sathavahana ispat ltd share price Directors report

To

The Members,

SATHAVAHANA ISPAT LIMITED,

The Resolution Professional presents to the Members the 33^nd Annual Report of the Company for the year ended 31^st March, 2022, which includes the Directors? Report (“Annual Report”).

FINANCIAL RESULTS:

Financial performance of the Company for the financial year 2021-22:

(Rupees in Lakhs)

Sl.No Particulars	Year Ended	Year ended
	31.03.2022	31.03.2021
1 Gross revenue from operations	2819.41	2676.09
2 Other income	371.17	1063.89
3 Operating profit/ (loss) Before finance costs and depreciation	709.96	(246.67)
4 Finance costs	8928.09	28123.17
5 Depreciation and amortization	4048.97	4230.53
6 Profit / (loss) before tax	(12267.10)	(32600.37)
7 Exceptional Item	0	0
8 Tax expense	0	0
9 Net Profit / (loss) after tax	(12267.10)	(32600.36)
10 Earnings /(loss)per Equity Share-Basic	(24.10)	(64.05)
11 Earnings/(loss)per Equity Share-Diluted	(24.10)	(64.05)

The performance during the year was impacted adversely due to factors beyond the control of the Company. The performance suffered due to working capital constraints and the consequent financial stress which resulted in underutilization of capacities.

The gross revenue of Rs. 2819.41 Lacs as compared to previous years revenue of Rs. 2676.09 Lacs. The year ended with loss of Rs. 12267.10 Lacs as against loss of Rs. 32600.36 Lacs in the previous year. Accordingly, the loss per share accounted for at Rs. 24.10 as compared to loss per share of Rs. 64.05 in the previous year.

INITIATION OF CORPORATE INSOLVENCY RESOLUTION PROCESS (CIRP)

National Company Law Tribunal (NCLT) has initiated Corporate Insolvency Resolution Process (CIRP) in respect of Sathavahana Ispat Limited (“the Company”) under the provisions of the Insolvency and Bankruptcy Code, 2016 (“the Code”) with effect from 28^th July, 2021.

In this connection, Mr. Golla RamaKantha Rao (IP Registration No. IBBI/IPA-003/IP-N000310/2020-21/13364) has been appointed as an Interim Resolution Professional (IRP) to carry out the activities relating to CIRP as per the rules, regulations and guidelines prescribed by the Code.

The Committee of Creditors (COC) in its first meeting held on 31/08/2021 appointed Mr. Bhuvan Madan (IBBI/IPA-001/IP-P01004/2017-2018/11655) as Resolution Professional (RP) pursuant to an order of the Honorable National Company Law Tribunal; Hyderabad Bench (NCLT) dated 08^th September, 2021 to carry out the activities relating to CIRP as per the rules, regulations and guidelines prescribed by the Code.

During this period, the NCLT has prescribed moratorium period for prohibiting all of the following namely:

I. The institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority.

II. Transferring, encumbering, alienating, or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein.

III. Any action to foreclose recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the securitization and reconstruction of financial assets and enforcement of security interest act, 2002.

IV. The recovery of any property by owner or lessor where such property is occupied by or in the possession of the corporate debtor.

As per Section 17 of the Insolvency and Bankruptcy Code from the date of appointment of the interim Resolution Professional

a) the management affairs of the company shall vest in the resolution professional.

b) the power of the board of directors company shall stand suspended and be exercised by the Resolution Professional.

c) the officers and managers of the company shall report to the resolution professional and provide access to such documents and records of the company as may be required by the interim resolution professional.

d) the financial institutions maintaining accounts of the company shall act on the instructions of the interim resolution professional in relating to such accounts furnish all information relating to the company available with them to the Resolution Professional.

CHANGE IN THE NATURE OF BUSINESS:

There is no change in the nature of business during the Financial Year 2021-22

DIVIDEND AND GENERAL RESERVE:

Your Company has not recommended any dividend for the year 2021-22 due to loss incurred during the year and carry forward loss from earlier years. Company cannot declare dividend until the carry forward loss is fully set off against the profits as provided in the Companies Act, 2013.

Your Company also has not proposed to transfer any amount to General Reserve in view of the carry forward loss.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 134(3) (c) of the Companies Act 2013 with respect to Directors Responsibility Statement, your Directors hereby state and confirm that:

i) In the preparation of Annual Accounts for the Financial Year 2021-22 the applicable Indian Accounting Standards (Ind-As) had been followed with proper explanation relating to material departures;

ii) The Accounting Policies selected were applied consistently and the judgements and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31^st March 2022 and of the Loss of the Company for the year ended on that date;

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 to be followed by the Company have been laid down and that such Internal Financial Controls are adequate and were operating effectively; and

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

ANNUAL RETURN:

Copy of Annual Return for the Financial Year 2021-22 shall be available on the website of the Company at www.sathavahana.com.

