DIRECTORS REPORT To. The Members of SHARDA ISPAT LIMITED Your Directors have pleasure in presenting the 54th Board's Report of your Company together with the Audited Statement of Accounts and the Auditors' Report of your company for the financial year ended, 31 st March, 2015. STATE OF COMPANY'S AFFAIRS AND FUTURE OUTLOOK During the financial year 2014-2015 India has witnessed a significant growth in its economy despite slowdown in the global economy. Nevertheless, the cheaper imports of steel products from the China and Russia posed the major problem for the World's as well as domestic steel industry. Consequently, the slackened demand for the domestic products amid inflation and higher interest rates resulted into subdued sales of the Company's products. During the period under review, the Company posted the sales turnover, of Rs. 6169.22 Lacs (Own Unit Rs. 6124.30 Lacs and Conversion / Service Rs. 44.92 Lacs) as against Rs. 8284.83 Lacs (Own Unit Rs. 8242.52 Lacs and Conversion / Service Rs. 42.30 Lacs) during the previous year. The total expenditure including cost of interest and provision for depreciation is Rs. 5621.70 Lacs and net profit before tax Rs. 100.46 Lacs. After adjusting Rs. 21.84 Lacs towards tax expenses the Company earned net profit after tax of Rs. 78.62 Lacs as against Rs. 2.17 Lacs during the last year. As can be seen, despite the adversities the Company recorded marginal profit for saving in cost of raw materials. As judged from the financial results of the first quarter of the financial year ending 31.03.2016 the performance of the Company would be satisfactory if the market conditions turns out to be favorable during the balance period of the financial year 2015-2016. DIVIDEND In view of meeting out working capital requirements of the Company in the ensuing year, your Directors express their inability to recommend any dividend for this year. AMOUNTS TRANSFERRED TO RESERVES Your Directors decided to transferee amount to f Rs. 78,62,541/-to the general reserves. INFORMATION ABOUT SUBSIDIARY/JV/ASSOCIATE COMPANY The Company has no Subsidiary/Associate/Joint venture Company (ies) in terms of the provisions of the Companies Act, 2013. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND There were no amounts including unclaimed dividend which were required to be transferred, to the Investor Education & Protection Fund by the Company. MATERIAL CHANGES AND COMMITMENTS Your Directors confirm that there were no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year and the date of this report. EXTRACT OF ANNUAL RETURN The Extract of Annual Return as required under section S2(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, in Form MGT-9 is annexed herewith for your kind perusal and information. (Annexure -1) a)in the preparation of the annual account the applicable accounting standards had been followed along with proper explanation relating to material departures c)appropriate accounting policies have been selected and applied them consistently and have made judgments and estimates that are reasonable and prudent soas to given a true and fair view of the state of affairs of the company as at 31.03.2015 c)proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provision of the companies act 2013 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 and e)proper internal financial controls has laid down and that internal control are adequate andwere operation effectively auditors and report thereon the auditors report and its annexure are self explanatory m/s loya bagri &co chartered accounting Nagpur retire as statutory auditors of the company at the conclusion of 54 annual general meeting and are eligible for re-appointment there are no qualification or adverse remarks in the auditors report which require any clarification explanation the notes on financial statement are self explanatory and need no further explanation further the auditors reporters for the financial year ended 31st march is annexed hereto and forms part of the annual report loans guarantees and investments during the period under review the company has not given any loans or guarantees or provided any security or made any investments as referred to in section 186 of the companies act 2013. Related party transaction The company has entered in to varios related parties transaction as defined under section 188 of the companies act 2013 with related parties as difined under section 2(76) of the said act further all the necessary details of transaction entered into by the company with the related parties are given in form no aoc -2 annexed hereto Conservation of energy technology absorption and foreign exchange outgo The information in accordance with the provision of section 134 (3) (m) of the companies act 2013 read with rule 8of companies accounts rules 2014 matters to be included in boards report regarding conservation of energy technology absorption foreign exchange earnings and outgo is given in annexure -4 Risk management The text on risk management is set out in report corporate governance and forms the part of this board report Directors and key managerial personnel Appointment of woman directors Smt poonam sarda who was appointed as directors of the company on 21.02.2010 and further as whole time directors non 01.04.2012 has been continued as woman directors of the company she is a part of promoters group and related to chairman &managing directors of the company shri n k sarda Reappointment of directors Amt poonam sarda thewhole time directors &ceo of the company is liable to retire by rotaion and being eligible offers herself for reappointment None of the other directors are related inter se except shri n k sarda and smt poonam sarda who are related to each other Appointment of key managerial personnel During the year under review the board of directors of the company at their meeting held on 11.08.2014 appointed smt poonam sarda