Pursuant to the regulation 34 read with the Schedule V of the SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015, your Directors wish to report as follows:
(i) Industry Structure & Developments:
The downstream steel industry, consisting of Cold Rolled (CR), Galvanised and Color
Coated products (GP & GC), has witnessed strong growth in demand over the recent
years. The focus to shift towards light weight, corrosion resistant, durable, high-shine
products across industries & applications has driven the demand.
Globally, financial year 2018 saw an average capacity utilization of 68% on cold
rolling with excess capacity varying between 20%-30% across China, India, Middle East and
Europe. Galvanizing lines saw a higher utilization during the period driven by shift from
CR to GP in end use. Across countries, the share of imports/ trade varied between 10-20%
of the total domestic consumption with China and India being one of the key exporters of
downstream products.
(ii) Opportunities & Threats:
The demand for downstream steel in India is expected to keep growing at a healthy rate
of 10-12% driven by a shift towards usage of galvanized materials and strong underlying
growth in the auto, construction, appliances and machinery industries. There is a huge
scope for Indian steel makers due to the countrys low per capita steel consumption and
positive future outlook due to increase in consumption from construction, automobile and
railways sectors. The ambitious infrastructure projects and the thrust in manufacturing
through the "Make in India" campaign are steps in the right direction. The plan
for smart cities, improved road and rail connectivity by building highways, bridges and
dedicated freight and superfast rail corridors have huge potential to spur domestic steel
demand While looking at the future planned capacity expansions, it is expected that the
capacity utilization for galvanized will exceed 90% over the next five years and we will
face a shortage of color coated capacity. This will result in healthy margins for the
existing players and drive revival of the downstream steel business in India further.
(iii) Segment-wise or Product-wise Performance:
Since your Company operates only in one Segment, segment-wise or product- wise analysis
of performance is not applicable.
(iv) Outlook :
Steel industry has been through one of the difficult phase largely due to impact of
supply disruptions with many players having to stop operations and your Company was not
immune it. However, the demand for the downstream steel products remains strong on back of
growth in the construction, auto and appliance sectors in India. The emerging markets
showing a strong demand due to infrastructure spending and shift towards usage of coated
products. Also with the introduction of GST, multiple new domestic markets will open up to
the Company for sale of products at competitive prices. In addition to all, the government
has put the resolution of stressed assets on fast track. The positive impact of stable
supply will be seen in next financial year.
(v) Risks and Concerns:
Risks, challenges and volatility are part and parcel of any industry and always the
point of concerns for the management of the Company. Your Company has subdued it through
well planned strategies and actions. Your Company is continuously evolving and improving
systems and measures to take care of all the risk exigencies involved in the business. All
inherent risks are identified, measured, monitored and regularly reported to the
management. The management decides measures required to overcome these risks and ensures
implementation of proper risk mitigation plans. The risk report and mitigation plans are
presented to the Board of Directors periodically In accordance with Regulation 17 of the
Securities Exchange Board of India (Listing Obligations and Disclosure Requirements)
Regulations, 2015, your Company has duly adopted steps for framing, implementing and
monitoring the risk management plan and accordingly your Directors have put in place
critical risk management framework across the Company for identification and evaluation of
all potential risks.
(vi) Internal Control Systems and their adequacy:
Your Company has an effective Internal Control System to prevent fraud and misuse of
Companys resources and protect shareholders interest. The base of Internal Control
System lies in the Code of Conduct (‘CoC) and various policies and procedures
adopted by your Company. Board Members, Senior managements and every Employees in an
organization carries the responsibility for internal control. All employees produce
information used in the internal control system or take other actions needed to affect
control. Also, all personnel are responsible for communicating to seniors about the
problems in operations, non-compliances with the code of conduct / applicable laws, or
other policy violations or illegal actions. Your Company has also established and
maintained the Internal Financial Control to ensure the orderly and efficiently conduct of
its business inter alia adherence to Companys policies, the safeguarding of its assets,
the prevention and detection of frauds and errors, the accuracy and completeness of the
accounting records, and the timely preparation of reliable financial information, as
required under the Companies Act, 2013.
