Mukand Ltd Directors Report.

1. The Directors present the 81st Annual Report along with the audited Financial Statements of the Company for the year ended March 31, 2019.

2. Financial Results:

Standalone Financial Highlights:

(Rupees in crore)

Description Financial year Financial year
2018-19 2017-18
Total Revenue 3,666.98 3,407.58
Earnings before Interest, Depreciation, Fair value Gains and Tax 155.72 74.18
Interest (net) and Depreciation 311.72 298.47
Profit / (Loss) before Fair Value Gains, Exceptional items & tax (156.00) (224.29)
Gain on Fair Valuation of Investments 23.67 263.59
Exceptional Income / (Expenses) -- (13.46)
Sub-Total 23.67 250.13
Profit/(loss) before tax (132.33) 25.84
Current Tax / Deferred Tax Credit / (charge) (net) 48.22 18.22
Profit/(Loss) after Tax (84.11) 44.06
Other Comprehensive Income (net) 3.50 30.71
Total Comprehensive Income (80.61) 74.77
Earnings per Share (in Rupees) (5.95) 3.12

3. Financial Performance and the State of Companys affairs:

The total revenue for the year was Rs. 3,666.98 crore as compared to Rs. 3,407.58 crore in the previous year. Loss before Tax for the year is higher at Rs. 132.33 crore as against profit before tax (PBT) of Rs. 25.84 crore in the previous year. PBT of previous year included net gains on fair value changes of equity instruments and exceptional items amounting to Rs. 250.13 crore as compared to Rs. 23.67 crore for the year under report. The resulting loss before such fair value gains and tax for the year would be Rs. 156.00 crore and is lower by Rs. 68.29 crore as compared to loss before fair value gains and tax of Rs. 224.29 crore for the previous year.

4. Dividend & Transfer to reserves:

The Directors have not recommended any dividend on account of the loss for the year under report. No amount has been transferred to the reserves.

5. Amalgamation of Group Companies:

On 16th July 2018, on the recommendation of the Audit Committee, the Board of Directors of the Company, has considered & approved the Scheme of Amalgamation between Adore Traders and Realtors Private Limited (Adore), a wholly owned subsidiary of Mukand Global Finance Limited (MGFL) with the parent company MGFL followed by the amalgamation of MGFL and Mukand Engineers Limited (MEL) with the Company.

This proposed Amalgamation will streamline the management structure with one listed company in the group, leading to better administration and reduction in costs for more focused operational efforts, rationalization, standardization and simplification of business.

MEL which was formerly part of the Industrial Machinery division of the Company, was formed as a separate entity 32 years ago to derive certain advantages from the then prevailing market and indirect taxation structure. The merged entity, will now be better placed to qualify for large tenders for infrastructure projects in the coming years.

The Companys Industrial Machinery Division and MEL are both in engineering business providing design, manufacture, supply and installation of equipment for a common market that includes customers in the Ferrous, Non-Ferrous, Power and infrastructure sectors. This merger between the two businesses will result in greater potential for the combined entity to secure better and higher volume of business and enable the Company to diversify into related areas.

The Appointed Date for the amalgamation is 1st April, 2019. The Company has filed an application for directions with National Company Law Tribunal (NCLT) Mumbai on receipt of the no-objection letters to the Scheme from BSE Limited and National Stock Exchange of India Limited.

The Scheme is subject to requisite approvals of respective shareholders, creditors, NCLT and other Statutory or Regulatory authorities as may be applicable.

6. Joint Ventures:

6.1 Mukand Sumi Metal Processing Limited (MSMPL) is a Joint Venture with Sumitomo Corporation (SC), Japan in the business of manufacturing and marketing cold finished bright bars and wires. During the year under review, revenue from operations was Rs. 815.56 crore and the Profit Before Tax stood at Rs. 11.24 crore.

