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Gallantt Ispat Ltd.

BSE:533265  |  NSE:GALLISPATEQ  |  58888:  |  IND:Steel - Integrated  |  ISIN code:INE528K01029  |  SECT:Metals - Ferrous

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You can view full text of the Director's Report for Gallantt Ispat Ltd.
Director Report
Mar2017   Mar 2018

TO THE MEMBERS

The Directors have pleasure in presenting the 14th Annual Report of the Company and the Annual Accounts for the year ended 31st March, 2018.

CORPORATE OVERVIEW

Gallantt Ispat Limited (“Your Company” or “The Company”) is a leading Iron and Steel manufacturing Company in Eastern Uttar Pradesh. The Company has its Registered Office at Kolkata and Factory at Gorakhpur, Uttar Pradesh.

WORKING RESULTS

(Rs.in Lacs)

Standalone

Consolidated

2018

2017

2018

2017

Financial Results

Income from operation

58,688.23

46,479.10

58,688.23

46,479.10

Other Operating Income

152.89

40.96

158.63

47.52

Finance Cost

857.17

423.78

857.17

423.78

Depreciation (including amortization)

1,836.71

1,369.26

1,836.71

1,369.26

Profit Before Tax

6,681.96

3,442.99

6,682.18

3,448.29

Tax Expenses (including Deferred Tax)

1,320.16

124.27

1,320.31

126.08

Profit After Tax

5,361.80

4,334.32

7,755.82

5,630.64

FINANCIAL ACCOUNTING AND ADOPTION OF IND AS

The Ministry of Corporate Affairs (MCA) has noticed phase- wise road map for the adoption of Indian Accounting Standard (“Ind AS”), converged with International Financial Reporting Standards (IFRS), vide its notification dated 16 February, 2015, announcing the Companies (Indian Accounting Standards) Rules, 2015 as amended by Indian Accounting Standards (“Ind AS”) Rules 2016 for application of the Ind AS. Accordingly, your Company has adopted Ind AS with effect from the FY 2017-18 (along with comparative for the FY 2016-17), which is covered under Phase-II, based on net worth criteria. Your Company maintains highest Standards of Corporate Governance and recognizes that Financial Statements are important source of information for the Shareholders and other Stakeholders.

The Financial Statements for the FY 2017-18 are the First Financial Statements with comparatives prepared under Ind AS. Notes to Standalone Financial Statements provide further explanation on the transition to Ind AS.

BUSINESS OPERATION AND PERFORMANCE REVIEW

During the year Revenue from Operations stood at Rs. 58,688.23 Lacs. FY17-18 has been a growing and remarkable year with respect to our top line and margins. Revenue from operations grew by 26% on year to year basis (standalone). Our margins and performance were very satisfactory due to increase in prices of final products of the Company. The Company recorded a growth of 24% in Net Profit on year to year basis (standalone) despite a relatively sluggish industry growth primarily on account of increase in sales volumes and improved cost efficiencies. Standalone and Consolidated Net Profit stood at Rs. 5,361.80 Lacs and Rs. 7,755.82 Lacs respectively. Earnings per Share (EPS) stood at Rs. 18.99 (standalone) and Rs. 27.47 (consolidated) for the Financial Year ended March 31, 2018. There is no change in the nature of the business of the Company. Disclosure of financial statement of subsidiaries and associate company has been provided in the prescribed format as a part of this Report. There were no significant and material orders passed by regulators or courts or tribunals impacting the going concern status and Company’s operations in future. Factory had been working efficiently during the year. Safety measures and processes have been installed and improved upon at the plants and work sites.

There are no material changes or commitments affecting the financial position of the Company which have occurred between the end of the financial year and the date of this Report.

Yours Directors are pleased to report a good performance of the Company in terms of both financial and operational performance.

DIVIDEND

During the year, your Directors recommended a Dividend of Re. 0.50 (Paise Fifty only) per Equity Share on 2,82,36,072 Equity Shares of Rs. 10 /- each i.e. 5% on each Equity Share of the company, total outgo on account of dividend shall be Rs. 1,41,18,036 subject to tax. However, consequent upon split of shares of face value of Rs. 10/- each into face value of Re. 1/- each the rate of dividend remain same at 5% but dividend per share would be five paise per share in place of fifty paise per share.

Securities and Exchange Board of India (‘SEBI’), vide its notification dated 8 July, 2016, has amended the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘Listing Regulations’), introducing new Regulation 43A mandating the top 500 listed entities, based on market Capitalization calculated as on 31 March of every Financial Year, to formulate a Dividend Distribution Policy and disclose the same in their Annual Reports and on their websites (www. gallantt.com).

Accordingly, the Board of the Company has adopted a Dividend Distribution Policy, which is available on the website of the Company i.e www.gallantt.com under “Investors Corner” and the same is annexed as Annexure-I.

