Bihar Sponge Iron Ltd Directors Report.

To the Members,

The Directors have pleasure in presenting the 37th Annual Report of the Company along with audited accounts for the year ended 31st March, 2019.

(Rs. Lacs)
Financial Parameters 2018-19 2017-18
Sales (Net of GST) - -
Other Income 864.97 704.33
Profit / (Loss) before Interest, Depreciation & Exceptional Items 557.21 402.04
Interest & Finance Charges 8.61 39.27
Depreciation 428.95 431.11
Profit/(Loss) for the year before Exceptional Items 119.65 (68.34)
Exceptional Items -Net income / (Expenditure) (130.52) 56.07
Provision for Tax - -
Loss for the year carried to Balance Sheet 10.87 12.27

OPERATIONS

The Plant is under shut since 9th August, 2013 on account of sudden stoppage of coal supply by Central Coalfields Limited, a Unit of Coal India Limited against long term Fuel Supply Agreement. The Coal available through on line auction by various coal companies were of lower grades and were available at a high price, it was not economically viable for the company to operate with the costlier coal.

SHORTAGE OF IRON ORE

The operations of the company continued to remain halted on account of shortage of Iron ore availability. Ghatkuri Iron ore Mine allotted to the company in April, 2007 in the State of Jharkhand with 406.40 hectares specifying estimated reserves of 35.65 million tons, proved incorrect as post survey conducted by the State Government of Jharkhand in Feb.2012, the reserve were assessed to be about 11.00 Million tons only and further in view of inferior quality of iron ore in the mine, the company surrendered the mine back to the government with a request for allotment of another mine. The company is still waiting for the allotment of new mine, essential for running smooth and viable operations.

The companys initiative of appointing an independent contract manufacturer from April 2017, are yet to yield positive results as the imposition of heavy penalties levied for illegal mining and violation of pollution control norms at the recommendations of Shah Commission appointed at the behest of the State Government, lead to the closure of many mines which further lead to the shortage of Iron ore availability.

It is expected that on improvement in supply situation for Iron ore, the companys activities will re-commence.

Resultantly, most of the mines closed down which resulted in shortage of iron ore in the market.

In view of the current market development, the Company has entered into a facility user agreement on 1st April, 2017 with a Company specialized in contract manufacturing, wherein part of the plant and machinery shall be operated by the said Company. The said contract manufacturing company is considering to re-start the operations of the Company and evaluating all the options available under present circumstances.

5 MW POWER PLANT / STEEL PLANT

The Company from the existing power plant generates 5 MW Power based on dolo char being produced in the manufacturing of sponge iron. Since the Company is not able to consume the entire dolo char, the Company has entered into an agreement with G S Pharmbutor Pvt. Ltd. (GSP) to install a 5 MW Power Plant. Whenever the existing power plant goes under regular maintenance, the Company has to generate power from DG Set, which is highly uneconomical. During such time the Company will take the power from GSP and for the rest of the period GSP will consume the power in induction furnace to produce pencil ingot. The 5 MW power plant is ready to be commissioned. The Company has been informed that once the sponge iron plant starts its operations, the said power plant will be commissioned and steps for setting up induction furnace will be initiated.

CORPORATE SOCIAL RESPONSIBILITY

The Company has been receiving constant demands from employees and local residents for establishment of a higher educational institution, for the development of the area and to create employment opportunities for the residents. Due to lack of basic infrastructural facilities like institutions imparting higher education at Chandil, the attrition of employees was quite high, resulting in substantial loss to the Company. Considering the necessity of providing higher and technical education, the Company has set up a trust for establishment of educational institution named BSIL Umesh Modi Educational Trust. This step has been taken by the Company voluntarily.

DIVIDEND

In view of the loss incurred by the Company, no dividend has been proposed for the financial year ended 31st March, 2019.

SHARE CAPITAL

The paid up Equity Capital as on March 31,2019 is 9020.54 lakhs. During the year under review, The Company has not issued shares with differential voting rights nor granted stock options nor sweat equity.

