DIRECTORS' REPORT To The Members of Aditya Ispat Limited, Your Directors take pleasure in presenting the Twenty Fourth Annual Report on the affairs of the Company for the financial year 2014-2015 together with the Audited Financial Statements and Report of the Auditors thereon. 2. DIVIDEND & TRANSFER TO RESERVE: The Board has not recommended any dividend during the year under consideration to augment resources for future growth of the Company and it has also not transferred any amount to reserves. 3. OPERATIONS AND THE STATE OF AFFAIR OF THE COMPANY During the year 2014-15, the Company has posted a gross turnover of Rs. 3423.51 lakhs higher by 4.46 % over last year ( Rs. 3277.43 lakhs in the F.Y. 2013.14) and has earned a net profit of Rs.46.38 lakhs before tax compared to previous year's profit of Rs 40.52 Lakhs. There is an improvement in profitability due to increase in turnover and on account of optimisation of cost of production. 4. FUTURE OUTLOOK: During financial year 2014-15 economic growth in India peaked in the second quarter of the fiscal at 8.2% (under new series) but remained moderate in the third and fourth quarter at around 7.5%. 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 resulted in sharp cut to steel prices in India over the past six months. According to World Bank, India is set to be the world's fastest growing major economy in the Financial Year 2015-16 at 7.5% and gradually move up to 8% in the next two financial years. However, this economic growth will depend on steady implementation of reforms aimed to improve productivity and competitiveness. Government initiatives like 'Make in India' will inspire manufacturing growth while its focus on infrastructure should revive the investment cycle. Indian steel demand is expected to reflect improving macro-economic environment. Steel end use sectors are expected to perform better compared to previous financial year. Infrastructure projects are gaining momentum and the steady decline in stalled projects coupled with hike in import duty in both flat and long products should stimulate steel demand. Recent weakness in Indian rupee has also helped competitiveness of domestic steel players. However, steel prices are expected to remain under pressure from Chinese exports and increased domestic competitiveness. 5. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY: The Company has in place an established internal control system designed to ensure proper recording of financial and operational information, compliance of various internal controls and other regulatory and statutory compliances. Self certification exercise is also conducted by which senior management certifies effectiveness of the internal control system of the Company. Internal Audit is conducted throughout the organization by qualified outside Internal Auditors. Findings of the Internal Audit report are reviewed by the top management and by the Audit Committee of the Board and proper follow up action are ensured wherever required. The Statutory Auditors have evaluated the system of the internal controls of the Company and have reported that the same are adequate and commensurate with the size of the Company and nature of its business. 6. DIRECTORS' RESPONSIBILITY STATEMENT: In accordance with the provisions of Section 134(3)(c) and 134(5) of the Companies Act, 2013, the board of directors, to the best of their knowledge and ability, confirm: i. that the accounting standards to the extent applicable to the Company have been followed in the preparation of the annual accounts and there are no material departures ii. 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 as at the end of the financial year and of the profit and loss of the Company for that period. iii. that 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 your Company and for preventing and detecting fraud and other irregularities. iv. that the annual Accounts have been prepared on a going concern basis. v. that proper internal financial controls were laid down and that such internal financial controls were adequate and were operating effectively. vi. that proper systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and were operating effectively. 7. AUDIT COMMITTEE: The audit committee of the board of directors of the Company consists of Mr Sanjay Solanki (Chairman), Mr Swamy S B Das and Mr H M Dugar. The Committee has adopted a Charter for its functioning. The primary objective of the Committee is to monitor and provide effective supervision of the Management's financial reporting process, to ensure accurate and timely disclosures, with the highest levels of transparency, integrity and quality of financial reporting. The Committee met four times during the year, the details of which are given in the Report of Corporate Governance that forms part of this Annual Report. 