Southern Ispat & Energy Ltd Directors Report.
Your Directors take immense pleasure in presenting this 20th Annual Report together with the Consolidated Audited Accounts of the Company for the Financial Year 2014-15 for the period ended on 31st March 2015.
Financial Results (Rs. Million)
|Sales & Other Income||6703.13||5065.00|
|Changes in Inventory||(6.61)||0.09|
|Profit before Taxes||252.37||283.81|
|- Deferred Tax||(3.14)||(1.18)|
|Profit After Taxes||255.52||284.77|
|Earnings per Share (Basic & Dilutive)||1.93||2.15|
In order to augment resources for the expansion plans, your Directors do not recommend distributing any dividend for the year ended 31st March 2015.
The paid up equity capital as on March 31, 2015 was 13214.91 Lakhs. During the year under review, the Company had gone for subdivision of the equity shares of the Company of face value of 10/- each into ten equity shares of the face value of 1/- each
REVIEW OF OPERATIONS
During the year under review, the Companys financial performance has been adversely affected due to the non-availability of raw material, increasing raw material costs and volatile foreign exchange. The company took various initiatives to improve its profitability by diversification which helped the Company to post a reasonable performance for the year.
BUSINESS RISK MANAGEMENT
The Company has devised and implemented a mechanism for risk management and has developed a Risk Management Policy. The Policy provides for constitution of a Risk Committee, which will work towards creating a Risk Register, identifying internal and external risks and implementing risk mitigation steps. The Committee will, on a quarterly basis, provide status updates to the Board of Directors of the Company.
In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Profit and Loss Account and other documents of the Subsidiary Company is not being attached with the Balance Sheet of the Company. However the financial information of the subsidiary companies is disclosed in the Annual Report in compliance with the said circular. The Company will make available the Annual Accounts of the subsidiary company and the related detailed information to any member of the Company who may be interested in obtaining the same. The annual accounts of the Subsidiary Company will also be kept open for inspection at the Registered Office of the Company and that of the respective Subsidiary Company. The Consolidated Financial Statements presented by the Company include the financial results of its subsidiary Company. Details of subsidiary of the Company are covered in Managements Discussion and Analysis Report forming part of the Annual Report
As on 31st March, 2015, about 99.95% of the shares of your Company are held in dematerialized form.
The shares of the Company are available for trading in the dematerialized form under both the Depository Systems in India-NSDL and CDSL. The International Securities Identification Number (ISIN) allotted to the Companys shares under the Depository System isINE943B01029. The Annual Custodial Fee for the Financial Year 2014-15 has been paid to NSDL and CDSL, the Depositories.
During the year, out of 1321490800 equity shares being the paid up capital of the Company as on 31st March, 2015, a total of 1320794040 shares constituting 99.95% of the paid up share capital stand dematerialized.
The Annual Listing Fees for the year 2014-15 had been paid to the Stock Exchanges where the Companys shares are listed.
Mr. Dinesh Kesri, Independent Director retires by rotation and being eligible offers himself for re-appointment
Mr. Madhav Rao, Independent Director retires by rotation and being eligible offers himself for re-appointment
Mr. T N Sivakumar, Independent Director retires by rotation and being eligible offers himself for re-appointment.
All independent directors have given declarations that they meet the criteria of independence as laid down under section 196(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.
Pursuant to Section 149 of the Companies Act, 2013 (new Act) read with the Rules made thereunder, the Independent Directors can hold office for a period of up to 5 consecutive years and shall not be liable to retire by rotation. They may be appointed for a maximum of two consecutive terms of up to 5 years each. In terms of revised Clause 49 of the Listing Agreement which came into effect from 1st October, 2014, in case the Independent Director has already served for 5 or more years, he can be appointed for only one term of 5 years. However, under the new act, and Clause 49 of Listing Agreement, they may be appointed afresh with a fixed period of up to 5 years. As per sub-section (5) of said Section 149, the compliance is to be made within one year from the date of commencement of the new Act.
