Your Directors submit the THIRTEENTH ANNUAL REPORT on the business and operations of the Company and the Audited Statements of Accounts for the year ended 31st March, 2016.
FINANCIAL RESULTS
OVERALL PERFORMANCE
Your Company’s performance during the financial year 2015-16 was badly affected due to the closure of the plant operations with effect from 30/05/2014 due to consensus lockout declared as per agreement reached with the workforce. This closure was necessitated due to adverse market conditions with subdue demand for Alloy and Stainless Steel resulting in lower utilization of capacity. The lay off is still continuing due to no change in the situation.
During the year under review, Company reported a total income of Rs188.96 Lakhs as against Rs 3043.87 Lakhs of the previous year. After making a provision of Rs 410.34 Lakhs towards interest and Rs 418.90 Lakhs towards depreciation, the loss for the current financial year amounts to Rs 1426.10 Lakhs as against the net loss of Rs 3093.18 Lakhs of the previous year. The net loss after exceptional items for the current financial year amounts to Rs 1426.10 Lakhs as against loss of Rs 1251.07 Lakhs reported in the previous year. There are no significant material orders passed by the Regulators/Courts which would impact the going concern status of the Company and its future operations. A detailed Management Discussion and Analysis Report forms part of this report is annexed as Annexure-1.
OUTLOOK FOR 2016-17
The lay off at Company’s plant is continuing and it is unviable to operate the plant under present business conditions. Our efforts for scouting for tie up with potential investors / strategic investors have not given any fruitful result. Hence the plant continues to remain under consensus lockout.
DIVIDEND
In the absence of profit, your directors are unable to declare any dividend for the year 2015-2016.
BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION
The accumulated losses of the Company for the financial year ended 31st March, 2014 exceeded its net worth, the Company has made reference to the Board for Industrial and Financial Reconstruction (BIFR) under section 15 of the Sick Industrial Companies (Special) Provisions Act, 1985. The reference has been registered vide Case No. 74/2014 by BIFR. There were three hearings, first hearing on 2nd July 2015, second hearing on 13th May 2016 and the third hearing on 20th July 2016. The proceedings are in progress.
PARTICULAR OF LOANS, GUARANTEES OR INVESTMENT
There are no loans, Guarantees and Investments made under the provisions of Section 186 of the Companies Act, 2013 during the year under review. Details of Loans, Guarantees and Investments as at the year end are given in the notes to the Financial Statements.
RELATED PARTY TRANSACTION
There are no contracts or arrangement with related parties referred to in Section 188 (1) by the Companies Act, 2013. The details of other transactions entered into with the related parties are given in Note 45 to the Financial Statement. The Policy on Related Party Transactions are approved by Board is uploaded on the Company’s Website.
DEPOSITS
The Company has not accepted deposit from the public falling within the ambit of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014.
CAPITAL STRUCTURE
Authorised Capital of the Company is Rs 60,00,00,000/- and there was no change in the authorised capital of the company during the year under review.
Paid up capital of the company is Rs 53,43,23,679/- comprising of 20,65,23,679 equity shares of Rs 1/- each and 32,78,000 5% Redeemable Cumulative Preference Shares of Rs 100/-each. During the year under review there was no change in the paid up capital of the company.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES:
In view of the continuing losses, the company is not in a position to make any expenditure under Corporate Social Responsibility as per the Provisions of Companies Act, 2013.
INDUSTRIAL RELATIONS
The Company has declared Consensus lock out as per the agreement reached with its work force effective from 30th May, 2014. Since then Company has separated 70 Officers and 317 Staff and Workers through Voluntary Separation Scheme. The number at employee as on 31st March, 2016 is 55.
EXTRACT OF ANNUAL RETURN
The extract of the Annual Return in Form MGT 9 is annexed herewith as Annexure- 2
NUMBER OF BOARD MEETINGS HELD
A calendar of Meetings is prepared and circulated in advance to the Directors. During the year Five Board Meetings and Five Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.