SHARE CAPITAL

The paid up Equity Share Capital as at March 31, 2018 stood at 2,823.61 Lacs. During the year under review, the company has not issued shares with differential voting rights nor has granted any stock options or sweat equity. As on March 31, 2018, none of the Directors of the company hold instruments convertible into equity shares of the Company. During the year Eight Wholly Owned Subsidiaries viz. Shikharji Rolling Mills Private Limited, Shikharji Steel & Agro Products Private Limited, Bhavika Steel Agencies Private Limited, Shrinu Agro Private Limited, Shrinu Steel Works Private Limited, Gyanika Flour Mills Private Limited, Satlaj Ispat Private Limited and Satlaj Flour Mills Private Limited amalgamated with the Company. Since, entire shareholding of these eight Wholly Owned Subsidiaries were held by the Company, no shares were allotted. Hence there was no impact on the total issued and paid up share capital. However, pursuant to the Scheme of Amalgamation as approved by the Central Government (Regional Director- ER) the Authorised Share Capital of these Wholly Owned Subsidiaries clubbed/merged with the Authorised Share Capital of the Company. Hence, post Merger the Authorised Share Capital of the Company stood at Rs. 46,68,50,000/DIRECTORS’ RESPONSIBILITY STATEMENT

In terms of Section 134 (5) of the Companies Act, 2013, the directors would like to state that:

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

b. The directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 or loss of the Company for the year under review.

c. The directors have 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 have prepared the annual accounts on a going concern basis.

e. The directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

f. The directors had devised proper system to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively.

FINANCE AND ACCOUNTS

As mandated by the Ministry of Corporate Affairs, IND AS is applicable to the Company from the Financial Year commencing from April 01, 2017. The estimates and judgments relating to the Financial Statements are made on a prudent basis, so as to reflect in a true and fair manner, the form and substance of transactions and reasonably present the Company’s state of affairs, profits and cash flows for the year ended March 31, 2018. Financial Statement has been prepared as per applicable Ind-AS.

CHANGE IN THE NATURE OF BUSINESS, IF ANY

There is no change in the nature of the business of the Company.

LISTING INFORMATION

The Equity Shares in the Company are in dematerialized form and is listed with Bombay Stock Exchange Limited and National Stock Exchange of India Limited. The Listing Fee has been paid to the Stock Exchanges for the year 2018-19. The ISIN No. of the Company is INE528K01029.

CREDIT RATING

During the year under review, the Rating agency CRISIL Limited has assigned BBB- rating for the Company’s Fund Based Working Capital facilities (long term) and BWR A3 for Non-Fund based working capital facilities (short term).

FIXED DEPOSITS

During the year, the Company has not accepted any deposits from public under Chapter V of the Companies Act, 2013.

AUDITORS & AUDITORS’ REPORT

M/s. Anoop Agarwal & Co., Chartered Accountants, statutory auditors of the Company was reappointed as the Auditors of the Company at the previous Annual General Meeting. As per the provisions of Section 139 of the Companies Act, 2013, Statutory Auditors of the Company hold office until the conclusion of the 5 years.

Necessary certificate has been obtained from the Auditors as per Section 139(1) of the Companies Act, 2013.

The notes on accounts referred to the Auditors’ Report are self-explanatory and therefore, do not call for any further explanation.

The Auditors’ Report is annexed hereto and forms part of the Annual Report. The Auditors’ report does not contain any qualifications, reservations or adverse remarks.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The information required under section 134(3) (m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, is annexed as Annexure-II to this Directors’ report.

DISCLOSURE REGARDING ISSUE OF SWEAT EQUITY SHARES AND EQUITY SHARES WITH DIFFERENTIAL RIGHTS

The Company has not issued any Sweat Equity Shares or Equity Shares with Differential Rights during the financial year.

COST AUDIT

The Company has submitted the Cost Audit Report and Cost Compliance Report for the year 2016-17 duly certified by a Cost Accountant to the Central Government within the due date. M/s. U. Tiwari & Associates, Cost Accountants were appointed with the approval of the Central Government to carry out the cost audit in respect of the Company for the financial year 2017-18. Based on the recommendation of the Audit Committee, M/s. U. Tiwari & Associates, Cost Accountants, being eligible, have also been appointed by the Board as the Cost Auditors for the financial year 2018-19 also. Company has maintained Cost Records and other documents as required under Companies Act, 2013 and rules made thereunder.

INSURANCE

All the insurable interests of your Company including inventories, buildings, plant and machinery and liabilities under legislative enactments are adequately insured.

INTERNAL COMPLAINT REGARDING SEXUAL HARRASSMENT

There were no cases of sexual harassment of woman at work place. Also, there are no instances of child labour/ forced labour/ involuntary labour and discriminatory employment during the year.

BOARD COMMITTEES

Details of Audit Committee, Nomination & Remuneration Committee, Stakeholders’ Relationship Committee and Corporate Social Responsibility Committee have been disclosed under Corporate Governance Report.

DETAILS OF RECOMMENDATIONS OF AUDIT COMMITTEE WHICH WERE NOT ACCEPTED BY THE BOARD ALONG WITH REASONS

The same is not applicable as the Audit Committee’s recommendations were accepted and implemented by the Board.

PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other details as required under section 197(12) read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as Annexure-III to this report.

A statement comprising the names of top 10 employees in terms of remuneration drawn is given in this report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

No loan has been granted during the year. Also, during the year your Company has neither given guarantee nor made any investment as per Section 186.

CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION & ANALYSIS REPORT

As per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Management Discussion and Analysis report is part of the Annual Report is annexed herewith as Annexure-IV.

A report on Corporate Governance together with the Auditors’ Certificate regarding the compliance of conditions of Corporate Governance is part of the Annual Report.

MARKET AND FUTURE PROSPECTS

Please refer to Management Discussion & Analysis Report which forms part of the Annual Report.

DETAILS OF POLICIES

(i) Nomination 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 Company’s Remuneration Policy is available on the Company’s website www.gallantt.com and the same is attached herewith as Annexure - V.

(ii) Corporate Social Responsibility Policy (CSR)

The Board has, on the recommendation of the CSR Committee, approved the CSR Policy. The Company’s CSR Policy is available on the Company’s website www.gallantt.com and the same is also attached herewith as Annexure - VI.

