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Mukand Ltd.

BSE: 500460 | NSE: MUKANDLTD |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE304A01026 | SECTOR: Steel - Medium & Small

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Annual Report

For Year :
2018 2017 2016 2015 2013 2012 2011 2010 2009

Director’s Report

1. The Directors present the 80th Annual Report and audited Financial Statements of the Company for the year ended March 31, 2018.

2. Financial Results:

Financial Highlights:

Description

2017-18

2016-17

(Rs. in Crores)

Revenue from operations and other operational Income

3,106.65

2,995.19

Profit/(loss)

Profit/(loss) before tax

25.64

74.08

Current Tax / Deferred Tax Credit / (charge) (net)

18.22

(62.84)

Profit/(Loss) after Tax

44.06

11.24

Other Comprehensive Income (net)

30.71

(21.66)

Total Comprehensive Income

74.77

(10.42)

Net worth:

Earnings per Share

3.12

0.79

3. Performance:

3.1 The total revenue (including other income) during the year was Rs. 3,407.58 crores compared to Rs. 3,171.45 crores in the previous year. The exports during the year were Rs. 222 crores compared to Rs. 151 crores in the previous year, i.e., an increase of 47%. The turnover has improved on account of increase in production of alloy steel and stainless steel during the year. The profit before tax for the year is Rs. 25.64 crores as compared to Rs. 74.08 crores in the previous year. The previous year’s figures of revenue and profits are not comparable on account of Ind-AS adjustments. The margins were affected due to increase in input cost which could not be passed on to customers, loss on account of volatility in foreign exchange rates, higher interest cost, etc.

3.2 The Company adopted Indian Accounting Standards (Ind-AS) from April 1, 2017. The figures of previous year are also re-cast / regrouped to be Ind-AS compliant as the transitional date for adoption of Ind-AS for your Company is April 1, 2016. These annual financial statements are the first financial statements of the Company under Ind-AS. Impact of such first-time adoption of Ind-AS as compared to previous GAAP is given in the annexed Financial Statements.

3.3 The performance of the Company is elaborated in the Management Discussion & Analysis annexed to this report.

4. The Directors do not recommend any dividend for the year in the absence of eligible profit required for distribution in terms of provisions of Section 123 of the Companies Act, 2013 and no amount has been transferred to the Reserves.

5. Transfer of Alloy Steel Rolling and Finishing Business:

5.1 As reported in the previous years, the application of Scheme of Arrangement and Amalgamation involving transfer of alloy steel rolling and finishing business of the Company to its wholly owned subsidiary company viz., MukandAlloy Steel Pvt. Ltd. (MASPL) was filed with National Company Law Tribunal (NCLT). The required approvals from Shareholders, Creditors and other competent statutory / regulatory authorities have been received and the Scheme was approved by NCLT (Mumbai Bench) on December 13, 2017.

5.2 After close of the year, Sumitomo Corporation, Japan (SC) as a Joint Venture partner for the Alloy Steel Rolling and Finishing Business (ASRFB) has invested an amount of ‘1,180.99 Crore.

5.3 The amount so received was utilized for payment of debt transferred by your company to MASL and consideration payable to the Company. This will reduce debt of the Company.

5.4 Upon such investment, Company now holds 51% and Sumitomo Corporation 49% in MASL. On infusion of funds by Sumitomo, the name of MASL was changed to Mukand Sumi Special Steel Ltd. (MSSSL).

5.5 Operations under the Joint Venture are expected to provide focused attention to improve efficiency of operations, widening of the marketing network and for expansion to enhance value for the Company and its Stakeholders.

6. Transfer of Industrial Machinery Division:

Your Board at its meeting held on March 27, 2017 had considered and approved a Scheme of Arrangement and Amalgamation amongst the Company and its wholly owned Subsidiaries, under the provisions of Sections 230 to 232 and other applicable provisions of the Companies Act, 2013. The Appointed Date under the Scheme was January 1, 2017. On review of current external business environment, management has decided not to proceed with the implementation of the Scheme at this stage.

7. Joint Venture:

7.1 Mukand Sumi Metal Processing Limited (MSMPL) is a Joint Venture with Sumitomo Corporation, Japan to carry on the business of cold finished bright bars and wires. During the year under review, net revenue from operations was Rs. 614.05 Cr. as compared to Rs. 473.57 Cr in the previous year.

7.2 Mukand Sumi Special Steel Limited (MSSSL), formerly known as, Mukand Alloy Steel Ltd. (MASL) is a Joint Venture with SC. During the year under review, the net revenue from operations was Rs. 1985.13Cr. Previous year’s figures were only for a part of the year, and therefore not comparable. .

8. Finance:

8.1 Share Capital:

The paid-up equity share capital as on March 31, 2018 was Rs. 141.41 Crore.

