Impex Ferro Tech Ltd Directors Report.
The Directors are pleased to present the 22nd Annual Report of the Company together with Audited Accounts for the Financial Year ended 31st March, 2017.
FINANCIAL HIGHLIGHTS (Rs. in Lacs)
The Companys financial performance for the year ended 31st March, 2017 is summarized below :
|Particulars||Current Year 31.03.2017||Previous Year 31.03.2016|
|Revenue from Operation (net)||12,131.48||27,195.85|
|Profit before Finance Cost, Depreciation and Tax||(9,927.51)||(3,982.80)|
|Less: Depreciation & Amortisation||730.87||730.26|
|Less: Finance Cost||52.40||3,424.13|
|Less: Tax Expenses||-||-|
|Net Profit after Tax||(10,710.78)||(8,137.19)|
|Add: Balance brought forward from previous year||(14,486.45)||(6,349.26)|
|Balance carried over to Balance Sheet||(25,197.12)||(14,486.47)|
FINANCIAL AND OPERATIONAL REVIEW
During the year under review, the Company has achieved Net Sales/Income from operation of 12,131.48 lacs as against 27,195.85 lacs in previous year registering a decline of 55.39%. The Company incurred a loss of 10,710.78 lacs as against 8,137.19 lacs in the previous year. The decline in sales and increase in losses are mainly attributed to depressed market for ferro alloys impacting the net realisation and margin. Slower growth in several sectors of the economy resulted into weaker domestic demand.
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.
TRANSFER TO RESERVE
Since the Company has incurred loss during the year, no amount has been transferred to reserves.
In view of the losses incurred by the Company, the Directors of the Company do not recommend any dividend for the financial year 2016-17.
The Board met Five (5) times during the year, 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 financial year 2016-17.
DIRECTORS AND KEY MANAGERIAL PERSONNEL Retirement
In accordance with the provisions of the Companies Act, 2013, Mr. Satish Kumar Singh (DIN: 05295625), 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 11th August, 2017.
Appointment / Re-appointment
Pursuant to the provisions of secti on 161 of the Companies Act, 2013, read with the relevant provisions in the Articles of
Association, Mr. Ravindra Kumar Mehra (DIN: 07898952) was appointed as an Additional Director(Non-Executive Independent) by the Board of Directors of the Company with effect from 11th August, 2017 to hold office 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 NonExecutive Independent Director.
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 section 134(5) of the Companies Act, 2013, the Board of Directors to the best of their knowledge and ability confirm:
a) that in the preparation of the annual accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;
b) that we have selected such accounting policies and applied them consistently and made judgements 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) 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;
d) that the annual accounts have been prepared on a "going concern" basis;
e) that proper internal financial controls were laid down and that such internal financial controls are adequate and were operating effectively; and
f) 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 last previous year for Long-Term debts/facilities was D and Short-Term facilities was A4 (A Four) given by ICRA Limited.
DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES
During the year under review, no Company has become or ceased to exist as the subsidiary of the Company. The Company has also not entered into any Joint Venture nor become an Associate Company during the year under review.
EXTRACT OF ANNUAL RETURN
The details of the extract of the Annual Return in Form MGT 9 is annexed herewith and forms part of this Report as Annexure-I. PUBLIC DEPOSITS
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.
At the 19th Annual General Meeting (AGM) of the Company held on 27th September, 2014, M/s. R. Kothari & Company (FRN: 307069E), Chartered Accountants, were appointed as Statutory Auditor of the Company to hold office for a term of fIve (5) years from the conclusion of 19th AGM (subject to ratification of such appointment by the members at every AGM) till the conclusion of the 24th AGM of the Company. Accordingly, the appointment of M/s. R. Kothari & Company (FRN: 307069E), Chartered Accountants, as Statutory Auditor of the Company, is placed for ratificati on by the members. The Company has received a confirmation from M/s. R. Kothari & Company, Chartered Accountants, to this effect that their appointment, if ratified, 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 and Disclosure Requirements) Regulations, 2015. The Audit Committee and the Board of Directors of the Company recommend ratification of their appointment from the conclusion of this AGM upto the conclusion of the 24th AGM of the Company.
