ISMT Ltd Directors Report.

To the Members of ISMT Limited

Your Directors present herewith the Twenty First Annual Report & Audited Financial Statements of the Company for financial year ended March 31, 2019.


The Company had undergone a very difficult period in last few years and peak net sales of Rs. 1,879 Crores in 201112 dipped to Rs. 968 Crores in 2015-16 and the net profit of Rs. 29 Crores dipped to net loss of Rs. 382 Crores during the said period. However, a remarkable turnaround has been achieved in last 3 years where the sales have gone back to the same level while the net loss also came down by 40% as can be seen from the following:

Rs. in Crore


Financial Year

2018-19 2015-16
Net Sales 1795.44 968.44
Gross Sales 2423.39 1331.28
Profit/ (Loss) before Finance Charges, Depreciation, Amortization & Tax (EBIDTA) 119.87 33.65
Cash Profit/ (Loss) (154.35) (300.99)
Gross Profit/ (Loss) (156.59) (246.47)
Profit/ (Loss) Before Tax (228.78) (372.82)
Taxation - (9.39)
Net Profit/ (Loss) (228.78) (382.21)
Re-measurement Gains/ (Losses) on Defined Benefit Plans (0.84) -
Total Comprehensive income for the year (229.62) (382.21)


Your Directors are unable to recommend dividend for the year ended March 31, 2019 in view of the losses.


No amount is proposed to be transferred to Reserves. OPERATIONS

There has been gradual improvement in utilization at all the plants. Steel plant utilization has gone up from 38% in 2015-16 to 50% in 2018-19. There is a quantum jump in tube plant utilization which went up from 22% in 2015-16 to 48% in 2018-19. MARKET

Total tube sales went up from Rs. 566 Crores in 2015-16 to Rs. 1,317 Crores in 2018-19 i.e. an increase of 133%. In fact the domestic sales increased 2.5 times from Rs. 456 Crores in 201516 to Rs. 1,122 Crores in 2018-19 while the exports sales nearly doubled from Rs. 110 Crores in 2015-16 to Rs. 195 Crores in 2018-19.

Steel despatches went up from Rs. 609 Crores in 2015-16 to Rs. 1,020 Crores in 2018-19. Most of the increase was driven by the captive sales which increased from Rs. 207 Crores in 2015-16 to Rs. 541 Crores in 2018-19 while external sales also went up by 20% from Rs. 402 Crores in 2015-16 to Rs. 478 Crores in 201819 despite the slow down in the Auto Industry.


The turnover of the Company doubled over last 3 years from Rs. 968 Crores in 2015-16 to Rs. 1,795 Crores in 2018-19. EBIDTA went up more steeply and EBIDTA in 2018-19 of Rs.120 Crores was more than thrice the EBIDTA in 2015-16 of Rs. 34 Crores. The cash loss in turn halved from Rs. 301 Crores in 2015-16 to Rs. 154 Crores in 2018-19.

The Company has continued to be EBIDTA positive throughout this period and the increasing EBIDTA is a positive for the Lenders of the Company. The Company is proposing to restructure its debt on sustainable basis which, inter alia, could necessitate downsizing of debt including interest. However, pending restructuring, the Company is required to provide full interest in its books to comply with the relevant accounting standards and will give effect to the restructuring once it is implemented.


The internal cash flows are mainly utilized for incremental working capital requirements, essential maintenance capex and other need based capex and also for payment to Lenders of the Company.

The Company is also regular in payment of its statutory dues.


The Company and the Bankers had been looking at various options permitted by Reserve Bank of India Circular in force from time to time and has finally decided to explore assignment of debt to Asset Reconstruction Company (ARC) as a Resolution Plan. Pursuant to the same, erstwhile Lead Bank viz. Indian Overseas Bank and other major Banks agregatating to about 71% have assigned their debt to ARCs with ARCIL acquiring most of this debt. ARCIL has initiated the process for restructuring the debt on a sustainable basis.


An effective import duty levied in 2016 provided immediate and much needed relief. After the initial dip, imports from China have again started increasing. There is also increase in non Chinese imports. The Company will seek continuation and widening of the tariff regime to address increasing imports.


Captive Power Plant of the Company continued to be inoperative throughout the year in the absence of banking facility from MSEDCL. The Company has contested the wrongful denial of the banking facility and the Companys appeal in this regard is pending in the Supreme Court.


Captive Power Plant in Maharashtra had in the past been identified as asset held for sale. Given the continuing weakness in the economic environment, the Company does not foresee disposal of the same in the short term. Hence, it has been decided to reclassify the said asset as non-current asset under the head “Property, Plant & Equipment”.

