panchmahal steel ltd share price Directors report


To,

The Members

Your Companys Directors are pleased to present the 50th Annual Report of the Company together with the Statement of Audited Accounts for the financial year ended 31st March, 2023.

FINANCIAL RESULTS

(Rs. in Lacs]

Particulars

Year ended 31.03.2023 Year ended 31.03.2022

Revenue from Operations

48864.10 57359.90

Operating Expenses

47310.74 49756.63

Operating Profit before Interest, Tax, Depreciation & Amortization

1553.36 7603.27

Depreciation & Amortization Expense

796.01 759.46

Finance Costs

707.92 589.79

Other Income

140.53 401.04

Profit before Tax

189.96 6655.06

Tax Expense (including Deferred Tax)

52.13 796.84

Profit for the year

137.83 5858.22

Other Comprehensive Income

12.51 (28.31)

Total Comprehensive Income for the year

150.33 5829.91

Earnings per Share (in Rupees)

0.72 30.71

REVIEW OF OPERATIONS & FUTURE OUTLOOK

The Company recorded total income of Rs.490.05 crores as compared to Rs.577.61 crores in the previous year. The Company achieved a Profit after Tax for the year of Rs.1.38 crores as against Rs.58.58 crores in the previous year.

The macro-economic volatility marked by high inflation, geopolitical turmoil, economic uncertainty, and industry cyclicality have dominated the global business environment during FY2022-23. However, the future outlook of the Company looks good. The stainless-steel market is poised for significant growth in the coming years due to several factors, including rapid industrialisation, increasing construction activities, and infrastructure development in the country. The Company is focusing on upgrading its portfolio by producing high-value added products and broadening its customer base.

DIVIDEND

The Directors do not recommend any dividend for the financial year ended March 31, 2023.

Pursuant to Regulation 43(A) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), the Company does not fall under top 1000 Listed Companies by market capitalisation as on 31st March, 2023 and hence the requirement for adopting the Dividend Distribution Policy is not applicable to the Company.

TRANSFER TO RESERVES

The Board of Directors has decided to retain the entire amount of profit for the financial year 2022-23 in the Statement of Profit and Loss.

MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION

There are no material changes and commitments affecting the financial position and business operations of the Company for the financial year ended 31st March, 2023 to the date of signing of the Directors Report.

SHARE CAPITAL

The paid-up Equity Share Capital of your Company as on March 31, 2023 stood at Rs.19.08 crores comprising of 1,90,78,329 equity shares of Rs.10/- each. The Company has not issued shares with differential voting rights/Bonus Shares nor has granted stock options/sweat equity and has not bought back any of its securities during the year under review.

FIXED DEPOSITS

The Company does not have Deposits as contemplated under Chapter V of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014. Further, the Company has not invited or accepted any such deposit during the financial year ended 31st March, 2023.

CREDIT RATING

The Rating Agency, India Ratings and Research (Ind-Ra) vide its letter dtd. 02.08.2022 has assigned the ratings of various credit facilities of the Company as stated below:

Instrument Type

Rating Type Rated Limits (million) Rating

Issuer Rating Long Term

- - IND BBB/Stable

Fund-based working capital limit

Long Term INR 900.00 IND BBB/Stable/ IND A3+

Non-fund-based working capital limit

Short Term INR 1320.00 IND A3+

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act, 2013, the Directors confirm that:

a) in preparation of the annual accounts for the year ended March 31, 2023, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2023 and of the profit of the Company for the year ended on that date;

c) they have 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) they have prepared the annual accounts on a going concern basis;

e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

CORPORATE GOVERNANCE AND MANAGEMENTS DISCUSSION AND ANALYSIS REPORT

The Company has complied with the Corporate Governance requirements under the Act and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

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 annexed thereto as integral part of this report.

Pursuant to Regulation 34 (2)(e) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), the Management Discussion and Analysis Report is presented in a separate section forming part of this Annual Report.

CORPORATE SOCIAL RESPONSIBILITY

Pursuant to the provisions of sub-section (9) of Section 135, the functions of CSR committee are duly discharged by the Board of Directors of the Company. The Board has formulated a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company. The CSR Policy may be accessed on the Companys website at http://panchmahalsteel.co.in/policies/Corporate-Social-Responsibility-Policy.pdf

The Report on CSR activities carried out by the Company under Section 135 of the Companies Act, 2013 and the Rules made thereunder is annexed hereto as "Annexure-A", which is forming a part of this report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Your Company has not directly or indirectly:

a) given any loan to any person or other body corporate other than usual advances envisaged in a contract of supply of materials if any,

b) given any guarantee or provide security in connection with a loan to any other body corporate or person; and

c) acquired by way of subscription purchase or otherwise, the securities of any other body corporate exceeding sixty percent, of its paid-up share capital, free reserve and securities premium account or one hundred percent of its free reserves and securities premium account whichever is more.

