BOARD'S REPORT To The Members, Your Directors are pleased to present the 30th Annual Report and Audited Statement of Accounts of the Company for the year ended 31st March, 2015. 2. REVIEW OF OPERATIONS The Financial year 2014-15 has witnessed an improvement in production and sales volumes as compared to financial year 2013-14. The gross revenue has registered an increase of 19% and the Profit after Tax [PAT] has shown an increase of 82% over financial year 2013-14 mainly because of higher margin in large dia pipes and higher sales volumes of pellets. The Company expects further improvements in coming quarters/years through focus on various measures to improve productivity, efficiency and profitability. Following is the review of various Products.: Welded Line Pipes (SAW Pipes) Strategic Business Division: This business has witnessed an improvement in production and sales volumes as compared to previous year. The Company expects further improvement in the pipe business backed by orders in hand with a mix of exports and domestic orders. Ductile Iron Pipes & Fittings (DI Pipes) Strategic Business Division: During the year the finishing production capacity was aligned to match with the hot metal capacity to cater the additional demand of pipes. This has resulted into higher production and higher sales of DI pipes during 2014-15 as compared to 2013-14. The Company is further increasing/ improving finishing line capacity of DI pipes. The Company expects further improvements in production and sales in financial year 2015-16. Seamless Tubes & Pipes (Seamless Pipes) Strategic Business Division: The production level of seamless pipes during 2014-15 was almost same as in 2013-14. However, the sales volume has declined marginally. The demand of seamless tubes and pipes remained subdued in line with the weaker trend in Oil & Gas markets. Falling oil prices have adverse effect on demand of OCTG products. The Company is exploring new markets and developing new product range to take care of adverse business environment. Mining and Pellet Strategic Business Division: The production of pellets has stabilized and the plant capacity utilization was at 100%. The Company would focus on improving the productivity through efficiency in production process and by setting-up balancing equipments for better yield. 3. DIVIDEND The Board has, subject to the approval of members at the ensuing annual general meeting, recommended a dividend of Rs. 1/- per equity share of Rs. 2/- for the year ended 31st March, 2015. The Board's recommendation for a stable and steady dividend is linked to Company's long term requirements of funds for meeting the working capital needs, capital expenditures for its growth plans & modernization and to finance such plans by retaining back the profits. Together with the corporate tax on dividend, the total outflow on account of equity dividend is Rs. 34.90 crores. 4. TRANSFER TO RESERVES Your Board has proposed to transfer Rs. 180.00 crores and Rs. 23.17 crores to General Reserve and Debenture Redemption Reserve respectively. 5. SHARE CAPITAL Your Directors have allotted 4,35,30,596 Compulsorily Convertible Debentures [CCDs] on preferential basis under the Securities and Exchange Board of India [Issue of Capital and Disclosure Requirements] Regulations, 2009 at a price of Rs. 81.10 per CCD. Each of these CCDs was to be converted into one equity share of Rs. 2/- each in three tranches. The two tranches of 1,38,08,414 CCDs and 1,44,98,696 CCDs have already been converted into equal number of equity shares on 25.03.2015 and 07.05.2015 respectively. By conversion of these CCDs, the paid-up share capital of Company stands increased to Rs. 60,90,61,262 comprising of 30,45,30,631 equity shares of Rs. 2/- each. Remaining 1,52,23,486 CCDs will be converted into equal number of equity shares during the financial year 2016-17. 6. MANAGEMENT DISCUSSION AND ANALYSIS REPORT Management Discussion and Analysis, as stipulated under Clause 49 of the Listing Agreement with Stock Exchanges forming part of this report has been given under separate section in the Annual Report. 7. CONSOLIDATED FINANCIAL STATEMENT In accordance with the Companies Act, 2013 ("the Act"] and Accounting Standard [AS] - 21 on Consolidated Financial Statements read with AS - 23 on Accounting for Investments in Associates and AS - 27 on Financial Reporting of Interests in Joint Ventures, the audited consolidated financial statement are provided in the Annual Report. 8. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES During the year under review, companies listed in Annexure 1 to this Report have become or ceased to be Company's subsidiaries, joint ventures or associate companies. A report on the performance and financial position of each of the subsidiaries, associates and joint venture companies as per the Companies Act, 2013 is provided as form AOC-1 to the consolidated financial statement and hence not repeated here for the sake of brevity. The policy for determining material subsidiaries as approved may be accessed on the Company's website at the link: <http://www.jindalsaw.com/pdf/Policy%20for%25> 20 Determining % 20 Material % 20 Subsidiaries.pdf 9. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the requirement under section 134 of the Companies Act, 2013 with respect to Directors' Responsibility Statement, it is hereby confirmed by the Board of Directors: - a. that in the preparation of the annual accounts for the financial year ended 31st March, 2015, the applicable accounting standards had been followed along with proper explanation relating to material departures; b. that they had 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 of the Company for the year ended on that period. c. that they had 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; d. that they had prepared the accounts for the financial year ended 31st March, 2015 on a 'going concern' basis. e. that they had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and f. that they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. 10. DIRECTORS AND KEY MANAGEIAL PERSONNEL Ms. Sminu Jindal, Managing Director [DIN: 00005317] and Shri Neeraj Kumar, Group CEO and Whole-time Director [DIN: 01776688] of the Company, retire by rotation and, being eligible, offer themselves for re-appointment. Shri Hawa Singh Chaudhary [DIN: 00041370] has been re-appointed as Whole-time Director for a further period of 2 years w.e.f. 1st November, 2015 by the Board of Directors subject to approval of the shareholders. The Company has received the notices under section 160 of the Companies Act, 2013 along with deposit of requisite amount from the shareholders proposing the candidature of Shri Hawa Singh Chaudhary [DIN: 00041370] for the office of the Whole- time Director of the Company. As per section 134[3][q] of the Companies Act, 2013 read with rule 8[5] of Companies [Accounts] Rules 2014, detail of directors or Key Managerial Personnel who were appointed and resigned during the year are given below:- During the year Ms. Tripti Puneet Arya [DIN: 00371397] and Ms. Shradha Jatia [DIN: 00016940] were appointed as Non-executive Directors of the Company. Dr. S. K. Gupta [DIN: 00011138], Shri Devi Dayal [DIN: 01083282], Shri Girish Sharma [DIN: 05112440], Dr. Raj Kamal Agarwal [DIN: 00005349] and Shri Ravinder Nath Leekha [DIN: 00888433], Independent Directors of the Company, were appointed as Independent Directors under section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement for a period up to 5 years. In order to broad base the Board, the Directors on 10th July, 2015 appointed Shri Abhiram Tayal [DIN: 00081453] [Independent Director] as additional Director. As per the provisions of section 161 of the Companies Act, 2013, he holds office up to the ensuing annual general meeting. Shri Indresh Batra [DIN: 00093471] had resigned from the office of Managing Director w.e.f. 17th May, 2014 and Shri Sanjeev Shankar [DIN:06872929] and Shri Kuldip Bhargava [DIN:00011103] resigned from the office of Director w.e.f. 1st May, 2015 and 15th July, 2015 respectively due to their pre-occupation. The Board places on record its appreciation for the services rendered by Shri Indresh Batra, Shri Sanjeev Shankar and Shri Kuldip Bhargava during their association with the Company. Shri Narendra Mantri has been designated as Chief Financial Officer of the Company w.e.f. 27th July, 2015 in place of Shri Naresh Kumar Agarwal, who has moved to other position in the Company. The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under section 149[6] of Companies Act, 2013 and Clause 49 of the Listing Agreement with the Stock Exchanges. 