Tulsyan NEC Ltd Directors Report.
Your Directors take immense pleasure in presenting 72nd Boards Report of your Company along with the Balance Sheet, Statement of Profit and Loss and Statement of Cash Flow for the financial year ended March 31, 2019.
The highlights of the financial results for the year are given below:
(Rs. In Lakhs)
|Particulars||FY 2019||FY 2018||FY 2019||FY 2018|
|Profit before tax including|
|Profit After tax||(22,259.28)||(15,753.55)||(21,879.17)||(16,111.59)|
|Proposed Dividend and tax thereon||-||-||-||-|
|Transfer to General Reserve||-||-||-||-|
|Earnings per Basic share||(151.28)||(107.15)||(145.86)||(70.08)|
RESULTS OF OPERATIONS AND STATE OF COMPANYS AFFAIRS AND FUTURE OUTLOOK:
During the year under review, demand for companies products showed an improvement and thus the sales and other receipts increased by 16%, YOY to Rs. 84911.64 lakhs and Loss after tax increased from Rs. 15753.55 lakhs to Rs.22259.28 Lakhs mainly due to finance cost.
The production of finished Steel in the country during the year witnessed a growth of 3.7% (Previous year 3.1%) over previous year and the import of finished steel registered an increase of 4.68%. Per capita finished Steel consumption in India was 70.90 kg in 2018. The companys steel production increased by over 8.84% over previous years production in terms of quantity and the growth was comparable to that of the industry.
Some of the other recent government initiatives in this sector are as follows:
An export duty of 30 per cent has been levied on iron ore (lumps and fines) to ensure supply to domestic steel industry.
Government of Indias focus on infrastructure and restarting road projects is aiding the boost in demand for steel. Also, further likely acceleration in rural economy and infrastructure is expected to lead to growth in demand for steel.
The Union Cabinet, Government of India has approved the National Steel Policy (NSP) 2017, as it seeks to create a globally competitive steel industry in India. NSP 2017 envisages 300 million tonnes (MT) steel-making capacity and 160 kgs per capita steel consumption by 2030-31.
The Ministry of Steel is facilitating setting up of an industry driven Steel Research and Technology Mission of India (SRTMI) in association with the public and private sector steel companies to spearhead research and development activities in the iron and steel industry at an initial corpus of Rs. 200 crore (US$ 30 million).
The Government of India raised import duty on most steel items twice, each time by 2.5 per cent and imposed measures including anti-dumping and safeguard duties on iron and steel items.
The II operations of the power plant improved during the year with demand and supply situation in Tamil Nadu improved to the company was able to improve capacity utilisation by 19% as compared to previous year. The operations of the Synthetic division showed improvement of about 21% over previous year.
During the year , SVC Co-operative Bank Limited vide their assignment agreement dated 19.01.2019 had assigned their financial assistance provided to the Company, along with all the underlying securities, rights title and interest in respect thereof to M/s. Prudent ARC limited, under Sec 5 of SARFAESI Act 2002.
PERSONNEL & INDUSTRIAL RELATIONS:
Overall, the industrial relations in all our manufacturing units are harmonious and cordial in nature. Your Company strictly believes that maintaining cordial industrial relations is the key to progress of the firm, individuals, management, industry and nation.
CHANGE IN THE NATURE OF BUSINESS:
The Company has not changed its nature of business in any manner during the financial year under review.
SHIFTING OF REGISTERED OFFICE OF THE COMPANY:
The Registered Office of the Company has been shifted from its present address "61, Sembudoss Street, Chennai-600001, Tamil Nadu" to the new address - "1st Floor, Apex Plaza, Old No.3, New No.77, Nungambakkam High Road, Chennai-600034, Tamil Nadu" w.e.f. 02nd April, 2019.
The Company has incurred loss during the year under review and hence the Directors have not recommended any payment as dividend to its shareholders.
