Ankit Metal & Power Ltd Directors Report.
The Directors are pleased to present the Companys 15th Annual Report together Audited Accounts for the financial year ended 31st March, 2017.
|FINANCIAL HIGHLIGHTS||(Rs. in Lacs)|
|Particulars||Current Year||Previous year|
|Revenue from Operation (net)||2,596.50||1,00,649.31|
|Profit before Finance Cost, Depreciation and Tax||(24,366.74)||(16,102.14)|
|Less: Depreciation & Amortisation||4,053.30||6,111.81|
|Less: Finance Cost||1,509.62||13,486.25|
|Less: Tax Expenses||-||-|
|Net Profit after Tax||(29,929.66)||(35,700.20)|
|Add: Other Comprehensive Income||8.07||(20.15)|
|Total Comprehensive Income||(29,921.59)||(35,720.35)|
Figures of the previous year have been regrouped/revised wherever necessary due to applicability of Ind AS from the current financial year.
FINANCIAL AND OPERATIONAL REVIEW
During the year under review, the Company has achieved Net Sales/Income from Operation of 2,596.50 Lacs only as against 1,00,649.31 Lacs in the previous year. The Company incurred a Net Loss of 29,921.59 Lacs as against 35,720.35 Lacs in the previous year. The losses and decline in sales are mainly attributed to depressed market for steel impacting the net realisation and margin.
The plant which was under suspension of work has resumed operations. The Company had made a reference to Board of Industrial and Financial Reconstruction (BIFR) under Section 15 of Sick Industrial Companies Act, 1985. However, with the repeal of the Sick Industrial Companies Act, 1985 w.e.f. 1st December, 2016, the submission is no more valid.
INDIAN ACCOUNTING STANDARDS (IND AS)
The Company has adopted Ind AS from the current financial year with the transition date of 1st April, 2015. As required under Ind AS, the comparative period financial statements have been restated for the effects of Ind AS. The effect of the transition has been explained in detail in the notes to the financial statements.
The Company has not transferred any amount to the General Reserve due to the losses incurred during the financial year ended 31st March, 2017.
In view of the losses incurred by the Company, the Directors of the Company do not recommend any dividend for the financial year ended 31st March, 2017.
During the year under review, the Board of Directors met seven (7) times, the details of which are given in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
CHANGES IN SHARE CAPITAL
There was no change in the Share Capital of the Company during the year.
In accordance with the provisions of the Companies Act, 2013, Mr. Sanjay Singh (DIN: 00531906) retires by rotation and being eligible, offers himself for re-appointment.
During the year Mr. Rohit Jain (DIN: 07129693), Non-Executive Independent Director of the Company has resigned from the directorship of the Company with effect from 14th December, 2016.
Mr. Prem Narayan Khandelwal (DIN: 00438367), Non-Executive Independent Director of the Company has resigned from the Directorship of the Company with effect from 11th August, 2017.
Pursuant to the provisions of Section 149, 152, 161 of the Companies Act, 2013 along with the rules made thereunder, read with Regulation 25 of SEBI (Listing Obligations & Disclosure Requirements) Regulation, 2015, Mr. Ankit Jain (DIN: 07672255) was appointed as an Additional Independent Director (Non-Executive) by the Board of Directors of the Company with effect from 14th December, 2016 up to the date of ensuing Annual General Meeting. The Company has received a notice in writing from a member proposing his candidature for the office of Independent Director (Non-Executive).
Mr. Ravindra Kumar Mehra (DIN: 07898952), has been appointed as an Additional Independent Director (Non-Executive) with effect from 11th August, 2017 up to the date of ensuing Annual General Meeting. The Company has received a notice in writing from a member proposing his candidature for the office of Independent Director (Non-Executive).
Mr. Ankit Patni (DIN: 00034907) who was appointed by the Board of Directors as an Additional Director of the Company with effect from 15th December, 2015 was regularised in the 14th Annual General Meeting held on 28th September, 2016.
KEY MANAGERIAL PERSONNEL
Chief Financial Officer
The Board had appointed Mr. Saurabh Jhunjhunwala (PAN: AFKPJ9394K), as Chief Financial Officer of the Company with effect from 23rd May, 2016.
