Ashirwad Steels & Industries Ltd Directors Report.
TO THE SHAREHOLDERS
Your Directors present their 33rd Annual Report on the business and operations of the Company and its Audited Statements of Accounts together with Auditors Report for the financial year ended 31st March, 2019.
Current year (31.03.2019)
Previous year (31.03.2018)
Rupees in Lakhs
Rupees in Lakhs
|1. SUMMARY OF FINANCIAL RESULTS AND PERFORMANCE OF THE COMPANY:|
|Income from Operations (Including other Income)||
|Profit before and also after exceptional and Extra-ordinary items and taxes||
|Less: Tax Expenses for the year||
|Add: Deferred Income Tax (Assets)||
|Net Profit for the year after tax||
|Add: Other Comprehensive income||
|Total Comprehensive income (including Post Tax Profit for the year)||
Your Directors do not recommend any dividend for the year under review.
No amount has been transferred to the reserve by the Board during the year under review.
4. THE COMPANYS WORKING/STATE OF AFFAIRS DURING THE FINANCIAL YEAR UNDER REVIEW
The Companys overall working performance during the financial year under review has not been satisfactory. The Companys Sponge Iron Plant located at Jamshedpur had to be shut down from April, 2018 onwards to carry out major augmentation of Pollution Control Equipments to comply with the advise/directions of the Pollution Control Boards Authorities. Such major exercise met with unforeseen difficulties, technical and otherwise and due to other reasons beyond the control of the Management including inordinate delayed supplies by the main equipment supplier; the installation of Pollution Control Equipments kept delaying and hence the Plant could resume manufacturing activities only in the last week of March, 2019. In view of above, the Plant during the year under review could produce only 439 M.T. of Sponge Iron. The total sales revenue of the Sponge Iron during the year was merely Rs.189.47 lacs net of taxes resulting in substantial operating losses.
As reported to you by the Board in its previous years Annual Report; the Companys Sponge Iron Plant at Dist. Nalgonda, Telengana, had been lying inoperative for the last few years as manufacturing operations were not remunerative/ profitable due to reasons and circumstances beyond the control of the Management and as such the said Plant was incurring losses on account of fixed overheads and accordingly the Board in its said report had felt and considered it prudent to dispose off the unit/undertaking.
During the current F.Y. 2018-19; the Board took necessary authorities, powers and consent from the Shareholders/ Members by passing a Special Resolution through the Postal Ballot Process (vide Postal Ballot Notice dated 25.06.2018) to dispose off the Companys manufacturing units/undertakings being the Sponge Iron Plant located at Dist. Nalgonda, Telengana, LPG Bottling Plant located at Uluberia, Howrah, West Bengal and also LPG Bottling Plant located at Raigarh, Chhattisgarh, in terms of compliance with the provisions of Sec.180 read with Sec.110 of the Companies Act, 2013, and other applicable rules of the said Act. Subsequently, the Company sold off its Sponge Iron Plant, located at Dist. Nalgonda, Telengana, to M/s. MPL Steel Industries Pvt. Ltd. by way of slump sale on a going concern basis for a consideration value of Rupees Eighteen Crores by executing on 22.11.2018, a Business Transfer Agreement with the said Buyer Company. The said slump sale transaction was completed on 21.01.2019 and the resultant net profit on such sale, (after adjustment of book value of the units assets and liabilities as on 31.10.2018) being Rs.1264.85 lacs is included and reflected as other income in the Note No.24 of the annual financial statements.
Further, the Company also entered into a similar Business Transfer Agreement on 03.01.2019 with M/s. SHV Energy Pvt. Ltd. to sell them the Companys LPG Bottling Plant, at Uluberia, Howrah, by way of a slump sale on a going concern basis for a consideration value of Rupees Sixteen Crores subject to the consent and approval of the West Bengal Industrial Infrastructural Development Corporation (WBIIDC), Kolkata. The said slump sale transaction/deal is still pending as the necessary approval and consent from WBIIDC has not been received. The Company is optimistic and hopeful of completing this transaction in the current financial year - 2019-20 after getting the approval of WBIIDC.
The Companys LPG Bottling Plant at Raigarh continues to be inoperative as the commercial operation thereon are not remunerative and also because of steep competition from the highly resourceful Government owned Oil Companies. The Board has taken authority from the members through Postal Ballot to dispose off the said Plant but unfortunately no buyer/purchase has come forward. The Board considers that only the free-hold land of the said Plant has commercial value but the current market price of land is quite unattractive due to overall sluggish conditions of Real Estates at and around Raigarh and hence the Board further considers and feels that barring the said free-hold land; the Plant & Machineries and other equipments, which have become old and obsolete, have only scrap value. However, the Directors continue to look around for a buyer of this Plant.
