Gangotri Iron and Steel Company Ltd Directors Report.
The Directors have pleasure in presenting the 21st Annual Report of the Company, together with the Audited Accounts, for the year ended 31st March, 2014.
1. Financial Results
(Rs. in Crores)
|F.Y 2013-14||F.Y. 2012-13|
|Sales & Other Income (net)||67.22||89.02|
|Profit/(Loss) before Interest & Depreciation||(11.00)||05.00|
|Less: Interest & Other Financial Charges||17.77||03.69|
|Profit/(Loss) before tax and exceptional items||(21.70)||(01.52)|
|Add / (Less): Exceptional items||-||-|
|Profit/(Loss) before tax and after exceptional items||(21.70)||(01.52)|
|Less: Provision for Taxation|
|Less/(Add): Deferred Tax||(0.04)||(0.64)|
|Net Profit /(Loss) after Tax||(1.72)||(0.88)|
|Balance as per last year||03.75||04.25|
|Balance Carried Forward||(13.56)||03.37|
2. Operations & Future Prospects
The Companys accounts were restructured by its Bankers towards the end of F.Y. 12-13. However, the finance provided to the Company was inadequate to maintain its scale of operations and the repayment obligations were extremely stringent. As a result, and due to the added impact of a continued global slowdown in the steel market and various other factors, Companys manufacturing units were forced to temporarily suspend production from November, 2014 onwards. However, there has been a recent resurgence in the Construction sector fueled by reforms by the Central Government. Resultantly, there has been a sustainable spike in demand for TMT rebars which is expected to increase further in the near future.
Furthermore, there has been significant appreciation in the assets of the Company including its land & building and other fixed assets in the recent past resulting in a major boost to the overall valuation of the physical assets of the Company.
Therefore, despite having suffered operational bottlenecks in the past due to the prevalent economic conditions and under-financing, the Company, boosted by attractive valuations and a positive outlook for the industry, has decided on a complete overhaul of operations and finances in the F.Y. 2014-15. The following measures have been identified and put in process by the Company :-
1. Enhancement of borrowing limits of the Company to address the issue of under-financing. In this respect, the Company is already in discussions with Strategic Investors and has entered into a Memorandum of Understanding for raising investment for restart and revival of its manufacturing operations. As per the discussions and documented commitments by the investors, the Company is confident of being able to raise finance starting in the month of October, 2014. Accordingly, the Company also plans to gradually repay its overdue liabilities to its Bankers and ensure Standardization of its accounts in a phase-wise manner.
2. Expansion of production and modernization of units to meet the increasing demand for TMT Bars fueled by recent reforms in the Construction industry. The Company recognizes the need to constantly reduce costing by way of achieving economies of scale and modernization of its manufacturing facilities. Therefore, for better efficiencies, utilization of existing facilities, reduction in cost and to cater to upcoming surge in demand, the Company has decided to expand its production capacities starting F.Y. 2014-15.
Taking into consideration the provisions of the new Companys Act 2013 and since some directors of the Company have expressed their wish to discontinue as Director in the Organization, it has also been decided to reconstitute the Board of Directors of the Company after infusion of funds as mentioned above.
3. Management Discussion and Analysis
Business Segment-wise Performance
The companys operation comprises of M.S. Bar and M.S. Billet that falls under one segment. Hence, Segment wise operational performance is not applicable.
The industry has passed through negative cyclical swings on account of Government policies and overall conditions of the global economy. However, there has been a resurgence in demand for steel recently due to reforms by the Central Government. The Company is taking necessary steps to restructure its working and the organization hopes to commence regular production soon.
Risks and Concerns
In view of the sharp expansion in capacity of similar products fierce competition is likely to continue affecting the profitability of the Company. However, in view of ambitious programme taken by the Central Government, improvement of law and order situation and indication of overall economic improvement, the demand is likely to improve in Bihar, although the profitability is likely to remain tight due to increased cost of raw materials and extreme competitiveness in the market. However, to counter such strain on margins, the Company is taking measures for cost reduction and capacity expansion.
Internal Control Systems and their Adequacy
There exists an internal audit system during the year under review, which needs to be strengthened for being commensurate with the size and nature of business.