FIXED DEPOSITS

During the year under review, your Company has not accepted any deposits within the meaning of provisions of Chapter V - Acceptance of Deposits by Companies of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.

SUBSIDIARY, ASSOCIATE AND JOINT VENTURES

The Company does not have any Subsidiary, Associate or Joint Venture Company as on 31st March, 2019.

MATERIAL CHANGES AND COMMITMENTS

There were no material changes and commitments affecting the financial position of the Company which have occurred between the end of financial year and the date of report.

DIRECTORS:

A) CHANGES IN DIRECTORS AND KEY MANAGERIAL PERSONNEL

Since last reported, the following changes have taken place in the Board of Directors: In accordance with the provisions of Section 152 of the Companies Act, 2013 and Article 128 of the Articles of Association of the Company, Mrs. KumKum Modi (DIN: 00522904) retires by rotation and is eligible for re-appointment.

Mr. Satish Kumar Gupta (DIN: 03537417) has been re-appointed as Whole- time Director designated as Director- Works in the Board Meeting held on 14th November, 2018, for a period of 5 years w.e.f. 13th December, 2018, subject to shareholders approval.

Mr. Jagan Nath Khurana (DIN: 00003817), Independent Director of the Company has resigned w.e.f. 25th April, 2018.

Mr. Shiv Shankar Agarwal, was appointed as an Independent Director w.e.f. 11th May, 2018 .

Mr. Subbiah Siddharth ceased to hold office as a Nominee Director w.e.f 09th August, 2018, pursuant to section 167(1)(b) of the Companies Act, 2013.

None of the directors of the Company are disqualified under Section 164 (2) of the Companies Act, 2013. Your directors have made necessary disclosures as required under various provisions of the Companies Act, 2013.

Composition of Key Managerial Personnel Pursuant to the provisions of Section 203 of the Act, The Company has the following KMPs:

S.No Name Designation
1. Mr.Satish Kumar Gupta Whole Time Director
2. Mr. Anil Kumar Sinha Chief Financial Officer
3. Ms. Subhangi Varshney * Company Secretary
4. Mr. Nitish Nautiyal# Company Secretary

*Resigned w.e.f 15.11.2018

# Appointed w.e.f. 16.11.2018 & resigned w.e.f. 30.04.2019.

B) DECLARATION BY INDEPENDENT DIRECTORS

All the Independent Director(s) have given declarations that they meet the criteria of in dependence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the Listing Regulations.

C) FORMAL EVALUATION OF BOARD, COMMITTEES AND DIRECTORS

Pursuant to the provisions of Section 134 of the Companies Act, 2013 and Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Independent Directors at their meeting without participation of the Non-Independent Directors and Management, considered/evaluated the Boards performance, Performance of the Chairman and other Non-Independent Directors.

The Board subsequently evaluated the performance of Independent Directors as per the criteria laid down and has recommended their continuation on the Board of the Company. The working of its Committees (Audit, Nomination and Remuneration and Stakeholders Relationship Committee) and Independent Directors (without participation of the Director being evaluated) were also evaluated. The criteria for performance evaluation have been detailed in the Corporate Governance Report.

D) NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

During the year 2018-19, Four Board Meetings were convened and held. Details of the same are given in the Corporate Governance Report which forms part of this report. The intervening gap between any two meetings was within the period prescribed under the Act, and the Listing Regulations.

E) DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to Section 134 (5) of the Companies Act, 2013 the Directors of your Company declare as under:

(a) that in the preparation of the annual accounts, the applicable accounting standard had been followed along with proper explanation relating to material departures;

(b) that the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) that the directors had prepared the annual accounts on a going concern basis; and

(e) that the directors, had laid down and implemented internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

(f) Explanation—For the purposes of this clause, the term "internal financial controls" means the policies and procedures adopted by the company for ensuring the orderly and efficient conduct of its business, including adherence to companys 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; and

(g) That the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

AUDITORS AND AUDITORS REPORT

Statutory Auditor

M/s. K. K. Jain and Co., Chartered Accountants (Firm Registration No.002465N), Statutory Auditors of the Company appointed in 35th Annual General Meeting of the Company till the conclusion of 40th Annual General Meeting.