Presently Sri. T. N. Sivakumar, Sri. Dinesh Kesri and Sri. Madhav Rao are the Independent Directors of the Company in terms of Section 149. As per their existing terms of appointment, all of them are liable to retire by rotation. The Board considered the appointment of the above mentioned Directors in terms of Section 149 and Schedule IV to the Companies Act, 2013 and Clause 49 of the Listing Agreement and was of the view that these independent directors fulfill the conditions specified in the Act and the rules made there under and that the proposed directors are independent of the management and can be appointed for a term of three years during which period, they shall not be liable to retire by rotation. These directors possess requisite qualifications, appropriate skills, experience and knowledge in one or more fields of finance, law management, marketing, administration, technical operations and other disciplines related to the Companys business, the educational/professional qualifications, working experience, expertise in line with Companys business, positive attributes.
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Appointment & Remuneration Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.
DIRECTORS RESPONSIBILITY STATEMENT
Your directors confirm that:
i. In the preparation of the financial statements for the year ended 31st March, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
ii. 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 as at 31st March, 2015 and of the profit of the Company for the year under review;
iii. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and
iv. The Directors had prepared the financial statements for the year ended 31st March, 2015, on a going concern basis.
The Board has, on the recommendation of the Appointment & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report.
A calendar of meetings is prepared and circulated in advance to the Directors.
During the year six Board Meetings and four Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.
NOMINATION AND REMUNERATION COMMITTEE
The Remuneration Committee of the Board was reconstituted and renamed as Nomination and Remuneration Committee complying with the requirements of the provisions of the Companies Act, 2013 and the Rues framed there under. The details regarding Nomination and Remuneration Committee Meeting held during the Financial Year is annexed to the Corporate Governance Report.
SOCIAL RESPONSIBILITY AND COMMUNITY DEVELOPMENT
Corporate Social Responsibility occupies a central position in Companies activities and is an ongoing daily affair. Our Companys plant at Kottayi, Palakkad is a leading industrial unit in the region and therefore the local community looks towards the Company for social support. Company continues to provide necessary support to economically backward people of the adjoining villages through various community development, education and healthcare programmes.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Pursuant to Clause 49 of the Listing Agreement with Stock Exchanges, a separate section titled "Management Discussion & Analysis" has been included in this Annual Report along with a Certificate of compliance from the Auditors and forms an integral part of this report.
i) A declaration signed by Chairman & Managing Director as required under Clause 49 (I)(D) of the Listing Agreement is enclosed.
ii) The Chairman & Managing Director have given a certificate to the Board of Directors, as required under Clause 49 (V) of the Listing Agreement, for the year ended 31st March, 2015.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with Accounting Standard-21- Consolidated Financial Statements prepared on the basis of audited financial statements received from subsidiary company as approved by their respective board forms part of this Report and Accounts.
The Audit Committee of Board of Directors constituted in terms of Clause 49 of the Listing Agreement and Section 177 of the Companies Act, 2013 consists of Sri. T.N. Sivakumar as its Chairman and Sri. Manish Kumar Mishra and Sri. Madhav Rao as its members.
AUDITORS AND AUDITORS REPORT
The Auditors Report and Notes to the Accounts are referred in the Auditors Report are self explanatory and therefore, do not call for any further comments or explanation.
M/s Sunil Johri & Associates, Chartered Accountants, Raipur, Auditors of the Company, hold the office till the conclusion of 22nd Annual General Meeting and are eligible for reappointment. A Certificate from the auditors has been received to the effect that their reappointment, if made, would be within the prescribed limits under Section 139(1) of the Companies Act, 2013.
Your Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.
The Company has not accepted any fixed deposits during the period under review.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The Company has not given any loans or guarantees covered under the provisions of Section 186 of the Companies Act, 2013.
The details of the investments made by Company is given in the notes to the Financial Statements
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO
The information relating to Conservation Of Energy, Foreign Exchange Earning And Out Go, Technology Absorption pursuant to Section 134(3)(m) of the Act, read with Rule 8 Sub Rule 3 of the Companies (Accounts) Rules, 2014 are annexed to this report.
PARTICULARS OF EMPLOYEES
None of the employees of the Company was in receipt of remuneration above 2,00,000/- per month or 24,00,000/- per annum during the year under review and as such there is no need to give a declaration u/s 217 (2A) of the Companies Act, 1956.
