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To the Members,
The Board of Directors present the 29th Annual Report of the Company, along with the financial statements for the financial year ended 31st March, 2019.
In accordance with the applicable provisions of the Insolvency and Bankruptcy Code 2016 (IBC/Code), the Corporate Insolvency Resolution Process (CIRP) of Monnet Ispat and Energy Limited (Company) was initiated by the Financial Creditor(s) of the Company. The Financial Creditor(s) petition to initiate the CIRP was admitted by the National Company Law Tribunal, Mumbai (NCLT) on 18th July, 2017 (Insolvency Commencement Date). Mr. Sumit Binani was appointed as the Interim Resolution Professional (IRP) to manage the affairs of the Company, and was subsequently confirmed as the Resolution Professional (RP) by the Committee of Creditors (CoC).
Honble NCLT vide its order dated 24th July, 2018 approved the Resolution Plan submitted by consortium of JSW Steel Limited (JSW Steel) and AION Investments Private II Limited (AION) (AION together with JSW Steel, the Consortium). Thereafter a new Board was constituted w.e.f. 31st August, 2018 (Reconstituted Board or Board) and new management was put in place.
1. FINANCIAL SUMMARY
The financial summary and performance highlights of the Company, for the year under review are as follows:
(? in Crore, except per share data)
|No.||Year Ended 31.03.2019||Year Ended 31.03.2018||Year Ended 31.03.2019||Year Ended 31.03.2018|
|1 Income from Operations|
|(a) Gross Sales||1872.35||1410.93||1872.35||1410.93|
|(b) Other Operating Income||7.06||8.16||7.06||8.16|
|Total income from operations (net)||1879.41||1419.09||1879.41||1419.09|
|(a) Cost of Materials consumed||1728.32||1096.50||1728.32||1096.50|
|(b) Changes in inventories of finished goods, work-in-progress and stock-in-trade||(250.32)||(24.19)||(250.32)||(24.19)|
|(c) Employee benefits expense||89.34||80.14||90.35||84.97|
|(d) Finance Costs||445.27||1181.66||445.27||1193.26|
|(e) Depreciation and amortization expense||275.60||351.61||277.51||355.02|
|(f) Excise Duty||-||35.83||-||35.83|
|(g) Other expenses(Any item exceeding 10% of the total expenses relating to continuing operations)||311.22||170.11||311.85||186.61|
|3 Profit / (Loss) from operations before exceptional items and tax (1-2)||(693.19)||(1460.43)||(696.57)||(1495.77)|
|4 Exceptional Items||2767.92||440.53||2855.67||263.52|
|5 Profit / (Loss) from ordinary activities before tax (3-4)||(3461.11)||(1900.96)||(3552.24)||(1759.29)|
|6 Tax expense:|
|(i) Current tax||-||-||-||-|
|(ii) Deferred tax||-||-||-||-|
|7 Loss after tax for the period (5 + 6)||(3461.11)||(1900.96)||(3552.24)||(1759.29)|
|8 Other Comprehensive Income (after tax)|
|A. (i) Items that will not be reclassified to profit or loss||(33.04)||(30.84)||(33.06)||(30.84)|
|(ii) Income tax relating to items that will not be reclassified to profit and loss||-||-||-||-|
|B. (i) Items that will be reclassified to profit or loss||-||-||-||-|
|(ii) Income tax relating to items that will be reclassified to profit and loss||-||-||9.98||(0.69)|
|9 Total Comprehensive Income for the period (7+8) comprising profit/ (loss) and other comprehensive income for the period.||(3494.15)||(1931.80)||(3575.32)||(1790.82)|
|10 Paid-up equity share capital (Face Value 10/- per share fully paid-up)||469.55||200.79||469.55||200.79|
|11 Reserve excluding Revaluation Reserve as per balance sheet of previous accounting year||982.27||(3278.48)||698.48||(3478.05)|
|12 Earnings Per Share (EPS) (not annualized)|
2. FINANCIAL AND OPERATIONAL PERFORMANCE
The Company has two manufacturing facilities namely, at Raipur and Raigarh, in the state of Chhattisgarh.
During the year under review post acquisition by the Consortium, the integrated steel production including Blast Furnace, Electrical Furnace (Steel making), Ladle Refinery and continuous Casting of Steel, was re-started at the Raigarh plant of the Company, with effect from 8th February, 2019.
Following is the operational and financial performance of the Company for the financial year under review:
The Companys operational performance in terms of physical production and sales during the year ended on 31st March, 2019, is as under -
Production (MT) -
|Particulars||FY19||FY18||Increase / (Decrease)|
Sales (MT) -
|Particulars||FY19||FY18||Increase / (Decrease)|
During the year under review, the Companys revenue from operations was ? 1879.41 crores as against ? 1419.09 crores in the previous year. The Companys Profit Before Depreciation Interest and Tax (PBDIT) was ? 27.68 crores in the financial year ended 31st March, 2019 as opposed to PBDIT of ? 72.84 crores in the immediate preceding year.