AUDITOR QUALIFICATION

Notes to accounts referred to in the Auditors Report are self-explanatory and therefore, do not require call for any further explanation. However the following has not been recognized as explained below:

a. Rs. 3,09,886 thousand against currency fluctuation of foreign currency loan has not been recognized as the Company has filed Letters Patent Appellate Jurisdiction (LPA) before the Divisional Bench of High Court of Jharkhand, Ranchi and it is hopeful that the decision will be in favour of the Company.

b. Rs. 21,528 thousands recovered by South Eastern Coal Fields Ltd as penalty on account of short lifting of coal quantity in terms of Fuel Supply Agreement as the matter has been disputed by the Company under writ petition filed before the Honble High Court of Chhattisgarh. It is hopeful that the Company would get the order in its favour.

c. Interest on unsecured loan taken from Promoters and other parties from 10.08.2013 to 31.03.2019 has not been taken on accounts as the Company will apply to the lenders for the waiver of the interest on unsecured loan.

d. Interest on Soft Loan taken from the Government of Jharkhand under the Industrial Rehabilitation Scheme 2003 amounting to Rs. 328,817 thousands from 10.08.2013 to 31.03.2019 has not been provided as the Company will make representation for waiver on re-start of the Companys operations.

Further due to shut down of the plant and suspension of operation from 9th August, 2013 the various dues could not be paid on due dates. Necessary steps are being taken to re-start the Company and payment of such dues shall be made after re-start of operation of the Company.

INTERNAL AUDITORS

M/s. Sarat Jain & Associates, Chartered Accountants, Noida, Conducted internal Audit periodically and submitted their reports to Audit Committee. Their Repots have been reviewed by the Audit Committee.

SECRETARIAL AUDITOR

M/s. R Singhal & Associates, Company Secretaries (PCS Registration No. 10699) were appointed as the Secretarial Auditor of the Company in relation to the financial year 2018-19, in terms of Section 204 of the Companies Act, 2013.

The Secretarial Audit Report for financial year 2018-19 is attached as "Annexure - A" with this report.

The observation in secretarial audit report are self-explanatory and therefore do not call for any further explanation. Further due to shutdown of the plant and suspension of operations since 09.08.2013 various dues could not be paid on due dates. Necessary steps are being taken to re-start the Company and payment of all such dues shall be made after re-start of operation of the Company.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186.

The Company has not given any loans, guarantees or made any investments under Section 186 of Companies Act, 2013 during the financial year 2018-19.

INTERNAL FINANCIAL CONTROL AND THEIR ADEQUACY

The Company has adopted policies and procedures for ensuring the orderly and efficient conduct of its business including adherence to the Companys 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 disclosures.

w.r.t. Auditors opinion on above it is clarified that Central Coalfields Ltd has stopped supply of linkage coal as per Fuel Supply Agreements (expired in April, 2013 &not renewed) to the Company w.e.f. 5th February 2013 , Due to non-supply of Coal by CCL, the operation of the company has been shutdown and operation suspended w.e.f. 9th August 2013.

Since there was restriction in entry to factory premises because of labour unrest, due to which physical verification of inventories of Raw-Materials and Stores & Spare Parts and Fixed Assets could not be done.

RISK MANAGEMENT POLICY

As per Section 134(3) (n) of the Companies Act, 2013, The Company has adopted a Risk Management Policy which is reviewed on a periodic basis in order to recognize and reduce exposure the risks wherever possible. The Companys Risk management policies are based on the philosophy on achieving the substantial growth and managing risks involved.