theshole time directors of the company as chief financial officer of the company for the period of 5 year effective from 01.04.2014 subject to the existing terms and condition of her appointment as whole time directors and liable to retire by rotation according she was designated as whole time directors chief financial officer. the appointment was made on recommendation of the nomination &remuneration committee of the board . Independent directors During the year under review the members at the annual general meeting held on 29.09.2014 approved the appointment of shri r p mohanka shri h k dass and shri. Ramesh mantra as independent directors who are not liable to retire by rotation pursuant to section 149 (7) of thecompanies act 2013 all independent directors have given declaration for the financial year 2015-16 that they meet the criteria of independence as laid down under section 149 (6) if the companies act 2013 clause 49 of the listing agreement Deposits The company has not invited or accepted any public deposit during the year under review Corporate social responsibility The company does not meet the criteria of section 135 of companies act 2013 read with the companies (corporate social responsibility policy) rules 2014 so there is no requirement to constitute corporate social responsibility committee Ratio of remuneration of each directors The information required pursuant to section 197 read with rule 5 of the companies appointment and remuneration of managerial personnel rules 2014 are given hereto Annual evaluation Pursuant to the provision of the companies act 2013 the board has carried out an annual performance evaluation of its own performance the directors individually as well the evaluation of the working of its audit committee nomination remuneration committee and stakeholder relationship committee A structure questionnaire was prepared after taking into consideration inputs received from the directors covering aspects of the booed functioning such as adequacy of the composition of the board and its committees board culture execution and performance of specified duties obligation and governance A separate exercise was carried out to evaluate the performance of individual directors including the chairman of the board who were evaluated on parameters such as level of engagement and contribute independence of judgment safeguarding the interest of the company and its minority shareholder etc. the performance evaluation of the independent directors was carried out by the entire board the performance evaluation of the chairman and the non independent directors was carried out by the independent directors who also reviewed the performance of the secretarial department Independent directors and declaration Shri rp mohanka shri ramesh mantra and shri h k dass have been appointed as the independent directors of the company as per section 149 (10) of the companies act 2013 On 29.09.2014 for a term of 5 consecutive year consecutive year on the board of the company The board of directors of the company hereby confirm that all the independent directors duly appointed by the company have given the declaration and they meet the critera of independence as provided under diction 149 (6) of the companies act 2013. Nomination and remuneration committee Terms of reference The terms of reference of the nomination and remuneration committee are as uner 1.to identify persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down recommend to the board their appointment and removal and shall carry out evaluation of every directors performance 2.to formulate the criteria for determining qualification positive attributes and independent of a directors and recommitted to the board a policy relating to the remuneration for the directors key managerial personal other employee 3.the nomination and remuneration committee shall while formulating the policy ensure that a)the level and composition of remuneration is reasonable and sufficient to attract retain and motivate directors of the quality required to run the company successfully b)relationship of remuneration to performance is clear and meets appropriate performance benchmark and c)remuneration to directors key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long term performance objective appropriate to the working of the company and its goals 4.regularly review the human resources function of the company 5.discharge such other function or exeicise such power as may by delegated to the committee by the board from time to time 6.make report to the board as appropriate 7.review and reassess the adequacy of this charter periodically and recommend and any proposed changed to the board for approval from to time to time 8.any other work and policy related and incidentals to the objectives of the committee as per provision of the act and rules made there under Remuneration policy Remuneration to executive directors The remuneration paid to executive directors is recommended by the nomination and remuneration committee and approved by board meeting subject to the subsequent approval of the shareholders at the general meeting and such other authorities as may be required the remuneration is decided after considering verging factors such as qualification experience performance responsibilities shouldered industry standards as well financial position of the company Remuneration to non executive directors The Non Executive Directors are paid remuneration by way of Sitting Fees and Commission. The Non Executive Directors are paid sitting fees for each meeting of the Board and Committee of Directors attended by them SECRETARIAL AUDIT REPORT Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 requires every listed company to annex to its Board's Report, a Secretarial Audit Report given by a Company Secretary in practice, in the prescribed form. The Board of Directors appointed Megha Bhaiya, Practicing Company