AFFLUENCE

BOARDS’ REPORT

To
The Shareholders
MSTC Limited

Directors are pleased to present the 51st Annual Report on the business and operation of the Company together with audited accounts and auditors report for the year ended 31st March, 2016.

A)AGENCY BUSINESS

   This year the total volume of Agency Business stands at Rs.20,67,730Lakh, against Rs.19,95,312 Lakh in 2014-15. Break-up for the year 2015-16 vis-à-vis 2014-15 is as follows:

e- PROCUREMENT

TRADING

The performance of Trading Division shows a total volume of business of Rs.4,38,223Lakh, against Rs.6,94,521 Lakhin 2014-15. Break-up for the year 2015-16 vis-à-vis 2014-15 is as follows:

FINANCIAL HIGHLIGHTS OF THE COMPANY

Profit after tax stands at Rs.5,988Lakh as against a profit of Rs.9,099Lakh last year.
Financial results of the company for the year 2015-16 and 2014-15 are given below:-

(Rs.in Lakh)

Dividend

The Directors have recommended a dividend of @102.5% for the year ended 31st March, 2016. Dividend shall be paid to the shareholders whose names will appear in the register of the members on as on the date of AGM.
Reserves

General Reserves of the Company stood at Rs.68,543 Lakh as on 31st March, 2015. During the year Rs.3,825 Lakh have been transferred to General Reserve from Profit & Loss Account. After considering Dividend and Dividend Distribution tax for 2015-16 the General Reserves stand at Rs.72,368Lakh as on 31st March 2016.

Extract of Annual Return

In compliance of section 134(3)(a), and Rule 12(1) of the Company’s (Management and Administrative) Rules 2014, extract of Annual Report is format MGT-9 for the financial year 2015-16 has been enclosed with this report as Annexure V in the prescribed format.

SYSTEMS

MSTC’s IT infrastructure is by far the most sophisticated in the country to take up ecommerce services in a secure and transparent manner.

MSTC’s IT Department is equipped with the latest powerful IBM Power Series 740 Servers having robust processing power and can serve thousands of concurrent users. The servers are highly energy efficient leading to saving of power.

Mumbai Disaster Recovery site is also having a similar set up as in Kolkata Data Center.

MSTC is concerned with information security issues and has left no stone unturned to achieve maximum security by installing Firewall, Intrusion Prevention System (IPS), Managed Distributed Denial of Service (MDDOS), etc.

SSL Encryption:

SSL (Secure Sockets Layer) is the standard security technology for establishing an encrypted link between a web server and a browser. This link ensures that all data passed between the web server and browsers remain private and integral. We have implemented 256-bit SSL in our web server.

All network equipment like routers, switches are from CISCO and are totally ready for IPv6 migration. Security Appliances like Firewalls, IPS are in place to prevent unauthorized intrusion with latest signatures.

Periodical Application Security Testing is conducted by STQC, a Govt. of India Department. MSTC ensures security through periodical penetration, vulnerability & performance testing by STQC.

MSTC conducts its business through a dedicated 100 Mbps ILL and has also a standby ILL connectivity taken from a different provider. MSTC has connected its regions and branches through VPN which enabled the centralized internal applications to be used by all in a more secured manner. Moreover an UTM has been installed for protecting the users systems from outside spams and viruses.

MSTC has developed an in-house complete e-Procurement solution. General Financial Rules, CVC guidelines, IT Act 2000 and its Amendment of 2008 have been adhered to in this e-Procurement application and the said service has been certified by STQC.

MSTC e-Commerce has been appraised to CMMI Level-3 Dev. For achieving CMMI Level 5 from existing CMMI Level 3, training and holding of CMMI DEV High Maturity Process, Concept and their implementation to officers’ started from 11th December 2015 and completed on 27th January 2016.

MSTC server in Kolkata is manned round-the-clock throughout the year. The Systems dept. is well equipped with qualified professionals whose skills are continuously upgraded with training on latest technology.

MSTC’s System Department is ISO 27001:2013 certified from STQC.

MSTC e-Commerce division is also ISO 9001:2008 Quality certified.

MSTC System department have developed in-house & implemented the following major modules in 2015-16:


Two-stage e-Auction System(Technical Bid with IPO-Initial Price Offer first, then Forward e-Auction) for Mining Lease & Composite License on behalf of Ministry of Mines(MOM)
Two-stage e-Auction System(Technical Bid with IPO first, then Price & quantity Reverse e-Auction) for Short Terms Power Purchase Agreement on behalf of Ministry of Power(MOP)
Two-stage e-Bidding System(Technical Bid with IPO first, then Price & Quantity Reverse e-Auction) for DeenDayalUpadhyaya Gram JyotiYojana on behalf of Ministry of Power(MOP d) Negative bidding were allowed to bidders in RLNG reverse auction resulting revenue collection of Rs.18 Crore to Government of India instead of disbursing Rs.1,400 Crore subsidy as Power System Development Fund(PSDF).
Sale of Fly Ash through Book Building Method of Bidding for NTPC & DVC.
During the year, MSTC’s system Department have developed Mobile Bidding System through Android and other Mobile phone users for prime item like Manganese Ore where price and quantity bidding is necessary. The same system has been implemented in the Live Server on 9th February 2016.

HUMAN RESOURCE DEVELOPMENT (HRD)

MSTC Limited has always considered its human resource as the most important resource. With the increase in volume of business and employees retiring from the Company, recruitment has been undertaken at the entry level of both executive cadre and Junior Computer Assistant posts. Total of 44 employees have joined our company through direct recruitment during the year.

Since we are a people oriented company, development of employees through training has been an important area of HR activities. Emphasis was laid on competency building of employees for higher roles in the Company. The company has trained 63 executives in various topics for capability enhancement and skill development. Out of 63, 13 persons were trained in Senior Management Development Program and 23 persons were trained in Skill Development relating IT/e-commerce. The MOU targets for HR for the year 2015-16 were successfully achieved.

WELFARE OF WEAKER SECTIONS:

The Presidential Directives issued from time to time in regard to reservation, relaxation, concession, etc. for the SC/ST/OBC/PWD candidates pertaining to the policies and procedures of the Government were duly observed. The directives in matters concerning recruitment and promotion regarding the weaker sections have been duly complied with. All Departmental Promotion Committees and Selection Committees (in case of recruitment) constituted during the year had representatives of SC/ST community. Out of 44 no of persons recruited during the year, 10 OBC, 2SC and 3 ST persons were taken; of which 1 belong to PWD (HH). During the year, 3 SC, 3 ST and 16 OBC employees of the Company, were sponsored for training programmes, both In-house and Institutional training programmes, out of which 1employee was PWD (VH) and 2 employees were from minority. In addition, all possible cooperation and assistance was provided to the MSTC SC/ST Employees’ Council, which function primarily to safeguard the interest of the reserved section of employees of the Company.

Online Performance Appraisal System:

The Company has launched its Online Performance Appraisal System for executives up to DGM level for bringing transparency and promptness to the systems of Performance evaluation and Management.

Empowerment of Women:


MSTC is a Corporate Life Member of Forum of Women in Public Sector (WIPS). During the year, several women employees were nominated in the programmes organized by WIPS. Besides, one of our executives is actively involved as the President, ER of WIPS. Internal Complaints Committees constituted in all the offices of MSTC have been functioning successfully. Periodical meetings and Complaint redressal, awareness programs, etc. are also duly conducted by the Committees.


Disclosure under section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.