Annual Report on CSR as required under Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 is also attached herewith as Annexure-VII.

(iii) Risk Management Policy

Business Risk Evaluation and Management is an ongoing process within the Organization. Pursuant to Section 134(3)(n) of the Companies Act, 2013, the Board has framed a Risk Management Policy for the Company. The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the business and functions are systematically addressed through mitigating actions on a continuing basis. At present the company has not identified any element of risk which may threaten the business (or) existence of the company.

(iv) Whistle Blower Policy - Vigil Mechanism

Your Company has formulated a Vigil Mechanism Policy with a view to provide a mechanism for employees and directors of the Company to approach the Chairman of the Audit Committee to ensure adequate safeguards against victimisation. This policy would help to create an environment wherein individuals feel free and secure to raise an alarm, whenever any fraudulent activity takes place or is likely to take place. It will also ensure that complainant(s) are protected from retribution, whether within or outside the organization. The Board has elected Mr. Nitesh Kumar, Company Secretary as the Whistle Officer under the vigil mechanism policy.

The details of establishment of the Vigil Mechanism Policy is displayed on the website of the Company www.gallantt.com under Investors corner.

SECRETARIAL AUDITORS

Mr. Anurag Fatehpuria, Practising Company Secretary, having office address at 23/1, Sita Nath Bose Lane, Salkia Howrah Pin-711101 has been appointed as Secretarial Auditors of the Company for the FY ended 31.03.2018. The Secretarial audit report received from the Secretarial Auditors is annexed to this report marked as Annexure - VIII and forms part of this report.

ANNUAL EVALUATION OF BOARD, COMMITTEES AND INDIVIDUAL DIRECTORS

During the financial year, formal annual evaluation of the Board, its committees and individual Directors was carried out pursuant to the Board Performance Evaluation Policy of the Company.

The performance of the Board and committees was evaluated after seeking inputs from all the Directors on the basis of the criteria such as Board/ committee constitutions, frequency of meetings, effectiveness of processes etc. The performance of individual Directors (including Independent Directors) was evaluated by the Board and Nomination & Remuneration committee (excluding the Director being evaluated) after seeking inputs from all Directors on the basis of the criteria such as thought contribution, business insights and applied knowledge.

A separate meeting of Independent Directors was also held to review the performance of Managing Director, performance of the Board as a whole and performance of the Chairperson of the Company, taking into account the views of Executive Directors and Non-Executive Directors.

FAMILIARISATION PROGRAMME

Your Company follows a structured orientation and familiarization programme through various reports/ codes/internal policies for all the Directors with a view to update them on the Company’s policies and procedures on a regular basis.

Periodic presentations are made at the Board Meetings on business and performance, long term strategy, initiatives and risks involved.

The details of familiarisation programme have been posted in the website of the Company www.gallantt. com under Investors corner.

CODE OF CONDUCT

Your Company has adopted a Code of Conduct for members of the Board (incorporating duties of Independent Directors) and the Senior Management. The Code aims at ensuring consistent standards of conduct and ethical business practices across the Company. Your Company has received confirmations from all concerned regarding their adherence to the said Code.

Pursuant to Regulation 17(5) of the Securities & Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, Mr. C. P. Agrawal, Chairman & Managing Director and Mr. Mayank Agrawal, Chief Executive Officer confirmed compliance with the Code by all members of the Board and the Senior Management.

The full text of the Code is hosted on the Company’s website www.gallantt.com under Investors corner.

CODE OF CONDUCT FOR PROHIBITION OF INSIDER TRADING

Your Company has adopted a Code of Conduct as per Securities and Exchange Board of India (SEBI) (Prohibition of Insider Trading) Regulations, 2015. All Directors, Designated Employees who could have access to the Unpublished Price Sensitive Information of the Company are governed by the Code. During the year under review, there has been due compliance with SEBI (Prohibition of Insider Trading) Regulations, 2015. Gallantt Ispat Limited - Code for Fair Disclosure’ are available on the Company’s website www.gallantt.com under Investors corner.

NUMBER OF MEETINGS OF BOARD AND AUDIT COMMITTEE HELD DURING THE YEAR 2017-2018

Eleven (11) meetings of the Board of Directors of the Company were conducted during the financial year and Nine (9) meetings of the Audit Committee of the Board of Directors were conducted during the financial year.

The details of board/committee/shareholders meetings are provided under the Corporate Governance Report which forms part of the Annual Report.

AUDIT COMMITTEE

The Audit committee of the Company as on the date of this report is constituted of following Directors:

Names

Designation

Category

Mr. Piyush Kankrania

Chairman

Independent

Mr. Jyotirindra Nath Dey

Member

Independent

Mr. Tarun Kumar Gupta

Member

Independent

REPORT ON PERFORMANCE AND FINANCIAL POSITION OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES

Pursuant to the provisions of Section 129(3) of the Act, a statement containing performance & salient features of the financial statements of Company’s subsidiaries and associate Companies in Form AOC-1 is attached as Annexure-IX.

The policies to ensure uniform accounting treatment are prescribed to the subsidiaries of your Company. The accounts of the subsidiary companies and associate Company are audited and certified by their respective Statutory Auditors for consolidation.

COMPANIES WHICH HAVE BECOME OR CEASED TO BE COMPANY’S SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR

Sl. No.

Name

Status

Date

1

Shikharji Rolling Mills Private Limited

Ceases to be a Subsidiary of the Company consequent upon amalgamation with the Company.

08.01.2018

2

Shikharji Steel & Agro Products Private Limited

Ceases to be a Subsidiary of the Company consequent upon amalgamation with the Company.

