S.A.L Steel Ltd Directors Report.
Your Directors pleased to present the 13th Annual Report of your company on the operations and performance along with the Audited Financial Statements for the year ended on 31st March 2016.
|Rs. In Lacs|
|Particulars||March 31, 2016||March 31, 2015|
|Profit before interest depreciation, extraordinary item and tax||2380.26||2674.74|
|Depreciation and Interest||2086.86||3865.76|
|Profit/(Loss) before extraordinary item and tax||293.40||(1191.02)|
|Profit/(Loss) before tax||(2876.84)||(5939.74)|
|Tax Expense/Deferred tax||Nil||1644.16|
|Net Profit/(Loss) for the year||(2876.84)||(7583.90)|
|Profit/(Loss) Brought forward from last year||(12812.85)*||(5175.09)|
|Balance Carried forward||(15689.69)||(12812.85)*|
* includes Rs. 54.13 lacs of transitional adjustment on depreciation.
STATE OF COMPANYS AFFAIRS/PERFORMANCE OVERVIEW
During the year under review Net Turnover of the Company has been decreased from Rs. 36604.09 lacs to Rs. 33819.36 lacs as compared to previous years turnover. Company has registered a net loss of Rs. 2876.84 lacs in comparison to the loss of Rs. 7583.90 lacs during previous year. Company had approached Honble BIFR for declaring it sick undertaking pursuant to provisions of Section 3 (1) (o) of SICA. Application of the company has been registered in August 2015. Matter is pending before Honble Bench of BIFR. All banks have transferred their debts to ARCs and Company is in the process of settling debts with ARCs.
Due to high accumulated loss, your Directors have not recommended dividend for the financial year 2015-16.
The company is engaged in manufacture of sponge iron, ferro alloys, MS & SS Angle and power. Company is generating power on account of waste heat recovery system resulting economic price. Company is having its power plant of 40 MW. Power generated is used for captive consumption and surplus power is sold resulting profit. There has been no change in the nature of business of the Company.
SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES
The company does not have holding or subsidiary companies during the year and no other company has become holding/subsidiary/ joint venture/associate. The Company is an Associate Company of M/s Shah Alloys Limited as it is holding more than 20% of the Equity Share Capital in the Company as a Promoter Company.
The Company has not accepted any public deposit during the year under review and no amount against the same was outstanding at the end of the year.
DETAILS OF LOANS, GUARANTEES AND INVESTMENTS U/S 186 OF THE COMPANIES ACT, 2013
During the year under review the Company has not made any inter corporate loans, investments, given any corporate guarantee to any other body corporate, subsidiary, associate or any other company.
In conformity with provision of regulation 34(2)(c) & 53(b) of SEBI (LODR), Regulations 2015, the Cash Flow Statement for the year ended 31.03.2016 is annexed hereto. The equity shares of the Company are listed on the BSE Ltd. and the National Stock Exchange of India Ltd. (NSE).
The Company has paid listing fees for the year 2016-17 to above stock exchanges.
DETAILS OF DIRECTORS OR KMPs APPOINTMENT OR RESIGNATION
During the year under review there is no change in the Composition of the Board or KMPs.
MEETINGS OF THE BOARD
The Board met five times during the financial year. Details of meetings are given in the Corporate Governance Report annexed herewith and forms part of this report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declarations from each Independent Director of the Company confirming that he/she met with the criteria of independence as laid out in sub-section (6) of Section 149 of the Companies Act, 2013 and under Regulation 16(1)(B) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
A diverse Board enables efficient functioning through differences in perspective and skill, and also fosters differentiated thought processes at the back of varied industrial and management expertise, gender, knowledge and geographical background. The Company follows diverse Board structure.
As per the provisions of the Companies Act, 2013 and SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015, the formal annual evaluation was carried out for the Boards own performance, its committee & Individual directors. The manner and detail in which evaluation was carried out is stated in the Corporate Governance Report which is annexed and forms a part of this report.
INTERNAL FINANCIAL CONTROL SYSTEM AND THEIR ADEQUACY
The details in respect of internal financial control and their adequacy are included in Management Discussion and Analysis Report, which forms part of this report.
