Rs 5323.82 Crores as against Rs
4673.87 Crores in the previous year. Your Company has recorded Profit
before Tax of Rs 113.53 Crores as against Rs 152.47 Crores in the
previous year.
Apart from expansion of the existing facilities, your Company is also
evaluating various opportunities in the different business verticals in
which it operates. In this endeavor, it is necessary to conserve the
funds to meet investment opportunities, which your Board believes would
enhance the shareholder's value in the long term. Accordingly, your
Board has not recommended any dividend for the financial year
2010-2011.
3. EXPORTS :
Your Company has exported to 144 countries across the globe and
continues to expand its reach. Your Company has maintained its presence
in the International Market inspite of the Global slowdown. This year,
your Company has serviced 225 export customers internationally.
The Global Economic crisis has adversely affected the International
business showing negative growth to the tune of 35%. Even in these
critical times your Company has retained a share of 11% out of total
Indian Steel Exports. Your Company has entered into exclusive marketing
and sales arrangements with M/s. ArcelorMittal International for Africa,
Middle East, Latin America and CIS countries to take advantage of their
local presence and broader customer base in order to improve Sales and
Profitability. The benefits of the same will accrue in the following
years.
Your Company has been the recipient of the EEPC Award from the Ministry
of Commerce and Industry, Government of India, for the 14th consecutive
year for its outstanding exports performance.
4. DOMESTIC MARKET :
The Company has focused on the Domestic Market for the last 3 years and
achieved leadership position. Domestic turnover has risen to 70% of the
total sales volume in 2010- 2011. A large volume of sale is now being
generated from the Industrial, Construction and Trade segments.
Profitability has been better in the Domestic Market due to growing
economy and boom in Industrial Sector.
The volume increase in sales has been 19% compared to the same period
last year. The growth in OEM segment is 21% while sale to Trade has
risen by 18%.
Your Company has increased its penetration and established itself
firmly in the White Goods Industry. Your Company is now a regular
supplier to Value Industries (Videocon), W hirlpool, LG Electronics,
Voltas, Haier Appliances, Samsung, Western Refrigeration and others.
Your Company supplies to vendors who cater to esteemed customers like
GE Appliances, Bajaj Electricals, LG and Carrier Aircon. There is also
a major increase in business in Automobile Sector with sales to Bajaj
Auto, Mahindra & Mahindra and the vendors of TATA Motors, Bajaj,
General Motors, Piaggio, Fiat, Suzuki etc.
During the year, your Company has also established its ÃUttam Suraksha'
GC (Galvanised Corrugated Roofing Sheets) brand firmly in the
Construction segment. It is recognised as one of the major Brands in
its segment in Domestic Markets like Maharashtra, Madhya Pradesh,
Gujarat, Andhra Pradesh, Karnataka, Chattisgarh etc.
Your Company has also made inroads into thicker gauge GP (GP produced
from the state of the art Super Galvanising Line) market by competing
with Industry majors and supplying to all segments including
Construction, Panel and Auto both directly and through trade channels.
6. CORPORATE GOVERNANCE :
Your Company has implemented all the mandatory requirements pursuant to
Clause 49 (as amended) of the Listing Agreement. A detailed report on
Corporate Governance along with a certificate from the Auditors
confirming the compliance is annexed hereto and forms part of the
Directors' Report as Annexure-III.
7. DIRECTORS :
Shri S. P. Talwar, Shri A. K. Mahendru and Shri S. G. Tudekar retire
by rotation and being eligible have offered themselves for
re-appointment. The Board of Directors recommends their re-appointment.
Shri Praveen Miglani, Non Executive Director, has resigned from the
Directorship of the Company w.e.f. 30th May, 2011 due to
pre-occupation. Your Directors wish to take this opportunity to place
on record their sincere appreciation and thanks to Shri Praveen Miglani
for his invaluable contribution made to the Company during his tenure
as Director.
8. PARTICULARS OF EMPLOYEES U/S. 217 (2A) OF THE COMPANIES ACT, 1956 :
Information required for particulars of Employees as required under
Section 217 (2A) of the Companies Act, 1956 is enclosed herewith as
Annexure à II.
9. DIRECTORS' RESPONSIBILITY STATEMENT :
Pursuant to Section 217(2AA) of the Companies (Amendment) Act, 2000,
the Directors confirm that:
i) In the preparation of the annual accounts, the applicable Accounting
Standards have been followed.
ii) Appropriate Accounting Policies have been selected and applied
consistently. Judgments and estimates that are
reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company as at 31st March, 2011 and of the Profit and
Loss Account for the Financial Year 2010-2011 have been made.
iii) Proper and sufficient care has been taken 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
preventing and detecting fraud and other irregularities.
iv) The Annual Accounts have been prepared on a going concern basis.
v) Proper systems are in place to ensure compliance of all laws
applicable to the Company.