Company Secretary & Compliance Officer
The Board had appointed Ms. Jaya Pathak (PAN: CDCPP7699M) as Company Secretary & Compliance Officer of the Company with effect from 7th October, 2016.
DIRECTORS RESPONSIBILITY STATEMENT
Based on the framework of Internal Financial Controls maintained by the Company, work performed by the Internal, Statutory, Cost and Secretarial Auditors and external agencies, the reviews performed by management and the relevant Board Committees, the Board, with the concurrence of the Audit Committee, is of the opinion that the Companys Internal Financial Controls were adequate and effective as on 31st March, 2017.
Accordingly, pursuant to provisions of Section 134(5) of the Companies Act, 2013, the Board of Directors to the best of their knowledge and ability confirm:
i. that in the preparation of the annual accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;
ii. that we have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year March 31, 2017 and of the profit and loss of the Company for that period;
iii. that 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 for preventing and detecting fraud and other irregularities;
iv. that the annual accounts have been prepared on a "going concern" basis;
v. that proper internal financial controls were laid down and that such internal financial controls are adequate and were operating effectively and
vi. that proper systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively.
During the year under review Credit Rating has not been done. The Companys credit rating for previous year for Long-Term and Short-Term debts/facilities was D given by ICRA Limited.
DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES
The Company does not hold any subsidiary/joint venture/associate companies during the year under review.
EXTRACT OF ANNUAL RETURN
The details of the extract of the Annual Return in the Form MGT-9 as on 31st March, 2017 is annexed herewith and forms part of this Report as Annexure-I.
The Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.
The properties and insurable assets and interests of the Company, like building, plant and machinery and stocks, among others, are adequately insured.
In terms of the provisions of Section 139 of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules, 2014 M/s. R. Kothari & Company, Chartered Accountants (FRN: 307069E) the Auditors of the Company shall hold office till the conclusion of the ensuing Annual General Meeting and they shall not be eligible for re-appointment due to expiry of the maximum permissible tenure as the Auditors of the Company. The Board appreciates the valuable contribution of the Auditors during their long association and guidance to the Company.
The Audit Committee recommended the Board at its meeting held on 11th August, 2017, to appoint M/s. J. B. S. & Associates, Chartered Accountants (FRN: 323734E ) as the new Auditors of the Company, in place of the retiring Auditors, M/s. R. Kothari & Company, Chartered Accountants (FRN: 307069E) to hold office from the conclusion of the ensuing 15th Annual General Meeting until the conclusion of the 20th Annual General Meeting of the Company, subject to approval of the members at the ensuing Annual General Meeting and ratification by the members of the Company every year thereafter.
The Company has received a confirmation from M/s. J.B.S. & Associates, Chartered Accountants (FRN: 323734E ) to this effect that their appointment, if made, would be within the limits prescribed under Section 139 of the Companies Act, 2013 and the rules framed thereunder and in accordance with Section 141 of the Companies Act, 2013. They have also confirmed that they hold a valid peer review certificate as prescribed under Regulation 33(d) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.
STATUTORY AUDITORS OBSERVATION
Auditors have drawn attention on Note no.29 of the Ind AS Financial Statements with regard to non-recognition of interest expense amounting to 15,443.31 Lacs (including 2,344.39 Lacs relating to Previous Year) on the borrowings of the Company for the year ended 31st March, 2017 which is not in accordance with the requirements of Ind AS 23: Borrowing Costs read with Ind AS 109: Financial Instruments.
The Company has not provided accrued interest in its books of accounts during the year and reversed interest provided in earlier period pertaining to the period the account was declared NPA by the respective lenders. During the year the Company has reversed interest amounting to 5,375.27 Lacs (including 2,344.39 Lacs relating to Previous Year). The un-provided liability in respect of interest on borrowings amounted to 15,443.31 Lacs. The same have consequential impact on the reported figures of this year as well as earlier periods. Had the aforesaid interest expense been recognised the Finance Cost would have been 16,952.93 Lacs (including 2,344.39 Lacs reversed for the Previous Year) instead of 1,509.62 Lacs and total comprehensive loss would have been 45,364.89 Lacs instead of 29,921.66 Lacs for the year ended 31st March, 2017. Other Equity and other Current Financial Liabilities as at 31st March, 2017 would have been ( 46,373.45) Lacs and 34,917.14 Lacs.
