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Steel Exchange India Ltd.

BSE:534748  |  NSE:STEELXINDBE  |  58888:stex  |  IND:Steel - Integrated  |  ISIN code:INE503B01013  |  SECT:Metals - Ferrous

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You can view full text of the Director's Report for Steel Exchange India Ltd.
Director Report
Mar2015   Mar 2016

To the Members,

The Directors have pleasure in presenting the 17th Annual Report and the Audited Financial Statements for the Financial Year ended March 31, 2016.

FINANCIAL RESULTS:

The performance for the Financial Year ended March 31, 2016 is as under:

The financial summary

(Rs. in Lakhs)

PARTICULARS

31-Mar-16

31-Mar-15

Total Revenue

168206.99

157763.26

Profit before finance cost, depreciation and tax expense

16294.68

18741.20

Finance cost

12272.78

12762.91

Profit before depreciation and tax expense

4021.90

5978.29

Depreciation

2654.44

2501.81

Profit before tax expense

1367.46

3476.48

Tax expense

628.39

630.82

Net Profit for the year

739.07

2845.66

State of the Company''s Affairs :

During the year under review, the total revenue of the company was Rs. 1682.06 crores as against previous figure Rs.1577.63 crores which is 6.62 % more than the last year, and Profit before depreciation and taxes recorded at Rs.40.21 crores as against previous figure Rs. 59.78 crores.

The manufacturing sales were Rs.794.14 Crores in the current year and Rs.755.99 Crores in the previous year. The trading sales during the year amounted to Rs. 922.11 Crores compared to Rs. 816.83 Croresin the previous year.

The increase in revenues would have been higher but for the substantial reduction in prices in the 3rd quarter both in domestic markets and world over. Revenue from power sales was also lower in the 4th quarter due to reduced off take by state government utilities.

Listing of Equity Shares

The Company''s Equity shares are listed at the Bombay Stock Exchange Limited (BSE), PhirozeJeeJeebhoy Towers, Dalal Street, Mumbai-400 001 having nationwide trading terminals.

The Company has paid the Annual Listing Fees to the said Stock Exchange for the financial year 2016-17.

The Company has made an application for listing of equity shares on National Stock Exchange of India Limited (NSE) and is yet to obtain the approval from NSE.

The Board of Directors of the Company has approved for voluntary delisting of equity shares from Calcutta Stock Exchange Limited (CSE) and the process is observed for delisting of equity shares from CsE in accordance with SEBI (Delisting of Equity Shares) Regulation, 2009.

Performance and financial position of each of the subsidiaries, associates and joint venture

Your Company does not have any Subsidiary, Joint Venture or Associate Companies.

Number of Meetings of the Board of Directors

During the year ended March 31, 2016, Seven Board Meetings were held.

The dates on which the Board meetings were held are May 09, 2015, August 12, 2015, August 28, 2015, September 11, 2015, November 14, 2015, February 10, 2016 and February 29, 2016.

Details of number of Meetings attended by each Director have been given in the corporate governance report which forms part of this Annual Report.

Directors Responsibility Statement as required under Section 134 of the Companies Act, 2013

Pursuant to the requirement under Section 134 of the Companies Act, 2013, with respect to the Directors'' Responsibility Statement, the Board of Directors of the Company hereby confirms:

i) that in the preparation of the Annual Accounts, the applicable accounting standards have been followed;

ii) that 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 March 31, 2016 and of Profit and Loss Account of the Company for that period;

iii) that 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;

iv) that the Directors have prepared the Annual Accounts for the Financial Year ended March 31, 2016 on a going concern basis;

v) that 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) That the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Statement on Declaration given by Independent Directors under Sub-Section (6) of Section 149

The independent directors have submitted the declaration of independence, as required pursuant to section 149(7) of the Companies Act, 2013 stating that they meet the criteria of independence as provided in sub-section(6).