STATUTORY AUDITOR OBSERVATION
The Statutory Auditor has put the qualification remark in their report. The details are as follows:-
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 debt at a sustainable level. In view of the above, pending finalisation of the restructuring plan, the Company has not provided accrued interest in its books during the year and reversed interest provided in earlier periods pertaining to the period the account was declared NPA by the respective lenders. The amount of interest reversed for earlier periods is 281.01 lacs. The amount of interest not provided for the year ended 31st March, 2017 is 3,227.11 lacs. Had the aforesaid interest expense been recognised, the net loss for the year ended 31st March, 2017 would have been 14,218.88 lacs instead of 10,710.76 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 3,508.12 lacs for the year ended 31st March, 2017 and accordingly the same has not been considered for compilation of Results for 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 M/s. A.J.S. & Associates, Cost Accountants (FRN : 000106), 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.
SECRETARIAL AUDIT REPORT
In terms of section 204 of the Companies Act, 2013 and rules made there under, CS Hanuman Mal Choraria of M/s. H M Choraria & Co., Practicing Company Secretary, have been appointed as Secretarial Auditor of the Company. The report of the Secretarial Auditor in Form MR-3 is enclosed as Annexure-II to this report.
SECRETARIAL AUDITOR OBSERVATION
The Secretarial Auditor has the following observation in Form MR-3 enclosed as Annexure II - The Company has defaulted in payment of statutory dues within the prescribed time.
Our comments are as under:
Statutory payments were delayed mainly due to poor liquidity position.
In terms of section 138 of the Companies Act, 2013 read with rule 13 of the Companies (Accounts) Rules, 2014, on the recommendati on 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 Auditors 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 Affairs and Financial Control (IAFC) 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 procedure 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 IFC over Financial Reporting and their Audit Report is annexed to the Independent Auditors Report under Financial Statements.
DETAILS RELATING TO REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND EMPLOYEES
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 forms part of the Boards Report as Annexure-III.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO
A statement giving details of Conservati on of Energy, Technology Absorpti on 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 Preventi on of Insider Trading, with a view to regulate trading insecurities 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.impexferrotech.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 AND COMMITMENTS IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THE REPORT
The Company is required to comply with Ind AS in the preparation of their Financial Statements for accounting periods beginning on or after April, 2017, with the comparatives for the periods ending March, 2017. Accordingly the Company has adopted the said Ind AS with effect from 1st April, 2017. The Company has devised a suitable implementation plan for adoption of Ind AS.
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 Remuneration Policy has been made a 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 minimize risk. The policy is periodically reviewed to ensure that the executive management controls the risk as per decided policy.
POLICY ON PREVENTION OF SEXUAL HARASSMENT
The Company has adopted policy on Prevention of Sexual Harassment of Women at Workplace in accordance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
During the financial year ended 31st March, 2017, the Company has not received any Complaints pertaining to Sexual Harassment. 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 secti on 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) 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 programmes policy and details of familiarisati on programme provided to the Directors of the Company is available on the Companys website www.impexferrotech.com.
The compositi on and terms of reference of the Audit Committee has been furnished in the Corporate Governance Report forming 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 forming part of this Annual Report.
STAKEHOLDERS RELATIONSHIP COMMITTEE
The compositi on and terms of reference of Stakeholders Relationship Committ ee has been furnished in the Corporate Governance Report forming part of this Annual Report.
CORPORATE SOCIAL RESPONSIBILTY (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 last 3 years eroding the entire net worth.
VIGIL MECHANISM POLICY
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 Policy and the same has been uploaded on the website of the Company i.e. www.impexferrotech.com. The policy provides access to the Chairman of the Audit Committee in
certain circumstances. 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 & 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 & Disclosure Requirements) Regulations, 2015, the CEO/CFO certification 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 Participants (DPs) and all other Business Associates for the growth of the organisation.
The Directors also wish to place on record their deep appreciation to all the employees for their commitment and continued contribution to the Company.
