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Rathi Steel & Power Ltd Directors Report

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Jul 18, 2024|03:50:00 PM

Rathi Steel & Power Ltd Share Price directors Report

Dear Shareholders,

Your Directors have pleasure in presenting the 52nd Annual Report together with the Audited Statement of Accounts of Rathi Steel & Power Limited for the year ended 31st March, 2023.

1. FINANCIAL RESULTS:

CURRENT YEAR (RS. IN LACS) PREVIOUS YEAR (RS. IN LACS)
Total Revenue 72756.98 54577.56
EBITDA (before Exceptional / Extraordinary Items) 3268.17 3120.08
Interest / Finance Charges 1210.31 1311.15
Depreciation 832.51 1346.44
Exceptional / Extraordinary Items 7521.82 4111.35
Profit Before Tax(PBT) 8747.17 (3648.86)
Tax adjusted for earlier year(s) 24.89 0.00
Profit after Tax (PAT) 8722.28 (3648.86)
Dividend NIL NIL

2. OPERATIONAL REVIEW:

During the year under review, the Company has achieved revenue from operation of Rs. 72,654.65 Lacs as against previous year of Rs. 54,577.56 Lacs. Company has achieved EBIDTA of Rs. 3,268.17 Lacs as against previous year of Rs. 3,120.08 Lacs. Company expects to do better if there is an improvement in overall industrial scenario.

3. DIVIDEND

Company is ploughing back its profit for smooth operations of the Company, so no dividend has been recommended.

4. ECONOMIC SCENARIO AND OUTLOOK GLOBAL SCENARIO

The World Steel Association (worldsteel) has released its Short Range Outlook (SRO) steel demand forecast for 2023 and 2024. Worldsteel forecasts that this year, demand will see a 2.3% rebound to reach 1,822.3 Mt. Steel demand is forecast to grow by 1.7% in 2024 to reach 1,854.0 Mt. Manufacturing is expected to lead the recovery, but high interest rates will continue to weigh on steel demand. Next year, growth is expected to accelerate in most regions, but deceleration is expected in China.

Global steel demand seen growing 1.7% in 2024 - association

Global steel demand is expected to grow by 1.7% in 2024 following a forecast 2.3% rebound in consumption this year mainly due to a recovery in manufacturing activity, an executive from the World Steel Association (WSA) said on Tuesday.

In the long run, the Association of Southeast Asian Nations (ASEAN) is expected to see a doubling in steel demand by 2035 from 80 million tonnes currently, Frank Zhong, the associations deputy director general told an industry conference.

Source: https://www.reuters.com/article/zlobal-steel-idINLlN37K03D

Global steel demand seen rising 2.3% in 2023,1.7% in 2024

India remains a bright spot in the sector as govt spending on infrastructure is strong, says World Steel Association

Demand for steel worldwide will witness a 2.3 per cent growth in 2023 and 1.7 per cent in 2024, the World Steel Association (worldsteel), a body with membership of every steel producing country, has said.

In its short range outlook released earlier this week, worldsteel said the demand will increase to 1,822 million tonnes (mt) in 2023 and 1,854 mt in 2024. The association pegged 2022 crude steel at 1,831.5 mt, down 4.3 per cent compared with 2021.

"Manufacturing is expected to lead the recovery, but high interest rates will continue to weigh on steel demand. Next year, growth is expected to accelerate in most regions, but deceleration is expected in China," worldsteel said.

INDIAN SCENARIO

Steel industry outlook: Growth prospects of the Indian steel sector in 2023

Let us first look at whats driving the demand for steel metal in India. According to predictions by the World Steel Association, the steel industry growth rate is estimated to be around 6.7% in 2023. After a slack period following the pandemic, the sector was able to revive in 2021-22 with global demand for steel rising.

The growth prospects and steel industry outlook in India is favourable. Recent changes in export taxes and import duties on steel, complemented by the rising demand for affordable housing, infrastructure development and construction projects, has led to a pan-India need for steel metal. Moreover, the governments initiative to make India self-sufficient has made room for sustainable urban development, construction of proposed logistics parks and industrial corridors - all adding to the meteoric demand for finished steel and steel as a raw material.

The iron and steel industry naturally will play a dominant role in bringing progress. In the next section, let us take a look at what are the growth prospects of the steel sector, the present outlook and future prospects of steel in India, and the multiple factors supporting and contributing to it.

Budget 2023-24: Announcements for the steel sector

Every year, all eyes are on the Budget announcement for news on monetary incentives, rebates, funds allocation and more for the development of different sectors and businesses.

In Budget 2023-34, though there were no specific funds for driving growth of the steel sector, there are several opportunities present in other industries that would directly boost the steel industry outlook.

