DIRECTORS’REPORT Your Directors hereby present the 54th Annual Report together with Audited Statement of Accounts of the Company for the financial year ended 31st March, 2016. DIVIDEND Your Board of Directors have not recommended any dividend on the equity shares of the Company for the FY 2015-16 in view of loss. STATE OF COMPANY'S AFFAIRS Ferro Alloys The production of ferro chrome during the year under review declined by 7.97% to 188,849 tonnes (previous year: 205,203 tonnes) mainly on account of a lockout declared at the Therubali unit from 21st November 2015 to 23rd February 2016 consequent to an illegal strike. Moreover, in view of unsustainable prices prevailing in the last quarter of the year under review, the Company decided to advance some of the maintenance activities scheduled for later. Electricity During the year under review your Company generated 857.99 MU's of electricity (previous year: 913.92 MU's) in accordance with lower captive requirement. Mining Chrome Ore production during the year under review was 359,468 tonnes as compared to 414,138 tonnes during the previous year. It is pertinent to note here that your Company has consistently followed in letter and spirit the practice of value addition and limiting ore raising from its captive mines to that required for captive consumption thus maximising contribution to the exchequer. EXTRACT OF THE ANNUAL RETURN An extract of annual return for the financial year ended on 31st March, 2016 in Form MGT-9 pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014 is attached as Annexure-1. NUMBER OF MEETINGS OF THE BOARD The Board met four times in FY 2015-16 viz. on 14th May, 2015, 23rd July, 2015, 20th October, 2015 and 9th February 2016. The maximum interval between any two meetings did not exceed 120 days. The details of the composition of the Board and its Committees and of the Meetings held and attendance of the Directors at such Meetings are provided in the Corporate Governance Report. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to provisions under section 134(5) of the Companies Act, 2013, your Directors hereby confirm: (i) that in the preparation of the annual accounts for the financial year ended 31st March, 2016, the applicable accounting standards read with requirements set out under Schedule III of the Companies Act, 2013 have been followed and there are no material departures from the same; (ii) that they have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the loss for the year under consideration; (iii) that they 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; (iv) that they have prepared the annual accounts of the Company for the financial year ended 31st March, 2016 on a going concern basis; (v) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and (vi) that they had devised proper system to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. DECLARATION GIVEN BY INDEPENDENT DIRECTORS The Independent Directors have given declaration that they meet the criteria specified under section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations). POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION The Company's Policy on Directors' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under sub-section (3) of section 178, is attached as Annexure-2 to this Report. AUDITORS AND AUDITORS' REPORT Statutory Auditors M/s Haribhakti & Co.LLP., Chartered Accountants, (Firm Registration No.103523W) were appointed as Statutory Auditors of the Company to hold office till the conclusion of the 57th Annual General Meeting to be held in the calendar year 2019. In terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of the auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the appointment of M/s Haribhakti & Co.LLP., Chartered Accountants, as Statutory Auditors of the Company, is placed for ratification by the shareholders. There are no qualifications, reservations or adverse remarks or disclaimers made in their audit report. Secretarial Auditor There are no qualifications, reservations or adverse remarks or disclaimers made in their secretarial audit report. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 The details of loans and investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements forming part of Annual Report. The Company has not provided any guarantees during the Financial Year. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES There are no contracts/arrangements/transactions which are not at arm's length basis and there are no material contracts/ arrangements/transactions which are at arm's length basis. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY There are no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year to which the financial statements relate and the date of the report. ENERGY CONSERVATION, ETC. The information required under section 134 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 are set out in Annexure-3 hereto forming part of this report. RISK MANAGEMENT POLICY The Company has a Risk Management framework in place which is designed to identify, assess and monitor various risks related to key business and strategic objectives and lead to the formulation of a mitigation plan. All identified risks are categorised based on a matrix of likelihood of occurrence and impact thereof and a mitigation plan is worked out to the extent possible. Major risks in particular are monitored regularly at meetings of the Executive Risk Committee and the Board of Directors of the Company is kept abreast of such issues. CORPORATE SOCIAL RESPONSIBILITY (CSR) The details about the development of CSR Policy and initiatives taken by the Company on Corporate Social Responsibility during the year as per Companies (Corporate Social Responsibility Policy) Rules, 2014 have been appended as Annexure-4 to this Report. ANNUAL EVALUATION BY THE BOARD The evaluation framework for assessing the performance of Directors comprises of the following key areas: i) Attendance of Board Meetings and Board Committee Meetings ii) Quality of contribution to Board deliberations iii) Strategic perspectives or inputs regarding future growth of Company and its performance iv) Providing perspectives and feedback going beyond information provided by the management v) Commitment to shareholder and other stakeholder interests The evaluation involves Self-Evaluation by the Board Member and subsequently assessment by the Board of Directors. A member of the Board will not participate in the discussion of his/ her evaluation. iii) the percentage increase in the median remuneration of employees in the financial year: 8.94 iv) the number of permanent employees on the rolls of Company: 2,420 v) the explanation on the relationship between average increase in remuneration and Company performance (PBT): Average increase in remuneration (in %): 8.89 Increase in Company's performance (in %): (354.41) vi) comparison of the remuneration of the Key Managerial Personnel against the performance of the Company (PBT): Average increase in remuneration (in %): (0.18) Increase in Company's performance (in %): (354.41) vii) variations in the market capitalisation of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase or decrease in the market quotations of the shares of the Company in comparison to the rate at which the Company came out with the last public offer: Market capitalisation as on 31.03.2016: Rs. 287.83 crore Market capitalisation as on 31.03.2015: Rs. 397.71 crore Decrease in market capitalisation: Rs. 109.88 crore Price earning ratio as at 31.03.2016: (5.26) Price earning ratio as at 31.03.2015: 33.21 viii) average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration: Average percentile increase in the salaries of employees other than the managerial personnel: 49th Percentile increase in the managerial remuneration : 67th x) the key parameters for any variable component of remuneration availed by the Directors: Dr B Panda, Executive Chairman, Mr Baijayant Panda, Vice Chairman and Mr Subhrakant Panda, Managing Director are paid commission subject to a maximum of 1.5% each per annum of the net profits of the Company computed in accordance with section 198 of the Companies Act, 2013. Mr J K Misra, Director(Corporate) & COO and Mr C R Ray, Whole-time Director are paid performance pay subject to a maximum of 100% and 50% of basic salary per annum respectively. All Non-Executive Independent Directors are paid commission not exceeding 0.5% per annum of the net profits of the Company subject to a maximum of Rs. 50,00,000/-distributed equally. xi) the ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year: None. xii) The Nomination and Remuneration Committee of the Company has affirmed that the remuneration is as per the Nomination and Remuneration Policy of the Company. PARTICULARS OF EMPLOYEES The information on employees who were in receipt of remuneration of not less than Rs. 60 lakh during the financial year or Rs. 5 lakh per month during any part of the said year as required under Section 197 (12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in the Annexure forming part of the Report. In terms of proviso to Section 136(1) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. The said statement is also open for inspection at the Registered Office of the Company. Any member interested in obtaining a copy of the same may write to the Company Secretary. PUBLIC DEPOSITS The Company has not accepted any public deposits during the year under review. WHISTLE BLOWER POLICY The Company has formulated a Whistle Blower Policy for Directors and employees to report their genuine concerns, details of which have been given in the Corporate Governance Report annexed to this Report. DIRECTORS AND KEY MANAGERIAL PERSONNEL Mr C R Ray and Mr Baijayant Panda, Directors retire by rotation at the forthcoming Annual General Meeting of the Company and are eligible for re-appointment. Mr Stefan Georg Amrein and Mr Bijoy Kumar Das were appointed as Additional Directors in the capacity of Director and Independent Director with effect from 7th January, 2016 and 9th February, 2016 respectively and hold office upto the forthcoming Annual General Meeting of