(vii) Discussion on Financial Performance with respect to Operational Performance and
state of Companys affairs:
The turnover and operating profits of your Company
havedeclinedascomparedtolastyearmainlyonaccount of delay in finalising debt resolution for
the Company. During the financial year, though the Company worked closely with various
Banks/ Financial Institutions to arrive at sustainable debt resolution plan, a mutually
acceptable scheme could not be finalised. The position further worsened after adverse
media news in market that the Company is being referred to National Company Law Tribunal
under Insolvency and Bankruptcy Code 2016. Due to these adverse media reports, the market
credit available to your Company was withdrawn which has deteriorated the working capital
position of the Company. Operating at suboptimal capacity has worsened the profitability
of the Company. In the meanwhile, the dues of the, Banks / Financial Institutions have
increased significantly. Despite adverse circumstances, the management is making all
efforts to improve capacity utilization and to arrive at a satisfactory debt resolution
with the Banks. In this regard, an One Time Settlement proposal has been submitted to the
Banks which is under consideration.
(viii) Human Resources Development and Industrial Relations:
Your Company endeavors to strive hard to nurture and develop their employees so that
the organization and individual employees can accomplish their work goals in service to
the end users. Your Company, on its path towards a culture of meritocracy, has put in
unprecedented vigor in identifying Key Result Areas, the targets which are identified for
each and every employee in accordance with the business objectives. This rigorous approach
has directly led to process re-engineering and right-sizing, resulting in reduction of
overhead costs. Also based on industry best practices, the competency framework which your
Company had institutionalized last year has aptly supported in identifying and developing
talent in the organization. Your Company is proud of its healthy Industrial Relations
record.
Presently, your Company employs more than 900 employees. Your Company has put in place
‘Employee Grievance Redressal Committee for their employees. Suitable processes and
mechanism are in place to ensure that grievance of any employee, is effectively addressed
and to ensure that it has been dealt with in a fair and just manner.
Your Company has in place an Anti-Sexual Harassment Policy in line with the
requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress
complaints received regarding sexual harassment. All employees (permanent, contractual,
temporary, trainees) are covered under this policy. No complaints pertaining to sexual
harassment were received during financial year 2017-18.
RELATED PARTY TRANSACTIONS
The transactions those were entered into with the Related Parties (RPT) during the
financial year were on arms length basis and in the ordinary course of business and in
compliance with the applicable provisions of the Companies Act, 2013 and Securities
Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations,
2015 (hereinafter "Listing Regulations"). During the year, there was no
transaction with any Related parties, which exceeds 10% of the annual consolidated
turnover of the preceding financial year (material transactions). Hence, the disclosure of
material related party transactions in the Form AOC-2, as referred in Section 188 read
with Section 134(3) (h) of the Companies Act, 2013 is not required to be annexed herewith
CORPORATE GOVERNANCE
A detailed report on Corporate Governance as required under Regulation 34 of the
Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements)
Regulations, 2015 ("Listing Regulations"), forms part of this Annual Report as ‘Annexure
I. The Auditors Certificate on compliance with the conditions of Corporate
Governance requirements by the Company is attached to the Report thereon.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
In accordance with the requirements of Section 135 of Companies Act, 2013 read with the
Companies (Corporate Social Responsibility Policy) Rules, 2014 as amended from time to
time, your Company has duly constituted Corporate Social Responsibility Committee, under
the Chairmanship of Shri G S Sawhney and two other Members namely Shri Rajiv Munjal and
Shri Arvind Kumar Gupta. The Committee has framed the Corporate Social Responsibility
Policy of the Company which is available on the Companys website. Since there was loss
during the financial year ended 31st March, 2017, the Company was not
mandatorily required to spend any amount on CSR activities in the financial year 2017-18.
Thus no report for CSR activities is required to be annexed herewith.
DIRECTORS & KEY MANAGERIAL PERSONNEL (KMP) (i) Appointment:
Shri Arvind Kumar Gupta (DIN 03203379) and Smt. Jagath Chandra (DIN 07147686) were
appointed as an Additional Directors from 19th January, 2018 and 7th
April, 2018 respectively. They both will act as Non-Executive and Independent Directors of
the Company and shall not be liable to retire by rotation as per provisions of Companies
Act, 2013.