MSTC has in place a mechanism for prevention and redressal of sexual harassment of women employees at the workplace in accordance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committees (ICCs) have been set up in all the offices of the Company for rendering necessary assistance to and dealing with complaints, if any, of all the women employees of the Company. All employees (permanent, outsourced, trainees etc.) are covered under this policy.


The following is a summary of sexual harassment complaints received and disposed off during each calendar year.


* No. of complaints received: 1 (received on 31.03.2016)

* No. of complaints disposed off: Nil.






MANPOWER STATISTICS OF MSTC AS ON 31-03-2016

SC/ST/OBC/PHYSICALLY HANDICAPPED/EX-SERVICEMENSTATUS AS ON 31-03-2016

MALE/FEMALE AS ON 31-03-2016

Grievance Redressal Mechanism


MSTC has Public Grievance Redressal cell in its each office. Each cell consists of three executives. There are total eight (08) cells in Head office, regions and branches of the organisation. MSTC has also implemented Centralized Public Grievance Redress and Monitoring System(CPGRAMS) for online receipt and disposal of public grievances, so that grievance can be sorted out immediately and to take action to solve the cases. Action is taken to address and redress grievances received from outside and from staff of the organisation. Periodical meeting is held for review of the status of grievances. Monthly and quarterly reports for Public Grievance Redressal are sent to the Administrative Ministry.

Existing mechanism is working satisfactorily. Grievances from the employees are also taken care by the HOD’s and Region/Branch Managers. Moreover, the HR Dept. attends to various formal/informal grievances received from the employees in day to day running of the office in consultation with the HOD’s & Staff Unions, wherever necessary. The organisation makes proactive disclosure of services it provides to the clients and common man and contact details of public grievance authority of the organisation.

During 2015-16, 15(fifteen) grievancesare registered and all have been redressed.

Statement of Public Grievances for the period of 01.04.2015 to 31.03.2016

RIGHT TO INFORMATION ACT 2005

MSTC has nominated an Appellate Authority, a CPIO and a Nodal officer in Head office. Every region/branch has a PIO and an APIO as well for effectively processing the RTI applications received at various locations of the Company. Provisions of Right to Information Act 2005 have been duly complied for processing the applications/requests received under RTI Act 2005. All the quarterly reports have been submitted on-line. During 1stApril 2015 to 31stMarch 2016,total 86 applications and 31 appeals have been received and all have been disposedoff. Online RTI application registration facility has been developed. RTI application can be received and disposed of through RTI web portal namelyhttps://rtionline.gov. RTI Applications and Appeals received through Offline and Online are processed expeditiously.




OFFICIAL LANGUAGE


Rajbhasha Trimas was inaugurated on 16 September 2015. During this period, Hindi competitions and Hindi workshops were organized in Head office and in regional and branch offices. Total 17 officers/employees were awarded prizes for winning in Hindi competitions and for passing Hindi examinations. Total 14 employees were nominated for the Hindi examinations conducted by Hindi Teaching Scheme, Official Language Dept. Government of Indiaduring the year.Quarterly reports and annual report were sent to the Ministry. Hindi reports are being submitted on-line also. TOLIC meetings were attended regularly. 

OLIC meeting of Ministry of Steel held during the year was attended. OLIC meetings were arranged in the office. As per the Official Language Act, inspection was done in Head office and regional and branch offices. All materials for inspection were made available at the time of inspection done by the Ministry. Incentive was provided to 24officers and employees.

MSTC, Head Office inspected branch office (Vadodara), NRO (New Delhi).Parliamentary Committee on Official Language inspected Vadodara branch on 08.10.2015. Monitoring for implementation of Official Language was done. Circular for implementation of section 3(3) of Official Language Act 1963 was issued from time to time. Departments of Head office and Eastern Regional office were inspected.

Re-certification of ISO 9001:2008 of Official Language Department was done.

Unicode was installed in the computers of head office and regional/ branch offices.

Documents coming under section 3(3) of Official Language Act were translated in Hindi. Translations from English to Hindi and vice versa have been provided as and when required. Hindi version of Annual report and MOU were also submitted. Official Language Act has been complied with. Ministry of Steel and its Hindi Salahkar Samity continuously provided their guidance about implementation of Official Language Act.


Vigilance

The aim of MSTC Vigilance Department is to ensure fairness, integrity and efficiency for the transparency and accountability in the functioning of all activities of the Company. Its set-up is operative to identify the corrupt practices and to institutionalize them for diminishing the human intervention in the business transactions. MSTC Vigilance Department complies with the ISO 9001-2008 Quality Management System wherein the emphasis has been put to establish the effective preventive measures through the use of leveraging technology.


The functioning of MSTC is run by its own IT Infrastructure like e-Commerce i.e. e-auction, e-sale, e-reverse auction, e-tender cum e-auction and e-Procurement operation. These processes are carried out in compliance with STQC certified Web Portal as per CVC Guidelines. Its software has several in-built provisions which prevent cartel formation and ensure transparency and fairness. The system of e-auction, e-sale, e-procurement is designed in such a way that during the run of e-auction, no one can view the details of the bidders in competitions, despite having their login id and password.

During the year, MSTC Vigilance Department has taken various initiatives to improve the functioning of activities in the organization. The actions, against twenty numbers of complaints received, have been taken and necessary advice for both system and systemic improvements have been given for necessary compliance. On the basis of the directives issued by CVC/MOS, the initiatives undertaken by Vigilance Division include implementation of Bill Tracking System which can be utilized for the display of pending bills of contractors on the portal, professing purchases above Rs.50,000.00, in all departments & branches through MSTC’s own e-Procurement Portal, review of recruitment rules, implementation of full disclosure of APAR, online writing of APAR, opportunity to make representation in response to the adverse report in APARs, devising risk profile of an organization, framing the constituents of transparency index etc. Further, during the year 2015-16, six routine inspections and two surprise inspections were carried out. The major focus of such inspections has been on identifying vulnerable areas of corruption, streamlining of system/procedure and awareness on vigilance/anti-corruption issues amongst the employees through interactions. As far as Annual Property Returns (APR) are concerned, Vigilance department has maintained a continuous follow up with the employees. Out of 324 employees, 308 have submitted APRs; scrutiny of the same is in progress.


MSTC provides a link to CPGRMS (Centralized Public Grievance Redressal and Monitoring System) to make the service delivery system more transparent. Integrity Pact has been implemented to prevent corruption in public procurement. The Whistle Blower Policy of MSTC provides opportunity to all employees for access in good faith. Citizens in Administration (Sevottam) and also a Vigilance page for lodging complaints directly to CVO. Corporate Governance Guidelines by DPE has been complied with and Code of Conduct for all Board members and designated service management has been laid down. MSTC Risk Profile of the organization is being prepared keeping in mind the present activities of MSTC and analysis of the business transactions. Transparency Index is being revised for accessing the degree of transparency practiced by MSTC.

The CVOs of MSTC Limited, Andrew Yule & Company Limited and Bridge & Roof Co.(I) Ltd coordinated among themselves to organize an elocution competition at St. James School, Entally, Kolkata on 17-11-2015. Altogether, 13 students were finalized to speak on the topic “Corruption is a Social Evil” in presence of 100 audiences. Cash Prizes and Certificates were awarded to the best three speakers and consolation prizes were also awarded to other ten participants. A creative writing competition was also organized amongst the audience, who are not enlisted as speaker in the elocution competition. The topic selected was “Steps to Eradicate Corruption”. A total of 22 entries were received and best five entries were awarded cash prizes.