08.01.2018

3

Bhavika Steel Agencies Private Limited

Ceases to be a Subsidiary of the Company consequent upon amalgamation with the Company.

08.01.2018

4

Shrinu Agro Private Limited

Ceases to be a Subsidiary of the Company consequent upon amalgamation with the Company.

08.01.2018

5

Shrinu Steel Works Private Limited

Ceases to be a Subsidiary of the Company consequent upon amalgamation with the Company.

08.01.2018

6

Gyanika Flour Mills Private Limited

Ceases to be a Subsidiary of the Company consequent upon amalgamation with the Company.

08.01.2018

7

Satlaj Ispat Private Limited

Ceases to be a Subsidiary of the Company consequent upon amalgamation with the Company.

08.01.2018

8

Satlaj Flour Mills Private Limited

Ceases to be a Subsidiary of the Company consequent upon amalgamation with the Company.

08.01.2018

9

Antarmukh Steel Manufacturer Private Limited

Acquisition of Wholly Owned Subsidiary of the Company

15.01.2018

10

Bhavika Smeltors and Food Products Private Limited

Acquisition of Wholly Owned Subsidiary of the Company

15.01.2018

11

Shrinu Rolls and Milling Private Limited

Acquisition of Wholly Owned Subsidiary of the Company

15.01.2018

12

Satlaj Rolls and Milling Private Limited

Acquisition of Wholly Owned Subsidiary of the Company

15.01.2018

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY’S OPERATIONS IN FUTURE

There are no significant material orders passed by the Regulators or Courts or Tribunal which would impact the going concern status of the Company and its future operations. However, Members attention is drawn to the statement on contingent liabilities, commitments in the notes forming part of the Financial Statements. DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM The Company has formulated a Whistle Blower Policy to establish a vigil mechanism for Directors and employees of the Company to report concerns about unethical behavior, actual or suspected fraud or violation of the Company’s code of conduct or ethics policy. The Whistle Blower Policy is available on the website of the Company.

CORPORATE SOCIAL RESPONSIBILITY

The Company has constituted a Corporate Social Responsibility Committee and has framed a Corporate Social Responsibility Policy and identified Healthcare, Children’s education, as some of the key areas. The Company will continue to support social projects that are consistent with the policy.

Corporate Social Responsibility Committee of the Company is constituted of:

Mr. Jyotirindra Nath Dey, Chairman,

Mr. Chandra Prakash Agrawal and Mr. Prem Prakash Agrawal KEY MANAGERIAL PERSONNEL

The following are the whole-time key managerial personnel of the Company:

Sl. No.

Name

Designation

1

Mr. Chandra Prakash Agrawal

Chairman and Managing Director

2

Mr. Prem Prakash Agrawal

Whole-time Director

3

Mr. Santosh Kumar Agrawal

Whole-time Director

4

Mr. Nitin Mahavir Prasad Kandoi

Whole-time Director

5

Mr. Mayank Agrawal

Chief Executive Director

6

Mr. Amit Jalan

Chief Financial Officer

7

Mr. Nitesh Kumar

Company Secretary

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Ind - AS on Consolidated Financial Statements read with the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, the Consolidated Audited Financial Statements and Consolidated Cash Flow Statement for the year ended March 31, 2018 are provided in the Annual Report.

A statement containing the salient features of the financial statements of each of the subsidiary and Associate Company in the prescribed Form AOC-1 is annexed Annexure-IX.

Pursuant to Section 136 of the Act, the financial statements of the subsidiary and Associate Companies are kept for inspection by the shareholders at the Registered Office of the Company. The Company shall provide free of cost, the copy of the financial statements of its subsidiary and Associate companies to the shareholders upon their request. The statements are also available on the website of the Company www. gallantt.com.

BUSINESS RESPONSIBILITY REPORT

The Business Responsibility Report for the financial year, as stipulated under Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is part of the Annual Report and is attached as Annexure - X.

EXTRACT OF ANNUAL RETURN

Pursuant to the provisions of section 92(3) of the Act, the details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as Annexure-XI. It has been posted on the website of the Company www.gallantt.com.

RISK MANAGEMENT

Risk management is embedded in your Company’s operating framework. Your Company believes that managing risks helps in maximizing returns. The Company’s approach to addressing business risks is comprehensive and includes periodic review of such risks and a framework for mitigating controls and reporting mechanism of such risks. The risk management framework is reviewed periodically by the Board and the Audit Committee. Some of the risks that the Company is exposed to are:

Financial risks

The Company’s policy is to actively manage its foreign exchange risk within the framework laid down by the Company’s forex policy approved by the Board. Given the interest rate fluctuations, the Company has adopted a prudent and conservative risk mitigation strategy to minimize financial and interest cost risks.

Commodity price risks

The Company is exposed to the risk of price fluctuations of raw materials as well as finished goods. The Company proactively manages these risks through forward booking, inventory management and proactive vendor development practices. The Company’s reputation for quality, product differentiation and service, coupled with the existence of powerful brand image with a robust marketing network mitigates the impact of price risk on finished goods.

Regulatory risks

The Company is exposed to risks attached to various statutes, laws and regulations. The Company is mitigating these risks through regular review of legal compliances carried out through internal as well as external Secretarial Audits.

Human resource risks

Retaining the existing talent pool and attracting new talent are major risks. The Company has initiated various measures including rolling out strategic talent management system, training and integration of learning and development activities. The Company has system and procedure in place which helps to identify, nurture and groom managerial talent within the Gallantt Group to prepare them for future business leadership.