CORPORATE GOVERNANCE
The report on corporate governance as per the requirement of the listing agreement with stock exchange forms part of this report is annexed as Annexure-3. The Company has complied with all the requirements of corporate governance. The certificate from the Auditors of the Company confirming compliance to the conditions of the corporate governance requirements is also annexed.
DIRECTOR RESPONSIBILITY STATEMENT
The Directors‘ Responsibility Statement referred in Section 134(5) of Companies Act, 2013 shall State that
(a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
(b) 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 and of the loss of the company for that period;
(c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
(d) the directors have prepared the annual accounts on a going concern basis; and
(e) the directors, have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.
(f) the directors have devised proper systems to ensure compliance with the provisions of all applicable Laws and that such system were adequate and operating effectively.
INFORMATION ON REMUNERATION
Information as per the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(1), 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules , 2014 are annexed as Annexure-4 to this report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The manufacturing operations were suspended with effect from 30th May 2014 and hence, there is no matter to be reported under this para for the period under review – Refer Annexure-5 and Form-A.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations.
FINANCE
Company’s banks accounts have been classified as NPA by all banks in the previous financial year due to non-payment of interest. Bank of India has issued a SARFAESI Notice under Section 13(2) of the SARFAESI Act on 25th July 2015 and further took symbolic possession of the assets of the Company vide Public Notice dated 10th October 2015. Indian Overseas Bank has also issued a Notice under Section 13(2) of the SARFAESI Act on 9th October 2015. The Company has challenged the action of Bank of India in the Debt Recovery Tribunal, Nagpur on the ground that Bank of India lacks the requisite majority for initiation of action under Section 13(4) of the SARFAESI Act. The matter is under subjudice. Invent Assets Securitisation & Reconstruction Pvt. Ltd. (INVENT) has informed the Company that the following four Banks have assigned their debts in their favour and INVENT has executed the necessary assignment agreement.
Some unsecured creditors have also filed winding up petition in the Nagpur Bench of the Mumbai High Court against the Company. The Company has taken necessary steps to protect its interst.
AUDITORS
STATUTORY AUDITOR
M/s Salve & Company, Chartered Accountants hold office upto the conclusion of the ensuing 13th Annual General Meeting. Based on the recommendation of the Audit Committee, the Board of Directors of the Company have proposed the appointment of M/s Salve & Co., Chartered Accountants, as the Auditors of the Company from the conclusion of the forthcoming 13th Annual General Meeting till the conclusion of the 14th Annual General Meeting (subject to ratification by shareholders at every Annual General Meeting). M/s Salve &
Co., have expressed their willingness to act as Auditors of the Company, if appointed, and have further confirmed that the said appointment would be in conformity with the provisions of Section 141 of the Companies Act, 2013.
Your Directors request you to ratify the appointment of M/s Salve & Company, Chartered Accountants (Registration No.109003W) as Statutory Auditors of the Company at the ensuing 13th Annual General Meeting and to fix their remuneration.
COST AUDITOR
The manufacturing operations have been suspended with effect from 30th May 2014 as per the consensus lockout agreement reached with the workforce. In view of this, the Company has not maintained any cost records and hence question of cost audit does not arise.
SECRETARIAL AUDITOR
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s P. S. Channe & Co., a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company for financial Year 2015-16. M/s P. S. Channe & Co., have expressed their willingness to act as Auditors of the Company, if appointed, and have further confirmed that the said appointment would be in conformity with the provisions of Section 141 of the Companies Act, 2013. The Report of the Secretarial Audit Report is annexed herewith as Annexure-6. There are no qualifications or observations or remarks made by Secretarial Auditor in his report.
DECLARATION BY INDEPENDENT DIRECTORS:
Shri A. S. Kapre, Shri M. B. Thaker, Shri Mohan S. Adige and Shri K. A. Pardhi are Independent Directors on the Board of your Company. In the Opinion of the Board and as confirmed by the these Directors, they fulfill the conditions specified in Section 149 of the Companies Act, 2013 and the rules made thereunder about their status as Independent Directors of the Company.