Taking into account deprecation and interest cost, profit before tax (PBT) stood at (? 3461.11) crores as against (? 1900.96) crores in the previous year and total comprehensive income for the year was (? 3494.15) crores against (? 1931.80) crores in the previous financial year.
During the year under review, there were exceptional items aggregating to ? 2767 92 crores as against ? 440.53 crores in the year ended on 31st March, 2019. Exceptional items for the year ended 31st March 2019 comprise of:
(a) Impairment/write off of property plant and equipment and capital work in progress amounting to ? 2,429.75 crores, which has been recognized based on the recoverable value of these assets.
(b) Impairment/write off of investments, inventories, receivables, current and non-current assets aggregating to ? 1,484.95 crores (previous year ? 440.53 crores) considered not realizable.
(c) Write back of current and non-current liabilities, aggregating to ? (1,173.78) crores.
(d) Plant Startup Expenses of ? 27.00 crores which comprise of various one-time revenue expenses incurred for startup of various manufacturing facilities at Raigarh plant of the Company which were non-operational for a long period of time.
During the year under review, the Companys revenue from operations was ? 1879.41 crores as against ? 1419.09 crores in the previous year. Further, in the financial year ended 31st March, 2019, profit before tax (PBT) was ? (3552.24) crores as against ? (1759.29) crores in the previous year and profit after tax (PAT) was ? (3552.24) crores against ? (1759.29) crores in the previous financial year.
The performance and financial position of the subsidiary companies and joint ventures is included in the consolidated financial statements of the Company.
3. CORPORATE INSOLVENCY RESOLUTION PROCESS & CHANGE OF MANAGEMENT
As stated above the Honble NCLT approved the Resolution Plan submitted by the Consortium with certain modifications (Resolution Plan), on 24th July, 2018 (IBC/NCLT Order).
Upon implementation of the Resolution Plan, the Resolution Applicants i.e. AION Investments Private II Limited (AION) and JSW Steel Limited (JSW) (directly and through their affiliates) took control over the management and ownership of the Company. The reconstituted Board reflects the joint control of the Companys management by JSW and AION as both the joint venture partners have appointed their nominees and Independent Directors.
Post-Acquisition, a new Board was constituted on 31st August, 2018 (Reconstituted Board or Board) and a new management was put in place. In accordance with the provisions of the IBC and the NCLT order, the approved Resolution Plan is binding on the Company and its employees, members, creditors, guarantors and other stakeholders involved.
Members may kindly note that, for the financial year under review, the Directors of the Reconstituted Board (Directors) were in office from 31st August, 2018 to which this report primarily pertains. During the CIRP which commenced from 18th July, 2017 to 24th July, 2018, the RP was entrusted with the management of the affairs of the Company.
Prior to the Insolvency Commencement Date, the erstwhile Board of Directors had the oversight on the management of the affairs of the Company. The Reconstituted Board is submitting this report in compliance with the provisions of the Companies Act, 2013, the rules and regulations framed thereunder (Act) and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015 (Listing Regulations).
Steering Committee of lenders, pursuant to approval of Resolution Plan by Honble NCLT, Mumbai Bench, appointed an Interim Board on 30th July, 2018 to implement the approved resolution plan. The Interim Board consisted of Mr. Sumit Binani, non-executive Director, Mr. Jyotin Mehta and Mrs. Anuradha Ambar Bajpai as Independent Directors of the Company. Mr. Sumit Binani ceased to be Director of the Interim Board of the Company w.e.f 31st August, 2018 on conclusion of Corporate Insolvency Resolution Proceedings.
On 31st August, 2018, the Board of Directors of the Company was re-constituted and as on date the Board of Directors of the Company consists of the following Directors:
|Name of Director||Designation|
|1||Mrs Anuradha Ambar Bajpai||Non-Executive Independent Director|
|2||Mr Jyotin Mehta||Non-Executive Independent Director|
|3||Mr Kalpesh Pankaj Kikani||Non-Executive Director|
|4||Mr Nikhil Omprakash Gahrotra||Non-Executive Director|
|5||Mr Ravichandar Moorthy Dhakshana||Whole-Time Director|
|6||Mr Sanjay Kumar||Non-Executive Director|
|7||Mr Seshagiri Rao MVS||Non-Executive Director|
|8||Mrs. Sutapa Banerjee||Non-Executive Independent Director|
Salient features of the Resolution Plan approved and implemented during the financial year under review are as follows:
Pursuant to the CIRP under the Insolvency and Bankruptcy Code, 2016 initiated on 18th July 2017, the National Company Law Tribunal (NCLT) on 24th July 2018 (Order date) approved (with modifications), the Resolution Plan (the Plan) submitted by the consortium of JSW Steel Limited and AION Investments Private II Limited, which, inter alia, resulted in the following:
(a) Extinguishment of 5,07,32,841 equity shares of ? 10 each and 1,75,00,000 preferences shares of ? 100 each held by the erstwhile promoters.