Further, during the year under review, the Companys revenue from operations net of taxes stood at Rs.276.47 lacs (previous year Rs.2304.54 lacs inclusive of excise duty) and the other income stood at Rs.1473.58 lacs (previous year Rs.178.43 lacs) and hence the total income stood at Rs.1750.05 lacs (previous year Rs.2482.97 lacs). The net profit after tax for the year stood at Rs.752.42 lacs (previous year Rs.51.80 lacs). The Other Comprehensive Income (OCI) for the year stood at Rs.42.71 lacs (previous year Rs. (-) 4.81 lacs). The total comprehensive income for the year stood at Rs.795.13 lacs (previous year Rs.46.99 lacs).
Your Board continues to make its best possible efforts to improve the overall working and financial performance of your Company.
5. CHANGE IN NATURE OF BUSINESS OF THE COMPANY:
None during the year.
6. MATERIAL CHANGES AND COMMITMENTS AFTER THE END OF THE FINANCIAL YEAR 31.03.2019 TILL THE DATE OF THIS BOARD REPORT:
The new Pollution Control Equipments installed at Companys Jamshedpur Sponge Iron Plant have developed some technical snags during trial runs and are yet to be stabilized, the necessary changes/modifications are being carried out to rectify the same, and hence the production activities have been hampered. The Management expects that the said modifications shall be completed by the end of June, 2019 and thereafter the Plant is expected to operate normally and at optimal level subject to favourable market conditions and economic operations.
7. SIGNIFICANT MATERIAL ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNALS AGAINST THE COMPANY:
8. ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO COMPANYS FINANCIAL STATEMENTS:
In the opinion of the Board, the Company has adequate Financial Controls in place with respect to Companys Financial Statements and Operations. Kindly refer to Annexure B of the Statutory Auditors report dated 29th May, 2019.
9. DETAILS OF NAMES OF COMPANIES WHICH HAVE BECOME OR CEASE TO BE THE COMPANYS SUBSIDIARY COMPANIES/JOINT VENTURE/ASSOCIATE COMPANIES DURING THE YEAR UNDER REVIEW AND THEIR FINANCIAL PERFORMANCE:
The Company neither has nor had in the past any subsidiary, associate or joint venture Company.
10. FIXED DEPOSIT :
The Company has not accepted any deposits during the year from the Public under section 73 or 74 (Chapter V) of the Companies Act, 2013 nor did it receive the same in any of the previous years and hence there are no overdue/ outstanding Deposits or any interest payable thereon and therefore the prescribed details under the Companies Act, 2013 are not required to be furnished.
11. STATUTORY AUDITORS :
M/s. M.R. Singhwi & Company, Chartered Accountant, were appointed as the Statutory Auditors of the Company for a period of five years beginning from financial year 2017-18 to 2021-22 (32nd AGM to 36th AGM) and accordingly they will continue to be the Statutory Auditors of the Company for the financial year 2019-20.
The requirements of annual ratification of re-appointment of auditors has been dispensed with pursuant to provisions of Section 40 of the Companies (amendment) Act, 2017 read together with Section 139 of the Companies Act, 2013 and other applicable provisions and rules framed thereunder (as amended).
12. AUDITORS REPORT :
The observations made in the Auditors Report are self-explanatory and do not call for any further comments u/s 134(3) (f) of the Companies Act, 2013. The Auditors have not made any materially significant qualifications in their Report and their opinion is unmodified .
13. EXTRACT OF THE ANNUAL RETURN OF FINANCIAL YEAR ENDED 31.03.2019:
The same is annexed with this Report in the prescribed FORM NO. MGT-9.
14. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, EXPORTS AND FOREIGN EXCHANGE EARNINGS AND OUTGOINGS.
The informations required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules 2014, are as under:-
(A) CONSERVATION OF ENERGY :
The Power requirement at Companys Gas Bottling Plant is negligible. For Sponge Iron Plant, the Capacitor Panels of adequate size and number have been installed and are maintained to save and economize on power consumption. The Company has not made any fresh investments on this account nor was there any need to take any fresh initiatives on this account.
(B) TECHNOLOGY ABSORPTION :
The Company has in-house technology and expertise for its Hydrocarbon LPG Bottling Plant. The technology to manufacture Sponge Iron was provided by an outside agency long ago. The said technology is fully indigenous, is now well established, and has been fully absorbed by the Company. The Company has not so far made use of any imported technology for its products/plants. The Company has not made nor felt necessary to absorb any fresh technology and the Company has not incurred any expenditure on Research and Development.