The detailed capital structure of the Company as on 31-3-2019 is as follows: a. Authorized Share Capital: The Authorized Share Capital of the Company is Rs. 36,00,00,000/- (Rupees Thirty Six Crores only) divided into 1,60,00,000 Equity Shares of Rs. 10/- each and 2,00,00,000 6% Non-Convertible Redeemable Preference Shares of Rs. 10/- each. b. Issued and Subscribed Share Capital: The Issued & Subscribed Share Capital of the Company is Rs. 15,00,00,000/- (Rupees Fifteen Crores only) divided into 1,50,00,000 Equity Shares of Rs. 10/- each.
c. Paid-up Share Capital: The Paid-up Share Capital of the Company is Rs. 23,54,55,281/- (Rupees Twenty Three Crores Fifty Four Lakhs Fifty Five Thousand Two Hundred and Eighty One only) divided into 1,45,06,790 Equity Shares of Rs. 10/- each, 1,96,989 Equity Shares of Rs. 6/- each (Partly Paid-up), 2,96,221 Equity Shares of Rs. 3/- each (Partly paid-up) and 88,43,000 6% Non-Convertible Redeemable Preference Shares of Rs. 10/- each.
TRANSFER TO RESERVES:
Your Company proposes not to transfer any sum to Reserves of the Company.
During the year under review, the Company did not raise any funds which could be classified within the ambit of the term "Deposits" under Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 and Circulars as amended from time to time.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013:
Details of Loans, Guarantees or Investments pursuant to the provisions of Section 186 of the Companies Act, 2013, for the financial year under review, are disclosed under the notes to Financial Statements forming part of this annual report.
INTERNAL FINANCIAL CONTROLS AND ITS ADEQUACY:
The Company has a well-placed, proper and adequate internal control system, which ensures that all assets are safeguarded and protected and that the transactions are authorized, recorded and reported correctly. The Internal Financial Controls with reference to financial statements as designed and implemented by the Company are adequate. During the year under review, no material or serious observation has been received from the Internal Auditors of the Company for inefficiency or inadequacy of such controls.
The Board of Directors has appointed M/s. Sunil Ahuja and Associates, Chartered Accountants, as the Internal Auditors of the Company. The Internal Auditors independently evaluate the adequacy of internal controls and concurrently audit the majority of the transactions in value terms. Independence of the audit and compliance is ensured by direct reporting of Internal Auditors to the Audit Committee of the Board. During the year, the Company continued to implement their suggestions and recommendations to improve the control environment.
MATERIAL CHANGES AND COMMITMENTS:
There were no significant material changes and commitments, affecting the financial position of the Company which have occurred between the end of the Financial Year of the Company to which the Financial Statements relate and the date of the report.
CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY:
As required under section 135 of the Companies Act, 2013, the CSR Policy was formulated by the CSR Committee and thereafter approved by the Board. During the last three financial years, the Companys average net Profit after tax on Standalone basis is negative and hence the Company is not required to spend any amount on CSR activities. The Annual Report on Corporate Social Responsibility (CSR) Activities is enclosed as Annexure-A to this Report.
Soft copies of the Annual Report 2018-2019 along with the Notice of 72nd Annual General Meeting are sent to all members whose email addresses are registered with the Company / Depository Participant(s). For members who have not registered their email addresses, hard copies of the Annual Report 2018-2019 along with the Notice of 72nd Annual General Meeting are sent to them in the permitted mode. Members requiring hard copies of the Annual Report can send a request to the Company. Further, the soft copy of the Annual Report is also available on our website (www.tulsyannec.in)
MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
In terms of provisions of Regulation 34 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, (hereinafter referred to as Listing Regulations) the Management Discussion and Analysis Report is given under separate section and forming part of the annual report.
CORPORATE GOVERNANCE REPORT:
In accordance with Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Report on Corporate Governance along with the Practicing Company Secretary Certificate confirming compliance is given under separate section and forming part of the annual report.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES AND JUSTIFICATION FOR THE SAME:
None of the transactions with the related parties were in conflict with the Companys interest. The Companys major related party transactions are generally with its subsidiary companies.
During the year under review, the contracts or arrangements with related parties referred to under section 188 of Companies Act, 2013 were on arms length basis and in the ordinary course of business. Accordingly, the particulars of the transactions as prescribed in Form AOC - 2 pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014 are disclosed herein as an Annexure-B to this Report.