The aforesaid Directors have submitted their declaration of Independence, as required
under subSection (7) of Section 149 of the Companies Act, 2013 and Regulation 16(1)(b) of
the SEBI Listing Regulations stating that they meet the criteria of independence as
provided therein.
The Board recommends and seeks your support in confirming the appointment of Shri
Arvind Kumar Gupta and Smt. Jagath Chandra as the Independent Directors.
(ii) Resignation:
Shri O P Gahrotra and Smt. Swarna Prabha Sukumar resigned from the post of
non-executive Independent Directorship and committees where they were serving as Chairman/
Member. Their resignations were accepted by the Board in their Meeting held on 7th
April, 2018. The Board placed on records its appreciation towards the valuable
contribution of Shri O P Gahrotra and Smt. Swarna Prabha Sukumar, during their tenure with
the Company.
(iii) Retire by Rotation:
As per the provisions of the Companies Act, 2013, Shri Rajiv Munjal will retire at the
ensuing AGM and being eligible, seeks re-appointment. The Board recommends and seeks your
support in confirming re-appointment of Shri Rajiv Munjal.
None of the Directors of your Company is disqualified under Section 164(1) of the
Companies Act, 2013. As required by law, this position is also reflected in the Auditors
Report.
Pursuant to Section 203 of the Companies Act, 2013, the Key Managerial Personnel of the
Company are, Shri Anuj R Miglani- Managing Director & CEO; Shri Gursharan Singh
Sawhney - Director (Finance) & Group CFO and Shri R Agrawal- President & Company
Secretary. During the year, there has been no change in the Key Managerial Personnel.
REMUNERATION OF THE DIRECTORS/ KEY MANAGERIAL PERSONNEL (KMP)/ EMPLOYEES
The Board on recommendation of the Nomination & Remuneration Committee, has
adopted, a policy for selection and appointment of Directors, Senior Management and their
remuneration. A brief detail of the policy is given in the Corporate Governance Report and
also posted on our website www.uttamgalva.com During the year under review the
remuneration paid to the Managerial personnel, is well within the ambit of the provisions
and compliances under the Companies act, 2013 and Schedule V and rules made thereof.
During the year under review no Employee of the Company other than the Managing
Directors has drawn remuneration of Eight Lakhs and Fifty Thousands per month or more.
The information required pursuant to Section 197(12) read with Rule 5 of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended time to
time, in respect to remuneration to the Whole Time Directors and Key Managerial Personnel
is prepared separately forming part of this report. Having regard to the provisions of the
first proviso of Section 136(1) of the Companies Act, 2013, the Annual Report is being
sent to the Members of the Company excluding the aforesaid information. However, the said
information is available for inspection at the registered office of the Company on any
working days upto the date of the ensuing Annual General Meeting.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act, 2013, the Directors confirm that: i)
In the preparation of the annual accounts, the applicable Accounting Standards have been
followed along with the proper explanation relating to material departures. ii)
Appropriate Accounting Policies have been selected and applied consistently. 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, 2018 and of the Profit and Loss
Account for the Financial Year 2017-18 have been made. 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
preventing & detecting fraud and other irregularities. iv) The Annual Accounts have
been prepared on a going concern basis. v) The Internal Financial Controls were in place
and that there are adequate and were operating effectively; vi) Proper systems are in
place to ensure compliance of all laws applicable to the Company and that such systems are
adequate and operating effectively.
STATUTORY AUDITORS AND THEIR REPORT
Pursuant to the provisions of Section 139 of the Companies Act, 2013 read with
Companies (Audit and
Auditors) Rules, 2014, as amended from time to time, M/s. Todarwal & Todarwal,
Chartered Accountants (Firm Registration No. 111009W), were appointed as statutory
auditors from the conclusion of the 32ndAnnual General Meeting (AGM) held on 19th
August, 2017 till the conclusion of the 35th AGM of the Company, subject to the
ratification of their appointment at every AGM, if required under law. Accordingly,
necessary resolution for ratification of appointment of auditors is included in the Notice
for this AGM.