MSTC Vigilance Department organized "Vigilance Awareness Week" in various offices of MSTC from 26.10.2015 to 31.10.2015 as per the directives received from the Central Vigilance Commission, New Delhi. To mark the occasion, MSTC Vigilance conducted Essay Competition and Slogan Writing was organized amongst the employees on all-India basis on the theme “Preventive Vigilance as a tool of Good Governance ". Prizes were distributed to the employees for the best entries to motivate them for their active participation. In addition, a workshop was organized at HO, Kolkata in consonance with the theme for Vigilance Awareness Week-2015, which was attended by CMD, functional Directors, HODs & employees/officers of the company. Shri A.K.Sinha, External Independent Monitor was the Chief Guest & on his key note address emphasized on the role of cultivating ethical principles and moral values to be an essential ingredient of good Governance. He also acknowledged the contribution of MSTC e-Commerce platform in promoting fair and transparent government transactions. Suitable banners were displayed at conspicuous public places in the premises of the Headquarters as well as Regional/Branch offices to sensitize one and all on the vigilance and anti-corruption measures. A brochure was unveiled to commemorate the occasion of Vigilance Awareness Week, highlighting the role played by MSTC in developing end-to-end e-commerce solutions that can provide the accountability at every level of hierarchies in administration as well as address the challenge of corruption. Copies of brochure have been widely circulated within and outside the Company.


COMMENTS BY COMPTROLLER AND AUDITOR GENERAL OF INDIA (CAG)

Comments of CAG on the Annual accounts of company in terms of section 143(3)(b) of the Companies Act, 2013, shall be deemed as part of Directors’ Report.

Directors Responsibility Statement

As required under the provisions of Section 134(5) of the Companies (Amendment) Act, 2013, Board of Directors state that:

In the preparation of annual accounts the applicable accounting standards have been followed along with proper explanation relating to material departures.

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 31.03.2016 and of the profit of the company for the financial year 2015-16.

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 frauds and other irregularities.

Directors have prepared the annual accounts for the year ended 31st March, 2016 on a going concern basis.

Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

AUDITORS

Pursuant to Section 143(5) of the Companies Act, 2013, the Comptroller and Auditor General of India, has appointed M/s. Ray & Co, Chartered Accountants, as Statutory Auditors of the Company for the year 2015-16. The report of the Auditors is attached to the annual accounts of the Company. Management replies on the comments/observations of the Auditors are placed at Annexure VIII to Directors’ Report.

DIRECTORS

Board of Directors of MSTC Ltd. presently consists of Shri B.B. Singh, Chairman-cum-Managing Director, Shri A.K. Basu, Director (Finance), who are whole time directors. Shri S.K Tripathi was CMD upto 31.05.2016. On his superannuation Shri B.B Singh has taken over as CMD, he is also holding additional charge of Director (Commercial). Shri Sunil Barthwal, Joint Secretary, Ministry of Steel and Shri Suraj Bhan, Economic Adviser, Ministry of Steel are Government nominee directors. Shri A. K. Goyal, former Member, Railway Board, is the only Independent Director. The term of Shri N.C. Jha, ex-CMD, Coal India Ltd., as independent director in the Board, expired on 09.10.2015.

The Board of Director places on records their deep appreciation of the valuable guidance and contribution made by Shri S K Tripathi as CMD of the company.

Secretarial Audit

In compliance with section 204 of the Companies Act, 2013, Saumayo Jyoti Seal, practicing company secretary has been appointed as the Secretarial Auditor for the year 2015-16. Report of the Secretarial Auditor as prescribed is enclosed as Annexure VII to this report.

Related Party Transactions

Pursuant to Rule 8(2) of Companies (Accounts) Rules, 2014 the particulars of contracts with related parties referred in section 188(1) in Form AOC- 2 are enclosed as Annexure III to this report.

CMD, Director (Finance) and Company Secretary are Key Managerial Personnel (KMP) under section 2(75) as well as related party as defined under 2(76). CMD and Director (Finance) are employed under contractual employment under terms decided by Government of India. Director (Finance) is also nominated director in subsidiary company i.e. Ferro Scrap Nigam Limited (FSNL).

MSTC functions as selling agent to FSNL which is a normal course of business for MSTC and charges service charges at a rate which is normally charged to other companies. MSTC has paid custodian service charges for warehouse management to FSNL which is a normal course of business for FSNL. Therefore transaction between MSTC and FSNL is not considered as related party transaction.


Corporate Social Responsibility

Company is seriously committed to social uplift. In line with the Companies Act, 2013 and also DPE guidelines, Company has a CSR Committee which functions as per Govt. guidelines and Company CSR policy. CSR Policy of the Company has been approved by the Board and is hosted on the website of the Company.
Annual Report on Corporate Social Responsibility as required under Rule 8 Companies (Corporate Social Responsibility Policy) Rules, 2014 is placed as Annexure VI.

Corporate Governance
Separate details on Corporate Governance and Management Discussion and Analysis are attached herewith as Annexure II and form part of this Directors Report. Compliance Audit Report is placed as Annexure to Corporate Governance Report.

Number of Meetings of the Board
Board met four times during the FY 2015-16. Details are available under Annexure II of this report.

Statement of Independence of Directors
All independent directors in the Board have submitted Statement of Independence in compliance of section 149(7) of the Companies Act, 2013.


Committees of the Board

MSTC has constituted four committees of the Board viz., Audit Committee, Remuneration Committee, Share Transfer Committee and Corporate Social Responsibility Committee.

Remuneration Committee

Pursuant to section 178 of the Company’s Act, 2013, read with Rule 6 of the Company’s (Meeting of Board and its powers) Rules, 2014, Company is supposed to have a Nomination and Remuneration Committee. Being a Govt. India Company, the nomination/appointment of director is made by Govt. of India. However, Remuneration Committee is in place which is also in compliance of Corporate Governance (CG) guidelines by DPE which apply to the Company.

Corporate Social Responsibility (CSR) Committee
In compliance of section 135(1) read with Rule 5 of the Company’s (CSR Policy) Rules 2014, Company has constituted CSR Committee of the Board.Details of the above Committees are mentioned under Annexure II of this report.

Stakeholders Relationship Committee

Constitution of Stakeholder’s Relationship Committee as provided under section 178(5) of the Act do not apply to the Company as number of shareholders are below one thousand. However, share transfer committee is in place.
Subsidiary Company – Ferro Scrap Nigam Limited

Ferro Scrap Nigam Limited is the 100% Subsidiary of the Company. The Operational result of two years is given below:
(Rs. in Lakh)

The detailed information relating to the subsidiary company is placed as Annexure IV in form AOC-1 in compliance of section 129 of the Companies Act, read with Rule 5 of Companies (Account) Rules.

Consolidated Financial Statement has been attached to with the Financial Statement of the holding company, MSTC Ltd.
Acknowledgement 

The Board of Directors wish to place on record their gratitude to the Hon’ble Union Minister for Steel, Secretary (Steel), Additional Secretary and FA (Steel), and other officials of the Ministry of Steel, Defence Ministry, Coal Ministry and various other Central Government Ministries, all State Governments, various Central and State public sector undertakings, private companies, the bankers, our principals and others for their valuable assistance and guidance extended to the Company during the year. The Directors express their gratitude to all stake holders, customers and suppliers for the trust and confidence reposed by them on your Company year after year.

Your Directors also place on record the appreciation of the sincere efforts made by employees which has resulted in excellent performance of the Company.