CORPORATE GOVERNANCE REPORT
The Company is committed to observe good corporate governance practices. The report on Corporate Governance for the financial year ended March 31, 2016, as per regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of this Annual Report. The requisite Certificate from the Practicing Company Secretary of the Company confirming compliance with the conditions of Corporate Governance is annexed to this Report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
As required under Section 134 (3) (m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014, particulars relating to conservation of Energy, R & D, Technology absorption and foreign Exchange earnings/outgo are separately provided in the annexure to this report as Annexure - 1.
RISK MANAGEMENT POLICY
The Company had put in place an enterprise wide risk management framework. This holistic approach provides the assurance that, to the best of its capabilities, the Company identifies, assesses and mitigates risks that could materially impact its performance in achieving the stated objectives. The Audit committee ensures that the Company is taking appropriate measures to achieve prudent balance between risk and reward in both ongoing and new business activities. The Committee reviews strategic decisions of the Company and on regular basis, reviews the Companys portfolio of risks and considers it against the Companys Risk Appetite. The Committee also recommends changes to the Risk Management Technique and/or associated frameworks, processes and practices of the Company.
VIGIL MECHANISM POLICY
The Company had implemented a vigil mechanism, whereby employees, directors and other stakeholders can report matters such as generic grievances, corruption, misconduct, fraud, misappropriation of assets and non-compliance of code of conduct to the Company. The policy safeguards the whistle blowers to report concerns or grievances and also provides a direct access to the Chairman of the Audit Committee. During the year under review none of the personnel has been denied access to the Chairman of Audit Committee.
CORPORATE SOCIAL RESPONSIBILITY
Company is loss making unit and hence provisions related to CSR is presently not applicable.
DIRECTORS RESPONSIBILITY STATEMENT
In Compliance with Section 134(5) of the Companies Act, 2013, the Board of Directors to the best of their knowledge and hereby confirm the following:
a) In the preparation of the annual accounts for the financial year ended 31st March 2016, as far as possible and to the extent, if any, accounting standards mentioned by the auditors in their report as not complied with, all other applicable accounting standards have been followed along with proper explanation relating to material departure;
b) The Directors had 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 profit and loss account of the Company for that period;
c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) The Directors had prepared the annual accounts on a going concern basis; and
e) The directors in the case of a listed company had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.
f) The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION
The policy of the Company on Directors appointment and remuneration, including criteria for determining qualifications, independence and other matters as provided under subsection (3) of Section 178 of the Companies Act, 2013 is available on the Companys website at www.salsteel.co.in
DISCLOSURE UNDER SECTION 22 OF THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL), ACT, 2013
There were no complaints pending for the redressal at the beginning of the year and no complaints received during the financial year. PARTICULARS OF THE EMPLOYEES
Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act,2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed to this Report as Annexure- 2. Particulars of employees remuneration, as required under section 197(12) of the Companies Act, 2013, read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are not attached with this report since there was no employee who was in receipt of remuneration in excess of aggregate of Rs. 60,00,000 during the year if employed throughout the financial year or Rs. 5 lacs per month in the aggregate if employed for part of the year.
DETAILS OF RELATED PARTIES TRANSACTIONS PURUSANT TO SECTION 188(1) OF THE COMPANIES ACT, 2013
During the financial year, all transactions entered into with the Related Parties as defined under Companies Act, 2013, were in the ordinary course of business and on an arms length basis and as such did not attract provisions of Section 188 (1) of Companies Act, 2013. The Company has formulated policy on related party transactions. Particular of related party transactions in prescribed Form AOC- 2 is attached at Annexure - 3. Approvals from the Audit Committee are obtained even for transactions which are in ordinary course of business and repetitive in nature. Further, on quarterly basis, disclosures are made to the Audit Committee and to the Board. Details of related party transactions are given in the notes to financial statements.
