Dear Members,
The Board of Directors of the Company are pleased to present the Company's 52nd annual report along with the audited financial statements (standalone and consolidated) for the financial year ended March 31, 2024.
FINANCIAL SUMMARY
A summary of the Company's standalone and consolidated financial performance for the year ended March 31, 2024, is given below:
Rs in Lakhs
A sustained high operational performance by the Indian power plants and higher external coal sales propelled the Company to register a record consolidated income of Rs 3,95,503 Lakhs overcoming the sector weakness in the ferro alloy segment and despite lower other income relative to the previous year. The Consolidated EBITDA margin of 46.9% for FY 24 (50.1% for FY 23) indicates the degree of resilience that consolidated operations have attained through diversification. The Consolidated Profit after Tax at Rs 1,25,608 Lakhs, with a growth of 2.8%, promises sustained profitability.
The Consolidated other income includes delayed payment surcharge on power dues and proceeds of insurance settlement pertaining to previous years.
The standalone total income was Rs 1,54,757 lakhs, a tad lower by 6.7% y-o-y owing to subdued ferro alloy business and accentuated by unforeseen accidental outage in Odisha ferro alloy works in the second half.
The Standalone EBITDA and profit after tax have stood at Rs 33,251 Lakhs and Rs 21,901 Lakhs, respectively, for the year with a decline by 24.0% and 32.1% respectively on Y-o-Y basis due to the reasons stated above.
A noteworthy achievement of the financial year is the Company becoming long-term debt free at both Consolidated and Standalone levels. MCL has repaid long-term debt of US$ 314.4 Mn. during the year under review paving way for distribution of future free cashflows to its sponsors, from FY25 onwards.
REVIEW OF OPERATIONS
Metals:
Telangana-operations: Production of Silico Manganese Alloys stood at 85,976 MT during the year, a decline of 14.5% y-o-y owing to reduced demand in export market and significant drop in realisations. The sale quantity was 91,343 MT, an increase by 0.4% y-o-y with higher sales made in the fourth quarter.
To overcome the pressure on margins in Manganese Alloys, the unit switched to Ferro Silicon production in one furnace from Q4 which has since obtained traction with export orders flowing in.
Odisha-operations: The unit had faced production loss due to a breakdown of the raw material handling system in August 2023 and the production of Manganese Alloys was confined to 18,987 MT during the year. The production has been resumed in January 2024 in both furnaces and has since been stabilized.
The unit has commenced the usage of manganese ore bricks from Fines in the recently commissioned brick plant to afford it with savings in blend cost of manganese ore being a major cost component.
Energy:
Telangana-operations: Due to the high cost of generation arising from a very high coal cost from Singareni Collieries, the 114 MW captive power plant operated only one unit of 50 MW / 32 MW for the majority of the year. Merchant power sales were made during 1st Quarter when the tariffs were remunerative. Overall, the generation and external sales were lower during the year owing to high coal costs.
The unit is addressing the issue of low productivity and higher cost of power generation by proposing to bifurcate the power station into a 50 MW Captive Unit and an IPP of 64 MW (2 X 32 MW) based on alternative sources of coal. The proposal requires certain modifications in the existing power network and requires clearances from the Grid which are being complied with.
Odisha-operations: The 150 MW power station comprising 90 MW CPP and 60 MW IPP delivered an impressive performance with higher availability and PLF of 76.5% on account of sustained decent power realisations in bilateral contracts and on power exchanges with coal costs from Mahanadi Coal fields trending normally. Captive consumption in FAP - Telangana Operations greatly benefited the CPP (90 MW), by enabling higher captive consumption, and thereby a higher quantum of power for merchant sales. The benefit of utilization of captive power by FAP(T) was more pronounced when FAP(O) was shut on account of accident in raw material handling system for about four months during the year. The profitable performance of this unit greatly contributed to the standalone profitability in the backdrop of subdued Ferro Alloy business and unremunerative cost structure in Power - Telangana Operations.
Nava Bharat Energy India Limited - 150 MW power unit: The performance of 150 MW plant during the year marks a turnaround event, buoyed by sector dynamics which boosted the consolidated profitability of the Company. The power plant operated throughout the year with the availability of bilateral contracts and remunerative tariffs over the power exchanges. Coal availability and sources have increased with regular auctions under Shakti B-III scheme which helped the unit reduce the cost of power generation.
Singareni Collieries started coal auctions under the Shakti B-III scheme in May 2024. These allotments are expected to mitigate the logistics management thereby increasing competitiveness to sell power at lower tariffs.
Maamba Collieries Limited - 300 MW power plant: The 300 MW power plant sustained decent operations with declared plant availability of 89.7% and PLF of 89.9% during the year. MCL leveraged upon the steady cash flows against the monthly power sales and realisations against the Arbitral Award to fully prepay the outstanding long term debt to be debt free at the end of FY 2024. This marked a unique feature in projects of this size in the African region. In this backdrop, MCL and its Sponsors remain confident to address the long overdue distributions from FY 2025 onwards.
