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DIRECTOR'S REPORT

Electrotherm (India) Ltd.

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Market Cap. (₹) 197.90 Cr. P/BV -0.16 Book Value (₹) -958.95
52 Week High/Low (₹) 380/114 FV/ML 10/1 P/E(X) 1.40
Bookclosure 30/09/2015 EPS (₹) 111.32 Div Yield (%) 0.00
Year End :2018-03 

To,

The Members

Electrotherm (India) Limited

The Directors have pleasure in presenting the 32nd Annual Report on the business and operations of the Company and Audited Financial Statements for the year ended on 31st March, 2018.

FINANCIAL SUMMARY OR HIGHLIGHTS:

The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013, read with Rule 7 of the (Companies Accounts) Rules, 2014. The financial statements for the Financial Year ended on March 31, 2018 are the Company’s first Ind AS compliant annual financial statements with comparative figures for the year ended on March 31, 2017 also under Ind AS. The date of transition is April 1, 2016.

The disclosure and effects of first time adoption of Ind AS are detailed in Note 45 of the standalone financial statements and Note 45 of the consolidated financial statements.

The standalone financial performance of the Company for the year ended on 31st March, 2018 is summarized below:

(Rs. In Crores)

Particulars

2017-2018

2016-2017

Total Income

2777.98

2104.64

Total Expenses

2766.78

2166.96

Profit / (Loss) before Exceptional Items and Tax

11.20

(62.32)

Less : Exceptional Items

-

14.45

Profit / (Loss) before Tax

11.20

(76.77)

Less: Tax Expenses

-

-

Profit / (Loss) for the Year

11.20

(76.77)

Other Comprehensive Income

0.58

(1.24)

Total Comprehensive Income

11.78

(78.01)

Note: The financial Statements for the year 2017-18 are the Company’s First Ind AS compliant annual financial statement as such the figures of the previous year have been rearranged, regrouped, reclassified and recasted wherever necessary in conformity with Ind AS to correspond with the current year classification / disclosure and may not be comparable with the figures reported earlier.

STATE OF THE COMPANY’S AFFAIRS AND OPERATIONS:

The Company is engaged in the business of manufacturing induction furnaces, TMT Bars, Ductile Iron Pipes (DI Pipes), Electric Vehciles, Transformers, Transmission Line Towers etc.

During the year ended on 31st March, 2018, the total income of the Company was Rs. 2777.98 Crores compared to Rs. 2104.64 Crores of previous financial year. The net profit for the current financial year was Rs. 11.20 Crores as compared to loss Rs. 76.77 Crores of previous financial year. A detailed analysis of performance for the year is included in the Management Discussion and Analysis, which forms part of this Annual Report.

CHANGE IN NATURE OF BUSINESS:

During the financial year, there was no change in the nature of business carried out by the Company.

TRANSFER TO RESERVES:

During the financial year under review, no amount has been transferred to the General Reserve.

DIVIDEND:

In view of accumulated losses during the previous financial years and fund requirements, the Board of Directors of the Company do not recommend any dividend on Equity Shares and on Preference Shares for the year ended on 31st March, 2018.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANICAL POSITION AFTER THE END OF FINANCIAL YEAR:

After the end of the financial year, the Company has entered into settlement with Vijaya Bank, Rare Assets Reconstruction Pvt. Ltd. as trustee of liabilities related to Dena Bank and International Finance Corporation for their outstanding liabilities. Other than this, there have been no material changes and commitments affecting the financial position of the Company between the end of the financial year and date of this Report.

CONSOLIDATED FINANCIAL STATEMENTS:

The Consolidated financial statements of the Company for the financial year 2017-18 are prepared in compliance with applicable provisions of the Companies Act, 2013, Indian Accounting Standards (“Ind AS”) and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”), which form part of this Annual Report.

