DIRECTORS' REPORT To, The Members, The Directors have pleasure in presenting the Forty-Third Annual Report on the business and operations of the Company and the Audited Financial Statements for the year ended 31st March, 2016. . Dividend & Reserves In view of the current global situation of the Steel Industry, considering most of the steel companies are making huge losses, the Company likes to preserve its resources for highly turbulent times. As a result, the Directors do not recommend any Dividend on Equity Shares for the financial year ended 31st March, 2016. During the year under review, no transfer is proposed to the General Reserve. An amount of Rs. 5,257.322 Million is proposed to be retained as 'Surplus in the Statement of Profit and Loss'. 3. The Year in Retrospect : The major challenge during the year was dip in global demand and subsequent surge in cheap imports. The reduction in raw material prices was not enough to set off the price difference between domestic and imported steel. With this background, the Company achieved gross sales of Rs. 14,542 Million against Rs. 15,327 Million in the previous year. However, Profits before Tax increased to Rs. 1,742 Million, against Rs. 1,240 Million in the previous year, representing growth of 40.48%. Clear focus on industry segments with critical application, targeted approach towards approvals with OEMs for niche segment products with long term partnerships, along with service level improvements helped the Company to retain its prices and margins. 4. State of Company's Affairs Discussion on the state of Company's affairs has been covered as part of the Management Discussion and Analysis (MD&A). MD&A for the year under review, as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is presented in a separate section forming part of the Annual Report. 5. Corporate Governance The Report on Corporate Governance as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is presented in a separate section forming part of the Annual Report. The requisite certificate from Auditors of the Company viz. M/s. P. G. Bhagwat, Chartered Accountants, Pune confirming compliance with conditions of Corporate Governance is attached to Report on Corporate Governance. Fixed Deposits The Company has not accepted any deposits from the public during the year. 7. Directors The Board of Directors at its meeting held on 30th October, 2015 had re-appointed Mr.R.K. Goyal, as Managing Director of the Company for the period of five years from 17th January, 2016 to 16th January, 2021. In terms of the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr.B.N. Kalyani, Chairman and Mr.S.M. Kheny, Director of the Company, are retiring by rotation at the ensuing Annual General Meeting and being eligible, have offered themselves for re-appointment. These re-appointments form part of the Notice of the Annual General Meeting and the Resolutions are recommended for your approval. Profiles of these Directors, are given in the Report on Corporate Governance. The Company has received declarations from all Independent Directors that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. 7.1 Board Evaluation Pursuant to provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Committees. Performance evaluation has been carried out as per the Board Diversity and Remuneration Policy. 7.2 Board Diversity and Remuneration Policy The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Board Diversity and Remuneration Policy is available on the website of the Company. (Web-link : http: //vww.kalyanisteels.com/ profile/code-of-conduct/board-diversity-remuneration-policy/) 7.3 Meetings of the Board During the Financial Year 2015-16, six Board Meetings were convened and held, the details of which are given in the Corporate Governance Report. 8. Directors' Responsibility Statement Pursuant to the requirements under Section 134(5) of the Companies Act, 2013, with respect to Directors' Responsibility Statement, it is hereby confirmed that : i) in the preparation of the annual accounts for the year ended 31st March, 2016, the applicable accounting standards have been followed and that there are no material departures; ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2016 and of the profit of the Company for that period; iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv) the Directors have prepared the annual accounts for the year ended 31st March, 2016, on a going concern basis; v) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and vi) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. 9. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings & Outgo The information on conservation of energy, technology absorption and foreign exchange earnings and outgo, as required to be disclosed under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith as Annexure "A". 10. Corporate Social Responsibility As a part of its initiatives under "Corporate Social Responsibility (CSR)'', the Company has undertaken various activities in the areas of education, health, water and sanitation. These activities are carried out in terms of Section 135 read with Schedule VII of the Companies Act, 2013 and Companies (Corporate Social Responsibility Policy) Rules, 2014. The details of CSR Activities undertaken by the Company are annexed herewith as Annexure "B". The CSR Policy is available on Company's website. (Web-link : <http://www.kalyanisteels.com/profile/code-of-conduct/corporate->social-responsibility-csr/) 11. Related Party Transactions All Related Party Transactions entered into by the Company during the financial year were in the ordinary course of business and on an arm's length basis. Particulars of material contracts / arrangements entered into by the Company with related parties referred to Section 188(1) of the Companies Act, 2013, are provided in Form AOC-2, which is annexed herewith as Annexure "C". Related party disclosures as per Accounting Standard 18 have been provided in Note '36' to the Financial Statements. The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website. (Web-link : <http://www.kalyanisteels.com/profile/code-of-conduct/related-party-transactions-policy/>) 12. Risk Management The Company recognises that risk is an integral and unavoidable component of business and is committed to managing the risk in a proactive and efficient manner. The Company as part of business strategy has in place a mechanism to identify, assess, monitor risks and mitigate various risks with timely action. Risks were discussed at the meetings of the Risk Management Committee, Audit Committee and the Board of Directors of the Company. 