Our comments are as under:
The lenders have stopped charging interest on debts, since the dues from the Company have been categorised as Non-Performing Asset (NPA). The Company is in active discussion/negotiation with its lenders to restructure its debts at a sustainable level including waiver of unpaid interest. In view of the above, pending finalisation of the restructuring plan, the Company has stopped providing interest accrued and unpaid effective 1st April, 2016 in its books. The amount of such accrued and unpaid interest not provided for stands at 10,068.04 Lacs for the year ended 31st March, 2017 and accordingly the same has not been considered for compilation of books for the year ended 31st March, 2017. Further, based on the above premises, the Company has also reversed the interest provided in the earlier periods from the date the accounts been categorised as Non-Performing Assets (NPA) by the respective lenders amounting to 2,895.94 Lacs in the year ended 31st March, 2017.
In terms of Section 148 of the Companies Act, 2013 read with Rule 14 of the Companies (Audit and Auditors) Rules, 2014, on the recommendation of Audit Committee, the Board of Directors has re-appointed Mr. Sambhu Banerjee, Cost Accountant (Membership No. 9780), as Cost Auditor of the Company, at a remuneration of 35,000 plus applicable taxes and re-imbursement of out of pocket expenses incurred by them to conduct an audit of the cost accounting records maintained by the Company for the current financial year beginning from 1st April, 2017 and ending on 31st March, 2018.
As required under Section 148 of the Companies Act, 2013 read with Rule 14 of the Companies (Audit and Auditors) Rules, 2014, the remuneration payable to Cost Auditor is being placed at the ensuing Annual General Meeting for ratification by the members.
In terms of Section 204 of the Companies Act, 2013 and rules made there under, M/s. K. C. Dhanuka & Co. (Prop. Mr. K.C. Dhanuka, FCS- 2204), Practicing Company Secretary has been appointed as Secretarial Auditor of the Company for the financial year 2016-17. The report of the Secretarial Auditor in Form MR-3 is enclosed as Annexure-II to this report.
SECRETARIAL AUDITORS OBSERVATION
The Secretarial Auditor has the following observations in Form MR-3 enclosed as Annexure II:
i. The position of a Company Secretary being KMP under Section 203 of the Companies Act, 2013 was vacant from 26th November, 2015 and filled up from 7th October, 2016.
ii. The amount remaining in Unclaimed Dividend Account due to transfer for the year 2015-2016 was not transferred within the stipulated time to Investor Education and Protection Fund (IEPF). However the same has been transferred to IEPF Account on 21st June, 2017.
iii. The Shareholding Pattern as required by Regulation 31 of SEBI (Listing Regulations and Disclosure Requirements) has been filed with BSE Limited (BSE) and National Stock Exchange of India Limited (NSE) for the quarter ended 31st December, 2016 on 3rd February, 2017.
iv. The Annual Listing Fees of National Stock Exchange of India Limited (NSE) for the financial year 2016-2017 is yet to be paid.
v. It has been observed that the Company has defaulted in the payment of statutory dues within the prescribed time.
Our Comments are as under:
i. The Company faced difficulties in getting a suitable incumbent in view of its poor financial position and also the plant operations remaining under suspension for a large part of the year 2016.
ii. Delays were mainly on account of getting proper form at RoC and also getting updated unpaid dividend account information.
iii. Delivery of benpos required for reporting the shareholding pattern was delayed by NSDL due to our making late payments.
iv. The fee is delayed due to serious cash flow constraints.
v. Payment of statutory dues has been delayed due to poor cash flow position.
In terms of Section 138 of the Companies Act, 2013 read with Rule 13 of the Companies (Accounts) Rules, 2014, on the recommendation of Audit Committee, the Board of Directors has appointed M/s. NR & Associates, Cost Accountants (FRN: 102903) as Internal Auditor of the Company for the financial year 2017-18 at a remuneration fixed by the Board of Directors of the Company in consultation with the Auditors.