(C) FOREIGN EXCHANGE EARNINGS AND OUTGO :
Earnings: Nil (Previous Year : Nil)
Outgo : Nil (Previous Year : Nil)
D) Annual Evaluation:
Pursuant to the provisions of the Sec 134 (3) (p) of the Companies Act, 2013 and clause 2 (f) (9) of chapter II of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter in this board report called and referred to as"SEBI LODR REGULATIONS); your Board has carried out an annual performance evaluation of its own performance, the performance of each Individual Director as well as the evaluation of the working of its Audit, Nomination and Remuneration Committees as per a suitably conceived manner. During the year under review, the Independent Directors had their exclusive meeting on 25th March, 2019 inter alia, to discuss the Performance evaluation of Non Independent Directors and Board of Directors as a whole and also of the Managing Director and the Chairman of the Company and Evaluation of the quality of flow of information between the Management and Board for effective performance by the Board and the same were generally found to be satisfactory. As mandated by SEBI (LODR) Regulation 17(10); the Board as a whole has carried out the performance evaluation of each of the Independent Directors of the Company, without the participation of the particular Independent Director whose performance is being evaluated, and fulfillment of the prescribed criteria of their independence and the Board is satisfied with the same.
15. CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY:
As per criteria prescribed under section 135 of the Companies Act, 2013; the CSR has become applicable to the Company in respect of the financial year 2018-19 covered under this Report. Accordingly the Board in its meeting held on 29.05.2019 has formed a"Corporate Social Responsibility Committee" comprising of three directors as its members namely Puranmal Agarwal, Vishesh Chhibbar and Lalit Kishore Choudhury, the latter being, the chairman and the independent director of the company. This newly formed committee shall formulate a CSR policy and recommend the same to the board for its approval along with expenditure to be incurred on CSR account.
16. DIRECTORS :
A) Changes in Directors and Key Managerial Personnel:
Mr. Suresh Kumar Agarwal and Mr. Yudhbir Chhibbar, Directors of the Company, resigned from their directorships and their resignations were formally taken note of and accepted by the Board in its meeting held on 18th January, 2019. The Companys Independent Director, Shri Praveen Kumar Chhabra conveyed through his letter dated 30.03.2019 that he wishes to resign from the Directorship of the Company w.e.f. 01.04.2019 and accordingly the office of the Registrar of Companies has been formally informed and hence he ceases to be an Independent Director of the Company w.e.f. 01.04.2019. The Companys Independent Director, Shri Tapas Datta also resigned w.e.f 22.05.2019 and the formal intimation of his resignation has been given to the Registrar of Companies and accordingly he ceases to be a Director w.e.f. 22.05.2019. All the four directors had resigned due to personal reasons. Your Board appreciates and convey its sincere and heartful thanks to all the said four outgoing Directors for their valuable advice, suggestions and guidance given to the Company/Board during their tenure.
Mr. Neeraj Chhabra was appointed as the Independent Director of the Company for a period of five years from 18/01/2019 to 17/01/2024 by the Board in its meeting held on 18.01.2019; subject to approval and ratification by the Members through a Special Resolution in the ensuing 33rd AGM of the Company. The five years term of Directorship of Shri Lalit Kishore Choudhury, an Independent Director and also the Chairman of the Company was coming to end on 27.03.2019. The Board in its meeting held on 18.01.2019 has re-appointed him for a further period of five years from 28.03.2019 to 27.03.2024; subject to approval and ratification by the Members through a Special Resolution in the ensuing 33rd AGM of the Company. Your Board recommend their appointment as Independent Directors.
Shri Dalbir Chhibbar, the Managing Director of the Company was re-appointed for five years by the Board in its meeting held on 28.03.2014 and his such appointment was approved and ratified by the Members in the 28th AGM held on 22.09.2014 and accordingly his term would have expired on 16.05.2019. The Board in its wisdom and in its meeting held on 18.01.2019 has re-appointed him for a further period of five years from 17.05.2019 to 16.05.2024; subject to approval and ratification by the Members through a Special Resolution in the ensuing 33rd AGM.
The texts of the Special Resolutions along with explanatory statement with respect to aforesaid appointment and reappointments of Directors/Managing Director are mentioned and annexed in the Notice convening the next 33rd AGM. Your Board recommends their appointments/re-appointments.