13. Statutory Auditors and Auditor's Report At the 41st Annual General Meeting held on 5th September, 2014, M/s P.G. Bhagwat, Chartered Accountants, Pune were appointed as Auditors of the Company, to hold office for the period of three years i.e. from the conclusion of 41st Annual General Meeting till the conclusion of the 44th Annual General Meeting to be held in 2017 and the said appointment is subject to ratification by the members at every Annual General Meeting in terms of First Proviso to Section 139 of the Companies Act, 2013. The Company has received letter from M/s P.G. Bhagwat, Chartered Accountants, to the effect that their re-appointment, if made, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified for re-appointment. The Directors recommend ratification of their appointment from the conclusion of ensuing Annual General Meeting till the conclusion of the 44th Annual General Meeting to be held in 2017. The Notes on Financial Statements referred to in the Auditor's Report are self-explanatory and hence do not call for any further comments. The Auditor's Report does not contain any qualification, reservation, adverse remark or disclaimer. 14. Cost Auditors Pursuant to Section 148 of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit record maintained by the Company is required to be audited. Your Directors had, on the recommendation of the Audit Committee, appointed M/s S.R. Bhargave & Co., Cost Accountants, Pune for conducting the cost audit of the Company for Financial Year 2016-17. As required under the Companies Act, 2013, the remuneration payable to the Cost Auditors is required to be ratified by the members of the Company. Accordingly, resolution seeking members' ratification for remuneration to be paid to Cost Auditors is included at Item No.7 of the Notice convening Annual General Meeting. 15. Secretarial Audit Pursuant to provisions of Section 204 of the Companies Act, 2013, the Board had appointed M/s SVD & Associates, Company Secretaries, Pune, to undertake Secretarial Audit of the Company for the Financial Year 2015-16. The Secretarial Audit Report for the Financial Year ended 31st March, 2016 is annexed herewith as Annexure "D". The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer. 16. Particulars of Employees and related Disclosures The information required pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, has been provided in Annexure "E". 17. Extract of the Annual Return An extract of the Annual Return of the Company, pursuant to the Section 92(3) of the Companies Act, 2013, in Form MGT-9 is annexed hereto as Annexure "F". 18. Whistle Blower Policy The Company has vigil mechanism named 'Whistle Blower Policy', wherein the employees / directors can report the instances of unethical behavior, actual or suspected fraud or any violation of the Code of Conduct and / or laws applicable to the Company and seek redressal. This mechanism provides appropriate protection to the genuine Whistle Blower, who avail of the mechanism. During the year under review, the Company has not received any complaint under the said mechanism. The 'Whistle Blower Policy' as approved by the Board is uploaded on the Company's website. (Web-link : <http://www.kalyanisteels.com/profile/code-of-conduct/whistle-blower/>) 19. Particulars of Loans, Guarantees or Investments Particulars of Loans, Guarantees and Investments covered under Section 186 of the Companies Act, 2013 form part of the notes to the Financial Statements provided in this Annual Report. 20. Internal Financial Controls The Company has in place adequate internal financial controls with reference to the Financial Statements. During the year, such controls were tested and no reportable material weakness was observed in the design or implementation. 21. Material Changes and Commitments, if any affecting Financial Position of the Company There are no adverse material changes or commitments occurring after 31st March, 2016, which may affect the financial position of the Company or may require disclosure. 22. Significant and Material Orders There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future. 23. Familiarisation Programme The details of programmes for familiarisation of Independent Directors with the Company are put up on website of the Company. (Web-link : <http://www.kalyanisteels.com/profile/code-of-conduct/terms-of-the-appointment-of->independent-directors-of-kalyani-steels-limited/) 24. Names of companies which have become / ceased to be Subsidiaries, Joint Ventures or Associate Companies during the year During the year, Lord Ganesha Minerals Private Limited became a subsidiary of the Company. A statement containing the salient features of the financial statement of the subsidiaries and associates / joint ventures in the prescribed format AOC-1 is annexed hereto as Annexure "G". The Policy for determining 'Material' subsidiaries has been displayed on the Company's website. (Web-link : <http://www.kalyanisteels.com/profile/code-of-conduct/policy-on-material-subsidiary/>) 25. Consolidated Financial Statements The Consolidated Financial Statements, pursuant to Section 129 of the Companies Act, 2013 are attached to the Standalone Financial Statements of the Company. 26. Obligation of Company under The Sexual Harassment of Women at Workplace (Prevention, Prohibition And Redressal) Act, 2013 In terms of provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has formulated a Policy to prevent Sexual Harassment of Women at Workplace. During the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. 27. Acknowledgement The Directors would like to express their sincere appreciation of the co-operation received from the Central Government, Government of Maharashtra, Government of Karnataka, Karnataka Industrial Area Development Board, Financial Institutions and the Bankers. The Directors also wish to place on record its appreciation for the commitment displayed by all employees at all levels, resulting in the successful performance of the Company during the year. The Directors also take this opportunity to express its deep gratitude for the continued co-operation and support received from its valued shareholders. The Directors express their special thanks to Mr.B.N. Kalyani, Chairman of the Company, for his untiring efforts for the progress of the Company. for and on behalf of the Board of Directors B.N. Kalyani Chairman Date : 24th May, 2016 Place : Pune |