DIRECTORS' REPORT To The Member of Mahamaya Steel Industrial Limited Dear Shareholders, Your Directors have pleasure in presenting the 28th Annual Report together with audited accounts of your Company for the year ended 31th March, 2016. 2. FINANCIAL PERFORMANCE AND OPERATIONS Recession in steel industry saw decline a sharp decline in finished products. The average sales price of billets & blooms has been decreased by 22 percent and the average sales price structures have been decreased by 23 percent. Likewise, the prices of end cutting (scrap) declined by 28 percent which in turn affected Company's performance and resulted in cash loss during financial year 2015-16. Despite tough environment with the sector, the Company achieved a remarkable performance on the operational front. The Company has achieved a remarkable 10 percent increase in the capacity utilisation of both divisions and 30 percent increase in sales quantity of its main products (billets & blooms by 24 percent, structures by 35 percent). However, due to continuous fall in market prices of Company's products the revenues from operations grew by 6 percent. Revenues from operations for the year ended March 31, 2016 stood at Rs. 30926.31 lakhs against Rs. 29145.42 lakhs in the previous year. The average sales price of billets & blooms has been decreased by 22 percent and the average sales price structures fell by 23 percent. Similarly the prices of end cutting (scrap) has decreased by 28 percent which resulted in increase in loss by Rs. 963.43 lakhs during financial year 2015-16. On the other hand. the prices of Power and Fuel have gone up by 9.75% resulting in increase in Loss by Rs. 473.92 Lakhs. Similarly Financial Costs has been increased by Rs. 192.09 Lakhs on account of increase in Interest Rates and Employee Cost, Administrative and Selling Expenses has increased by Rs. 23.00 Lakhs and Rs. 65.96 Lakhs respectively. However due to increase in capacity utilisation by 10 per cent, the Company has able to save Rs. 62.72 Lakhs on account of Operational Efficiencies in Contractor Payments and Lower Burning Loss. In spite of Cash Loss, the Company has timely cleared its all Statutory Dues such as Central Excise Duty, Service Tax, TDS, VAT, CST, and EPF & ESI Contributions. Also the Instalments of Term Loans from Banks and Financial Institutions has been cleared on respective due dates. Also the Company is continuously working on up gradation and modernization of Plant & Machineries. 3. DIVIDEND In view of the loss incurred by the Company, your Board of Directors do not recommend any dividend for the financial year 2015-16. 4. TRANSFER TO RESRVES In view of the loss, your Board of Directors do not appropriate any amount to be transferred to General Reserves during the year under review. 5. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY There have been no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this report. 6. CHANGE IN THE NATURE OF BUSINESS During the year under review, there are no changes in the nature of the business of the Company. 7. 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. 8. SUBSIDIARIES, ASSOCIATE AND JOINT VENTURE COMPANIES & CONSOLIDATED FINANCIAL STATEMENTS As on 31st March, 2016 the company have two associates, and do not have any subsidiary and Joint Venture Companies. In accordance with Section 129(3) of the Companies Act, 2013 we have prepared consolidated financial statements of the Company, which forms part of this Annual Report. Further a statement containing the salient features of the financial statement of our associates in the prescribed format AOC-1 is appended as Annexure-A to the Director's Report. In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of each of its associates are available on our website www.mahamayagroup.in. These documents will also be available for inspection during business hours at registered office of the Company. 9. PARTICULARS OF CONTRACTS AND ARRANGEMENTS WITH RELATED PARTY All Related Party Transactions that were entered into during the financial year were on arm's length and were in the ordinary course of business. All Related Party Transactions were placed before the Audit Committee of the Board of Directors for their approval. The Company has formulated a policy on materiality of Related Party Transactions and also on dealing with Related Party Transactions. The policy is available on the Company's website www.mahamayagroup.in The Company in the ordinary course of its business, enters into transactions relating to purchase and sale of products, rendering and receiving services from its group companies who are 'Related Party' as defined under Companies Act, 2013 or rules made thereunder and SEBI (Listing Obligation & Disclosure Requirements) Regulations, 2015. The current and the future transactions are/will be deemed to be 'material' in nature as defined in SEBI (Listing Obligation & Disclosure Requirements) Regulations, 2015 as they may exceed 10 per cent of the annual turnover of the Company based on future business projections. Thus, as per SEBI (Listing Obligation & Disclosure Requirements)Regulations, 2015, such transactions would require the approval of the members by way of a Ordinary Resolution. 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-B in Form AOC-2 and the same forms part of this report. 10. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS During the year the company has not granted any loans, investments, guarantees and securities granted in respect of which the provisions of section 185 & 186 of the Companies Act, 2013 are applicable. 11. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES The Company does not have any employee, whose particulars are required to be given pursuant to the provisions of section 197 of the Companies Act, 2013 read with Rule 5(2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed hereto marked as Annexure - C and forms part of this report. 12. AWARDS & RECOGNITION We were awarded for Upscaling Energy Efficient Production and Implementation of Energy efficient technology by UNDP at Delhi on 11.12.2015. 13. REPORT ON CORPORATE GOVERNANCE & MANAGEMENT DISCUSSION & ANALYSIS Pursuant to Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 Company has taken adequate steps to ensure that all mandatory provisions of Corporate Governance as prescribed under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are complied with, a separate section titled Report on Corporate Governance together with a Certificate from the Practicing Company Secretary forms part of this Report. A detailed Management Discussion & Analysis forms part of this Report. 14. MEETINGS Board Meetings During the year, Eleven Board Meetings were convened and held the details of which are given in the Corporate Governance Report. The maximum interval between any two meetings did not exceed 120 days, as prescribed in the Companies Act, 2013. Audit Committee Meetings During the year, Ten Audit Committee Meetings were convened and held the details of which are given in the Corporate Governance Report. Nomination & Remuneration Committee Meetings During the year, Seven Nomination & Remuneration Committee Meetings were convened and held the details of which are given in the Corporate Governance Report. Stakeholders Relationship Committee Meetings During the year, Four Stakeholders Relationship Committee Meetings were convened and held the details of which are given in the Corporate Governance Report. 15. POLICY ON DIRECTOR'S APPOINTMENT AND REMUNERATION The current policy is to have an appropriate mix of executive and independent directors to maintain the independence of the Board, and separate its functions of governance and management. As on 31st March, 2016, the Board consists of 6 members, three of whom are Executive Directors and three are Independent Directors. The 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 on our website www.mahamayagroup.in. There has been no change in the Policy since the last Financial Year. We affirm that the remuneration paid to the directors is as per the terms laid out in the Nomination and Remuneration Policy of the Company. 16. DECLARATION BY INDEPENDENT DIRECTORS The Company has received necessary declarations from each Independent Directors under section 149(7) of the Companies Act, 2013 that he/she meets the criteria of Independence laid down in Section 149(6) of the Companies Act, 2013 and Regulation 25 of SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015. 17. BOARD EVALUATION Pursuant to the provisions of the Act and the SEBI Regulations, the Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Audit, Nomination and Remuneration and Stakeholders Relationship Committee. The Criteria applied in the evaluation process are explained in the Corporate Governance Report. 18. FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS In compliance with the requirements of SEBI Regulations, the Company has put in place a familiarization programme for the Independent Directors to familiarize them with their role, rights and responsibility as Directors, the working of the Company, nature of the industry in which the Company operates, business model etc. The details of the familiarization programme are explained in the Corporate Governance Report. The same is also available on the website of the Company www.mahamayagroup.in 19. PREVENTION OF INSIDER TRADING In January, 2015, SEBI (Prohibition of Insider Trading) Regulations, 2015 which came into effect from May 15, 2015. Pursuant thereto, the Company has formulated and adopted a new Code for Prevention of Insider Trading. The new code viz. "Code of Internal Procedures and Conduct for Regulating, Monitoring and Reporting Trading by Insiders" and the "Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information" allows the formulation of a trading plan subject to certain conditions and requires pre-clearance for dealing in the Company's shares. It also prohibits the purchase or sale of Company's shares by the Directors, designated employees and connected persons, while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Company Secretary is responsible for implementation of the Code. All Board Directors, designated employees and connected persons have affirmed Compliance with the Code. 20. LISTING AGREEMENT The Securities and Exchange Board of India (SEBI) on September 2, 2015, issued SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with the aim to consolidate and streamline the provisions of the Listing Agreement for different segements of capital markets to ensure better enforceability. The said regulations were effective December 1, 2015. Accordingly, all listed entities were required to enter in to the Listing Agreement within six months from the effective date. The Company entered in to Listing Agreement with BSE Limited during December 2015. 