DIRECTORS' REPORT To the Members, The Directors have pleasure in presenting the 33nd Annual Report of the Company along with audited accounts for the year ended 31st March, 2015. OPERATIONS : During the year under review there was no production of sponge iron due to Plant being shut from 9th August, 2013 on account of sudden stoppage of coal supply by Central Coalfields Limited, Ranchi, a Unit of Coal India Limited against our long term Fuel Supply Agreement. The reason for stoppage of coal supply was that Ministry of Coal had allocated a Captive Coal Mine - Macherkunda Coal Block in the year 2008 and as per terms & conditions the Mine was to be operative by February, 2013. The Mine could not be developed due to various reasons beyond our control i.e. depending upon the Govt.of India for clearance. The Coal Block was later cancelled on 20th November, 2012 by Ministry of Coal, Govt.of India. The Company challenged this by filing a Writ Petition No. W.P.(C) 1660 in the year 2013 in the Hon'ble Jharkhand High Court. Further, all Coal Blocks were also cancelled by Hon'ble Supreme Court of India vide its Order dated 25th September, 2014 and our Macherkunda Coal Block was also amongst these Coal Blocks. Since the Policy about renewal of Fuel Supply Agreement (FSA) after de-allocation of Captive Coal Blocks was not clear, hence they stopped the coal supply. Later on in a Special Meeting of Standing Linkage Committee (Long Term) held on 3rd December, 2014 under the Chairmanship of Additional Secretary (Coal), Ministry of Coal decided that all EUP which were already having long term linkage should get coal from the respective Coal companies. Accordingly, we approached the Chairman-CCL, Ranchi and he advised to withdraw our Writ Petition No. W.P.(C) No.1660 of 2013. He further suggested that once the said writ petition is withdrawn, CCL would proceed in the matter for renewal of Fuel Supply Agreement. The Company has made an interlocutory application for withdrawal of the said writ petition before Hon'ble Jharkhand High Court. We hope that the matter would be resolved with the withdrawal of the said Writ Petition by the said High Court. IRON ORE MINE: The Company was allotted Ghatkuri Iron Ore Mine in April, 2007 in the State of Jharkhand with 406.40 hectares of land and consisting of reserves estimated at 35.65 million tons. However, the Geological Survey was conducted by Department of Geology, Ministry of Mines, Govt. of Jharkhand and report was released in February, 2012 wherein they have assessed the Ore reserve to be about 11.00 Million Tons. The Company has requested for the allocation for an additional Iron Ore Mine to compensate the difference in allocated quantity and for revised geological reserves. The draft Mining Plan prepared by MECON was submitted with Ministry of Mines on 3rd September, 2012 based on the revised reserves of 11.00 million tons. The Indian Bureau of Mines, Ministry of Mines, Govt. of India vide its letter dated 06-02-2014 have communicated the mining plan is not approved. The Company expects a total capital investment of around Rs.45.00 Crores for the development and anticipates the commencement of production of iron ore by 2016. COAL MINE: As already reported the Macherkunda Coal Block allocated to the Company for captive mining of coal has been de-allocated by the Ministry of Coal, Government of India. The Government of India has filed a number of transfer petitions in the Honb'le Supreme Court for transfer of the coal block cases which were pending in various high courts. The Supreme Court has expressed its view that all coal block allocations on and after 2003 are illegal. The Supreme Court has vide its order dated 25th September, 2014 has cancelled allocation of all but 4 coal blocks allocated from 2003. The Macherkunda Coal Block was among the all cancelled coal blocks.The Company has made an application to Ministry of Coal, Govt. of India for return of Bank Guarantee of Rs. 2.81 cr. Vide its letter dated 15th October, 2014. 5 MW POWER PLANT / STEEL PLANT The Company from the existing power plant generates 5 MW Power based on dolo char being produced in the manufacturing of sponge iron. Since the Company is not able to consume the total dolo char, the Company has entered into an agreement with G.S. Phambutor Pvt. Limited (GSP) to install a 5 MW Power Plant. Whenever the existing power plant goes under regular maintenance, the Company has to generate power from DG Set, which is highly uneconomical. During such time the Company will take the power from GSP and for the rest of the period GSP will consume the power in induction furnace to produce pencil ingot. The 5 MW power plant is at commissioning stage. Once the sponge iron plant starts its operations to said power plant will be commissioned