DIRECTORS:
Mr. M.D. Saraf shall retire by rotation at the 13th Annual General Meeting and being eligible offers himself for reappointment in accordance with the provisions of the Companies Act, 2013, and in terms of the Memorandum and Articles of Association of the Company.
Mrs. (Dr) Champaka Rangachari ceased to be director with effect from 6th May, 2016.
The Company has formulated a code of conduct for all members of the Board. All concerned members have affirmed compliance with the said code.
NOMINATION AND REMUNERATION POLICY
The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report. The above policy was approved by the Board of Directors in their Meeting held on 14th February, 2015.
AUDIT COMMITTEE
Audit Committee of the Company comprises of Mr. A. S. Kapre, Mr. M. B. Thaker, Mr. M. S. Adige and Mr. Anurag Saraf, Except Mr. Anurag Saraf, who is a Promoter Director of the Company, rest all members of the Audit Committee are Independent Directors. The committee has been constituted in strict compliance with the provisions of Clause 49 of the Listing agreement and assumes all responsibilities provided therein, discharging their duties diligently with transparency and accountability as their sole motivation.
You are requested to appoint Auditors for the current year and to fix their remuneration.
AUDITOR’S REPORT
The report by Auditors if self explanatory. Further, in view of consensus lockout at plant and preparation of Accounts on going concern basis, the Auditors have made some observations under "Emphasis of matter appearing in the Auditors Report which management has responded in Note 1(b) under Significant Accounting Policies and 29 to the Audited Financial Statements for the year ended 31st March, 2016.
DISCLOSURE WHERE COMPANY IS REQUIRED TO CONSTITUTE NOMINATION AND REMUNERATION COMMITTEE:
The Company has constituted a Nomination & Remuneration Committee under Clause 49 of the Listing Agreement & has Nomination & Remuneration Policy for appointment and remuneration of Directors Under Section 178 of the Companies Act, 2013 and Clause 49 of the Listing Agreement. All the appointments of Directors is as per the Nomination & Remuneration Policy of the Company, which were also approved by the Committee.
DISCLOSURE OF VIGIL MECHANISM IN BOARD REPORT:
The Company have adopted the Vigil Mechanism Policy for the Company in its duly held Board Meeting on 14th February, 2015 and the same is available on the website of the Company.
DISCLOSURE ABOUT ESOP AND SWEAT EQUITY SHARE
Company has not issued any share under ESOP or Sweat Equity Shares during the year.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMAN AT WORK PLACE (PREVENTION , PROHIBITION AND REDRESSAL) ACT, 2013
The Company has in place a policy for Prevention of Sexual harassment in accordance with the requirements of the Sexual Harassment of Women at work place (Prevention, Prohibition and Redressal) Act, 2013. All employees (Permanent, Contractual, temporary, trainees) are covered under this policy. The Company did not receive any complaint during the year 2015-16.
ACKNOWLEDGEMENTS
Directors of the Company wish to thank the Central and State Governments for their continued support and co-operation extended towards the business as well as the company’s social functions. The Management also thanks the shareholders, Business Associates, Financial Institutions & Banks, Customers and Suppliers for the faith reposed in the Company. The Board expresses its sincere appreciation to the dedicated and committed team of employees and workmen of your Company.
Annexure-4 to the Directors Report
Information under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and forming part of the Directors Report for the year ended March 31, 2016 No employee of the company is paid gross remuneration aggregate of not less than Rs.5,00,000/- per month.
Annexure-5 to the Directors Report
Additional information as required under the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988.
FORM ‘A’
FORM OF DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY.