Members at its 12th Annual General Meeting held on September 24, 2015 approved the appointment of M/s. Talati & Talati, Chartered Accountants, as statutory auditors for the period as per provisions of the Act, subject to ratification in every Annual General Meeting. Company has received letter of consent and confirmation under section 141(1) the Companies Act 2013 for their appointment hence, the Board has now proposed to ratify the appointment of Statutory Auditors from conclusion of 13th Annual General Meeting to next Annual General Meeting to be held in 2017. Necessary Resolution for their appointment as the Statutory Auditors and fixing their remuneration is proposed to be passed at the Annual General Meeting.
Pursuant to the provisions of Section 148 of the Companies Act, 2013 and the Rules made there under M/s. Ashish Bhavsar & Associates, Cost Accountants were appointed for auditing cost accounting records of the Company for the year ending 31st March, 2016.
The Company has appointed an Independent firm of Chartered Accountants to act as an Internal Auditor as per suggestion of auditors and recommendation of the Audit Committee in order to strengthen the internal control system for the Company.
Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with rules made thereunder, the Board of Directors has appointed M/s Kamlesh Shah & Co., Practicing Company Secretaries, as Secretarial Auditor to conduct Secretarial Audit of the Company for the Financial Year 2015-16. The report submitted by the Secretarial Auditor in Form MR-3 is attached to this report as Annexure - 4. The remark of secretarial auditor is self explanatory in nature.
BOARDS RESPONSE ON THE REMARKS MADE BY STATUTORY AUDITORS
The Directors submit their explanations to then various observations made by the Auditors in their report for the year 2015-16. Para nos. of Auditors Report and reply are as under:
Basis for Qualified Opinion - Para 1
Company has paid the capital advances in earlier years for total amounting Rs. 9,41,22,080 which are currently shown under long term loans and advances to the suppliers for the supply of customized equipments based on our specific design and requirements. The machines are manufactured and ready for dispatch but Company does not have further funds to pay balance amount to lift the machines. However, the Management is trying to recover such advances from the suppliers fully subject to provisions made in the books of accounts of Rs. 1,69,32,523. At present amount of loss is not quantifiable.
Annexure A to the Independent Auditors Report - Para vii a
Payments of Statutory dues were marginally delayed on account of slow recovery/collection. However, the same has been paid.
Annexure A to the Independent Auditors Report - Para viii
In view of the market conditions of steel sector at the relevant time, Company approached to the Consortium of the Banks for restructuring of the debts through CDR mechanism. The lenders appointed SBI Capital Market Limited to prepare a financial package and GITCO to carry out the Techno Economic Viability (TEV) Report. Based on the viability of the plant certified by SBI Caps and GITCO, SBI approached to the CDR (EG) and the case was admitted by the CDR and directed the lenders to submit the final report within 90 days for the sanction of the package. In between, SBI withdrew the support from the CDR by submitting letter of withdrawal without assigning any reason. As a result Company suffered badly and later not able to make the payments as per the terms of sanction. As a result financial health of the Company got further deteriorated and net worth became negative. Thus, Company approached to Honble BIFR for declaring company as sick undertaking pursuant to the provisions of Section 3 (1) (o) of the SICA. The application of the Company has been registered vide letter dated 24.08.2015.
All the banks assigned debts to Assets Reconstruction Company (ARC). Company has made proposal for settlement with ARC. Company is actively negotiating with them for settlement of debts and expecting a settlement. Since matter is pending before Honble BIFR and settlement proposals are under considerations.
1. No material changes have taken place after the closure of the financial year up to the date of this report which may have substantial effect on the business and financial of the Company.
2. No significant and material orders have been passed by any of the regulators or courts or tribunals impacting the going concern status and companies operations in future.
EXTRACT OF ANNUAL RETURN
An extract of the Annual Return in Form MGT-9 in compliance with Section 92 of the Companies Act 2013 read with applicable rules made thereunder is annexed to this report at Annexure - 5.