(b) Reduction in the face value of the balance 36,52,33,620 equity shares (including the equity shares issued under
(c) and (d) below) held by the non- promoter equity shareholders to ? 3.30 per share and their consolidation into 12,05,27,534 equity shares of ? 10 each.
(c) Settlement of debts of financial creditors amounting to ? 10,247.86 crores, partly by issue of 20,00,56,892 equity shares of ? 10 each, partly by cash payment of ? 2.457.00 crores, and partly by the effective purchase of the remaining debt, (on deemed conversion into Optionally Convertible Preference shares), for a sum of ? 199.85 crores by a Company of the consortium, Milloret Steel Limited (MSL).
(d) Settlement of corporate guarantees issued to financial creditors amounting to ? 767.05 crores, partly by issue of 1,51,41,327 equity shares of ? 10 each and payment of ? 20.07 crores.
(e) Settlement of operational creditors, (other than employees and workmen), for a sum of ? 25 crores payable by the Company within one year from the NCLT Order date and extinguishment of other current and non-current liabilities standing as on the commencement of CIRP
(f) Extinguishment of all contingent liabilities, commitment and other claims and obligations including all taxes and other government dues standing as on the effective date (i.e. 31st August, 2018).
(g) Merger of MSL into the Company, resulting in the extinguishment of the deemed Optionally Convertible Preference shares, contemporaneously with (c) above. The shareholders of MSL were issued 34,90,20,000 equity shares of ? 10 each and 52,59,80,000 Compulsorily Convertible preference shares of ? 10 each.
Fractional entitlements of equity shares of the Company resulting from such consolidation of the equity shares have been consolidated into equity shares having a face value of ? 10 each and were held by a Director of the Company as a trustee (Trustee) on behalf of the equity shareholders of the Company entitled to such fractional entitlements for the purpose of sale in the open market. The sale proceeds realized by the Trustee from such sale (less the costs incurred by the Trustee to carry out such sale) have been distributed to the original equity shareholders entitled to such fractional entitlements in the same proportion as their respective fractional entitlements.
Further, in terms of NCLT Order, every retail shareholder of the Company holding 3 (three) or less equity shares of the Company as on the date of NCLT order, i.e., 24th July, 2018, has been allotted one equity share.
4. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATES AND THE DATE OF THE REPORT
There were no material changes and commitments, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.
5. DIVIDEND AND RESERVES
In view of the losses incurred by the Company, the Board of Directors of the Company has not recommended any dividend for the financial year under review. As the Company has incurred losses during the year, no amount has been transferred to Reserves.
6. SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES
As on 31st March, 2019, the Company has six subsidiary Companies (including 2 step-down subsidiaries), four joint ventures and one associate Company. During the financial year under review, the name of Monnet Enterprise PTE Ltd., Singapore, a non-operative and non-material subsidiary of the Company was voluntarily struck off from the register of Accounting and Corporate Regulatory, Singapore with effect from 4th December 2018. There has been no change in the nature of business during the year under review. The consolidated financial statements presented by the Company include financial information of its subsidiaries, joint ventures and associate companies and prepared in compliance with applicable Ind AS. The consolidated financial statement does not include financials of Monnet Power Company Limited (MPCL), an associate of the Company, since MPCL is under CIRP as per IBC and the Company has written off its investment in MPCL during the year under review.
A gist of financial highlights/performance of these Companies is contained in Form AOC-1 and forms part of this report and annexed as Annexure-1. The separate audited/unaudited financial statements of these subsidiaries, as case may be, are available on the website of the Company, www.aionisw.in.
The annual financial statements of the subsidiary companies are open for inspection by any shareholder at the Companys Registered Office situated at Monnet Marg, Mandir Hasaud, Raipur, Chhattisgarh -492101 and the Company will make available these documents and the related detailed information upon request by any shareholder of the Company or any shareholder of its subsidiaries, joint ventures and associate companies who may be interested in obtaining the same. Also, the standalone financial statements, consolidated financial statements and financial statements of subsidiaries are available on the website of the Company www.aionjsw.in
Further, the consolidated financial statements of the Company and its subsidiaries, joint ventures and associate company for the year under review is prepared in compliance with the applicable provisions of the Companies Act, 2013, Indian Accounting Standards (Ind AS) and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended (SEBI Listing Regulations, 2015) which forms part of the Annual Report.