and steps for setting up induction furnace will initiated. DIVIDEND In view of the loss incurred by the Company, no dividend has been proposed for the financial year ended 31st March, 2015 FIXED DEPOSITS: During the year under review, your Company did not accept any deposits within the meaning of provisions of Chapter V - Acceptance of Deposits by Companies of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186. The Company has not given any loans, guarantees or made any investments under Section 186 of Companies Act, 2013 during the financial year 2014-15. INTERNAL CONTROL SYSTEM 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 authorised, recorded and reported correctly. The Company's internal control system comprises audit and supplemented by internal audit checks from the Internal Auditor M/s.Sarat Jain & Co. 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. NOMINATION AND REMUNERATION POLICY OF THE COMPANY The Board of the Company in its meeting held on 12th May, 2015 has approved and adopted the Company's Nomination and Remuneration policy. Any member interested in hard copy of the said policy may inspect the same at the Registered Office of the Company or write to the Company Secretary for a copy. The same is also disclosed in the Company's website www.bsil.org.in.Details of the Committee is provided in the corporate governance report annexed with this report. WHISTLE BLOWER POLICY: Pursuant to Section 177(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Clause 49 of the Listing Agreement, the Board of director of the Company in its meeting held on 6th February, 2015 has approved and adopted vigilance mechanism - Whistle Blower Policy. This Policy inter-alia provides a direct access to the Chairman of the Audit Committee. Your Company hereby affirms that no Director/ employee has been denied access to the Chairman of the Audit Committee and that no complaints were received during the year. The said policy is available in the Company website, www.bsil.org. in. Any member interested in hard copy of the said policy may inspect the same at the Registered Office of the Company or write to the Company Secretary for a copy. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES. All transactions entered by the Company with Related Parties were in the Ordinary Course of Business and at Arm's Length pricing basis. The Audit Committee granted omnibus approval for the transactions (which are repetitive in nature) and the same was reviewed by the Audit Committee and the Board of Directors. There were no materially significant transactions with Related Parties during the financial year 2014-15 which were in conflict with the interest of the Company. Suitable disclosures as required under AS-18 have been made in the Notes to the financial statements. The Board had approved policies on Related Party Transactions. The policies have been uploaded on the Company's website: www.bsil.org.in. Any member interested in hard copy of the said policy may inspect the same at the Registered Office of the Company or write to the Company Secretary for a copy. The particulars of contract and arrangements entered into by the Company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 read with clause 49 of the Listing Agreement is disclosed separately in Form No. AOC -2 as Annexure-D and forms part of this report. EXTRACT OF THE ANNUAL RETURN The extract of the Annual Return for 2014-15 in Form No. MGT - 9 is given separately as Annexure - E, which form part of the Board's report. SECRETARIAL AUDIT The Board of Directors of the Company have appointed M/s. R Singhal& Associates, Company Secretaries (PCS Registration No. 10699) as the Secretarial Auditor of the Company in relation to the financial year 2014-15, in terms of Section 204 of the Companies Act, 2013. The Secretarial Audit Report for financial year 2014-15 done is separately annexed as Annexure-F with this report and is available on the Company's website www.bsil.org.in. The observation in secretarial audit report are self explanatory and therfore do not call for any further explanation. Further due to shutdown of the plant and suspension of operation from 09.08.2013 various dues could not be paid on due dates. Necessary steps are being taken to re-start the Company and payment of all such dues shall be made after re-start of operation of the Company. MANAGERIAL REMUNERATION: Disclosures required u/s 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rule, 2014 relating to ratio of the remunration of each director to the median employee's remuneration and other details shall be provided on request, in accordance with the provisions of Section 136 of the Act. The relevant information could not be provided as the plant is under shut and the operations has been suspended