AUDIT COMMITTEE:

The Audit Committee is duly constituted as per the provisions of the Act, applicable Rules framed there under read with the listing regulations. The primary objective of the committee is monitoring and supervising the Managements financial reporting process to ensure accurate and timely disclosures with highest levels of transparency, integrity and quality of financial reporting.

Committee comprises of Chairman - Shri K. Thanu Pillai, Independent Director and two other Independent Director members -Shri Syed Anis Hussain, and Shri S.N.Rao. The Committee met 2(two) times during the year. Details of terms of reference of the Committee, number and dates of meetings held and attendance of Members during the year are part of the Corporate Governance Report.

Audited Accounts of the Company for the financial year ended 31^st March 2022 were approved on 16^th May, 2022

CORPORATE GOVERNANCE:

Pursuant to Listing Regulations 2015 the Company is required to comply with the Code of Corporate Governance for the financial year under review. Accordingly, the Reports on Corporate Governance and Management Discussion and Analysis together with Auditors Report on compliance of Code of Corporate Governance are attached to this Report and forms part of the Annual Report. These Reports are to be read in conjunction with this Directors Report.

Policy on selection and appointment of Directors, Composition and category of Directors, attendance of each Director at meetings, Number of other Directorships held by each Director, Number of Board meetings held and dates on which held, Board meetings process, familiarisation programme of each Independent Directors, Boards evaluation process are discussed in the Report on Corporate Governance which forms part of this Report.

DECLARATION GIVEN BY INDEPENDENT DIRECTORS:

The Board of Directors confirms that based on the declarations given by all the Independent Directors in pursuance of provisions of Section 149(7) of the Companies Act 2013, all the independent Directors meet the criteria of independence as provided in Section 149(6) of the Companies Act 2013.

DETAILS OF DIRECTORS OR KEY MANAGERIAL PERSONNEL WHO WERE APPOINTED OR HAVE RESIGNED DURING THE YEAR:

There have been no changes in the office of directors or key managerial personnel during the year. However, Mr. VSRK Hanuman has tendered his resignation from the post of the Chief Financial Officer of the Company w.e.f 16^th May, 2022

MEETINGS:

During the year, two meetings of Board of Directors were held as more particularly disclosed in the attached report of Corporate Governance. The intervening gap between any two meetings was within the prescribed period.

The Number and dates of meeting held by the Board and its Committees, attendance of Directors is given separately in Corporate Governance Report in terms of Section 134(3)(b) of the Companies Act, 2013.

PERFORMANCE EVALUATION:

Since National Company Law Tribunal (NCLT) has initiated Corporate Insolvency Resolution Process (CIRP) in respect of Sathavahana Ispat Limited (“the Company”) under the provisions of the Insolvency and Bankruptcy Code, 2016 (“the Code”) with effect from 28^th July, 2021. There no performance evaluation done by the Board as all the powers of the Board are suspended As such, since September 15, 2021, has been under the control and management of Mr. Bhuvan Madan, the Resolution Professional.

AUDITORS AND AUDIT REPORT:

The tenor of present Auditors M/s. Majeti & Co., Chartered Accountants, Hyderabad has been fixed for period of five years at the Annual General Meeting held on 29.09.2017 from conclusion of 29^th Annual General Meeting till the conclusion of 33^rd Annual General Meeting of the Company, subject to ratification of appointment at every subsequent Annual General Meeting. However, the Ministry of Corporate Affairs, Government of India, has vide Companies (Amendment) Act 2017 notified vide notification dated 07.05.2018 and as such ratification of appointment of statutory auditors is not required at the subsequent Annual General Meetings which in other words means that appointment made initially continues to be effective until the expiry of five years from the date of their appointment.

Accordingly no ratifications of appointment of statutory auditors is proposed in the ensuing Annual General Meeting.

The term of appointment of the existing Auditors M/s Majeti & Co., Chartered Accountants, Hyderabad, expire at the conclusion of the 33^rd AGM. As per the provisions of Section 139 of the Companies Act, they are eligible to be re-appointed and have expressed their willingness to be appointed as the Statutory Auditors of the Company.

Accordingly, Board of Directors of the Company propose their appointment for second term of 5 Years. Further the Notice convening the AGM contains a resolution for approval of members for reappointment of Statutory Auditors to hold office from the Conclusion of 33^rd Annual General meeting till Conclusion of 38th Annual General Meeting.