UNPAID AND UNCLAIMED AMOUNT OF DIVIDEND AND SHARE APPLICATION MONEY

Following amount of Unpaid Share Application Money and Unpaid Dividend has not been claimed and paid till 31.03.2018 :

Nature of Money

Relevant Financial Year

Bank Account Details

Amount lying (In Rs.)

Final Dividend for 2011

2010-11

HDFC Bank Account No. 00142300001876

9,929.00

Final Dividend for 2012

2011-12

HDFC Bank Account No. 00142300002332

5,419.00

Final Dividend for 2013

2012-13

IDBI Bank Account No. 0135103000007344

17,307.00

Final Dividend for 2014

2013-14

IDBI Bank Account No. 0135103000007900

3,026.50

Final Dividend for 2015

2014-15

IDBI Bank Account No. 0135103000008587

3,109.00

Interim Dividend 2016

2015-16

ICICI Bank Account No. 001105026007

3,929.00

Final Dividend for 2017

2016-17

IDBI Bank Account No. 1526103000000347

9,132.50

Unpaid dividend amounts are not available for use by the Company. Unpaid and Unclaimed Share Application Money of Rs. 71,900 due for refund was transferred to Investors’ Education and Protection Fund on November 08, 2017. This Share Application money remained unclaimed and unpaid for seven consecutive years. Unclaimed and unpaid amount of Dividend for the Financial Year 2010-11 to the tune of Rs. 9,929 are to be transferred to the Investors’ Education and Protection Fund. Members who have not so far encashed their Divided Warrants for the financial years ended 31st March, 2011, 2012, 2013, 2014, 2015, 2016 and 2017 are requested to approach immediately the Registrars for revalidation of unclaimed Dividend Warrants. The details of unclaimed dividend are available on the Company’s corporate website www.gallantt.com and also uploaded on the website of IEPF viz. www.iepf.gov. in.

BOARD OF DIRECTORS AND SENIOR EXECUTIVE

The Board of Directors comprises of Eight Directors of which four are Independent. In terms Section 152 of the Companies Act, 2013, Mr. Prem Prakash Agrawal, liable to retire by rotation at the ensuing Annual General Meeting and eligible for re-election.

Mr. Jyotirindra Nath Dey, Mr. Tarun Kumar Gupta, Mr. Piyush Kankrania and Mrs. Sangeeta Upadhyay are Independent Directors of the Company. Independent Directors are appointed for five consecutive years and are not liable to retire by rotation in terms of Sections 149, 152, Schedule IV and other applicable provisions, if any, of the Companies Act, 2013 read with Companies (Appointment and Qualification of Directors) Rules, 2014. Mrs. Sangeeta Upadhyay has been appointed as Independent Woman Director. Mr. Mayank Agrawal was appointed as a Chief Executive Officer of the Company as per the provisions of the Companies Act, 1956. His appointment has been aligned with the new provisions of the Companies Act, 2013 and he has been appointed in the same position and designation as per the new provisions of the Companies Act, 2013. Mr. Amit Jalan is Chief Financial Officer and is inter alia looking after the core finance function of the Company. Mr. Nitesh Kumar is working in the capacity of Company Secretary and Compliance Officer.

None of the Directors of your Company is disqualified under the provisions of Section 164(2)(a) & (b) of the Companies Act, 2013.

DETAILS OF DIRECTORS OR KEY MANAGERIAL PERSONNEL WHO WERE APPOINTED OR HAVE RESIGNED DURING THE YEAR

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16 (b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Tenure of Mr. J.N. Dey and Mr. P. Kankrania end on 31st March, 2019 and Mrs. Sangeeta Upadhyay ends on 9th July, 2019. They are being appointed for second term of 5 years. This is as per Section 149(11).

No new Director or KMP has been appointed and resigned during the year.

TRANSFER TO RESERVES

Your Directors propose to transfer an amount of Rs. 5,209.13 Lacs standing in retained earnings and it is to be transfered to the General Reserve.

RELATED PARTY TRANSACTIONS

The details of Related Party Transactions during the Financial Year ending 31.03.2018, being arm’s length transactions have been reported in the financial statements and forms part of this report. The Audit Committee and the Board of Directors of the Company have formulated the Policy on dealing with RPTs and a Policy on materiality of RPTs which is uploaded on the website of the Company and can be accessed through the website of the Company www.gallantt.com under the Investors Corner Link.

All transactions entered with Related Parties for the year under review were on arm’s length basis and in the ordinary course of business and that the provisions of Section 188 of the Companies Act, 2013 and the Rules made thereunder are not attracted. Thus, disclosure in form AOC-2 in terms of Section 134 of the Companies Act, 2013 is not required. Further, there are no material related party transactions during the year under review with the Promoters, Directors or Key Managerial Personnel. The Company has developed a framework through Standard Operating Procedures for the purpose of identification and monitoring of such Related Party Transactions.

All Related Party Transactions are placed before the Audit Committee as also to the Board for approval. Omnibus approval was obtained on a yearly basis for transactions which are of repetitive nature. Transactions entered into pursuant to omnibus approval are audited by the Audit Committee and a statement giving details of all Related Party Transactions are placed before the Audit Committee and the Board for review and approval on a quarterly basis.

The policy on Related Party Transactions as approved by the Board of Directors has been uploaded on the website of the Company viz. www.gallantt.com. None of the Directors has any pecuniary relationship or transactions vis-a-vis the Company.