For & on behalf of Board of Directors



(B.B Singh)
Chairman-cum- Managing Director

Annexure: I


Annexure to Directors Report

Particulars of conservation of energy, technology absorption, foreign exchange earnings and outgo as per section 134 of the Companies Act, 2013, as read with Rule 8(3) of the Companies (Accounts) Rules, 2014.

Conservation of Energy and Technology Absorption

Company has upgraded its Server to the latest IPV6 which consumes much less electrical power and conserves energy. Being IT oriented company, technological upgradation is a continuous process in MSTC and has been fully achieved by your Company.

Foreign Exchange Earnings & Outgo

The total foreign exchange outgo during the year 2015-16 for import of goods and others was Rs.1,35,953 lakhas against Rs.1,60,348Lakh in the year 2014-15. The company has earned Rs.5 lakhin foreign exchange during the year 2015-16. In the previous year i.e. 2014-15, the foreign exchange earning was Rs.13 Lakh.

Annexure: II

CORPORATE GOVERNANCE
MSTC’s Policy on Corporate Governance

Effective corporate governance practices to provide for an environment in achieving the objectives of the company have been the basic management philosophy of your company.

All out efforts are made for transparency and integrity at all levels of management in order to retain confidence reposed in its management by the stakeholders.

MSTC aspires to follow high ethical standards, commitment to values while doing business, maintain transparency, conduct due diligence in commercial contracts and follows best governing practices. The guidelines on Corporate Governance for Central Public Sector Enterprises as issued on May 2010, have been complied with in the year 2015-16 and shall be complied with in future also.

BOARD OF DIRECTORS
Composition

Board of Directors of MSTC Ltd. presently consists of Shri B.B Singh, Chairman-cum-Managing Director, Shri A.K. Basu, Director (Finance), who are whole time directors. Shri S.K Tripathi was CMD upto 31.05.2016, on his Superannuation Shri B.B Singh has taken over as CMD, he is also holding additional charge of Director (Commercial). Shri Sunil Barthwal, Joint Secretary, Ministry of Steel, and Shri Suraj Bhan, Economic Adviser, Ministry of Steel are Government nominee directors. Shri A. K. Goyal, former Member, Railway Board, is the only Independent Director. The term of Shri N.C. Jha, ex-CMD, Coal India Ltd., as independent director in the Board expired on 09.10.2015.

Brief information of the newly appointed directors

Ms. Molly Tiwari
Ms. Molly Tiwari, Dy. Secretary, Ministry of Steel, was appointed as Director on 15.08.2015 and continued upto 31.12.2015.

Shri Sunil Barthwal
During the year Shri Sunil Barthwal, IAS, Joint Secretary in the Ministry of Steel has been appointed as Govt. Nominee Director.
Remuneration to the Directors

Independent Directors are not entitled to any remuneration other than sitting fees for attending Board and Board Committee Meeting. Sitting fees are not given to Government Directors. CMD, and other two functional directors, being in whole time employment, are entitled to remuneration as per the terms of the appointment issued by Govt. The Remuneration Committee determines the Performance Related Pay payable to whole time directors in line with Govt. guideline.

Remuneration received by CMD and two functional directors as salary and allowances is Rs.150 Lakh, Company’s contribution to PF is Rs.7 Lakh and reimbursement of medical expenses is Rs.2 Lakh for the year 2015-16. CMD, D(F) and D(C) are also provided car by the Company. They are also entitled to Performance Related Pay (PRP) as per DPE Guidelines and as recommended by Remuneration Committee of the Board.

DIRECTORS’ ATTENDANCE RECORD

Record of Attendance of the Directors during the Board Meetings of MSTC Ltd held in the F.Y. 2015-16 is placed below. CMD was present in all the Board Meetings during the year.

p – present, a – absent and x – not in office

CMD, Director (Finance), Director (Commercial) and Shri A.K Goyal, Chairman Audit Committee attended the last AGM held on 14th September 2015.

Directorship held by the Directors

Shri A.K Basu, Director (Finance) is also MSTC nominee director in Ferro Scrap Nigam Ltd. Shri Suraj Bhan, Government Nominee Director, MSTC, and Shri A. K. Goyal, Independent Director of MSTC are not holding directorship in any other company. Shri Sunil Barthwal, Joint Secretary, MOS, is a Govt. nominee director who is also a Govt. nominee director in Steel Authority of India Limited (SAIL) and Hindustan Steelworks Construction Limited (HSCL).

Committees of the Board

MSTC has constituted four committees of the Board viz, Audit Committee, Remuneration Committee, Share Transfer Committee and CSR Committee.

Pursuant to section 178 of the Company’s Act, 2013, read with Rule 6 of the Company’s (Meeting of Board and its powers) Rules, 2014, Company is supposed to have a Nomination and Remuneration Committee. Being a Govt. of India Company, the nomination/appointment of director is made by Govt. of India. However, Remuneration Committee is in place which is also in compliance of CG guidelines by DPE which applies to the Company.

In compliance of section 135(1) read with Rule 5 of the Company’s (CSR Policy) Rules 2014, Company has constituted CSR Committee of the Board. The Committee comprises of Shri A.K. Goyal, Independent Director, as Chairman and Shri B.B.Singh, CMD and presently holding additional charge of Director (Commercial) and D(F).

Constitution of Stakeholder’s Relationship Committee as provided under section 135(5) of the Act do not apply to the Company as number of shareholders is below one thousand. However, share transfer committee is in place.

Audit Committee

Audit Committee comprised of Shri N.C. Jha, independent director, as chairman with Shri A. K Goyal, independent director and Shri Suraj Bhan, Government nominee director as members. On the expiry of term of Shri N.C. Jha on 09.10.2015, Shri A.K Goyal was appointed Chairman. As there is no other Independent director, the committee consists of two members only. 

The Audit Committee complies with the guidelines issued by DPE on Corporate Governance relating to Audit Committee.


ATTENDANCE OF THE DIRECTORS IN THE AUDIT COMMITTEE MEETINGS OF MSTC LTD HELD IN THE F.Y. 2015-16

p – Present, a – absent and x – not in office


Remuneration Committee

The committee was constituted with Shri N.C.Jha, independent director as chairman, Shri A.K.Goyal, independent director, as member and Shri Suraj Bhan, Government nominee director, as member. On the expiry of term of Shri N.C. Jha on 09.10.2015, Shri A.K Goyal has been appointed Chairman. As there is no other Independent director, the committee consists of two members only. The committee functions as per DPE guidelines on Corporate Governance issued in May 2010 and recommends PRP to whole time employees including directors. This complies with section 178 of the Companies Act, 2013 read with Rule 6 of the Companies (Meeting of Board and its Powers) Rules, 2014.

Being a Government of India Company nomination/appointment is made by Government of India. Remuneration of the employees is as per DPE, Government of India guidelines.

Share Transfer Committee

In order to render better services to the shareholders Board has constituted a share transfer committee comprising of Shri A.K. Basu Director (Finance) and Shri B.B. Singh Director (Commercial), though Shri Singh has taken over as CMD, he continues to be the member of the committee. This committee also decides on issue of duplicate and split share certificates.

Corporate Social Responsibility(CSR) Committee

CSR Committee is constituted by Board with an independent director, Shri A.K. Goyal as Chairman and Director(Finance) and Director(Commercial) as members. Committee monitors the CSR activities of the Company. With Director (Commercial) taking over as CMD the committee needs to be reconstituted.

Code of Conduct

A Code of Conduct for all Board members and designated senior Management of MSTC Ltd. has been laid down in accordance with the Guidelines on Corporate Governance by DPE. The Code of Conduct is available on the website of the company www.mstcindia.co.in. All Board members and designated senior Management personnel have affirmed compliance with the Code of Conduct. A declaration signed by the Chief Executive Officer (CEO) to this effect is enclosed at the end of this report.

