The Directors have pleasure in presenting the Forty-Fifth Annual Report on the business and operations of the Company together with the Audited Financial Statements for the Financial Year ended 31st March, 2018.
1. Financial Highlights (on stand-alone basis) :
(Rs. in Million)
Depreciation & amortisation expenses
Profit before Tax
Tax Expenses :
- Current Tax
- Deferred Tax
Profit after Tax
2. Indian Accounting Standards (Ind AS) :
The Ministry of Corporate Affairs (MCA), vide its notification dated 16th February, 2015, notified the Indian Accounting Standards (Ind AS) applicable to certain classes of companies. Ind AS has replaced the existing Indian GAAP prescribed under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014.
Being applicable, the Company has adopted Ind AS from April 1, 2017 and accordingly, the transition was carried out, from the Accounting Principles generally accepted in India as specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 (previous GAAP) to Ind AS 101 “First time adoption of Indian Accounting Standards”.
The impact of transition has been recorded in opening reserves as at April 1, 2016 and the periods presented have been restated / reclassified.
The reconciliation and descriptions of the effect of the transition from Indian GAAP to Ind AS have been provided in Note 47 of the notes forming part of separate financial statements.
3. Dividend & Reserves :
The Directors are pleased to recommend a dividend of Rs. 5/- per Equity Share of Rs. 5/- each (i.e.100%) for the financial year ended 31st March, 2018, for approval of the members. The dividend on Equity Shares, if approved by the members would involve a cash outflow of Rs. 218.27 Million plus a dividend tax of Rs. 44.87 Million.
During the year under review, no transfer is made to the General Reserve. An amount of Rs. 7,035.59 Million is retained as surplus in the Statement of Profit and Loss.
4. Performance of the Company :
During the Financial Year ended 31st March, 2018, the Company achieved Revenue from Operation of Rs. 13,870.15 Million against Rs. 14,105.10 Million in the previous year. The Profits before Tax is Rs. 1,745.95 Million, against Rs. 2,392.33 Million in the previous year.
In the steel industry, cost is the main driver for competitiveness. During the year under review cost of key raw materials such as Iron Ore, Coke, Electrodes, Refractories etc. has increased substantially, however there was a delay in accepting such increased costs by our customers, which resulted in comparatively lower profits. Secondly in view of the reduction in margins for sale of Pig Iron, the Company sold 4,095 tonnes of Pig Iron as compared to 26,686 tonnes in the previous year.
5. State of Company’s Affairs :
Discussion on the state of Company’s affairs has been covered as part of the Management Discussion and Analysis (MD&A). MD&A for the year under review, as stipulated under Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is presented in a separate section forming part of the Annual Report.
6. Corporate Governance
The Company has committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance Requirements set out by SEBI. The Report on Corporate Governance as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is presented in a separate section forming part of the Annual Report.
The requisite certificate from Auditors of the Company viz. M/s. P. G. Bhagwat, Chartered Accountants, Pune confirming compliance with conditions of Corporate Governance is attached to Report on Corporate Governance.
During the year under review, the Company has not accepted any deposit under Chapter V of the Companies Act, 2013.
In terms of the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr.B.N. Kalyani, Chairman and Mr.S.M. Kheny, Director of the Company, are retiring by rotation at the ensuing Annual General Meeting and being eligible, have offered themselves for re-appointment.
Mr.C.G. Patankar, Independent Director of the Company resigned with effect from 11th August, 2017, due to his other pre-occupations and ceased to be the Director of the Company. The Board places on record its appreciation of the valuable contributions made by Mr.Patankar during his tenure as Director of the Company.
Mr.S.S. Vaidya, Independent Director of the Company resigned with effect from 18th May, 2018, due to health reasons and ceased to be the Director of the Company. The Board places on record its appreciation of the valuable contributions made by Mr.Vaidya during his tenure as Director of the Company.
The Board of Directors at its meeting held on 9 th November, 2017 had co-opted Mr. Sachin K. Mandlik, as an Additional Independent Director for the period of 5 (five) years from 9th November, 2017 to 8th November, 2022, subject to approval of the members at the ensuing Annual General Meeting.
The Board of Directors at its meeting held on 18th May, 2018 had co-opted Mr.Shrikrishna K. Adivarekar, as an Additional Independent Director for the period of 5 (five) years from 18th May, 2018 to 17th May, 2023, subject to approval of the members at the ensuing Annual General Meeting.
Mr.B.B. Hattarki, Independent Director on the Board of the Company is seeking re-appointment for a second term of 5 (five) years with effect from 1st April, 2019 to 31st March, 2024.
These appointment / re-appointments form part of the Notice of the Annual General Meeting and the Resolutions are recommended for your approval. Profiles of these Directors, are given in the Report on Corporate Governance for reference of the members.
The Company has received declarations from all Independent Directors that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
8.1 Board Evaluation
Pursuant to provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, 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 Committees. Performance evaluation has been carried out as per the Board Diversity and Remuneration Policy.