from 09.08.2013, thereby the salary, wages and allowances of the employees is unascertained. In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, non of the employee is drawing remuneration in excess of the limits set out in the said Rules. DIRECTORS : A) CHANGES IN DIRECTORS AND KEY MANAGERIAL PERSONNEL Since the last Annual General Meeting, the following changes have taken place in the Board of Directors: Mr. Satish Kumar Gupta,Whole Time Director designated as Director (Works) of the Company is re-appointed as Whole Time Director designated as Director (Works) w.e.f. 13-12-2014 for a period of 3 years. In accordance with the provisions of Section 160 of the Companies Act, 2013 and Article 128 of the Articles of Association of the Company, Mrs. Kumkum Modi retires by rotation and are eligible for re-appointment. Mr. G. W. Elsenheimer ceased to be the director of the Company under Section 167 of the Companies Act, 2013. Mr. G. C. Jain has resigned as director of the Company w.e.f. 15th April, 2015. Mr. R. K. Agarwal, Mr. Jagan Nath Khurana, and Mr. Madan Lal the independent directors of the Company pursuant to section 149 (10) of the Companies Act, 2013 shall hold the office as directors for a term of 5 years w.e.f.12th May, 2015, 12th May, 2015 and 14th November, 2014 respectively, subject to the approval of shareholders. Mr. B. K. Goel is appointed as Chief Financial Officer of the Company w.e.f. 6th February, 2015. None of the directors of the Company are disqualified under Section 164 (2) of the Companies Act, 2013. Your directors have made necessary disclosures as required under various provisions of the Companies Act, 2013. B) DECLARATION BY AN INDEPENDENT DIRECTORS The Company has received declaration by all Independent Director(s) that they meet the criteria of independence as provided in sub-section (6) of Section 149 of the Companies Act, 2013. The declaration received from the independent directors were placed at the meeting of the Board of directors of the Company held on 12th May, 2015. Any member interested in hard copy of the said policy may inspect the same at the Registered Office of the Company or write to the Company Secretary for a copy. C) FORMAL ANNUAL EVALUATION Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, Independent Directors at their meeting without the participation of the Non-independent Directors and Management, considered/ evaluated the Boards' performance, Performance of the Chairman and other Non-independent Directors The Board subsequently evaluated its own performance, the working of its Committees (Audit, Nomination and Remuneration and Stakeholders Relationship Committee) and Independent Directors (without participation of the relevant Director).The criteria for performance evaluation have been detailed in theCorporate Governance Report which is attached as Annexure- B to this Report. D) NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS The Board of the Company met for the four times, i.e. on 29th May, 2014, 19th September, 2014, 14th November, 2014 and 6th February, 2015 during financial year 2014-15, E) DIRECTORS RESPONSIBILITY STATEMENT: Pursuant to Section 134(5) of the Companies Act, 2013 the Directors of your Company declare as under: (a) that in the preparation of the annual accounts, the applicable accounting standard had been followed along with proper explanation relating to material departures; (b) that the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company 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 this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; (d) that the directors had prepared the annual accounts on a going concern basis; and (e) that the directors, in the case of a listed company, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. Explanation—For the purposes of this clause, the term "internal financial controls" means the policies and procedures adopted by the company for ensuring the orderly and efficient conduct of its business, including adherence to company's 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; (f) That 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. AUDIT COMMITTEE The composition of an Audit Committee is disclosed in the corporate governance report annexed with this report and forms part of it. Further there has not been any instance where the Board had not accepted any recommendation of the Audit Committee. AUDITORS: M/s. Thakur Vaidyanath Aiyar and Co., Chartered Accountants (Firm Registration No.000038N), Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. The Company has received a letter from them to the effect that their re-appointment, if made would be within the prescribed limits under Section 139 of the Companies Act, 2013 and the Audit Committee of the Company has