• Railways: The governments initiative to redevelop 50+ existing railway stations and the plan to provide a capital of ?2.4 lakh crore to Railways is likely to scale the need for steel.

• Logistics: An investment of ?75,000 crore is planned for 100+ critical transportation infrastructure projects that will connect ports, coal, steel, fertiliser, and food grain sectors across the first- and last-mile delivery network. This is expected to improve connectivity and transportation services across major points, in turn leading to a rise in demand for steel.

• City development: Urban planning development projects will be undertaken to transform cities into sustainable cities. With the proposed 410.000 crore annual fund, the goal is to ramp up infrastructure development, especially in Tier II and Tier III cities. This is likely to witness a growth in steel demand, especially for steel girders in infrastructure and TMT steel bars in construction among others.

(Source: Outlook, March 2023)

Steel pricing in India

An overview of steel pricing will show how steel metal has always had its demand in India. However, in the last few months, especially following the global economic crisis caused by the pandemic, the price of steel in India has been dynamic. In February 2023, there was a 5% increase in steel prices in India.

Multiple factors, including rise of raw material prices (especially iron ore and coking coal) and rise in infrastructural and engineering projects, has impacted daily steel price. It is however predicted that steel prices will be above the pre-pandemic rates, i.e., tOO.OOO per tonne by March 2023.

5. REVIVAL/SETTLEMENT/RESTRUCTURING WITH LENDERS

In the FY 20-21 Company has entered into settlement agreement with lenders for majority of its debt. Thereafter in the FY 2122 debt level was further brought down through sale of Orissa unit. In the interest of all its stakeholders and for long term revival of the Company, efforts are being made to further bring down the debt to sustainable level. With continuous efforts during the FY 22-23,Company has entered into settlement/successfully implemented the settlement with banks .

Company is making all efforts to further bring down the debt in the interest of all stakeholders.

6. MATERIAL CHANGES AND FINANCIAL COMMITMENTS.

Apart from the information provided/disclosures made elsewhere in the Directors Report including Annexures thereof, there are no material changes and commitments affecting the financial position of the Company, which occurred between the end of the financial year of the Company i.e. 31st March, 2023 to which this financial statement relates and till date of this Report.

7. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Full particulars of the loans given, guarantees extended or securities provided and the investments made by the Company, if any, in various bodies corporate in terms of the provisions of Section 186 of the Companies Act, 2013 and the rules framed thereunder have been adequately described in the notes to Financial Statements. The same are in consonance the provisions of the aforesaid section.

8. CORPORATE SOCIAL RESPONSIBILITY

Even though the provisions of Companies Act, 2013 regarding Corporate Social Responsibility are not attracted to the company yet the Company has been, over the years, pursuing as part of its corporate philosophy, an unwritten CSR policy voluntarily which goes much beyond mere philanthropic gestures and integrates interest, welfare and aspirations of the community with those of the Company itself in an environment of partnership for inclusive development

9. RISK MANAGEMENT POLICY

Risk management policy of the Company promotes a proactive approach in reporting, evaluating and mitigating risks associated with the business. Mechanisms for identification and prioritization of risks include business risk environment scanning and focused discussions in the Risk Management Group (at Senior Management Level).

10. INTERNAL FINANCIAL CONTROLS

Internal financial control systems of the Company are commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable accounting standards and relevant statutes, safeguarding assets from unauthorised use, executing transactions with proper authorisation and ensuring compliance of corporate policies. The Company has a well- defined delegation of power with authority limits for approving revenue as well as expenditure, both capital and revenue. The Company uses an established ERP system to record day to day transactions for accounting and financial reporting.

The Companys internal audit function monitors and assesses the adequacy and effectiveness of the Internal Financial Controls. The Audit Committee deliberated with the members of the management, considered the systems as laid down and met the internal auditors and statutory auditors to ascertain, inter alia, their views on the internal financial control systems. The Audit Committee satisfied itself of the adequacy and effectiveness of the internal financial control system as laid down and kept the Board of Directors informed. Details of internal control system are given in the Management Discussion and Analysis Report, which forms part of the Report.

11. VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has adopted a Whistleblower Policy and Vigil Mechanism to provide a formal mechanism to the Directors, employees and its stakeholders to report their concerns about unethical behavior, actual or suspected fraud or violation of the Companys Code of Conduct or Ethics Policy. Protected disclosures can be made by a whistleblower through several channels. The policy provides for adequate safeguards against victimisation of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company have been denied access to the Audit Committee.

12. RELATED PARTY TRANSACTIONS

There were no contracts or arrangements entered into by the company in accordance with provisions of section 188 of the Companies Act, 2013. However, there were no material related party transactions in pursuance of regulation 23 of SEBI (LODR) regulations, 2015.

