DIRECTORS' REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS FOR THE FINANCIAL YEAR 2014-2015 To, The Members, AHMEDABAD STEELCRAFT LIMITED CIN: L27109GJ1972PLC011500 Your directors have pleasure in presenting their 43rdAnnual Report on the business and operations of the Company together with the Audited Statement of Accounts for the year ended 31st March, 2015. Financial Highlights (Standalone) The Company had made provision of Rs. 238.00 Lacs of diminution in value of investment made with Light Work LLC an overseas Company on account of diminution in the book value of the Share of Light Work LLC. The Company has also written off the advances of Rs. 45.00 Lacs in relation to advances given to one party. This has resulted into the loss of Rs. 223.21 Lacs during the year. However, there is continuity in the profit of the Company from its operational activities. The diminution in the value of overseas investment is subject to necessary approval from the concerned authorities. State of Company's Affairs and Future Outlook: The income of the Company during the year was Rs. 4.17 Crores in comparison of Rs. 13.89 Crore in the previous year. The profitability of the Company from operational activities has decreased by 66.84% during the Financial Year 2014-2015. The Company continues the trading of Hot Rolled (Non-Alloy) Mild Steel Window sections and Angles. Major trading activities are relating to export in overseas market. The management is hopeful to enhance the trading activities in still better coming years. The Company continues to be partner of LLPs. The operational activity has commenced and the management is confident in achieving higher amount of profits in current and upcoming years. In view of the same, the management is of the opinion that: 1. Real estate as an attractive investment option 2. Improved real estate transparency levels 3. Wider option to choose from. 4. Availability of high-quality residential formats. 5. Competitive home loan rates. 6. Flexible home loan financing-EMI holiday by developers. 7. Increased NRI buyer interests And exactly for such reasons residential offerings have evolved to accommodate concepts of themed projects, designer homes, green homes etc. Today people want to live, work, play entertain, be entertained, flaunt, relax, rejuvenate, study, exercise when it comes to 'where' they stay. In order to bring the construction quality at par with the global standards, developer have introduced contemporary technologies such as Mivan and PERT to their construction. The advanced technologies have not only reduced the cost of construction, but also brought down construction turnaround time significantly in the recent past. There has been greater awareness about green building construction in the last decade. All these above factors will not only improve the performance of Company but will consequently help in increasing the net worth of Stakeholders. However the Management is concerned about the increase in Service Tax apart, from this the prices of raw material;cement etc. may affect the margin of the Company. Dividend: Due to Loss during the year no Dividend is recommended by the Board for the Financial Year ended on 31st March, 2015. Amounts Transferred to Reserves: No amount is transferred to General Reserve due to non recommendation of Dividend and Loss. Extract of Annual Return: The extract of Annual Return, in format MGT -9, for the Financial Year 2014-15 has been enclosed with this report as Particulars of Loan, Guarantees and Investments under Section 186: The loans advances given to Light Works LLC Mongolia has been provided to meet the working capital requirement of the Company in the financial year 2008-09.The Company is regularly receiving the repayment of loan. During the financial year 2014-15, the Company has not given any loan to any other Company including Associate Concern. The investment in other securities is within the authority given to the Board by the shareholders under Section 372A of the Companies Act, 1956/Section 186 of the Companies Act, 2013 Particulars of Contracts or Arrangements with Related Parties: All the transactions are at Arm's length. Remuneration paid to the Working Directors i.e. Managing Directors & Executive Directors is in respect of their time involvement in development of Company. Other transactions are in the form of capital contribution. The dividend/Profit earned from this associate are tax free in the hands of Company. Explanation to Auditor's Remarks: The remarks made by the Auditors in their Report have been suitably dealt with in the schedules and notes and therefore, do not call for any further clarification. Conservation of Energy, Technology, Absorption, Foreign Exchange Earnings and Outgo: The details of Energy, Technology, Absorption, Foreign Exchange Earnings and Outgo are as under: A. Conservation of Energy: Particulars with respect to Conversation of Energy are not applicable as the Company has not done any manufacturing activities. B. (1) Research and Development : Not Applicable (2) Technology absorption Foreign Exchange earnings and outgo: Not Applicable (1) Activities relating the export Company exports steel related items. (2) Foreign Exchange earned 1,80,41,765 (3) Foreign Exchange used Nil Risk Management Policy: The Company has developed a very comprehensive risk management policy and the same is reviewed by the Audit Committee at periodical intervals, which in turn, informs the Board about the risk assessment and minimization procedures adopted by the management. Suggestions or guidance given by the audit committee members are immediately implemented. At the corporate level major risks are reviewed by the Managing Directors and directions in this regard are issued accordingly. Induction of New Director: On the recommendation of Nomination & Remuneration Committee the Board appointed Mrs. Nita Girish Shah (DIN:03225876) as Additional Director with effect from 22nd January, 2015 in terms of Section 149 Rule 3 of the Companies Act,2013 and Clause 49 of the Listing Agreement. She was also appointed as Whole Time