Despite non operation for last 5 years, the Captive Power Plant has been kept in good working condition. It also has easy access to raw material being located close to the coal mines. The Company also has surplus land and other infrastructure for increasing the capacity. The Company is also evaluating the possibility of restarting the Power Plant.

Port and Power project in Tamil Nadu does have long term potential. The Company, through its wholly owned subsidiary, has also got about 1,000 acres of freehold land which can be put to alternate use once there is improvement in the investment scenario.


As part of Companys overall strategy, Company remained focused on developing new products for all its market segments including Energy, OCTG, Bearing, Auto & Mining Sectors. R&D activities also focused on process cost reductions. Details of R&D activities undertaken are enumerated in Annexure ‘B attached to this Report.


Mr. R Poornalingam & Mr. Kanakraj Madhavan were appointed as Additional Directors (Independent) of the Company w.e.f. December 28, 2018 & March 1, 2019 respectively.

Mr. Shyam Powar is re-appointed as Independent Director of the Company, subject to shareholders approval at the ensuing AGM. Post completion of the tenure as Independent Directors, Mr. S C Gupta and Ms. Deepa Mathur continued on the Board as NonExecutive Directors (Non-Independent) till the ensuing AGM. Mr. Shashank Dixit, Nominee Director & Mr. S C Gupta, Nonexecutive Director resigned as Directors of the Company w.e.f. January 18, 2019 & March 29, 2019 respectively.

The Board placed on record its sincere appreciation and gratitude for services rendered by Mr. Shashank Dixit and Mr. S C Gupta during their respective association with the Company.

The term of Mr. Rajiv Goel as Whole-time Director expired on September 30, 2018. He was further re-appointed as such upto September 30, 2019.

The term of Mr. B R Taneja as Managing Director expired on November 30, 2018. He was further re-appointed as such upto November 30, 2020.

Eight (8) meetings of the Board of Directors were held during the year. Detailed information is given in the Corporate Governance report.

The Independent Directors have given a Declaration pursuant to Section 149(7) of the Companies Act, 2013 (Act).

The Company has devised a Policy for annual performance evaluation of the Board, its Committees & individual Directors which include criteria for performance evaluation of the nonexecutive & executive directors.

The performances of non-independent directors & Committees of the Board have been evaluated by independent directors. The performances of independent directors have been evaluated by Chairman of the Nomination & Remuneration Committee (NRC) with inputs from all directors. The performance of the Board as a whole is evaluated by the Chairman with inputs from all directors. The performance evaluation of Chairman of NRC is evaluated by Chairman with inputs from all the directors.

The above evaluations have been carried out once during the year.

The details of familiarization Programme of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company at


In respect of the Qualified Opinion and Emphasis of Matter by the Auditors on the Financial Statements of the Company, it has been explained in the Notes forming part of the said Financial Statements i.e. Note Nos. 1.31, 3.12, 3.16, 3.17, 3.18, 3.19 and 3.20 which are self-explanatory and therefore do not call for any further comments.

The Auditors have discussed the key matters for each of the qualifications.


The Company is required to maintain cost records as specified u/S 148(1) of the Act and accordingly such accounts and records are made and maintained by the Company.

Pursuant to Section 148 of the Act read with Rules framed thereunder, your Directors had, on recommendation of the Audit Committee, approved the appointment & remuneration of the following Cost Auditors of the Company for FY2018-19:

(i) M/s Dhananjay V. Joshi & Associates; and

(ii) M/s Parkhi Limaye & Co.

The payment of remuneration for FY2018-19 to aforesaid Cost Auditors is subject to ratification by the Members at the ensuing Annual General Meeting.

The Cost Audit Report for FY2017-18 was filed within the prescribed time limit as per the Companies (Cost Record and Audit) Rules, 2014.


As on date of this report, the Company has ten direct and indirect subsidiary companies. In accordance with Section 129(3) of the Act, a statement containing salient features of the financial statements of subsidiaries in Form AOC-1 is provided separately in this Annual Report. A report on performance & financial position of each of the subsidiaries is provided in financial statements forming part of this Annual Report. The Company has also framed a Policy for determining Material Subsidiaries which is available on website:


The Company has not accepted any deposits from the public.


Pursuant to SEBI (LODR) Regulations, 2015 (Listing Regulations), a separate section on Management Discussion & Analysis & Corporate Governance Report is forming part of this Report.

The Managing Director & CFO have certified to the Board with regard to the financial statements & other matters as required under Regulation 17(8) of the Listing Regulations.

Certificate from Auditors of the Company regarding compliance of conditions of Corporate Governance is also annexed to this Report.


The extract of Annual Return in Form MGT-9 is forming part of this Report as Annexure ‘A.

Further, the latest Annual Return of the Company in Form MGT- 7 is placed on website of the Company at


Information required under Section 134(3)(m) of the Act is forming part of this Report as Annexure ‘B.