10. AUDITOR'S REPORT :
Notes to the Accounts as referred in the Auditor's Report are self Ã
explanatory and therefore, do not call for any further comments or
explanations.
11. AUDITOR :
M/s. Prakkash Muni & Associates, Chartered Accountants, the retiring
Auditor is eligible for re-appointment. The Company has received
necessary Certificates from the Auditor pursuant to Section 224(1B) of
the Companies Act, 1956, regarding their eligibility for
re-appointment. Accordingly, the approval of the Shareholders for the
re-appointment of M/s. Prakkash Muni & Associates, Chartered
Accountants as Auditors of the Company is being sought at the ensuing
Annual General Meeting. Your Board recommends the appointment of M/s.
Prakkash Muni & Associates, Chartered Accountants as Auditors of the
Company.
12. FIXED DEPOSITS :
Your Company has not accepted Deposits from Public u/s. 58A of the
Companies Act, 1956 and Companies (Acceptance of Deposits) Rules, 1975.
13. INSURANCE :
Your Company has taken adequate insurance cover for all its assets.
14. LISTING OF SECURITIES :
The Company's Equity Shares are Listed on the Bombay Stock Exchange
(BSE) and the National Stock Exchange (NSE). The Company's Secured,
Redeemable, Non- Convertible Debentures are listed on the Wholesale
Debt Market (WDM) segment of the BSE.
The Company has paid the applicable listing fees for the Financial Year
2011-2012 to BSE and NSE.
The Equity Shares of the Company have been De-listed from the Delhi
Stock Exchange Association Ltd and the Foreign Currency Convertible
Bonds (FCCB's) of the Company have been De-listed from the Singapore
Stock Exchange.
15. DEMAT OF SECURITIES :
Nearly 89.64% of total Equity Share Capital is held in dematerialized
form with NSDL/CDSL. While the Secured,
Redeemable, Non-Convertible Debentures are entirely held in
dematerialized Form.
16. SUBSIDIARY COMPANY :
There are three wholly-owned Subsidiary Companies of the Company namely
(I) Uttam Galva Holdings Limited in Dubai, (II) Atlantis International
Services Limited in British Virgin Islands and (III) Uttam Galva Steels
Netherlands B.V. in Netherlands. Further, Uttam Galva Holdings Limited
has incorporated a downstream wholly owned Subsidiary Company namely
Ferro Zinc International FZE in Jebel Ali Free Zone in United Arab
Emirates.
Pursuant to the General Circular No. 2/2011 dated 8th February, 2011
issued by the Ministry of Corporate Affairs, the Board of Directors of
the Company have accorded their consent for not attaching the accounts
of the aforesaid Subsidiary Companies along with the accounts of your
Company. However the financial information pertaining to all the
aforesaid Companies, as required in the aforesaid Circular, is provided
in the Annual Report of your Company. Also the accounts of all the
aforesaid Companies are kept for inspection by any shareholders at the
head office of your Company. Your Company further undertakes that the
Annual Accounts of the Subsidiary Companies and the related detailed
information shall be made available to shareholders of the Company on
demand.
Apart from the aforesaid subsidiaries, your Company also has two joint
venture Companies namely, Texturing Technology Private Limited and
Moira Madhujore Coal Limited.
The Consolidated Audited Annual Accounts of your Company together with
its subsidiaries and joint venture companies for the Financial Year
2010-2011 are being published pursuant to Clause 32 of the Listing
Agreement.
17. DISCLOSURES :
Information on conservation of energy, technology absorption, foreign
exchange earnings and outgo required to be given pursuant to section
217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of
Particulars in the Report of the Board of Directors) Rules, 1988 is
annexed hereto (Annexure à I) and forms part of this report.
18. ACKNOWLEDGEMENT:
Your Directors would like to express their appreciation to the Central,
State & Local Governments, Authorities, Regulatory Bodies, Financial
Institutions, Banks, Customers and the Shareholders of the Company for
their continued support and co-operation.
Your Directors also place on record their sincere appreciation for the
total commitment, dedication and hard work put in by every member of
the Uttam Family.