There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

The policy on Related Party Transactions as approved by the Board is uploaded on the Companys website. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company.

13. DIRECTORS AND KEY MANAGERIAL PERSONNEL Directors

Appointment/Re-appointment

There was no new appointment during the Financial year 2022-23. However, Ms. Sonika Sharma (DIN 10192265) and Ms. Surbhi Pareek (DIN 10231959) joined the Board as Non-Executive Independent Directors w.e.f. 10.07.2023.

Moreover, Mr. Abhishek Verma whose term of 5 years expires as Independent Director has been re-designated as NonExecutive Director and Chairman of the Company

Independent Directors

The Independent Directors hold office for a fixed term of five years and are not liable to retire by rotation in terms of Section 149( 13) the Act. In accordance with Section 149(7) of the Act, each Independent Director has given a written declaration to the Company confirming that he/she meets the criteria of independence as mentioned under Section 149(6) of the Act and the Listing Regulations. Details of Familiarisation programme for Independent Director is provided separately in the Corporate Governance Report.

Key Managerial Personnel (KMP)

Mr. P. N. Vershney, Managing Director, Mr Rakesh Kumar (CFO) and Mrs. Shobhita Singh, Company Secretary are the other KMP as per the definition under Section 2(51) and Section 203 of the Act.

BOARD EVALUATION

Pursuant to the provisions of the Act and the corporate governance requirements prescribed under the Listing Regulations, the Board has earned out the annual performance evaluation of its own performance, and that of its Committees and Individual Directors.

The performance of the Board and individual Directors was evaluated by the Board after seeking inputs from all the directors. The criteria for performance evaluation of the Board included aspects such as Board composition and structure, effectiveness of Board processes, contribution in the long term strategic planning, etc. The performance of the committees was evaluated by the Board after seeking inputs from the committee members. The criteria for performance evaluation of the committees included aspects such as composition of committees, effectiveness of committee meetings, etc.

The Board and the NRC reviewed the performance of the individual Directors on the basis of the criteria such as the contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the Chairman was also evaluated on the key aspects of his role.

In a separate meeting of Independent Directors, performance of non-independent directors, performance of the board as a whole and performance of the Chairman was evaluated, taking into account the views of executive directors and non-executive directors. The same was discussed in the Board Meeting that followed the meeting of the Independent Directors, at which the feedback received from the Directors on the performance of the Board, its Committees and Individual directors were also discussed.

14. DIRECTORS RESPONSIBILITY STATEMENT

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory, cost and secretarial auditors and external consultant!s). including audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Companys internal financial controls were adequate and effective during the FY 2022-23.

Accordingly, pursuant to Section 134(5) of the Act, the Board of Directors, to the best of their knowledge and ability, confirm that:

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

(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 at the end of the financial year and of the profit of the Company for that period;

(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 were operating effectively; and

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

15. MANAGEMENT DISCUSSION & ANALYSIS AND CORPORATE GOVERNANCE REPORTS

Pursuant to Regulation 34 of SEBI (LODR) Regulation, 2015, the Management Discussion and Analysis and the Corporate Governance Report are presented in a separate section forming part of the Annual Report.

16. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed pursuant to the provisions of Section 134 of the Act read with the Companies (Accounts) Rules, 2014, are provided in Annexure -1 to this Report.

16. AUDITORS

I. Statutory Auditors and their report:

M/s M. Lai & Company, Chartered Accountants, were appointed as Statutory Auditors of the Company for a period of 5 years to hold office i.e., till the conclusion of Annual General Meeting to be held in year 2027. As required by the provisions of the Companies Act, 2013 their appointment should be ratified by members each year at the AGM. Accordingly, requisite forms part of the notice convening the AGM.

Further, the report of the Statutory Auditors along with notes to Schedules is enclosed to this Report. The observations made in the Auditors Report are self-explanatory and therefore do not call for any further comments.

II. Cost Auditors and Cost Audit report:

In view of the provisions of Section 148 and all other applicable provisions of the Act read with the Companies (Audit and Auditors) Rules, 2014, R. M. Bansal & Co., Cost Accountants have been appointed as Cost Auditors to conduct the audit of cost records of your Company for the FY 2023-24. The remuneration proposed to be paid to them requires ratification of the shareholders of the Company. In view of this, your ratification for payment of remuneration to Cost Auditors is being sought at the ensuing AGM. The Company is properly maintaining the records for the purpose of Cost Audit as per the provisions of the Companies Act, 2013.

III. Secretarial Audit

In terms of Section 204 of the Act and Rules made there under, M/s. Sameer Bhatnagar & Company, Practicing Company Secretaries have been appointed as Secretanal Auditors of the Company. The report of the Secretarial Auditors is enclosed as Annexure-2 to this Report. The report is self-explanatory and do not call for any further comments.