Against the Arbitration award of US$ 518.1 Million, MCL received US$ 274.0 Million as of March 2024 thus reducing the receivables to US$ 244.1 Million. MCL expects to receive the balance as per the agreed plan with ZESCO.
Mining:
The revenue and profitability of the mining division received a fillip with the increase in external coal sales of MCL by 35.3% y-o-y owing to the increased marketing efforts and the marginal discounts offered to contain the competition from the newly opened coal mines nearby. This division continues to contribute to the free cashflows of MCL.
Agribusiness - Avocado Plantation:
The avocado plantation initially undertaken by Kawambwa Sugar Ltd. in Zambia was transferred to the newly incorporated Nava Avocado Ltd., as the avocado business requires a different branding and marketing strategy. The plantation is being developed in four divisions, with 100,000 trees planted in each division. As of March 2024, over
75,000 avocado plants have been planted, and more than 20,000 plants are available in the nursery for planting in Division A. Orders have been placed for 100,000 trees to be planted by March 2025 as part of Division B.
Nava's avocado farm will be one of the world's largest and most technologically advanced operations, adhering to Global Good Agricultural Practice (GAP) standards. The farm aims to bring significant positive societal impact to the region while fostering employment opportunities and skill development for the local community.
The infrastructure commitments of road connectivity and power supply to the farm are being addressed by the Government of Zambia and the Company jointly. The transmission line of 9 kms for power connection is in final stages of completion and the road works have started in March 2024 after the receding of rains.
Manganese Ore mine in Cote d'Ivoire:
The Company is looking to achieve backward integration by acquiring its own manganese ore mine for Ferro Alloys operations. Exploration studies of the manganese ore mine in Cote d'Ivoire, which was allotted a year ago, have confirmed a limited presence of manganese in this mining area, making it not economically viable for commercial exploitation. The Company is now evaluating alternative mines for manganese ore exploration within Cote d'Ivoire and is concurrently conducting techno-commercial studies for setting up a ferro alloys plant in Cote d'Ivoire.
Magnetite Ore mine in Zambia:
MCL holds a Small Scale Mining License for magnetite ore in the Central Province of Zambia. A recent magnetic survey of the licensed area has indicated the presence of high-quality magnetite ore suitable for wide usage. The survey also indicated continuity of ore beyond the license area. Accordingly MCL has obtained surface rights and mining license for the extended area of about 323 Ha. and MCL will be conducting exploration studies in the license area over the year to ascertain the mineable resources and extractable reserves for commercial exploitation.
Sugar:
The plant and machinery of the discontinued sugar works were completely sold except for few items with nominal value which is being sold as scrap. The final sale proceeds of the plant and machinery was much higher compared to the overall carrying value in the books. The sugar division spans an area of 100 acres, and its monetization is being pursued earnestly by the Company.
Others:
In respect of healthcare enabled services in Singapore and Malaysia, the strategy remains to pursue trading of niche lifestyle products with the distribution of Iron product ceasing as at the end of FY 2024. With a diversified product portfolio, the business presence is expected to spur enterprise valuation.
DIVIDEND:
Consistent with the Company's policy of dividend payout, your Board of directors are pleased to recommend a dividend on the equity shares @ 200% (Rs 4.00 per share of Rs 2/- each) for the FY 2023-24, after having considered ongoing and imminent commitments, subject to shareholders' approval at the ensuing annual general meeting (AGM). The aggregate dividend pay-out amounts to Rs 5804.03 Lakhs. This is comparable to the payout ratio of the last financial year.
RESERVES:
No amounts were proposed to be transferred to Reserves for the period under review.
FIXED DEPOSITS:
The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of balance sheet.
LISTING OF EQUITY SHARES:
The securities of the Company are listed at National Stock Exchange of India Limited (NSE) and BSE Limited (BSE). Further, the Company has no equity shares carrying differential rights.
SUBSIDIARY COMPANIES:
The Company has 16 direct and stepdown subsidiaries as on March 31, 2024, including one step-down subsidiary incorporated during the year.
Consolidated financial statements have been prepared by the Company in accordance with the requirements of Ind AS 27 issued by Institute of Chartered Accountants of India (ICAI) and as per the provisions of the Companies Act, 2013 ("the Act").
Pursuant to the provisions of Section 136 of the Act, the standalone and consolidated financial statements of the company along with separate audited financial statements of subsidiaries are placed by the Company on its website at www.navalimited.com and a report on the performance and financial position of each of the subsidiaries included in the consolidated financial statements pursuant to Rule 8(1) of Companies (Accounts) Rules, 2014, is enclosed as Annexure-1 to this report.
Statement containing the salient features of the financial statements of subsidiaries for the year ended March 31, 2024 in Form AOC-1 (Pursuant to first proviso to sub-section (3) of section 129 of the Act read with Rule 5 of Companies (Accounts) Rules, 2014) is enclosed as Annexure-2 to this report.