8.2 Board Diversity and Remuneration Policy
The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Board Diversity and Remuneration Policy is available on the website of the Company. (Web-link : http://www.kalyanisteels.com/ profile/code-of-conduct/board-diversity-remuneration-policy/)
8.3 Meetings of the Board
During the Financial Year 2017-18, four Board Meetings were convened and held. Also a separate meeting of Independent Directors as prescribed under Schedule IV of the Companies Act, 2013 was held. The details of meetings of Board of Directors are provided in the Report on Corporate Governance that forms part of this Annual Report.
9. Directors’ Responsibility Statement
Pursuant to the requirements under Section 134(5) of the Companies Act, 2013, with respect to Directors’ Responsibility Statement, it is hereby confirmed that :
i) in the preparation of the annual accounts for the year ended 31st March, 2018, the applicable accounting standards have been followed and that there are no material departures;
ii) the Directors have 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 31st March, 2018 and of the profit of the Company for that period;
iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv) the Directors have prepared the annual accounts for the year ended 31st March, 2018, on a going concern basis;
v) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
vi) 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.
10. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings & Outgo
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo, as required to be disclosed under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith as Annexure “A”.
11. Corporate Social Responsibility
The Company has been carrying out various Corporate Social Responsibility (CSR) activities in the areas of education, health, water, sanitation etc. These activities are carried out in terms of Section 135 read with Schedule VII of the Companies Act, 2013 and Companies (Corporate Social Responsibility Policy) Rules, 2014.
The details of CSR Activities undertaken by the Company are annexed herewith as Annexure “B”. The CSR Policy is available on Company’s website. (Web-link : http: //www.kalyanisteels.com/profile/code-of-conduct/corporate-social-responsibility-csr/)
12. Related Party Transactions
All contracts or arrangements entered into by the Company with Related Parties during the financial year were in the ordinary course of business and on an arm’s length basis. Pursuant to Section 134 of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014, the particulars of transactions with related parties, are provided in Form AOC-2, which is annexed herewith as Annexure “C”. Related party disclosures as per Ind AS have been provided in Note 39 of the notes forming part of separate Financial Statements.
The policy on Related Party Transactions as approved by the Board is uploaded on the Company’s website. (Web-link : http://www.kalyanisteels.com/profile/code-of-conduct/related-party-transactions-policy/)
13. Risk Management
The Company recognises that risk is an integral and unavoidable component of business and is committed to managing the risk in a proactive and efficient manner. The Company as part of business strategy has in place a mechanism to identify, assess, monitor risks and mitigate various risks with timely action. Risks are discussed at the meetings of the Audit Committee and the Board of Directors of the Company.
14. Audit Committee
As on 31st March, 2018, the Audit Committee comprises of Mr.S.S. Vaidya, Chairman of the Committee and Independent Director, Mr.B.N. Kalyani, Promoter Non-Executive Director, Mr.B.B. Hattarki, Independent Director and Mr.M.U. Takale, Independent Director.
All the recommendations made by the Audit Committee were deliberated and accepted by the Board during the Financial Year 2017-18.
15. Auditors and Auditor’s Report
The members, at their Forty-Fourth Annual General Meeting held on 1st August, 2017, had appointed M/s. P.G. Bhagwat, Chartered Accountants, Pune, as Auditors of the Company, to hold office for the period of five years i.e. from the conclusion of Forty-Fourth Annual General Meeting till the conclusion of the Forty-Ninth Annual General Meeting to be held in 2022 and the said appointment was subject to ratification by members at every Annual General Meeting.
The Companies (Amendment) Act, 2017, has amended Section 139(1) of the Companies Act, 2013 effective from 7th May, 2018 whereby first proviso to Section 139(1) is omitted which provided for ratification of appointment of Auditors by members at every Annual General Meeting.
In view of the same, the Board of Directors have proposed to ratify the appointment of M/s. P. G. Bhagwat, Chartered Accountants, Pune (Firm Registration No.101118W), as Auditors of the Company, for the period of four years i.e. from the Conclusion of this Annual General Meeting till the conclusion of the Forty-Ninth Annual General Meeting to be held in 2022.
The Company has received letter from M/s. P. G. Bhagwat, Chartered Accountants, to the effect that ratification of appointment, if made, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified for appointment.
The Directors recommend ratification of appointment of Auditors from the conclusion to ensuing Annual General Meeting till the conclusion of the Forty-Ninth Annual General Meeting to be held in 2022.
The Notes on Financial Statements referred to in the Auditor’s Report are self-explanatory and hence do not call for any further comments. The Auditor’s Report does not contain any qualification, reservation, adverse remark or disclaimer.
16. Cost Auditors
Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, as amended, the cost audit record maintained by the Company is required to be audited. The Board of Directors had, on the recommendation of the Audit Committee, appointed M/s S.R. Bhargave & Co., Cost Accountants, Pune for conducting the cost audit of the Company for Financial Year 2018-19.
As required under the Companies Act, 2013, the remuneration payable to the Cost Auditors is required to be ratified by the members of the Company. Accordingly, resolution seeking members’ ratification for remuneration to be paid to Cost Auditors is included at Item No.10 of the Notice convening Annual General Meeting.