11. BOARD EVALUATION The Company has devised a Policy for Performance Evaluation of Independent Directors, Board, Committees and other Directors which includes criteria for performance evaluation of the non-executive directors and executive directors under section 178[1] of the Companies Act, 2013. This may be accessed on the Company's website at the link: <http://www.jindalsaw.com/pdf/Criteia%20for%20Pe> rformance%20Evaluation.pdf On the basis of the Policy for Performance Evaluation of Independent Directors, Board, Committees and other Directors, a process of evaluation was followed by the Board for its own performance and that of its Committees and individual Directors. The details of the same have been given in the report on Corporate Governance annexed hereto. The details of programme for familiarization of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters have been uploded on the website of the Company at the link: <http://www.jindalsaw.com/pdf/Familiarization%20Prog> ramme%20for%20Independent%20Directors.pdf 12. CORPORATE GOVERNANCE The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirement set out by Stock Exchanges. The report on Corporate Governance as stipulated under the Listing Agreement forms an integral part of this Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of corporate governance is attached to the report on Corporate Governance. 13. CREDIT RATING During the year, your company's credit rating is "CARE AA[-]" for the long-term borrowings and short-term borrowings is "CARE A1[+]" by Credit Analysis & Research Limited ['CARE']. 14. CONTRACTS AND ARRANGEMENT WITH RELATED PARTIES All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis. During the year, the Company had not entered into any material contract / arrangement / transaction with related parties. The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company's website at the link: <http://www.jindalsaw.com/Common/Uploads/Con> tentTemplate/140_Download_RELATEDPARTYTRANS ACTIONPOLICY.pdf Your Directors draw attention of the members to Note 44 to the financial statement which sets out related party disclosures. 15. CORPORATE SOCIAL RESPONSIBILTY (CSR) The Corporate Social Responsibility Committee [CSR Committee] formulated and recommended to the Board, a Corporate Social Responsibility Policy [CSR Policy] indicating the activities to be undertaken by the Company, which has been approved by the Board. The CSR Policy may be accessed on the Company's website at the link: <http://www.jindalsaw.com/CSR%20Policy/HEAD_T> M__93. The key philosophy of all CSR initiatives of the Company is driven by core value of inclusion. The Company is committed to ensure that all development activities/initiatives undertaken in the field of education, health care, sanitation, community welfare, skill development, employment generation, infrastructure development, promotion of national heritage and culture etc. are accessible to most marginalized segment of societies such as children, women, elderly and those with disabilities. The Company would also undertake other initiatives in compliance with Schedule VII to the Act. During the year the Company has spent Rs. 5.25 crores on CSR activities. The Annual Report on CSR Activities is annexed herewith as Annexure 2. 16. RISK MANAGEMENT During the year, your Directors have constituted a Risk Management Committee which has been entrusted with the responsibility to assist the Board in [a] overseeing and approving the Company's enterprise wide risk management framework; and [b] identifying and assessing that all the risks that the organization faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal, regulatory, reputational and other risks and to ensure that there is an adequate risk management infrastructure in place capable of addressing those risks. A Risk Management Policy was reviewed and approved by the Committee. The Company manages, monitors and reports on the principal risks and uncertainties that can impact its ability to achieve its strategic objectives. The Company's management systems, organisational structures, processes, standards, code of conduct and behaviors together form the Management System that governs how the Company conducts the business and manages associated risks. 17. INTERNAL FINANCIAL CONTROLS The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation was observed. 18. AUDITORS & THEIR REPORT A. STATUTORY AUDITORS M/s N.C.Aggarwal & Co., Chartered Accountants [Registration No. 003273N], Auditors of the Company retire at the ensuing annual general meeting, and, being eligible, offer themselves for re-appointment. The Company has received confirmation from M/s N.C. Aggarwal & Co., regarding their consent and eligibility under Sections 139 and 141 of the Companies Act, 2013 read with the Companies [Accounts] Rules, 2014 for appointment as the Auditors of the Company. As required under Clause 41 of the Listing Agreement, 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. Auditors' remarks in their report read with the notes to accounts referred to by them are self-explanatory. B. COST AUDIT Pursuant to Section 148 of the Companies Act, 2013 read with rules made thereunder, the Board, has re-appointed M/s. R. J. Goel & Co., Cost