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Adhunik Metaliks Ltd.

BSE: 532727 | NSE: ADHUNIK | Series: NA | ISIN: INE400H01019 | SECTOR: Steel - Sponge Iron

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Annual Report

For Year :
2016 2015 2014 2013 2012 2011 2010 2009 2008

Director’s Report


To the Members of Adhunik Metallic’s Limited

The Directors are pleased to present the Fifteenth Annual Report and Audited Statement of Accounts for the year ended 31st March, 2016.

(Rs, in Lacs)


Standalone Results

Consolidated Results





(9 Months)

(12 Months)

(9 Months)

(12 Months)

Revenue from operations (gross)





Less: Excise duty





Revenue from operations (net)





Other income





Revenue from operations (including other income)





Profit before Interest, Depreciation and Exceptional item





Less: Finance Cost





Less: Depreciation





Profit/(loss) before Exceptional item





Less : Exceptional items



Profit/(loss) before Tax










Net Profit/(loss) after tax but before minority interest





Share of profit /(loss) of Minority Interest



Profit/(loss) for the year






During the year under review, post implementation of Corporate Debt Restructuring, your management made all efforts to revive operations, however iron & steel sector scenario continued to remain subdued and in spite of improvements in operations, overall profitability could not be established. Total revenue on standalone basis, stood at '' 47,542.45 lacs for 9 months period ended 31st March, 2016. The Company has incurred net loss of '' 28,905.47 lacs during the period.


In view of the losses for the year ended 31st March, 2016 and accumulated losses, the Board of Directors of your Company is constrained not to recommend any dividend for the year under review.


In view of losses incurred by the Company during the year, no amount has been transferred to the General Reserve for the financial year ended 31st March, 2016.


During the year under review, there has been no change in the nature of business of the Company.


Your Company did not accept any deposits within the meaning of Section 73 of the Companies Act, 2013 and the rules made there under. The Company does not hold any deposits from the public, shareholders and employees as on 31st March, 2016.


During the year under review, CDR scheme was implemented by the Lenders of the Company which helped the Company to revive operations. The package implemented by the Lenders included the following:

a. Reduction of Interest rates and step up in the years to come, for term loans and working capital

b. Conversion of part of outstanding into Working Capital Term Loan

c. Repayment period rescheduled to match revenues of the Company with moratorium

d. Interest funding for initial years, to be repaid subsequently

The CDR package helped the Company to revive operations at its unit at Sundergarh and maintain a capacity utilization 50.56% during the year under review.


During Financial year 2013-14, your Directors approved amalgamation of the Company with its wholly owned subsidiary i.e Orissa Manganese & Minerals Limited. The Company has filed the confirmation Petition before the Hon''ble High Court, Cuttack (Odisha) and the same is pending for approval at present. The amalgamation, if approved will be advantageous and beneficial to all stakeholders of your Company. The Hon''ble High Court at Odisha has heard the matter and is yet to pass final orders.


The Company''s paid up equity share capital remained at Rs, 1,234,995,360 (Rupees One Hundred Twenty Three Crores Forty Nine Lacs Ninety Five Thousand Three Hundred Sixty only) comprising of 12,34,99,536 equity shares of Rs, 10 each. There was no change in the Company''s share capital during the year under review.


Your Company has, subsequent to year end, transferred a sum of Rs, 300,387 to Investor Education and Protection Fund, in compliance with the provisions of Section 124, 125 and other applicable provisions of the Companies Act, 2013 (corresponding to Section 205C of the Companies Act, 1956).

The said amount represents dividend for the year 2007-08 which remained unclaimed for a period 7 years from its due date of payment.


Your company''s wholly owned subsidiary namely, Orissa Manganese & Minerals Limited (OMML) operates Ghatkuri Iron ore mines in the state of Jharkhand and Patmunda and Orahuri Manganese Mines in the state of Odisha. OMML operates a iron ore pellet plant at Kandra, Jharkhand and another wholly owned subsidiary, Global Commodity and Resources Limited based at Hongkong SAR, which was set up to boost the trading activity of the company. During the year under review, the subsidiary has remained inactive due to significant operational difficulties faced by the domestic holding company in India.

The consolidated financial statements presented by the Company include financial information of its subsidiaries prepared in compliance with applicable Accounting Standards.