17. Secretarial Audit and Secretarial Standards
Pursuant to provisions of Section 204 of the Companies Act, 2013, the Board had appointed M/s. SVD & Associates, Company Secretaries, Pune, to undertake Secretarial Audit of the Company for the Financial Year 2017-18. The Secretarial Audit Report for the Financial Year ended 31st March, 2018, is annexed herewith as Annexure “D”. The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer.
The Company is compliant with the Secretarial Standards issued by the Institute of Company Secretaries of India and approved by Central Government under Section 118(10) of the Companies Act, 2013.
18. Particulars of Employees and related Disclosures
The information required pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, has been provided in Annexure “E”.
19. Extract of the Annual Return
An extract of the Annual Return of the Company, pursuant to the Section 92(3) of the Companies Act, 2013, in Form MGT-9 is annexed hereto as Annexure “F”.
20. Whistle Blower Policy
The Company has vigil mechanism named ‘Whistle Blower Policy’, wherein the employees / directors can report the instances of unethical behavior, actual or suspected fraud or any violation of the Code of Conduct and / or laws applicable to the Company and seek redressal. This mechanism provides appropriate protection to the genuine Whistle Blower, who avail of the mechanism. During the year under review, the Company has not received any complaint under the said mechanism. The ‘Whistle Blower Policy’ as approved by the Board is uploaded on the Company’s website. (Web-link : http://www.kalyanisteels.com/profile/code-of-conduct/whistle-blower/)
21. Particulars of Loans, Guarantees or Investments
Particulars of Loans, Guarantees and Investments covered under Section 186 of the Companies Act, 2013, form part of the notes to the Financial Statements provided in this Annual Report.
22. Internal Financial Controls
The Company has in place adequate internal financial controls with reference to the Financial Statements. During the year, such controls were tested and no reportable material weakness was observed in the design or implementation.
23. Material Changes and Commitments, if any affecting Financial Position of the Company
There are no adverse material changes or commitments occurring after 31st March, 2018, which may affect the financial position of the Company or may require disclosure.
24. Significant and Material Orders
There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company’s operations in future.
25. Familiarisation Programme
The Board members are provided with necessary documents / brochures, reports and internal policies to enable them to familiarise with the Company’s procedures and practices. Periodic presentations are made at Board Meetings, Board Committee Meetings, on business and performance updates of the Company, global business environment, business strategy and risks involved.
The details of programmes for familiarisation of Independent Directors with the Company are put up on website of the Company. (Web-link : http://www.kalyanisteels.com/profile/code-of-conduct/terms-of-the-appointment-of-independent-directors-of-kalyani-steels-limited/)
26. Subsidiaries, Joint Ventures or Associate Companies
As on 31st March, 2018, the Company has one Subsidiary and two associates / joint venture companies. A statement containing the salient features of the financial statement of the subsidiary and associates / joint ventures in the prescribed format AOC-1 is annexed hereto as Annexure “G”.
The Policy for determining ‘Material’ subsidiaries has been displayed on the Company’s website. (Web-link : http: / / www.kalyanisteels.com/profile/code-of-conduct/policy-on-material-subsidiary/)
27. Consolidated Financial Statements
The Consolidated Financial Statements, pursuant to Section 129 of the Companies Act, 2013 are attached to the Standalone Financial Statements of the Company.
28. Transfer to Investor Education and Protection Fund (IEPF)
Pursuant to provisions of the Companies Act, 2013, the declared dividends, which are unpaid or unclaimed for a period of seven years, shall be transferred by the Company to the Investor Education and Protection Fund (IEPF) established by the Central Government,
Accordingly, the unpaid or unclaimed dividend remaining unpaid or unclaimed for a period of seven years from the date they became due for payment, have been transferred to the IEPF established by the Central Government.
Pursuant to section 124(6) of the Companies Act, 2013 read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, as amended, all shares in respect of which dividend has not been paid or claimed for seven consecutive years or more, shall be transferred by the Company to IEPF.
Accordingly, the Company after complying with all the requisite procedures, has transferred 128,464 Equity Shares to IEPF Authority.
29. Obligation of Company under The Sexual Harassment of Women at Workplace (Prevention, Prohibition And Redressal) Act, 2013
In terms of provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has formulated a Policy to prevent Sexual Harassment of Women at Workplace. During the year under review, one complaint was filed and redressed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
The Directors would like to express their sincere appreciation of the co-operation received from the Central Government, the Government of Maharashtra, the Government of Karnataka, Karnataka Industrial Area Development Board, Financial Institutions and the Bankers. The Directors also wish to place on record its appreciation for the commitment displayed by all employees at all levels, resulting in the successful performance of the Company during the year.
The Directors also take this opportunity to express its deep gratitude for the continued co-operation and support received from its valued shareholders.
The Directors express their special thanks to Mr.B.N. Kalyani, Chairman of the Company, for his untiring efforts for the progress of the Company.
for and on behalf of the Board of Directors
Place : Pune B.N. Kalyani
Date : May 18, 2018 Chairman