21. POLICIES We seek to promote and follow the highest level of ethical standards in all our business transactions guided by our value system. The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 mandated the formulation of certain policies for all listed companies. All our Corporate Governance Policies are available on our website (www.mahamayagroup.in). The policies are updated based on need and new compliance requirement. In addition to its Code of Conduct and Ethics, key policies that have been adopted by the Company are as follows: Whistleblower Policy (Policy on Vigil Mechanism): The Company has adopted the whistle blower mechanism for directors and employees to report concerns about unethical behavior, actual or suspected fraud, or violation of the Company's Code of Conduct and Ethics. Nomination and Remuneration Policy: This Policy formulates the criteria for determining qualifications, competencies, positive attributes and independence for the appointment of a director (executive/non-executive) and also the criteria for determining the remuneration of the directors, key managerial personnel and other employees. Related Party Transaction Policy: The Policy regulates all transactions between the Company and its related parties. Code of Internal Procedures and Conduct for Regulating, Monitoring and Reporting Trading by Insiders: The Code provides the framework in dealing with securities of the Company. Policy for determining materiality for disclosures: This Policy applies to disclosures of material events of the Company, it deals with dissemination of unpublished, price-sensitive information. Document Retention and Archival Policy: The Policy deals with the retention and archival of Corporate Records of the Company 22. DIRECTORS AND KEY MANAGERIAL PERSONNEL Pursuant to the provisions of Companies Act, 2013 Mr. Yewesh Yede (DIN: 07275526) was appointed as Additional Director (Executive and Non Independent) with effect from 26th September, 2015. Yewesh Yede holds office as an Additional Director up to the date of this Annual General Meeting. He has submitted a declaration that he is eligible for appointment and in respect of whom the Company has received a Notice in writing under section 160 of the Companies Act, 2013, proposing his candidature for the office, liable to retire by rotation. Mrs. Rekha Agrawal (DIN 00597156), retires by rotation as Director at the ensuing Annual General Meeting and being eligible, offers herself for reappointment. Pursuant to the provisions of Section 149 of the Act, Mr. Niraj Kansal (DIN 02513034), Mr. Manish Kumar Agrawal (DIN 02822174) and Mr. Atul Garg (02822051) were appointed as Independent Directors at the Annual General Meeting of the Company held on 30th September, 2014. The terms and conditions of appointment of Independent Directors are as per Schedule IV of the Act and there has been no change in the circumstances which may affect their status as Independent Director during the year. Mr. Devarshi Pandey Chief Financial Officer of the Company has resigned from the Company w.e.f 23.06.2015 and in his place Mr. Parveen Kumar Chavda was appointed as Chief Financial Officer of the Company with effect from 21.12.2015 Mr. Jai Prakash Jhunjhunwala Chief Executive Officer has resigned from the Company w.e.f 21.12.2015. Mr. Rajesh Agrawal, Managing Director, Mr. Praveen Kumar Chavda Chief Financial Officer, and Mrs. Jaswinder Kaur Mission, Company Secretary are the KMPs of the Company as per the provisions of the Act. 23. COMMITTEES OF THE BOARD Currently the Board has 3 Committees the Audit Committee, the Nomination and Remuneration Committee and the Stakeholders Relationship Committee. A detailed note on the composition of the Board and its committees is provided in the Corporate Governance Report Section of this Annual Report. During the year the Company has dissolved two Committees Corporate Social Responsibility Committee and Risk Management Committee as they were no longer applicable for our Company as per Companies Act, 2013 and SEBI(LODR) Regulations 2015 respectively. Though the Company had dissolved the Committee but the Company has done always and will continue to take initiatives and support social causes like running of Schools, Social community center and will always enhance the beauty of earth by plantations and to reduce the pollution. Further though the Company had dissolved the Risk Management Committee but the Risk Management Policy will be effective and will be overseen by the Audit Committee. 24. EXTRACT OF THE ANNUAL RETURN In accordance with Section 134(3)(a) of the Companies Act, 2013, an extract of the Annual Return in the prescribed format is appended as Annexure D to the Board's Report. 25. 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 statement in terms of Section 134 of the Act; Your Directors state that: 1. In the preparation of the annual accounts for the year ended 31st March, 2016, the applicable accounting standards have been followed and there are no material departures from the same; 2. 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 the year ended on that date; 3. the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; 4. the Directors have prepared the annual accounts on a 'going concern' basis; 5. the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and 6. 