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DIRECTOR'S REPORT

Rama Steel Tubes Ltd.

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Market Cap. (₹) 75.49 Cr. P/BV 0.87 Book Value (₹) 51.81
52 Week High/Low (₹) 127/44 FV/ML 5/1 P/E(X) 9.02
Bookclosure 30/09/2019 EPS (₹) 4.99 Div Yield (%) 0.00
Year End :2018-03 

To the Members,

The Directors submit annual report of the Rama Steel Tubes Limited (the "Company" or "RAMA") along with the audited financial statements for the financial year ended March 31, 2018.

FINANCIAL RESULTS

(Rs. in Lakhs)

Particulars

Standalone

Consolidated

2017-18

2016-17

2017-18

2016-17

Revenue from Operations

33,981.92

25,957.36

38,218.89

28,442.34

Other Income

389.03

240.33

461.96

275.56

Total Revenue

34,370.95

26,197.69

38,680.86

28,717.90

EBIDTA

2,450.81

2,230.46

2,727.60

2,370.63

Finance Costs

602.04

766.18

650.07

767.71

Depreciation and Amortisation Expenses

213.06

290.83

232.81

291.03

Net Profit Before Tax

1,635.70

1,173.46

1,844.72

1,311.89

Tax Expenses

576.63

365.59

573.18

365.59

Net Profit After Tax

1,059.07

807.86

1,271.55

946.30

Other Comprehensive Income

0.97

(3.36)

1.96

(7.21)

Total Comprehensive Income

1,060.04

804.50

1,273.50

939.09

Earing per equity share (Face Value of '5 each)

Basic

6.34

5.38

7.62

6.28

Diluted

6.34

5.38

7.62

6.28

COMPANY'S PERFORMANCE

The Financial Year ("FY") 2017-18 was one of the significant years in the terms of growth and sustainability.

During the FY 2017-18, total revenue from operations was Rs.38,218.89 Lakhs as compared to Rs.28,442.34 Lakhs in FY 201617, registering an increase of 34%.

Profit before tax (PBT in FY 2017-18 was Rs.1844.72 Lakhs as compared to Rs.1311.89 Lakhs in FY 2016-17, reflecting an increase of 41%.

Profit after tax (PAT) was Rs.1271.55 Lakhs as against Rs.946.30 Lakhs in FY 2016-17, an increase of 34 % over the previous year.

Earnings before Interest, Depreciation and Taxes (EBIDTA) stood at Rs.2727.60 Lakhs in FY 2017-18, as compared to Rs.2370.63 Lakhs in FY 2016-17.

DIVIDEND

The Board does not recommend any dividend for the year under review.

ADOPTION OF INDIAN ACCOUNTING STANDARDS (IND AS)

The Company has adopted Indian Accounting Standards (Ind AS). Accordingly, the standalone financial statements of the Company and the consolidated financial statements of the

Company with its subsidiary for the financial year ended March 31, 2018, have been prepared in accordance with Ind AS as prescribed under section 133 of the Companies Act, 2013(the "Act"), read with the relevant rules made there under and other accounting principles generally accepted in India.

EQUITY SHARE CAPITAL

The Company has issued 7,60,000 Equity Shares of Rs.5/- each pursuant to Conversion of 7,60,000 fully convertible warrants issued preferential basis to the persons belonging to promoter category.

Consequently the issued, subscribed and paid-up equity share capital has increased from Rs.8,01,70,000 divided into 1,60,34,000 Equity shares of Rs.5/- each to Rs.8,39,70,000 divided into 1,67,94,000 Equity shares of Rs.5/- each.

FULLY CONVERTIBLE WARRANTS

The Company has issued 15,00,000 fully convertible warrants on preferential basis to the persons belonging to promoter category in year 2016-17, out of them 7,60,000 fully convertible warrants were converted into equivalent number of equity Equity shares of '5/- each in 2017-18.

MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT

Management's Discussion and Analysis Report for the year under review, is presented in a separate section forming part of this Annual Report.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES

Pursuant to Section 129 of the Companies Act, 2013 a statement in prescribed Form AOC-1, relating to subsidiaries and joint venture for the year ended on March 31, 2018 has been attached with the consolidated financial statements of the Company for the financial year ended March 31, 2018.

The policy for determining material subsidiaries as approved may be accessed on the Company's Website:http://www.ramasteel. com/app/webroot/img/uploads/files/93/POLICY%20FOR%20 DETERMINING%20MATERIAL%20SUBSIDIARY.pdf

PUBLIC DEPOSITS

Your Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014. Accordingly, there are no unclaimed or unpaid deposits lying with the Company for the year under review.

DIRECTORS AND KEY MANAGERIAL PERSONNEL Retirement by Rotation:

As per the provisions of the Companies Act 2013 and the Articles of Association of the Company, Mr. Surender Kumar Sharma, Director of the Company will be retiring by rotation at the ensuing AGM and being eligible has offered himself for reappointment.

The details pursuant to Regulation 36(3) of the SEBI (Listing Obligation and Disclosure Requirements) Regulation 2015 relating to appointment and re-appointment of directors at the AGM are provided in the Notice to the members.