With respect to the Independent Auditors Report for the year ended 31^st March 2022 which forms part of the Annual Report containing emphasis of matters and qualifications your Board of Directors state that the management replies to the same are as under:

1. As mentioned in Note No. 33 to the IND AS financial statements, the Company has been referred to National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016, (“Code”) and the company?s obligation towards current borrowings was Rs. 1,74,714.10 Lakhs significantly exceeded its available cash and cash equivalents and other financial assets as on the date of balance sheet. The company?s financial results and funds availability were adversely affected due to continuing shut down of the ferrous plant since 12th June 2017, very limited operations in the coke oven plant and power plant resulted in a Net Loss of Rs.12,267.10 Lakhs for the year ended resulting into accumulated losses of Rs.1,18,316.26 Lakhs and erosion of its Net worth as at March 31, 2022. These conditions give rise to material uncertainty over the ability of the Company to continue as a going concern.

Since Corporate Insolvency Resolution Process (CIRP) is currently in progress, as per the Code, it is required that the Company be managed as going concern during CIRP. Accordingly, the financial statements are continued to be prepared on going concern basis. However, there exists a material uncertainty about the ability of the Company to continue as a “Going Concern”. The same is dependent upon the resolution plan to be approved by NCLT. The appropriateness of the preparation of financial statements on going concern basis is critically dependent upon CIRP as specified in the Code. Necessary adjustments required on the carrying amount of assets and liabilities are not ascertainable at this stage.

The financial statements have been prepared on going concern basis based on the reason as described above. In the absence of forecast plans made available to us, presently not ascertainable about company?s ability to repay its borrowings, trade payables, statutory liabilities, other payables and arrangement of funds to resume its operations. We are unable to obtain sufficient and appropriate audit evidence to conclude the company will remain in operation into the foreseeable future and whether the use of the going concern assumption to prepare the financial statements is appropriate

Managements Reply:

As of March 31, 2022, the Company, M/s Sathavahana Ispat Limited, is currently undergoing corporate insolvency resolution process (“CIRP”) pursuant to the order dated July 28, 2021, passed by the Hon?ble National Company Law Tribunal, Hyderabad Bench (“NCLT”) , in C.P. No.17/9/HDB/2020 filed by one M/s Thirumala Logistics, an operational creditor of the Company. Vide the same order, one Mr. Golla Ramakantha Rao, an Insolvency Professional, was appointed as the Interim Resolution Professional. Pursuant to order dated September 08, 2021, passed by the Hon?ble NCLT, Mr. Bhuvan Madan, an Insolvency Professional, was appointed as the Resolution Professional to conduct the CIRP and to manage the affairs of the Company. The copy of the said order was received by Mr. Bhuvan Madan, the Resolution Professional on September 15, 2021. As such, since September 15, 2021, has been under the control and management of Mr. Bhuvan Madan, the Resolution Professional. The CIRP of the Company is at advanced stage with the Resolution Plans being under consideration of the COC. Though, the Resolution Plans have been voted upon by the Committee of Creditors of the Company in their meeting held on March 17, 2021 which continued on March 20, 2022, however, pursuant to the order dated March 07, 2022, passed in I.A. No.791 of 2021 filed by one Operational Creditor, the outcome of the voting on the Resolution Plans has been put on hold. Accordingly, the Company continues to be under CIRP under the aegis of Mr. Bhuvan Madan, the Resolution Professional. Since Corporate Insolvency Resolution Process (CIRP) is currently in progress, as per the Code, it is required that the Company be managed as going concern during CIRP and Resolution plan was considered by COC which was put on hold on account of reasons specified in above. Accordingly, the financial statements are continued to be prepared on going concern basis

2. We have been informed by the Resolution Professional that certain information including the Minutes of meetings of the Committee of Creditors and the outcome of certain procedures carried out as per the CIRP are confidential in nature and could not be shared with anyone other than the Committee of Creditors and NCLT. Accordingly, we are unable to comment on the possible financial impact, presentation and disclosure, if any, that may arise if we have been provided access to those information

Managements Reply:

That certain information relating to CIRP including the minutes of meetings of the Committee of Creditors and the outcome of certain procedures carried out as a part of the CIRP are confidential in nature and could not be shared with anyone other than the Committee of Creditors (CoC) and NCLT. However, the stock exchange continues to remain informed about key outcomes of the meetings of the CoC

3. We draw your attention to Note no 42 to the Ind AS Financial statements, As per Indian Accounting Standard 36 on Impairment of Assets, the Company is required to determine impairment in respect of Property, Plant and equipment and capital work in progress as per the methodology prescribed under the said Standard on account of shut down of the ferrous plant and very limited operations in the coke oven plant since 12th June 2017. However, the Management of the Company has not done impairment testing for the reasons explained in the above note. However, In the absence of documents related to working for impairment of the Property, Plant and equipment and capital work in progress as per Ind AS 36, the impact of impairment, if any, on the Ind AS financial statements is not ascertainable.

