BOARD'S REPORT Dear Shareholders, The Directors of your Company are pleased to present the 45th Annual Report together with the Audited Financial Statement for the financial year ended on March 31, 2016. 2. STATE OF COMPANY'S AFFAIRS: The Company has earned revenue from operation of Rs.13,704.24 Lacs during the year ended on 31st March, 2016 as against Rs. 7,914.31 Lacs earned during the previous year ended on 31st March, 2015, giving a rise of 73.16% as compare to previous year. The Company has also earned other income of Rs. 37.12 Lacs during the year under review as against Rs.148.66 Lacs earned during the previous year. The Company has earned the profit before tax of Rs. 41.47 Lacs during the year ended on 31st March, 2016 as compared to loss of Rs. (2,301.00) Lacs beared during the previous year ended on 31st March, 2015, showing a rise of 101.80%. The Company has earned net profit of Rs. 13.29 Lacs for the year ended on 31st March, 2016 after providing finance cost and depreciation and amortization expenses and after making provision for deferred tax and other adjustment, as compared to loss of Rs. (1,850.04) Lacs beared by the Company during the previous year ended on 31st March, 2015. After adding the surplus in the Statement of profit & loss of Rs. (1557.46) lacs loss brought forward from the previous year to the profit of Rs. 13.29 lacs earned by the Company during the year under review, the total amount of Rs. (1,544.17) lacs loss is available for appropriation. 3. EQUITY INFUSION: Your Company has issued and allotted on 26th March, 2016, 202,4000 equity shares of face value of Rs. 5/- each at a price of Rs. 60 per Equity Share (including a premium of Rs. 55 per Equity Share) on preferential basis to Non Promoter Investors in accordance with Section 42 of the Companies Act, 2013 (including the rules made thereunder) and Chapter VII of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 and consequently, paid up capital of your Company get increased from Rs. 9,180,000 to Rs. 101,200,000. The proceeds of this preferential issue were used for long term working capital requirement, repayment of long term debts, capital expenditure and other general corporate purposes. 4. DIVIDEND: Considering the year's financial performance, the Board decided not to recommend any dividend for the year under review. 5. CONSERVATION OF ENERGY, RESEARCH AND DEVLOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EARNINGS AND OUTGO: The Information relating to the Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo required under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed to this Report as an Annexure- A and forming part of this Report. 6. SEGMENT REPORTING: The Company is engaged in the Castings business only and therefore there is only one reportable segment in accordance with the Accounting Standard on Segment Reporting, AS-17. 7. SUBSIDIARIES, ASSOCIATE AND JOINT VENTURE: the Company is having a partnership firm namely STEELCAST LLC, in USA. Except the same, during the year under review, no Company has become or ceased to become Subsidiary, Joint Venture or Associate Company. 8. CORPORATE SOCIAL RESPONSIBILITY (CSR): Company has formulated Policy on CSR in accordance with Schedule VII of the Companies Act, 2013 and the details of the composition of the Committee are covered in the Corporate Governance Report. Your Company has spent sufficient amount towards CSR activities during the year. Report on CSR activities is annexed as Annexure- B and forming part of this Report. The Board has approved Policy on CSR which has been uploaded on the Company's website at www.steelcat.net 9. QUALITY: Your Company has continued emphasis on Research & Development. A dedicated Quality Assurance ("QA") team is monitoring product quality. Substantial CAPEX has been incurred towards quality improvement and product innovation. Your Company strives to be industry leader by adopting modern technology and towards this, a modern Automated No-Bake Fast Loop Moulding Line for production of high quality steel castings has already been commissioned. 10. INSURANCE: All assets of the Company, including Building, Plant & Machinery, Stocks etc., wherever necessary and to the extent required, have been adequately insured. 11. DIRECTORS AND KEY MANAGERIAL PERSONNEL: 11.1 CHANGES IN DIRECTORS AND KEY MANAGERIAL PERSONNEL: During the period of this report, Mr. V W Makary, Non-Executive Director of the Company, has resigned as Director of the Company with effect from 28th May, 2015. The Board appreciates the valuable services rendered by him during his tenure. Mr. Tipirneni Kumar has been appointed as a Chief Financial Officer of the Company at the Board Meeting held on 28th May, 2015, upon recommendation made by Audit Committee, is to be considered as Key Managerial Personnel under Section 203 of the Companies Act, 2013, effective from 28th May, 2015. He has also been reappointed as a Whole Time Director of the Company at the Board Meeting held on 6th August, 2015, upon recommendation made by Nomination and Remuneration Committee and the said reappointment has been approved by Members in their Extraordinary General Meeting held on 17th March, 2016 effective from 1st September, 2015. Pursuant to the provisions of Section 152 of the Companies Act, 2013 and Rules made thereunder, Mrs. Manali C. Tamboli, Non-Independent Non-Executive Director of the Company, shall retire by rotation at this Annual General Meeting and being eligible offer herself for re-appointment. The Members are requested to consider her re-appointment as Director of the Company. Pursuant to the provisions of Section 196 of the Companies Act, 2013 and Rules made there under, tenure of appointment of Mr. Chetan M Tamboli as Managing Director of the Company will expire on 31.08.2016. Being in Company's interest to reappoint him as Managing Director of the Company for a further period of 5 (five) years effective from 1st September, 2016, your Directors in their meeting held on 30th May, 2016, upon recommendation of Nomination and Remuneration Committee, have reappointed Mr. Chetan M Tamboli accordingly subject to approval of the Members. The Members are requested to consider his re-appointment as Managing Director of the Company. Necessary resolutions relating to Directors who are seeking appointment / reappointment are included in the Notice of Annual General Meeting. The relevant details of the said Directors are given in the Notes/annexure to the Notice of the Annual General Meeting. 