6.2 Mukand Sumi Special Steel Limited (MSSSL), is also a Joint Venture with SC in the Business of manufacturing and marketing Alloy Steel bars and rods. During the year under review, the revenue from operations was Rs. 2,054.21 crore and the Profit Before Tax was Rs. 35.48 crore.

7. Finance

7.1 Share Capital:

The paid-up equity share capital as on March 31, 2019 was Rs. 141.41 crore. During the year under review there was no change in the Share Capital of the Company.

7.2 Material Changes & Commitments:

There have been 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 and the date of this report.

7.3 Fixed Deposits:

The Fixed Deposits accepted during the year amounted to Rs. 0.37 crore and the Company re-paid (including transfer to IEPF) an amount of Rs. 30.37 crore in accordance to the Companies (Acceptance of Deposits) Rules 2014. The matured & unclaimed deposits as at the end of the year were Rs. 0.49 crore. There has been no default in repayment of deposits or payment of interest during the year. There are no deposits which are not in compliance with the requirements of Chapter V of the Companies Act, 2013.

8. Corporate Social Responsibility (CSR):

8.1 The Company has constituted a CSR Committee of the Board of Directors pursuant to Section 135 of the Companies Act, 2013. As on March 31, 2019, the Committee comprised of Shri Niraj Bajaj, Shri Rajesh V. Shah, Shri Suketu V. Shah and Shri Dhirajlal S. Mehta During the year under review there was no change in the composition of the Committee. 1 (one ) meeting of committee was held on 29th May 2018 which was attended by all the members of the Committee. As per the relevant provisions of the Companies Act, 2013, the Company is not required to incur any expenditure in pursuance of the CSR Policy in view of the aggregate losses as calculated in accordance with Sections 135 and 198 of the Companies Act, 2013 during the three immediate preceding financial years. However, the Company has carried out the following activities voluntarily under CSR.

At Steel Plant, Ginigera:

The Company sponsored Childrens Day, Independence Day and Republic Day celebrations at the local schools and also distributed notebooks and pencils to the students. Cricket tournaments were organized amongst various High Schools in the region and 24 schools participated in the same. The Company also organized a health camp across 5 villages in the vicinity. It also contributed towards Child Marriage Prevention campaign by Koppal District Authorities. The Company also participated and encouraged local festivals.

At Steel Plant, Dighe, Thane:

The Company with active support from Janakidevi Bajaj Gram Vikas Sanstha (JBGVS) continues its effort in promoting education of the economically disadvantaged children in Shahapur Taluka of Thane district as part of its CSR programme. During the year, the Company supported more than 10,000 students studying across 44 schools in Shahapur taluka by providing them with free text books, notebooks and uniforms . The Company also conducts free math classes during non-school hours for girl students studying in classes 7, 8 and 9. The Company also has helped many of these schools in repairing their infrastructure. During the year, the Company also provided a nutritional snack, three times a week, to the children in 19 schools and hopes to increase the same to all high schools in Shahapur Taluka.

By the Mukands Joint Venture company

MSMPL engaged the services of Concern India Foundation and Mimaasa Foundation to identify and provide remedial action and counselling for children with learning defects in two TMC schools in Thane Municipality.

MSMPL also provided nutritional snacks, three times a week, to children from 5 schools studying in Shahapur Taluka.

8.2 By the Bajaj Group:

In addition to the activities carried out by the Company, the Bajaj Group is involved in a number of CSR projects through various trusts and group companies. The guiding principles of spending on these projects are: benefit generations, educate for self-reliance and growth, promote health, encourage for self-help, focused approach, targeted towards needy and sustenance of natural resources. These projects are in the areas of rural development, education, health care, economic and environmental development, social and urban development, protection of culture, employment enhancing vocation skills and livelihood enhancement particularly for women, homes/hostels for women, education for differently abled children and measures for benefit of armed forces veterans. The group also manages schools, colleges, hospitals, and a nursing college. It helps NGOs, Charitable Bodies and Trusts operating at various locations. One of the trusts also gives awards for outstanding contribution for constructive work for application of science, technology and upliftment and welfare of women and children along Gandhian lines. Rural and community development activities are also conducted in the villages.