DISASSOCIATION OF SUBSIDIARIES AND DISPOSAL OF STAKE IN SUBSIDIARIES

Vide its Order dated January 08, 2018 Central Government (Regional Director-ER) has approved the Scheme of Amalgamation of Shikharji Rolling Mills Private Limited, Shikharji Steel & Agro Products Private Limited, Bhavika Steel Agencies Private Limited, Shrinu Agro Private Limited, Shrinu Steel Works Private Limited, Gyanika Flour Mills Private Limited, Satlaj Ispat Private Limited and Satlaj Flour Mills Private Limited (all being Wholly Owned Subsidiaries of the Company) with the Company. Consequent upon amalgamation of these Wholly Owned Subsidiaries with the Company, these entities ceased to exist as Subsidiaries. Amalgamation Orders of Honorable Regional Director have been received on January 11, 2018 and the same were filed with the Registrar of Companies, West Bengal on January 13, 2018.

SCHEME OF AMALGAMATION OF WHOLLY OWNED SUBSIDIARIES

At their meeting held on January 24, 2018, Board of Directors of the Company has approved the Scheme of Amalgamation of M/s. Antarmukh Steel Manufacturer Private Limited, M/s. Bhavika Smeltors and Food Products Private Limited, M/s. Shrinu Rolls and Milling Private Limited and M/s. Satlaj Rolls and Milling Private Limited with the Company. All the transferor Companies are Wholly Owned Subsidiaries of the Company. Hence, as per the provisions of Section 233 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, Company has filed Scheme of Amalgamation with the Registrar of Companies, West Bengal and Office of the Official Liquidator, Calcutta High Court for their Observation on the same.

Vide its Letter bearing reference no. ROC/ LEGAL/233/2017/238 dated 25.04.2018, the office of Registrar of Companies, West Bengal has issued its observation with the following suggestions:

1. The share capital clause of the scheme shall include the class and category of company which enters into the scheme of amalgamation i.e. Holding and a Wholly Owned Subsidiary Companies.

2. The Scheme shall include the clause related to providing “transfer of charges”, “purchase of share held by the descending shareholders/debtors, creditors, “cancellation or extinguish of shares on demerger”, if applicable.

3. The Scheme shall include the clause related to providing Share Exchange Ratio between the Transferor Company and the Transferee Company, if applicable.

4. It appears that the transferee Company M/s. Gallantt Ispat Limited is a listed Company. Hence, necessary approval/suggestion as issued by the concerned regulatory authorities shall be made incorporated in the said Scheme. The Scheme may also include the Clause providing Compliance of Listing Regulation and SEBI Guidelines as applicable.

5. This Office has scrutinised the scheme of Amalgamation for its limited internal purpose / in-principle approval for deciding on the matter of Amalgamation of the transferors and transferee companies and it should not for any reason affects the interest of public.

The said suggestions were duly incorporated in the Scheme of Amalgamation.

Further, the Office of the Official Liquidator, High Court, Calcutta vide its letter bearing reference no. OL-Misc./ Amalg/50/6266/G dated 13.02.2018 has given its Observation with following suggestions:

1. This Office has scrutinised the scheme of Amalgamation for its limited internal purpose / in-principle approval for deciding on the matter of Amalgamation of companies and it should not for any reason affects the interest of public.

In accordance with the provisions of Section 233 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, Company have convened and held meeting of Equity Shareholders and Creditors of the Company on June 25, 2018.

Members and Creditors of the Company at their respective meetings held on June 15, 2018 have approved the Scheme of Amalgamation as above.

OUTLOOK AND EXPANSION

The recent trend in macro indicators clearlypoint towards improving fundamentals of the domestic economy. The Central Government has also shown its intent in furthering the reform momentum to revive investments and improve governance. The global commodity cycle is expected to be benign with consumption demand from the Chinese economy slowing down. Taking cues from the inflationary trend, the Reserve Bank of India has already eased the monetary cycle and is expected to bring out more interest rate cuts going forward. All this favorable factors coupled with some of the important developmental reforms that are being pursued by the Central Government like the tax reform and push for infrastructure spending will set the stage for further pick-up in economic activity in 2017-18. This should augur well for your Company’s business across infrastructure.

Expansion Project:

Your company plans to take the performance to the next level by modernization, installing high tech and time saving machinery and supportive systems, improving quality of work by employee training.

The expansion plan by further investment in installation of new capacities and technology upgradation and modern machinery for increasing the capacity of the existing Units are being implemented.

In terms of the sales and profitability targets for the coming years, Board of Directors of the Company proposed to modify the plant capacity as under:

Phase I Expansion:

Units

Unit

Existing Capacity

Proposed Addition in Capacity

Total Capacity After Addition

Captive Power

MW

18

35

53

DRI

MT

99000

198000

297000

Steel Melt Shop

MT

167400

162600

330000

Rolling Mill

MT

162380

167620

330000

PERSONNEL, INDUSTRIAL RELATIONS AND MARKETING

The Company’s HR philosophy is to establish and build a high performing organization, where each individual is motivated to perform to the fullest capacity: to contribute to developing and achieving individual excellence and departmental objectives and continuously improve performance to realize the full potential of our personnel. Industrial relations have remained harmonious throughout the year.

DECLARATION OF INDEPENDENCE

Your Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under the provisions of Companies Act, 2013 read with the Schedules and Rules issued thereunder as well as Securities & Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

AWARD AND RECOGNITIONS

During the previous years, Company we have received following awards and reconciliation:

1. The Chairman of the Company Mr. C.P. Agrawal received a certificate from the State Government of U.P. awarding him with UDDAMI OF THE REGION Award.

