Steelco Gujarat Ltd Directors Report.


The Members,

Your Directors are pleased to present the Twenty Seventh Annual Report of your Company together with the Audited Financial Statements for the year ended 31st March, 2017.


(Rs in Lakhs)
Particulars Current Year Ended Previous Year Ended
31.03.17 31.03.16
Sales / Other Income 53,499.97 50,849.01
(Net of Excise Duty)
Profit before Depreciation & Interest (693.25) 227.88
(Less) : Depreciation (252.15) (254.92)
Profit / Loss before interest & financial charges (945.40) (27.04)
(Less) : Interest & financial charges (2,128.81) (2,095.76)
Profit / (Loss) after interest & financial charges (3,074.21) (2,122.80)
Exceptional & extraordinary items 0.00 (2,221.43)
Profit after Exceptional & (3,074.21) 98.63
Extraordinary items
Net profit / (loss) before tax (3,074.21) 98.63
(Less) : Tax 0.00 0.00
Net profit / (loss) after tax (3,074.21) 98.63


Your Directors do not recommend any dividend on the equity shares of the Company in view of carried forward losses.


The overall sales during FY 2016-17 stood at 109,109 MT, increased by 5% over FY 2015-16 (104,052 MT) and in terms of revenue also, it has increased by approx. 5% from Rs 508.49 crores to Rs 534.99 crores. Further, the Company made cash loss of Rs 28.22 crores as compared to Cash Profit of Rs 3.53 crores of FY 2015-16.

The Steel Industry has been impacted adversely during the year and the Company faced various challenges due to certain factors which are as under: Global pressure due to structural demand slowdown; Significant overcapacity in China coupled with the slowdown in its domestic demand has resulted in Chinese Steel producers ‘dumping its production in overseas market at uneconomic rates for others to be able to compete and thus has adversely affected the Companys export market with lower margins; Lack of adequate working capital assistance from banks adversely affected the SGLs operations. With the support of third party financing, it resulted in a higher input cost, ultimately impacting margins of the Company; The domestic coated market has moved towards 1220 mm material with rapid growth in the colour coated steel sector and against that, the company was not able to participate in this high growth, high margin market, due to width concern; Discontinuance of Open Access Power by GETCO, resulting in considerably high power cost; and Fluctuation in raw material prices during the year.

There are challenges going forward in FY 2017-18, however, the outlook of the Company is optimistic in view of the following:

The Company is implementing various long-term measures to improve its cash flow and revival of the operations of the Company. The Company is exploring multiple options of financial restructuring and is in discussions with strategic investor to infuse long-term required finance for its critical capex plan and also for revival of its operations. The Company is also in discussion with lenders on its detailed Debt Resolution Plan envisaging proposed critical capex on colour coating line and Alu Zinc lines. On positive outcome of efforts in above direction, the Company and its management is hopeful to make optimum utilization of its resources, renegotiate its contracts and complete the on-going projects to generate future cash flows, meet its financial obligations towards lenders and creditors. The Company believes that these measures will not only generate cash flows for revival but will also result in future orders and consequently sustainable cash flows. The promoters also continue to be committed to providing the required operational support to Company in the foreseeable future;

• Strategies & markets with upcoming economy with colour coated products under capex;

• Starting of open Access power, which has already started resulting into significant saving in power cost, which is one of the major cost of the Company;

• Various steps being taken by the Government of India will help to grow steel industry as a whole;

The value-add capex of Colour Coating Line (CCL) has already started from June 2017 and is in operations with capacity of around 80%;

The proposed value-add capex of Aluminum Zinc (AZ) Line will enable the company to enhance the Companys viability in the market with wider market, both domestic & export, better margin and branding of the Company;

Diversifying the product basket and market;

Forward Integration by implementation of capex adding value added products resulting in higher realization per ton of production; and

With various products, the Company will be in a position to explore and penetrate new markets including domestic markets, which will enable sustained growth.


As such, as per the provisions of the Companies Act, 2013, there is no subsidiary Company of the Company.Metchem Singapore Pte. Ltd, during the year under review, have transferred all the shares of Steelco Colour Coating Limited, held by them, to SPICA Investment Ltd, Mauritius (holding company of the Company) and hence, Steelco Colour Coating Limited has become fellow subsidiary of Steelco Gujarat Limited as per the applicable Accounting Standards.


Dr. R. S. Mamak, Non-Executive Vice Chairman and Shri S. S. Ranjan, Independent Director ceased to be the directors of the Company due to their resignations w.e.f. 16th September, 2016 and 25th May, 2017.

Shri Amish H. Mehta has been appointed as an additional director of the company, who holds the office till the conclusion of the Annual General Meeting.