CODE OF CONDUCT
The Board of Directors has approved a Code of Conduct which is applicable to the members of the Board and all employees in the course of day to day business operations of the
Company. The Company believes in "Zero Tolerance" against bribery, corruption and unethical dealings/ behaviours of any form and the Board has laid down the directives to counter such acts. The code laid down by the Board is known as "Code of Business Conduct" which forms an appendix to the Code.
VIGIL MECHANISM/WHISTLE BLOWER POLICY
The Company has a vigil mechanism named Fraud and Risk Management Policy to deal with instance of fraud and mismanagement, if any.
In staying true to our values of Strength, Performance and Passion and in line with our vision of being one of the most respected Companies in India, the Company is committed to the high standards of Corporate Governance and stakeholder responsibility.
The Company has a Fraud Risk and Management Policy to deal with instances of fraud and mismanagement, if any, The FRM Policy ensures that strict confidentiality is maintained whilst dealing with concerns and also that no discrimination will be meted out to any person for a genuinely raised concern.
A high level Committee has been constituted which looks into the complaints raised. The Company reports to the Audit Committee and the Board.
Exploring Mining Opportunities & Securing Raw materials and integrating backwards into mining of Iron Ore and Chrome Ore. Setting up a Beneficiated & Pelletizing plant with an installed capacity of 12,00,000 TPA in Madhya Pradesh, India for exploiting the mining operations & maximizing profits.
INTERNAL CONTROL SYSTEM
The Company has in place an adequate and appropriate system of internal control, commensurate with its size and nature of business to ensure efficacy of operations and compliance with applicable legislations. The Company has comprehensive budgetary control system. The management regularly reviews actual performance.
During the year under review, your Company enjoyed cordial relationship with workers and employees at all levels.
HUMAN RESOURCES AND INDUSTRIAL RELATIONS
Your Company all the time strives towards the development of its employees, to upgrade their skills and to boost the motivation levels of its human resource through various mechanisms. For enhancing the team spirit of the employees departmental quality circles and other awareness programmes being organized from time to time. We were successful in maintaining a healthy working environment and cordial industrial relations throughout the year. The efforts put in by the employees at all levels are highly commendable and have contributed immensely to the excellent performance of the company. Your Company HR team has been continuously striving for establishing a better and congenial relationship with Workmen, Unions and all external agencies resulting in achieving zero man days loss due to industrial unrest.
RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year were on arms length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the Company at large.
PREVENTION OF INSIDER TRADING
The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Companys shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees which in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code.
All Board Directors and the designated employees have confirmed compliance with the Code.
Pursuant to provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Company has appointed Palak Desai, Practising Company Secretary to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as "Annexure A"
M/s Arindam & Associates, Cost & Management Accountants, Raipur, Cost Auditors of the Company has been re-appointed as the Companys Cost Auditors for the Financial Year 2015-16.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as "Annexure B".
The Directors would like to express their sincere appreciation and co-operation received from the Central Government, Government of Kerala and Kerala Industrial Area Development Board. The Directors also wish to place on record its appreciation for the commitment displayed by all employees at all levels, resulting in the successful performance of the Company during the year.
The Directors also take this opportunity to express its deep gratitude for the continued cooperation and support received from its valued shareholders.
The Directors express their special thanks to Mr. Vivek Agrawal, Chairman & Managing Director of the Company, for his untiring efforts for the progress of the Company.
|For Southern Ispat & Energy Ltd|
|Dated: 14th August 2015||Vivek Agrawal||Vinod Bajoria|
|Place: Palakkad||Chairman & Managing Director||Director|
ANNEXURE TO THE DIRECTORS REPORT
Information under Section 134(3)(m) of the Companies Act, 2013, read with Rule 8 of the Companies (Accounts) Rules, 2014.