The details of the major subsidiaries are given below:
FOREIGN SUBSIDIARIES
NAVA BHARAT (SINGAPORE) PTE. LIMITED (NBS)
NBS is the Company's wholly owned subsidiary, serving as the investment arm and holding company for overseas strategic investments in coal mining and energy generation. Its principal investment is in Maamba Collieries Limited, Zambia. NBS will pursue the investment for setting up of Ferro Alloys plant in Cote d'Ivoire upon establishing commercial viability of captive manganese ore.
MAAMBA COLLIERIES LIMITED (MCL)
MCL is a step- down subsidiary in Zambia with NBS holding 65% of the equity stake while 35% is held by ZCCM Investments Holdings PLC., (ZCCM-IH) a Government of Zambia undertaking. MCL pursues businesses of coal and energy sale in Zambia and holds strategic financial and operational position in the consolidated financials of the Company. The group exposure to MCL is about Rs 217,407 Lakhs (US$ 261 Million) as at March 31, 2024 (represented by the Equity Share capital, Shareholder loans including interest accrued thereon and other receivables) which is expected to come down from FY2025 with the distribution of free cashflows to the sponsors.
Energy
The 300 MW power plant operated with declared plant availability of 89.7% during the year compared to 91.9% for FY 2023 and generated power of 2369 MUs being 12% of Zambia's electricity consumption.
Coal mining
The coal mining division has reported growth in revenue and profitability during the year with the improved sale quantities at 487,776 MT, up by 35.3% on y-o-y basis and lower finance costs.
The Zambian coal realizations, however, cannot be compared to high international index prices as Zambia is a land locked country with much higher road transport charges and existence of a geographical limitation as opposed to high value minerals like copper.
NAVA ENERGY PTE. LTD., SINGAPORE (NEPL) & NAVA ENERGY ZAMBIA LTD., ZAMBIA (NEZL):
NEPL, the wholly owned subsidiary (WOS) and NEZL, a step-down subsidiary of the Company continue to render quality O&M services to MCL for its 300 MW power plant in Zambia. The O&M operations leverage upon the technical support extended by the Company and its Indian subsidiaries.
Qualified and experienced personnel and subcontractors have been engaged in Zambia to carry out onsite works at MCL's power plant. Both companies were instrumental in MCL's power plant achieving high operational performance during the year.
NEPL hopes to expand the customer profile in this service offering as well as related technical services, if any, and keeps this as a thrust area for growth. NEPL's branch office in Dubai is providing support services in organising the expert manpower and spares etc required as part of O&M operations.
During the year, NEPL and NEZL have distributed dividend of US$ 1.5 Million and US$ 1.3 Million to their shareholders respectively.
NAVA AGRO PTE. LTD., SINGAPORE (NAPL)
NAPL is a wholly owned subsidiary of the Company and is intended to be the intermediate holding company in Singapore to pursue investments in commercial agriculture and related businesses, initially in Zambia through Kawambwa Sugar Limited.
KAWAMBWA SUGAR LTD., ZAMBIA (KSL)
KSL is a Zambian step-down subsidiary which has been allocated 10,000 ha of land by the Government of Zambia to pursue commercial Agri-ventures including processing thereof. NAPL holds 100% shareholding of KSL.
During the year KSL has transferred Avocado plantation business to newly incorporated sister subsidiary Nava Avocado Limited as Avocado business require a different branding and marketing strategy. Out of 10,000 ha of land, 2092 Ha of land is sub-leased to Nava Avocado Limited for developing the Avocado Plantation.
KSL farm has seen positive strides from the Government side in respect of approach road, power connectivity and other infrastructure critically required for the project. Road infrastructure works are on-going and power connectivity to the site is in final leg of completion under the reimbursement scheme agreed with the Government.
The project of fuel-agnostic Ethanol for blending with automotive fuel is under the active consideration of the concerned authorities.
NAVA AVOCADO LIMITED (NAL)
NAL was incorporated during the year in Zambia as a step-down subsidiary under NAPL, to take over the Avocado Plantation business from KSL and accordingly the Avocado business is fully transferred during the year.
NAVA HOLDING PTE. LIMITED (NHPL)
NHPL was incorporated in Singapore, to hold investments in emerging areas of growth including the healthcare enabled services and other financial investments being undertaken by the Company.
HEALTHCARE ENABLED SERVICES - TIASH PTE. LIMITED (TPL), SINGAPORE
TPL is a step-down subsidiary of the Company with 65% equity stake by Nava Holding Pte. Ltd. balance 35% is held by another shareholder. The Company NHPL has acquired the balance stake in TIASH and plan to amalgamate it to remain investment focused through operating companies in Singapore and Malaysia.
NAVA RESOURCES CI, COTE D'IVOIRE (NRCI)
NRCI, a 100% subsidiary of the Company, undertook exploration studies of a manganese ore mine. The studies confirmed that the presence of manganese is limited in this mining concession and is not economically viable for commercial exploitation.
The Company is evaluating alternate mines for Manganese ore exploration within Cote d'Ivoire and have made applications in this regard.