A statement containing the salient features of the financial statement of the Company''s subsidiaries in the prescribed form AOC-1 pursuant to first proviso to Section 129(3) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 is annexed separately to the financial statements. The Annual Accounts of the subsidiary companies will be made available to the shareholders of the aforesaid subsidiaries and the Company as and when they demand and will also be kept for inspection by any investor at the registered office of the Company and these subsidiaries. The Financial statements of the Company and its subsidiaries are also available on the website of the Company.


The Board met 3 (three) times during the year, the details of which are given in the Corporate Governance Report that forms part of the Annual Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 and the Listing Agreement.

Further, the Independent Directors at their meeting, reviewed the performance of the Board, Chairman of the Board and of Non Independent Directors, as required under the Act and the Listing Agreement.


In accordance with the provisions of Section 152 of the Companies Act, 2013 and in terms with the Articles of Association of the Company, Mr. Ghanshyam Agarwal (DIN - 00507800) and Mr. Mohan Lal Agarwal (DIN - 01047906)who retires by rotation and being eligible offers themselves for re-appointment. The Board has recommended their re-appointment.

The Company has received declarations from Mr. Nihar Ranjan Hota (DIN 01173440), Mr. Amrendra Prasad Verma (DIN 00236108), Mr. Nandanandan Mishra (DIN 00031342), Mr. Gopal Dikshit (DIN 00090579) and Mr. Ramgopal Agarwala (DIN 02054856), Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under Section 149 (6) of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchanges.

Ms. Uttara Dasgupta (DIN 06570950) was appointed as Nominee Director (Nominee of State Bank of India as Lead Lender acting for itself and for the consortium of Lenders, providing financial assistance to the Company) on 28th August, 2015.


Mr. Manoj Agarwal, Managing Director of the Company stepped down from his position with effect from 14th November, 2015 owing to health issues.

Mr. Nirmal Agarwal, Director of the Company, has been appointed as Managing Director of the Company with effect from 14th November, 2015 and subsequently his appointment was approved by the Shareholders of the Company at the fourteenth Annual General Meeting held on 31st March, 2016.


The financial year of the Company is from 1st July, 2015 to 31st March, 2016. In accordance with the requirements of the Companies Act, 2013, the Company has changed its accounting year during the year under review.


Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory, cost and secretarial auditors and the reviews performed by the Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Company''s internal financial controls were adequate and effective during the financial year 2015-16.

Accordingly, pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm that:-

a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b) 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) The Directors had prepared the annual accounts on a going concern basis;

e) The Directors had laid down proper internal financial controls and such internal financial controls are adequate and were operating effectively;

f) 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.


The Board carried out an annual performance evaluation of its own performance, the individual Directors as well as the Board Committees, in due compliance with the provisions of the Companies Act, 2013 and the Listing Agreement. The performance evaluation of the Independent Directors was carried by the entire Board and the performance evaluation of the Chairman and Non

- Independent Directors was carried out by the Independent Directors.

The Board evaluation was carried out in accordance with the criteria laid down in the Nomination and Remuneration policy of the Company.


The Audit committee comprises of five (5) members of which four (4) members are independent including Chairman Mr. Nandanandan Mishra is the Chairman of the Audit Committee. The members of the Committee possess adequate knowledge of Accounts, Audit and Finance. The composition of the Audit Committee meets the requirements as per Section 177 of the Companies Act, 2013 and of Clause 49 of the Listing Agreement and is detailed in the Corporate Governance Report forming part of this Annual Report. All recommendations made by the Audit committee were accepted by the Board during FY 2015-16.


During the year under review, none of the Directors has received any commission from holding / subsidiary Company.


M/s. Das & Prasad, Chartered Accountants, having registration number FRN 303054E allotted by The Institute of Chartered Accountants of India (ICAI) retires as Auditor of your Company at the ensuing Annual General Meeting (AGM) and have confirmed their eligibility and willingness to accept the office of Auditors, if re-appointed. Pursuant to section 139 of the Companies Act, 2013 and rules framed there under, it is proposed to appoint M/s. Das & Prasad, Chartered Accountants as Statutory Auditors of the Company from the conclusion of the ensuing AGM till the conclusion of the 16th AGM to be held for F.Y. 2016-17.