11.2 COMPLIANCE ON CRITERIA OF INDEPENDENCE BY THE INDEPENDENT DIRECTORS: All Independent Directors of the Company have given declarations to the Company under Section 149 (7) of the Act that, they meet the criteria of independence as provided in Sub-Section 6 of Section 149 of the Act and also under the Listing Regulations. 11.3 FORMAL ANNUAL EVALUATION: The Board of Directors has carried out an annual evaluation of its own performance, its Committees and individual Directors pursuant to the requirements of the Act and the Listing Regulations. Further, the Independent Directors, at their exclusive meeting held 28th January, 2016 during the year reviewed the performance of the Board, its Chairman and Non-Executive Directors and other items as stipulated under the Listing Regulations. 11.4 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 details of the Nomination and Remuneration Policy are covered in the Corporate Governance Report. The said policy has also been uploaded on the Company's website at www.steelcast.net 11.5 MEETINGS: During the year Six Board Meetings and five Audit Committee Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. 11.6 COMMITTEES OF THE DIRECTORS: The details of various committees of Directors constituted under various provisions of Companies Act, 2013 and Rules made there under, their constitution, terms of reference and other details are provided in the Corporate Governance Report. Compositions of Board of Directors and various Committees of Directors are available on the Company's website at www.steelcast.net 12. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS: Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013, are given in the notes to the Financial Statements, if any. 13. RELATED PARTY TRANSACTIONS: Information on transactions with related parties pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Annexure- C in the prescribed Form - AOC-2 and the same forms part of this report. All related party transactions are placed before the Audit Committee and Board of the Company for review and approval or Omnibus approval as permitted under law. Transactions with related parties, as per requirements of Accounting Standard 18 are disclosed in the notes to accounts annexed to the financial statements. Your Company's Policy on Related Party Transactions, as adopted by your Board, can be accessed on the Company's website at www.steelcast.net 14. PARTICULARS OF EMPLOYEES: The 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 enclosed with this report as Annexure- D. The Statement of particulars of employees under Section 197(12) read with Rule 5 (2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel), Rules, 2014 is not provided with as, during the financial year under review, no employee of the Company including Managing Director was in receipt of remuneration in excess of the limits set out in the said rules. 15. HUMAN RESOURCES: Your Company believes that its employees are one of the most valuable assets of the Company. During the year under review, the Company organized various training programs at all level to enhance skill of the employees. As on 31st March, 2016, total employees strength at STEELCAST is over 543. The employees are deeply committed to the growth of the Company. 16. VIGIL MECHANISM / WHISTLEBLOWER POLICY: The Company has formulated Whistleblower Policy in conformity with the provisions of Section 177 (9) of the Companies Act, 2013 and Listing Regulation to provide a mechanism for any concerned person of the company to approach the Ethics Counselor/ Chairman of the Audit Committee of the Company for the purpose of dealing with instance of fraud and mismanagement, if any and also ensure that whistleblowers are protected from retribution, whether within or outside the organization. The details of the Whistle Blower Policy are explained in the Corporate Governance Report and also posted on the Company's website at www.steelcast.net 17. EXTRACT OF ANNUAL RETURN: Pursuant to the provisions of section 92 (3) of the Companies Act, 2013, an extract of annual return is annexed hereto as Annexure- E and forms part of this report. 18. SECRETARIAL AUDITORS: Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, M/s. D.G.Bhimani & Associates, Company Secretary, (CP: 6628) Anand, have been appointed as the Secretarial Auditors to conduct the Secretarial Audit of the Company for the Financial Year 2016-17, the Secretarial Audit Report for the Financial Year 2015-16 is annexed herewith as Annexure- F and forms part of this report". The clarifications have been made by the Directors in respect of the observations made by the Secretarial Auditors in the Secretarial Audit Report for the year ended on 31st March, 2016, it is clarified that the company was inadvertently and due to oversight taken unsecured loan to meet urgent fund necessity, which was repaid immediately. 19. CORPORATE GOVERNANCE REPORT AND CERTIFICATE: Your Company is committed to maintain the highest standards of Corporate Governance and adheres to the Corporate Governance requirements set out by SEBI. As required under Regulation 34 (3) read with Schedule V (C) of the Listing Regulations a Corporate Governance report and the certificate as required under Schedule V (E) of the Listing Regulations from Statutory Auditors of the Company regarding compliance of conditions of Corporate Governance are given in Annexure- G and Annexure- H respectively, forming part of this report. 