Human Resource Development / Industrial Relations
The Company has been taking various initiatives for HR development, a process that will continue in the coming years. Your Company organizes Architects and Masons meets on a regular basis in various areas where it markets its products. These meets are very well attended and have resulted in better demand for its products apart from popularizing its brand image. The Company has also made arrangement with Shri Ravi Kishan, a very popular movie and TV personality to act as its brand ambassador.
As the Company incurred loss during the year hence no dividend payment was considered.
During the year, the Company continued to avail credit facilities by way of overdrafts, cash credits, issuance of guarantees, including deferred payment guarantees and indemnities, negotiation and discounting of demand and/or usance bills and cheques and such other facilities from State Bank of India, Commercial Branch, Patliputra, Patna and other private bodies for the existing and Bihta unit.
In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr. Ankit Choudhary, Mr. Badri Pd. Agarwal and Mr. Amar Kumar Agarwal are retiring by rotation and being eligible offers themselves for re-appointment.
7. Directors Responsibility Statement
In compliance with section 217(2AA) of the Companies Act 1956, the Directors confirm that
a) in preparation of the Annual Accounts, for the year ended 31st March 2014, all the applicable accounting standards prescribed by the ICAI have been followed.
b) the Directors have adopted such accounting policies and have applied them consistently and have made judgments and estimates in a reasonable and prudent manner so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the profit/loss of the Company for the year.
c) the Directors have taken proper and sufficient care 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 for preventing and detecting fraud and other irregularities.
d) the Directors have prepared the annual accounts on a going concern basis.
M/s. ARSK & Associates, Chartered Accountants, Auditors of the Company are retiring at the conclusion of the ensuing Annual General Meeting and being eligible offer themselves for re-appointment. The Company has received a certificate to the effect that their re-appointment if made will be within the prescribed limit u/s.224 (1-B) of the Companies Act, 1956.
9. Depository System
As the members are aware, your Companys shares are tradable compulsorily in electronic form and your Company has connectivity with both the depositories, i.e. National Securities Depository Limited (NSDL) & Central Depository Services (India) Limited (CDSL). Members are requested to avail the facility of dematerialisation of the Companys shares on either of the Depositories as aforesaid, if not already done.
10. Public Deposit
The company has not invited /accepted any deposits from the public and as such there are no outstanding deposits, in terms of the Companies (Acceptance of Deposits) Rules, 1975.
There is no employee in respect of whom particulars pursuant to Section 217(2A) of the Companies Act, 1956 are required to be given.
12. Conservation of Energy
The information relating to conservation of energy as required U/s. 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given in the Annexure-A to this Report. The Company has no figure to disclose in respect of technology absorption and /or foreign exchange earnings and outgo.
13. Social Welfare Activities
The Company organises masons meet from time to time at various centres.
14. Corporate Governance
Separate Report on Corporate Governance is annexed and marked "Annexure - B". The Auditors Certificate on compliance with the conditions of Corporate Governance is annexed and marked "Annexure - C".
Your Directors wish to place their sincere appreciation to the co-operation extended by the Bank, State Government, Electricity Board, Customers, Suppliers and Shareholders and solicit their continued support. The Directors also wish to place on record the dedicated service rendered by the Management, Staffs and Workers
|For and on behalf of the Board|
|Place: Patna Date: 3rd September, 2014||Sanjiv Kumar Choudhary||Ankit Choudhary|
|Chairman Cum Managing Director||Director|
"Annexure-A" to the Directors Report
Information in accordance with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988
|A) Power & Fuel Consumption|
|a) Purchased Unit (KWH)||01,48,96,300||01, 09, 02,260|
|b) Total Amount (Rs.)||10,34,09,545||06, 26, 42,413|
|c) Rate/Unit (Rs.)||06.94||05.75|
|a) Qty (Kg.)||7,01,230||85,560|
|b) Total Amount (Rs.)||48,86,670||7, 05,553|
|c) Average Rate (Rs.)||06.97||8.25|
|B) Consumption per unit of Production Product|
|a) Units (M.T.) - M.S. Bars||15,693.76||9,977.890|
|b) Electricity (KWH)||23.03||04.51|