8.2 Material Changes & Commitments:

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 and the date of this report except for infusion of capital in the Joint Venture Company, Mukand Sumi Special Steel Ltd. (formerly known as Mukand Alloy Steels Ltd.) by Joint Venture Partner, Sumitomo Corporation, Japan.

8.3 Fixed Deposits:

The Company is authorised to accept fixed deposits upto 35% of aggregate of the paid-up share capital, free reserves and securities premium account in terms of Companies (Acceptance of Deposits) Rules, 2014 only from its members. Deposits accepted during the year amounted to Rs. 47.80 Cr, re-paid during the year amounted to Rs. 2.29 Cr and matured & unclaimed deposits as at the end of the year were ‘ 0.60 Cr. There has been no default in repayment of deposits or payment of interest thereon during the year. There are no deposits which are not in compliance with the requirements of Chapter V of the Companies Act, 2013.

9. Corporate Social Responsibility (CSR):

9.1 The Company has constituted a CSR Committee of the Board of Directors comprising of Shri Niraj Bajaj, Shri Rajesh V. Shah, Shri Suketu V. Shah and Shri Dhirajlal S. Mehta pursuant to Section 135 of the Companies Act, 2013. As per the relevant provisions of the Companies Act, 2013, the Company is not required to incur any expenditure in pursuance of the CSR Policy in view of the aggregate losses during three immediately preceding financial years. However, the Company has carried out following activities under CSR.

9.2 By the Company:

At Steel Plant, Ginigera

The Company participates in the celebrations held in the local schools on Children’s Day. The Company supports the Schools around the Plant by providing full time teachers. During the year it also supported a Government College by providing benches for students. The Company also ensures regular supply of drinking water to the Ginigera village. During the year it contributed towards procurement of drinking water pipeline and pipe welding works for a length of about 8 KMs. It contributed towards procurement of tricycles for physically challenged persons,. It also sponsored a Sports person for participation in the Vth Asian Beach Games at Vietnam and Cricket tournaments for high school children

At Steel Plant, Dighe, Thane:

The Company with active support from Janakidevi Bajaj Gram Vikas Sanstha (JBGVS) continues its effort in promoting education of the economically disadvantaged children in Shahapur Taluka of Thane district as part of its CSR programme. The villagers, school authorities, children and parents have acknowledged the Company’s and JBGVS’s contribution through letters and words over the last 2 years. During the year, the company supported more than 10,000 students studying across 44 schools in Shahapur taluka by providing them with free text books, notebooks, footwear, compass box and sports items. The Company also conducts free math classes during non-school hours for girl students studying in classes 7, 8 and 9 Presently 39 coaching classes across the Taluka are conducted. The Company also provided benches and fans to several schools and built a toilet facility for boys and girls .The Company also started a vocational training in the basics of tailoring and trains girls who have passed Class 10 to become financially independent by setting up their own tailoring units.

9.3 By the Bajaj Group:

In addition to the activities carried out by the Company, the Bajaj Group is involved in a number of CSR projects through various trusts and group companies. The guiding principles of spending on these projects are: benefit generations, educate for self-reliance and growth, promote health, encourage for self-help, focused approach, targeted towards needy and sustenance of natural resources. These projects are in the areas of rural development, education, health care, economic and environmental development, social and urban development, protection of culture, employment enhancing vocation skills and livelihood enhancement particularly for women, homes/hostels for women, education for differently abled children and measures for benefit of armed forces veterans. The group also manages schools, colleges, hospitals, and a nursing college. It helps NGOs, Charitable Bodies and Trusts operating at various locations. One of the trusts also gives awards for outstanding contribution for constructive work for application of science, technology and upliftment and welfare of women and children along Gandhian lines. Rural and community development activities are also conducted in the villages.

10. Statutory disclosures:

The Statutory Disclosures in accordance with Section 134 read with Rule 8 of Companies (Accounts) Rules 2014, Section 178, Section 197 read with Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI LODR 2015).

10.1 Management Discussion and Analysis:

As required under Regulation 34(2) read with Schedule V of SEBI (SEBI LODR 2015), the Management Discussion and Analysis is enclosed as a part of this report - Annexure-1.

10.2 Corporate Governance Report:

The Company has taken necessary steps to adhere to all the requirements of SEBI LODR 2015. A report on Corporate Governance together with the certificate of the statutory auditors confirming compliance with the conditions of Corporate Governance as stipulated in Regulation 34(3) read with Schedule V of SEBI LODR 2015 is included as a part of this report. - Annexure 2.

10.3 Extract of Annual Return:

An extract of the Annual Return as prescribed under Sub-Section (3) of Section 92 of the Companies Act, 2013 in Form MGT - 9 is annexed to this report - Annexure-3.