Managements Reply:

The Companys current level of operations in Metallurgical Coke division at Nineteen percent capacity and no operations at Ferrous division, may not be an indication of the future performance of the Company. As the company has awarded Repair and Maintenance Contract to Jindal Saw Limited to upkeep the Property plant and Equipment. Accordingly, Impairment testing under Ind AS has not been performed while presenting these results.

4. Management has not performed the stock verification during the year end due to the reasons described in the said note 5(f), In the absence of physical verification of stock, we have not been able to obtain sufficient, appropriate audit evidence over the existence of inventory of Rs.1555.82 Lakhs as of March 31, 2022

Managements Reply:

Resolution Professional has taken control over both plants and reviewed the position of inventory before handing over the same to Jindal Saw limited for Repair and Maintained work

5. We draw attention to Note 40 to the Ind AS Financial statements, regarding non-moving inventories Since shut down of the operations at factory located at Haresamudram amounting to Rs.1458.67 Lakhs (As at 31st March 2021: Rs.1985.98 lakhs). Management believes that no adjustments to the carrying value of the inventories is required as those are regularly monitored, maintained and in usable/ saleable condition. As per Indian Accounting Standard - 2 ‘Inventories? are to be Valued at the lower of cost and net realisable value. Pending corroborative evidence to assess the net realisable value, we are unable to comment on the realisable value of these Inventories together with consequential impact.

Managements Reply:

Management regularly monitored, maintained and ensured same in usable/ saleable condition and assessed the stated value was fully recoverable and no provision is required as on the date of balance sheet.

6. We draw your attention to Note no 44 to the Ind AS Financial statements, pursuant to commencement of CIRP under the code, there are various claims submitted by the financial creditors, operational creditors, employees and other creditor to the RP. The books balances appears will be recasted upon successful implementation of resolution plan. Pending final outcome of the CIRP, no accounting impact in the books of accounts has been recognised in respect of excess or short claims or non-receipts of claims for above- mentioned creditors

Managements Reply:

Resolution Professional has invited the Claims through the Public Announcement and Various Creditors such as financial, operational and other have submitted and reconciled the same with Books of accounts based on the documents provided by the claimant which has been verified. And the Final version of claims summary has been uploaded on the company website.

7. We draw attention to note No 30 to the financial statements where in dues to the micro and small enterprises was disclosed as Rs Nil. We are unable to verify the accuracy of the same due to the lack of related information with the company.

Managements Reply:

The above point is self-explanatory

8. We draw attention to Note No 37 to the Ind AS Financial statements, where in management has considered outstanding trade receivables of Rs. 3,486.76 Lakhs (March 31,2021 Rs. 3481.82 Lakhs) capital advances of Rs.174.01 Lakhs (March 31,2021 Rs. 174.01 Lakhs), supplier advances Rs. 607.63 lakhs (March 31,2021 Rs. 595.27 Lakhs) and other financial assets Rs. 156.42 lakhs (March 31,2021 Rs. 157.02Lakhs), respectively due for a period of more than one year as good and recoverable as at March 31, 2022, for which no provision has been made in the books of account. For reasons said in the aforesaid note, and due to confirmations being not available and pending reconciliation adjustments we are unable to comment on the recoverability of these receivables and its consequential effect on these financial statements.

Managements Reply:

The management assess the recoverability of trade receivables and other balances on regular basis and believes there was no uncertainty at present on recoverability these receivables and legal cases were preferred where required to ensure recoverability. Provision will be based on outcome of the legal cases until then the dues are considered good.

9. We draw attention to Note No 24(c) to the Ind AS Financial statements, where in management written of Rs 1163.77 lakhs during the year as bad debts. We are unable to get sufficient explanation and appropriate evidence to comment about the amount written off as bad debts

Managements Reply:

Rs. 1163.77 lakhs written off as bad debts during Q4 2021-22, after due deliberations with customer and assessment of the recoverability

10. We draw attention to Note no 38 to the Ind AS Financial statements, Statutory dues related to Income tax, Employee?s provident fund, Employee state insurance act and professional tax, amounting to Rs. 1460.92 Lakhs (March 31,2021 Rs. 1105.80 Lakhs) have become overdue and remain unpaid, interest, penalty if any in respect of the same has remained unascertained and unaccounted for.