Annexure 6 to Directors Report
Form No.MR-3
SECRETARIAL AUDIT REPORT
FOR THE FINANCIAL YEAR ENDED ON 31STMARCH, 2016
[Pursuant to section 204(1) of the Companies Act, 2013 and rule No.9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014]
To,
The Members,
Facor Steels Limited,
46-A & B, MIDC Ind. Estate Hingna Road, Hingna Road,
NAGPUR-440028
I have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by Facor Steels Limited (hereinafter called the Company) having CIN: L27100mh2004PLC146283. Secretarial Audit was conducted in a manner that provided me a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing my opinion thereon. Based on my verification of the Company’s books, papers, minute books, forms and returns filed and other records maintained by the company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct of secretarial audit, I hereby report that in my opinion, the company has, during the audit period covering the financial year ended on 31st March, 2016 complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance-mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:
I have examined the books, papers, minute books, forms and returns filed and other records maintained by the Company for the financial year ended on 31st March, 2016 according to the provisions of:
1. The Companies Act, 2013(the Act) and the rules made there under, as applicable;
2. The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made thereunder;
3. The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder;
4. Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings;
5. The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (‘SEBI Act’):-
a. The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;
b. The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations,1992;
c. The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 –
Not applicable as the Company did not issue any security during the financial year under review;
d. The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 notified on 28thOctober 2014 Not applicable as the Company has not granted any Options to its employees during the financial year under review; e. The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 – Not applicable as the Company has not issued any debt securities during the financial year under review;
f. The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client;
g. The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009- Not applicable as the Company has not delisted its equity shares from any stock exchange during the financial year under review ;
h. The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998 – Not applicable as the Company has not bought back any of its securities during the financial year under review and i. The Secretarial Standards issued by the Institute of Company Secretaries of India
6. Labour Laws, Factories Act, Pollution Laws and other applicable laws – Company has suspended its production activity completely and locked out is effective from 30th May 2014. I have examined compliances from the papers/register and the information given by the staff members/officers (who have not adequate knowledge about the subject matter) available in the office of the Company. I have audited and examined in very specific manner to ensure whether adequate system and process is in order or not and commented upon irregularities seen apparently.
I have also examined compliance with the applicable clauses of the Listing Agreements entered into by the Company with BSE Ltd.
I have not examined compliance by the Company with the applicable clauses of the following: a. Applicable financial laws, like direct and indirect tax laws, since the same have been subject to review by statutory financial auditor and other designated professionals.
During the period under review the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards, etc. mentioned above subject to the following observations:
a) That the Company had not given facility of Ballot Paper to the Shareholders of the Company at the time of Annual General Meeting.
b) That Company has received two notices from BSE Limited (formerly known as Bombay Stock Exchange Ltd.) for Non-submission of Corporate Governance Report for the Quarter ended December 2015 and Non-submission of Share Capital Audit Report for the Quarter ended December 2015. Company has not submitted Reports for further period also. The Company has not submitted Shareholding Pattern for the Quarter ended March 2016.
c) That Company has not altered the Articles of the Company nor adopted Table- F to include the matters as require under the provisions of the Companies Act, 2013
d) That the Company has not published its notice for the Board Meeting in the newspapers as require under Listing Agreement for the meeting held for adopting results for the Quarter ended on December 2015 and March 2016..
e) That the Company has not filed its Annual Return in form MGT-7 along with MGT-8 as required under section 92 of the Companies Act, 2013 and Rules applicable.
f) That the Company has not appointed Key Managerial Person i.e. Company Secretary and Chief Financial Officer within 6 months from the date of vacation of respective designated post.
g) That the Company has not appointed an Internal Auditor and did not carried out Cost audit as require.
h) That the Mrs. Champaka Rangachari (Independent and Women Director) did not attend any Board Meeting during the year under review. We have noticed that in the Minutes Books of the meetings, Leave of absence has been granted but no such documents are available with Company.
i) That the Company has not complied with procedure as prescribed in the Secretarial Standards as issued by the Institute of Company Secretaries of India.
j) That the Company has not signed new Listing Agreement with BSE Ltd. k) That the Provident Fund deducted but not deposited for the month of February 2016 and March 2016. l) That the Company has not renewed licenses related to Pollution Laws etc.
m) That the Factory License under Factories Act has not been renewed from 01.01.2015 and has been deposited with Deputy Director, Industrial Safety & Health, Civil Lines, Nagpur.