recommended their appointment as statutory Auditors for two consecutive years starting from the conclusion of 33rd AGM to the conclusion of 35th AGM of the Company. ACCOUNTS AND AUDIT: Notes to accounts referred to in the Auditor's Report are self-explanatory and there fore, do not call for any further explanation. However the following has not been recognized as explained below: a. Rs. 2,32,381 thousand against currency fluctuation of foreign currency loan has not been recognized as the Company has filed Letters Patent Appellate Jurisdiction (LPA) before the Divisional Bench of High Court of Jharkhand, Ranchi and it is hopeful that the decision will be in favour of the Company. b. Rs. 21,528 thousands recovered by South Eastern Coal Fields Ltd as penalty on account of short lifting of coal quantity in terms of Fuel Supply Agreement as the matter has been disputed by the Company under writ petition filed before the Hon'ble High Court of Chhattisgarh. It is hopeful that the Company would get the order in its favour. c. Interest on unsecured loan taken from Promoters and other parties from 10.08.2013 to 31.03.2015 has not been taken on accounts as the Company has applied to the lenders for the waiver of the interest on unsecured loan. d. Interest on Soft Loan taken from the Government of Jharkhand under the Industrial Rehabilitation Scheme 2003 amounting to Rs. 81,331 thousands has not been provided as the Company will make representation for waiver on re-start of the Company operation. e. Salaries, Wages, Allowances, Contribution to PF including interest on overdue amount as well as employee benefit expenses w.e.f. 10.08.2013 to 31.03.2015 has not been provided in view of the shut down of the plant and suspension of operation from 9th August, 2013. Further due to shut down of the plant and suspension of operation from 9th August, 2013 various dues could not be paid on due dates. Necessary steps are being taken to re-start the Company and payment of such dues shall be made after re-start of operation of the Company. SUBSIDIARY COMPANY Chandil Power Limited has become a subsidiary company of the Company pursuant to Section 4 (1) (a) of the Companies Act, 1956 and Section 2(87) of the Companies Act, 2013 and in accordance with the general circular No. 2/2011 dated 8 February, 2011 issued by the Ministry of Corporate Affairs, Government of India the balance sheet, profit and loss account and other documents as required to be attached with balance sheet are not attached with the balance sheet of the Company. The same will be made available to any member of the Company, who may be interested in obtaining the same. The Annual accounts and related documents of the subsidiary company will also be kept open for inspection at the registered office of the Company. Further the consolidation of accounts is not required as Chandil Power has become subsidiary by virtue of control on of composition of Board of Directors of Chandil Power Limited and the Company do not hold any shares in Chandil Power Limited.Chandil Power Limited ceased to be subsidiary of the Company w.e.f. 29th September, 2014. CORPORATE GOVERNANCE: A separate report on Corporate Governance is attached as Annexure B to this report. The Auditors' Certificate confirming compliance of conditions of Corporate Governance and CEO/CFO Certificate as required under Clause 41 of the Listing Agreement is included in the said Corporate Governance Report. MANAGEMENT DISCUSSION ANALYSIS REPORT In terms of Clause 49 of the Listing Agreement with the Stock Exchange, Management Discussion and Analysis Report is annexed as Annexure - C and form part of this report. LISTING IN STOCK EXCHANGE: The equity shares of the Company continues to be listed in the Bombay Stock Exchange and listing fee for the Financial Year 2015-16 has been paid. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO: Information pursuant to Section 134 of the Companies Act, 2013 and rules made there under, a statement giving the required information relating to energy conservation, technology absorption, foreign exchange earnings and outgo is annexed hereto as Annexure-A and form part of this report. ACKNOWLEDGEMENT: Your Directors take this opportunity to place on record their sincere thanks to all stakeholders, various departments of Central Government, the Government of Bihar and Jharkhand, Financial Institutions and Banks for their valuable assistance. Your Directors equally acknowledge the trust reposed by you in the Company. The Directors also wish to place on record their appreciation for the all round support and co-operation received from the employees at all levels. For & on behalf of the Board ANNEXUREA S.K. Gupta Director-works DIN: 03537417 B.D. Garg DirectorDIN 00002792 Place: New Delhi Date: 12.05.2015 |