INDIAN SUBSIDIARIES
NAVA BHARAT ENERGY INDIA LIMITED (NBEIL)
NBEIL is a step-down, but wholly owned, subsidiary of the Company operating a 150 MW independent power plant (IPP). The details on operational performance of NBEIL for FY 2023-24 have since been given under the head "Review of Operations" above.
NBEIL extends back end and supervisory service to NEZL, Zambia under a contractual arrangement.
NBEIL also runs an Ash Products Plant for part utilization of bed Ash and fly Ash to produce premium quality bricks and pavers. In addition, NBEIL has added the production of manganese bricks to the array of products under a conversion arrangement with the Company, being the holding company of NBEIL.
NAVA BHARAT PROJECTS LIMITED (NBPL)
NBPL is a wholly owned subsidiary of the Company and is engaged in extending technical and commercial services to the group companies. It plans to expand its foray of services outside the Group. Part of the service offering relates to back end critical technical and commercial support under the O&M contract that NEPL has with MCL.
NBPL holds 74% of equity share capital of NBEIL making it a step-down subsidiary to the Company. This shareholding is subject to an attachment by the Enforcement Directorate of the Government of India following a case instituted by the Central Bureau of Investigation (CBI) against Brahmani Thermal Power Private Limited (formerly Navabharat Power Private Limited (NPPL)), a subsidiary of Essar Power Limited and an erstwhile joint venture company as detailed below.
The ED based on the Charge sheet, inter alia, furnished by the CBI of the Government of India, instituted cases making allegations of misrepresentation pertaining to the allotment of coal block to NPPL and alleging that the shareholding of NBPL in NPPL and its sale to EPL being the subject matters of the case. The cases were instituted in 2013 against the erstwhile Directors of NPPL, one of them being the Managing Director of the Company and against NBPL. The Case has been going on before the Special Court at New Delhi. Based on the non-involvement of the Company's
MD in the alleged offences, it is felt that a positive outcome is anticipated in due course. Further, ED had attached the NBPL's shareholding in NBEIL and further sought transfer thereof which was contested by NBPL and a stay was obtained from the designated Tribunal.
BRAHMANI INFRATECH PRIVATE LIMITED (BIPL)
The case involving Mantri Group, concerning the erstwhile SEZ development project, went through protracted litigation through Arbitration at first and then was before the Hon'ble High Court of Telangana which directed that the matter be discharged by the Commercial Court at Hyderabad in accordance with past judgement of the Hon'ble Supreme Court. The matter is now awaiting disposal by the Commercial Court.
KINNERA POWER COMPANY PRIVATE LIMITED (KPCPL) (Associate Company)
The Company is holding 26% of equity shares in KPCPL, which is continued as specified by the National Highway Authority of India (NHAI). As per the professed intention and there being no economic interest, the Company plans to fully off-load its stake in KPCPL in favor of Meenakshi Infra Group as per the regulations. Accordingly, no economic interest from KPCPL is being factored in the consolidated financials nor the accounts of KPCPL appended to the Annual report of the Company.
OUTLOOK AND FUTURE PLANS
"Management Discussion and Analysis" contains a section on the Company's outlook and future plans and members may please refer the same on this.
CHANGE IN THE NATURE OF BUSINESS
There is no change in the nature of businesses of the Company during the year under review.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
In accordance with the provisions of Section 134 (3) (m) of the Act, the required information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo have been enclosed as Annexure-3 to this report.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The annual report on CSR activities, in terms of Section 135 of the Act, and the details about the policy developed and implemented by the Company on CSR initiatives taken during the year are enclosed as Annexure-4 to this report. A detailed policy on CSR is placed on the Company's website under the web link: https://www.navalimited.com/investors/policies/corporate-governance/
ANNUAL RETURN
In accordance with Section 92(3) of the Act and Rule 12(1) of the Companies (Management and Administration) Rules, 2014 (as amended), a copy of the Annual Return of the Company is placed on the website of the Company at https://www.navalimited.com/investors/financials/annual-reports/
CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
The particulars of contracts or arrangements with related parties referred to in sub-section (1) of Sec.188 in Form AOC-2 pursuant to clause (h) of sub-section (3) of Section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014 are enclosed as Annexure-5 to this report.
The policy on materiality of related party transactions and also on dealing with the related party transactions as approved by the Audit committee and the Board of directors is placed on the website of the Company at https://www.navalimited.com/investors/policies/corporate-governance/
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The details of loans given, guarantees provided and investments made, if any, during the Financial Year ended on March 31, 2024 are enclosed as Annexure-6 to this Report in compliance with the provisions of Section 186 of the Companies Act, 2013 read with the Companies (Meetings of the Board and its Powers) Rules, 2014. The particulars of aggregate loans, guarantees and investments under Section 186 of the Act are disclosed in Financial Statements, which may be read as part of this Report.
DISCLOSURES UNDER REGULATION 34(3) READ WITH SCHEDULE V OF THE LISTING REGULATIONS Related party disclosure:
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report for the year under review as stipulated under Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) 2015 ("the Listing Regulations") is enclosed as Annexure-7.
BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT
In accordance with Regulation 34(2)(f) of the Listing Regulations, the BRSR forms part of this Integrated Annual Report, which can be accessed on the Company's website under the web link: https://www.navalimited.com/investors/financials/annual-reports/
The report describes initiatives undertaken by the Company from an environmental, social and governance perspective. And the Company has reported according to the updated BRSR format and disclosed information on the BRSR Essential Indicators.
CORPORATE GOVERNANCE
A report on Corporate Governance as required under the Listing Regulations is provided as separate section to this Annual Report.
DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP):
The Board of directors of the Company has an optimum combination of Executive, Non-Executive and Independent Directors including one Women Independent Director.
Independent and Non-Executive Directors:
As prescribed under Listing Regulations and pursuant to Section 149(6) of the Act, the particulars of Non-Executive and Independent Directors (as on the date of signing this report) are as under: Mr. K. Durga Prasad, Mr. GP Kundargi, Dr. A. Indra Kumar and Mrs. B. Shanti Sree.
The Board, at its meeting held on February 02, 2024, and the members, through postal ballot by Special Resolution on March 18, 2024, re-appointed Dr. A. Indra Kumar as an Independent Director of the Company for the second term of 5 years w.e.f. February 07, 2024.
Mrs. B. Shanti Sree was appointed as an Independent Women Director of the Company for a period of five years, effective from October 30, 2019. Her term of office as an Independent Director will expire on October 30, 2024. Upon performance evaluation, the Nomination and Remuneration Committee considered and recommended to the Board the reappointment of Mrs. B. Shanti Sree as an Independent Director for another term of five years. She fulfils the conditions for appointment as an Independent Director as specified under the Companies Act, 2013, and Listing Regulations. The Board is of the opinion that she possesses high integrity, expertise, and experience (including proficiency). The resolution for the reappointment of Mrs. B. Shanti Sree as an Independent Women Director is proposed for consideration and approval of the members by way of a special resolution at the ensuing AGM.
Changes in Directors and KMP:
Mr. Baiasubramaniam Srikanth ceased to be Independent Director effective from June 16, 2023 upon completion of his term of two years. The Board placed on record its appreciation of the valuable services rendered by Mr. Balasubramaniam Srikanth as an Independent Director.
Whole-Time Directors:
The following are the whole-time directors of the Company. Mr. D. Ashok, Chairman, Mr. P. Trivikrama Prasad, Managing Director, Mr. Ashwin Devineni, Chief Executive Officer and Mr. G R K Prasad, Executive Director.
Further, Mr. D Ashok, Chairman was re-appointed by the members at the AGM held on August 27, 2021 for a period of three years with effect from August 14, 2021 and his term will end on August 13, 2024 as Executive Chairman. Mr. D. Ashok opted not to continue as Executive Chairman. Considering the need to leverage upon his rich experience and project management oversight in all the strategic initiatives that the Group is pursuing in energy, minerals, Commercial Agriculture and emerging businesses, the Nomination & Remuneration committee and the Board at their respective meetings considered the proposal to continue Mr. D Ashok, as Chairman in the capacity of non-executive director with effect from August 14, 2024 and he will also provide mentorship to the executive management on various strategic initiatives besides leading the Board and Governance processes of the Company. A special resolution for the appointment and payment of commission @ 1% per annum, of net profits of the Company in terms of Section 198 of the Companies Act, 2013 is proposed for consideration and approval of the members by way of a Special Resolution at the ensuing AGM.
Further, Mr. Ashwin Devineni, Whole Time Director and designated as CEO was re-appointed by the members at the AGM held on August 08, 2019 for a period of five years (from May 29, 2019 to May 28, 2024). The Nomination & Remuneration committee and the Board at their respective meetings considered and approved the proposal for re- appointment of Mr. Ashwin Devineni as Whole Time Director and designated as CEO without remuneration for a period of 5 years w.e.f. May 29, 2024, subject to approval of the members at the ensuing AGM. Mr. Ashwin Devineni draws remuneration from Nava Bharat (Singapore) Pte. Ltd., and he opted to continue the same.
Declarations of Independent Directors:
All the independent directors of the Company have given declaration that they meet the criteria of independence as provided in sub-section (6) of section 149 of the Act. The Company also received a declaration of compliance of sub- rule (1) and sub-rule (2) of the Rule 6 of the Companies (Appointment and Qualifications of Directors) Rules, 2014.
Directors retiring by rotation:
Pursuant to the provisions of the Companies Act, Mr. Ashwin Devineni retires at the ensuing AGM and being eligible, offers himself for re-appointment.
NUMBER OF MEETINGS OF THE BOARD
During the financial year under review, four meetings of the directors were held on May 24, 2023; August 04, 2023; November 09, 2023 and February 2, 2024 in compliance with provisions of the Companies Act, 2013 ('the Act'), the Listing Regulations and Secretarial Standards.