I further report that, based on the information provided by the Company, its officers and authorized representatives during the conduct of the audit, and also on the review of quarterly compliance reports by respective department heads / company secretary taken on record by the Board of Directors of the Company, in my opinion, adequate systems and processes and control mechanism exist in the Company to monitor and ensure compliance with applicable laws subject to the observations made hereinbefore.
I further report that
The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors and Independent Directors except the incidence of Women & Independent Director. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act. Adequate notice is given to all Directors to schedule the Board Meetings. With respect to the agenda and detailed notes on agenda , start time and end time of the Board meeting, company has not complied with the Ssecretarial Standards issued by ICSI. A system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.
As per minutes of the meetings duly recorded and signed by the Chairman, the decisions were unanimous and no dissenting views have been recorded.
I further report that there are adequate systems and processes in the company commensurate with the size and operations of the company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines except to the observations made earlier.
I further report that Company has made application to MSEDCL for reduction in Power Contract from 7500kva to 1000Kva for its mini steel plant.
I further report that Company has passed Special Resolution by Postal Ballot and sold its investment held in Sai Wardh Power (Wardha Power Company Ltd.) .
I further report that the Invent Assets Securitization and Reconstruction Private Limited acquired debt from Central Bank of India and Syndicate Bank.
I further report that the Kesari Steels Limited filed a Recovery Suit at Rohini Court, Delhi and company has received summons on 28th September 2015.
I further report that the Bank of India, a secured creditor of the Company, issued a notice dated July 25, 2015 u/s 13 (2) of the SARAESI, calling upon Company to pay the outstanding dues within 60 days from the date of said notice. Also received Notice under SARFEASI from Indian Overseas Bank, Vizag on 9th October 2015 u/s 13 (2) I further report that the MSEDCL has disconnected electricity supply at Factory premises due to non-payment of electricity charges.
I further report that Company has filed petition to the High Court, Nagpur for withdrawal of complaint by DRS Logistics Private Limited.
I further report that we have asked for a certificate from its Registrar & Transfer Agent for due compliances with respect to Share Transfer, Transmission etc. & members register. Company has informed us that Registrar and Transfer Agent is only reporting to the SEBI hence we are unable to comment. I further report that Company has not taken note of observation/comment made by me in the Secretarial Audit Report dated 05/08/2015.
For P S CHANNE & ASSOCIATES
Company Secretaries
CS PRADIP S CHANNE
Place : NAGPUR (Proprietor)
Date : 05/08/2016
FCS No. 6265 C.P No.7138
Note: This report is to be read with my letter of even date which is annexed as ‘ANNEXURE A’ and forms an integral part of this report.
‘Annexure A’
The Members, Facor Steels Limited, 46-A & B, MIDC Ind. Estate Hingna Road, NAGPUR-440028
My report of even date is to be read along with this letter.
1. Maintenance of secretarial record is the responsibility of the management of the company. My responsibility is to express an opinion on these secretarial records based on my audit.
2. I have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the contents of the Secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial records. I believe that the processes and practices, I followed provide a reasonable basis for my opinion.
3. I have not verified the correctness and appropriateness of financial records and Books of Accounts of the Company.
4. Where ever required, I have obtained the Management representation about the compliance of laws, rules and regulations and happening of events etc.
5. The compliance of the provisions of Corporate and other applicable laws, rules, regulations, Standards is the responsibility of management. My examination was limited to the verification of procedures on test basis.
6. The Secretarial Audit report is neither an assurance as to the future viability of the company nor of the efficacy or effectiveness with which the management has conducted the affairs of the company.