Impex Ferro Tech Ltd Directors Report.
The Directors are pleased to present the 21st Annual Report of the Company together with Audited Accounts for the Financial Year ended 31st March, 2016.
(Rs in Lacs)
|Particulars||Current Year||Previous Year|
|Revenue from Operation (net)||27,195.85||50,580.19|
|Profit before Finance Cost, Depreciation and Tax||(3,982.80)||(2,246.24)|
|Less: Depreciation & Amortisation||730.26||863.76|
|Less: Finance Cost||3,424.13||3,033.65|
|Less: Tax Expenses||-||-|
|Net Profit after Tax||(8,137.19)||(6,143.64)|
|Add: Balance brought forward from previous year||(6,349.26)||(101.95)|
|Adjusted for Depreciation relating to Fixed Assets||-||(103.67)|
|Balance carried over to Balance Sheet||(14486.45)||(6,349.27)|
FINANCIAL AND OPERATIONAL REVIEW
During the year under review, the Company has achieved Net Sales/Income from operation of Rs 27,195.85 lacs as against Rs 50,580.19 lacs in previous year registering a decline of 46.23%. The Company incurred a loss of Rs 8,137.19 lacs as against Rs 6,143.64 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. On the other hand rising inflation in the country resulted in increase in the cost of raw materials and other overheads which could not be passed on to the consumers.
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 2015-16.
The Board met Twelve (12) 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
To accommodate the allotment of Equity Shares consequent to Preferenti al Issue, the Company has increased the Authorised Share Capital from Rs 82,50,00,000 to Rs 95,00,00,000. The Capital Clause of the Memorandum of Association of the Company was accordingly amended.
The Board of Directors in their meeting held on December 26, 2015, allotted 63,35,000 Equity Shares of Rs 10/- each at a premium of Rs 10/- per share on preferential basis to an entity belonging to Promoter group in terms of the approval received from the Shareholders in the previous Annual General Meeting held on September 28, 2015.
In accordance with the provisions of the Companies Act, 2013, Mr. Suresh Kumar Patni (DIN: 00032674), retires by rotation and being eligible, offers himself for re-appointment.
During the year Mr. Ankit Patni (DIN: 00034907), Non-Executive Promoter Director of the Company has resigned from the directorship of the Company with effect from August 22, 2015.
During the year Mr. Ramesh Seemakurti (DIN: 00096163), Non-Executive Director of the Company has resigned from the directorship of the Company with effect from November 14, 2015.
Appointment / Re-appointment
Pursuant to the provisions of section 161 of the Companies Act, 2013, read with the relevant provisions in the Articles of Association, Mr. Ankit Patni (DIN: 00034907) was appointed as an Additional Director (Non-Executive Promoter) by the Board of Directors of the Company with effect from September 30, 2015 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 Non-Executive Promoter Director.
Pursuant to the provisions of section 196, 197, 198 of the Companies Act, 2013, read with Schedule V, Mr. SatiRs sh Kumar Singh (DIN: 005295625) Executive Director, whose tenure was expired on August 23, 2015, was re-appointed for a further period of three (3) years from August 24, 2015 to August 23, 2018.
DIRECTOR S 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 CompanyRs s Internal Financial Controls were adequate and effective as on 31st March, 2016.
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.
The CompanyRs s credit rating for Long-Term debts/facilities is Rs DRs and Short-Term facilities is Rs A4 (A Four)Rs , rated by ICRA Limited.
SALE OF INVESTMENT
The Company entered into a Joint Venture with Ankit Metal & Power Ltd. and formed SKP Mining Pvt. Ltd. on January 16, 2015. Since the purpose for which Joint Venture was formed could not be materialized, the Company decided to exit from the same and thus disposed off its holding in the Company on June 30, 2015.
DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES
Consequent upon the sale of investment in SKP Mining Pvt. Ltd., the Joint Venture with SKP Mining Pvt. Ltd. no more exists. 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.
