The Honble National Company Law Tribunal ("Honble NCLT"), Kolkata Bench
vide order dated 7th February, 2020 has initiated Corporate Insolvency Resolution Process
("CIRP") based on the application filed by the State Bank of India under Section
7 of the Insolvency and Bankruptcy Code, 2016 ("the Code"). Mr. Supriyo Kumar
Chaudhuri (IP Registration No. IBBI/IPA-001/IP-P00644/2017-18/11098) was appointed as
Interim Resolution Professional (IRP) to manage affairs of the Company in accordance with
the provisions of the Code. In the first meeting of Committee of Creditors
("CoC") held on 5th March, 2020, Mr. Supriyo Kumar Chaudhuri was re-appointed as
the Resolution Professional (RP) for the Company.
Further, in consonance with the stipulation contained in Section 17 of the IBC, 2016,
the powers of the Board of Directors of the Company stand suspended and the same is being
vested and exercised by Mr. Supriyo Kumar Chaudhuri, Resolution Professional (RP) w.e.f.
7th February, 2020.
Members of the Committee of Creditors (CoC) in their 31st meeting considered the
Resolution Plans received from five Prospective Resolution Applicants and approved the
Resolution Plan submitted by the Tata Steel Mining Limited with requisite majority through
e-voting process (concluded on 5th June, 2021). Pursuant to Section 30(6) of the Code, the
Resolution Professional has filed the Resolution Plan (as approved by the CoC) with the
Honble NCLT, Kolkata Bench on 7th June, 2021 for its subsequent approval thereupon.
Economic Overview
Global economy has suffered a recession of 4.4% in the year 2020-21 from 2.9% in
2019-20 and growth is expected to fluctuate in the upcoming years.
The GDP growth in the Economic Sector of India for the financial year 2021-2022 is
expected to be negligible. The nation is currently experiencing a phase of depression due
to amid spread of epic pandemic Covid-19, resultant to a nationwide lockdown declared by
the Government of India, since March, 2020 till May, 2020, however post lockdown scenario
has not changed the growth aspect, wherein the said depression has adversely affected all
sectors and specially the steel and ferro alloy sector which is, highly dependent on
foreign markets like China. Growth is expected to pick up towards the end of 2021 and the
market may stabilize from early 2022 after the end of Covid 19 pandemic. India also has an
opportunity to strengthen its recent economic gains by initiating more integration in the
global value chain. Factors such as a young working population, improving business climate
and renewed focus on export expansion would support this opportunity.
Ferro Alloys Industry
Ferro chrome is an alloy of chrome and iron which is primarily used in manufacturing
stainless steel.
Ferro-alloys are critical additives in the production of Iron & Steel and the
fortune of Ferro Alloys Industry is directly linked with the growth of Iron & Steel
Industry. The Company produces Ferro chrome-based alloys.
Indian Ferro Chrome Industry
The Indian ferro chrome production is gradually on increasing track in the Year 2021-22
as compared to the Year 2020-21 after the adverse effect of the Covid-19 pandemic. The
countrys export of annual ferro chrome is also showing a gradual increase. The
socio-political relations with neighbouring countries is also expected to play an
important part in the future for ferro chrome industry.
The demand for Ferro Chrome is expected to remain on increasing trend in the near
future due to outbreak of Covid 19. Due to slowly revival of world economy, high demand of
infrastructure projects are expected to raise demand for Stainless Steel and Ferro Chrome.
The industry is expected to see substantial consolidations which will drive market
discipline and cut down inefficiencies in the production capacity. India holds a lot of
promise with government initiatives easing mining operations for consolidated Ferro Alloys
producers.
Steel Industry
The growth in the Indian steel sector has been driven by domestic availability of raw
materials such as iron ore and cost-effective labour.
Government of Indias focus on infrastructure and undertaking road projects is aiding
the boost in demand for steel and is expected to increase the demand post the pandemic
from early part of the year 2022.
Stainless Steel Industry
Indias per capita consumption for stainless steel products is continue to be below the
world average which may cause a massive unrealised potential for steel demand growth.