Particulars of Loans, Guarantees or Investments under Section 186

Pursuant to Section-186 of the Companies Act, 2013 and Schedule V of the SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015 ("Listing Regulations" ) the Company neither has, directly nor indirectly, given any loan to its Directors nor extended any guarantee or provide any security in connection with any loan taken by them. Further, the company has neither given any inter-corporate loan/advance not made any investments in other companies during the financial year 2015-16.

Particulars of Contracts or Arrangements with Related Parties Referred to in Sub-Section (1) of Section 188

The particulars of contracts or arrangements with related parties referred to in sub-section (1) of Section 188 are prepared in Form No. AOC-2 pursuant to clause (h) of sub-section (3) of Section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014 and the same is enclosed as Annexure - 1 to this Report.

Transfer of Amount to Reserves

The Company doesn''t propose to transfer any amount to the general reserve for the Financial Year ended 31st March, 2016.

Dividend

The Board of Directors of the Company could not recommend Dividend for the financial year ended March 31, 2016.

Share Capital

Authorized Share Capital: There was no change in the authorized share capital of the Company during the year under review.

Paid up Share Capital:

59,82,720 equity shares of Rs.10/- each were allotted to the shareholders of GSAL (India) Ltd. on May 9, 2015 as per the terms of amalgamation.

1,80,52,092 Equity Shares of Rs. 10/- each and 1,86,08,750 10.5% Non-convertible Redeemable Preference Shares of Rs. 10/- each were allotted to the shareholders of Simhadri Power Limited on January 27, 2016 as per the terms of amalgamation with the Company.

As a result, the issued, subscribed and paid up share capital of the Company increased to Rs. 94,59,35,620/- comprising of 7,59,84,812 equity shares of Rs. 10/- each and 1,86,08,750 10.5% Non-Convertible Redeemable Preference Shares of Rs. 10/- each.

Listing Permissions and Trading Approvals for all equity shares allotted during the year have been obtained and traded on Bombay Stock Exchange.

The Company has not issued any shares with differential rights and hence no information as per the provisions of Section 43(a)(ii) of the Act read with Rule 4(4) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished.

Deposits

The Company has not accepted any deposits from the public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet, in terms of Section 73 of the Companies Act, 2013.

Extracts of Annual Return

The Extracts of Annual Return is prepared in Form MGT-9 as per the provisions of the Companies Act, 2013 and Rule 12 of Companies (Management and Administration) Rules, 2014 and the same is enclosed as Annexure - 2 to this Report. The conservation of energy, technology absorption, foreign exchange earnings and outgo pursuant to provisions of Section 134(3)(m) of the Companies Act, 2013 (Act) read with the Companies (Accounts) Rules, 2014.

Information with respect to conservation of energy, technology absorption, foreign exchange earnings and outgo pursuant to Section 134(3)(m) of the Act read with Companies (Accounts) Rules, 2014 is prepared and the same is enclosed as Annexure-3 to this Report.

Risk Management Committee

The Board of Directors has formed a risk management committee to identify, evaluate, mitigate and monitor the risk associated with the business carried by the company. The committee reviews the risk management plan and ensures its effectiveness. A mechanism has been put in place which will be reviewed on regular intervals.

Corporate Social Responsibility Committee

Corporate Social Responsibility is commitment of the Company to improve the quality of life of the workforce and their families and also the community and society at large. The Company believes in undertaking business in such a way that it leads to overall development of all stakeholders and Society. Company has been pursuing CSR activities long before they were made mandatory under the Companies Act, 2013. A report on Corporate Social Responsibility (CSR) Policy and Activities as per Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 is appended with this report as Annexure-4 and link to the CSR policy is available at the website http://seil.co.in.

Committees of the Board:

The Board has Audit Committee, Nomination and Remuneration Committee, Stakeholder''s Relationship Committee and Corporate Social Responsibility Committee. The details of these committees have been given in the Corporate Governance Report forming part of the Annual Report.