Risk Management Policy

Company has a Risk Management Policy approved by the Board of Directors which is reviewed from time to time by the Board.

Fraud Prevention Policy

Company has a Fraud Prevention Policy approved by the Board of Directors which is reviewed from time to time by the Board. The policy is available at the company website.


Vigil Mechanism

Whistle Blower Policy

Company has a Whistle Blower Policy approved by the Board of Directors which is reviewed from time to time by the Board. The policy is available at the company website.


Information Placed Before the Board Of Directors


Annual operating plans and budgets and any updates.
Capital budgets and any updates.
Financial results for the company and its operating divisions or business segments.
Minutes of meetings of audit committee and other committees of the board.
The information on recruitment and remuneration of senior officers just below the board level, including appointment or removal of Chief Financial Officer and the Company Secretary.
Show cause; demand prosecution notices and penalty notices which are materially important.
Fatal or serious accidents, dangerous occurrences, any material effluent or pollution problems.
Any material default in financial obligations to and by the company, or substantial non-payment for goods sold by the company.
Any issue, which involves possible public or product liability claims of substantial nature, including any judgment or order which, may have passed strictures on the conduct of the company or taken an adverse view regarding other enterprises that can have negative implications on the company.
Details of any joint venture or collaboration agreement.
Transactions that involve substantial payment towards goodwill, brand equity, or intellectual property.
Significant labour problems and their proposed solutions. Any significant development in Human Resources/Industrial Relations Front like signing of wage agreement, implementation of Voluntary Retirement Scheme etc.
Sale of material nature, of investments, subsidiaries, assets, which is not in normal course of business.
Quarterly details of foreign exchange exposures and the steps taken by management to limit the risks of adverse exchange rate movement, if material.
Non-compliance of any regulatory, statutory requirements and shareholders service such as non-payment of dividend, delay in share transfer etc.

Management Discussion and Analysis

Company’s Business

MSTC has two core business segments namely e-commerce & trading. MSTC plays a very important role as a service provider in e-commerce and is a market leader in this sector. It has the distinction of serving majority of Central/PSUs/State Govt. Department and a few Private Institutions for providing transparent, fair & seamless e-Commerce services to its clients.

E-Commerce Business

e-Commerce business consists of forward e-Auction and e-Reverse auction. Forward e-Auction is considered as Selling Agency Business for scraps, condemned items, old plant & machinery, surplus stores, land parcels, NPAs etc. and e-sales for minerals like coal, lignite, barytes, chrome ore, iron ore and also commodities like raw pet coke, human hair to name a few.

In e-procurement, MSTC provides e-Tender and e-Reverse auction services backed by mandatory STQC certificate for quality requirements. Although, MSTC made a modest beginning in FY 2013-14 but it has made a significant growth in the FY 2015-16 and is poised for exponential growth in future.

e-Commerce business constitutes about 86% (77% in 2014-15) of the total volume of business of the company during FY 2015-16 and has the potential to grow exponentially. It contributed 76% (79% in 2014-15) of the total operational income.

Trading Business:

In trading business, which constituted 14% ( 23% in 2014-15) of the total volume of business during FY 2015-16, MSTC acts as a facilitator for procurement of raw material for secondary steel producers and petrochemical industry on behalf of buyers and charge mark-up on percentage basis.

This business contributed 24% (21% in 2014-15) of the total operational income of the company.

E-Commerce Business

In this segment of business, MSTC acts as service provider for selling agency business, e-sales and e-procurement.

Selling Agency Business

In this portfolio, MSTC acts as selling agent for disposal of scrap, old Plant & Machinery, e-waste, surplus store, hazardous items, obsolete items, etc and offers seamless services from preparation of the auction catalogue to the issuance of delivery order.

E-Sales

Under this portfolio of business, the prime products such as coal, lignite, iron ore, chrome ore, manganese ore, barytes, rock phosphate, tea, raw pet coke etc and also human hair are sold by way of e-auction through specialized application software developed in-house.

During FY 2014-15, MSTC successfully conducted e-Sales of confiscated Red Sanders wood (a forest produce) for the first time for the state of Andhra Pradesh. This has paved the way for e-Auction of forest products such as timber, Red Sander, Sal Seeds, logs, spices, etc. for the state of Kerala. MSTC created history by successfully auctioning coal mining blocks to Steel, Cement and Power sector and state owned entities in a transparent and fair manner. The Company also introduced e-auction for sale of Forest timber and sandal wood in the state of Kerala for the first time in the country.

MSTC conducted e-auction of Fly-ash emanating from Thermal Power Plant for the first time in the country through Book Building method on behalf of NTPC Ltd, DVC, NLC, etc. Ministry of Power engaged MSTC Ltd. to conduct e-reverse auction for revival of underutilized Standard Gas Based Power plants in the country utilizing Power system Development Fund of Rs.3,500 Crore.

Some of the emerging opportunities in this segment are e-auction of NPAs, land parcels, leasing of Port Land, agri forest produce, major & minor mineral blocks, coal linkages.

E-Procurement

MSTC offers end-to-end solution for e-procurement starting from raising of indents to issuance of Letter of Intent/Purchase Order for both e-tender and e-reverse auction. MSTC is fully geared up to tap the immense business potential in e-procurement and trying to rope in potential customers in Central Govt. /PSUs, state PSUs & private Companies.

It is relevant to mention here that the mandatory requirements of STQC Certificate as per CVC guidelines and IT Act 2000 & its amendment are fully met by MSTC and the system is in conformity with GFR norms.

The package has been developed in-house and will provide ease of operation as well as customization as and when needed by the clients.

MSTC has commenced e-reverse auction for imported thermal coal and geared up for coking coal, rock phosphate and other minerals which will open up window of opportunity in e-procurement business.

The enabling factors for providing seamless services to all MSTC’s clients in e-Commerce segment are:-

MSTC is standalone service provider and does not outsource any of the e-commerce activities to outside agency.
The development of application software portals, customization is done in-house by team of highly motivated programmers and engineers having domain knowledge in respective areas.

E-Commerce Infrastructure:

MSTC e-commerce division is equipped with latest P series (I/PV-6) server of IBM make capable of taking more than 10,000 concurrent hits with a mirror image server acting as a disaster recovery server located at Mumbai. The division is accredited with ISO 9001:2008 and the system has the ISO 27001:2013 certification.

MSTC e-commerce system complies with latest CVC guidelines and Information Technology Act 2000 & its subsequent amendments to ensure services to customers in a most transparent and fair manner.

MSTC has implemented VPN network for quick communication across its Regional/Branch offices.

As per the CVC guidelines, the system is periodically audited by STQC, and independent third party agency under Ministry of Communication and Information Technology, Government of India. All the aforesaid features make the system an unique, state-of-the-art and par excellence.

MSTC developed e-Commerce Modules (MSTC e-commerce application Software) for providing e-commerce services to its principals and customers. This Application Software designed in house is being customized from time to time to suit the requirement of various principals. A patent to the effect has been earned by MSTC and registered by the Deputy Registrar of Copyrights, Government of India.

MSTC is the first company to have obtained STQC certification for quality requirement of e-procurement as per the mandate of CVC circular no: 1-1-2012 dated 12-01-2012.

MSTC has also obtained unique STQC Certificate for Mining Lease Cum Composite License (MLCL) for all minerals and is in the advanced stage of obtaining the same for e-auction of Coal.