NOMINATION AND REMUNERATION POLICY

In accordance with the requirements under Section 178 of the Companies Act, 2013 and Listing Regulations, The Committee formulated a Nomination and Remuneration policy to govern the nomination/appointment and remuneration of Directors, Key Managerial Personnels other employees, senior Management of the Company. Details of Composition of Committee are given in the Corporate Governance Report. The aforesaid policy can be accessed on the Companys websitewww.bsilorg.in .

VIGIL MECHANISM / WHISTLE BLOWER POLICY:

In compliance of Section 177 (9) & (10) of the Companies Act, 2013 and in terms of Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has set up a whistle blower policy which can be viewed on the Companys website www.bsil.org.in. In terms of the said policy, the Directors and employees are given direct access to the Chairman of the Audit Committee to report on alleged wrong doings. Your Company hereby affirms that no Director/ employee has been denied access to the Chairman of the Audit Committee and that no complaints were received during the year.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES.

All the Related party Transactions entered by the Company during the year with were in the ordinary course of business and at Arms Length Price. The Audit Committee granted omnibus approval for the transactions (which are repetitive in nature) and the same was reviewed by the Audit Committee and the Board of Directors.

During the year, your Company had entered into materially significant transactions i.e. transactions exceeding ten percent of the annual consolidated turnover with Related Parties are within the limits approved by the Shareholders in 35th Annual General Meeting of the Company. Suitable disclosures as required under IND AS - 24 have been made in the Notes to the financial statements.

The details of these transactions, as required to be provided under section 134(3) (h) of the Companies Act, 2013 are disclosed in Form AOC-2 as Annexure-B and forms part of this report.

The Board of Directors of the Company , at its meeting held on 13th February, 2019, re-framed a policy on materiality to regulate transactions between the Company and its related parties, in compliance with the applicable provisions of the Act, and regulation 23 of the Listing Regulations, as amended,

The policy as approved by the Board is uploaded and can be viewed on the Company website www bsilorg.in.

EXTRACT OF THE ANNUAL RETURN

The details of the extract of the Annual Return in Form MGT-9 as per the provisions of Section 92 of Companies Act, 2013 read with Rule 12 of Companies (Management and Administration) Rules, 2014 is annexed herewith and marked as "Annexure-F" to this Report and also available on the website of the Company at www. bsil.org.in

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

Disclosure with respect to remuneration of Directors and employees as required under section 197 (12) of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and forming part of the Board report for the year ended 31st March , 2019 are given in Annexure- C to this Report.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The Information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under Section 134 of the Companies Act, 2013 read with rule (8)(3) of the Companies Account Rules, 2014 is enclosed in Annexure-D and forms part of this report.

CORPORATE GOVERNANCE:

A report on Corporate Governance along with a Auditors Certificate confirming compliance of conditions of Corporate Governance as stipulated under Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of the Annual report.

MANAGEMENT DISCUSSION ANALYSIS REPORT

In terms of Regulation 34 read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Management Discussion and Analysis Report is annexed as Annexure-E and form part of this report.

LISTING OF SECURITIES

The equity shares of your Company continue to be listed on BSE Ltd. and listing fee for the Financial Year 2019-20 has been paid.

COMPLIANCE WITH SECRETARIAL STANDARD

The Company has complied with the Secretarial Standards issued by the Institute of Company Secretaries of India as approved by Central Government as required under Section 118(10) of the companies Act, 2013.

ACKNOWLEDGEMENT:

Your Directors take this opportunity to place on record their sincere thanks to all stakeholders, various departments of Central Government, the Government of Bihar and Jharkhand, Financial Institutions and Banks for their valuable assistance. Your Directors equally acknowledge the trust reposed by you in the Company. The Directors also wish to place on record their appreciation for the all-round support and co-operation received from the employees at all levels.

For & on behalf of the Board
U.K. Modi
Place : New Delhi Chairman
Date : 25.05.2019 DIN:00002757