RISK MANAGEMENT POLICY:
The Company has developed and implemented a risk management policy 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 and the Audit Committee periodically undertake a review of the major risks affecting the Companys business and suggests steps to be taken to control and mitigate the same.
WHISTLE BLOWER POLICY:
In terms of the provisions of section 177(9) of the Companies Act, 2013 and rules framed thereunder, the Company has framed a Whistle Blower Policy
/ Vigil Mechanism with an objective of encouraging the employees of the Company to raise any concern about Companys operations and working environment. It provides a channel to the employees to report to the management concerns about unethical behavior, actual or suspected fraud or violation of any code of conduct or policy in force.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:
Information as required to be given under section 134(3) (m) read with rule 8(3) of the Companies (Accounts) Rules, 2014 is provided under Annexure-C forming part of this Report.
PARTICULARS OF EMPLOYEES:
The information required under section 197 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 in respect of Directors and Employees of your Company is set out in Annexure-D to this report.
DETAILS OF SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES:
The Company doesnt have any Joint Venture and Associate Companies. Further, pursuant to the provisions of Section 129(3) of the Companies Act, 2013, a statement containing the salient features of the financial statements of Subsidiaries in the prescribed Form AOC-1 is provided under Annexure-E to this Report. The statement also provides the details of the performance of the Subsidiary Companies, financial positions of each of the subsidiaries and their contribution to the overall performance of the Company during the period under report.
EXTRACT OF ANNUAL RETURN:
An extract of Annual Return in Form No.MGT-9 as required under Section 92 of the Companies Act,
2013 for the financial year ended March 31, 2019 is annexed hereto as an Annexure-F and forms part of this report.
SIGNIFICANT / MATERIAL ORDER PASSED BY THE REGULATORS:
No such significant and material orders have been passed by any regulators/ courts/ tribunals against the Company which will impact the going concern status and Companys operation in future.
AUDITORS: a. Statutory Auditors & their Report
M/s. CNGSN & Associates LLP, Chartered Accountants, Chennai, having LLP Identity Number: AAC-9402, having Firm ICAI Registration No: 004925S/S200036 was appointed as Statutory Auditors of the Company at the 70th AGM till the 74th Annual General Meeting. The Auditors Report contains the following qualifications for which the necessary response has been given by the management as follows:
|Auditors Qualification||Managements Reply|
|The Company is continuously incurring losses and its net worth is totally eroded as on 31.03.2019. During the Financial Year 2015-16, the Companys loans and liabilities were restructured under the Corporate Debt Restructuring Scheme. As per the said Scheme, the companys repayment obligations were deferred/ restructured. The banks also provided certain reliefs / waivers / sacrifices by reducing the rate of interest. Interest was provided in the books at the lowered rates of interest. However the bankers had withdrawn the concession with retrospective effect and charged the interest at original rates. Consequent to withdrawal of concessions, few banks have debited the account of the company for the differential amount of interest and other concessions given as per the CDR Scheme. The period 1. of withdrawal relate from 1st May 2014 to the date of debit. The company has sought waiver of the said debits in the restructuring proposal submitted to the Bank which is pending with the bankers. Pending acceptance of the waiver sought, the charges as debited has been recognized as finance charges during the year. Based on information and explanation given to us, the company is also in the process of restructuring its borrowings from banks and finalising alternative business plans which are expected to result in profits in the near future. The Companys ability to continue as a Going Concern is depended upon the successful implementation of the uncertainty and same. The above indicates a significant doubt about the companys ability to continue as a Going Concern.||The company has shown improved performance in sale of steel during the year as compared to the previous year and with the steel sector showing sign of recovery and buoyancy the Turnover and profitability would increase further during the Current FY. With respect to the power division the sales during the last few months have shown improvement with increase in the demand. Together the performance from current FY is expected to be better than what was witnessed in the last few years. Despite the losses incurred and unfavourable business circumstances, the company is able to achieve reasonable levels of Capacity utilization and is in a position to meet all its operational expenses from out of operations and is up to-date with all obligations except the interest to the Banks. The company has made a resolution proposal to the Banks which is under their consideration. Therefore all the uncertainties have been reasonably addressed with definite plan and proposal and therefore the Board firmly believes that the company would be able to continue as a going concern.|