For and on behalf of the Board
Place : Mumbai Rajinder Miglani
Date : 30th May, 2011 Chairman
Mar 31, 2010
The Directors have pleasure in presenting the Twenty Fifth Report on
the business and operations of the Company, along with the Audited
Statement of Accounts for the Financial Year ended 31st March, 2010.
1. FINANCIAL RESULTS (Stand Alone Basis):
PARTICULARS Year ended Year ended
31st March, 31st March,
2010 2009
(Rs. in Crores) (Rs. in Crores)
Gross Sales 4673.87 4509.75
Gross Profit before Depreciation
and Interest 450.56 359.36
Less: Interest & Financial Charges 185.39 165.63
Cash Profit 265.17 193.73
Less: Depreciation 112.70 92.37
Profit before Tax 152.47 101.36
Less: Provision for Tax 57.98 12.04
Add: MAT Credit Entitlement 7.98 10.85
Profit after tax 102.47 100.17
Balance Carried to Balance Sheet 566.80 522.17
2. OPERATIONS:
Your Company has achieved a turnover of Rs. 4673.87 Crores as against
Rs. 4509.75 Crores in the previous year. Your Company has recorded
Profit before Tax of Rs. 152.47 Crores as against Rs. 101.36 Crores in
the previous year. Owing to expansions and importance of timely
execution of projects, your Board is of the opinion that cash flow
should be conserved and hence has decided to plough back earnings for
the time being & not to recommend dividend payout.
3. EXPORTS:
Your Company has exported to 142 countries across the Globe and
continues to expand its reach. This year, your Company has serviced 330
export customers across the World, of which 78 are new recipients of
Uttam products. The Global Economic crisis has adversely affected the
International business showing negative growth to the tune of 23%. Even
in these odd times it is the great achievement of your Company to
maintain the share of 14% out of total Indian Exports. More emphasis
has been given to export of value added products and segments like
white goods, building & construction segments, Pre-Engineering
Buildings.
Your Company has been awarded for 13th consecutive year by EEPC for its
outstanding exports performance.
4. DOMESTIC MARKET:
In the domestic market the volume increase in sales has been 111%
compared to sales in the same period last year. The growth in OEM
segment is 110% and sale to trade has also grown by 112%.
Your Company has been fully successful with the white goods industry
during the year and is now the regular supplier to Value Industries
(Videocon), Whirlpool, LG Electronics, Voltas, Haier Appliances,
Western Refrigeration etc and the vendors to customers like GE
Appliances, Bajaj Electricals, LG etc. Your Company also continues to
supply the vendors of TATA Motors, General Motors, Piaggio, Volkswagen,
Fiat, Suzuki, etc.
During the year, your Company successfully continued supply of
Galvanised roofing sheets and thicker gauge GI coils to all segments
including Construction segment in Structural Grade, Panel Grade and
Auto Grade Galvanized Steel.
5. MANAGEMENT DISCUSSION AND ANALYSIS:
Pursuant to Clause 49 (IV) (B) & (F) of the Listing Agreement your
Directors wish to report as follows:
a) Industry Structure & Development
The steel demand in India is predicted to grow at 13.5% per Annum
keeping the pace with vibrant GDP growth & strong demand from the
construction & automotive sector. Thus your Companys overall sales
have shown growth of 35% contrary to World wide reduction in Steel
consumption by 6.7% in 2009.
b) Opportunities & Threats
Your Company has shown remarkable growth in sales in Domestic market
inspite of recession across the world. We are optimistic that the
revival of the Global Economy coupled with improvement in size & market
mix will result in enhancement of bottom line in coming years.
However, with more capacity back on stream, which had been shut due to
low demand of steel mainly due to economic crisis, poses a threat for
price rise. Also the volatility in Raw Material prices in range of
30-40% band is a matter of concern.
c) Segment à wise Performance
Since your Company operates only in one Segment, segment-wise or
product wise analysis or performance is not applicable.
d) Outlook
The industry outlook is promising with revival of economy due to
stimulus packages offered by various governments to overcome the
economic crisis. Indian steel consumption is expected to grow @ 13.9%
in 2010 & 13.7% in 2011. As per World Steel Association apparent steel
use will increase by 10.7% in year 2010. This will lead to more
optimistic future outlook for your Company. Your Company will
concentrate more on Domestic Marketing opportunities with enhanced
capacity, without reducing its presence in International markets.
e. Risks and Concerns
Your Directors has put in place critical risk management framework
across the Company. Your Company is continuously evolving and improving
systems and measures to take care of all the risk exigencies involved
in the business.
f. Internal Control Systems and their adequacy
Effective internal operational control systems and regular internal
audit mechanisms to monitor and review the same under the overall
control and supervision of the Audit Committee of Directors are in
place and functioning well. Efforts for continued improvements are
being consistently made in this regard.
g. Discussion on Financial Performance with respect to Operational
Performance
The financial performance with respect to the operational performance
during the year under review was good due to which your Company has
been able to achieve good financial results.
h. Material Development in Human Resources / Industrial Relations
Front, including Number of People Employed Implementation of healthy
HRD practices for overall development of human resources and induction
of professionally qualified and skilled manpower including internal and
external training programmes are constant features of your Company.