Pursuant to the provisions of Section 134(3)(c) read with Section 134(5) of the Act, your Directors make the following statement:

i) That in preparation of annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii) that the Directors have selected such accounting policies & applied them consistently & made judgments & estimates, that are reasonable & prudent so as to give a true & fair view of the state of affairs of the Company at end of financial year March 31, 2019 and of the Loss of the Company for that period;

iii) That the Directors have 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 annual accounts on a going concern basis;

v) That the Directors had laid down internal financial controls to be followed by the Company & that such internal financial controls are adequate & were operating effectively; and

vi) 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.


The Nomination & Remuneration Policy of the Company on directors appointment & remuneration including criteria for determining qualifications, positive attributes, independence of a director & other matters is available on website of the Company at

The criteria for performance evaluation as laid down by the Nomination & Remuneration Committee have been defined in the Nomination & Remuneration Policy.

Details pertaining to Section 197(12) of the Act read with Rules framed thereunder are forming part of this Report as Annexure ‘C.

A statement showing details of employees in terms of Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report. However, in terms of Section 136 of the Act, the Annual Report excluding the aforesaid information is being sent to the members and other entitled thereto. The said statement is available for inspection by the Members at the Registered Office of the Company during business hours on working days up to the date of the ensuing AGM. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard.


Pursuant to Section 204 of the Act & Rules made thereunder the Board has appointed M/s. MRM Associates, Company Secretaries as Secretarial Auditors to undertake Secretarial Audit of the Company for the period ended March 31,2019.

The Report of the Secretarial Auditors in Form MR-3 is forming part of this Report as Annexure ‘D.

In respect of the Audit observations, following are the comments of the Board:

i. Delay in submission of financial Results:

Submission of the financial results got delayed only by 2 weeks due to delay in financials of foreign subsidiaries.

ii. Inadequate Board composition:

Listing Regulations usually provide 3 months to fill vacancy of independent directors.

Accordingly, the Company within 3 months filled the vacancy of Independent Director.

iii. Promoter shareholding not in demat form:

One Promoter Group (holding 0.02% shares in physical form) was classified as such by virtue of being related to a former promoter of the Company.

The Company proposes to take steps to reclassify the said promoter group to public category.

iv. Disqualification of Director

The concerned director was erroneously disqualified by ROC. Nevertheless, on the date of appointment in the Company, the said Director was not disqualified. Subsequently, he has resigned from the Board on becoming aware of his disqualification.

v. Non-filing of forms with ROC

Due to pre-scrutiny/ technical error on MCA website, the Company could not file few forms with ROC. However, the said forms were subsequently filed through form GNL-2, which were duly approved by ROC.


Particulars of Loans, Guarantees and Investments covered under Section 186 of the Act have been mentioned in the Notes to the Financial Statements forming part of this Annual Report.


The Company has constituted a Risk Management Committee to address organization wide risk including credit, security, property, regulatory and other risks. The Committee is assisting the Board in ensuring that there is adequate risk management policy in place capable of addressing those risks.

INTERNAL FINANCIAL CONTROLS The Company has an internal financial control framework which is commensurate with the size, scale and complexity of its operations. The Statutory Auditors of the Company review the same on periodical basis.


Pursuant to Section 135 of the Act a CSR Committee has been constituted by the Board consisting of three directors including one independent director.

Pursuant to the provisions of Section 135 of the Act, no profits were available for spending on CSR activities.


Pursuant to Section 177 of the Act, an Audit Committee constituted by the Board consists of at least three directors with independent directors forming a majority.

The Whistle Blower Policy/ Vigil Mechanism of the Company was established by the Board & available on website at www.


During the year, the Company has not entered into any contract/ arrangement/ transaction with related parties which were either not at an arms length or not in the ordinary course of business & further could be considered material in accordance with the policy of the Company on materiality of related party transactions. Hence, there is no information to be provided in Form AOC-2 while particulars of Related Party Transactions in terms of Ind AS-24 are forming part of the enclosed financial statements.

The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the website at


1. No significant or material orders were passed by Regulators or Courts or Tribunals which impact the going concern status & Companys operations in future.

2. The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 and during the year, there were no cases filed/pending under the said Act.

3. The Company has complied with the applicable secretarial standards.


Your Directors take this opportunity to express its sincere gratitude for continued support & co-operation received by the Company from Government of India, Government of Maharashtra, Reserve Bank of India, Stock Exchanges, other regulatory agencies & shareholders. The Board would also like to acknowledge continued support of its bankers, vendors, clients & investors. The Directors also wish to place on record their appreciation of all employees for their dedication & team work.

For and on behalf of
the Board of Directors
Pune O P Kakkar
June 14, 2019 Chairman