The Company has not accepted any deposits within the meaning of secti on 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 September 27, 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 ratification 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
There are no qualifications or adverse remarks in the AuditorRs s Report which require any clarification/explanation. The notes to accounts referred to in the AuditorRs s Report are self-explanatory, and therefore, do not call for any further comments/explanations.
In terms of secti on 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 Rs 35,000/- plus applicable taxes and reimbursement 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 April 1, 2016 and ending on March 31, 2017.
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 Abhijeet Jain of M/s. A J & Associates, 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 observations in Form MR-3 enclosed as Annexure II.
(i) Form MGT-14 for Appointment of Internal Auditor u/s 138 for the year 2015-16 is yet to be filed
(ii) It was noted that the Company has complied the Secretarial Standards issued by the ICSI to a great extent; however the stricter implementation of the Secretarial Standards is yet to be observed by the Company.
(iii) There has been some instances where the Forms were filed with some delay, thereby paying the additional fees. Some forms are yet to be filed.
Our Comments are as under:
(i) Owing to technical glitches at MCA Portal throughout the last year, the filings were failing at many times. This led to confusion at our end and the Form was not filed, steps will be taken to file the same.
(ii) The Secretarial Standards were issued in the last year, we are trying our level best to implement these in entirety in the near future.
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. N R & Associates, Cost Accountants, (FRN : 102903) as Internal Auditor of the Company for the financial year 2016-17 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 CompanyRs s 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 as Annexure-B to the Independent AuditorsRs 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 BoardRs s 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 Rs Code of Conduct for Regulating, Monitoring and Reporting of Trading by InsidersRs which is also displayed on the website of the Company www.impexferrotech.com.
The Code requires pre-clearance for dealing in the CompanyRs s shares and prohibits the purchase or sale of CompanyRs s shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relati on 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 has become a sick industrial company as per section 3(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 as the accumulated losses of the Company at the end of Financial Year 31.03.2016 exceeded its entire net worth as per Audited Financial Statement as on 31.03.2016. The Company will make necessary reference to the Board for Industrial and Financial Reconstruction (BIFR) under section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985.
As per Companies (Indian Accounti ng Standard) (Ind AS), every Listed Company and their holding and subsidiary companies (other than banking companies, insurance companies and non-banking financial companies) are required to comply with Ind AS in the preparation of their financial statements for accounting periods beginning on or after April, 2016, with the comparatives for the periods ending March, 2016. The Company is not falling under the criteria from April, 2016 as the Net worth of the Company is below Rs 500 Crores. Accordingly the Company will adopt the said Ind AS with effect from April 1, 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 armRs s 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 parti es referred to in section 188(1) of the Companies Act, 2013 in Form AOC-2 (Annexure V) is NIL.
POLICY ON DIRECTORSRs 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, 2016, 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 section 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 familiarisation programme provided to the Directors of the Company is available on the CompanyRs s website www.impexferrotech.com.
The composition 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 compositi on and terms of reference of the Nominati on and Remuneration Committee has been furnished in the Corporate Governance Report forming part of this Annual Report.
STAKEHOLDERSRs RELATIONSHIP COMMITTEE
The composition and terms of reference of Stakeholders Relationship Committee 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 secti on 177 of the Companies Act, 2013, rules framed thereunder and Regulati on 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 relati ng to inappropriate functioning of the organization 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
ManagementRs s 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 was awarded for Export Excellence by EEPC INDIA for highest exporter in the product group Thrust Markets of Thrust Products in the large enterprise category for the outstanding contribution to Engineering Exports during year 2015-16 in Ferro Alloy Segment (Eastern Region).
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, CompanyRs s Bankers, Central and State Government Authorities, Stock Exchange(s), Depository Participants (DPRs 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.
ANNEXURE FORMING PART OF THE DIRECTORSRs 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|
|Suresh Kumar Patni|
|Kolkata, August 12, 2016||Chairman cum Managing Director|