Presently, your Company employs 1600 employees. Your Company is proud
of its healthy Industrial Relations record.
i. Material Financial and Commercial Transactions with related parties
There are no materially significant financial and commercial
transactions with the related parties conflicting with the interest of
the Company during the financial year under review.
6. CORPORATE GOVERNANCE:
Your Company has implemented all the mandatory requirements pursuant to
Clause 49 (as amended) of the Listing Agreement. A detailed report on
Corporate Governance along with a certificate from the Auditors
confirming the compliance is annexed hereto and forms part of the
Directors Report as Annexure-III.
7. DIRECTORS:
During the year under review Shri Rajinder Miglani was re-appointed as
the Chairman & Managing Director of the Company for the period of 3
years from 31st December, 2009 to 30th December, 2012. Subsequently
the Board of Directors of the Company in their Meeting held on 28th
July, 2010 re-designated Shri Rajinder Miglani as the Executive
Chairman of the Company with effect from 28th July, 2010 on the same
terms and conditons.
Shri Anuj Miglani was re-appointed as Dy. Managing Director of the
Company for the period of 3 years from 10th November, 2009 to
9thNovember, 2012. Subsequently the Board of Directors of the Company
in their Meeting held on 28th July, 2010 re-designated Shri Anuj
Miglani as the Managing Director of the Company with effect from 28th
July, 2010 on the same terms and conditons.
Shri Ankit Miglani was appointed as the Director (Commercial) with
effect from 29th July, 2008 for a period of three years, which was
approved by the Members of the Company in the Annual General Meeting
held on 26th September, 2009. The Board of Directors of the Company, at
their Meeting held on 28th July, 2010, re-designated Shri Ankit Miglani
as the Dy. Managing Director of the Company. All other terms and
conditions of his appointment remain unaltered.
Shri P G Kakodkar, Shri S T Parikh and Dr. N S Datar retire by rotation
and being eligible have offered themselves for re-appointment. The
Board of Directors recommends their re-appointment. Smt. Swarna Prabha
Sukumar was appointed as a Nominee Director of Life Insurance
Corporation of India (LIC) on 22nd September, 2009 in place of Shri S R
Krishnaswamy and Smt. Lalita Sharma was appointed as a Nominee Director
of IDBI Bank Limited on 29th September, 2009 in place of Shri V D
Shinde.
Your Directors wish to take this opportunity to place on record their
sincere appreciations and thanks to Shri S R Krishnaswamy and Shri V D
Shinde for their valuable guidance and services rendered to the Company
during their tenure as Director.
8. PARTICULARS OF EMPLOYEES U/S 217 (2A) OF THE COMPANIES ACT, 1956:
Information required for particulars of Employees as required under
Section 217 (2A) of the Companies Act, 1956 is enclosed herewith as
Annexure à II.
9. DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to Section 217(2AA) of the Companies (Amendment) Act, 2000,
the Directors confirm that:
i) In the preparation of the annual accounts, the applicable accounting
standards have been followed.
ii) Appropriate Accounting Policies have been selected and applied
consistently. Judgments and estimates that are reasonable and prudent
so as to give a true and fair view of the state of affairs of the
Company as at 31st March, 2010 and of the Profit and Loss Account for
the Financial Year 2009-2010 have been made.
iii) Proper and sufficient care has been taken 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
preventing and detecting fraud and other irregularities.
iv) The Annual Accounts have been prepared on a going concern basis.
v) Proper systems are in place to ensure compliance of all laws
applicable to the Company.
10. AUDITORS REPORT:
Notes to the Accounts as referred in the Auditors Report are self
explanatory and therefore, do not call for any further comments or
explanations.
11. AUDITOR:
M/s. Prakkash Muni & Associates, Chartered Accountants, the retiring
Auditor is eligible for re- appointment. The Company has received
necessary Certificates from the Auditor pursuant to Section 224(1B) of
the Companies Act, 1956, regarding their eligibility for
re-appointment. Accordingly, the approval of the Shareholders for the
appointment of M/s. Prakkash Muni & Associates, Chartered Accountants
as Auditors of the Company is being sought at the ensuing Annual
General Meeting.