MATERIAL CHANGES AND COMMITMENTS

There have been no material changes and commitments affecting the financial position of the Company since the close of financial year i.e. since 31st March, 2018 till the date of this Report. Further, it is hereby confirmed that there has been no change in the nature of business of the Company. However, after approval of the Scheme of Amalgamation as above all the assets and liabilities of the Transferor Companies shall be transferred to the Company.

Significant and material orders passed by the regulators / courts / tribunals impacting the going concern status and the Company’s operations in future :

As such there is no significant and material order by the regulator/court/tribunals impacting the going concern status and the Company’s operation in future. GENERAL

a) Your Company has not issued equity shares with differential rights as to dividend, voting or otherwise; and

b) Your Company does not have any ESOP scheme for its employees/Directors.

CHANGE IN SHARE CAPITAL

As stated hereinabove Company has concluded amalgamation Eight Wholly Owned Subsidiaries with the Company. As per the Scheme of Amalgamation as sanctioned by Honorable Regional Director (ER), Ministry of Corporate Affairs, Authorised Share Capital of Company was enhanced with the outstanding Authorised Share Capital of Transferor Companies. Post amalgamation total Authorised Share Capital of the Company stood at Rs. 46,68,50,000/- (Rupees Forty Six Crores Sixty Eight Lacs Fifty Thousand only). Company has not allotted any fresh equity shares during the year. The Issued, Subscribed and Paid up Share Capital of the Company is Rs. 28,23,60,720/- (Rupees Twenty Eight Crores Twenty Three Lacs Sixty Thousand Seven Hundred and Twenty Only).

INTERNAL FINANCIAL CONTROLS

Your Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting are operating effectively based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control. Your Company had laid down guidelines, policies, procedures and structure for appropriate internal financial controls across the Company. These control processes enable and ensure the orderly and efficient conduct of company’s business, including safeguarding of assets, prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and timely preparation & disclosure of financial statements. Review and control mechanisms are built in to ensure that such control systems are adequate and operating effectively. The Audit Committee evaluated the internal financial controls based on the following criteria:

1. Systems have been laid to ensure that all transactions are executed in accordance with management’s general and specific authorisation. There are well-laid manuals for such general or specific authorisation.

2. Systems and procedures exist to ensure that all transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles or any other criteria applicable to such statements, and to maintain accountability for aspects and the timely preparation of reliable financial information.

3. Access to assets is permitted only in accordance with management’s general and specific authorisation. No assets of the Company are allowed to be used for personal purposes, except in accordance with terms of employment or except as specifically permitted.

4. The existing assets of the Company are verified/ checked at reasonable intervals and appropriate action is taken with respect to any differences, if any.

5. Proper systems are in place for prevention and detection of frauds and errors and for ensuring adherence to the Company’s policies.

A report on the internal financial controls under clause (i) of sub-section 3 of Section 143 of the Companies Act, 2013 issued by M/s. Anoop Agarwal & Company, Chartered Accountants, Statutory Auditors of the Company is attached with their Independent Auditor’s report and the same is self-explanatory.

Effective steps are taken by the Management to enable continuous monitoring of lead control indicators and action taken towards correcting identified gaps. Respective functions have been trained and equipped to enable continuous monitoring of exceptions by themselves to reduce surprises and enable corrective action on timely and regular basis.

Your Company has a robust financial closure selfcertification mechanism wherein the line managers certify adherence to various accounting policies, accounting hygiene and accuracy of provisions and other estimates.

PARTICULARS OF LOANS/ADVANCES/ INVESTMENTS AS REQUIRED UNDER SCHEDULE V OF THE LISTING REGULATIONS

The details of related party disclosures with respect to loans/advances/investments at the year end and maximum outstanding amount thereof during the year as required under Part A of Schedule V of the Listing Regulations have been provided in the notes to the Financial Statements of the Company.

FRAUD REPORTING

There have been no frauds reported by the Auditors of the Company to the Audit Committee or the Board of Directors under sub-section (12) of section 143 of the Companies Act, 2013 during the financial year.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

As a part of its initiative under the “Corporate Social Responsibility” (CSR) drive, the Company has undertaken projects in the area of Health, Education and rural development, eradicating hunger, promoting health care and education. These projects are in accordance with Schedule VII of the Companies Act, 2013 and the Company’s CSR policy. The Report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed as Annexure - VIII and forms an integral part of this Report. Apart from the CSR activities under the Companies Act, 2013, the Company continues to voluntarily support various social initiatives details of which have been given on this Report.

ENVIRONMENT AND SAFETY

The Company is conscious of the importance of environmentally clean and safe operations. The Company’s policy requires conduct of operations in such a manner so as to ensure safety of all concerned, compliances of environmental regulations and preservation of natural resources.

ORDER OF SEBI, NSE AND BSE LIMITED

Vide its order bearing no. SEBI/HO/ISD/ OW/P/2017/18183 dated August 07, 2017 the Securities and Exchange Board of India (“SEBI”) has classified and included our Company amongst the list of suspected “331 Shell Companies” and shares of the Company were shifted to Graded Surveillance Measures (GSM) VI category with effect from August 08, 2017. As a result of such order the shares of the Company were restrictly traded since August 08, 2017.

Company has filed various documents and papers to the SEBI, National Stock Exchange of India Limited (“NSE”) and BSE Limited (“BSE”) as per the required format justifying them that our Company does not fall under the Suspected Shell Companies category.

In the interest of the investors the Company on November 23, 2017 has preferred an Appeal before the Honorable Securities Appellate Tribunal (“SAT”) to set aside the order of SEBI as above and to normalize the trading in shares of the Company.