Your Directors place on record their sincere appreciation for the valuable support and co-operation as received from government authorities, Financial Institutions, Banks and ARCs during the year. Directors are also thankful for the support extended by Customers, Suppliers and contribution made by the employees at all level. Directors would also like to acknowledge continued patronage extended by Companys shareholders in its entire endeavor.
|For and on behalf of the Board|
|Rajendra V. Shah|
|Date : 30th May 2016||Chairman|
|Place : Santej||(DIN: 00020904)|
ANNEXURE - 1 TO THE DIRECTORS REPORT
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
(Statement pursuant to Section 134 (3) (m) of the Companies Act, 2013, read with the Rule 8(3) of Companies (ACCOUNTS) Rules, 2014 for the year ended March 31, 2016.)
A. CONSERVATION OF ENERGY
(a) Energy conservation measures taken:-
Your company gives priority to Energy conservation. It regularly reviews measures to be taken for Energy Conservation/Consumption and its effective utilization.
(b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy:-
Your Company is highly power intensive industry and power is the basic requirements of manufacturing process. In order to reduce the cost per unit for power consumption, the Company has installed 40 MW Captive Power Plant.
(c) Impact of measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods:
The company is operating 40 MW Captive Power Plant in parallel with GETCO Grid and with the consumption of own power, Company saves substantial amount from the same.
(d) Total energy consumption and energy consumption per unit of production:
(I) POWER & FUEL CONSUMPTION
|Total Amount (Rs.)||37341897||44128702|
|(b) Own Generation|
|(i) Through Diesel Generator Unit (Kwh)|
|Unit Per Ltr of Diesel Oil||Nil||Nil|
|(ii) Through Steam Turbine/Generator Unit (Kwh)||88907||76603|
|Unit Per Kg of Lignite||0||0|
|Cost Lignite/Unit (Rs.)||272||0|
|Cost Coal/Unit (Rs.)||2529||2938|
|Cost Coal & Lignite/Unit (Rs.)||2797||2938|
|2 COAL (Including Coal Fines)|
|Total Cost (Rs.)||224,537,868||225,032,910|
|Average Rate (Rs.)||2,616||2,768|
|3 FURNACE OIL|
|(used in the generation of power)|
|Quantity (K Ltr)||Nil||Nil|
|Total Cost (Rs.)||Nil||Nil|
|Average Rate (Rs.)||Nil||Nil|
|4 OTHERS - LIGNITE|
|(used in the generation of steam)|
|Quantity (K Tonns)||9210||Nil|
|Total Cost (Rs.)||24,174,834||Nil|
|Average Rate (Rs.)||2625||Nil|
(II) CONSUMTION PER M.T. OF PRODUCTION
|Particulars of Product||2015-16||2014-15|
|Electricity (in Unit)||Nil||Nil|
|Coal (Specify quantity)||Nil||Nil|
B. TECHNOLOGY ABSORPTION
|(I) Research and Development (R & D)|
|1. Specific areas in which R&D carried out by the company.||NIL||NIL|
|2. Benefits derived as a result of the above R&D||NIL||NIL|
|3. Future plan of action:||NIL||NIL|
|d) Total R&D expenditure as a percentage of total turnover|
|(II) Technology absorption, adaptation:|
|Company has not carried out research, development & innovation activities.|
|1. Efforts, in brief, made towards technology absorption, adaptation and innovation.||NIL||NIL|
|2. Benefits derived as a result of the above efforts, e.g. product improvement, NIL cost reduction, product development, import substitution etc.||NIL|
|3. In case of imported technology||NIL||NIL|
|(imported during the last 5 years reckoned from the beginning of the financial year), following information may be furnished:|
|a) Technology imported|
|b) Year of import|
|c) Has technology has been fully absorbed|
|d) If not fully absorbed, areas where this has not taken place, reasons therefore and future plans of action.|
C. FOREIGN EXCHANGE EARNINGS AND OUTGO
|(Rs. in lakhs)|
|1) EARNINGS & OUTGO|
|a) Foreign Exchange earnings||19.44||Nil|
|b) Foreign Exchange outgo||4260.98||1496.41|
2) TOTAL FOREIGN EXCHANGE USED AND EARNED:
As per notes on account.
|For and on behalf of the Board|
|Rajendra V. Shah|
|Date : 30th May 2016||Chairman|
|Place : Santej||(DIN: 00020904)|