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. 26. AUDITORS AND AUDITOR OBSERVATION STATUTORY AUDITOR Pursuant to the provisions of Section 139 of the Act and the rules framed thereunder, M/s R.K. Singhania & Associates, Chartered Accountants, were appointed as statutory auditors of the Company from the conclusion of the 26th annual general meeting (AGM) of the Company held on September 30, 2014 till the conclusion of the 30th AGM of the Company, subject to ratification of their appointment at every AGM. Accordingly, the appointment of M/s R.K. Singhania & Associates, Chartered Accountants as Statutory Auditors of the Company is placed for ratification by the Shareholders. STATUTORY AUDITORS' OBSERVATIONS ON STANDALONE AND CONSOLIDATED FINANCIAL STATEMENTS With reference to the Qualification/Observation of the Auditor in Standalone and Consolidated Audit Report, Management reply is given below: Regarding Electricity Duty Exemption Management's Reply: The Company is eligible for electricity duty subsidy under the Industrial Policy of the State of Chhattisgarh. In this regard Company had already filed an application to the CGM DIC and now CGM DIC had recommended same to Industry of Secretary along with all papers and documents which is well progressed and is in final stage. Therefore there is reasonable certainty regarding ultimate collection of the same. So company has recognized it in books of account in accordance with the accounting standards. COST AUDITOR The Cost Audit Records maintained by the Company in respect of its activity are required to be audited pursuant to Section 148 of the Act and the rules framed thereunder. Your Directors have on the recommendation of the Audit Committee appointed M/s S.C. Mohanty & Associates, Cost Accountants for conducting the audit of cost records of the Company for the financial year 2015-16. As required under the Act, the remuneration payable to the Cost Auditor is required to be placed before the Members in a General Meeting for their ratification. Accordingly, a resolution for seeking Members ratification for the remuneration payable to M/s S.C. Mohanty & Associates, Cost Auditor, is included in the Notice convening the Annual General Meeting. SECRETARIAL AUDITOR The Board has appointed Brajesh R. Agrawal, Practising Company Secretary as the Secretarial Auditor of your Company to conduct Secretarial Audit for the financial year 2015- 16. The Secretarial Audit Report for the financial year ended March 31, 2016 is annexed herewith marked as Annexure-E to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. 27. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AN FOREIGN EXCHANGE EARNINGS AND OUTGO. The Information on conservation of energy, technology absorption, foreign exchange earnings and out go, which is required to be given pursuant to the provisions of section 134(3)(m)of the Companies Act, 2013, read with Rule 8(3) of Companies (Account) Rules, 2014 is annexed hereto marked as Annexure-F and forms part of this report. 28. PAYMENT OF ANNUAL LISTING FEES Shares of the Company are presently listed at BSE Limited, P.J.Towers, Dalal Street, Mumbai and the Company has paid listing fee upto 31st March, 2017 in respect of above stock exchange. 29. GENERAL DISCLOSURE Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review: 1. Details relating to deposits covered under Chapter V of the Act. 2. Issue of equity shares with differential rights as to dividend, voting or otherwise. 3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save or ESOS. 4. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future. Your Directors further state that 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. 30. INVESTOR RELATIONS & SERVICES Your Company always endeavors to keep the time of response to shareholders request / grievance at the minimum. Priority is accorded to address all the issues raised by the shareholders and provide them a satisfactory reply at the earliest possible time. The Stakeholders Relationship Committee of the Board meets periodically and reviews the status of the Shareholders' Grievances. The shares of the Company continue to be traded in electronic forum and de-materialization exists with both the depositories viz., National Securities Depository Limited and Central Depository Services (India) Limited. Mrs. Jaswinder Kaur Mission Compliance Officer of the Company and the Registrar M/s System Support Services are looking after the physical as well as Demat work and also shareholders correspondence, they endeavored their best to service the Investors satisfactorily. 31. EMPLOYEE RELATIONS Employee relations throughout the Company were harmonius. The Board wishes to place on record its sincere appreciation of the devoted efforts of all the employees in advancing the Company's vision and strategy to deliver good performance. ACKNOWLEDGMENT Your Directors place on record their sincere appreciation and gratitude for the assistance and generous support extended by all Government authorities, Financial Institutions, Banks, Customers and Vendors during the year under review. Your Directors wish to express their immense appreciation for the devotion, commitment and contribution shown by the employees of the Company while discharging their duties. By Order of the Board Rajesh Agrawal Managing Director Date: 15 June, 2016 Place: Raipur |