PERFORMANCE EVALUATION OF THE BOARD
Pursuant to the provisions of the Act and the Listing Regulations, the Board has carried out an annual performance evaluation of itself, the individual directors, and the mandatory committees of the Board. A structured set of criteria was adopted after considering the inputs received from the directors. This covered various aspects of the Board's functioning, such as the adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations, and governance. The evaluation of the Board members is conducted annually by the Board, the Nomination and Remuneration Committee, and the Independent Directors, with a specific focus on the performance and effective functioning of the Board and individual directors.
The Nomination and Remuneration Committee had specified criteria for performance evaluation of Directors, Committees and the Board as a whole and recommended the same to the Board for evaluation.
Performance indicators for evaluation of independent directors:
Independent directors have three key roles - governance, control and guidance. Some of the performance indicators based on which the independent directors are evaluated are:
• Ability to contribute towards the overall growth of the Company
• Ability to create a brand image for the Company and assist in resolving issues, if any, whenever possible
• Contribution to strategy and other areas impacting Company's performance.
And, in general, commitment to the fulfilment of a Director's obligations and fiduciary responsibilities.
The performance evaluation of each Independent or non-executive director is done by the Board annually based on criteria specified above and also the role played other than at meetings.
The evaluation process also considers the time spent by each of the Board members, core competencies, personal characteristics, accomplishment of specific responsibilities and expertise.
POLICY ON DIRECTORS' APPOINTMENT, REMUNERATION & OTHER DETAILS
Pursuant to the provisions of the Act and the Listing Regulations, the Nomination and Remuneration committee identifies persons who are qualified to become directors in accordance with the criteria laid down and recommend to the Board for their appointment and removal. The Company adopted a policy relating to the remuneration for Directors, key managerial personnel and other senior management personal. This Policy covers the remuneration and other terms of employment for the Company's executive team. The remuneration policy for members of the Board and for management, aims at improving the performance and enhancing the value of the Company by motivating and retaining them and to attract the right persons to the right jobs in the Company. The object of this Remuneration Policy is to make your Company a desirable workplace for competent employees and thereby secure competitiveness, future development and acceptable profitability. In order to achieve this, it is imperative that the Company is in a position to offer competitive remuneration in all its operational locations.
A detailed policy on remuneration of the Directors and Senior Management is placed on the Company's website under the web link: https://www.navalimited.com/investors/policies/corporate-governance/
POLICY FOR SELECTION OF DIRECTORS AND DETERMINING DIRECTORS' INDEPENDENCE
The Nomination and Remuneration committee (NRC) shall assess the independence of directors at the time of appointment, re-appointment and the Board shall assess the same annually based on the criteria provided by NRC. The Board shall re-assess determination of independence when any new interests or relationships are disclosed by a Director.
The criteria of independence are as prescribed in the Act and the listing regulations and the independent directors shall abide by the Code specified for them in Schedule IV to the Act.
THE CRITERIA FOR THE APPOINTMENT OF DIRECTORS, KMPs AND SENIOR MANAGEMENT
The Nomination and Remuneration Committee identifies persons who are qualified to become directors, KMP and who may be appointed in the senior management in accordance with the criteria laid down and recommend to the Board for their appointment and removal.
A person for appointment as director, KMP or in senior management should possess adequate qualifications, expertise and experience for the position considered for appointment. The committee decides whether qualification, expertise and experience possessed by a person are sufficient for the concerned position. The committee ascertains the credentials and integrity of the person for appointment as a director, KMP or senior management level and recommends to the Board his / her appointment.
The Committee, while identifying suitable persons for appointment to the Board, will consider candidates on merit against objective criteria and with due regard for the benefits of diversity on the Board.
COMMITTEES OF THE BOARD
Currently the Board has six committees: Audit, Nomination and Remuneration, Corporate Social Responsibility, Stakeholders' Relationship, Risk Management and Investment. The composition of the committees is in line with the applicable provisions of the Act, Rules and the Listing Regulations and are as detailed below.
A detailed note on the Board and its Committees is provided in the Corporate Governance Report.
PARTICULARS OF EMPLOYEES
The names and other particulars in accordance with the provisions of Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are enclosed as Annexure-8 to this Report.
Names of the top ten employees in terms of remuneration drawn and the name of every employee employed throughout the financial year and in receipt of remuneration of Rs 1.02 cores or more, or employed for part of the year and in receipt of Rs 8.50 Lakhs or more per month, under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, are enclosed as Annexure-9 to this Report.
EMPLOYEES' STOCK OPTION SCHEME
Members at the 51st AGM held on August 04, 2023 approved NAVA Employee Stock Option Scheme {Restricted Stock Units 2023} - "RSUs 2023" to the employees of the Company whether existing or future by enabling them to participate in the ownership of the Company. The maximum number of shares under the scheme shall not exceed 29.05 lakh equity shares. The detailed scheme is available at the Company's website https://www.navalimited.com/investors/policies/corporate-governance/ So far, no RSUs were granted to any employees of the Company.
