DIRECTORS' REPORT Dear Members, Your Directors are pleased to present the Company’s Thirty Ninth Annual Report and the Company’s audited financial statement for the financial year ended 31st March, 2016. OPERATIONS AND OVERALL PERFORMANCE Global Steel Industries Scenario The outlook for the global economy is mostly positive with growth picking up in the US, India and Southeast Asia, while several emerging markets are experiencing a deceleration in growth. However, the structural shift in the transitioning Chinese economy could cap this momentum. Countries and businesses are becoming increasingly interdependent through trade, investment and financial systems across the world. The risks and opportunities in the steel business are getting larger in scale and impact, with their sources becoming more diverse and global. While the Chinese steel sector turns introspective over the next decade to deal with its excess capacity, pollution, low market concentration and lack of profitability, this is the window of opportunity to build competitive advantage now before supersized, more efficient Chinese steelmakers emerge in the global market. Steel companies that embrace globalization (in their strategy, supply chains, knowledge and information, processes, talent and financial flows) while balancing with customization (of their products, marketing, and stakeholder relationships) will emerge as sector leaders in the long term. India has emerged as the third-largest steel producer in the world after China and Japan, beating the US to the fourth position producing about 89.6 million tons (MT) of steel a year even the world steel output went down 2.8% to 1.6 billion tones. Despite the strong adverse impact of global economic meltdown, Indian steel demand in India is expected to grow by 5.4 per cent to 83.8 million tons (MT) this year on the back of low oil prices, reform momentum that remains better than in many countries. The construction industry is expected to rise further due to government’s stimulus plan. The automotive sector is doing well. Hence, it is expected that domestic steel demand is going to recover soon and for the long term as well. The global industry body has also forecasted that demand in the world's third largest producer will again grow at 5.4 per cent to 88.3 MT in 2017. Globally, WSA has forecasted steel demand to decrease by 0.8 per cent to 1,488 MT in 2016 following a contraction of 3 per cent in 2015. The global steel market is suffering from insufficient investment expenditure and continued weakness in the manufacturing sector. In 2017, the world steel demand is expected to return to growth of 0.4 per cent to reach 1,494 MT. India's prospects are brightening due to low oil prices, the reform momentum and policies to increase infrastructure and manufacturing output. India's steel demand will increase by 5.4 per cent in both 2016 and 2017 reaching 88.3 MT in 2017. Power Industries Scenario A robust and thriving Power sector is central to India’s sustained economic growth. India’s power sector has evolved substantially over the last few decades and is now witnessing unprecedented interest and investments across the value chain. With the global economic growth and industrialization, power consumption is escalating rapidly, creating demand for more power and compelling industry players to manage their power portfolio efficiently. In 2015-16 as a whole, total power generation in India grew by 8.5% and it is expected to grow by 8.4% in 2016-17. The power transmission sector in India has not been able to keep pace with the rising power demand and generation capacity in the country. The Indian Power Sector faced a challenging year under review as it juggled with increasing power demand, the poor paying capability of power distribution Companies, inadequate domestic coal/gas availability, an inefficient power tariff mechanism and rising financing costs. By virtue of issuance of Commercial Circular No. 154 & 156 dated 23.01.2012 by Maharashtra State Electricity Distribution Company Limited and other laws and circulars of authority, the scope of distribution/supply/utilization of electricity through Open Access has been expanded. Due to this, the prospects of the industry is expected to improve in the nearest future. The company is exploring all the possibilities, strictly adhering to and complying with the parameters and conditions laid down in the said circulars & other laws to utilize the power generated by its power generation unit. The Total Income of the Company was ` 390.98 crores during the year as against ` 661.34 crores in the previous year, showed decrease of 40.88%. The Company has reported Net profit of ` 0.72 crores during the year under review as against loss of ` 20.82 crores in the previous year. SPONGE IRON DIVISION The production of Sponge Iron Division during the year under review was 1,73,745 MT against 1,43,384 MT in the previous year showing increase of 21.17%. The total income of the division was ` 319.11 Crores (including trading) as against ` 599.58 Crores during the previous year, showing decrease of 53.22% as a result decreasing in trading of Steel and realization of lower price of sponge iron. POWER DIVISION The production of the division was 22.67 MWH during the year under review as compared to 17.10 MWH for the previous year. The total income of the division was ` 57.76 Crores during the year under review as against ` 39.34 Crores during the previous year showing an increase of 46.85%. MINING ACTIVITIES In respect of Iron ore mining activities, the company has received all statutory permissions and necessary sanctions from the concerned authorities to commence mining operations. Further, the mining activities, at Surjagarh Iron Ore mines at Gadchiroli leased to us, which were suspended due to Force Majeure has been resumed. The company has taken adequate steps to commence mining operations as per mining plan. CARBON CREDITS The Company has received 71,302 CERs (Certified Emission Reductions) from UNFCCC (United Nations Framework Convention on Climate Change). This is issued against the power produced at the waste to energy plant during the period from 27th May, 2013 to 30th June, 2014 