Accountants [Registration No. 000026], to audit the Cost Accounts of the Company for the year ending 31st March, 2016. Further, their remuneration will be subject to ratification by shareholders. The Company has submitted Cost Audit Report and other documents for the year ended 31st March 2014 with the Central Government by filing Form A-XBRL on 24th September, 2014 C. SECRETARIAL AUDITOR The Board had appointed Shri S. K. Gupta of M/s. S. K. Gupta & Co., Company Secretaries, to conduct Secretarial Audit of the Company for the financial year 2014-15. The Secretarial Audit Report for the financial year ended March 31, 2015 is annexed herewith marked as Annexure-3 to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. 19. DISCLOSURE CORPORATE SOCIAL RESPONSIBILITY COMMITTEE (CSR COMMITTEE) The CSR Committee presently comprises of Dr. Raj Kamal Agarwal, Independent Director, as Chairman and Ms. Sminu Jindal, Managing Director and Shri Neeraj Kumar, Group CEO & Whole-time Director as other members. AUDIT COMMITTEE The Audit Committee presently comprises of Independent Directors namely, Dr. Raj Kamal Agarwal [Chairman], Dr. S. K. Gupta, Shri Devi Dayal, Shri Ravinder Nath Leekha, Shri Girish Sharma and Shri Neeraj Kumar, Group CEO & Whole-time Director as other members. Shri Kuldip Bhargava [Chairman] of the committee had resigned from the directorship of the Company w.e.f. 15th July, 2015 and accordingly, ceased to be Chairman of the Audit Committee. VIGIL MECHANISM The Vigil Mechanism of the Company, which also incorporates a whistle blower policy in terms of the Listing Agreement. Protected disclosures can be made by a whistle blower through an e-mail, or a letter to the Compliance Officer or Group CEO & Whole-time Director or to the Chairman of the Audit Committee. The Policy on vigil mechanism and whistle blower may be accessed on the Company's website at the link: <http://www.jindalsaw.com/Common/Uploads/Con> tent Template/139_Download_Whistle Blower Policy. pdf MEETINGS OF THE BOARD Six meetings of the Board of Directors were held during the year. For further details, please refer report on Corporate Governance of this Annual Report. PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN AND SECURITIES PROVIDED Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security were proposed to be utilized by the recipient are provided in the standalone financial statement [Please refer to Note Nos 12, 13, 14, 18 & 54 to the standalone financial statement]. PARTICULARS REGARDING CONSERVATION OF ENERGY, ETC. Information persuant to the provision of Section 134 of Companies Act, 2013 read with the rule 8 of Companies [Accounts] Rules, 2014 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo are given in the statement annexed hereto as Annexure- EXTRACT OF ANNUAL RETURN Extract of Annual Return of the Company is annexed herewith as Annexure-5 to this Report. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES In terms of the provisions of Section 197[12] of the Act read with rules 5[2] and 5[3] of the Companies [Appointment and Remuneration of Managerial Personnel] Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are provided as Annexure-6. Disclosures pertaining to remuneration and other details as required under Section 197[12] of the Act read with rule 5[1] of the Companies [Appointment and Remuneration of Managerial Personnel] Rules, 2014 are provided as Annexure-7. 20. PUBLIC DEPOSITS The Company has discontinued its Public Fixed Deposit Scheme w.e.f. 1st April, 2014 and repaid all the Public Fixed Deposits and interest thereon by 31st March, 2015. 21. ANY SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE During the financial year there is no such significant material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future. 22. THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 Company has adopted a policy for prevention of Sexual Harassment of Women at workplace and has formed a Committee for implementation of said policy. No complaint of harassment was received during the year. 23. ACKNOWLEDGEMENT Your Directors express their grateful appreciation to concerned Departments of Central / State Governments, Financial Institutions & Bankers, Customers and Vendors for their continued assistance and co-operation. The Directors also wish to place on record their deep sense of appreciation for the committed services of the employees at all levels. They are also grateful for the confidence and faith that you have reposed in the Company as its member. For and on behalf of the Board Prithvi Raj Jindal Chairman Date: 27th July, 2015 Place: New Delhi |