SUBSIDIARY / JOINT VENTURE COMPANIES:

The company has the following subsidiaries as on 31st March, 2018:

1. Hans Ispat Limited

2. Shree Hans Papers Limited

3. Shree Ram Electro Cast Limited

4. ET Elec-Trans Limited

5. Jinhua Indus Enterprises Limited

6. Jinhua Jahari Enterprises Limited (Step-down Subsidiary Company)

7. Bhaskarpara Coal Company Limited (Joint Venture Company) Pursuant to section 129(3) of the Companies Act, 2013, a statement containing the salient features of the financial statement including the highlights of the performance of the subsidiary / joint venture companies in Form AOC-1 is attached as “Annexure - A” to this Report.

Pursuant to the section 136 of the Companies Act, 2013, the financial statements of the company, consolidated financial statements along with relevant documents and separate audited accounts in respect of subsidiaries / joint venture companies, are available on the website of the company www.electrotherm.com.

During the financial year 2017-2018, none of the companies have become or ceased to be subsidiaries, joint ventures or associate companies.

NUMBER OF BOARD MEETINGS:

During the financial year 2017-18, Nine (9) Board Meetings were held and the intervening gap between the meetings was within the period prescribed under the Companies Act, 2013. Details of the composition of the Board and its Committees and of the meetings held, attendance of the Directors at such meetings and other relevant details are provided in the Corporate Governance Report.

DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP):

* Retirement by Rotation

Pursuant to the provisions of section 152 of the Companies Act, 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and Articles of Association of the Company, Mr. Avinash Bhandari (DIN: 00058986), Jt. Managing Director & CEO retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

* Appointment & Cessation of Directors 0 Appointment/Re-appointment

During the year 2017-18, Mr. Siddharth Bhandari (DIN: 01404674), pursuant to the provisions of section 161, 196 and 197 of the Companies Act, 2013, was appointed as an Additional Director and Whole Time Director with effect from 26th April, 2017 and the same was regularized / approved by the shareholders at 31st Annual General Meeting held on 5th September, 2017.

Pursuant to section 149, 152 and other applicable provisions of the Companies Act, 2013 and the Rules farmed thereunder, on receipt of notices under section 160 of the Companies Act, 2013, Mr. Dinesh Shankar Mukati (DIN: 07909551), Mr. Madhu Menon (DIN: 00950279) and Mr. Pratap Mohan (DIN: 03536047) were appointed as Independent Directors of the Company by the shareholders with requisite majority at the 31st Annual General Meeting held on 5th September, 2017 for a period of five (5) years from the date of the such annual general meeting.

Pursuant to the provisions of section 161 of the Companies Act, 2013 and the Rules farmed thereunder, Ms. Hinal Jaimin Shah (DIN: 07789126) was appointed as an Additional Director in the category of Non-Executive Independent Woman Director, Mr. Arun Kumar Jain (DIN: 07563704) as an Additional Director in the category of Non-Executive Independent Director and Ms. Nivedita Sarda (DIN: 00938666) as an Additional Director in the category of Non-Executive Independent Woman Director for the term upto five (5) consecutive years, with effect from 11th December, 2017, 19th January, 2018 and 25th May, 2018, respectively, and they hold office upto the date of ensuing Annual General Meeting of the Company. However, Ms. Hinal Jaimin Shah, Additional Director ceased to be Director of the Company with effect from 7th February, 2018 due to resignation.

M/s. Invent Assets Securitisation & Reconstruction Pvt. Ltd. (Invent), the Secured Creditor of the Company nominated Ms. Sheetal Manhas as Nominee Director on the Board of the Company. Pursuant to the provisions of section 149, 161 of the Companies Act, 2013 and the Rules farmed thereunder, on the recommendation of Nomination and Remuneration Committee, Ms. Sheetal Manhas (DIN: 07439658) was appointed as a Nominee Director in the category of Non-Executive Additional Director of the Company with effect from 14th August, 2018.

Mr. Arun Kumar Jain (DIN: 07563704), Ms. Nivedita Sarda (DIN: 00938666) and Ms. Sheetal Manhas (DIN: 07439658) shall hold office up to date the ensuing Annual General Meeting. The Company has received notices in writing pursuant to section 160 of the Companies Act, 2013 proposing the candidature of Mr. Arun Kumar Jain, Ms. Nivedita Sarda and Ms. Sheetal Manhas for the office of Directors of the Company. Your Directors with majority recommend their appointment as Directors of the Company.