8. NOMINATION AND REMUNERATION COMMITTEE: The Nomination and Remuneration Committee works with the Board to determine the appropriate characteristics, skills and experience for the Board as a whole and its individual members with the objective of having a Board with diverse backgrounds and experience in business, government, education and public service. Characteristics expected of all Directors include independence, integrity, high personal and professional ethics, sound business judgment, ability to participate constructively in deliberations and willingness to exercise authority in a collective manner. The policy on appointment and removal of Directors and determining Directors' independence is posted on the website of the Company www.adityaispat.com. 9. CORPORATE SOCIAL RESPONSIBILITY: The Company is not required to constitute a Corporate Social Responsibility Committee as it does not fall within purview of Section 135(1) of the Companies Act, 2013 and hence it is not required to formulate policy on corporate social responsibility. 10. BOARD EVALUATION: Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination and Remuneration and other Committees. The manner in which the evaluation has been carried out has been posted on the website of the Company www.adityaispat.com. The Independent Directors are regularly updated on industry and market trend, plant and process and operational performance of the Company through presentations in this regard and periodic plant visits. They are also periodically kept aware of the latest developments in the Corporate Governance, their duties as directors and relevant laws. 11. DIRECTORS : Mr. S.K.Kabra, retires by rotation at the forthcoming Annual General Meeting and, being eligible, offers himself for re-appointment. Brief particulars and expertise of the director and his other directorships and committee memberships have been given in the annexure to the Notice of the Annual General Meeting in accordance with the requirements of listing agreement with Stock Exchanges. 12. PARTICULARS OF EMPLOYEES AND KEY MANAGERIAL PERSONNEL (KMP) : The following three persons are the Key Managerial Personnel of the Company as per the provisions of Sec 203 of the Companies Act, 2013. a) Mr. Satya Bhagwan Chachan, Managing Director b) Mrs. Alphonsa Domingo, Chief Financial Officer c) Mr. Mahendra.N.Soni, Company Secretary Pursuant to Sec 197(12) read with Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the Remuneration and other details of Key Managerial Personnel and other Employees for the year ended March 2015 are annexed to this report. (Annexure 1) Mrs. Alphonsa Domingo was appointed as Chief Financial Officer of the Company with effect from 23rd January 2015 at the Board meeting held on 23rd January 2015. Mr. Mahendra.N.Soni was appointed as Company Secretary of the Company with effect from 23rd January 2015 at the Board meeting held on 23rd January 2015. 13. AUDITORS: i. Statutory Auditors M/s. Dagliya & Co, Chartered Accountants, Secunderabad, were appointed as Auditors of the Company for tenure of three years i.e. till the conclusion of the 26th Annual General Meeting of the Company. However, this appointment is subject to ratification by members at every Annual General Meeting held after appointment during their tenure of office. The Auditors have confirmed their eligibility and qualification under Section 141 of Companies Act 2013 and therefore, their ratification for appointment as Statutory Auditors for the year 2015-16 is being sought from the Members of the Company at the ensuing AGM. As regards the comments in the Auditors' Report, the relevant notes in the Accounts are self explanatory and may be treated as information/ explanation submitted by the Board as contemplated under provisions of the Companies Act, 2013. ii. Secretarial Audit In compliance with the provisions of Section 204 and other applicable provisions of Companies Act, 2013, a secretarial audit was conducted during the year by Secretarial Auditors, M/s A J Sharma & Associates, Company Secretaries. There are no qualifications or observations or remarks made by the Secretarial Auditors in their Audit Report. The Secretarial Auditor's Report is attached as annexure and form part of this report. (Annexure 2). 14. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS: The particulars of loans, guarantees and investments have been disclosed in the notes to financial statements. 15. TRANSACTION WITH RELATED PARTIES: All related party transactions that were entered into during the financial year were on arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with promoters, Directors, KMP or other designated persons which may have a potential conflict with the interest of Company at large. All related party transactions are placed before the Audit Committee and given in the notes annexed to and forming part of this Financial Statement. The approved policy on related party transactions is also available on the website of the Company www.adityaispat.com Your Directors draw attention to the members to Note No.2.31 to the Financial Statement which sets out related party disclosures. 16. SUBSIDIARY COMPANIES: There are no subsidiary companies within the meaning of Section 2(87) of the Companies Act 2013. 