the Company. The Company has received notice from the member(s) pursuant to Section 160 of the Companies Act, 2013 stating intent to propose Mr Amrein as Director and Mr Das as Independent Director under section 149 of the Companies Act, 2013. In terms of Section 149 and other applicable provisions of Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulation 2015, Major R N Misra (Retd) and Mr N R Mohanty are proposed to be re-appointed as NonExecutive Independent Directors for a period of five years from the conclusion of the ensuing Annual General Meeting. Further, Mr D Bandyopadhyay is proposed to be re-appointed as NonExecutive Independent Director for a period of two years from the conclusion of the ensuing Annual General Meeting. The Company has received notice from the member(s) pursuant to Section 160 of the Companies Act, 2013 signifying intention to propose them for the office of Independent Director under section 149 of the Companies Act, 2013. Dr B Panda, Mr Baijayant Panda, Mr Subhrakant Panda and Mr Jayant Kumar Misra were re-appointed as Executive Chairman, Vice Chairman, Managing Director and Director (Corporate) & COO respectively for a further period of three years from 28th October, 2015. Further, Mr C R Ray was re-appointed as Whole-time Director for a further period of 3 years with effect from 31st January, 2016. Their terms of appointment were approved by the members on 10th December, 2015 through e-voting/postal ballot. Mr Alexius Markus Amrein stepped down as Director of the Company with effect from 7th January, 2016 due to personal reasons. The Board places on record its sincere appreciation of the valuable service, guidance and advice rendered by him from time to time in his capacity as Director of the Company. The term of Dr S Acharya, Independent Director is expiring on the conclusion of the ensuing Annual General Meeting and he is not seeking re-appointment. The Board places on record its sincere appreciation of the valuable service, guidance and advice rendered by him from time to time in his capacity as Independent Director of the Company. Resolutions seeking approval of the members have been incorporated in the notice of the forthcoming Annual General Meeting. Brief resume/details relating to Directors who are to be appointed/re-appointed are furnished in the Explanatory Statement to the Notice of the ensuing Annual General Meeting as required under the Code of Corporate Governance. SECRETARIAL AUDIT REPORT The Company has appointed M/s Sunita Mohanty & Associates, Company Secretaries to conduct secretarial audit and their Report on Company's Secretarial Audit is appended to this Report as Annexure-5. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY The Company has a comprehensive system of internal controls that enables efficient operations, optimal resource utilisation and compliance with all applicable laws and regulations. Each of these internal controls strengthens the Company and protects loss or unauthorised use of assets by providing adequate checks and balances. The Company authorises, records and reports all transactions. An independent firm of Chartered Accountants serves as the Internal Auditor to execute the internal audit functions. The Management and Audit Committee of the Board observes and then recommends corrective measures following such audits to improve business operations. CORPORATE GOVERNANCE Pursuant to SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, a report on the Corporate Governance, Management Discussion and Analysis, Certificate from Practicing Company Secretary regarding compliance of conditions of Corporate Governance have been made a part of the Annual Report. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS There are no significant and material orders passed by the Regulators/Courts that would impact the going concern status of the Company and its future operations. SUBSIDIARY/JOINT VENTURE COMPANIES A report on the performance and financial position of each of the subsidiaries, associates and joint venture companies included in the consolidated financial statement is attached as Annexure-6. INDUSTRIAL RELATIONS During the year under review, industrial relations at the Company's manufacturing/ operational complexes located at different sites remained cordial except Therubali where a lock out was declared from 21st November 2015 to 23rd February 2016 consequent to illegal action by workers in not reporting for duty. ACKNOWLEDGEMENT Your Directors would like to place on record their sincere appreciation of the exemplary service rendered by the entire workforce during the year under review. Further, your Directors would also like to appreciate the support received from Term Lenders and Working Capital Bankers. Last but certainly by no means least, your Directors would like to thank shareholders, customers, Government and the public at large for their continued support and confidence For and on behalf of the Board (Subhrakant Panda) Managing Director (Jayant Kumar Misra) Director(Corporate) & COO Date : 17th May, 2016 Place: Bhubaneswar |