IV. Internal Auditors

There was no change in the Internal Auditor of the Company during the Financial Year ending March 31, 2023. Internal Auditors has performed their duties and their report is reviewed by the audit committee from time to time. Company has appointed M/s Y.P. Arya and Company, Chartered Accountants (FKN 008298 N) as Internal Auditors for the Financial Year 2023-24.

17. DISCLOSURES

i. Details of Board meetings

During the year, 10 (Ten) Board meetings were held and the details of which are provided in the Corporate Governance Report.

ii. Composition of Audit Committee:

The Audit Committee comprises 3 (three) Members out of which two are Independent Directors. During the year, 4 (Four) Audit Committee meetings were held and the details of which are provided in the Corporate Governance Report.

Listing Regulations

The Securities and Exchange Board of India (SEBI) has, by its notification dated 2nd September, 2015, issued the (Listing Obligations and Disclosure Requirements) Regulations, 2015 with an aim to consolidate and streamline the provisions of the Listing Regulations for different segments of capital markets to ensure better enforceability. The Regulations became effective from 1st December, 2015 and have replaced the Listing Agreements. Accordingly, all listed entities were required to enter into the Listing Agreement within 6 (six) months from the effective date. The Company has entered into Listing Agreement with BSE Limited. Pursuant to the Listing Regulations, the following policies were approved and adopted by the Board:

(l) Policy on determination of Materiality for disclosures of events or information.

(ii) Policy for preservation of documents, to classify documents in two categories, viz. documents which need to be preserved permanently and documents which need to be preserved for not less than 8 years after completion of the relevant transactions.

(m) Archival Policy, to determine the period, for which information is required to be disclosed on the Companys website. Policy on Materiality and Archival Policy are also available on the website of the Company under ‘Investor Relations section.

Particulars of Employees

The information required pursuant to Section 197 read with Rule, 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is as follows:

The company has One Executive Director and no sitting fees have been paid to any director during the year. Details enclosed as Annexure-4 to this Report

18. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

A detailed note on ongoing litigations/court orders has been provided in the notes to account.

19. EXTRACT OF ANNUAL RETURN

Pursuant to Section 92(3) of the Act and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, extract of annual return in Form MGT 9 is enclosed as Annexure -3 to this Report.

20. GREEN INITIATIVE

The Company has implemented the "Green Initiative" to enable electronic delivery of notice/documents/annual reports to shareholders. The Annual Report for the FY 2022-23 and Notice of the 52nd Annual General Meeting are being sent to all members electronically, whose e-mail addresses are registered with the Company/Depository Participant(s).

The e-voting facility is being provided to the members to enable them to cast their votes electronically on all resolutions set forth in the notice, pursuant to Section 108 of the Companies Act, 2013 read with Rule 20 of the Companies (Management and Administration) Rules, 2014. The instructions for e-voting are provided in the notice of this 52"d AGM.

21. ACKNOWLEDGEMENTS

The Board wishes to place on record its appreciation of the significant contributions made by the employees of the Company during the year under review. The Company has achieved impressive growth through competence, hard work, solidarity, cooperation and support of employees at all levels. Your Directors thank the customers, dealers, distributors, franchisee partners, vendors and other business associates for their continued support in the Companys growth.

Your Directors also wish to thank the Government of India, the State Governments and other regulatory authorities, banks and members for their cooperation and support extended to the Company.

22. CAUTIONARY STATEMENT

The statements contained in the Boards Report and Management Discussion and Analysis contain certain statements relating to the future and therefore are forward looking within the meaning of applicable securities, laws and regulations.

Various factors such as economic conditions, changes in government regulations, tax regime, other statues, market forces and other associated and incidental factors may however lead to variation in actual results.

Sd/- For and on behalf of the Board of Directors Sd/-
New Delhi Shobhita Singh Prem Narain Varshney
05.09.2023 Company Secretary Managing Director
DIN:00012709

DECLARATION REGARDING COMPLIANCE BY BOARD MEMBERS AND SENIOR MANAGEMENT PERSONNEL WITH THE CODE OF CONDUCT

This is to confirm that the Company has adopted the Code of Conduct for its employees including the Managing Director and the Whole-time Directors. In addition, the Company has adopted the Code of Conduct for the Non-Executive Directors. Both these Codes are available on the Companys website.

I confirm that the Company has in respect of the Financial Year ended March 31st, 2023, received from the Senior Management Team of the Company and the Members of the Board, a declaration of compliance with the Code of Conduct as applicable to them.

For the purpose of this declaration, Senior Management Team means the Members of the Management one level below the Managing Director as on March 31st, 2023.

Sd/-
New Delhi Prem Narain Varshney
05-09-2023 Managing Director
DIN:00012709

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