0 Cessation / Resignation of Directors:

Dr. Narayan Masand (DIN: 07797910), Dr. Krishna Kant Shiromani (DIN: 07827220) and Mr. Vivek Sharma (DIN: 07897857) ceased to be Additional (Independent) Directors of the Company at 31st Annual General Meeting held on 5th September, 2017.

Ms. Kruti Shukla (DIN: 07298899), Independent (Woman) Director, Mr. Madhu Menon (DIN: 00950279), Independent Director and Ms. Hinal Jaimin Shah (DIN: 07789126), Independent (Woman) Director of the Company, has resigned from the Board with effect from 8th September, 2017, 19th January, 2018 and 7th February, 2018, respectively.

The Board places on record its appreciations for the service rendered by Dr. Narayan Masand (DIN: 07797910), Dr. Krishna Kant Shiromani (DIN: 07827220), Mr. Vivek Sharma (DIN: 07897857), Ms. Kruti Shukla (DIN: 07298899), Mr. Madhu Menon (DIN: 00950279) and Ms. Hinal Jaimin Shah (DIN: 07789126) as a Director of the Company during their tenure and as a Member / Chairman of various Committees.

* Key Managerial Personnel

At the 31st Annual General Meeting held on 5th September, 2017, the members of the Company regularized / approved the appointment of Mr. Siddharth Bhandari (DIN: 01404674) as a Whole-time Director of the Company for the period of three years with effect from 26th April, 2017 and concluding on 25th April, 2020.

The Board of Directors of the Company in their meeting held on 26th April, 2017, approved the change in Designation of Mr. Mukesh Bhandari from ‘Chairman’ to ‘Chairman & Managing Director’ with effect from 26th April, 2017.

Except above, there was no change in the Key Managerial Personnel during the year under review.

Subsequently, the Board of Directors of the Company, in their meeting held on 4th July, 2018 approved the change of designation of Mr. Mukesh Bhandari from ‘Chairman & Managing Director’ to ‘Chairman’.

* Declaration of Independence

The Company has received declaration of Independence as stipulated under section 149(7) of the Companies Act, 2013 and Regulation 16(b) of the Listing Regulations from all Independent Directors confirming that they meet the criteria of independence and not disqualified from appointment / continuing as an Independent Director.

* Annual Evaluation of Board’s Performance

In terms of the provisions of Section 134(3)(p) of the Companies Act, 2013 read with Rule 8(4) of the Companies (Accounts) Rules, 2014 and Listing Regulations, the Board of Directors has carried out the annual evaluation of the performance of the Board, its Committee and the directors individually. The manner in which the evaluation was carried out is provided in the Corporate Governance Report, which is part of this Annual Report.

* Nomination and Remuneration Policy

The Board of Directors of the Company has, on the recommendation of Nomination and Remuneration Committee, framed and adopted a policy for selection and appointment of Directors, Key Managerial Personnel, Senior Management and their remuneration. The salient aspects covered in the Nomination and Remuneration Policy, covering the policy on appointment and remuneration of Directors and other matters have been outlined in the Corporate Governance Report which forms part of this Annual Report. The said policy is available on the website of the Company at www.electrotherm.com.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENT:

Particulars of investments made, loans given and guarantee given as covered under the section 186 of the Companies Act, 2013, has been provided in Note No. 5, 6 and 30 of the notes to the financial statement which form part of this Annual Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR):

Pursuant to the provisions of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company has constituted a CSR Committee. The Board of Directors on the recommendation of Corporate Social Responsibility (CSR) Committee had approved the Corporate Social Responsibility Policy. The CSR policy is available on the website of the company at www.electrotherm.com. The composition and terms of reference of the Committee are detailed in the enclosed Corporate Governance Report.

Since the Company has incurred losses during three immediately preceding financial years, the Company is not required to incur any expenditure on CSR activities. The Annual Report on CSR activities in accordance with the Companies (Corporate Social Responsibility Policy) Rules, 2014 is set out as “Annexure -B” to this report.

