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THE MEMBERS OF ISMT LIMITED
The Directors have pleasure in presenting the Annual Report and Audited Accounts of the Company for the year ended March 31, 2015.
Your Directors are unable to recommend a dividend for the year ended on March 31, 2015, in view of the loss.
This has been one of the most difficult years with all the three plants viz. Baramati, Jejuri and Ahmednagar recording lowest production and sales in last 10 years. The continuing imports resulted in tube segment operating at 25% capacity.
Both domestic and export markets continued to be extremely challenging – on account of large volume of imports at low prices and sharp drop in oil prices in the international market.
The Joint Lenders' Forum (JLF) of the Company bankers had mandated SBI Capital Markets Limited to make a financial plan and had also commissioned Techno Economic Viability Study by Dun and Bradstreet Information Services India Pvt. Ltd. The JLF then approved a Corrective Action Plan for fresh Corporate Term Loans of Rs. 450 Crore by way of rectification.
Term Loans of Rs. 405 Crore were accordingly disbursed during the year. Due to increased borrowings and higher interest rates, the finance cost shot up by more than 23%.
The Corrective Action Plan (CAP), however, failed to achieve the desired result primarily due to aggressive Chinese imports in the absence of a deterrent Import Duty. The Company is now discussing with Bankers the various options including Restructuring.
CAPTIVE POWER PLANT
Captive Power Plant (CPP) had envisaged that the Coal Linkage will be available and the Banking of Power will be allowed, both of which are still not in place resulting in large losses. The Company has now appealed to APTEL against the MERC order denying Banking to the Company.
The Company has yet to receive an amount of Rs. 40.83 Crore from MSEDCL towards excess energy charges paid on account of non availability of Banking facility.
The Safeguard Duty of 20% was finally imposed after about two years in August, 2014 which will soon come down to 10% in August 2015. The domestic industry has since filed an application for levy of Anti Dumping Duty against imports from China.
It is critical for survival of the industry that steep and long term Anti Dumping Duty is imposed at the earliest and that the Provisional Duty is urgently levied immediately after initiation of Anti Dumping Proceedings.
SALE OF NON CORE ASSETS
Reduction of debt through sale of non core assets is one of the highest priority of the Company.
In accordance with the provisions of the Companies Act, 2013 ('Act') and the Articles of Association of the Company, Mr. O. P. Kakkar retires by rotation and being eligible, offers himself, for re–appointment.
IDBI Bank Limited had appointed Mr. Ajit Ingle as its Nominee Director in place of Mr. Suresh Khatanhar on the Board of the Company w.e.f September 6, 2014. The Board placed on record its sincere appreciation and gratitude for his guidance and contribution to the Company.
Mr. Salil Taneja whose term as Whole–time Director was upto November 30, 2014 has resigned as Director of the Company w.e.f. December 1, 2014. The Board placed on record its appreciation and gratitude for his guidance and contribution to the Company.
Mr. B. R. Taneja was appointed as the Managing Director of the Company w.e.f. December 1, 2014 for a period of 2 (two) years with approval of the Members of the Company by way of Postal Ballot.
Mr. Rajiv Goel has been re–appointed as a Whole–time Director of the Company w.e.f. December 1, 2014 for a period of 1 (one) year subject to approval of the Members of the Company at its ensuing Annual General Meeting (AGM).
The Independent Directors of the Company had given a declaration pursuant to Section 149 (7) of the Act.
The Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors which includes criteria for performance evaluation of the non–executive directors and executive directors like : Knowledge and Skills, Familiarity with the Company and its business, Monitoring Company's Corporate Governance Practices, Development of strategies and risk management, Participation and attendance in meetings, Professional conduct and Sharing of information etc.
The details of familiarisation programme of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company at www.ismt.com
Pursuant to Section 139 of the Companies Act, 2013 and the Rules framed thereunder, the members of the Company at the 16th AGM held on September 26, 2014, approved the appointment of M/s. P. G. Bhagwat and J. K. Shah & Co., as Joint Statutory Auditors of the Company to hold office for a period of 3 (three) consecutive years till the conclusion of 19th AGM, subject to ratification of their appointment at every AGM.
In respect of the Qualified Opinion and Emphasis of Matter by the Auditors on the Standalone and Consolidated Financial Statement, it has been explained in the Notes forming part of said Financial Statements which are self–explanatory and do not call for further comments.
Pursuant to Section 148 of Companies Act, 2013 read with The Companies (Audit and Auditors) Rules, 2014, your Directors had, on recommendation of the Audit Committee, approved the appointment and remuneration of following Cost Auditors for Financial Year 2014–15:
(i) M/s. Dhananjay V. Joshi & Associates and
(ii) M/s Parkhi Limaye & Co.