The observations of the Auditors are duly dealt in Notes to Accounts attached to Balance Sheet and are self explanatory in nature and do not call for any further comments except:-

a) The Management of the Company is reasonably certain that the Company would be having Future Taxable Income and deferred tax assets are only recognized to the extent that their utilization is probable, i.e. tax benefit is expected in future periods and the same is further supported by the Technical & Economical Valuation conducted by Dun & Bradstreet as a part of CDR Implementation.

b) The company has locked out its plant at Rourkela in the month of February, 2015 owing to adverse business condition. The lock out was declared in accordance with the procedures laid down in the state of Odisha. In the opinion of the management, since the lock out was declared in accordance with lawful procedures, the salary and other statutory liabilities do not accrue during the period of lockout and hence no provision has been made in the books of account of the company.

c) The observation of the Auditors for the subsidiary company, Orissa Manganese & Minerals Limited has been dealt in Notes to Accounts which are self explanatory and do not require any further elucidation.


In terms of the provisions of Section 138 of the Act, M/s Sudhir Kumar Jain & Associates, Independent Chartered Accountants were appointed as Internal Auditors of the Company for the financial year 2015-16. The Audit Committee in consultation with the Internal Auditors formulates the scope, functioning, periodicity and methodology for conducting the Internal Audit. The Audit Committee, interlay, reviews the Internal Audit Report.


In respect of financial year ended 31st March, 2016, your Company has appointed M/s. S.B. & Associates, Cost Accountants, as Cost Auditor of the Company w.e.f. 1st July, 2015 to 31st March, 2016 to carry out audit of cost records of the Company in compliance with the requirements of section 148 and all other applicable provisions of the Companies Act, 2013 read with Rule 14 of the Companies (Audit and Auditors) Rules, 2014 (including any statutory modification(s) or re-enactment thereof for the time being in force).


Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company appointed Mr. Pramod Kumar Pal, Practicing Company Secretary to undertake the Secretarial Audit of the Company for the year ended 31st March, 2016. The Secretarial Audit Report is annexed (Annexure -C) herewith and forms part of this report.


In terms of Clause 32 of the Listing Agreement with Stock Exchanges, Consolidated Financial Statement, conforming to Accounting Standard 21 issued by the Institute of Chartered Accountants of India, is attached as a part of the Annual Report.


The Company is committed in maintaining the highest standards of Corporate Governance and adheres to the stipulations prescribed under Clause 49 of the Listing Agreement with the Stock Exchanges. Report on Corporate Governance & Shareholder Information together with the Practicing Company Secretary Certificate thereon is annexed as part of this Annual Report.


The Company''s policy on Directors'' appointment and remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the Corporate Governance Report, which forms part of this Annual Report.


A detailed analysis of the Industry and Company Outlook, Company''s operations, project review, risk management, strategic initiatives and financial review & analysis, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges is presented under a separate section titled Management Discussion and Analysis forming part of the Annual Report.


The details forming part of the extract of the Annual Return in Form MGT -9 (Annexure - D) as per provisions of the Companies Act, 2013 and rules framed there under are annexed to this Annual Report.


The particulars of loans, guarantees and investments have been disclosed in the financial statements.


The Company has in place Adhunik Employee Stock Option Plan (''ESOP 2012'') for employees of the Company as well as employees of the subsidiaries which continue with the Company''s philosophy of encouraging the employees to be partners in the growth of the organization. ESOP Scheme is administered by the Remuneration Committee of the Board of Directors of the Company.

During the year under review 333,770 Stock Options have vested with the employees of the Company and its subsidiaries and 913,852 Stock Options have been forfeited till 31st March 2016. As on 31st March 2016, none of the Options have been exercised.

The disclosures required to be made under Clause 12.1 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, as amended from time to time, together with a certificate obtained from the Statutory Auditors, confirming compliance thereto, are provided in Annexure B forming part of this Report.


The volatility in the global economy and the increasingly complex interplay of factors influencing the business makes Risk Management an inevitable exercise and to cater to the same, your Company has identified major focus areas for risk management to ensure organizational objectives are achieved and has a robust policy along with well-defined and dynamic structure and proactive approach to assess, monitor and mitigate risks associated with the business. The risk management framework is aimed at effectively mitigating business risks and operational risks through effective strategic implementation. The Company believes that the risks faced by the Company are within its risk capacity.


Your Company has adequate system of internal control procedures commensurate with its size and the nature of its business. The internal control systems of the Company are monitored and evaluated by the Internal Auditors and their audit reports are periodically reviewed by the Audit Committee of the Board of Directors of the Company.