RELATED PARTY TRANSACTIONS:

The Company has pursuant to the approval of the shareholders through special resolution under Section 188 of the Companies Act, 2013, entered into related party transactions on arm’s length basis. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the Policy of the Company on materiality of related party transactions.

The Policy on materiality of related party transactions and on dealing with related party transactions as approved by the Board may be accessed on the Company’s website at www.electrotherm.com. There are no materially significant related party transactions that may have potential conflict with interest of the Company at large. The details of transaction with related parties for the financial year ended on 31st March, 2018 is given in Note No. 38 of the financial statements of the Company.

FIXED DEPOSIT:

During the financial year 2017-18, the Company has not accepted any deposit within the meaning of section 73 and 74 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014. Further there are no outstanding deposits as on 31st March, 2018.

DIRECTORS’ RESPONSIBILITY STATEMENT:

Pursuant to section 134(3)(c) of the Companies Act, 2013, the Directors state that :

a) in the preparation of the annual accounts for the financial year ended on 31st March, 2018, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any;

b) the Directors had 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 financial year and of the profit or loss of the company for that period;

c) the Directors had 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;

d) the Directors had prepared the Annual Accounts on a going concern basis;

e) 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; and.

f) 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.

AUDITORS AND AUDITORS’ REPORT:

* Statutory Auditor:

Pursuant to the provisions of Section 139, 142 and other applicable provisions of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, M/s. Hitesh Prakash Shah & Co., Chartered Accountants, Ahmedabad (Firm Registration No. 127614W), were appointed as Statutory Auditors of the Company at the 31st Annual General Meeting held on 5th September, 2017 for a term of five (5) years beginning from the conclusion of the 31st Annual General Meeting till the conclusion of the 36th Annual General Meeting, subject to ratification of the appointment by the Members at every subsequent Annual General Meeting. However, as per the notification of the Ministry of Corporate Affairs (“MCA”) dated 7th May, 2018, Section 139 of the Companies Act, 2013 was amended by the Companies (Amendment) Act, 2017 and as per the amendment of Companies (Audit and Auditors) Second Amendment Rules, 2018, the requirement of annual retification of appointment of the Statutory Auditors has been omitted. Accordingly, the resolution pertaining to ratification of the appointment of M/s. Hitesh Prakash Shah & Co., Chartered Accountants, Ahmedabad (Firm Registration No. 127614W) is not required to be placed before the members at the 32nd Annual General Meeting.

Auditors’ Report:

In the Independent Auditors’ Report for the year ended on 31st March, 2018, there are certain matters of emphasis related to winding up petitions, recovery of dues, assignment of debts, balance confirmations etc. The relevant Notes to accounts related to these matters of emphasis are self-explanatory.

With regard to the qualification in the Independent Auditors’ Report for non-provision of interest on Bank loan as account declared as Non-Performing Assets (NPA) for the total amount of Rs. 752.04 Crores, the Board of Directors submits that the loan accounts of the Company have been classified as NonPerforming Assets (NPA) by the Bankers and some of the Bankers has not charged interest on the said accounts and therefore provision for interest has not been made in the books of accounts. The quantification has been done only for the loans which have not been settled.

* Cost Auditor:

Pursuant to the consent and certificate received from M/s V. H. Savaliya & Associates, Cost Accountants, Ahmedabad and as per Section 148 and other applicable provisions if any, of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules, 2014, the Board of Directors of the Company has on the recommendation of the Audit Committee appointed him as Cost Auditors, to conduct the cost audit of the Company for the financial year ending on 31st March, 2019, at a remuneration as mentioned in the notice convening the Annual General Meeting, subject to ratification of the remuneration by the Members of the Company.

* Secretarial Auditor:

Pursuant to the provisions of section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. Bharat Prajapati & Co., Company Secretaries in Practice to conduct the Secretarial Audit of the Company. The Secretarial Audit Report in Form No. MR-3 is annexed herewith as “Annexure - C” to this Report.