|I. Conservation of Energy|
|a. Energy conservation measures taken||The Company is using Induction Furnace and hence possibility of conserving energy is limited.|
|b. Additional investments and proposals, if any, being implemented for reduction of consumption of energy||NIL|
|Impact of measures at (a) & (b) above for reduction of energy consumption and consequent impact on the cost of production of goods.||NA|
|A. Power and Fuel Consumption||Current Year ended on 31/03/15||Previous Year ended on 31/03/2014|
|Total Amount (Rs. in Lakhs)||493.60||308.81|
|Own Generation (Diesel Generation)|
|Units per litre of Diesel Oil||NA||NA|
|Cost of Unit of Diesel Oil (Rs./KWH)||NA||NA|
|Qty (MT) (Grade varies from A to D)||NIL||NIL|
|Total Cost (Rs. lakhs)||NA||NA|
|Average Rate (Rs./Tonne)||NA||NA|
|3 Furnace Oil (Diesel Oil/LD Oil)|
|Total amount (Rs. lakhs)||NIL||NIL|
|Average rate (Rs./Litre)||NA||NA|
B. Consumption per unit of production
|Product||Current Year (31/03/15)||Previous Year (31/03/2014)|
|M S Ingots||Electricity (KWH)||Diesal / LD Oil (Ltr)||Coal (MT)||Electricity (KWH)||Diesal / LD Oil (Ltr)||Coal (MT)|
II. Technology Absorption
(Form for disclosure of particulars with respect to Technology Absorption)
1. RESEARCH AND DEVELOPMENT
The Companys products are well within the stipulated requirements of the Customers and
Research & Development works are going on a routine manner. The Company has not incurred any expenditure on this account as the same is a routine. The company has fully fledged laboratories at its Plants for testing the quality of Raw Materials and also of the finished products.
2. TECHNOLOGY ABSORPTION ADAPTATION AND INNOVATION
Since no technology has been absorbed from outside the item is not applicable to us. The Company however, continues the efforts for up gradation of technology in order to improve the quality and reduce cost to the extent possible.
SECRETARIAL AUDIT REPORT
For The Financial Year Ended On 31st March, 2015
(Pursuant to Section 204(1) of the Companies Act, 2013 and Rule No.9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014)
Southern Ispat & Energy Limited
I have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by Southern Ispat & Energy Limited (hereinafter called the Company). Secretarial Audit was conducted in a manner that provided me a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing my opinion thereon.
Based on my verification of the Companys books, papers, minutes books, forms and returns filed and other records maintained by the Company and also information provided by the Company, its officers, agents and authorized representatives during the conduct of secretarial audit, I hereby report that in my opinion, the Company has, during the audit period covering the financial year ended on 31st March, 2015, complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance-mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:
I have examined the books, papers, minute books, forms and returns filed and other records maintained by Southern Ispat & Energy Limited for the Financial Year ended on 31st March 2015 according to the provision of:
(i) The Companies Act, 2013 (the Act) and the rules made there under;
(ii) The Securities Contracts (Regulation) Act, 1956 (SCRA) and the rules made there under; (iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed there under; (iv) Foreign Exchange Management Act, 1999 and the rules and regulations made there under to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings; (v) The Regulations and Guidelines prescribed under the Securities and Exchange Board of
India Act, 1992 (SEBI Act) viz:
(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011; (b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992; (c) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009; (d) The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999; (e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008; (f) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client;
(g) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; and (h) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998.
(vi) OTHER APPLICAB LE ACTS, (a) Factories Act, 1948
(b) Payment Of Wages Act, 1936, and rules made thereunder, (c) The Minimum Wages Act, 1948, and rules made thereunder, (d) Employees State Insurance Act, 1948, and rules made thereunder,
(e) The Employees Provident Fund and Miscellaneous Provisions Act, 1952, and rules made thereunder, (f) The Payment of Bonus Act, 1965, and rules made thereunder, (g) Payment of Gratuity Act, 1972, and rules made thereunder, (h) The Water (Prevention & Control of Pollution) Act, 1974, Read with Water (Prevention & Control of Pollution) Rules, 1975, (i) Food Safety and Standards Act, 2006, and rules made thereunder.
We have also examined compliance with the applicable clauses of the following:
(i) Secretarial Standards issued by the Institute of Company Secretaries of India. (ii) The Listing Agreements entered into by the Company with Bombay Stock Exchange.
During the period under review the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards, etc.
We further report that,
The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors and Independent Directors. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act.
Adequate notice is given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least seven days in advance.
Majority decision is carried through while the dissenting members views are captured and recorded as part of the minutes.
We further report that there are adequate systems and processes in the Company commensurate with the size and operations of the Company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines.
|Place: Mumbai||Practising Company Secretary|
|Date: 14th August, 2015||CP No. 7426|
Note: This report is to be read with our letter of even date which is annexed as ANNEXURE A and forms an integral part of this report.