7. SHARE CAPITAL
Authorised Share Capital of the Company as on 1st April, 2018 was ? 3,86,00,00,000/- (Rupees three hundred eighty-six crore only), divided into 21,10,00,000 (Twenty-one crores ten lacs) equity shares of ? 10/- (Rupees ten) each and 1,75,00,000 (One crore seventy-five lacs) Preference Shares of ? 100/- (Rupees one hundred) each.
Pursuant to the implementation of the Resolution Plan sanctioned by the NCLT, authorized share capital of the Company has been increased to ? 15,50,00,00,000 (Rupees one thousand five hundred and fifty crore only) comprising of 82.50.00. 000 (Eighty two crore fifty lakh only) Equity Shares of ? 10/- (Rupees ten) each and 55,00,00,000 (Fifty five crore only) Preference Shares of ? 10/- (Rupees ten) each and 1.75.00. 000 (One crore seventy five lakh) Preference Shares of ? 100/- (Rupees hundred) each.
Further, post implementation of the Resolution Plan the paid up capital stands at 46,95,47,534 equity shares of ? 10 (Rupees ten) each and 52,59,80,000 Compulsory Convertible Preference Shares of ? 10 (Rupees ten) each.
During the financial year under review, the members of the Company at the 28th Annual General meeting held on 27th December, 2018 approved the reclassification of authorised capital into 15,50,00,00,000 (Rupees one thousand five hundred and fifty crores only) comprising 1.00. 00.00.000 (Rupees one hundred crore only) Equity Shares of ? 10/- (Rupees ten) each and 55,00,00,000 (Fifty-five crore only) Preference Shares of ? 10/- (Rupees ten).
As on 31st March 2019, post implementation of the resolution plan the authorized capital of the Company stands ? 15,50,00,00,000/- (Rupees one thousand five hundred and fifty crores only) and the paid up capital stands at ? 9,95,52,75,340/- (Rupees nine hundred and ninety-five crores fifty-two lakhs seventy five thousand three hundred and forty only) consisting of 46,95,47,534 equity shares of ? 10 (Rupees ten) each and 52,59,80,000 Compulsory Convertible Preference Shares of 10 (Rupees ten) each.
8. NON-CONVERTIBLE DEBENTURES
As on 01st April, 2018, the Company had 9200 Secured Redeemable Non-Convertible Debentures (NCDs) of ? 10,00,000/- each aggregating to ? 920.00 crores.
As on 31st March 2019, the Company does not have any outstanding NCD. Pursuant to the implementation of the Resolution Plan as approved by the Honble NCLT, debts of eligible financial creditors were also paid in the manner provided in the approved Resolution Plan. The said NCDs have been extinguished from the records of National Securities Depository Limited and Central Depository Services (India) Limited, respectively and the Company is in process of delisting the same from BSE Limited.
9. CREDIT RATING
CARE Ratings Limited (Formerly known as Credit Analysis & Research Limited) has assigned the credit rating of A- Stable for long term bank facilities (term loan & fund based-cash credit) and A- Stable/A2+ for non-fund based long/short term bank facilities bank guarantees of the Company. The agency has given a stable outlook for the facilities of the Company.
10. PUBLIC DEPOSITS
The Company has not accepted or renewed any public deposits during the period under review. It has not accepted any deposits from the public within the meaning of the provisions of Section 73 of the Companies Act, 2013 and Rules made thereunder. Therefore, it is not required to furnish information in respect of outstanding deposits under non-banking, non-financial Companies (Reserve Bank) Directions, 1966 and Companies (Accounts) Rules, 2014.
11. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
During the year, there are no significant or material orders passed by the Regulators/ Courts/ Tribunals that could impact the going concern status of the Company and its future operations except on 24th July, 2018, the NCLT vide its order approved the Resolution Plan.
Further, members attention is drawn to the statement on contingent liabilities, commitments in the notes forming part of the financial statements.
The nominated authority, Ministry of Coal Head, vide their letter dated 30th December 2017 (The Letter) issued for termination of coal mines development and production agreement and vesting order in respect of Gare Palma IV/7 coal mine, and the termination is effective on completion of notice period of 15 business days as stated in the letter i.e. on 19th January, 2018. The Honble National Company Law Appellate Tribunal (NCLAT) vide its order dated 08th February, 2018 has restrained the Nominated Authority Ministry of Coal, Government of India from allotting the mine in question, in favour of any person, without the permission of the Honble NCLAT. The appeal before Honble NCLAT against termination of vesting Order and CMDPA was dismissed vide Order dated 30th November, 2018 and keeping in view the commercial feasibility of the mine, it has been decided to be handed over to the Government.