Corporate Governance

A separate report on Corporate Governance is annexed as part of the Annual Report along with the Auditor''s Certificate on its compliance.

Management Discussion and Analysis

Management Discussion and Analysis Report for the year under review, as stipulated under Listing Regulations, is annexed herewith which forms part of this report.

Whistle Blower Policy and Mechanism

The Board of Directors has adopted Whistle Blower Policy. The Whistle Blower Policy aims for conducting the affairs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behavior. All permanent employees of the Company are covered under the Whistle Blower Policy.

A mechanism has been established for employees to report concerns about unethical behavior, actual or suspected fraud, or violation of Code of Conduct and Ethics. It also provides for adequate safeguards against the victimization of employees who avail of the mechanism and allows direct access to the Chairperson of the audit committee in exceptional cases. Board Evaluation

The Board of Directors has carried out an annual evaluation of its own performance, board committees and individual directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed by SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015. The performance of the Board was evaluated by the board after seeking inputs from all the directors on the basis of the criteria such as the board composition and structure, effectiveness of the board processes, information and functioning etc. In a separate meeting of independent directors, performance of non-independent directors, performance of the Board as a whole and performance of the Chairman was evaluated, taking into account the views of executive directors and non-executive directors. The same was discussed in the board meeting that followed the meeting of the independent directors, at which the performance of the board its committees and individual directors was also discussed. Performance evaluation of independent directors was done by the entire board, excluding the independent director being evaluated.

Directors

Mr. Bavineni Suresh and Mr. Veeramachaneni Venkata Krishna Rao, Directors of the Company retire by rotation and being eligible offer themselves for re-appointment.

The office of Mr. B. Satish Kumar was completed on 29th February, 2016 as the Managing Director for a period of three years and Mr. B. Satish Kumar was re-appointed as Managing director w.e.f 01.03.2016 for a period of three years as recommended by the Nomination and Remuneration Committee.

Details of Directors or Key Managerial Personnel Who were appointed or have resigned during the Year

Shri. B. Satish Kumar (DIN: 00163676) was reappointed as Managing Director of the Company for a further period of three years with effect from 01st March, 2016 pursuant to the provisions of Sections 196, 197 and 203 read with Schedule V and all other applicable provisions of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Mr. B. Narahari, Company Secretary resigned as Company Secretary of the Company w.e.f. March 01, 2016.

Mr. L. Babu Are, Company Secretary was appointed as Company Secretary of the Company w.e.f. May 02, 2016 pursuant to provisions of Section 203 of the Companies Act, 2013.

Policy on Directors'' Appointment and Remuneration

A gist of policy of the Company on Directors'' appointment and remuneration , including criteria for determining qualifications, positive attributes, independence of a director and other matters, as required under sub-section (3) of Section 178 of the Companies Act, 2013 is available in the Corporate Governance Report.

The Company''s policy on Directors'' appointment and remuneration and other matters provided in Section 178 (3) of the Act have been disclosed in the corporate governance report. Under Section 178 (3) of the Companies Act, 2013, the Nomination and Remuneration Committee of the Board has adopted a policy for nomination, remuneration and other related matters for directors and senior management personnel.

Statutory Auditors

At the Annual General Meeting held on December 31st 2014, M/s. Pavuluri & Co, Chartered Accountants (Firm Registration No. 012194S), Hyderabad, were appointed as Statutory Auditors of the Company to hold office for a period of Five years

i.e., till the conclusion of the Annual General Meeting to be held in the calendar year 2019.

In terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of the auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the said appointment of M/s. Pavuluri& Co, Chartered Accountants (Firm Registration No. 012194S), Hyderabad, as statutory auditors of the Company is placed for ratification by the Shareholders.

As required under section 139 of the Companies Act, 2013, the Company has obtained written consent from M/s. Pavuluri & Co, Chartered Accountants (Firm Registration No. 012194S), Hyderabad, to such appointment and also a certificate from the auditors to the effect that if their appointment is ratified, it would be in accordance with the provisions of Section 139(1) of the Act and the rules made there under.