|Auditors Qualification||Managements Reply|
|There has been an inspection during January 2019 by GST officials during which the said officials have pointed out that on purchases to the tune of Rs.61.64 crores involving GST of Rs.11.10 crores, the parties/supplier have not remitted the GST collected on such purchases, and the company had to pay the said amount to the GST Department as transpired from the books of accounts. The company has debited the amounts so paid to the account of the vendor and have accordingly recovered Rs.6.24 Crores and the balance is to be recovered in due course.||The Company has paid the GST amount as demanded and will be recovering the same from the vendor. In view of this, there wont be any liability on the Company in this regard. The Company is in total compliance of GST Law in this regard.|
b. Reporting Of Frauds By Auditors
During the year under review, the Statutory Auditors has not reported any instances of fraud committed against the Company by its officers or employees, to the Audit Committee, under Section 143(12) of the Companies Act, 2013, the details of which would have been required to be mentioned in the Boards Report. c. Cost Auditors
The Board of Directors, on recommendation of the Audit Committee, has approved the re-appointment of Messrs Murthy & Co. LLP, Cost Auditors of the Company for the financial year ending 31st March, 2020, under section 148 of the Companies Act, 2013, and recommends ratification of his remuneration by the shareholders at the ensuing Annual General Meeting of the Company. Further, maintenance of cost records as specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013, is required by the Company and accordingly such accounts and records are made and maintained. d. Secretarial Auditors
Pursuant to the provisions of section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company has engaged the services of M/s. M. Damodaran
& Associates, a firm of Company Secretaries in practice, Chennai, to conduct the Secretarial Audit of the Company for the 12 months period ended on 31st March, 2019. The Secretarial Audit Report in Form MR-3 is attached as Annexure-G, to this Report. The Secretarial Audit Report contains some observations as mentioned below:
|Observations by Secretarial Auditors||Our Reply|
|The composition of the Board and Nomination & Remuneration Committee of the Company was not in compliance with Regulation 17(1) (a), Regulation 17(1) (b) and Regulation 19(1) (b) of SEBI (LODR) Regulations, 2015. However, subsequently, the Board has appointed Mr. M. Parthasarathy, This has been subsequently complied Independent Director (Non-Executive) w.e.f. 13.11.2018 and thereafter, with the composition of the Board and the Committee is in compliance with Regulation 17(1) (a), Regulation 17(1) (b) and Regulation 19(1) (b) of SEBI (LODR) Regulations, 2015. There was a delay in submission of the financial results by the Company to the BSE for the quarter and financial year ended on 31st March, 2018 The delay was unintentional pursuant to Regulation 33(3) of SEBI (LODR) Regulations, 2015. The said results were submitted to the BSE on 08th August, 2018.|
e. Secretarial Standards
The Company has complied with all the applicable Secretarial Standards issued by the ICSI.
DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to the provisions of section 134(3)(c) read with Section 134(5) of the Companies Act, 2013, the
Board of Directors, to the best of their knowledge and ability, confirm that:
a) in the preparation of the annual accounts, the applicable Accounting Standards had been followed along with proper explanation relating to material departures; b) they 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 of the profit and loss 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 the 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; e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and f) 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.
DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL:
a. Change in Board Constitution
During the year following changes were occurred in the Composition of the Board of Directors- (i) At the 71st AGM held on 28th September, 2018, Mr. Sanjay Tulsyan, Managing Director of the Company, who was retired from his office by rotation and being eligible offered himself for re-appointment, was re-appointed as a Director of the Company and is liable to retire by rotation.
(ii) Mr. Manogyanathan Parthasarathy has been appointed as an Additional Director (Non-Executive and Independent) of the Company w.e.f. 13th November, 2018 and his tenure shall expire at the ensuing Annual General Meeting and being eligible his appointment as Independent Director (Non-Executive) of the Company has been recommended to the shareholders at the ensuing Annual General Meeting for approval.