12. INTERNAL CONTROLS, AUDIT AND INTERNAL FINANCIAL CONTROLS
Internal control systems are integral to the Companys corporate governance. The internal control systems and procedures are designed to assist in the identification and management of risks, the procedure-led verification of all compliances as well as an enhanced control consciousness.
The reconstituted Board / management are of the opi nion that based on the knowledge/ information gained by them about affairs of the Company in a limited period of time from records of the Company, the Company has effective internal financial control systems and policies and such controls are operating effectively. The reconstituted management is taking steps for further strengthening of internal financial controls.
The internal control systems include documented policies, checks and balances, guidelines and procedures, that are supplemented by robust internal audit processes and monitored continuously through periodical reviews by management to provide reasonable assurance that all assets are safeguarded; and all transactions entered into by Company are authorized, recorded and reported properly.
Audit plan and execution
The Internal Audit function prepares audit plan which is approved by the Audit Committee. The frequency of the audit is decided by risk ratings of areas/functions. The audit plan is carried out by the internal team and reviewed periodically to include areas that have assumed significant importance in line with the emerging industry trend and the aggressive growth of the Company. In addition, the Audit Committee also places reliance on internal customer feedback and other external events for inclusion into the audit plan. Significant observations, if any, of internal auditor are reported to the Audit Committee every quarter.
Internal financial controls
Post-acquisition, the Reconstituted Board/Management has reviewed the internal controls framework of the Company with an objective to have a robust internal control framework commensurate with the size, scale and nature of business of the Company. The reconstituted management has initiated steps to implement the robust internal control framework. This framework includes entity-level policies, processes and Standard Operating Procedures (SOP).
13. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)
Pursuant to approval of Resolution Plan of the Company vide order dated 24th July, 2018 of the Honble NCLT, Mumbai, erstwhile Directors of the Company Mr. Sandeep Kumar Jajodia, Mr. Jagdamba Prasad Lath and Mr. Kunal Sharma were deemed to have resigned.
During the financial year under review, Mr. Sumit Binani who was appointed as the Director of Interim Board resigned as the Resolution Professional on 29th July, 2019 and as the Director of Interim Board on 31st August, 2018.
On 31st August 2018, the composition of Board of Directors of the Company was re-constituted and as on date of this report, as stated also in item No. 3 of this report, the Board of Directors of the Company consists 1 Whole-time Director (Executive), 3 Independent Directors and 4 Non- Executive Directors of the Company, the details of which are given in the Corporate Governance Report which forms part of this Annual Report
At the 28th Annual General meeting held on 27th December 2018 members of the Company have considered and approved the respective appointments of said Directors.
Mr. Ravichandar Moorthy Dhakshana, Whole-time Director and Mr. Seshagiri Rao MVS, Director, whose office of directorship are liable to retire by rotation at the ensuing 29th Annual General Meeting and being eligible and having offered themselves for reappointment. The Board of Directors has proposed to the shareholders for their respective reappointment as Directors liable to retire by rotation, pursuant to section 152 of the Companies Act, 2013.
Key Managerial Personnel
During the year under review, the following changes took place in Key Managerial Personnel of the Company;
a) Post implementation of the Resolution Plan, Mr. Sandeep Kumar Jajodia ceased as the Chairman & Managing Director and Mr. Ravichandar Moorthy Dhakshana was appointed as the Whole Time Director of the Company with effect from 31st August 2018
b) Relinquishment ofposition by Mr. Sanjay Garodia, as the Chief Financial Officer of the Company and Mr. Hardeep Singh, as the Company Secretary and Compliance Officer of the Company, w.e.f. 21st January, 2019.
c) Appointment of Mr. J Nagarajan as Chief Financial Officer of the Company with effect from 21st January 2019.
d) Appointment of Mr. Ajay Kadhao as the Company Secretary and Compliance Officer of the Company with effect from 21st January 2019.
14. DIRECTORS ‘RESPONSIBILITY STATEMENT
Members may kindly note that, the Directors of the Reconstituted Board were not in office for the part of the period to which this report primarily pertains. During the CIRP Process (i.e. between 18th July, 2017 to 24th July, 2018), RP and prior to the Insolvency Commencement date, the erstwhile Board of Directors were entrusted with and responsible for the management of the affairs of the Company.
As pointed out above, the reconstituted Board of Directors have been in office only since 31st August, 2018. The reconstituted Board is submitting this report in compliance with the Act and Listing Regulations and the Directors, as on date, are not to be considered responsible for the fiduciary duties discharged with respect to the oversight on financial and operational health of the Company and performance of the management for the period prior to the acquisition.