There is an ongoing thrust for infrastructure development which will further boost the
demand for stainless steel in the country post the effects of the pandemic is over. The
growth in the Indian steel sector has been driven by domestic availability of raw
materials such as iron ore and cost-effective labour. Moreover, growing urbanisation and
disposable income will also enhance demand of stainless steel. Consequently, the steel
sector has been a major contributor to Indias manufacturing output.
Outlook
The steel sector has been a major contributor to Indias manufacturing output which in
turn depends on increase in automotive production and the development of construction
sector.
The proportion of use of Ferro chrome depends upon the grade of stainless steel being
produced which can be up to 30% of the total input of production. The demand for Ferro
chrome is expected to increase gradually in future. Rising investment in the
infrastructure and real estate sectors and increase in number of construction activities
are promising a slow but gradually demand for stainless steel products.
Rohit Ferro is the one of the significant manufactures Ferro chrome in Eastern India.
The Company currently operates two manufacturing complexes at Jajpur in Odisha and
Bishnupur plant in West Bengal and has an integrated management system that encompasses
quality, environment and occupational health and safety certification.
Details of Significant change in Key Financial Ratio:
The significant changes in the financial ratios over 25% of the Company are summarised
below:
| Ratio |
F.Y. 2020-21 |
F.Y. 2019-20 |
Change (%) |
Reason for change |
| Net Profit Margin (%) |
(10.90) |
(92.04) |
88.16 |
No change in ECL policy and Impairment of PPE during current year |
| Interest Coverage Ratio (X) |
(39.83) |
(3.85) |
(934.51) |
Decrease in sales and increase in raw material price |
| Debtors Turnover Ratio (X) |
24.20 |
3.19 |
658.64 |
High proportion of quality customers |
| Inventory Turnover Ratio (X) |
13.72 |
8.15 |
68.36 |
Strong sales due to considerable demand of products |
Risk, Opportunities and Threats
The Company manufactures ferro alloys as well as stainless steel. In Financial Year
2020-21, the overall growth of stainless-steel business was not satisfactory with slower
increase in demand. Also, the effect of the Covid-19 pandemic has further put a halt on
all production activities for almost four months. All construction sights and other areas
of infrastructure were also put on halt and the country faced acute crisis of labour as
most of them returned to their native places in view of the pandemic and lockdown being
announced by the Government of India. The business was severely impacted by the increase
in cost of raw material and oversupply by China. The domestic consumption of steel is
likely to increase 2021-22 due to Government initiatives like make in India, building
Smart Cities, focus on sanitation facilities and development in areas of roads and
railways etc.
The government has already firmly taken incessant number of steps for the betterment of
Indian economy and has also undertaken two large initiatives viz. putting more money into
the rural economy especially after demonetisation and putting a renewed focus on
infrastructure development which would certainly enable the ferro alloys and steel
producers to survive and grow in the markets.
Further, the electrical energy is one of the major inputs in production of ferro alloys
and high-power tariff is a great threat for the ferro alloys industry. High power cost has
already impacted us severely and that led to suspension of our plant at Haldia since 1st
July, 2015.
The Company has a Risk Management framework in place which is designed to identify,
assess and monitor various risks related to key business and strategic objectives. All
identified risks are categorised based on a matrix of likelihood of occurrence and impact
thereof and a mitigation plan is worked out to extent possible.
Government regulations, like reduction in import duties, anti-dumping duty and increase
in power tariffs and shortage of power, may also affect the profitability of the Company,
since 40% or more production costs account for power.
Segment-wise performance Ferro Alloys
During the year under review, the Company has produced 41505 MT of Ferro Alloys against
56400 MT of Ferro Alloys in previous year registering a decrease of 26.41% over previous
year. This is mainly account of shortage of working capital being faced by the Company.
Also, the Covid-19 pandemic and lockdowns declared by Central Govt and State Govt has
dented the production during the current Financial Year.
Iron & Steel
During the year under review, the Company has produced 44429 MT of Stainless Steel
against 55750 MT in previous year registering a decrease of 20.20% over previous year.