Secretary as Secretarial Auditor to conduct Secretarial Audit of the Company for Financial Year 2014-15 and her report is annexed to this Board Report byway of Annexure-7. The necessary clarification/explanation on the qualifications or adverse remarks in the Secretarial Audit Report are given below: Clause No. (1)(a) & (1) (b): The non filing of e-form MGT-14 for Resolutions passed at Annual General Meeting was occurred inadvertently. Steps are being taken to e-file the Forms. Clause No. <1)(c): The non filing of e-form DIR 12 took place due to administrative reasons. Nevertheless, the e-Form is being e-filed shortly. Clause No. (1 )(d) & (1) (e) : The charges were not filed with ROC due to communication gap between the Bank and the Company. Necessary steps have been taken to regularize the matter. Clause No. (2): Earlier, the financial position of the Company was by and large affected due to consistent losses and therefore it was beyond the capacity of the Company to engage Company Secretary. Nevertheless, the Company appointed Company Secretary during the year under review. The minor delay in that behalf has been due to the time taken to find out a right person forthe job. Clause No. (3) & (4): The Company is in process of forwarding the said documents to the Stock Exchanges shortly. The Company will take due care in future in that regard. Clause No. (5): The website of the company is under construction and once it starts to operate the company will upload all the required documents as per the statutory provisions. Clause No. (6): The talks of the Company in that behalf with the Calcutta Stock Exchange are on. Once, the irregularities prevailing gets known, the Company will comply with all the requirements including payment of listing fees to remove the status of Suspended' Clause No. (7): The delay in filing the documents with ROC as well as Stock Exchange was due to administrative reasons. To ensure the timely filing and compliances the Company has appointed in the Company the Qualified Company Secretary as a Company Secretary & Compliance Officer. Clause no (8) in view of present board structure the company followed the provision of section 152 of the companies act 2013 regarding retirement of directors taking in to consideration the prohibitory provision for retirement of managing directors given in the articles of association of the company and further provision in the act as regards to non retirement of independent directors as such the company has planned to increase the number of directors on the board of the company is possible Appointment of cost auditors The board at its meeting held on 30.05.2015 has re appointed m/s narendra peshne &associateds cost accountants as cost auditors to conduct audit of cost accounting records of the company for the financial year ending 31.03.2016 pursuant to the provision of section 148 of the companies act 2013 and rules made there under the ratification of the members is necessary for the payment of the remuneration to cost auditors your directors recommend the same Vigil mechanism /whistle blower policy As per section 177 (9) and (10) of the companies act 2013 and as per the clause 49 of the listing agreement the company has established vigil mechanism named whistle blower policy for directors and employee to report genuine concerns and made provision for direct access to the chairperson of the audit committee the company has made provision for direct access to the chairperson of the audit committee the company ahs formulated the present policy for established the vigil mechanism whistle blower policy to safeguard the interest of its stakeholder directors and employee to freely communicate and address to the company their genuine concerns in relation to any illegal or unethical practice being carried out in the company the details of the whistle blower policy are explained in the corporate governance report Sexual harassment policy The company has in place a policy on prevention of sexual harassment of its employees at the workplace in line the requirement of the sexual harassment of women at workplace prevention prohibition and redressed act 2013an internal complaints committee has been constituted by the company to redress the complaints received regarding sexual harassment you directors state that during the year under review there were no cases filed pursuant to the sexual harassment of woman at work place act 2013. Shares a)buy back of securities the company has bought bank of its securities during the year under review c)bonus shares no bonus shares were issued during the year under review d. employee stock option plan the company has not provided any stock option scheme to the employee order of court the details of significant and material orders passed by the regulatory or courts or tribunals impacting the going concern status and company operation in future if any not applicable DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS The internal financial control system in your Company commensurate with the size and nature of its operations and financial aspects. The periodic audits are conducted in various disciplines to ensure adherence to the same. During the year, Internal Auditors of your Company had independently evaluated the adequacy and efficacy of the internal controls. The Board and the management review the findings and recommendations of the audit committee as well as the auditors and take in that behalf the corrective actions, whenever necessary. The Board invariably monitors the accounting functioning in the Company and ensures that the accounting treatments are in conformity with the prescribed accounting standards and procedures in that behalf. The Board also considers risk assessment, identification of mitigating actions and internal financial control procedure to ensure that business as well as financial risks are identified, managed and regularly reviewed