Director by the Board which is subject to the approval of shareholders in ensuing Annual General Meeting. The Management seeks your support in confirming your appointment as Director and Whole Time Director. The requisite Deposit of Rs.1 Lac (Rupees One Lakh only) recommending your confirmation as Director has been received. Re-Appointment of Directors: As per the Provision of the Companies Act, 2013 and Article of Association of the Company, Shri Shashank I. Shah (DIN: 00545449) and Shri Anand N. Jhaveri (DIN: 00489833) retires in ensuing Annual General Meeting and being eligible seeks Re-Appointment. The Board recommends their Re-Appointment. Resignation of Director: Due to pre-occupation Shri Girish D. Shah (DIN: 00545407) resigned from the Board as Director and Whole Time Director of the Company with effect from 22nd January, 2015.The Board accepted his decision and thanked him for his Vision/Leadership and Guidance in making the Company to achieve the Development. Comparison of Remuneration to Directors and employees: There is 50% increase in the remuneration payable to Directors in Comparison to 10% increase in the salary of employee. The Salary rise is based on the inflation data. The previous year increase in salary of Director is after two years. As such the rise in the salary is at par with other employee of the Company. The Performance of the Company has been affected by Global recession and economic slowdown in the Indian economy. In comparison to the Remuneration of Directors and other employees is as under: 1) Median of Directors remuneration:- Rs. 9,00,000/- per annum. 2) Median of employees remuneration:- Rs.2,69,185/- per annum. Details of significant & material orders passed by the regulators or courts or tribunal: No order has been passed by the Court/Tribunal during the financial year 2014-2015. Receipt of any commission by Managing Director / Whole Time Director from a Company or for receipt of commission / remuneration from it Holding or subsidiary: Company is not paying any commission to it's director Declaration by Independent Director: The Company has received declaration from all the Independent Directors under the Companies Act, 2013 and rules made thereunder. Secretarial Audit Report: Secretarial Audit Report in prescribed format Form MR-3 given by a Practicing Company Secretary Dilip N. Motwani is annexed with the Board Report as Annexure - 2 Corporate Social Responsibility (CSR) Policy: The Company is not falling within the criteria of Section 135 of the Companies Act, 2013 and hence the Company is not required to form CSR committee. Audit Committee: As on 31 March 2015, the Audit Committee comprises four Directors, out of which two are Independent Directors. Shri Kanishka Kaji (DIN: 02329312) Independent Director is the Chairman of the Committee. The time gap between two meetings was less than 120 days. The Committee met four times in the year under review on 27/05/2014, 29/ 07/2014, 7/11/2014 and 22/01/2015. The functions of the Audit Committee of the Company include the following: • Oversight of the Company's financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible. • Recommending to the Board, the appointment re-appointment, if required the replacement or removal of the statutory auditor and fixation of the audit fees. • Approval of payment to the statutory auditor for any other services rendered by the statutory auditors. • Reviewing, with the management , the annual financial statement before submission to the Board for approval, with particular references to : - Matters required to be included in the Directors Responsibility Statement to be included in the Board's report in terms of Section 134 of the Companies Act, 2013.. - Changes, if any, in accounting policies and practices and reason for the same. - Major accounting entries involving estimates based on the exercise of judgment by management. - Significant adjustment made in the financial statements arising out of audit findings. - Compliance with listing and other legal requirements relating to financial statements. • Disclosure of any related party transactions. • Qualification in the audit report. • Reviewing with the management, performance of statutory and internal auditors, and adequacy of the internal control system. • Reviewing the adequacy of internal audit plan. • Discussion with internal auditors on any significant findings and follow up thereof. • Reviewing the findings of any internal investigation by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board. • Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post audit discussion to ascertain any area of concern. • To look into the reasons for substantial defaults in the payments to the depositors, shareholders (in case of non-payment of declared dividends) and creditors. • Reviewing the functioning of the Whistle Blower Mechanism. • Carrying out any other function as is mentioned in the terms of reference of the Audit Committee. The Audit Committee is empowered, pursuant to its terms of references, to: • Investigate any activity within its terms of reference and to seek any information it requires from any employee. • Obtain legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise, when considered necessary. The Company has systems and procedures in place to ensure that the Audit Committee mandatorily reviews: • Management discussion and analysis of financial condition and results of operations. • Statement of significant related party transactions (as defined by the Audit Committee), submitted by management. • Management letters/letters of internal control weaknesses issued by the statutory auditors. • Internal audit reports relating to internal control weaknesses. • The appointment, removal and terms of remuneration of the internal auditor. In addition, the Audit Committee of the Company also reviews the financial statements. The Audit Committee is also apprised on information with regard to related party transactions by being presented: • A statement in summary form of transactions with related parties in the ordinary course of business. • Details