17. VIGIL MECHANISM: The vigil mechanism of the Company, which also incorporates a whistle blower policy in terms of the Listing Agreement, comprises senior executives of the Company. Protected disclosures can be made by a whistle blower through an E mail, or by telephone line or a letter to the chairman of the Audit Committee. The policy on vigil mechanism and whistle blower policy may be accessed on the Company's website at www.adityaispat.com. 18. EXTRACTS OF ANNUAL RETURN: As provided under section 92(3) of the Act, the extract of Annual Return is given in the prescribed Form MGT-9, which forms part of this report (Annexure 3). 19. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO: Information regarding Energy Conservation, Technology Absorption, Foreign Exchange Earnings and outgo in accordance with Section 134(3)(m) of the Companies Act, 2013 and forming part of the Directors Report for the year ended 31st March, 2015 is annexed to this report (Annexure 4). 20. RISK MANAGEMENT: As a policy the Company has indentified key risk concern/areas. The assessment of each risk area has been done on quarterly basis. Following are of the concern areas of the Company: Market Related Risk: related to mainly demand, realization and redundancy of the product. Production related risk: related to mainly availability of inputs, accident or break down in the plant and rejection of material by the customers. Human Resource Risk: includes the risk of labour unrest, high employee turnover ratio and lower productivity due to dissatisfaction of employees. The Board and the Audit Committee takes note of the Risk management of the Company in every quarter. The risk assessment is also discussed in the Management Discussion & Analysis attached to this report. 21. NO. OF MEETING OF THE BOARD: The Board met Six times during the year, the details of which are given in the Report of Corporate Governance that forms part of this Annual Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and the Listing Agreement. 22. INDEPENDENT DIRECTORS DECLARATION: The Company has received the necessary declaration from each Independent Director in accordance with Section 149(7) of the Companies Act, 2013, that he/she meets the criteria of independence as laid out in sub section (6) of Section 149 of the Companies Act, 2013 and clause 49 of the Listing Agreement and the Board is also of the opinion that independent directors fulfill all the conditions specified in the Companies Act 2013 making them eligible to act as independent directors. 23. FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS : All new Independent Directors (IDs) inducted into the Board are given an orientation. Presentations are made by Executive Directors (EDs) and Senior Management giving an overview of our operations, to familiarise the new IDs with the Company's business operations. The new IDs are given an orientation on our products, Board constitution and procedures, matters reserved for the Board, and our major risks and risk management strategy. The Policy on the Company's Familiarisation Programme for IDs can be accessed at Company's website at www.adityaispat.com 24. GENERAL: Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review : i. The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of balance sheet. ii. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future. iii. There was no change in the nature of the business of the Company during the year. iv. There were no material changes and commitments affecting the financial position of the Company occurring between 31st March, 2015 and the date of this report. v. Issue of equity shares with differential rights as to dividend, voting or otherwise. vi. Issue of shares (including sweat equity shares) to employees of the Company under any scheme. Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. 25. CORPORATE GOVERNANCE a) As per the amended Listing Agreement with the Stock Exchanges, a Management Discussion & Analysis, a Report on Corporate Governance together with the Auditors' certificate regarding the Compliance of conditions of Corporate Governance forms part of the Annual Report. b) The Board of Directors of the Company has laid down a comprehensive Code of Conduct for all its Board members and senior management personnel which have also been posted on the website of the Company. A certificate by the Managing Director regarding compliance of the code of conduct of the Company is also included in the Annual report. 26. ACKNOWLEDGEMENTS: The Board takes this opportunity to express its deep gratitude for the continued co-operation and support received from its Bankers, State and Central Governments, the customers, the shareholders, business associates and employees during the year under review. Specific acknowledgement is also made for the confidence and understanding shown by the Members in the Company. On behalf of the Board of Directors S.B CHACHAN CHAIRMAN & MANAGING DIRECTOR Place: Hyderabad. Date : 26.08.2015 |