9. Statutory disclosures:

The Statutory Disclosures in accordance with Section 134 read with Rule 8 of Companies (Accounts) Rules 2014, Section 178, Section 197 read with Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI LODR 2015).

9.1 Management Discussion and Analysis:

As required under Regulation 34(2) read with Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI LODR 2015), Management Discussion and Analysis is enclosed as a part of this report as - Annexure-1.

9.2 Corporate Governance Report:

The Company has complied with the Corporate Governance requirements under the Act and SEBI Listing Regulations.

A report on Corporate Governance together with the certificate of the statutory auditors confirming compliance with the conditions of Corporate Governance as stipulated in Regulation 34(3) read with Schedule V of SEBI LODR 2015 is enclosed as a part of this report as - Annexure-2.

9.3 Extract of Annual Return:

Extract of annual return as at March 31, 2019 in the prescribed format under the Companies Act, 2013 (MGT-9) is enclosed as part of this report as - Annexure-3 and is also available on the website of the Company and same can be accessed at https://www.mukand.com.

9.4 Number of meetings of the Board and its Committee:

During the year under review, 5 (five) Meetings of the Board of Directors of the Company were convened and held. Detailed information on the meetings of the Board and its various Committees are included in Corporate Governance Report forming part of this report.

9.5 Directors Responsibility Statement:

Pursuant to Section 134 (3)(c) of the Companies Act, 2013, the Directors, to the best of their knowledge and belief, confirm that:

i. In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;

ii. Appropriate accounting policies have been selected and applied consistently. Judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the Company as at March 31, 2019, and of the loss of the Company for the year ended March 31, 2019;

iii. 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;

iv. The Annual Accounts have been prepared on a going concern basis;

v. Internal financial controls have been laid down and followed by the Company and that such controls are adequate and are operating effectively;

vi. Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

9.6 Statement on declaration given by Independent Directors:

The Company has received necessary declarations/confirmation from each Independent Director under Section 149(6) and 149(7) of the Companies Act, 2013 and Regulation 16(1)(b) and Regulation 25(8) of the SEBI LODR Regulations 2015 that they meet the criteria of independence laid down thereunder.

9.7 Disclosure regarding Companys policies under Companies Act, 2013:

Companys policies on i) Directors appointment and remuneration, determining criteria for qualification/independence, ii) Remuneration for Directors, Key Managerial Personnel and other employees, iii) Performance evaluation of the Board, Committees and Directors, iv) Materiality of Related Party transactions, v) Risk Management, vi) Determining Material Subsidiaries and vii) Whistle Blower/Vigil Mechanism along with details of web link (in cases where it is prescribed) are given in Annexure-4.

9.8 Particulars of Loans, Guarantees and Investments:

The particulars of loans, guarantee or investments given or made by the Company under Section 186 of the Act are disclosed in Notes to the Financial Statements.

9.9 Related Parties Transactions:

There were no Related Party Transactions (RPTs) entered into by the Company during the financial year, which attracted the provisions of Section 188 of Companies Act, 2013. However, there were material RPTs, which got covered as material RPTs under Regulation 23 of SEBI LODR 2015.

During the year 2018-19, pursuant to Section 177 of the Companies Act, 2013 and Regulation 23 of SEBI LODR 2015, all RPTs were placed before Audit Committee for its prior / omnibus approval. The requisite disclosure in Form AOC-2 is furnished in Annexure-5

The policy on RPTs as approved by the Board is uploaded on the Companys website.

9.10 Conservation of Energy, technology absorption, imported technology, Foreign Exchange earnings and outgo:

Information under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is provided in Annexure-6.