In this regard, the Honorable SAT after hearing the appeal on November 29, 2017 has disposed off the appeal by directing National Stock Exchange (NSE) to pass appropriate order within a period of six weeks from November 29, 2017 and the appeal as above was disposed of by Honorable SAT. During this period of six weeks an Independent Auditor appointed by NSE submitted its report on December 01, 2017 making few observations all of which were satisfactorily addressed by the Company. On December 15, 2017 NSE also granted an opportunity of personal hearing to the Company where the representatives of the Company submitted their representations and successfully answered to some queries raised by the Exchange officials.

Since SEBI vide its letter bearing no. SEBI/HO/ISD/ ISD/OW/P/2017/26891 dated November 02, 2017 has delegated powers to stock exchanges to perform direct fact finding exercise and dispose of the representations received by them directly from the Company, NSE based on such powers conferred to it by SEBI has revoked the actions envisaged in SEBI’s letter dated August 07, 2017 and the consequential actions taken by National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) against Gallantt Ispat Limited, its promoters and directors.

Company no longer falls under the list of suspected “Shell Companies” and trading in shares normalized w.e.f. January 01, 2018. The Company placed on record its appreciation towards SEBI, NSE and BSE for revoking its earlier order dated August 07, 2017 regarding suspected shell Company.

MANDATORY UPDATE OF PAN AND BANK DETAILS AGAINST YOUR SHARE HOLDING

Pursuant to SEBI circular SEBI/HO/MIRSD/DOP1/ CIR/P/2018/73 dated 20th April, 2018, shareholders whose ledger folios do not have/have incomplete details with respect to PAN and Bank Account particulars are mandatorily required to furnish these details to the Issuer Company/RTA for registration in the folio. As per the records of the Company, few Shareholders’ folio needs to be updated with the PAN / Complete Bank Account details so that the investments held by them are in compliance with the aforementioned circular.

Such Shareholders are hence requested to submit the following documents within 21 days of receipt of this communication:

- Enclosed Form duly filled in and signed by all the shareholders.

- Self-Attested Copy of Pan Card of all the shareholders,

- Cancelled Cheque Leaf with Name (if name is not printed on cheque - self-attested copy of first page of pass book) of all the shareholders and

- Address Proof (self-attested copy of Aadhaar-Card of all the shareholders)

TRANSFER OF SHARES COMPULSORILY IN DEMAT MODE

As per amended Regulation 40(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 amended vide SEBI Notification No. SEBI/LAD-NRO/GN/2018/24 dated June 8, 2018, effective from December 5, 2018; securities of the listed companies can be transferred (except in case of transmission or transposition) only in the dematerialized form.

In case any of the Shareholders have any queries or need any assistance in this regard, please contact;

SPLIT OF SHARES FROM FACE VALUE OF Rs. 10/- EACH TO FACE VALUE OF RE. 1/- EACH

In order to improve the liquidity of your Company’s Equity Shares in the Stock Markets with higher floating stock in absolute numbers and to make them more affordable for the small retail investors to invest in the Company, Board of Directors of the Company at their meeting held on June 29, 2018 has proposed split of Shares of the Company from Face Value of Rs. 10/- each to Face Value of Re. 1/- each. At their meeting held on July 27, 2018 the shareholders of the Company through passed special resolution approved the proposal of the Board for the said split of Shares.

Company has fixed August 08, 2018 as the Record Date / Cut Off Date for determining the eligibility of shareholders to whom shares shall be credited after split of shares in the ratio of 10:1 meaning thereby that shareholders holding shares as on cut off date shall be credited 10 (ten) equity shares for every 1 (one) share held in the Company as on cut off date.

Old ISIN of the Company has been deactivated and in place new ISIN: INE528K01029 was activated by the depositories for the equity shares of the Company.

Shares have been successfully credited into the demat accounts of shareholders holding shares as on cut off date as above and shareholders holding shares in physical form were given fresh share certificates with new distinctive numbers.

ALTERATION OF ‘CAPITAL CLAUSE’ OF MEMORANDUM OF ASSOCIATION

Pursuant to the sub-division of face value of equity shares of the Company has altered the Capital Clause (Clause V) of the Memorandum of Association of the Company and Clause V of Memorandum of Association was altered and substituted with the a new Clause V to reflect the corresponding changes in the Authorised Share Capital.

Shareholders of the Company have approved such alteration in the Capital Clause of Memorandum of Association at their Extra-ordinary General Meeting held on July 27, 2018.

Post Split of Equity Shares as above Authorised Share Capital of the Company stood at Rs. 46,68,50,000/-(Rupees Forty Six Crores Sixty Eight Lacs Fifty Thousand only) divided into 46,68,50,000 (Forty Six Crores Sixty Eight Lacs Fifty Thousand only) Equity Shares of Re. 1/- each and the Issued, Subscribed and Paid up Share Capital of the Company is Rs. 28,23,60,720/-(Rupees Twenty Eight Crores Twenty Three Lacs Sixty Thousand Seven Hundred and Twenty Only) divided into 28,23,60,720 (Twenty Eight Crores Twenty Three Lacs Sixty Thousand Seven Hundred and Twenty Only) Equity Shares of Re. 1/- each fully paid up.

ACKNOWLEDGEMENT

The Board appreciates the commitment and dedication of its employees across all the levels who have contributed to the growth and sustained success of the Company. We would like to thank all our customers, vendors, bankers and other business associates for their continued support and encouragement during the year. We also thank the Government of India, Government of Uttar Pradesh and all Other Government Agencies for their support during the year and look forward to the same in the future.

On behalf of the Board

Place: Gorakhpur C. P. Agrawal

Date: August 13, 2018 Chairman

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