Managements Reply:

Claims have been received from various governments authorities admitted / partial admitted or rejected based upon the verification conducted by Resolution Professional and can be settled in accordance with Resolution plan approved by NCLT

11. Non compliance with Companies Act

a) The company has not taken approval for related party transactions related to Pre CIRP period which are required as per section 177 and 188 of the Act due to the reason specified in note 31(a) to Ind AS Financial Statements.

b) The company had paid donations to charitable trust amounting to Rs.11.02 Lakhs without obtaining prior permission in general meeting as required under section 181 of the Companies Act, 2013.

c) During the year Internal audit was not carried out as per the requirement of section 138 of the Act.

d) As the company is in default of making payments to secured creditors, prior approval from secured creditors is required pursuant to Part II of Schedule V to section II(B) of the Companies Act, which is not obtained by the company. Accordingly, the provision of section 197 read with Schedule V has not complied. (Refer Note 31 to the Ind AS financial statements for payments of remuneration to directors)

penalty if any in respect of above non-compliances has remained unascertained and unaccounted for.

Managements Reply:

Related Party transactions occurred during April 01, 2021 to July 28, 2021 were not obtained approval form Board due to post initiation of CIRP.

b to d are self explanatory and are Statements of Fact

12. We draw your attention to Note 41 to the Ind AS Financial statements regarding overdue payables aggregating to Rs.224.15 lakhs as at March 31, 2022 (As at 31st March 2021: Rs.222.45 lakhs), included in Creditor for capital works, which is outstanding to a non-resident company for more than three years, and for which the Company is yet to obtain approval from the Authorised Dealer or Reserve Bank of India (RBI) to remit the aforesaid amounts. Any penalties that may be levied by RBI in the aforesaid liabilities in the financial statements are presently not ascertainable.

Managements Reply:

The Company is required to obtain approvals from consent authorities to condone such delay in payment of foreign currencies, which is presently not obtained and the Company intends to take the necessary approvals in this regard, pending which any penalties that may be levied by consent authorities and impact in the aforesaid liabilities in the financial statements are not presently ascertainable

13. As per the recognition principles mentioned in Indian Accounting Standard (Ind AS) 37, provision shall be recognised when company has a present obligation (legal or constructive) as a result of a past event, which is to be measured by the best estimate of the expenditure required to settle the present obligation at the end of the reporting period. On 20 September 2021 the company entered into a contract for ‘Repairs & Maintenance of Manufacturing Facilities? at a contract Price of Rs 26600 lakhs and related work was commenced by the contractor. The company has not accounted any provision for expenses till date of Balance sheet due to the reasons described in note no.24(d) In the absence of any best estimate of the provision to be accounted, we are unable to comment about its consequential effect if any on these financial results.

Managements Reply:

The above remark is self explanatory

14. As Mentioned in note no 13(i) to the Ind AS Financial Statements, all borrowings were assigned by the Banks and Financial Institutions to J C Flower Asset Reconstruction Company Limited along with all rights and privileges. The company has not accounted for accrued interest amounting to Rs.21091.17 lakhs from August 2021 to date of balance sheet, which is noncompliance of Indian Accounting Standard (Ind AS) 109 Financial Instruments.

Managements Reply:

Pursuant to the public announcement, financial creditor have filed their claim of Rs. 174714.00 Lakhs as on insolvency commencement date which has been duly verified and reconciled for the purpose of admission of claims on account of provisions of IBC. Hence no provisions for interest was created

15. The Company has taken advances from customers which were outstanding for more than one year amounting to Rs.88.14 Lakhs in terms of Section 73 of Companies Act, 2013 read together with Companies (Acceptance of Deposits) Rules, 2014, (Rule 2(1)(xii)(a)), such advances are liable to be treated as deposits and hence the Company is in violation of the same. Except for compliance with the aforesaid amount, The Company has not accepted any deposits from the public within the meaning of Sections 73, 74, 75 and 76 of the Act and the Rules framed there under to the extent notified. According to the information and explanations given to us, no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal on the Company in respect of the aforesaid deposits.

Managements Reply:

These amounts are not taken in the nature of deposits and due to financial crisis that the Company has been undergoing, Company could not repay the same and as the CIRP has been commenced all the amounts shall form part of claims

COST AUDITORS AND COST AUDIT REPORT:

Company appointed M/s. Nageswara Rao & Co, Hyderabad, Practicing Cost Accountants (Firms Registration Number 000332), as Cost Auditors for the financial year 2021-22.

The Board of Directors based on the recommendations of the Audit Committee, has appointed M/s. Nageswara Rao & Co, Practicing Cost Accountants (Firms Registration Number : 000332) as Cost Auditors for conducting Cost Audit of the Cost Records of the Company for the year 2022-23.

In pursuance of the provisions of Section 148 and other applicable provisions, if any, of the Companies Act 2013, read with Companies (Audit and Auditors) Rules 2014 the remuneration payable for conducting the Cost Audit for the year ending 31^st March 2023 to M/s. Nageswara Rao & Co, Practicing Cost Accountants is being placed before the Members in the ensuing Annual General Meeting for their ratification and approval.

INTERNAL AUDITORS:

The Board of Directors based on the recommendation of the Audit Committee have appointed ASK & CO, Chartered Accountants, as internal Auditors of your Company. The Internal Auditors are submitting their reports on quarterly basis.

SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT:

M/s. D. Hanumanta Raju & Co., Practicing Company Secretaries, Hyderabad who have been appointed as Secretarial Auditor for the financial year 2021-22 have conducted the Audit of the Secretarial Records and submitted their Report in MR-3 which is annexed to this Report (Annexure-IV).

The Secretarial Audit Report for the financial year ended 31^st March 2022, contains the following observations.

a) The Company is yet to file Form MGT-14 towards the approval of Director?s Report for the Financial Year 2020-21. b) The Company is yet to file Form MGT-15 for Annual General Meeting held on 28.12.2021 and reconvened Annual General Meeting held on 31.01.2022.

c) The Company is yet to file Form IEPF-2 for change in the nodal officer.

d) The Company is yet to file Form MGT-14 for Annual General Meeting held on 28.12.2021 and reconvened Annual General Meeting held on 31.01.2022 through video Conferencing/ other audio visual means.

e) The Company is yet to file Form IEPF-4 for statement of transfer of shares in respect of Un-claimed dividend for seven years to IEPF authority as required under Section 124 (6) of Companies Act, 2013.

f) The Company has not obtained prior approval of the secured creditors for the re-appointment of key managerial personnel and payment of remuneration to them as required under Part II of Schedule V of the Companies Act, 2013, Hence Section 197 read with Schedule- V is not complied with.

g) The Company has taken advances from customers which were outstanding for more than one year amounting to Rs. 88.14 Lakhs in terms of Section 73 of Companies Act, 2013 read together with Companies (Acceptance of Deposits) Rules, 2014, (Rule 2(1)(xii)(a)), such advances are liable to be treated as deposits and hence the company is in violation of the same.

h) The Company has not obtained approval for related party transactions as required under provisions of Section 177 and 188 of the Companies Act, 2013.

i) The Company had paid donations to Charitable trust amounting to Rs. 11.02 Lakhs without obtaining prior permission in general meeting as required under Provisions of Section 181 of the Companies Act, 2013.

j) During the year under review, the Company has not carried out Internal Audit as required under Section 138 of the Companies Act, 2013.

k) The company has not filled the vacancy of Company Secretary in the Company till date as required under Section 203 of Companies Act, 2013 read with Rule 8 of Chapter XIII of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Regulation 6 (1) Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

l) The Company has submitted Statement of Investor Complaints as required under Regulation 13(3) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 for the quarter ended 30.09.2021 to the stock exchanges with a delay of 27 (Twenty Seven) days.

m) The Company has not intimated to the stock exchanges about the meeting of the board of directors in which financial results will be approved for the quarter ended as on 30.06.2021 as required under Regulation 29 (2) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

n) The Company has submitted Shareholding Pattern as required under Regulation 31 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 for the quarter ended 30.09.2021 to the stock exchanges with a delay of 27(Twenty Seven) days.

o) The Company has submitted financial results for the quarter ended 30.06.2021 as required under Regulation 33 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 with a delay of 60 (Sixty) days. p) The Company has not disclosed to the Stock Exchanges about the details of default on payment of interest / installment obligations on loans from Banks/ Financial Institutions for the quarter ended as on 31.12.2021 as required under circular SEBI/HO/CFD/CMD1/CIR/P/2019/140 dated 21.11.2019.

q) As required under Regulation 74(5) of Securities and Exchange Board of India (Depositories & Participants) Regulations, 2018, the Company has submitted the compliance certificate for quarter ended 30.06.2021 to stock exchanges on 27.07.2021 with a delay of 7(Seven) days.

r) As per Regulation 30 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 Company was required to give intimation to stock exchanges about material events within 24 (Twenty Four) hours but it was observed that;

The Company has delayed by 1 (One) day in intimating the stock exchanges about the National Company Law Tribunal (NCLT) Orders dated 07.08.2021 for initiating Corporate Insolvency Resolution Process (CIRP) against the Company.

The Company has not disclosed to the stock exchanges the List of Creditors which is required to be displayed by Corporate Debtor.

The Company has delayed by 6 (Six) days in intimating the stock exchanges about the NCLT Order dated 08.09.2021 towards appointment of Resolution Professional.

The Company has not intimated the Prior and Post-Facto Information of meeting of Committee of Creditors held after the initiation of CIRP against the Company and the Key decisions made therein

s) The Website of the Company is not updated with respect to publishing Annual Return as per Section 92 of the Companies Act, 2013 and Annual General Meeting Transcripts as required under Regulation 46 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

t) The Company has submitted Reconciliation of share capital audit report as required under Regulation 76 of Securities and Exchange Board of India (Depositories & Participants) Regulations, 2018 for the quarter ended 30.09.2021 to the stock exchanges with a delay of 18 (Eighteen) days.