The Independent Directors on the Board of the Company, viz. Shri J. Mehra, Shri Mahendra Lodha, Shri S. S. Ranjan (upto 24th May, 2017) & Smt. Ameeta Trehan (Woman Director) and the Company has received confirmation / declarations from the Independent Directors of the Company under Section 149(6) of the Companies Act, 2013 and applicable provisions of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.

Shri Rashmi Chandaria ceased to be a director w.e.f. 29th July, 2017, due to his sad and sudden demise occurred on 29th July, 2017.


During the year under review, the details of Key Managerial Personnel are as under:

Sr. No Name of person Designation
1 Shri Mitesh H. Shah Managing Director
2 Shri Abhishek Jajoo Chief Financial Officer
3 Shri Achal Thakkar Company Secretary


Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, as may be applicable, a structured questionnaire was prepared after taking into consideration of the various aspects of the Boards functioning, composition of the Board and its Committees, culture, execution and performance of specific duties, obligations and governance. Respective member of the Board does not participate in the discussion of his / her evaluation. The Board of Directors expressed their satisfaction with the evaluation process.


The Company has complied with the provisions for holding Board Meetings and the gap between any two meetings did not exceed 120 days. Four meetings (including one adjourned meeting) of the Board of Directors of the Company were held during the year under review on 20/05/2016, 12/08/2016, 11/11/2016, 16/02/2017 (adjourned meeting of 14/02/2017).


The Company has a Whistle Blower Policy pursuant to Section 177 of the Companies Act, 2013 and the rules made thereunder and applicable provisions of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, to report genuine concerns of Directors and Employees. The Policy has been posted on website of the Company,


The Policy of the Company has been framed on Directors appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and remuneration of Key Managerial Personnel and other employees of the Company pursuant to Sub-section (3) of Section 178 and Regulation 19 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. The Policy has been posted on website of the Company,


Your Company is compliant of all mandatory requirements pursuant to SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. A separate report on Corporate Governance as stipulated by Regulation 72 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, along with the required certificate from a Practicing Company Secretary regarding compliance of the conditions of Corporate Governance as stipulated by the said Regulations is given in Annexure - 3.


Management Discussion and Analysis Report is given in Annexure - 4.


All transactions entered with related parties during the year under review, if any, were on arms length basis and in ordinary course of business and that the provisions of Section 188 of the Companies Act, 2013 are not attracted. Further, there is no material related party transaction during the year under review with the promoters, directors or key managerial personnel.


To the best of the knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 134(4) (c) of the Companies Act, 2013:

i. That in preparation of the annual accounts for the year ended 31st March, 2017, the applicable accounting standards read with requirements set out under Schedule III have been followed along with proper explanation relating to material departures, if any;

ii. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2017 and of the loss of the Company for the year ended on that date;

iii. That the Directors have taken proper and sufficient care 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 regularities;

iv. The annual accounts have been prepared on a ‘Going Concern basis;

v. That the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively, as such, however, the same needs to be strengthened further.

vi. That the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively.


The terms of present statutory auditors M/s Mukesh M. Shah & Co., Chartered Accountants, Ahmedabad, expired and they hold office until the conclusion of the ensuing Annual General Meeting.

The Company has received consent and requisite certificate from M/s. Walker Chandiok & Co., LLP, Chartered Accountants, as the Auditors to the effect that their appointment, if made, would be within the prescribed limit under Section 141 of the Companies Act, 2013, confirming their eligibility for appointment as Auditors of the Company.


Your Directors have appointed M/s A. G. Tulsian & Co., Cost Accountants, Ahmedabad, as Cost Auditors in compliance with the Companies (Cost Accounting Records) Rules, 2011.

The Cost Auditors have filed the Cost Audit Report for the financial year ended 31st March, 2016 within the due date.

Pursuant to provisions of section 148 of the Companies Act, 2013 read with the Companies (Audit & Auditors) Rules, 2014, and the Companies (Cost Records and Audit) Rules, 2014 and other applicable provisions, if any, the Board on the recommendation of the Audit Committee, has approved the reappointment of M/s A. G. Tulsian & Co., Cost Accountants, Ahmedabad as the Cost Auditors and remuneration payable to them, to conduct the audit of the cost records of the Company for the financial year ending 31st March, 2018. The Company has received a letter from M/s A. G. Tulsian & Co., Cost Accountants, Ahmedabad showing their willingness to be appointed as Cost Auditors, certifying that they are not disqualified under section 148(5) read with section 141(3) of the Companies Act, 2013.


The Company has received consent and requisite certificate from M/s. Devesh Vimal & Co., Practicing Company Secretaries, Vadodara, the present Secretarial Auditors, to the effect that their re-appointment, if made, would be within the prescribed limit, confirming their eligibility for re-appointment as Secretarial Auditors of the Company. Accordingly, M/s. Devesh Vimal & Co. has been re-appointed to act as Secretarial Auditors of the Company for the FY 2017-18.