and the same facts has been informed to the concerned Govt. Authority. ENVIRONMENT & SOCIAL OBLIGATION The Company maintains the pollution free environment in and around its plants. The Company’s plants comply with all norms set up for clean & better environment by Competent Authorities. . DIVIDEND With a view to conserve the resources in long run, your Directors have not recommended any dividend for the year ended 31st March, 2016. SUBSIDIARY & CONSOLIDATED FINANCIAL STATEMENTS The Company is not required to consolidate its Financial Statements for the year ended 31st March, 2016 as Company do not have any subsidiary. INVESTOR SERVICES The Company and its Registrar M/s. Bigshare Services Private Limited who is looking after the physical as well as Demat work and also shareholders correspondence in terms of SEBI direction for having a common Registrar and Share Transfer Agent, endeavored their best to service the Investors satisfactorily. RESERVES The Company did not propose to transfer any amount to any reserves. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY There have been no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this report. CHANGE IN THE NATURE OF BUSINESS During the year under review, there are no changes in the nature of the business of the company. INTERNAL FINANCIAL CONTROLS The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed. DIRECTORS’ RESPONSIBILITY STATEMENT Your Directors state that: 1. in the preparation of the annual accounts for the year ended 31st March, 2016, the applicable accounting stand ards have been followed and there are no material departures from the same; 2. the Directors have selected such accounting policies and applied them consistently and made judgements 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, 2016 and of the profit of the Company for the year ended on that date; 3. the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; 4. the Directors have prepared the annual accounts on a ‘going concern’ basis; 5. the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and 6. the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. BOARD MEETINGS Four meetings of the Board of Directors were held during the year on 10th April, 2015, 31st July, 2015, 06th November, 2015 and 15th January, 2016. In respect of such meetings proper notices were given and the proceedings were properly recorded and signed in the Minutes book maintained for the purpose. No circular resolutions were passed by the Company during the financial year under review. DIRECTORS AND KEY MANAGERIAL PERSONNEL Mr. Rajesh R. Gupta (DIN 00028379) In accordance with the provisions of Companies Act, 2013 and the Articles of Association of the Company, Mr. Rajesh R. Gupta (DIN 00028379), Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment. Mr. Bharat Bhushan Chadha (DIN 00298713) Mr. Bharat Bhushan Chadha (DIN 00298713) resigned from the directorship of the Company with effect from 03rd November, 2015 and board of directors noted the same in board meeting held on 06th November, 2015. DECLARATION BY INDEPENDENT DIRECTORS The Independent Directors have submitted the Declaration of Independence, as required pursuant to section 149(7) of the Companies Act, 2013, stating that they meet the criteria of independence as provided in sub-section 149(6) of Companies Act, 2013. PERFORMANCE EVALUATION OF THE DIRECTORS The Nomination and Remuneration Committee has laid down the criteria for performance evaluation of the individual Directors and the Board. The framework of performance evaluation of the Independent Directors captures the following points: A. Key attributes of the Independent Directors that justify his / her extension / continuation on the Board of the Company; B. Participation of the Directors in the Board proceedings and his / her effectiveness; The evaluation was carried out by means of the replies given / observations made by all the Directors on the set of questions developed by them which brought out the key attributes of the Directors, quality of interactions among them and its effectiveness. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES The Company does not have any employee, whose particulars are required to be given pursuant to the provisions of section 197 of the Companies Act, 2013 read with Rule 5(2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed hereto marked as Annexure "D" and forms part of this report. PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEE GIVEN AND SECURITIES PROVIDED Particulars of Investments made pursuant to Section 186 of the Companies Act, 2013 are provided in Note 10 to the Financial Statement. The Company has not given any loan or guarantee or provided security during the year under review. PARTICULARS OF CONTRACTS AND ARRANGEMENTS WITH RELATED PARTY The Company did not enter into any transactions / contracts or arrangement with any of the related party during the financial year ended 31st March, 2016 pursuant to section 188(2) of the Companies Act, 2013. COMMITTEES AND POLICIES Audit Committee The Audit Committee was reconstituted at the Board Meeting held on 6th November, 2015, due to the resignation of Mr. Bharat Bhushan Chadha, from the post of Directorship of the Company. Presently, the Committee comprises of Mr. Shantanu Mohapatra as the Chairman and Mr. Mukesh R. Gupta, Dr. B.R. Singh and Mr. Devidas Kambale as the Members. All the recommendations made by the Audit Committee are accepted and implemented by the Board of Directors. More details on the committee are given in the Corporate Governance Report. Nomination and Remuneration Committee The Nomination and Remuneration Committee was reconstituted at the Board Meeting held on 6th November 2015, due to the resignation of Mr. Bharat Bhushan Chadha, from the post of Directorship of the Company. Presently, the Committee comprises of Dr. B.R. Singh as the Chairman and Mr. Mukesh R. Gupta and Mr. Devidas Kambale as the members. During the financial year 2015-2016, no meetings of Nomination and Remuneration Committee were held. Stakeholders Relationship Committee The Stakeholders Relationship Committee is entrusted with the responsibility of redressing the shareholders’/ investors’ complaints with respect to transfer of shares, non-receipt of Annual Report, non-receipt of dividend etc. The Committee comprises of Mr. Mukesh R. Gupta as the Chairman and Mr. Devidas Kambale and Dr. B.R. Singh as the Members. Risk Management Committee The Risk Management Committee of the company comprises of Mr. Mukesh R. Gupta as the Chairman and Mr. Babulal Agarwal, Mr. Rajesh R. Gupta and Mr. Jagannath Dange as the Members. Risk Management Policy The Risk Management policy is formulated and implemented by the company. The policy helps to identify the various elements of risks faced by the company, which in the opinion of the Board threatens the existence of the Company. The Risk Management Policy as approved by the Board is uploaded on the company’s website at the web link: http://www.lloyds.in/ policies.html. Remuneration Policy The Remuneration policy provides guidelines to the Nomination & Remuneration Committee relating to the Appointment, Removal & Remuneration of Directors and KMP. It also provides criteria for determining qualifications, positive attributes and independence of a director. The Nomination and Remuneration policy as approved by the Board is uploaded on the company’s website at the web link: http://www.lloyds.in/policies.html. Whistle Blower Policy & Vigil Mechanism The Company has formulated Whistle Blower Policy & established Vigil Mechanism for the directors and employees of the Company to report, serious and genuine unethical behavior, actual or suspected fraud and violation of the Company’s code of conduct or ethics policy. It also provides adequate safeguards against victimization of persons, who use such mechanism and makes provision for direct access to the chairperson of the Audit Committee in appropriate or exceptional cases. None of the employees of the Company has been denied access to the Audit Committee. Mr. Nitesh Tanwar, Company Secretary and Compliance officer of the company, has been designated as Vigilance and Ethics Officer for various matters related to Vigil Mechanism. The Policy on Vigil Mechanism and Whistle Blower Policy as approved by the Board is uploaded on the company’s website at the web link: http://www.lloyds.in/policies.html. CORPORATE GOVERNANCE The Company has taken adequate steps to ensure that all mandatory provisions of Corporate Governance as prescribed under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are complied with. The report on Corporate Governance as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms an integral part of this Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of corporate governance is annexed hereto marked as Annexure "E" and forms part of this report. AUDITORS AND AUDITORS’ REPORT Statutory Auditor Pursuant to Section 139 of the Companies Act, 2013, rules made thereunder and subject to approval of the members of the company at the Annual General Meeting, the Board of directors on the recommendation of the Audit Committee appointed M/s Todarwal & Todarwal, Chartered Accountants (Firm Registration No.111009W), as the Statutory Auditors of the company for the period of three financial years commencing from 1st April, 2014 to 31st March, 2017. The Board based on the recommendation of the Audit Committee, recommends the ratification of the appointment of M/s Todarwal & Todarwal, Chartered Accountants (Firm Registration No.111009W) as the Statutory Auditors. The members are thus requested to ratify the appointment of aforesaid Statutory Auditors for the next financial year 2016- 2017 at the ensuing Annual General Meeting. The Statutory Auditors have not reported any incident of fraud to the Audit Committee of the Company in the year under review. Cost Auditor In terms of provisions of Section 148 of the Companies Act, 2013 and in accordance with notification issued by the Ministry Of Corporate Affairs, F.No.52 /26/ CAB – 2010 dated 2nd May, 2011, M/s Manisha & Associates, Nagpur, Cost Accountants was appointed as Cost Auditor of the Company for the financial year 2015-16 and they have offered themselves for re-appointment for the financial year 2016-17. The Company has filed Cost Audit Report for the financial year ended 31st March, 2015 with the Central Government within the time limit prescribed under the Companies Act, 2013. Secretarial Auditor Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has appointed Mr. K. C Nevatia of K. C Nevatia & Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company for the financial year ended 31st March, 2017. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. The Secretarial Audit Report is annexed hereto marked as "Annexure B" and forms part of this Report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO. The Information on conservation of energy, technology absorption, foreign exchange earnings and out go, which is required to be given pursuant to the provisions of section 134(3)(m)of the Companies Act, 2013, read with Rule 8 of Companies (Account) Rules, 2014 is annexed hereto marked as Annexure ‘A’ and forms part of this report. EXTRACT OF THE ANNUAL RETURN The Extract of the Annual Return for the Financial Year 2015- 16 is enclosed with this report pursuant to section 92(3) of the Companies Act, 2013 as Annexure ‘C’ and forms part of this report. GENERAL DISCLOSURE Your 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: Details relating to deposits covered under Chapter V of the Act. Issue of equity shares with differential rights as to dividend, voting or otherwise. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save or ESOS. 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.
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. ACKNOWLEDGEMENT: Your Directors place on record their sincere appreciation and gratitude for the assistance and generous support extended by all Government authorities, Financial Institutions, Banks, Customers and Vendors during the year under review. Your Directors wish to express their immense appreciation for the devotion, commitment and contribution shown by the employees of the company while discharging their duties. For and on behalf of the Board Mukesh R. Gupta Chairman Date : 14th April, 2016 Place : Mumbai |