MSTC has been appraised at CMMI Level 3 from CMMI Institute, Carnegie Mellon, USA for its e-commerce Software Development expertise. CMMI Level 3 states as follows:-

“An appraisal at maturity level 3 indicates the organization is performing at a “defined” level. At this level, processes are well characterized and understood and are described in standards, procedures, tools and methods. The organization’s set of standard process which is the basis for maturity level 3, is established and improved over time.”

Total e-commerce business is given as under:


Agency Business:


Scrap Disposal

During the year 2015-16, the total volume of business achieved is Rs.2,59,412 Lakh against previous year’s achievement of Rs.3,26,703 Lakh.

e-Sales

The total e-sales business during 2015-16 was Rs.18,08,318 Lakh as against the corresponding figure of Rs.16,68,610 Lakh; an increase of 8.37% over previous year. The volume of sales of coal, lignite, raw pet coke, barytes, other minerals, human hair, tea, etc., are given as under:
( Rs. in Lakh)

e-Procurement

Taking a big leap forward in e-procurement, the volume of business in FY 2015-16 was Rs.5,75,975Lakh as against corresponding figure of Rs.3,02,422 Lakhduring last year. After obtaining the mandatory STQC certificate for e-procurement as per CVC guidelines, MSTC went full steam for capitalizing the opportunity of growing tendency of Govt. companies in switching over to electronic mode for the purchases.

The service charge earned was Rs.634 Lakh as against corresponding figure of Rs.206 Lakh in the previous year. The percentage service income is usually less compared to other e-commerce business due to less content of services involved. This figure is stated to raise manifold as we secure more volume of business from clients.

In nutshell, against the MOU target (very good) of Rs.20,500 Crore for total volume of e-Commerce business, MSTC achieved a figure of Rs.26,43,705Lakh, which is an increase of 28.96% over MOU target and an increase of 15.06% as compared to the corresponding figure of last year.

It is pertinent to mention here the decrease in e-Commerce service charge income from Rs.13,139 Lakh in 2014-15 to Rs.12,228 Lakh during FY 2015-16 are not commensurate with the increase in volume of business.

Since MSTC’s service charge is based on % age basis, the service charge income declined sharply due to reduction in prices of scrap and minerals despite handling more through put.


However, e-commerce business remains to be mainstay of MSTC in the long run due to its immense potential in future and comparatively less risk involved in the business.


Trading Business

Trading contributes significantly to both top line and bottom line. MSTC provides finance for the procurement of raw materials on behalf of the secondary steel producers and petrochemical industry. Trading has been the mainstay of MSTC’s business. MSTC acts in a facilitator mode or purchase-sale mode and finances the procurement of raw materials on behalf of primarily the secondary steel producers and its allied industries.

For imports, MSTC opens L/C on overseas supplier on behalf of buyers who are selected after their due diligence and as per Risk Management Policy (RMP) norms for supply of raw materials as per the buyers’ specification and consent for price and delivery terms. The material is sold to buyers on ‘High-Sea’ sale basis wherein the material is pledged to MSTC and the ownership rests with the buyers. The materials thus sourced through import or from domestic sources are kept in the custody of MSTC at the premise of buyers through a custodian appointed for this purpose after signing a tripartite agreement between MSTC, the custodian and the buyers. The buyers are allowed to lift the material against their requirement on payment under ‘Cash & Carry’ basis.

Service charge earned from this segment was Rs.3,906 Lakh during the year.

Import of Thermal Coal

In order to meet the demand of imported thermal coal by the various power utilities in India, MSTC has been supplying thermal coal to such buyers on door delivery basis. MSTC participates in the tenders floated by the buyers for supply of thermal coal through its business associates (empaneled annually through an open tender by MSTC) on back-to-back basis. MSTC had supplied successfully 5.62 million MT of imported thermal coal valued at Rs.2,51,811 Lakh which is less than 3.04 million MT supplied in the previous year.

Taking an innovative solution for import of thermal coal to meet demand supply gap MSTC has developed a reverse e-auction model for imported thermal coal on behalf of the buyers in India. In this solution, MSTC conduct e-reverse auction as per the coal specification provided by Indian buyers. The suppliers who will be registered with MSTC will participate in the reverse e-auction and bid to become L-1 on Door Delivery basis or on FOB basis. MSTC will charge its mark-up on per ton of coal delivered. MSTC has conducted successfully reverse e-auctions for one of the customers in India which has resulted in drastic reduction in import price.

Due to prolonged slowdown in the Global economy, particularly in the steel sector, the trading business was subdued due to slump in demand for steel.

With regard to the business for imported thermal coal, the demand had shrunk due to glut situation of thermal coal in the domestic market which has resulted in less quantity of Coal imported during the year 2015-16. In addition, MSTCs mark up is based on % age basis of the price of imported coal, there was huge reduction in the service income due to steep fall in the global prices of thermal coal.

The total performance of Trading Division during FY 2015-16 stands at Rs. 4,38,223 Lakh as against MOU Target (very good) of Rs. 5,95,000 Lakh which is 73.65% of Target.


Diversification for growth and future developments:


MSTC is consistently pursuing the ambitious project of setting up of the first Auto Shredding Plant in India for which input raw materials like condemned automobiles, white goods etc are required. MSTC with the help of the Ministry is making efforts to implement this project.


MSTC is already in talks with the Ministry of Road Transport and Highways, Ministry of Heavy Industries, Society of Indian Automobile Manufacturers (SIAM) and other such bodies for enactment of a Law for incentivizing compulsory scrapping of End of Life Vehicles as existing in other developed and developing countries. Govt. of India is shortly coming up with a policy in this regard.


MSTC has also diversified its e-Commerce activities in various domains like Coal and Non-Coal Mining Block Auctions, red sander wood auctions, sandal wood auctions and human hair, various minerals, agri and forests produce, NPAs etc. In addition MSTC is further looking forward to expand its e-Commerce presence into various other arenas like e-Retail business along with India Post and its logistic services support. Discussion for the same is going on.

Plans are afoot to float a portal for e-shopping mall in B2B and B2C mode for metal goods particularly steel products to start with. The portal has already been developed and registrations are going on. This will be formally launched within next 4-5 months.

5. MSTC has launched e-procurement services providing end-to-end solution to the clients for their purchases. In addition, it has developed and implemented e-reverse auction portal for imported Thermal Coal which has made import of coal easy, hassle free and economical.


Future Outlook:

MSTC has become a major standalone e-commerce service provider in the country. MSTC is attempting new & diverse lines of business such as tea, sago, gorgon nut (makhana) in agri-products, tendu leaves, timber, sal seed in forest products, human hair, fly ash etc. Apart from this, MSTC has also undertaken the e-auction of land, apartment, banks’ NPAs and also assets under DRT etc.

Setting up of an e-Waste recycling Plant is under PPP model also being explored. The Board has recommended exploring the possibility of inclusion of e-Waste recycling plant with the proposed Auto Shredding Plant which can also extract & recover precious metals present in the e-Waste.

MSTC is increasing the e-commerce Business exponentially to exploit the available potential with a focus on e-auction of mining blocks (both coal & non-coal), minerals, agri.& forest produce and e-procurement.

MSTC has plans to launch ‘e-Shopping Mall’ for metal as well as for handicrafts, apparels, painting, etc in various states to promote Cottage Industries. However, it is going slow in the Trading business due to volatility in commodity prices and slump in international and domestic market.