Accordingly, as required under Section 134 (5) of the Act, the reconstituted Board of Directors, based on the knowledge/ information gained by them about the actions of the erstwhile Directors of the Company (i.e the Directors of the Company prior to the Acquisition) and the affairs of the Company in a limited period of time from the records of the Company, state that:
(a) in the preparation of the annual accounts for the financial year ended 31st March, 2019, the applicable accounting standards have been followed and a proper explanation has been provided in relation to any material departures;
(b) such accounting policies have been applied consistently and made judgments and estimates that are reasonable and prudent so as to give a reasonably true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March, 2019 and of the profit or loss of the Company for that period;
(c) the Reconstituted Board had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
(d) the annual accounts for the financial year ended 31st March, 2019 have been prepared on a going concern basis.
(e) the Reconstituted Board had laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and are operating effectively; and
(f) the Reconstituted Board had devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.
15. ANNUAL EVALUATION OF PERORMANCE OF BOARD, ITS COMMITTEES AND DIRECTORS;
Pursuant to applicable provisions of the Companies Act, 2013 and the SEBI Listing Regulations 2015, the Board has formulated a framework containing, inter-alia, the criteria for performance evaluation of the entire Board of the Company, its Committees and individual Directors, including Independent Directors (the Performance Evaluation Policy). During the year under review, the said policy was amended by the Board on the recommendation of the Nomination and Remuneration Committee in compliance with the SEBI Listing Regulations 2015.
For the financial year under review, the performance evaluation of all the Directors was carried out by the Nomination and Remuneration Committee. The performance evaluation of the Chairman and the Non-Independent Directors was carried out by the Independent Directors. The Board carried out an annual performance evaluation of its own performance, the performance of the Independent Directors individually as well as the evaluation of the working of the Committees of the Board.
Details of the same are given in the report on Corporate Governance annexed hereto.
16. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS
After commencement of CIRP, Mr. Sumit Binani was appointed as Interim Resolution Professional (IRP), who was later on confirmed as Resolution Professional (RP) by the Committee of Creditors. As per Section 17 of the Insolvency and Bankruptcy Code 2016, upon appointment of the IRP, the powers of the Board of Directors stands suspended and, thereafter, such powers are exercised by the IRP/ RP appointed for the Company.
During the financial year, after the Reconstitution of Board of Directors on 31st August, 2018, three (3) Board Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between these Meetings was within the period prescribed under the Companies Act, 2013 and Regulations 17 of the Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulation, 2015.
17. COMMITTEES OF THE BOARD
Your Company has duly constituted the Committees as required under the Companies Act, 2013 read with applicable Rules made thereunder and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
During the year under review, pursuant to the Resolution Plan approved by the Honble NCLT, the Composition of Board of Directors of the Company and their Committees were re-constituted.
At present following are the Committees of the Board;
a. Audit Committee
b. Nomination and Remuneration Committee
c. Stakeholders Relationship Committee
d. Corporate Social Responsibility Committee
e. Finance Committee
f. International Trade Practices and Corporate Governance Committee
The details of composition of each Committee, terms of the reference and number of meetings held during the year under review are given in the Corporate Governance Report, annexed to this report.
18. STATEMENT ON DECLARATION BY INDEPENDENT DIRECTORS
The Company has received the necessary declaration from each Independent Directors who are part of reconstituted Board confirming that he/she meets the criteria of Independence as laid out in Section 149(6) of the Companies Act, 2013 read with the Schedules, rules made thereunder and Regulation 25 of SEBI Listing Regulations, 2015.
19. NOMINATION AND REMUNERATION POLICY
During the financial year under review, pursuant to the SEBI Listing Regulations 2015 read with SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, the Board of Directors, on the recommendation of the Nomination and Remuneration Committee amended the Nomination and Remuneration policy of the Company.
The details of this policy are explained in the Corporate Governance Report which forms part of this Annual Report.
The Nomiation and Remuneration Policy, as approved by the Board of Directors, is also hosted on the website of the Company viz:- https://www.aionisw.in/investors/policies .
20. VIGIL MECHANISM CUM WHISTLE BLOWER POLICY
The Company has a vigil mechanism named as Vigil Mechanism Cum Whistle Blower Policy, to deal with instances of fraud and mismanagement, if any. Details of the same are given in the Corporate Governance Report. The policy is available on the website of the Company viz: - https:// www.aionisw.in/investors/policies .
21. RELATED PARTY TRANSACTIONS
All Related Party Transactions (RPT) that were entered into by the Company during the financial year under review were on an arms length basis and in the ordinary course of business and hence disclosure in Form AOC-2 in terms of Section 134 of the Companies Act, 2013 is not required and does not form part of this report.