INTERNAL FINANCIAL CONTROL SYSTEM
The Companies Act, 2013 has mandated the Company to have a formal framework of Internal Financial Controls (IFC) and has also laid down specific responsibilities on the Board, Audit Committee, Independent Directors and Statutory Auditor with regard to IFC.
The financial control system and framework is required to ensure:
The orderly and efficient conduct of its business,
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.
The Board reviews the effectiveness of controls documented as part of Internal Financial Control (IFC) framework and take necessary corrective actions, where weaknesses are identified as a result of such reviews. This review covers entity level controls, fraud risk controls and information technology environment.
The Policies and procedures adopted by the Company ensures the orderly and efficient conduct of its business and adherence to the Companys policies, prevention and detection of frauds and errors, accuracy and completeness of the records and the timely preparation of reliable financial information.
Based on this evaluation, no significant events had come to notice during the year that have materially affected or are reasonably likely to materially affect our IFC. The management has also come to the conclusion that the IFC and other financial reporting was effective during the year and is adequate considering the business operations of the Company.
The Statutory Auditor of the Company has audited the Internal Financial Control over Financial Reporting and their Audit Report is annexed as Annexure-B to the Independent Auditors Report under Financial Statements.
DISCLOURES ON REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND EMPLOYEES OF THE COMPANY
Disclosure pertaining to remuneration and other details as required under Section 134(3)(q), 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and subsequent amendments thereto, is annexed to this Directors Report as Annexure III.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO
A statement giving details of Conservation of Energy, Technology Absorption and Foreign Exchange Earning and Outgo as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules 2014, is annexed to this report as Annexure IV.
DECLARATION ON COMPLIANCE WITH CODE OF CONDUCT
The Board has formulated a Code of Conduct for the Board Members and Senior Management of the Company, which has been posted on the website of the Company.
It is hereby affirmed that all the Directors and Senior Management Personnel have complied with the Code and a confirmation to that effect has been obtained from the directors and the senior management.
PREVENTION OF INSIDER TRADING
The Company already had a structured Code of Conduct for Prevention of Insider Trading, with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code has been further streamlined to keep parity with the new Companies Act, 2013 and SEBI (Prohibition of Insider Trading) Regulations, 2015 and be named as Code of Conduct for Regulating, Monitoring and Reporting of Trading by Insiders which is also displayed on the website of the Company www. ankitmetal.com.
The Code requires pre-clearance for dealing in the Companys shares and prohibits the purchase or sale of Companys shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code.
All the Directors and designated employees, who hold any shares in the Company, have confirmed compliance with the Code.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS/COURTS/TRIBUNALS
There are no significant material orders passed by the Regulators/Courts/Tribunals which would impact the going concern status of the Company and its future operations.
MATERIAL CHANGES AFFECTING THE COMPANY
During the year under review, there were no such material changes which affects the Company.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The Company has not given any loans or guarantees covered under the provisions of Section 186 of the Companies Act, 2013. The details of the investments made by Company are given in the notes to the financial statements.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All contracts/arrangements/transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on arms length basis. During the year, the Company had not entered into any contract/ arrangement/transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions between the Company and the Directors, the management, or the relatives except for those disclosed in the financial statements.
Accordingly, particulars of contracts or arrangements entered into by the Company with related parties referred to in Section 188(1) of the Companies Act, 2013 in Form AOC-2 (Annexure V) is NIL.
POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION
The Board has, on the recommendation of the Nomination and Remuneration Committee framed a policy for selection and appointment of Directors, Key Managerial Personnel and their remuneration. A note on Nomination and Remuneration Policy has been made part of the Corporate Governance Report.
RISK MANAGEMENT POLICY
The Company has a defined Risk Management framework to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.
The Risk Management Policy provides for identification of risk, its assessment and procedures to minimise risk. The policy is periodically reviewed to ensure that the executive management controls the risk as per decided policy.