at all levels and that Directors are periodically apprised of the key risks. SHARES IN SUSPENSE ACCOUNT There are no such shares of the Company which are to be kept in shares suspense account. MATERIAL VARIATIONS There are no material variations between the projections and the actual utilization/profitability. CODEOFCONDUCT The code of conduct for the members of the board and senior management personnel is given in Point No. 15 of the Report on Corporate Governance forming part of this Board's Report. MANAGEMENT DISCUSSION AND ANALYSIS REPORT ECONOMY: In the year2015 the global economy grew at moderate pace, only marginally faster than the previous year manifesting disparate growth rates in the advanced and emerging economies. Among the advanced economies, while the US economy exhibited modest growth, the European economy continued to be sluggish. Most of the emerging market economies, barring China and India, registered slowdown in their respective growth momentum. The Indian economy exhibited a healthy growth at 7.3% in 2014-2015, vis-S-vis 6.9% in 2013-2014, aided by among other factors, various initiatives taken by the Government to address the policy issues, which have served to regenerate the investment appetite. Owing to this, various global institutions like international monetary fund (IMF) and the World Bank have both forecasts India to grow at a higher rate of 7.5 % in 2015. For 2016. while IMF has forecast India to grow by 7.5%. World Bank expects the economy to grow even faster at 7.9%. It is also for the first time India has been forecast to grow at a faster rate than China. Besides, cyclical macro parameters like inflation, current account deficit have improved during the year due to domestic as well as external factors. However, domestic steel producers witnessed subdued sales as increased imports from China and Russia resulted in sharp cut to steel prices in India over the past six months. INDUSTRY STRUCTURE & DEVELOPMENTS; As per the World Steel Association (WSA), global apparent stee! use reported a growth of 0.6% only in CY2014, as against a growth of 3.6% in CY2013. while aggregate capacity utilization too dropped to 76.7% in CY2014. from 78.4% in CY2013. Weak demand in China, owing to the real estate sector slowdown, resulted in a de-growth of 3.4% in CY2014 in the country and was one of the major reasons behind the decline in the growth rate of global steel consumption. Muted demand condition prompted steel producers in China to turn to export markets in CY2014 and the same resulted in a 50% growth in China's steel exports, which in turn led to a sharp decline in steel prices in the rest of the world, especially during the second half of FY15, from about S485/MT in October 2014 to S370/MT in March 2015. With WSA estimating China's steel demand to contract in CY2015 and CY2016 and the IMF also revising downwards the global growth rate forecast to 3.5% in January 2015, from 3.8% in October 2014, global steel demand is unlikely to witness any significant improvement in the coming period. Despite an improvement in the second half of FY15, domestic steel consumption growth rate remained low at 3.1% in FY15; pricing pressures from cheaper imports intensified in Q4 FY15 Domestic steel consumption growth improved to 3.1% in FY15 from 0.6% in FY14, but remained low at an absolute level. However, the growth rate improved from 0.5% level during Apr-Oct 2014 to 3.1 % in the whole of FY15, indicating a sharper improvement in the second half of FY15 on the back of improved automobile sales. Given that the construction and capital goods sectors, which together account for about 70-75% of the total steel demand in India, are yet to witness much on-the-ground recovery, automobile sector is expected to support domestic steel demand in the near term. On supply side, India's steel production growth rate continued to exceed the consumption growth rate in FY15, and stood at 3.3%, with secondary steel producers reporting a higher growth of 3.9% during FY15 compared to 2.9% reported by integrated steel producers. Whereas steel exports de-grew by 8.1% in FY15, imports surged by 71% due to a sharper fall in international steel prices than domestic prices, leading to a widening gap between price levels. Since India became a net importer of steel in FY15 and there was a large gap between steel production (90.6 mt) and steel consumption levels (76.4 mt), ICRA believes that inventory levels of steel players have risen and the same, coupled with weak international demand, is unlikely to result in any meaningful improvement in domestic steel prices in the near term. FUTURE OF STEEL INDUSTRY: In emerging economies the structural factors of population growth linked to urbanization and (hopefully) industrialization, suggest a bright future for our product. It is estimated that a bit more than 1 billion people will move to towns and cities between now and 2030. This major flow not only creates substantial new demand for steel to be used in infrastructure developments such as water, energy and mass transit systems as well as major construction and housing programmes, but the process of urbanisation also leads to an increased, and hopefully, more equitable distribution of wealth. This in turn drives demand for steel for additional consumer products such as household appliances, vehicles and additional machine building that supports the industrial processes to manufacture these consumer goods. Moreover, continued transformation of urban areas plays an important role even in the countries having already reached a high level of urbanization. Cities are in the process towards improvements in city organization and living standards. Over the last 10 years, many countries have started revising their urban policies to increase living standards in urban areas, to improve energy efficiency and to make cities more environmental friendly. Given the expected