ANNEXURE 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 the Directors Report:
|I||Extract of the Annual Return (Form MGT-9)|
|II||Secretarial Audit Report (Form MR 3)|
|III||Particulars of Employees|
|IV||Prescribed particulars of Conservation of Energy, Technology, Absorption and Foreign Exchange Earnings and Outgo|
|V||Particulars of Contract or Arrangements with Related Parties (Form AOC 2)|
|For and on behalf of the Board|
|Place: Kolkata,||Suresh Kumar Patni|
|Date: 11th August, 2017||Chairman cum Managing Director|
Annexure - III
Particulars of Employees
|Sl. No.||Name of Director/ KMP & Designation||Remuneration of Director/KMP for Financial Year 2016-17||% increase in Remuneration in the Financial Year 2016-17||Ratio of remuneration of each Director to median remuneration of employees|
|1.||Mr. Suresh Kumar Patni (Managing Director)||12,00,000||0%||9.09|
|2.||Mr. Satish Kumar Singh (Executive Director)||9,76,340||8.48%||7.40|
|3.||Mr. Sanjeet Kumar Gupta (CFO)||12,00,000||48.15%||NA|
|4.||Ms. Richa Agarwal (Company Secretary)||4,20,024||20.86%||NA|
i) No other Director other than the Managing Director and Whole Time Director received any remuneration other than siffing fees during the F.Y. 2016-17.
ii) In the Financial Year, there was an increase of 8.20% in the median remuneration of employees.
iii) There were 260 Permanent employees on the rolls of Company as on 31st March, 2017.
iv) The remuneration of the Key Managerial Personnel put together is 37.96 lacs which increased by 16.48% from 32.59 lacs.
v) The remuneration of Directors/KMPs/Senior Management Personnel for the F.Y. 2016-17 are as per the Remuneration Policy of the Company.
*Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are not applicable to the Company for the year under review.
Annexure - IV
Particulars of Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo required pursuant to section 134(3)(m) of the Companies Act, 2013.
A) Conservation of Energy
i. Steps taken for Conservation of Energy
0 Installation of HT & LT Capacitor bank in Submerged Arc Furnace.
0 Effective use of waste char for Power Generation.
0 Effective maintenance and daily monitoring of capacitor bank for improvement in power factor.
ii. Steps taken for Utilizing Alternate Source of Energy
0 Installation of energy efficient light fiffings in shop floor, offices and other areas.
0 Replacement of old motors with energy efficient motors.
iii. Capital investment on energy conservation equipment
The Company proposes to install solar power equipments like night lighting systems and solar power pump sets to save on energy costs.
B) Technology Absorption
i. Efforts made towards technology absorption
The Company is continually updating the production processes through the latest technology.
ii. Benefits derived like product improvement, cost reduction, product development or import substitution
Improvement in the quality of its products.
Improvement in the safe and environment friendly process.
iii. In case of imported technology (imported during the last three years reckoned from the beginning of the financial year) - Nil.
iv. Expenditure incurred on Research and Development
|d) Total R&D expenditure as a percentage of total turnover||Nil|
C) Foreign Exchange Earnings and Outgo
i. Activities relating to export, initiative taken to increase exports, development of new export markets for the products
& services and export plans:
The Company is actively exploring the export market and has taken various initiatives to export its products.
|ii. Total Foreign Exchange used and earned:||(Rs. in Lacs)|
|1. Foreign Exchange earned||6,103.10||11,899.53|
|2. Foreign Exchange used||4,719.80||4272.74|
1. Details of Contracts or Arrangements or Transactions not at Arms Length Basis
|Name(s) of the Related Party and Nature of Relationship||Nature of Contracts/ Arrangements/ Transactions||Duration of the Contracts/ Arrangements/ Transactions||Salient Terms of the Contracts or Arrangements or Transactions including the value, if any||Justification for entering into such Contracts or Arrangements or Transactions||Date(s) of Approval by the Board||Amount paid as Advances, if any||Date on which the Special Resolution was passed in General Meeting as required under First Proviso to Section 188|
2. Details of Material Contracts or Arrangements or Transactions at Arms Length Basis
|Name(s) of the Related Party and Nature of Relationship||Nature of Contracts/ Arrangements/ Transactions||Duration of the Contracts/ Arrangements/ Transactions||Salient Terms of the Contracts or Arrangements or Transactions including the value, if any||Date(s) of Approval by the Board||Amount paid as Advances, if any|
|For and on behalf of the Board|
|Place: Kolkata,||Suresh Kumar Patni|
|Date: 11th August, 2017||Chairman cum Managing Director|