RELATED PARTY TRANSACTIONS

All Related Party Transactions, that were entered into during the Financial Year under review, were on an arms length basis, and in the ordinary course of business and are in compliance with the applicable provisions of the Act and the Listing Regulations. The related party transactions entered into by the Company are disclosed in Notes forming part of the financial statements of the Company for the year ended 31st March, 2023.

There were no materially significant related party transactions with the Companys promoters, directors, management or their relatives, which could have had a potential conflict with the interests of the Company at large or which is required to be reported in Form AOC-2 in terms of Section 134(3)(h) read with Section 188 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014, as amended.

The Company has laid down policies and process/procedures so as to ensure compliance to the subject section in the Companies Act, 2013 and the corresponding Rules. The Related Party Transaction Policy as approved by the Board is posted on the website of the Company and available at http://panchmahalsteel.co.in/policies/Related-Party- Transaction-Policy.pdf

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Appointment / Re-appointments

In accordance with the provisions of Section 152(6) of the Companies Act, 2013 and Rules made thereunder, Ms. Suchita Shah, Non-Executive Non-Independent Director of the Company retires by rotation at the ensuing Annual General Meeting and being eligible, offers herself for re- appointment. The members are requested to consider and approve her re-appointment.

The Board of Directors at their meeting held on August 14, 2023 on recommendation of Nomination and Remuneration Committee, have appointed Mr. Ashok Malhotra (DIN: 00120198) as Chairman & Managing Director of the Company for a period of 3 years with effect from April 1, 2024, subject to approval of the Shareholders. Your directors recommend to the Shareholders the appointment of Mr. Ashok Malhotra as Chairman & Managing Director of the Company at the ensuing Annual General Meeting.

Declaration by Independent Directors

The Company has received the necessary declarations/confirmations from each Independent Director under Section 149(6) and 149(7) of the Act and Regulations 16(1)(b) and 25(8) of theSEBI Listing Regulations, that they meet the criteria of independence laid down thereunder. The independent directors have also confirmed compliance with the provisions of rule 6 of Companies (Appointment and Qualification of Directors) Rules, 2014 as amended, relating to inclusion of their name in the data bank of Independent Directors.

In the opinion of the Board, there has been no change in the circumstances which may affect their status as Independent Directors of the Company and the Board is satisfied of the integrity, expertise, and experience (including proficiency in terms of Section 150(1) of the Act and applicable rules thereunder) of all Independent Directors on the Board. Performance Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Regulation 17(10) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 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. The details of Board evaluation process have been provided under the Corporate Governance Report.

Familiarization Programme for Independent Directors

All Independent Directors are familiarized with the Company, their roles, rights and responsibilities, nature of the industry and operations of your Company. The Independent Directors were regularly updated on the industry and market trends, plant processes and the operational performance of the Company through presentations.

In compliance with the requirements of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Company has put in place a familiarization program for Independent Directors. The details of familiarization programs are explained in the Corporate Governance Report.

Nomination & Remuneration Policy

The Companys policy for appointment of Directors, Key Management Personnel and Senior Management employees and their remuneration and other matters provided in Section 178(3) of the Act is available on the website of the Company at http://panchmahalsteel.co.in/policies/Remuneration-Policv-for-Directors-KMP-and-other-Emplovees.pdf. The details of Nomination & Remuneration Policy form part of the Corporate Governance Report of this Annual Report.

Number of Meetings of the Board and its committees

During the year under review, 4 (four) meetings of the Board of Directors of the Company were convened and held. The detailed information on the meeting of the Board and its various Meetings are included in the Corporate Governance Report forming part of this report. The Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.

Committees of the Board

The Board of Directors has the following Committees:

1. Audit Committee

2. Remuneration and Nomination Committee

3. Stakeholders Relationship Committee

The details of the Committees along with their composition, number of meetings held and attendance at the meetings are provided in the Corporate Governance Report.

Key Management Personnel

Pursuant to the provisions of Section 2(51) and Section 203 of the Companies Act, 2013 read with Rules framed thereunder, the following persons have been designated as Key Management Personnel of the Company:

1. Mr. Ashok Malhotra, Chairman & Managing Director

2. Mr. Nilesh Shah, Chief Financial Officer

3. Mr. Deepak Nagar, GM (Legal) & Company Secretary.

During the year under review, there has been no change in the Key Managerial Personnel.

AUDITORS AND AUDITORS REPORT Statutory Auditors

In terms of provisions of the Companies Act, 2013, at the 46th Annual General Meeting (28.09.2019) of the Company, M/s CNK & Associates LLP, Chartered Accountants (Firm Registration No. 101961W), Vadodara, were appointed as statutory auditors of the Company to hold the office from the conclusion of the 46th Annual General Meeting till the conclusion of 51st Annual General Meeting to be held in the year 2024. They have confirmed that they are not disqualified from continuing as auditors of the company.

The Notes on Financial Statements referred to in the Auditors Report are self-explanatory and do not call for any further comments. The Auditors Report does not contain any qualification, reservation, adverse remark, or disclaimer.