(iii) The Board, upon recommendation of the Nomination and Remuneration Committee, in their respective meetings held on 13th February, 2019, has re-appointed Mr. Chakkolath Ramachandran (DIN: 00050893), who has attained the age of 80 years, as a Non-Executive Independent Director of the Company to hold the office for a second term of five (5) consecutive years w.e.f. from April 1, 2019 via approval of the shareholders through Postal Ballot results dated 27th March, 2019. b. Change in Key Managerial Personnel
Mr. Rakhal Panigrahi, Company Secretary and Compliance officer of the Company has been resigned from the service of the Company w.e.f. 29th October, 2018 and in his place Mrs. Parvati Soni has been appointed as the Company Secretary cum Compliance officer and KMP of the Company by the Board of Directors with immediate effect. c. Policy for Remuneration to Directors, KMP & Other Senior Management Personnel
The Remuneration policy for the Directors/KMP and other Senior Management Personnel is given under Annexure-H to this Report.
d. Declaration by Independent Directors
The Independent Directors on the Companys Board have given their respective declarations that they meet the criteria of Independence as provided under Section 149(6) of the Companies Act, 2013 and Chapter IV of SEBI (Listing Obligations and disclosure Requirements) Regulations, 2015.
e. Familiarization Programme for Independent Directors
The Company has adopted policy of Familiarization Programme for Independent Directors.
f. Performance Evaluation
Pursuant to the provisions of Section 134 of the Companies Act, 2013 read with Schedule IV of the Act and also in line with Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, the Independent Directors of the Company met on 13th February 2019 without the attendance of Non Independent Directors and Members of the Management and reviewed the performance of Non-Independent Directors and the Board as a whole. They also reviewed the performance of the Chairperson.
The Board has adopted a formal mechanism for evaluating its performance as well as that of its Committees and Individual Directors, including the Chairman of the Board. The exercise was carried out through a structured evaluation process covering various aspects of the Board functioning such as composition of the Board & Committees, experience & competencies, performance of specific duties & obligations, contribution at the meetings and otherwise, independent judgment, governance issues etc.
NUMBER OF MEETINGS OF THE BOARD AND ITS COMMITTEE HELD DURING THE YEAR:
The details of the meetings of the Board and its committees held during the financial year 2018-2019 are given in the Corporate Governance Report which forms part of the Annual Report.
INTERNAL COMPLAINTS COMMITTEE:
The company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company has constituted an Internal Complaints Committee to prevent and prohibit any form of sexual harassment at workplace and provide redressal for woman employees as required under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year, the members of Internal Complaints Committee met on 13th November 2018 and noted that there was no event affecting any of the women employees on account of any sexual harassment at the work place.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF):
During the year under review, the Company has transferred a sum of Rs. 1,76,580/- unclaimed/unpaid final dividend amount pertaining to the Financial Year 2010-11 to the Investor Education and Protection Fund (IEPF) in compliance with applicable provisions of the Companies Act, 2013. Further the unclaimed/unpaid dividend amount pertaining to the Financial Year 2011-12 will be credited to the IEPF on 02nd November, 2019 and the corresponding shares on which dividend was unclaimed or unpaid for seven consecutive years will also be transferred to IEPF as per the procedures set out in the Rules.
LISTING ON STOCK EXCHANGES:
Our Companys shares are suspended from trading w.e.f. 29th November, 2016. All the revocation norms has been complied with by the Company. However, there should not be any difference between the Listed Capital and Issued Capital of the Company as per SEBI norms on revocation of suspension and in order to comply with this, the Management is taking all necessary steps and actions to uplift the suspension at earliest.
Your Directors wish to extend their sincerest appreciation to the investors, bankers, customers, suppliers, executives, staffs and workers at all levels for their continuous co-operation and assistance. Your Directors express their sincere gratitude to all the Regulatory Authorities such as the SEBI, Stock Exchanges and other Central & State Government authorities and agencies, Registrars for their guidance and support.
Your Directors place on record their sincere appreciation for the continued support from shareholders, customers, suppliers, banks and financial institutions and other business associates.
By Order of the Board of Directors For Tulsyan NEC Limited Sd/-
Lalit Kumar Tulsyan Executive Chairman DIN: 00632823
Place: Chennai Date: 14-08-2019 Registered Office:
Apex Plaza, I Floor, New No.77, Old No.3, Nungambakkam High Road Chennai-600034, Tamil Nadu