The Board of Directors and the Committee thereof, recommended the appointment and the resolution forms part of the agenda at the ensuing Annual General Meeting.The Auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

The Statutory Auditor''s Report does not contain any qualifications, reservation or adverse remarks. This report forms part of the Annual Report.

Cost Auditors:

The Products classified as "Steel and Electricity" manufactured by the Company are subject to Cost Audit in terms of Sec. 148 of the Companies Act 2013 read with the rules issued there under by the Central Government.

Accordingly M/s. DZR & Co., Cost Accountants have been re-appointed as the Cost Auditors for the year ending 31st March 2017.

The Cost Audit Report for year ended 31st March 2015 was reviewed by the Audit Committee at its meeting held on September 11, 2015 and has been filed on November 23, 2015.

Internal Auditors

The Board of Directors of the Company has appointed M/s Bhavani & Co Chartered Accountants to conduct Internal Audit of the Company for the Financial Year ended 31st March, 2016.

Secretarial Auditor''s Report

As per the provisions of Section 204 of the Companies Act, 2013, the Board of Directors have appointed BSS & Associates, Company Secretaries as Secretarial Auditors to conduct Secretarial audit of the company for the Financial year ended on March 31, 2016.

Secretarial Audit Report issued by Mr. S. Srikanth, Partner of M/s BSS & Associates, Company Secretaries in form MR-3 is enclosed as Annexure - 5 to this Annual Report.

There are no qualifications in Secretarial Audit Report.

Statement of particulars of appointment and remuneration of managerial personnel

The ratio of remuneration of each director to the median of employee''s remuneration as per Section 197(12) of the Companies Act, 2013, read with Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as Annexure - 6 to this Annual Report.

Insurance

All properties and insurable interests of the Company including building, plant and machinery and stocks have been fully insured.

Details in respect of adequacy of internal financial controls with reference to the Financial Statements

1. The Company has set internal control systems to maintain accurate and complete accounting records, to safeguard its assets, to prevent and detect any frauds and errors.

2. The Company has appointed Internal Auditors to observe the Internal Controls and whether the work flows of organization are being done through the approved policies of the Company. In every Quarter during the approval of Financial Statements, Internal Auditors will present the Internal Audit Report and Management Comments on the Internal Audit observations; and

The companies which have become or ceased to be Company''s Subsidiaries, joint ventures or associate companies during the year are:

Nil

Change in the nature of business

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

The 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 and material orders passed by the regulators or courts or tribunals impacting the going concern status and company''s operations in future Material changes and commitments

There are no Material changes and commitments in the business operations of the Company from the financial year ended 31st March, 2016 to the date of signing of the Director''s Report.

Policy on Sexual Harassment

The Company has adopted policy on Prevention of Sexual Harassment of Women at Workplace in accordance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

During the financial year ended 31st March, 2016, the Company has not received any Complaints pertaining to Sexual Harassment.

Industrial Relations and Human Resources

Your company believes that its employees are one of the most valuable assets of the Company and the Board appreciates the employees across the cadres for their dedicated service to the company and expects their continuous support and higher level of productivity for achieving the targets set for the company. During the year under review, the company organized various training programmes at all levels to enhance skills of employees. The total employee strength is over 1420 as on 31st March, 2016.

Acknowledgement

The Directors take this opportunity to place on record their sincere thanks to the Banks and Financial Institutions, Insurance Companies, Central and State Government Departments and the shareholders for their support and co-operation extended to the Company from time to time. Directors are pleased to record their appreciation of the dedicated services of the employees and workmen at all levels.

For and on behalf of the Board of Directors

Place: Hyderabad B. SATISH KUMAR

Date: 31.08.2016 Chairman & Managing Director

(DIN:00163676)

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