COST AUDITORS AND THEIR REPORT
As per Section 148 of the Act read with Companies (Cost Records and Audits) Rules,
2014, as amended and on the recommendation of the Audit Committee, the Board of Directors
of your Company has reappointed M/s. Manisha & Associates, Cost Accountants as
"Cost Auditors" to conduct Cost Audit for Steel and Power Division of the
Company for the Financial Year 2018-19. As required under the Companies Act, 2013, a
resolution seeking Members approval for the remuneration payable to the Cost Auditors
forms part of the notice of the Annual General Meeting for their ratification. The Cost
Audit Report of the Company for the Financial Year ended 31st March,2017 was
duly filed with Central Government within the stipulated time as prescribed under
Companies Act, 2013 read with Companies (Cost Records and Audit) Rules, 2014
SECRETARIAL AUDIT
The Secretarial Audit of the Company for the financial year 2017-18, was carried out by
M/s. JNG & Co., Practicing Company Secretaries (C.P. No. 8108). The Secretarial Audit
Report is annexed hereto and part of the Directors Report as an ‘Annexure II.
The said report does not contain any qualification, reservation or adverse remarks.
SUBSIDIARY & JOINT VENTURE COMPANIES
The Company has 7 Wholly-Owned Subsidiary Companies and 1 step down subsidiary of the
Company namely (i) Uttam Galva Holdings Limited in Dubai, (ii) Atlantis International
Services Limited in British Virgin Islands, (iii) Uttam Galva Steels Netherlands B.V. in
Netherland, (iv) Neelraj International Trade Limited in British Virgin Islands, (v) Uttam
Galva Steels BVI Limited in British Virgin Islands and (vi) Uttam Exports BVI Ltd. in
British Virgin Islands (vii)
Uttam Galva North America, Inc. and (viii) Uttam Galva International, FZE (Step down
Subsidiary) in Jebel Ali Free Zone in United Arab Emirates, the subsidiary of Uttam Galva
Holdings Limited, Dubai.
Apart from the aforesaid subsidiaries, your Company also has 2 Joint Venture Companies
namely (i) Texturing Technology Private Limited and (ii) Moira Madhujore Coal Limited.
The Company has, in accordance with Section 129(3) of the Companies Act, 2013 prepared
consolidated financial statements of the Company and all its subsidiaries, which form part
of the Integrated Report. Further, the report on the performance and financial position of
each of the subsidiary and joint venture and salient features of the financial statements
in the prescribed form AOC-1 is annexed to this report as ‘Annexure III. In
accordance with Section 136 of the Companies Act, 2013, the audited financial statements,
including the consolidated financial statements and related information of the Company and
financial statements of each of the subsidiary will be available on our website www.uttamgalva.com.
These documents will also be available for inspection during business hours at the
Registered Office of the Company.
During the year, in one of the Subsidiary of the Company namely Uttam Galva Steels BVI
Limited, the Lender has appointed receiver due to default in repayment made by that
Company.
HEALTH, SAFETY AND ENVIRONMENT
Your Company values environmental protection and safety as the major considerations in
its functioning. We have well-versed pollution control devices namely Air Pollution
Control device (scrubber followed by fume extraction system and adequate height of
chimney) to ensure level of pollutant parameter which are well within the standard norms.
Your Company has zero water discharge unit and 100% of Industrial waste water is being
recycled and reused in the process which comprises ETP, UF, RO, and MVRE & MEE. Your
Company has Sewage Treatment Plant to treat and reuse treated domestic waste water for
flushing and gardening. We have also appointed a laboratory which is approved by Ministry
of Environment and Forests
(MOEF) & National Accreditation Board to monitor the maintenance of environment on
monthly basis. Your Company is yearly submitting Hazardous waste return and Environment
Statement Report to Maharashtra Pollution Control Board.
The Company is continuously endeavoring to improve the health and quality of life in
the communities surrounding its industrial complexes.