DISCLOSURE UNDER SEXUAL HARASSMENT OF EMPLOYEE AT WORKPLACE
The Company has an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of any employee at workplace. The Audit Committee will 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 the financial year 2016-17.
STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS UNDER SECTION 149(6)
The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015 with the Stock Exchanges.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
The Company proactively keeps its Directors informed of the activities of the Company, its management and operations and provides an overall industry perspective as well as issues being faced by the industry. The Familiarisation Programme Policy and details of familiarisation programmes for Independent Directors is available on the Companys website www. ankitmetal.com.
The composition and terms of reference of the Audit Committee has been furnished in the Corporate Governance Report forms part of this Annual Report. There has been no instance where the Board has not accepted the recommendations of the Audit Committee.
NOMINATION AND REMUNERATION COMMITTEE
The composition and terms of reference of the Nomination and Remuneration Committee has been furnished in the Corporate Governance Report forms part of this Annual Report.
STAKEHOLDERS RELATIONSHIP COMMITTEE
The composition and terms of reference of Stakeholders Relationship Committee has been furnished in the Corporate Governance Report forms part of this Annual Report.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
In line with the provisions of the Companies Act, 2013, the Company has framed its Corporate Social Responsibility (CSR) policy for the development of programmes and projects for the benefit of weaker sections of the society and the same has been approved by the CSR Committee and the Board of Directors of the Company. The Company has not spent any amount in CSR activities since the Company has incurred losses during the previous 3 years eroding the entire net worth.
In terms of Section 177 of the Companies Act, 2013, rules framed thereunder and Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has a vigil mechanism in place for the Directors and Employees of the Company through which genuine concerns regarding various issues relating to inappropriate functioning of the organisation can be communicated. For this purpose, the Board has a Vigil Mechanism and the same has been uploaded on the website of the Company i.e. www.ankitmetal.com and available at the link www.ankitmetal.com/vigilmechanism.pdf. The policy has been constituted under the guidance of the Chairman of the Audit Committee. During the year under review, there has been no incidence reported which requires action by the Audit Committee.
The Board has carried out an annual evaluation of its own performance, the directors individually as well as the evaluation of the functioning of various Committees. The Independent Directors also carried out the evaluation of the Chairman and the Non Independent Directors, the details of which are covered in the Corporate Governance Report.
The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out in Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Report on Corporate Governance as stipulated under the above regulation forms an integral part of this Annual Report.
MANAGEMENT DISCUSSION AND ANALYSIS
Managements Discussion and Analysis for the year under review, as stipulated under Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is presented in a separate section forming part of this Annual Report.
As required by Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the CEO/CFOfficertification has been submitted to the Board and forms an integral part of this Annual Report.
AWARDS & ACHIEVEMENTS
During the year under review the Company has not received any awards.
GREEN INITIATIVES IN CORPORATE GOVERNANCE
Ministry of Corporate Affairs has permitted companies to send electronic copies of Annual Report, notices etc., to the e-mail ids of shareholders. The Company has accordingly arranged to send the soft copies of these documents to the e-mail ids of shareholders wherever applicable. In case any shareholder would like to receive physical copies of these documents, the same shall be forwarded upon receipt of written request.
The Directors wish to extend their thanks and appreciation for the valuable and continued support received from the shareholders, Companys bankers, Central and State Government authorities, Stock Exchange(s), Depository Participant(s) and all other business associates for the growth of the organization.
The Directors also wish to place on record their deep appreciation to all the employees for their commitment and continued contribution to the Company.
ANNEXURES FORMING PART OF THE DIRECTORS REPORT
The annexures referred to in this report and other information which are required to be disclosed are annexed herewith and forms part of this Directors Report:
|I||Extract of the Annual Return (Form MGT-9)|
|II||Secretarial Audit Report (Form MR-3)|
|III||Par culars of Employees|
|IV||Par culars of Conserva on of Energy, Technology, Absorp on and Foreign Exchange Earnings and Outgo|
|V||Par culars of Contract or Arrangements with Related Par es (Form AOC-2)|
For and on behalf of the Board
|Ankit Metal & Power Limited|
|Place: Kolkata||Suresh Kumar Patni|
|Dated: 11th August, 2017||Chairman|