12. FIXED DEPOSITS:
Your Company has not accepted Deposits from Public u/s. 58A of the
Companies Act, 1956 and Companies (Acceptance of Deposits) Rules, 1975.
13. INSURANCE:
Your Company has taken adequate insurance cover for all its Assets.
14. LISTING OF SECURITIES:
The Companys Equity Shares are Listed on the Bombay Stock Exchange
(BSE), the National Stock Exchange (NSE) and the Delhi Stock Exchange.
The Companys Foreign Currency Convertible Bonds (FCCBs) are Listed on
the Singapore Stock Exchange. During the year under review the Company
issued 58,74,760 Equity Shares of Rs. 10/- each to the Shareholders of
Shree Uttam Steel & Power Limited (SUSPL) pursuant to the Merger of the
Power Division of SUSPL with the Company. Further the Company issued
24,11,900 Equity Shares of Rs. 10/- each to the Bondholders of the
Company pursuant to the Conversion of 2.5 Million Series A FCCBs of
the Company. The aforesaid shares were duly listed on the Bombay Stock
Exchange (BSE), the National Stock Exchange (NSE) and the Delhi Stock
Exchange. The Company has paid the listing fees for the Financial Year
2010-2011 to BSE, NSE and DSE. Approval for de-listing of Equity
Shares has been received from the Calcutta Stock Exchange Association
Ltd.
During the Financial Year 2009-2010, the Company had issued 2000
Secured, Redeemable, Non-Convertible Debentures of Rs. 10,00,000/-
each (Rupees Ten Lacs Only) aggregating to Rs. 200 Crores on Private
Placement basis. The said Debentures are listed on the Wholesale Debt
Market (WDM) segment of the BSE.
15. DEMAT OF SECURITIES:
Nearly 89.57% of total Equity Share Capital is held in dematerialized
form with NSDL/CDSL.
16. STRATEGIC ALLIANCE:
The Indian Promoters of the Company and the Company entered into a
Co-Promotion Agreement on 4th September, 2009 with ArcelorMittal
Netherlands B.V. (an indirect 100% subsidiary of ArcelorMittal, which
is the worlds largest steel manufacturer). Accordingly ArcelorMittal
Netherlands B.V. made an open offer to the Shareholders of the Company
which was fully subscribed. The Indian promoters of the Company and
ArcelorMittal Netherlands B.V. are now part of the same "group" as that
expression is defined in the Monopolies and Restrictive Trade Practices
Act, 1969 being in control of the Company. They are, however, not
persons acting in concert with each other.
17. SUBSIDIARY COMPANY:
There are two wholly-owned Subsidiary Companies of the Company namely
Uttam Galva Holdings Limited and Atlantis International Services
Limited out of which Atlantis International Services Limited was
incorporated during the year in British Virgin Islands as an
International Business Company. Further, Uttam Galva Holdings Limited
has incorporated a step down wholly owned Subsidiary Company namely
Ferro Zinc International FZE in Jebel Ali Free Zone in United Arab
Emirates, the accounts of all the aforesaid Companies are attached
along with the accounts of your Company pursuant to Section 212 of the
Companies Act, 1956. The Consolidated Audited Annual Accounts of the
Company together with its Subsidiaries for the Financial Year 2009-2010
are being published in the Annual Report of the Company pursuant to
Clause 32 of the Listing Agreement.
18. DISCLOSURES:
Information on conservation of energy, technology absorption, foreign
exchange earnings and outgo required to be given pursuant to section
217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of
Particulars in the Report of the Board of Directors) Rules, 1988 is
annexed hereto (Annexure à I) and forms part of this report.
19. ACKNOWLEDGEMENT:
Your Directors take this opportunity to express their deep gratitude to
the Central, State & Local Governments, Financial Institutions and
Banks for their continued support, co-operation andguidance.
Your Directors also like to place on record their sincere appreciation
for the total commitment, dedication and hard work put in by every
member of the Uttam Family.
Your Directors express their gratitude to the esteemed customers of the
Company for their continued confidence and faith, which they have shown
in the products and services of your
Company.
And to you our Shareholders, we are deeply grateful for the confidence
and faith which you have always placed in us.
For and on behalf of the Board
Rajinder Miglani
Chairman
Place : Mumbai Date:
28th July, 2010