Management Reply:

Since the Company is in CIRP Process and due to change in the person responsible in ensuing the Compliances, Company has been irregular in filing various forms with MCA and meeting the timelines provided under SEBI(LODR) Regulations and other compliances incidental thereto

TRANSFER OF UNCLAIMED DIVIDEND AMOUNTS TO IEPF:

Pursuant to the provisions of Section 205A (5) of the Companies Act, 1956 and / or Section 124(5) of the Companies Act 2013, previously declared dividends, which remained unclaimed for a period of seven years, have been transferred by the Company to the Investor Education and Protection Fund (IEPF) established by the Central Government pursuant to Section 205C of the Companies Act, 1956 and / or Section 125 of the Companies Act, 2013.

DIRECTORS, EMPLOYEES AND THEIR REMUNERATION:

The particulars of employees required to be furnished pursuant to Section 197(12) of the Companies Act 2013 read with sub rule (2) to Rule 5 to the Companies (Appointment & Remuneration) Rules, 2014, as amended, are not required to be provided as there were no employees drawing remuneration more than the stipulated limits. Details of Remuneration Policy and payment of remuneration to all Directors / Key Managerial Personnel / other managerial employees is given in the Report on Corporate Governance under the head Nomination and Remuneration Committee which forms part of this Report. Managing Director and other Whole Time Directors have not received any remuneration or commission from holding or subsidiary companies as the Company do not have such companies. In the opinion of the Board the level and composition of remuneration to Directors, Key Managerial Personnel and other managerial employees is reasonable and sufficient to attract, retain and motivate the people who could run the Company efficiently.

The Board affirms that the remuneration paid is in accordance with Remuneration Policy of the Company. The copy of Nomination and Remuneration policy is also posted in the investors section of the companys website www.sathavhana.com. The relationship between performance and remuneration is clear and meets appropriate benchmarks and that the remuneration criteria succinctly balances between fixed and variable pay wherever set reflecting short and long term performance objectives appropriate to the working of the Company and its goals. Disclosures required to be made pursuant to Rule 5 to the Companies (Appointment & Remuneration) Rules, 2014 are attached to this report (Annexure-II).

DEMATERIALISATION OF EQUITY SHARES:

The Agreements entered into by the Company with the two Depositories viz., National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) for dematerialisation of Shares are in force and the Companys Shares are in dematerialised mode under ISIN No. INE176C01016. The Securities and Exchange of India (SEBI) in its circular dated 20.04.2018 has stated that the equity shares have to compulsorily convert into dematerialization before 5th December 2018 the same was further extended to 1^st April 2019. and thereafter dematerialized equity shares are only eligible for transfers with the exception of transmissions. In view of the significant benefits that accrue on dematerialisation of securities, Members may avail the facility.

LISTING OF SHARES ON STOCK EXCHANGES:

The Equity Shares of the Company are listed on BSE Ltd (formerly The Bombay Stock Exchange Limited) Scrip Code: 526093 and The National Stock Exchange of India Limited (NSE) Scrip Code: SATHAISPAT and are regularly traded.

The listing fee to above Stock Exchanges has not paid in financial year 2022-23.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

Information on conservation of energy, technology absorption, foreign exchange earnings and out go required to be disclosed under Section 134 of the Companies Act 2013 read with Companies (Accounts) Rules 2014, is given in the Annexure forming part of this Report (Annexure-I).

DEPOSITS:

Your Company has not accepted any fixed deposits nor does the Company have any outstanding deposits under section 73 of the Act, read with the Companies (Acceptance of Deposits) Rules, 2014 as on the date of Balance Sheet.

DEVELOPMENT AND IMPLEMENTATION OF A RISK MANAGEMENT POLICY FOR THE COMPANY INCLUDING IDENTIFICATION THEREIN OF ELEMENTS OF RISK, IF ANY, WHICH IN THE OPINION OF THE BOARD MAY THREATEN THE EXISTENCE OF THE COMPANY:

The Board engaged itself with the task of Risk Management by preparing, implementing and monitoring the risk management plan of the Company. The Board apart from ensuring the effectiveness of risk management covering internal financial risks and controls also reviews the same on regular basis. Major risks identified are monitored on a regular basis by the Board.