Internal Auditors

Your Company has re-appointed M/s Keyur Patel & Co., Chartered Accountants, Vadodara as Internal Auditors of the Company to carry out the internal audit of various operational areas of the Company for the financial year 2023-24. Cost Auditors

The Company is required to maintain cost records as specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013 and accordingly such accounts and records are made and maintained by the Company.

M/s. Kiran J. Mehta & Co., Cost Accountants, (FRN: 000025) Ahmedabad, the Cost Auditors of the Company have carried out the audit of cost records for steel Plant of the Company during the year.

The Board after considering the recommendations of its Audit Committee, appointed the aforesaid firm as cost auditors for the financial year 2023-24. As required under the Companies Act, 2013, a resolution seeking members approval for the remuneration payable to the Cost Auditor forms part of the Notice convening the Annual General Meeting for their ratification.

The Cost Audit Report for the financial year ended 31st March, 2022 was filed with the Ministry of Corporate Affairs on 31st August, 2022.

Secretarial Auditor

Your Board has appointed Mr. Niraj Trivedi, Practicing Company Secretary, Vadodara, as Secretarial Auditor of the Company for the financial year 2023-24.

The Secretarial Audit Report as issued by the Secretarial Auditor in Form No. MR-3 for the financial year 2022-23 is annexed herewith as "Annexure-B" and forms integral part of this Annual Report. The Secretarial Audit Report does not containany qualification, reservation or adverse remark. The Company has complied with applicable Secretarial Standard during the year.

Reporting of Fraud

During the year under review, the Statutory Auditors, Cost Auditors and Secretarial Auditors have not reported any instances of frauds committed in the Company by its officers or employees to the Audit Committee under Section 143(12) of the Act, details of which need to be mentioned in this Report.

ANNUAL RETURN

As required under Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on March 31, 2023 is available on the Companys website at http://panchmahalsteel.co.in/disclosures.html#0

AUDIT COMMITTEE

During the year, the Board has accepted all recommendations of Audit Committee and accordingly no disclosure is required to be made in respect of non-acceptance of the recommendation of the Audit Committee by the Board. The composition of Audit Committee and other details are given in the Corporate Governance Report.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has a vigil mechanism named Whistle Blower Policy to deal with instances of fraud and mismanagement, if any. The details of the Whistle Blower Policy are explained in the Corporate Governance Report and also posted on the website of the Company.

RISK MANAGEMENT POLICY

The Company has a Risk Management Policy to ensure appropriate risk management within its systems and culture. The Board of Directors and the Audit Committee of the Company periodically reviews the Risk Management Policy of the Company. The provisions of Regulation 21 of SEBI (LODR) Regulations, 2015 relating to Risk Management Committee are not applicable to the Company.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope of the audit activity is broadly guided by the annual audit plan approved by the top management and audit committee. The Internal Auditors routinely test these systems and significant audit observations, if any, and follow up actions thereon are reported to the Audit Committee.

The Company has in place adequate internal financial controls with reference to financial statements. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS & OUTGO

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, is annexed herewith as "Annexure-C" to this Report.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The information required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Companies (Appointment and Remuneration of Managerial Personnel) Amendments Rules, 2016, as amended from time to time, in respect of Directors / employees of the Company is set out in "Annexure-D" to this report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant material orders passed by the Regulators /Courts which would impact the going concern status of the Company and its future operations.

SUBSIDIARY, JOINT VENTURES OR ASSOCIATE COMPANY

Honeyvick Enterprises Private Limited continues to be a holding company, holding 55.12% Equity Share Capital of the Company. The Company neither has any subsidiary/ associate/ joint venture company nor any other company has become subsidiary/ associate/ joint venture company of the Company during the year.

DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has zero tolerance for sexual harassment at workplace and has in place an Anti-Sexual Harassment Policy in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed thereunder.

During the year under review, the Company has not received any complaint on sexual harassment and hence no complaints remain pending as of March 31, 2023.

OTHER DISCLOSURES

1. There was no change in the nature of business of the Company as stipulated under sub-rule 5(ii) of Rule 8 of Companies (Accounts) Rules, 2014.

2. There is no application made or proceeding pending under the Insolvency and Bankruptcy Code, 2016 during the financial year 2022-23.

3. There was no instance of one-time settlement with any Bank or Financial Institution.

4. Regulation 34(2)(f) of SEBI LODR, 2015 with regard to Business Responsibility and Sustainability Report is not appliable to the Company.

APPRECIATION

Your Directors thank the Banks, Central and State Government Authorities, Shareholders, Customers, Suppliers and other business associates for their co-operation and support to the Company. The Directors express their sincere appreciation for the dedication and commitment of all its employees.

For and on behalf of the Board of Directors

Place : Vadodara

Ashok Malhotra

Date : 14th August, 2023

Chairman & Managing Director

DIN : 00120198