20. MANAGEMENT DISCUSSION AND ANALYSIS REPORT: Management Discussion and Analysis Report for the year under review, as stipulated under Listing Regulation, is annexed herewith as Annexure- I and forms part of this report. 21. COST AUDITORS: In terms of the provisions of Section 148 of the Act read with the Companies (Cost Records and Audit) Rules, 2014, as amended the Board of Directors, on the recommendation of the Audit Committee, have appointed M/s. S K Rajani & Co. Cost Accountants, Bhavnagar as Cost Auditor of the Company, for the Financial Year ending March 31, 2017, on a remuneration as mentioned in the Notice of Annual General Meeting for conducting the audit of the cost records maintained by the Company. A Certificate from M/s. S K Rajani & Co. Cost Accountants has been received to the effect that their appointment as Cost Auditor of the Company, if made, would be in accordance with the limits specified under Section 141 of the Act and Rules framed thereunder. A resolution seeking Member's ratification for the remuneration payable to Cost Auditor forms part of the Notice of the Annual General Meeting of the Company and same is recommended for your consideration and approval. Cost Audit report for the financial year ended March 31, 2015 were filed on November 6, 2015, due to technical error in MCA system while filing with ROC, which was not within the time limit as prescribed in the Companies (Cost Records and Audit) Rules, 2014 as amended. 22. STATUTORY AUDITORS: M/s. Sanghavi & Co., Chartered Accountants, Statutory Auditors of the Company, having Firm Registration Number 109099W, were appointed as Auditors at AGM concerning F.Y. 2013-14 for three consecutive years. As required under Listing Regulation, 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. As required under the Companies Act, 2013, your Directors recommend ratifying their appointment as Statutory Auditors of the Company for F.Y. 2016-17. The clarification has been made by the Directors in respect of the observation made by the Auditors under Para 5 of CARO report for the year ended on 31st March, 2016, it is clarified that the company was inadvertently and due to oversight taken unsecured loan to meet urgent fund necessity, which was repaid immediately. 23. 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 weaknesses in the design or operation were observed. These are aimed at giving the Audit Committee a reasonable assurance on the reliability of financial reporting and statutory & regulatory compliances, effectiveness and efficiency of your Company's operations. 24. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS: There were no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations, during the year under review. 25. CHANGE IN THE NATURE OF BUSINESS: During the year under review, there was no change in the nature of business of the Company and there is no material change and/or commitments, affecting the financial position of the Company, during the period from 31st March, 2016 till the date of this report. 26. DIRECTORS' RESPONSIBILITY STATEMENT: To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) and 134 (5) of the Companies Act, 2013, that: a. in the preparation of the annual financial statements for the year ended March 31, 2016, the applicable Accounting Standards have been followed along with proper explanation relating to material departures, if applicable; b. for the Financial Year ended March 31, 2016, such accounting policies as mentioned in the Notes to the financial statements have been applied consistently and judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year and of the Profit and Loss of the Company for that period; c. proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d. the Annual Financial Statements have been prepared on a going concern basis; e. proper internal financial controls are in place and such internal financial controls are adequate and were operating effectively; f. proper systems have been devised to ensure compliance with the provisions of all applicable laws and are adequate and operating effectively. 27. RISK MANAGEMENT: The Company has been addressing various risks impacting the Company and details of the same are provided elsewhere in this Annual Report in Management Discussion and Analysis. 28. DETAILS OF DEPOSIT: During the year under review, the Company has not accepted any deposits covered under Chapter V of the Companies Act, 2013. However the Company was inadvertently and due to oversight taken unsecured loans stated in annexure to the Auditors' Report, to meet urgent fund necessity, which was not in compliance with the provisions of Chapter V of the Companies Act, 2013, the said unsecured loans were repaid immediately. 29. SEXUAL HARASSMENT POLICY: Your Company has zero tolerance towards sexual harassment at the workplace and has adopted a Policy on Sexual Harassment in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made there under. The said policy can be accessed on the Company's website at www.steelcast.net 30. ACKNOWLEDGEMENTS: Yours Directors take this opportunity to express their sincere appreciation for the excellent support and co-operation extended by the shareholders, customers, suppliers, bankers and other business associates. Your Directors gratefully acknowledge the ongoing co-operation and support provided by the Central and State governments and all Regulatory Authorities. Your Directors also place on record their deep sense of appreciation to all employees for their dedicated services rendered at various levels. For and on behalf of the Board of Directors (Chetan M. Tamboli) Chairman & Managing Director Date : May 30, 2016 Place : Ahmadabad |