INTERNAL FINANCIAL CONTROL AND SYSTEMS AND THEIR ADEQUACY:

The Company has put in place Internal Financial Controls that will ensure the policies and procedures of the Company are followed regularly so that the business of the Company is conducted in orderly and efficient manner. The Internal Financial Controls are applied inter alia to test various aspects in the conduct of business including adherence to Companys policies, safeguarding Companys assets, prevention and detection of frauds and errors or irregularities, the accuracy and completeness of the accounting records and timely preparation of reliable financial information and the financial statements. In the opinion of the Board such Internal Financial Controls are adequate and were operating effectively. During the year such Internal Financial Controls have been tested and no reportable weaknesses in the design and operations were observed. With respect to the Independent Auditors Report for the year ended 31st March 2022 which forms part of the Annual Report containing qualification on the Internal Financial Controls your Board of Directors state that the management replies to the same are contained in Note No.36 to the financial statements which is self-explanatory.

RELATED PARTY TRANSACTIONS:

In Compliance with the provision of the Act and the Listing Regulations, each related party transaction is placed before the Audit Committee for prior approval/noting.

There are no material related party transactions entered into by the Company falling within the meaning of Section 188(1) of the Companies Act 2013. Other related party transactions, contracts or arrangements entered into by the Company are in the ordinary course of business and at arms length price. The details of these contracts or arrangements or transactions as required to be disclosed in terms of Section 134(3) (h) are provided in Form AOC-2 which forms part of this Report (Annexure-III) and accompanying Financial Statements.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS:

The Company has not granted loans, guarantees or made investments in or to companies, firms or other parties covered in the Register maintained under Section 189 of the Companies Act 2013. The Company has not extended any loans to the employees for purchase of its shares. Other investments made by the Company are given in the accompanying Financial Statements which are in the ordinary course of business.

CORPORATE SOCIAL RESPONSIBILITY:

The details with respect to Corporate Social Responsibility of the Company as required to be disclosed in terms of provisions of Section 135 read with Section 134(3) (o) and Rule 9 of Companies (Accounts) Rules 2014 are given in the Report on Corporate Governance attached to and forming part of this Report. During the year the Company, in terms of provisions of sub section 5 to Section 135 of the Companies Act 2013, is not required to earmark any fund for Corporate Social Responsibility activities in view of the losses.

VIGIL MECHANISM/ WHISTLE BLOWER POLICY:

Your Company has well-defined Vigil Mechanism policy in place to provide a formal mechanism for all Directors, employees, business associates and vendors of the Company to approach Chairman of the Audit Committee.

During the year under review, none of the Directors/employees/ business associates / vendors was denied access to Chairman of Audit Committee.

REPORTING OF FRAUD:

The auditors of the Company have not reported any fraud as specified under section 143(12) of the Act.

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

Your Company has zero tolerance towards sexual harassment at the workplace. It has well defined policy in compliance with the requirements of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed thereunder. An internal Committee is in place to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees, etc.) are covered under this Policy. The Company has not received any compliant of sexual harassment during the F.Y. 2021-2022.

MATERIAL CHANGES AND COMMITMENTS:

In terms of Section 17 of the Code, on commencement of the Corporate Insolvency Resolution Process (CIRP), the powers of the Board of Directors of Sathavahana Ispat Limited stands suspended and the same are being exercised by Mr. Bhuvan Madan. The management of the affairs of Sathavahana Ispat Limited has been vested with Mr. Bhuvan Madan.

Except for the above mentioned, there are no other material changes and commitments affecting the financial position of the company occurred between the end of financial year of the company to which the financial statements relate and the date of the report.

ORDERS PASSED BY THE REGULATORS, COURTS OR TRIBUNALS:

The application filed by the M/s. Thirumala Logistics against the company under Sec. 9 of The Insolvency Bankruptcy Code 2016, has been approved by the Honorable National Company Law Tribunal, Hyderabad Bench (NCLT) dated 28th July, 2021. The Committee of Creditors meeting was conducted and a Resolution Professional was appointed.

Consequent to an order of the Honourable National Company Law Tribunal, Hyderabad Bench (NCLT) dated 28th July, 2021, the Company is currently under Corporate Insolvency Resolution Process (CIRP) as per the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC) and as per Section 17 of the Code, the powers of the Board of Directors of Sathavahana Ispat Limited (Corporate Debtor) stands suspended and such powers shall be vested with Mr. Bhuvan Madan, Resolution Professional.

Further there are no other significant material orders passed by the Regulators which would impact the going concern status of the Company and its future operations.

THE NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR:

Your Company does not have any Subsidiaries or Associates or Joint ventures.

ACKNOWLEDGMENTS:

Your Company take this opportunity to express their grateful thanks to Canara Bank, State Bank of India (formerly State Bank of Hyderabad), Union Bank of India, Shareholders, Central and State Governments and valued suppliers and customers for their co-operation and support. The Company also places on record its appreciation of the valuable services rendered by the employees at all levels of the Company.

Place: Hyderabad	For Sathavahana Ispat Limited
Date: 08.12.2022	Bhuvan Madan
	Resolution Professional
	(IBBI/IPA-001/IP-P01004/2017-2018/11655)