The payment of remuneration for FY 2014–15 to aforesaid Cost Auditors is subject to ratification by the Members at the ensuing Annual General Meeting.
The Cost Audit Report for the financial year 2013–14 was due on September 30, 2014 and was filed with the Ministry of Corporate Affairs on September 26, 2014.
As on date of this report, the Company continued to have eleven direct and indirect subsidiary companies. A report in Form AOC–1 on the performance and financial position of each of the subsidiary companies as per the Companies Act, 2013 included in the consolidated financial statement is provided in the Financial Statements forming part of this Annual Report.
The Company has framed a Policy for determining Material Subsidiaries which is available on its website at www.ismt.com
The Company has not accepted any deposits from the public.
MANAGEMENT DISCUSSION & ANALYSIS AND
CORPORATE GOVERNANCE REPORT
Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on Management Discussion Analysis and Corporate Governance Report together with a Certificate from the Company's Auditors on compliance, is forming part of this Report.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134 (3) (c) read with Section 134 (5) of the Companies Act, 2013, your Directors make the following statement:
i) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates, that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year March 31, 2015 and of the Loss of the Company for that period;
iii) That the 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 fraud and other irregularities;
iv) That the Directors have prepared the annual accounts on a going concern basis;
v) That 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;
vi) That 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.
EXTRACT OF ANNUAL RETURN
The extract of the Annual Return in Form MGT–9 is forming part of this Report as Annexure A.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO
The particulars as required under Section 134(3)(m) of the Companies Act, 2013 is forming part of this report as Annexure B.
NOMINATION AND REMUNERATION POLICY
The Nomination and Remuneration Policy of the Company on director's appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters is available on the website of the Company at www.ismt.com
The criteria for performance evaluation as laid down by Nomination and Remuneration Committee has been defined in the Nomination and Remuneration Policy.
Detail pertaining to remuneration of Directors and employees required under Section 197(12) of the Companies Act, 2013 read with Rules framed thereunder are forming part of this Report as Annexure C.
SECRETARIAL AUDIT REPORT
Pursuant to Section 204 of the Act, the Board has appointed M/s. MRM Associates, Company Secretaries in Practice as Secretarial Auditors to undertake the Secretarial Audit of the Company for the financial year ended March 31, 2015. The Report of the Secretarial Auditors is forming part of this Report as Annexure D. The Company is in the process of appointing an Independent Woman Director to address both the observations of the Secretarial Audit Report.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Particulars of Loans, Guarantees and Investments covered under Section 186 of the Act forming part of the Notes to the Financial Statements is forming part of this Report.
The Management of the Company has been entrusted with the responsibility to assist the Board in (a) Overseeing and approving the Company's risk management framework; and (b) Overseeing that all the risks that the organization faces such as strategic, financial, credit, liquidity, security, property, IT, regulatory and other risks have been identified and assessed and there is an adequate risk management policy in place capable of addressing those risks.
INTERNAL FINANCIAL CONTROLS
The Company has in place adequate internal financial controls with reference to financial statements.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Pursuant to Section 135 of the Companies Act, 2013 a CSR Committee constituted by the Board of Directors consists of three directors including one independent director.
AUDIT COMMITTEE AND VIGIL MECHANISM
Pursuant to Section 177 of the Companies Act, 2013 an Audit Committee constituted by the Board of Directors consists of three directors with independent director forming a majority.
The Whistle Blower Policy/ Vigil Mechanism of the Company was established by the Board of Directors and is available on the website of the Company at www.ismt.com
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
During the year, the Company had not entered into any contract/ arrangement/ transaction with related parties which were either not at an arm's length or not in the ordinary course of business and further could be considered material in accordance with the policy of the Company on materiality of related party transactions.
Hence, there is no information to be provided in Form AOC–2 while the particulars of all Related Party Transactions in terms of AS–18 are forming part of the financial statements.
The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company's website at www.ismt.com
1. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future.
2. Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Your Directors take this opportunity to express its sincere gratitude for the continued support and co–operation received by the Company from the Government of India, Government of Maharashtra, Reserve Bank of India, Stock Exchanges, other regulatory agencies and the shareholders.The Board would also like to acknowledge the continued support of its bankers, vendors, clients and investors. The Directors also wish to place on record their appreciation of all the employees for their dedication and teamwork.
For and on behalf of the Board of Directors
S C Gupta
Date : May 30, 2015
Place : Pune