With regard to qualification of the Secretarial Auditor for non reconstitution of Nomination and Remuneration Committee, the same could not immediately reconstituted due to pending approval of the Board of Directors.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO

The information required under the provisions of section 134(3) (m) of the Companies Act, 2013 read with Rule 8(3) the Companies (Accounts) Rules, 2014 with respect to conservation of energy, technology absorptions and foreign exchange earnings and outgo is given in “Annexure - D” which forms part of this Annual Report.

PARTICULARS OF EMPLOYEES:

The information required pursuant to section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of the employees are given in “Annexure- E” to this Annual Report.

AUDIT COMMITTEE:

The composition, terms of the reference and number of meetings & attendance at the Audit Committee held during the financial year is covered in the enclosed Corporate Governance Report.

RISK MANAGEMENT POLICY:

The Risk Management Policy adopted by the Board of Directors of the Company covers the various criteria for identification of key risk, action plans to mitigate those risks, review and reporting of identified risks on periodical basis etc.

In the opinion of the Board of the Directors of the Company, there are elements of risks in the nature of legal cases related to winding up petitions, recovery of dues and possession of assets which may threaten the existence of the Company.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS:

Presently, there are certain significant and material orders passed by the regulator / court / tribunal impacting the going concern status and company’s operations in future as mentioned in Note No. 33 of the standalone financial statements in respect of winding up petitions, recovery cases and attachment of properties against the Company.

CORPORATE GOVERNANCE:

In compliance with the provisions of Listing Regulations, a separate report on Corporate Governance along with a certificate from a Practicing Company Secretary regarding the status of compliance of conditions of corporate governance forms a part of this report.

WHISTLE BLOWER POLICY/VIGIL MECHANISM:

The Company is committed to highest standards of ethical, moral and legal business conduct. Accordingly the Board of Directors has formulated Whistle Blower Policy/Vigil Mechanism policy in compliance with the provision of Section 177(10) of the Companies Act, 2013 and Regulation 22 of the Listing Regulations. The policy provides for a framework and process whereby concerns can be raised by its employees against any kind of discrimination, harassment, victimization or any other unfair practice being adopted against them. More details of the Whistle Blower Policy/ Vigil Mechanism are explained in the Corporate Governance Report. The Policy of vigil Mechanism of the company is available on the website of the Company at www.electrotherm.com.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

Pursuant to Regulation 34(2)(e) read with Part B of Schedule V of the Listing Regulations, Management Discussion and Analysis Report is annexed after the Directors’ Report and form a part of this report.

EXTRACT OF ANNUAL RETURN:

Pursuant to section 143(3)(a) and section 92(3) of the Companies Act, 2013, the extract of the Annual Return in Form No. MGT-9 is annexed herewith as “Annexure - F” and forms a part of this report and same is also available on the website of the Company at www. electrotherm.com.

DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS:

The Company has put in place adequate internal financial controls with reference to the financial statements. During the financial year, such internal financial controls were operating effectively and it is commensurate with the size, scale and complexity of the Company and the nature of business of the Company.

OTHER DISCLOSURES:

a) The Company has not issued equity shares with differential rights as to dividend, voting or otherwise.

b) The Company has not issued sweat equity shares to its directors or employees.

c) The Company does not have any Employees Stock Option Scheme for its Employees/Directors.

d) The Auditors has not reported any frauds under sub-section (12) of Section 143 of the Companies Act, 2013.

e) Maintenance of cost records as specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013, is required by the Company and accordingly such accounts and records are made and maintained by the Company.

f) The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and during the financial year, the Company has not received any complaints under the said Act.

APPRECIATION:

Your Directors wish to place on record their appreciation for the valuable co-operation and support received from the customers and suppliers, various financial institutions, banks, government authorities, auditors and shareholders during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the devoted services of the Executives, Staff and Workers of the Company.

For and on behalf of the Board of Directors

Electrotherm (India) Limited

Mukesh Bhandari

Place : Palodia Chairman

Date : 14th August, 2018 (DIN: 00014511)

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