DISCLOSURES UNDER THE COMPANIES ACT, 2013 i) Extract of Annual Return:
The details containing the extract of the Annual Return is enclosed in the Form MGT-9
as an ‘Annexure IV and forms part of this report. ii) Particulars of
Loans, Guarantee or Investment:
Details of Loans, Guarantees and Investments covered under the provisions of Section
186 of the Companies Act, 2013 are given in the notes to the Financial Statements. Kindly
refer note no. 4 of the stand-alone balance sheet. iii) Conservation of Energy,
Technology Absorption, Foreign Exchange Earnings and Outgo: a) Conservation of Energy
The Company has an Energy Conservation Cell which ensures implementation of the Energy
Conservation efforts &Energy Management Policy. Conservation of the energy is a
continuous activity and the Company continually strives to conserve energy. During the
year under review followings steps has been taken by the Company to conserve energy at its
Plant: Monitor and Optimize process parameters in the combustion system of all the thermal
equipments in the Plant. This includes Incinerators, Galvanizing furnace, Annealing
furnace, Acid Re-generation Plant, Boilers etc.
The Company has installed variable speed drive in the Utility System (both water and
air) to ensure that energy is conserved.
During the year under review, the Company has not taken any steps for utilizing
alternate source of energy. During this year under review, no capital expenditure has been
incurred in energy conservation equipment.
Energy conservation has been carried out by effective process optimization.
b) Technology Absorption
The Companys products are manufactured by using in-house know how and no outside
technology is being used for manufacturing activities. The Company has fully absorbed the
technology. The Company constantly strives for maintenance and improvement in quality of
its products and entire Research & Development activities are directed to achieve the
aforesaid goal.
c) Foreign Exchange Earnings & Outgo
During the year under review, the Company has exported its product in various countries
and has also made expenditure in foreign currency. The details of the foreign exchange
earnings & outgo are as below:
|
|
in Crore |
| Particulars |
2017-18 |
2016-17 |
| Foreign Exchange Earnings |
176.84 |
1261.73 |
| Value of direct Imports |
122.29 |
1089.60 |
| Expenditure in Foreign Currency |
15.71 |
61.69 |
iv) General Disclosures:
Your Directors state that no disclosures/ reporting are required since there were no
transactions in respect of the following items during the year under review: a. Details
relating to deposits covered under Chapter V of the Act. b. Significant and material
orders passed by the Regulators or the Courts which would impact the going concern status
of the Company and its future operations. c. Issue of Equity shares with differential
rights 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 not
the Whole Time Directors of the Company receive any remuneration or commission from any of
its subsidiaries. f. During the year,ArcelorMittal Netherlands B.V. (Co-promoter) sold
their entire shareholding (inter-se transfer between the promoters) to the other promoter
Group Company and Co-Promotion Agreement between the promoters stands terminated from on 7th
February, 2018. The necessary compliances under SEBI (LODR) Regulations have been
duly complied with. However, some of the shareholders of the Company filed an appeal with
the Honble Securities Appellate Tribunal(SAT) challenging the approval given by National
Stock exchange of India and BSE Limited. The matter is pending with the Honble appellate
tribunal.
CAUTIONARY STATEMENT
Statements in this Directors report and in the Management Discussion and Analysis
describing the Companys objectives, projections, estimates, expectations or predictions
and those are forward looking statements within the meaning of applicable laws and
regulations. Actual results could differ from those expressed or implied. Important
factors that could make a difference to the Companys operations include raw material
availability and its prices, economic conditions affecting demand and supply, price
conditions in domestic and international market, change in Government regulations, tax
regimes, economic developments and other related and incidental factors.
ACKNOWLEDGEMENT
Your Directors would like to express their appreciation to the Central, State &
Local Governments, Authorities, Regulatory Bodies, Financial Institutions, Banks,
Customers and the Shareholders of the Company for their continued support and
co-operation. Your Directors also like to place on record their sincere appreciation for
the total commitment, dedication and hard work put in by every Member of the Uttam Galva
Family. Your Directors are deeply grateful to you Shareholders, for the confidence and
trust reposed in us.
|
For and on behalf of the Board |
|
Sd/- |
|
Rajinder Miglani |
| Place : Mumbai |
Chairman |
| Date: 7th April, 2018 |
(DIN 00286788) |
+91-9892691696