The policy on Policy on Materiality of Related Party Transactions and also on dealing with Related Party Transactions (? the Policy), as approved and amended by the Board of Directors has been uploaded on the website of the Company viz : https://www.aionisw.in/investors/policies. The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and Related Parties. This Policy specifically deals with the review and approval of RPT, keeping in mind the potential or actual conflicts of interest that may arise because of entering into these transactions. All RPT are placed before the Audit Committee for review and approval.
Prior omnibus approvals are obtained for related party transactions that are of repetitive nature and / or entered in the ordinary course of business and are at arms length, in compliance with applicable provisions.
22. CORPORATE SOCIAL RESPONSIBILITY
In compliance with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, the Board of the Company has formed Corporate Social Responsibility (CSR) Committee. The policy on CSR as approved by the Board of Directors is also hosted on the website of the Company i.e. https://www.aionisw.in/investors/policies.
Pursuant to Section 135 of the Companies Act, 2013 read with CSR policy of the Company, it is required to spend two percent of the average net profit of the Company for three immediately preceding financial year. As the average net profit of the Company during previous three financial years is negative, the Company is not required to spend any amount for the CSR purpose during the year under review.
Annual Report on mandatory CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, have been annexed as Annexure-2 and forms integral part of this Report.
a) Statutory Auditor
Members of the Company at the Annual General Meeting (AGM) held on 28th September, 2017, approved the appointment of M/s. APAS & Co., Chartered Accountants (FRN No. 000340C) as the statutory auditor from the conclusion of the 27th AGM till the conclusion of the 32nd AGM.
The Auditors have audited standalone and consolidated financial statements of the Company for the financial year ended 31st March 2019 and no fraud has been reported by the Auditors under Section 143(12) of the Companies Act, 2013 requiring disclosure in the Boards Report. The Report does not contain any qualification, reservation or adverse remark or disclaimer requiring explanation or comments from the Board under Section 134(3) of the Companies Act, 2013.
Existing statutory auditors APAS & Co. have tendered their resignation to the Company, on account of their other assignments due to which they will not be able to devote sufficient time for audit of the Company. They have informed the Company that their resignation will be effective from the conclusion of the ensuing 29th AGM of the Company.
The existing statutory auditor also noted that pursuant to the provisions of the Resolution Plan submitted by the Consortium, as approved by the Honble NCLT, vide its order dated 24th July 2018, the Resolution Applicants have the right to seek appointment of the statutory auditors of the Company and the existing statutory auditors has conveyed their no objection to the same. Accordingly, M/s APAS & Co., will continue as the statutory auditors of the Company till conclusion of the ensuing 29th AGM.
The Board of Directors at its meeting held on 17th May 2019 has taken on record the said resignation letter tendered by M/s APAS & Co as the statutory auditors.
In view of resignation of the statutory auditors, the Board of Directors at the said meeting held on 17th May 2019, on recommendation of the Audit Committee, subiect to approval of the shareholders, approved and recommended to the shareholders, the proposal of appointment of M/s. Deloitte Haskins & Sells LLP, Chartered Accountant, Mumbai, (Registration Number 117366W/W-100018) as the statutory auditors, for a period of 5 years with effect from the conclusion of the ensuing 29th AGM till the conclusion of 34th AGM of the Company.
In terms of provisions of section 139 of the Companies Act, 2013, M/s. Deloitte Haskins & Sells LLP Chartered Accountant, Mumbai, have furnished a certificate that their appointment, if made, will be within the limits prescribed under the said section of the Act. As required under Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, they have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.
b) Secretarial Auditor
Post-implementation of Resolution Plan, pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board, at its meeting held on 15th October, 2018 has appointed M/s S. Srinivasan & Co., a Company Secretaries firm to conduct a secretarial audit of the Company for the financial year 2018-19. The Report of the Secretarial Audit carried out for the financial year 2018-19 is annexed herewith as Annexure -3.
The report does not contain any qualification, reservation or adverse remark or disclaimer requiring explanation or comments from the Board under Section 134(3) of the Companies Act, 2013. During the period under review, the Company has complied with the applicable Secretarial Standards notified by the Institute of Company Secretaries of India.
The Board, at its meeting held on 17th May 2019 has re-appointed M/s S. Srinivasan & Co., a Company Secretaries Firm of Practicing Company Secretaries, as Secretarial Auditor, for conducting Secretarial Audit of the Company for financial year 2019-20.
c) Cost Auditor
Pursuant to Section 148(2) of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, your Company is required to get its cost accounting records audited by a Cost Auditor.