10.4 Number of meetings of the Board and composition of Audit Committee:

During the year under review, five (5) Board Meetings of the Board of Directors of the Company were convened and held. The relevant details, including composition of the Board, dates of meetings, attendance and various Committees of the Board are given in the Corporate Governance Report forming part of this report.

10.5 Directors’ Responsibility statement:

Pursuant to Section 134 (3)(c) of the Companies Act, 2013, the Directors confirm that:

i. In the preparation of the annual accounts, the applicable accounting standards have been followed;

ii. Appropriate accounting policies have been selected and applied consistently. Judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the Company as on March 31, 2018, and of the profit of the Company for the year ended March 31, 2018;

iii. 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 the Company and for preventing and detecting fraud and other irregularities;

iv. The Annual Accounts have been prepared on a going concern basis;

v. Internal financial controls have been laid down and followed by the Company and that such controls are adequate and are operating effectively;

vi. Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

10.6 Statement on declaration given by Independent Directors:

The Independent Directors of the Company have submitted their Declaration of Independence, as required under the provisions of Section 149(7) of the Companies Act, 2013 stating that they meet the criteria of independence as provided in Section 149 (6) of the Act.

10.7 Familiarization programme for Independent Directors:

The Company has held familiarization programme for the Independent Directors by way of presentations on various aspects of business and deliberations held on major developments in legal and regulatory areas particularly on GST and Ind-AS. The website link on this is http://www. mukand.com/images/Familiarisation_Programme.pdf.

10.8 Disclosure regarding Company’s policies under Companies Act, 2013:

Company’s policies on i) Directors appointment and remuneration, determining criteria for qualification/independence, ii) Remuneration for Directors, Key Managerial Personnel and other employees, iii) Performance evaluation of the Board, Committees and Directors, iv) Materiality of Related Party transactions, v) Risk Management, vi) Determining Material Subsidiaries and vii) Whistle Blower/ Vigil Mechanism along with details of web link (in cases where it is prescribed) are given in Annexure-4.

10.9 Particulars of Loans, Guarantees and Investments:

The particulars of loans, guarantee or investments given or made by the Company under Section 186 of the Act are disclosed in Notes to the Financial Statements.

10.10 Related Parties Transactions:

There were no Related Party Transactions (RPTs) entered into by the Company during the financial year, which attracted the provisions of Section 188 of Companies Act, 2013. However, there were material RPTs, which got covered as material RPTs under Regulation 23 of SEBI LODR 2015.

During the year 2017-18, pursuant to Section 177 of the Companies Act, 2013 and Regulation 23 of SEBI LODR 2015, all RPTs were placed before Audit Committee for its prior approval. The requisite disclosure in Form AOC-2 is furnished in Annexure-5.

The policy on RPTs as approved by board is uploaded on the Company’s website.

10.11 Conservation of Energy, technology absorption, imported technology, Foreign Exchange earnings and outgo:

Information under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is provided in Annexure-6.

10.12 Report on the subsidiaries, associates and joint venture Companies. Names of Companies which have become or ceased to be its Subsidiaries, Joint Venture or Associate Companies:

A report on performance and financial position of each of the subsidiaries, associates and joint venture companies included in the financial statement together with names of companies which have become or ceased to be subsidiaries, joint ventures or associate companies during the year under review are furnished in Annexure-7.

10.13 Significant and material orders passed by the Regulators or Courts:

During the year, no significant and material orders were passed by any of the Regulators or Courts except for approval of Scheme of Arrangement and Amalgamation by NCLT for transfer of Company’s Alloy Steel Rolling and Finishing Business Undertaking.

10.14 Details of Directors or KMP who are appointed or have resigned during the year and Directors who are liable to retire by rotation:

Shri Vinod S. Shah, who was Director on your Board passed away on April 8,2018 at the age of 88 . Shri Shah joined the Company in the year 1953 as a young commerce graduate and spent 55 years in the full time service of your Company. After retirement in 2008, he was on your Board as Non-executive Director. He worked closely with two generations of the promoter families. The Board records its sincere appreciation for the exemplary contribution, support and guidance provided by him during his long tenure with the Company.

Shri Niraj Bajaj, Chairman & Managing Director and Shri Rajesh V. Shah, Co-Chairman & Managing Director retire by rotation and are eligible for re-appointment.

Shri Pratap V. Ashar was appointed as an Additional Director and Whole-time Director with effect from 29th May, 2018 for a period of three years. He shall be liable to retire by rotation. In accordance with the requirements of Sections 196,197,203 read with Schedule V to the Companies Act,2013, this appointment and remuneration payable to him are subject to approval of the members at the ensuing General Meeting of Members.

Pursuant to Section 149(4) of the Companies Act, 2013 read with Regulation 17(1) of SEBI LODR 2015, the Board has one half of its directors in the category of independent directors in terms of aforesaid Regulation.