of material individual transactions with related parties which are not in the normal course of business. • Details of material individual transactions with related parties or others, which are not on an arm's length basis along with management's justification for the same. Statement Indicating the Manner in which Formal Annual Evaluation has been made by the Board of its own Performance, its Directors, and that of its Committees: During the year, the Board adopted a formal mechanism for evaluating its performance and as well as that of its Committees and individual Directors, including the Chairman of the Board. The exercise was carried out through a structured evaluation process covering various aspects of the Boards functioning such as composition of the Board & committees, experience & competencies, performance of specific duties & obligations, governance issues etc. Separate exercise was carried out to evaluate the performance of individual Directors including the Board Chairman who were evaluated on parameters such as attendance, contribution at the meetings and otherwise, independent judgement, safeguarding of minority shareholders interest etc. The evaluation of the Independent Directors was carried out by the entire Board and that of the Chairman and the Non-Independent Directors were carried out by the Independent Directors. The Directors were satisfied with the evaluation results, which reflected the overall engagement of the Board and its Committees with the Company. Nomination & Remuneration Committee Policy: The sitting fees paid to the non-executive directors, commission to independent director, and remuneration paid to the whole- time director is approved by the remuneration committee. Remuneration Committee consists of Shri Ashok C. Gandhi (DIN: 00022507) and Shri Kanishka H. Kaji (DIN: 02329312) both are Independent Directors. Half- yearly Declaration A half - yearly/Quarterly Declaration of financial performance including summary of significant events in the last six months is currently not being send to each household of shareholders. However, the Company publishes its results in national and state level newspapers having wide circulation. The results are also posted on the website of the Company i.e. www.steelcraft.co.in Disclosure on Establishment of a Vigil Mechanism: Fraud free corruption, free work culture has been core to the Company. In view of the potential risk of fraud and corruption due to rapid growth and geographical spread of operations, the Company has put an even greater emphasis to address this risk. To meet this objective, a comprehensive Fraud Risk Management (FRM) policy akin to vigil mechanism or the Whistle Blower Policy has been laid down by the Board of Directors. Disclosures under Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013: In accordance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, Ahmedabad Steelcraft Limited has Modified the erstwhile policy for Prevention of Sexual Harassment at the Workplace and the Board of Directors have unanimously adopted the same w.e.f. July 23, 2014. Vide notification dated December 9, 2013; Ministry of Women and Child Development have introduced Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Rules, 2013. The earlier policy has been amended by incorporating the rules and procedures as mandated in the said notification. The revised policy shall be in effect from July 23, 2014. Company has Appointed Smt. Nita G. Shah (D.I.N: 03225876) to redress the issues regarding Sexual Harassments at work place. Statutory Auditors: M/s Dhiren Shah & Co. Chartered Accountants retires as Statutory Auditors of the Company at the conclusion of the Annual General Meeting to be held for the Financial Year 2016-2017 and being eligible to offer themselves for reappointment. Cost Auditors: Company does not fall within the purview of Section 148 of the Companies Act, 2013 and hence there is no requirement for the Company to appoint Cost Auditor for the F.Y 2014-15. Directors Responsibility Statement: In accordance with the provisions of Section 134(5) of the Companies Act 2013, your directors confirm that: a) 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) The directors had 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, 2015 and of the profit /loss of the Company for that period; c) The directors 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) The directors had prepared the annual accounts on a going concern basis; e) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. f) The directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively. Green initiatives: During fiscal 2011, we started a sustainability initiative with the aim of going green and minimizing our impact on the environment. Like the previous years, this year too, we are publishing only the statutory disclosures in the print version of the Annual Report. Additional information is available on our website, www.steelcraft.co.in. Electronic copies of the Annual Report 2014-15 and Notice of the 43rd Annual General Meeting are sent to all members whose email addresses are registered with the Company / Depository Participant(s). For members who have not registered their email addresses, physical copies of the Annual Report 2015 and the Notice will be the 43rd Annual General Meeting are sent in the permitted mode. Members requiring physical copies can send a request to the Company. The Company provides e-voting facility to all its members to enable them to cast their votes electronically on all resolutions set forth in the Notice. This is pursuant to Section 108 of the Companies Act, 2013 and Rule 20 of the Companies (Management and Administration) Amendment Rules, 2015. The instructions for e-voting are provided in the Notice. Acknowledgment The Directors express their sincere appreciation to the valued shareholders, bankers and clients for their support. For and on behalf of the Board of Directors Shri Anand V. Shah Managing Director (DIN: 00017452) Shri Darshan A. Jhaveri Managing Director (DIN: 00489773) Place : Ahmedabad Date : 28th May, 2015 |