Accordingly, the Board, at its meeting held on 17th May, 2019, on the recommendation of the Audit Committee, has appointed M/s. Shome & Banerjee, Cost Accountants (Firm Reg. No. 00001) to conduct the audit of the cost accounting records of the Company for Financial Year 2019-20 on a remuneration of ? 3,00,000/- plus taxes as applicable and reimbursement of actual travel and out-of-pocket expenses. The remuneration is subject to the ratification of the Members in terms of Section 148 read with Rule 14 of the Companies (Audit and Auditors) Rules, 2014 and is accordingly placed for your ratification.
The due date for filing the Cost Audit Report of the Company for the Financial Year ended 31st March 2018 was 31st December 2018 and the Cost Audit Report was filed in XBRL mode on 14th November, 2018.
24. COMPLIANCE WITH THE PROVISIONS OF SECRETARIAL STANDARDS
The Company has in place proper systems to ensure compliance with the provisions of the applicable secretarial standards issued by the Institute of Company Secretaries of India and such systems are adequate and operating effectively. During the financial under review the Company was in compliance with Secretarial Standards i.e. SS- 1 and SS- 2 relating to Meetings of Board of Directors and General Meetings respectively.
25. RISK MANAGEMENT
The reconstituted Board/ management has reviewed the risk management framework of the Company and has adopted revised Risk Management framework of the Company.
The Company recognizes that the emerging & identified risks need to be managed and mitigated to -
• protect its shareholders and other stakeholders interest,
• achieve its business objective and
• enable sustainable growth.
The Board oversees the Enterprise Risk Management framework to ensure -
1) execution of decided strategies with focus on action;
2) monitoring risks arising out of unintended consequences of decisions or actions related to performance, operations, compliance, incidents, processes and systems, transactions and the same are managed appropriately.
26. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
In accordance with Section 134(3)(m) of the Companies Act, 2013, read with the Rule 8(3) of the Companies (Accounts) Rules, 2014, as amended, the information on conservation of energy, technology absorption and foreign exchange earnings and outgo are annexed as Annexure - 4 hereto and forms an integral part of this Report.
27. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
Disclosures pertaining to remuneration and other details of the employees as required under Section 197(12) of the Companies Act 2013, read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, are annexed to this report as Annexure -5 and 6.
28. EXTRACT OF ANNUAL RETURN
In accordance with the provisions of the Companies Act, 2013 and amendment thereto, the extract of the annual return in Form No. MGT - 9 is annexed as Annexure - 7 and same is hosted on the website of the Company viz https:// www.aionisw.in/investors/mgt9 .
29. MANAGEMENT DISCUSSION & ANALYSIS REPORT
A detailed analysis of the Companys performance is discussed in the Management Discussion and Analysis Report, which forms part of this Annual Report and annexed as Annexure-8.
Certain Statements in the Management Discussion and Analysis section may be forward-looking and are stated as required by applicable laws and regulations. Many factors may affect the actual results, which would be different from what the Directors envisage in terms of the future performance and outlook. Investors are cautioned that this discussion contains forward looking statement that involve risks and uncertainties including, but not limited to, risks inherent in the Companys growth strategy, dependence on certain businesses, dependence on availability of qualified and trained manpower and other factors discussed. The discussion and analysis should be read in conjunction with the Companys financial statements and notes on accounts.
30. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186
Details of Investments, Loans and Guarantees as covered under the provisions of Section 186 of the Companies Act, 2013 are given in the note nos. 5, 6 and 34 respectively, to the financial statements.
31. CORPORATE GOVERNANCE REPORT
The Company constantly endeavours to follow the corporate governance guidelines and best practices sincerely and disclose the same transparently. The Board is conscious of its inherent to disclose timely and accurate information on the Companys operations, performance, material corporate events as well as on the leadership and governance matters relating to the Company. Your Company has complied with the requirements of Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015 regarding corporate governance.
A report on the Corporate Governance practices followed by the Company, together with a certificate from the Practicing Company Secretary regarding compliance are given as an Annexure-9 to this report.
32. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013.
The Company has laid down Anti Sexual Harassment policy on Gender Equality, Gender Protection, Prevention of Sexual Harassment and Redressal System as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, apprenticeship) are covered under this policy. No complaints pertaining to sexual harassment were received or pending to be resolved by the Company in this respect, during financial year 2018-19.
33. OTHER DISCLOSURES / REPORTING
Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions pertaining to these items during the year under review:
1. Issue of equity shares with differential rights as to dividend, voting or otherwise.
2. Issue of shares (including sweat equity shares) to employees of the Company under any scheme or ESOPs.
4. Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries.
The Directors wish to place on record their gratitude to the Authorities, Banks, Business Associates, and Shareholders for their unstinted support, assistance and co-operation. The Directors place on record their deep appreciation to employees at all levels for their hard work, dedication and commitment.
|By order of the Board|
|For Monnet Ispat and Energy Limited|
|Date: 17th May, 2019||DIN: 00033518|