DIRECTORS' RESPONSIBILITY STATEMENT
Directors confirm that:
(a) in the preparation of the annual accounts for the financial year ended March 31, 2024, the applicable accounting standards have been followed and there are no material departures;
(b) they 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 and of the profit of the Company for that period;
(c) they took proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) they prepared the annual accounts on a going concern basis;
(e) they laid down internal financial controls to be followed by the Company and that such internal financial controls were adequate and operating effectively; and
(f) they devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
STATUTORY AUDITORS & AUDITOR'S REPORT
M/s. Walker Chandiok & Co. LLP, Chartered Accountants (Firm Regn. no. 001076N / N500013) were appointed as statutory auditors of the Company for a period of 5 years (second term) by the members of the Company at their meeting held on August 10, 2022. i.e., till the conclusion of 55th AGM to be held in the calendar year 2027 at such remuneration as may be mutually agreed between the Board of directors of the Company and the statutory auditors from time to time.
The Auditors' Report on the standalone and consolidated financial statements of the Company for the financial year ended March 31, 2024 does not contain any reservation, qualification or adverse remarks and their report together with the notes to Financial Statements are self-explanatory and hence do not call for any further comments under Section 134 of the Act, except in respect of (a) the loans granted by the Company to Nava Bharat Energy India Limited (NBEIL) (step down wholly owned), the receipts of principal and interest were delayed as referred in the Annexure I (point iii (c) & (d)) to the Independent Auditor's Report to the standalone financial statements and (b) regarding having a feature of edit log in the accounting software used by the Company and its subsidiaries which are companies under the Act. The Board explained that the NBEIL had borrowed Rs 155.00 crore term loan in Sep 2018 from the Company which is to be repaid in 32 structured quarterly instalments. One loan instalment of Rs 639.40 lakh each due on 30 June 2023 and interest payments for the months of April to July 2023, October 2023, November 2023 and February 2024 were not paid for preserving cash to buy coal for the operations of the power plant. The delay in interest and loan instalment payments would not affect the operations, credit profile of NBEIL as the loan is from the ultimate holding Company which is supportive and not from a Bank/Financial Institution. Further, with effect from March 18, 2024, the management of the group has enabled the edit log in the accounting software used by the Company and its Subsidiaries in India.
FRAUD REPORTING
During the Financial Year under review, the Statutory Auditors have not reported any incident of fraud to the Board of Directors of the Company, pursuant to the provisions of Section 143(12) of the Companies Act, 2013.
COST AUDIT
The Board appointed M/s. Narasimha Murthy & Co., Cost Accountants, as Cost Auditors for conducting the audit of cost records of the Company for Steel (ferro alloys) and Electricity for the Financial Year 2023-24 on the recommendations of the Audit committee. The same was ratified by the Members at the 51st AGM held on August 04, 2023.
The Cost Audit reports for FY 2022-23 were filed with Ministry of Corporate Affairs on September 1, 2023. Further, the Board of directors based on the recommendations of the audit committee, appointed M/s. Narasimha Murthy & Co., Cost Accountants, as Cost Auditors for conducting the audit of cost records of the Company for Steel (ferro alloys) and Electricity for FY 2024-25, subject to ratification of members at the ensuing AGM.
INTERNAL AUDITORS FOR COSTING SYSTEMS AND COST ACCOUNTING RECORDS
M/s. Sagar & Associates, Internal Auditors (Costing) conducted internal audit of cost records for the Financial Year 2023-24. Further, the Board appointed M/s Sagar & Associates, as Internal Auditors to conduct the internal audit of cost records for the Financial Year 2024-25.
MAINTENANCE OF COST RECORDS
During the year under review, Section 148(1) of the Act is applicable to your Company and accordingly such accounts and records are made and maintained by the Company as specified.
SECRETARIAL AUDIT
During the year under review, the Company has complied with the provisions of Section 204 of the Act and Regulation 24A of the Listing Regulations. The Secretarial Audit Report for the financial year ended March 31, 2024 issued by M/s. P.S. Rao & Associates, Practicing Company Secretaries, Hyderabad is enclosed as Annexure - 10 to this Report and it does not contain any reservation, qualification or adverse remarks.
The Board has appointed M/s. P.S. Rao & Associates, Practicing Company Secretaries to conduct secretarial audit pursuant to the recommendations of the Audit committee for the FY 2024-25. Further, the Secretarial Audit report of Nava Bharat Energy India Limited (NBEIL), a material subsidiary of the Company, is also available on the Company's website at https://www.navalimited.com/investors/financials/annual-reports/
MATERIAL CHANGES AND COMMITMENTS
There have been no material changes and commitments in the business operations of the Company from the financial year ended March 31, 2024 to the date of the signing of the Directors' Report.
MATERIAL ORDERS PASSED BY THE REGULATORS
No significant and material orders were passed by the Regulators or courts or tribunals impacting the going concern status and the Company's operations in future, except as stated otherwise.
INSURANCE
All the properties of the Company including buildings, plant and machinery and stocks have been adequately insured.
ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The Company maintains all its records in SAP system and the workflow and approvals are routed through SAP.
The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company and its subsidiaries. Based on the report of internal audit function, the Units undertake corrective action in their respective areas and strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit committee of the Board periodically.
The Board of directors of the Company have adopted various policies like related party transactions policy, whistle blower policy, policy to determine material subsidiaries and such other procedures for ensuring orderly and efficient conduct of its business for safeguarding its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records, and timely preparation of reliable financial information.
TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND
During the year under review, pursuant to the provisions of Section 124 (5) of the Act (section 205A of the Companies Act 1956), an amount of Rs 20,97,435/- relating to FY 2015-16, which remained unclaimed for a period of 7 years was transferred to the Investor Education and Protection Fund by the Company in September 2023.
TRANSFER OF UNCLAIMED SHARES TO INVESTOR EDUCATION AND PROTECTION FUND AUTHORITY
During the year under review, all shares in respect of which dividend has not been paid or claimed for seven consecutive years or more (relevant shares) upto and including the financial year 2015-16 were transferred by the Company in the name of IEPF from time to time and the statement containing such details as prescribed is placed on the Company's website at https://www.navalimited.com/investors/policies/corporate-governance/
VIGIL MECHANISM
The Company established a Whistle Blower policy & Vigil Mechanism for directors and employees to report genuine concerns pursuant to Section 177 of the Act. The vigil mechanism provides adequate safeguards against victimisation of employees who use such mechanism and for direct access to the chairperson of the Audit Committee in appropriate or exceptional cases.
The policy lays down the mechanism for conducting inquiries into whistle blower complaints received by the Company. Employees who become aware of any alleged wrongful conduct are encouraged to make a disclosure to the Audit committee.
The details of such mechanism are communicated to all the directors and employees and it is also disclosed on the website of the Company https://www.navalimited.com/policies-code-of-conduct/
RISK MANAGEMENT POLICY
The Board formulated and implemented Risk Management Policy for the Company which identifies various elements of risks which in its opinion may threaten the existence of the Company and measures to contain and mitigate risks. The Company has adequate internal control systems and procedures to manage the risks. The Risk Management procedures are reviewed by the Audit Committee and the Board on periodical basis.
DIVIDEND DISTRIBUTION POLICY
The Dividend Distribution policy as stipulated under Regulation 43A of the Listing Regulations is applicable to your Company for FY 2023-24 and is placed on the website of the Company under the web link: https://www.navalimited.com/investors/policies/corporate-governance/
INDUSTRIAL SAFETY AND ENVIRONMENT
Utmost importance continues to be given to the safety of personnel and equipment in all the plants of the Company. The Company reviews thoroughly the various safety measures adopted and takes effective steps to avoid accidents. Safety drills are also conducted at regular intervals to train the employees for taking timely and appropriate action in case of accidents.
AWARDS
Your Company received the following awards during FY 2023-24:
• CII Star Performance Award for Energy Conservation among Energy Intensive Industries in the Eastern Region; and
• 52nd EEPC - All India Award for Outstanding Export Performance for the year 2019-20.
GREEN INITIATIVE
The Ministry of Corporate Affairs (MCA) has taken a green initiative in Corporate Governance by allowing paperless compliance by the Companies and permitted the service of Annual Reports and other documents to the shareholders through electronic mode subject to certain conditions and the Company continues to send Annual Reports and other communications in electronic mode to those members who have registered their email ids with their respective depositories.
Members may note that Annual Reports and other communications are also made available on the Company's website https://www.navalimited.com/investors/tinancials/annual-reports/ and websites of the Stock Exchanges i.e. BSE Limited and National Stock Exchange of India Limited.
INDUSTRIAL RELATIONS
Industrial relations have been cordial during the year under review and your directors appreciate the sincere and efficient services rendered by the employees of the Company at all levels towards successful working of the Company.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
Your Company has zero tolerance towards sexual harassment at the workplace and the details of sexual harassment complaints as per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder are as follows:
No of Complaints Received : Nil
No of Complaints disposed off : NA
During the year under review, the Company has complied with the provisions related to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
COMPLIANCE WITH SECRETARIAL STANDARDS
During the financial year under review, the Company has complied with all the secretarial standards issued by the Institute of Company Secretaries of India.
GENERAL
Your Directors state that no disclosure or reporting is required in respect of the following as the same were not applicable for the Company during the year under review:
(i) The details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 during the year along with their status at the end of the financial year. and
(ii) The details of difference between the amount of valuation done at the time of one time settlement and the valuation done while taking loan from Banks or Financial Institutions along with the reasons thereof.
ACKNOWLEDGEMENT
The Directors take this opportunity to express their appreciation and thank all customers, vendors, investors, bankers, Government of India and State Governments wherever we have operations for their assistance, patronage and co- operation. The Directors also wish to place on record their appreciation for the dedicated contribution made by all employees of the Company. Our consistent growth was made possible by their hard work, solidarity, cooperation, and support.