Your Company manages and monitors the various risks and uncertainties that can have adverse impact on the Company''s Business. Your Company is giving major thrust in developing and strengthening its internal audit so that risk threat can be mitigated.

Internal control systems are integral to the Company''s corporate governance policy. Some of the significant features of internal control systems include:

- Documenting of policies, guidelines, authorities and approval procedures, encompassing the Company''s all primary functions.

- Deploying of an SAP system which covers most of its operations and is supported by a defined on-line authorization protocol.

- Ensuring complete compliance with laws, regulations, standards and internal procedures and systems.

- De-risking the Company''s assets/resources and protecting them from any loss.

- Ensuring the accounting system''s integrity proper and authorized recording and reporting of all transactions.

- Preparing and monitoring of annual budgets for all operating and service functions.

- Ensuring the reliability of all financial and operational information.

- Forming an Audit committee of the Board of Directors, comprising Independent Directors. The Audit Committee regularly reviews audit plans, significant audit findings, adequacy of internal controls, and compliance with accounting standards and so on.

- Forming a comprehensive Information Security Policy and continuous up-gradation of IT Systems.

The internal control systems and procedures are designed to assist

- the identification and management of risks, the procedure-led verification of all compliance as well as an enhanced control consciousness


Your Company obtained a Credit Rating of BWR BB - from Brickwork Ratings in the month of November, 2015.


All related party transactions entered into during FY 2015-16 were on arm''s length basis and also in the ordinary course of business and provisions of section 188 of the Companies Act, 2013 are not attracted. Further, there are no materially significant related party transactions during the year under review made by the company with promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. Thus, disclosure in Form AOC-2 is not required. The transactions entered into pursuant to the omnibus approval so granted were audited and a statement giving details of all related party transactions was placed before the Audit Committee for its approval on a quarterly basis. The statement was supported by a Certificate duly signed by the Managing Director and the Head (Finance & Accounts). The policy on Related Party Transactions as approved by the Board is uploaded on the

Company''s website at

None of the Directors or KMP has any pecuniary relationships or transactions vis-a-vis the Company during FY 2015-16.


There were no significant and material orders passed by the Regulators / Courts / Tribunals impacting the going concern status and company''s operations in future.

There were also no material changes and commitments occurred after the closure of the year till the date of this report, which affect the financial position of the company.


Details of energy conservation, technology absorption and foreign exchange earnings and outgo are annexed to this report (Annexure - A).


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.


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 to this Report (Annexure - E).

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 a statement showing the names and other particulars of employees drawing remuneration in excess of the limits set out in the said Rules are provided in the Report.


The Company has adopted Vigil Mechanism policy that provides a formal mechanism for all Directors, employees and vendors of the Company to approach the Ethics Counselor/Chairman of the Audit Committee of the Board and make protective disclosures about the unethical behavior, actual or suspected fraud. The Vigil Mechanism comprises of whistle blower policy for directors, employees and vendors.


The Corporate Social Responsibility (CSR) policy recommended by the Corporate Social Responsibility Committee had been approved by the Board of Directors. The CSR policy is available on the website of the Company at

Since your Company''s last three financial years average net profit was negative, the compliance requirement of spending 2% for CSR initiative was not needed for 2015-16. But as a responsible corporate, your Company has already initiated various CSR activities in the surrounding villages of its plant at Chadri Hariharpur, Odisha. However, no separate reporting is made in this regard.


In terms of the requirement of Section 178 of the Companies Act, 2013, the Board of Directors has approved the Nomination and Remuneration policy of the Company and the same is available on the website of the company.


The Company has zero tolerance towards sexual harassment at the workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under. The Company has not received any complaint of sexual harassment during the financial year 2015-16.


Your Directors wish to place on record their appreciation for the continuous support and guidance of all Governmental Authorities, Central and States. It further acknowledges and wishes to place on record the deep appreciation for support of Financial Institutions, Banks and various stakeholders, such as, shareholders, customers and suppliers, among others. The Directors also commend the continuing commitment and dedication of the employees at all levels, which has been critical for the Company''s success. The Directors look forward to their continued support in future.

For and on behalf of the Board

Place: Kolkata Ghanshyam Das Agarwal

Date: 02nd September, 2016 Chairman

Director’s Report