The vacancy caused by the resignation of Mr. Sangala Venugopal, CFO, for personal reasons was filled up by the appointment of Mr. Chandra Prakash Srivastava as the new chief financial officer ( CFO) of the Company on 25th March, 2019.
Shweta Mishra, the Company Secretary, had resigned from her post for personal reasons and the Board in its meeting held on 29.5.2019 has accepted her resignation and hence w.e.f. 29.5.2019 she has been released and ceases to be the Company Secretary. The Board is trying its best to fulfill the said vacancy at the earliest and in view of such resignation the Board has appointed Mr. Vishesh Chhibbar, Director, as the temporary Compliance Officer.
Mr. Vishesh Chhibbar and Mr. Puranmal Agarwal were re-appointed as Directors of the Company by the members in the last Annual General Meeting held on 24th September, 2018. Mrs. Sushma Chhibbar is the only Director who retire by rotation at the forthcoming 33rd AGM and being eligible has offered herself for re-appointment in the said ensuing 33rd AGM. The brief resume about Mrs. Sushma Chhibbar, Director, seeking re-appointment is annexed with the notice of AGM.
B) Declaration by an Independent Director(s) and Re-appointment, if Any:
Declaration given by Independent Directors meeting the criteria of independence as provided in sub-section (6) of Section 149 of the Companies Act, 2013 and Rule 5 of the Companies (Appointment and Qualification of Directors) Rules, 2014 has been received and taken on record. Two of the Independent Directors, namely Shri Tapas Datta and Shri Praveen Kumar Chhabra have resigned from the Board. The remaining Independent Director, namely Shri Lalit Kishore Choudhury has been serving the Company for the past over five years and has been well familiarized with the functional, operational and financial aspects of the Company. The newly appointed Independent Director, Shri Neeraj Chhabra is also being familiarized with the said aspects of the Company.
The term of Mr. Lalit Kishore Choudhury, as an independent director expired on 27th March, 2019. However, the board reappointed him as an independent director for another term of five years in its meeting held on 18th January, 2019 and his extended period of directorship shall be from 28/03/2019 upto 27/03/2024; subject to approval and ratification by the shareholders in the ensuing 33rd AGM of the Company.
17. BOARD MEETINGS HELD DURING THE YEAR :
During the year the Board of Directors Meetings were held on seven occasions e.g. on 29.05.2018, 25.06.2018, 13.08.2018, 12.11.2018, 22.11.2018, 18.01.2019 and on 25.03.2019. The Independent Directors held their separate exclusive meeting on 25.03.2019.
18. AUDIT COMMITTEE, NOMINATION & REMUNERATION COMMITTEE, STAKEHOLDERS RELATIONSHIP COMMITTEE :
The Board in its meeting held on 29.05.2019 has re-constituted all the aforesaid Committees pursuant to change/ resignation of some Directors and the details of the re-constituted Committees are stated in the Corporate Governance Report annexed hereto.
19. LOANS, GUARANTEES AND INVESTMENTS:
Regarding loans given by the Company please refer to Note No.12 and for investments made by the Company, please refer to the Note No.5 in the annual Financial Statements of Accounts. The Company has not given any guarantee of any kind to any person or to any Bank or Financial Institution.
20. RELATED PARTY TRANSACTIONS AS REQUIRED UNDER SECTION 188(1) COMPANIES ACT, 2013:
The company has paid Rs.3.00 lacs to a related party as office rent and has also paid Rs.9.00 lacs as remuneration to the Managing Director of shareholders. These Related Party transactions are in the normal course and are not considered to be material and hence approval of the same from the shareholders is not required. There are no other related party transactions. Please refer to Form AOC-2 annexed with this Board Report and forms part of it. The details of payment made to other related parties is defined under Ind-AS Accounting Standards are as per Note No.33(4) on financial statements.
21. MANAGERIAL/DIRECTORS REMUNERATION:
The particulars of the same are as mentioned in the Corporate Governance Report annexed to this Board Report.