Note No. 35 relating to preparation of financial statement on Going Concern basis, in spite of accumulated losses and their impact on net worth, is self-explanatory as regards the observation made by the Statutory Auditors in their report.

In Secretarial Audit Report Observations, relating to order of SEBI for non-compliance / delayed compliance of Minimum Public Shareholding, please refer to clause XI, para 5 of Corporate Governance Report, which is self-explanatory.


Pursuant to the provisions of section 204 of the Companies Act, 2013 and the rules made thereunder, the Company has appointed M/s. Devesh Vimal & Co. Practicing Company Secretaries, Vadodara to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is included as Annexure –5 and forms an integral part of this report.


The details forming part of the extract of the Annual Return in form MGT-9, as required under section 92 of the Companies Act, 2013 is included in this Report as Annexure – 6 and forms an integral part of this report.


The Company has appointed M/s. CNK & Associates LLP, Chartered Accountants, to report on adequacy and effectiveness of internal financial controls with reference to financial statements. During the year under review, such controls were tested and no reportable weakness in the design or operation was observed by them. The Statutory Auditors have opined that the Company has, in all material respects, internal financial controls over financial reporting, which is required to be strengthened further and its operative effectiveness requires improvement.


The Company is conscious of the importance of environmentally clean and safe operations. The Companys policy requires conduct of operations in such a manner so as to ensure safety of all concerned compliances environmental requirement regulations and preservation of natural resources.


As required by the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has formulated and implemented a policy on prevention of sexual harassment at workplace with a mechanism of lodging complaints. All employees (permanent, contractual, temporary, trainees) are covered under this policy. During the year under review, there were no cases filed pursuant to the Sexual Harassment of Women under Workplace (Prevention Prohibition and Redressal) Act, 2013.


The Company takes pride in the commitment, competence and dedication shown by its employees in all areas of business. The Company has structured induction process and management development programs to upgrade skills of managers. Objective appraisal systems based on Key Result Areas (KRAs) / Key Performance Areas (KPAs) are in place for management staff. The Company is committed to nurturing, enhancing and retaining top talent through superior learning & organizational development.


M/s Brickwork Ratings India Pvt. Ltd. had awarded BWR ‘B in respect of long term debts and BWR ‘A4 in respect of Short term Debts during FY 2015-16 and during the year under review, there has been no update on the rating renewal.


The disclosure of particulars relating to conservation of energy and technology absorption and foreign exchange earnings and outgo as required by Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 is given in Annexure - 1.


Considering the losses and exposure, the CSR requirements are not applicable to your Company; hence, the Company has not framed Corporate Social Responsibility (CSR) Policy.


In terms of the provisions of Section 197 (12) of the Act read with Rules 5(1), 5(2) and Rules 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees and the Disclosure pertaining to remuneration and other details are set out in Annexure – 2 to the Boards Report.

Having regard to the provisions of the first proviso to Section 136(1) of the Act and as advised, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the registered office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request.

None of the employees listed in the said Annexure - 2 is a relative of any Director of the Company. None of the employees hold (by himself or along with his / her spouse and dependent children) more than two percent of the equity shares of the Company.


Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

a) Details relating to deposits covered under Chapter V of the Act.

b) Details of remained, unpaid or unclaimed dividend at the end of year.

c) Issue of equity shares with differential right as to dividend, voting or otherwise.

d) Issue of shares (including Sweat Equity Shares) to employees of the Company under any scheme.

e) Neither the Managing Director nor the Whole Time Directors of the Company receive any remuneration or commission from any of its subsidiaries.

f) No significant or material orders passed by the Regulators or Courts or Tribunals, which impact the going concern status and Companys operations in future.


Your Directors take this opportunity to express their appreciation for the co-operation and assistance received from the Government of India, Government of Gujarat, Financial Institution, the Companys Bankers, Electricity Companies, Palej Gram Panchayat, other Government Agencies, Customers, Suppliers and Investors. Your Directors express gratitude to the investors for their confidence reposed in the Company and Co-operation, and especially to the employees for their dedicated service and support.


Statement in the Boards Report and Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be ‘Forward Looking Statements within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed or implied. Important factors that may make difference to the Companys operations include raw material availability and its prices, cyclic demand and the pricing in the Companys principal markets, changes in government policies, regulations, tax regimes, economic developments within India and countries in which the Company conducts business.

By order of the Board
For Steelco Gujarat Limited
Place : Mumbai Mahendra Lodha Mitesh H. Shah
Date : 30th August, 2017 Director Managing Director