9.11 Report on the subsidiaries, associates and joint venture Companies. names of Companies which have become or ceased to be its Subsidiaries, Joint Venture or Associate Companies:

A report on performance and financial position of each of the subsidiaries, associates and joint venture companies together with names of companies which have become or ceased to be subsidiaries, joint ventures or associate companies during the year under review are furnished in Annexure-7.

Further, pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with the relevant documents and separate audited financial of statements in respect of subsidiaries, are available on the Companys website, www.mukand.com .

9.12 Significant and Material orders passed by the Regulators or Courts:

During the year, no significant and material orders were passed by any of the Regulators or Courts.

9.13 Details of Directors or KMP who are appointed/re-appointed or have resigned/retired(including by rotation) during the year:

Resignation: Shri Narendra J. Shah, Non-Executive Director resigned from the Board with effect from November 14, 2018, due to personal reasons. The Board placed on record its appreciation of the valuable contribution and services rendered by him during his long association with the Company.

Retirement: The first term of Shri Dhirajlal S. Mehta and Shri N. C. Sharma Independent Directors of the Company expires on the date of the ensuing Annual General Meeting. They have expressed their intention to not seek re-appointment for second term due to their other commitment and pre-occupation and hence, the Board has not recommended their re-appointment. The Board places on record its appreciation of their valuable contribution and services rendered by Shri Dhirajlal S. Mehta and Shri N. C. Sharma during their long tenure as Independent Directors of the Company.

Directors liable to retire by rotation: Shri Suketu V Shah retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The members are requested to consider and approve his re-appointment.

Re-appointment: The first term of Shri Prakash V. Mehta, Shri Amit Yadav and Mrs. Bharti R. Gandhi will expire on 8th August 2019, 9th November 2019 and 10th February 2019 respectively.

The aforesaid Independent Directors, being eligible, the Board recommends their re-appointment for a second term of five years to the shareholders of the Company at the ensuing AGM. Members are requested to consider and approve their re-appointment.

Appointment: based on recommendation of Nomination and Remuneration Committee (NRC) Shri Sankaran Radhakrishnan (DIN: 00381139) was appointed as an Additional Director (Independent) by the Board of Directors effective from May 20, 2019 subject to approval of Members at ensuing Annual General Meeting. A resolution seeking appointment of Shri Sankaran Radhakrishnan as an Independent Director for five years is provided at item no. 14 of notice of the ensuing AGM. Members are requested to consider and approve his appointment.

Pursuant to Section 149(4) of the Companies Act, 2013 read with Regulation 17(1) of SEBI LODR Regulations 2015, the Board has one half of its directors in the category of independent directors in terms of aforesaid Regulation.

Changes in Key Managerial Personnel :

During the year, Shri S.B. Jhaveri, Chief Financial Officer retired on December 31, 2018 after rendering 62 years of continuous and meritorious service. The Board records its sincere appreciation for the exemplary contribution, support and guidance provided by him during his long tenure with the Company. Shri Umesh V. Joshi, who was Controller of Accounts and has experience of 46 years in the Company has been appointed by the Board as Chief Financial Officer with effect from February 12, 2019.

9.14 Performance evaluation of the Board:

Pursuant to the provisions of the Companies Act, 2013 and SEBI LODR 2015, the Board has carried out an annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of Board Committees viz. Audit committee, Nomination & Remuneration committee, Stakeholders Relationship committee. For further information with regard to manner in which evaluation was carried out etc. refer Performance Evaluation section of Corporate Governance Report attached to this report.

The Independent Directors of the Company met separately on 12th February 2019 to discuss the following:

i) review the performance of non-independent directors and the Board as a whole;

ii) review the performance of the Chairperson of the Company, taking into account the views of executive directors and non-executive directors;

iii) assess the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

All Independent Directors were present at the Meeting and discussed the above and expressed their satisfaction.