Some of the major opportunities MSTC is pursuing are:

Ministry of Power engaged MSTC to conduct e-Reverse Auction for revival of under-utilized and Stranded Gas Based power plants in the country utilizing Power System Development Fund(PSDF) of Rs.3,500 Crore. The 1st tranche of e-Reverse auction has already been completed successfully and subsidies worth Rs.900 Crore have been auctioned. During 2015-16, gas subsidy worth Rs.2,712.48 Crore to be disbursed, have been auctioned.



Introduction of e-auction for sale of Forest Produce in different states on the lines of Keralacan immensely benefit the local artisans, craftsmen and people involved into business in unorganized sector.

MSTC conducted e-auction of Fly-ash emanating from Thermal Power plant for the first time in the country on behalf of two units of NTPC Ltd. This has given considerable benefit in terms of revenue to NTPC. Commercial utilization of Fly-ash which is a waste product will improve the environment and provide business opportunity for the local people in building cement bricks out of it including cement industry who are using 30-40% of Fly-ash for cement making. Other power utilities are being approached for availing MSTC portal foe e-Auction of fly ash. 

Government of Telangana has engaged MSTC for complete e-commerce services in line with that of Government of Andhra Pradesh for a period of 3 years. Under the Government order, MSTC will render e-Commerce services to all the departments in the state.
Governments of Gujarat, Rajasthan, Maharashtra, Madhya Pradesh, Chhattisgarh, Jharkhand, Odisha, Andhra Pradesh have signed agreements with MSTC for e-Auction of mineral blocks in the respective states.
MSTC has successfully conducted so far e-Auction for Iron Ore, Lime stone and Gold mines offered by various states.

MSTC is exploring possibility of taking software projects in alliance with a suitable partner for e-auction for fruit & vegetable either at big Mandi in metropolitan city or at the growers site in the first phase and thereafter, logistics for its storage & transportation in second phase.

MSTC plays a major role in recycling of e-waste and helps create wealth from the waste for its customers. MSTC is exploring the possibility to set up e-waste recycling unit at the earliest.

E-procurement and E-reverse auction is another potential area in which MSTC is making a rapid stride to grab the business.

In trading business, MSTC is not very upbeat to increase business as this business is fraught with risks. Hence, MSTC will have business with few selected parties having good credibility and past performance. MSTC will renew its effort to pursue alternate mode of trading business for iron ore and rock phosphate etc. besides food grains through Ministry of Commerce & Industries.

MSTC Board has approved to set up first Auto Shredding Plant for recycling End of Life Vehicles (ELVs) and other white goods by converting these into shredded scrap which is vital raw material of secondary steel plant. By this method the good quality steel could be produced with about 47% less energy than the primary route using Iron Ore etc. and also save foreign exchange which will be an item as ‘Make in India’. A MoU has been signed with M/s Mahindra Intertrade Ltd. (a part of Mahindra Partners) on April 28, 2016 for setting up the first Auto Shredding Plant under JV with them. Joint Venture Agreement is to be signed shortly.

MSTC also finalized the national portal for e-bidding for power procurement which has been named as DEEP (Discovery of Efficient Electricity Price). The portal was formally inaugurated by the Hon’ble Minister for Coal and Power in April 2016 in New Delhi. The portal is aimed at bringing uniformity in the procurement process being followed by various DISCOMs in the country and to reduce their electricity procurement bills.

Ministry of Petroleum and Natural Gas has appointed MSTC as the e-Commerce service provider to develop and make available a portal for e-Allocation of Discovered Small Oil and Gas fields.

MSTC developed a virtual market place for small and medium sector enterprise. The portal ‘MSTC Metal Mandi’(M3) will initially focus on sale of steel products of small & medium sector producers and traders. The portal has a potential to bring growth, transparency, fairness and promptness in sale & purchase decisions. The portal will provide strength to the campaigns of Government of India like Digital India, Make in India, Ease of Doing Business etc. The portal will be launched within next 4-5 months.

Ministry of Coal decided to award Fuel Supply Agreements to Non-Power Sector Consumer viz. Sponge Iron, Cement, CPP, Steel and Others through e-Auction portal of MSTC. MSTC is providing the e-Auction service to Coal India for Coal Linkages. First Phase of e-Auction for Sponge Iron and Cement sectors is concluded.

Govt. of India has engaged MSTC for implementation of its various flagship of Innovative schemes through its e-Commerce portal some are already implemented and some are upcoming.


Cautionary Statement:   

Statements under “Management Discussion and Analysis” are on company’s estimates, projections and estimates. Actual results may materially differ from such projections and depend on economic condition and industry demand in the relevant domestic and international market. Government regulations including fiscal regulations and other incidental factors may also affect the projections and estimates.



DISCUSSION ON FINANCIAL PARAMETERS WITH RESPECT TO OPERATIONS AND PERFORMANCE


PERFORMANCE

A) AGENCY BUSINESS

This year the total volume of Agency Business stands at Rs.20,67,731Lakh againstRs.19,95,312 Lakh in 2014-15. Break-up for the year 2015-16 vis-à-vis 2014-15 is as follows:

B) e- PROCUREMENT

TRADING

The performance of marketing Division shows a total volume of business of Rs.4,38,223 Lakh against in Rs.6,94,521Lakh 2014-15. Break-up for the year 2015-16 vis-à-vis 2014-15 is as follows:

SWOT ANALYSIS

Strengths & Weaknesses

MSTC’s strength lies in substantial experience in dealing with scrap, surplus items, e-sale of prime products and sourcing of raw-materials. The experienced people, equipped with latest infrastructure, transparency, prudentially laid down policies together make MSTC an efficient service provider.

The e-commerce service is handled by well competent persons and backed by state of the art infrastructure. The system has the latest features as mandated by CVC guidelines & IT Act 2000 and its subsequent amendments and is being audited periodically by third party agency namely STQC, a Dept. Under Ministry of Communications and IT, Govt. of India.Shortly, MSTC is the only company in the country to have achieved the compliance certificate from STQC for its guidelines which is one of the essential criteria as per the Ministry of Finance notification for serving as e-procurement service provider.

MSTC has largest client base of 50000 plus for e-commerce services which depicts its customer orientation & seamless services being made available to them. MSTC’s presence at almost all major cities in India provides comforts in terms of efficient, less time consuming hassle free services available to its customers.

In the import segment, many big industries have relied upon MSTC for sourcing of raw-materials due to excellent business relationship with overseas suppliers, bankers, other stake holders and buyers.

There can be no business model without weaknesses which can be attributed to low product knowledge (since MSTC deals with various types of products), volatility in price of materials and less revenue dependent business of the customer companies. Weaknesses may also be attributed to dependence of others for trading business. Also MSTC has nil status of canalizing agent for Exim business unlike our peer companies such as MMTC, STC, etc. have in trading business. MSTC has a small work force of 324 employees spread across the country and therefore is not equipped to indulge in direct export/ import or domestic trade.

Opportunities & Threats

Opportunity seems to be quite substantial for e-commerce business of various commodities particularly in minerals, agricultural and forest products. Strategic forward integration in processing of scrap, iron & steel, joint venture in shredding plant, e-waste recycling are some of the emerging opportunities for the company. There also exist ample opportunities for MSTC in e-Procurement and e-Marketing of agri-products. The likely ban in illegal mining of various minerals in the states by the Government and the consensus emerging for sale of mines produce through e-auction augers well for MSTC business.
Any business, now a days is not without threat. For MSTC, threat is Government policy on import and export, customers shifting to other trading companies or choosing to make direct imports, small players coming in and offering lesser service charges. However, MSTC is aware of such threats and always makes strategies to come out of these threats.