22. SECRETARIAL AUDIT REPORT AND SECRETARIAL COMPLIANCE REPORT :
Annual Secretarial Audit Report for the financial year ended 31st March, 2019, along with AnnexureA dated 21.05.2019 (in the prescribed Form No.MR-3) as given by the secretarial auditors, M/s Patnaik & Patnaik, Company Secretaries, is annexed hereto and forms part of this Board Report as Annexure - 1
The Secretarial Compliance report dated 28.05.2019 for the financial year ended 31st March, 2019, in relation to compliance of applicable SEBI Regulatons/Circulars/guidelines issued thereunder, pursuant to requirement of regulation 24A of listing regulations; as issued by the aforesaid secretarial auditors is also annexed as Annexure"2" and forms part of this Board report. With respect to the said auditors observation about the demateralisation of shares under promoters group; the board wish to submit that only a very negligible 58500 number of shares representing just
0.47% are yet to be dematerialized due to some unavoidable pending legal issues concerning transmission of shares upon death of some shareholders and for some other unavoidable reasons . Management is constantly following up the matter and it is hoped that the pending shares shall be dematerialized during the current FY -2019-2020.
23. CORPORATE GOVERNANCE :
The Company files quarterly Corporate Governance Report with BSE Ltd. as required under SEBI LODR REGULATION-27. Corporate Governance Report along with the Certificate dated 21.05.2019 of the Secretarial Auditors confirming compliance of conditions of Corporate Governance as required under the relevant Regulations of SEBI LODR Regulation - 2015 is annexed to and forms part of this Board Report.
24. RISK MANAGEMENT POLICY:
The Companys biggest risk is with regard to procurement of critical raw materials namely Iron-Ore and Coal at reasonable/affordable rates but it has virtually no control on the same as only a limited number of Iron Ore Mines are in operation with almost monopoly status and similarly the coal has to be procured from the Coal India Ltd., again virtually the monopoly supplier in the Country and fixes the coal prices arbitrarily. The Company also procures imported coal whose prices keep changing in the International Market as per demand supply equations. The other risks are the wide fluctuations in the selling price of Sponge-Iron which again depend on Demand and Supply and your Company being a nominal player has no control or influence on the same. The Company has, however, laid down procedures to inform the Board of Directors about Risk Assessments and its minimization procedures. The Board has also framed and implemented the Risk Management Plan for the Company to the extent it was possible, feasible and practical. The formation of Risk Management Committee is not applicable to the Company as the requirement is applicable to only top 500 listed entities on BSE Ltd. as per Regulation 21 of SEBI LODR REGULATIONS, 2015.
25. DISCLOSURES ABOUT REMUNERATION TO DIRECTORS VIS-A-VIS EMPLOYEES AND OTHER PARTICULARS AS REQUIRED UNDER SECTION 197 OF THE COMPANIES ACT 2013 READ WITH RULE 5 OF COMPANIES (APPOINTMENT & REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014:
A. During the year a remuneration of Rs 9,00,000/- was paid to Managing Director and sitting fees of Rs.63,000/- was paid to the Independent Directors for attending the Board Meetings and none of the other directors received any remuneration and therefore, the computation of ratio of remuneration of each Director to the median remuneration of the employees of the Company are not furnished. The remuneration paid and/or payable to the Key Managerial Personnels is very reasonable and commensurate with their performances. The remuneration paid to the employees is as per the remuneration policy of the Company, which is dynamic in nature and changes as per the financial performance of the Company and of an individual employee including their work experience, competency, job profile, skill and seniority.
B. No employee of the Company during the financial year was in receipt of remuneration aggregating to Rs.102 lacs or more if employed for the whole year and Rs.8.5 lacs per month if employed for a part of the financial year. No employee of the Company is holding 2% or more of the Equity Shares of the Company. The number of permanent employees as at year end were eighteen and the ratio of remuneration paid to Managing Director to median remuneration of the employees was 5:1.
26. DISCLOSURE UNDER SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013:
The Board of Directors and/or the Management of the Company has not received any complaint on this account from any of the employees of the Company or from any other person.
27. DIRECTORSRESPONSIBILITY STATEMENT:
The DirectorsResponsibility Statement referred to in clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, states:-
(i) That in the preparation of the annual accounts for the financial year ended 31st March, 2019, the applicable accounting standards had been followed along with proper explanation relating to material departures.
(ii) That the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the year under review.
(iii) That the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.
(iv) That the Directors have prepared the accounts for the financial year ended 31st March, 2019 on a going concern basis.
(v) That the Directors had laid down internal financial controls, which are to be followed by the Company, and that such internal financial controls are adequate and were operating effectively.
(vi) That the Directors had devised proper systems to ensure compliance with provisions of all applicable laws and that such systems were adequate and operating effectively.
Your Directors would like to convey their sincere appreciation for the assistance and co-operation received from the Stakeholders during the year under review. Your Directors also wish to place on record their appreciation for the contribution of the employees at all levels.
For and on behalf of the Board
Ashirwad Steels & Industries Limited
|Dated: 29th May, 2019||
(DIN : 00550703)