9.15 Internal Financial Controls with reference to financial statements:

Adequate systems for internal controls provide assurances on the efficiency of operations, security of assets, statutory compliance, appropriate authorization, reporting and recording of transactions. The scope of the audit activity is broadly guided by the annual audit plan approved by the top management and audit committee. The Internal Auditor prepares regular reports on the review of the systems and procedures and monitors the actions to be taken.

9.16 Details relating to Remuneration of Directors, Key Managerial Personnel and Employees:

The information required under Section 197 of the Companies Act, 2013 read with rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company and Directors is furnished in Annexure-8.

9.17 Safety, Health and Environment:

The Company pays utmost importance towards safety and health of its employees by implementing policies, procedures and conducting various awareness programmes among the employees. It conducts many promotional activities among its work force on safety adherence and developing the community on national and international events related to Health, Safety and Environment. During the year under report, National Safety Week and Environment Day were observed by reminding the employees through campaigns on its crucial significance in todays world. All functional Departments work in cohesion to a common goal that includes efficiency in energy and in utilizing natural resources with minimal or no damage to the environment.

9.18 Consolidated Financial Statements (CFS):

The CFS is prepared by the Company pursuant to Section 129(3) of the Companies Act, 2013 in accordance with the requirements of Ind - AS 110 - Consolidated Financial Statements read with other applicable Indian Accounting Standards. Segment-wise disclosure of revenues, results, assets and liabilities on the basis of segments are separately given in a tabular form in the Consolidated Financial Statements.

9.19 Disclosure as per Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal ) Act, 2013:

During the year under review, no case was reported to the Committee formed under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

10. Auditors :

10.1 Messrs Haribhakti & Co. LLP, Chartered Accountants, Mumbai, (Firm Registration No.103523W) have been Auditors of your Company continuously for a period of 9 years starting from the year 2010-11. Under the provisions of Companies Act, 2013 an audit firm can conduct Statutory Audit upto maximum period of 10 consecutive years. Your Board, therefore, proposes to re-appoint them as Statutory Auditors for conducting audit of financial statements of FY 2019-20. Messrs Haribhakti & Co. LLP are eligible for the said re-appointment for Financial Year 2019-20 and have furnished necessary certificate of their eligibility and consent to act as the Auditors of the Company. Accordingly, a resolution seeking re-appointment of Haribhakti & Co LLP, as Statutory Auditors is provided at item no. 3 of the notice of the ensuing AGM.

10.2 Based on recommendation of the Audit Committee, Board has reappointed CMA Sangeeta Kulkarni, Cost Accountants, as Cost Auditors of the Company for the financial year 2019-20. A resolution seeking ratification of remuneration payable to the Cost Auditors for F.Y. 2019-20 is provided at item no. 4 of the notice of the ensuing AGM.

10.3 Pursuant to the provisions of Section 204 of the Companies Act, 2013, the Board has appointed Anant Khamankar of M/s. Anant B. Khamankar & Co. (Membership No. FCS: 3198), Practising Company Secretary, to undertake the Secretarial Audit of the Company for the financial year ended March 31, 2019. Secretarial Audit report is enclosed to this report as Annexure-9.

11. Auditors Report:

The observations made in the Statutory auditors report, read together with the relevant notes thereon are self-explanatory and hence, do not call for any comments under Section 134(3)(f) of the Companies Act, 2013. Secretarial Auditors report does not contain any qualification, reservations, adverse remark or disclaimer.

12. Confirmation of Compliance of Secretarial Standards:

The Company has complied with applicable Secretarial Standards during the year under review.

13. Acknowledgement:

The Board of Directors thanks the Banks, Central and State Government Authorities, Shareholders, Customers, Suppliers, Employees and Business Associates for their continued co-operation and support to the Company.

On behalf of the Board of Directors,

Niraj Bajaj Rajesh V. Shah
Chairman & Managing Director Co-Chairman & Managing Director
DIN: 00028261 DIN: 00021752
Mumbai, May 20, 2019