Technological development has reduced secondary arising of scrap leading to lower trading volume in agency business segment.

Small players in e-commerce space having scanty infrastructure and less security features in their system are mushrooming and eating away business on their strength of unreasonably lower service charges rates.

Existing customers are forcing MSTC to reduce service charge which may hit bottom-line unless there is commensurate increase in overall volume of business. Besides this, customers are also resorting to tenders in which case MSTC’s chance to win the tender gets diminished mainly due to skewed and non-levels playing field conditions. 


RISKS AND CONCERNS

Agency Business

Selling agency business has inherent risk since principal can any time decide to do the selling job themselves. Of late, principals are resorting to tendering and small players are quoting very less rate of service charge owing to their less investment in infrastructure and nil obligations towards CVC guidelines and IT Act, 2000. However, because of quality and transparency, MSTC has retained most of the business in this segment.

Being a PSU, MSTC has to follow all the guidelines issued by CVC, regulation of IT Act 2000 and other audit requirements of STQC for which, MSTC has to invest huge amount towards Systems infrastructure, whereas, the private players are not under any such obligation. Therefore, unless Government Departments and PSUs insist upon fulfillment of criteria in line with CVC guidelines by the service providers in the tender documents, it would be increasingly difficult for MSTC to get orders, since private players, having scanty infrastructure, can afford to quote very low service charge.


Trading Business (import & export)

This segment mainly functions as sourcing of raw materials for industries either through import or domestically. The materials remain pledged to MSTC and delivery is given to the customer on payment basis. There is an inherent risk of not lifting material as per schedule by the customers mainly due to change in their production schedule and volatility in the market.



RISKS, INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Risk Management Policy in MSTC was introduced in the year 2008-09. The policy has been revised since 24thApril, 2015. MSTC makes it certain that the internal control system functions within the risk appetite of the company and is being fine-tuned to include more safeguards for being more effective.

Risk Management Policy for another segment of business i.e. e-commerce is also introduced this year to have necessary safeguards in this business too.

M/s. M.C. Bhandari & Co., chartered accountants was assigned with the internal audit function of the company for the year and their reports are put up to the management at regular intervals and summarized statement of important issues are placed before the Audit Committee. The committee analyses the functions of the internal control system and recommendations of the committee are put up to the Board and those are implemented as per the considerations of the Board. Audit Committee also considers various financial statements for risk analysis and control.


CONSERVATION OF ENERGY AND RESOURCES


MSTC works primarily in the field of procurement of scrap materials, especially ferrous scraps from different consumers and trading of those scraps for recycling. Thus, MSTC works for the conservation of the natural resources, reduction in pollutants, conservation of energy by recycling ferrous scraps into a re-useable form. MSTC is in a way recycling company that consolidates facilities and auctions scrap of various types for reuse after processing by its buyers.

Information on development of HR, Industrial Relations and Corporate Social Responsibility is mentioned in the Directors’ Report.

Auto Shredding Plant being planned by MSTC will be first of its kind in India, will promote Secondary Steel making in India using IF and EAF routes. These processes consume less energy and pollute less than primary process of utilizing BFs and Convertors etc.

The productivity under this route is also much higher than the conventional methods.






FURTHER DISCLOSURES AS PER CORPORATE GOVERNANCE GUIDELINES


There is no materially significant related party transaction that may have potential conflict with the interest of the company.
No non-compliance by the company has been observed /reported. No statutory authority has issued any strictures or levied penalty or any matted related to any guidelines issued by the Government during last three years.
Company has formulated a whistle blower policy in line with Government guidelines duly approved by Board. No person has been denied personal access to Audit Committee and company has protected whistle blower from adverse personal action.
Corporate Governance guidelines have been complied with and a separate report on Corporate Governance is placed as Annexure to Annual Report.
All Presidential guidelines have been complied with by the Company for the year and also during last 3 years.
No items of expenditure have been debited in books of accounts, which are not for the purpose of business.
No expenses are incurred which are personal in nature for the Board of Directors and Top Management.
Administrative expenses are 2% of total expenses.
The financial results are available in the website of the company i.e. www.mstcindia.co.in. From time to time they are also published in corporate advertisements.




For & on behalf of Board of Directors





(B. B. Singh)
Chairman-cum- Managing Director

A)AGENCY BUSINESS This year the total volume of Agency Business stands at Rs.20,67,730Lakh, against Rs.19,95,312 Lakh in 2014-15. Break-up for the year 2015-16 vis-à-vis 2014-15 is as follows: Business Segment Volume of Business ( Rs. in Lakh) 2015-16 2014-15 Sale of Scrap & Manganese Ore etc. 7,86,637 7,28,350 Sale of Coal 8,18,444 6,13,644 Iron ore 4,62,649 6,53,318 Total (A): 20,67,730 19,95,312 B) e- PROCUREMENT Business Segment Volume of Business ( Rs. in Lakh) 2015-16 2014-15 e-Procurement (B) 5,75,975 3,02,422 Total (A+B): 26,43,705 22,97,734 C) TRADING The performance of Trading Division shows a total volume of business of Rs.4,38,223Lakh, against Rs.6,94,521 Lakhin 2014-15. Break-up for the year 2015-16 vis-à-vis 2014-15 is as follows: Business Segment Volume of Business ( Rs. in Lakh) 2015-16 2014-15 Procurement of: Imported materials 1,35,027 1,60,334 Indigenous materials 3,03,196 5,34,187 Total: (C) 4,38,223 6,94,521 Grand Total (A+B+C) 30,81,928 29,92,255 FINANCIAL HIGHLIGHTS OF THE COMPANY Profit after tax stands at Rs.5,988Lakh as against a profit of Rs.9,099Lakh last year. Financial results of the company for the year 2015-16 and 2014-15 are given below:- (Rs.in Lakh) 2015-16 2014-15 Volume of Business 30,81,928 29,92,255 Profit (Loss) before tax 9,134 13,147 Tax 3,146 4,048 Profit after tax 5,988 9,099 Paid up capital (Equity) 880 880 Reserves 72,368 68,543 Dividend (%) 102.5 207 Earnings per share ( Rs. ) (Face value Rs. 10/-) 68 103 PBT Per Employee 28.19 42.86

Conservation of Energy and Technology Absorption Company has upgraded its Server to the latest IPV6 which consumes much less electrical power and conserves energy. Being IT oriented company, technological upgradation is a continuous process in MSTC and has been fully achieved by your Company.

Conservation of Energy and Technology Absorption Company has upgraded its Server to the latest IPV6 which consumes much less electrical power and conserves energy. Being IT oriented company, technological upgradation is a continuous process in MSTC and has been fully achieved by your Company.

Foreign Exchange Earnings & Outgo The total foreign exchange outgo during the year 2015-16 for import of goods and others was Rs.1,35,953 lakhas against Rs.1,60,348Lakh in the year 2014-15. The company has earned Rs.5 lakhin foreign exchange during the year 2015-16. In the previous year i.e. 2014-15, the foreign exchange earning was Rs.13 Lakh.

Directors Responsibility Statement As required under the provisions of Section 134(5) of the Companies (Amendment) Act, 2013, Board of Directors state that: In the preparation of annual accounts the applicable accounting standards have been followed along with proper explanation relating to material departures. 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 31.03.2016 and of the profit of the company for the financial year 2015-16. 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 frauds and other irregularities. Directors have prepared the annual accounts for the year ended 31st March, 2016 on a going concern basis. Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.