During the year, there were no changes in Key Managerial Personnel.

10.15 Performance evaluation of the Board:

Pursuant to the provisions of the Companies Act, 2013 and SEBI LODR 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 Audit, Nomination & Remuneration, Stakeholders’ Relationship and Corporate Social Responsibility Committees of the Board. The Independent Directors met separately on 14th February, 2018 to discuss the following:

i) review the performance of non-independent directors and the Board as a whole;

ii) review the performance of the Chairperson of the Company, taking into account the views of executive directors and non-executive directors;

iii) assess the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

All Independent Directors were present at the Meeting and discussed the above and expressed their satisfaction.

10.16 Internal Financial Controls with reference to financial statements:

Adequate systems for internal controls provide assurances on the efficiency of operations, security of assets, statutory compliance, appropriate authorization, reporting and recording transactions. The scope of the audit activity is broadly guided by the annual audit plan approved by the top management and audit committee. The Internal Auditor prepares regular reports on the review of the systems and procedures and monitors the actions to be taken.

10.17 Details relating to Remuneration of Directors, Key Managerial Personnel and employees:

The information required under Section 197 (read with Rule 5 of Companies Appointment and Remuneration of Managerial personnel) Rules, 2014 in respect of directors and employees of the Company are furnished in Annexure-8.

The aforesaid annexure includes information relating to relationship between Directors inter se.

10.18 Safety, Health and Environment:

The Company pays utmost importance towards safety and health of employees by implementing policies, procedures and conducting various awareness programmes among the employees. It conducts many promotional activities among its work force on safety adherence and developing the community on national and international events related to Health, Safety and Environment. During the year under report, celebrations were held during National Safety Week and on the Environment Day. All functional Departments work in cohesion to a common goal that includes efficiency in energy and in utilizing natural resources with minimal or no damage to the environment.

10.19 Prevention of Sexual Harassment at Workplace:

During the year under review, no case was reported to the Committee formed under “Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace Act, 2013.”

10.20 Consolidated Financial Statements (CFS):

The CFS is prepared by the Company pursuant to Section 129(3) of the Companies Act, 2013 in accordance with the requirements of Ind - AS 110 - Consolidated Financial Statements read with other applicable Indian Accounting Standards. Segment-wise disclosure of revenues, results, assets and liabilities on the basis of segments are separately given in a tabular form in the Consolidated Financial Statements.

11. Auditors:

11.1 In accordance with the provision of section 139 and Rules made thereunder, M/s. Haribhakti& Co. LLP, Chartered Accountants, Mumbai, (Firm Registration No. 103523W) were appointed as the Statutory Auditors of the Company to hold office for a period of five consecutive years from the conclusion of 76th Annual General Meeting held on August 13, 2014, till the conclusion of 81st Annual General Meeting to be held in Calendar Year 2019, subject to ratification by the members at each intervening Annual General Meeting. In view of the amendment to the said section 139 through the Companies (Amendment) Act, 2017 notified on 7th May 2018, ratification of auditors’ appointment is no longer required. However pursuant to provision of provision of section 142 of the Companies Act, 2013, approval of members is sought for authorising the Board of Directors of the Company to fix Auditors remuneration for the year 2018-19.

11.2 The Company has appointed Ms. Sangita Kulkarni as Cost Auditor to carry out the audit of cost records relating to Steel Plants and Industrial Machinery Division of the Company for the Financial Year 2017-18. The Cost Audit Report for the Financial Year 2016-17 was filed with the Ministry of Corporate Affairs on 21st September 2017 before the due date.

11.3 Pursuant to the provisions of Section 204 of the Companies Act, 2013, the Company has appointed M/s. Anant B. Khamankar (Membership No. FCS:3198), a Practicing Company Secretary to undertake the Secretarial Audit of the Company. Secretarial Auditors’ Report of F.Y. 2017-18, does not contain any qualification, reservation or adverse remark. Secretarial Auditors’ Report is enclosed as Annexure-9.

12. Auditors’ Report:

The observations made in the auditors’ report, read together with the relevant notes thereon are self-explanatory and hence, do not call for any comments under Section 134(3)(f) of the Companies Act, 2013.

13. Disclosure regarding compliance of Secretarial Standards:

The Company has complied with applicable Secretarial Standard during the year.

14. Acknowledgement:

The Board of Directors thanks the Banks, Central and State Government Authorities, Shareholders, Customers, Suppliers, Employees and Business Associates for their continued co-operation and support to the Company.

On behalf of the Board of Directors,

Niraj Bajaj Rajesh V. Shah

Chairman & Managing Director Co-Chairman & Managing Director

DIN: 00028261 DIN: 00033371

Mumbai, May 29, 2018

Director’s Report