population growth, emerging new applications for steel and more sophisticated steel applications, the global steel market has a potential to grow by between 700 and 1000 million tones in the next 50 years That is equivalent to a market that is 60% larger than that of today. We believe that between now and 2030; global use of steel will increase by as much as 400 million tons annually. A good future prospect indeed! Many of the conditions as applicable to the global steel industry also apply to India. It is a developing economy with a large population. The forces of economic growth will require continued investments in new infrastructure, new and larger cities, machinery and production to employ more people and drive the economy forward. India already is the third largest producer of steel, with an expected steel use of 80 million tonnes in 2015 and 86 million tonnes in 2016. It is also expected to be one of the fastest growing areas in steel use this year and next year. OPPORTUNITIES AND THREATS: Your Company is poised to seize the opportunities in the Iron & Steel Industry (both for steel & intermediary saleable products) through its strengths of locational and logistical advantages, raw material linkages, technology edge and management expertise. These opportunities will be linked directly to the growing demand from the automobile and auto components, infrastructure, construction and power sectors. Your Company's strategic location in Nagpur offer scope for seamless value addition in its manufacturing process from hot metal to stainless steel. The threats for your Company would come from adverse fluctuations in input and capital costs, foreign exchange variations and taxes & duties. The buoyancy in the Iron & Steel Sector has attracted many players, resulting in reduced availability of skilled manpower and contractor workforce. Delay in opportunity grabbing may result in loss in revenue generation and rise in costs. RISK & CONCERNS: Your Company has identified major areas of risk and concerns and increased focus thereon to ensure achievement of the organizational objectives. The Company has a well defined structure and proactive approach to assess, monitor and mitigate risks associated with these areas, as briefly enumerated below: a) Systems - Your Company has implemented ERP. the software for Enterprise Resource Planning and integrated its operations to use best business and commercial practices. b) Statutory compliances - Procedure is in place for monthly reporting of compliance of statutory obligations and reported to the Board of Directors at its meetings. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY: The Company has an internal control system which includes internal financial controls, the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of business, including adherence to the Company's policies, the safeguarding of the assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and timely preparation of reliable financial information, commensurate with the size, scale and complexity of its operations. The scope and authority of the internal auditors have been defined by the audit committee from time to time. To maintain its objectivity and independence, the internal auditor reports its observations to the audit committee of the board. The internal auditor monitors and evaluate the efficacy and adequacy of internal control system in the company, its compliance with operating system, accounting procedures and policies of the company. Based on the report of the internal auditors, process owners undertake corrective actions in their respective areas and thereby strengthen the control. Audit observations and corrective actions thereon are presented to the audit committee of I the board. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONALI PERFORMANCE. During the fiscal 2014-15. the Company achieved the sales turnover, of Rs. 6169.22 Lacs (Own Unit] 6124.30 Lacs (12083.94 MT) and Conversion / Service 44.92 Lacs) (1159.33 MT) as against Rs. 8284.83 Lacs [Own Unit 8242.52 Lacs (16732.450 MT) and Conversion I Service 42.30 Lacs] (1380.510 MT) during the previous year. After providing Rs. 18.86 Lacs for depreciation and Rs. 152.34 Lacs towards interest and further adjusting Rs. 21.84 Lacs for taxation (net) the Company posted net profit after tax of Rs 78.62 Lacs as against Rs. 2.17 Lacs during the last year. The decline in operational performance of the Company was due to slackened demand for the domestic products. Nevertheless, the financial performance of the Company registered growth over the previous year as a result of saving in cost of inputs. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED. Your Company recognizes the fact that manpower is one of the vital constituent of a successful organization. The success of any business lies under the qualified, trained & motivated Human Resources. The company increased its more concentration on the development of Human Resources than any other Resources The company updated its HR policy in line with the changing system in the industry as a whole and took adequate steps for maintaining safety and healthy environment for the workers. The Industrial relations continue to be cordial, throughout the year. Your Directors place on record their sincere appreciation for the excellent team work displayed by the employees of the Company. During the year ended 31.03.2015 the total number of employees employed by the Company was 44 (Forty Four). ACKNOWLEDGEMENT Your Directors wish to express their grateful appreciation to the continued co-operation received from the Banks. Government Authorities, Customers, Vendors and Shareholders during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed service of the Executives, staff and Workers of the Company. For & on behalf of the Board of Directors N. K. Sarda DIN: 00229911 Chairman & Managing Director Date: 02.09.2015 Place: Nagpur |