Health, Safety and Environment
The Company is committed to conducting its activities in a manner that promotes the
health and safety of its employees, assets and the public, as well as protection of the
environment. The Companys Integrated Management System comprises of quality, environment
and occupational health and safety certification. New employees are being given intensive
safety induction training and are being issued with "Safety Passports" related
to their work area. All the statutory requirements related to safety, health and
environment are being complied with.
Requirements of environmental acts and regulations are complied with. Monitoring and
analysis of water, stack emissions and ambient air quality etc., are undertaken
periodically to verify whether the level of environmental parameters are maintained and
are well within the specified limits.
Internal Controls Systems and their adequacy
Your Company maintains adequate Internal Control Systems in all areas of operation.
Services of Internal and External Auditors are utilized from time to time, as also
in-house expertise and resources. The Company continuously upgrade these systems in line
with the best available practices. Some significant features of Internal Control Systems
are:
• Adequate documentation of policies, guidelines, authorities and approval
procedures covering all important functions.
• Deployment of an ERP system which covers most operations and is supported by a
defined on-line authorisation protocol.
• Ensuring complete compliance with laws, regulations, standards, and internal
procedures and systems.
• Ensuring the integrity of the accounting system; the properly authorised
recording and reporting of all transactions.
• Ensuring a reliability of all financial and operational information.
Prior to the initiation of CIRP, the Company had an Audit Committee with majority of
independent directors as members. The committee periodically reviews significant audit
findings, adequacy of internal control and compliance with Accounting Standards, amongst
others. The Internal Audit Reports are placed before the meeting of Resolution
Professional with Directors and Key Managerial Personnel for consideration. The Resolution
Professional duly considers and takes appropriate action on the recommendations made by
the Statutory Auditors, Internal Auditors. The Company also takes quarterly compliance
certificate in respect of various applicable laws from the concerned departmental heads
and place the same before the Board / the Resolution Professional.
However, pursuant to commencement of the CIRP against the Company w.e.f. 7th February,
2020, the powers of the Board along with Audit Committee of Directors stood suspended and
are exercised by the Resolution Professional in accordance with the provisions of the Code
and accordingly the aforementioned functions are not being exercised by the Audit
Committee since 7th February, 2020.
Discussion on financial performance with respect to operational performance
This has been dealt within the Boards Report.
Industrial Relations and Human Resources
Human Resource management is not only important but also a critical asset for a
Companys growth. The Companys human capital comprises a prudent mix of youth and
experience. The Company employs contract labour in its manufacturing facilities. The
Company partners with its employees to ensure a highly engaged and motivated workforce
dedicated to achieving the Companys goals. We ensure a safe work environment for all our
women employees. We also promote gender equality. Abiding by the Sexual Harassment Policy,
we have a Complaint Committee which addresses any complaint from women employees in this
relation and take necessary action. The Policy is being reframed as per the provision of
Sexual Harassment of Women at the work-place (Prevention, Prohibition & Redressal)
Act, 2013. During the financial year, the Company has not received any complaints of
sexual harassment. During the year ended 31st March, 2021, there were 379 parmanent
employees on the payroll of the Company.
Cautionary Statement
Statements made in this report describing the Companys objective and predictions may
be "forward-looking statements" within the meaning of applicable laws and
regulations. Actual results may vary significantly from the forward-looking statements
contained in this document due to various risks and uncertainties. These risks and
uncertainties include the effect of economic and political conditions in India, volatility
in interest rates new regulations and government policies that may impact the Companys
business as well as its ability to implement the strategy. The Company doesnt undertake
to update the statements.
Since none of the Directors were present in the Meeting of Resolution Professional with
Directors and Key Managerial Personnel, the Boards Report and Annexure thereon were
signed by the Key Managerial Personnel.
| By the Order of Resolution Professional |
| Rohit Ferro-Tech Limited |
| (Company under Corporate Insolvency Resolution Process) |
|
Anil Prasad Shaw |
Vipul Jain |
| Kolkata, 29th June, 2021 |
(Company Secretary) |
(Chief Financial Officer) |
+91-9892691696