Committees of the Board of Directors:

The Company has constituted the following committees in compliance with the Companies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015:

1. Audit Committee,

2. Nomination and Remuneration Committee and

3. Stakeholders Relationship Committee

4. Corporate Social Responsibility Committee

The Board has accepted all the recommendations of the above committee(s).

Key Managerial Personnel:

The Key Managerial Personnel (KMP) in the Company as per Section 2(51) and 203 of the Companies Act, 2013 are as follows:

*Mr. Naresh Kumar Bansal, Managing Director *Mr. Rajkumar Malik, Chief Financial Officer (Upto 31st May 2018) *Mr. Kapil Datta, Company Secretary

*Mr. Rajeev Kumar Aggarwal, Chief Financial Officer (w.e.f. 1st June 2018)

During the year, there was no change (appointment or cessation) in the office of KMP. However, after the close of financial year, the Board of Directors in their meeting held on 28th May 2018 has appointed Mr. Rajeev Kumar Aggarwal as Chief Financial Officer, as KMP of the Company in place of Mr. Rajkumar Malik who has resigned from the post of Chief Financial Officer of the Company w.e.f. 31st May 2018.

DIRECTORS' RESPONSIBILTY STATEMENT

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm that:

a) that in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been no material departure;

b) that the selected accounting policies were applied consistently. Reasonable and prudent judgments and estimates were made so as to give a true and fair view of the state of affairs of the Company as at March 31, 2018 and of the loss of the Company for the year ended on that date;

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 fraud and other irregularities;

d) that the annual accounts have been prepared on a going concern basis;

e) the directors had laid down internal financial controls to be followed by the Company and such internal financial control 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 such systems are adequate and were operating effectively.

POLICY ON DIRECTORS'APPOINTMENT AND REMUNERATION AND OTHER DETAILS

The current policy is to have an appropriate mix of executive and independent directors to maintain the independence of the Board, and separate its functions of governance and management. As on March 31, 2018, the Board consist of 6 members, three of whom are executive and three are independent directors. The Board periodically evaluates the need for change in its composition and size.

The policy of the Company on directors' appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under Sub-section (3) of Section 178 of the Companies Act, 2013, adopted by the Board. We affirm that the remuneration paid to the directors is as per the terms laid out in the nomination and remuneration policy of the Company.

DECLARATION BY INDEPENDENT DIRECTOR(S)

All the Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149 (6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules.

CORPORATE GOVERNANCE REPORT

The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. The Company has also implemented several best corporate governance practices as prevalent globally. The report on Corporate Governance as stipulated under the Listing Regulations forms an integral part of this Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of corporate governance is attached to the report on Corporate Governance.

EXTRACT OF ANNUAL RETURN

In accordance with Section 92(3) of the Companies Act, 2013, an extract of annual return is given in Annexure -I in the prescribed Form MGT-9, which forms part of this report.

NUMBER OF MEETINGS OF THE BOARD

Nine meetings of the board were held during the year. For details of the meetings of the board, please refer to the corporate governance report, which forms part of this report.

CONTRACTS AND ARRANGEMENT WITH RELATED PARTIES

All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an 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.

Your Directors draw attention of the members to Note 43 to the Standalone financial statement which sets out related party disclosures. The particulars of contracts and arrangements entered into by the company with related parties referred to in Section 188 in Form AOC-2 is attached herewith as Annexure- II.

AUDITORS AND AUDITORS' REPORT Statutory Auditors

The Auditors, M/s VAPS & Company, Chartered Accountants (Firm Registration No. 003612N) hold office until the conclusion of the Annual General Meeting to be held in the year 2018 as their term of appointment is completing in terms of Section 139 of the Companies Act, 2013.

On the recommendation of the Audit Committee, the Board of Directors has proposed to appoint M/s Alok Mittal & Associates, Chartered Accountants (Firm Registration No. 005717N) as Statutory Auditors for a period of five years i.e. from the conclusion of the ensuing Annual General Meeting to be held in the year 2018 and till the conclusion of Annual General Meeting to be held in the year 2023 subject to ratification by the Members at every Annual General Meeting, at a remuneration to be decided by the Board of Directors. Wherein M/s Alok Mittal & Associates, Chartered Accountants has confirmed their willingness and eligibility under the provision of the Companies Act, 2013 to be Statutory Auditors of the Company, which is subject to shareholders approval.

The proposed Auditors have consented to the said appointment and confirmed that they are eligible for appointment as Statutory Auditors of the Company under Section 139 of the Act and meet the criteria for appointment specified in Section 141 of the Act. Further, the Company has also received a copy of Peer Review Certificate as prescribed by the Institute of Chartered Accountant of India to the Auditors and declaration from the Auditors that they are not disqualified for such appointment/ reappointment under the said Act.

Secretarial Auditors

The Board has appointed M/s Arun Kumar Gupta & Associates, Company Secretaries, to conduct Secretarial Audit for the financial year 2017-18. The Secretarial Audit Report for the financial year ended March 31, 2018 is annexed herewith marked as Annexure - III to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

Cost Auditors

The Board has appointed M/s. S. Shekhar & Co., Cost Accountants, for conducting the audit of cost records of the Company for Steel pipe Segment for the financial year 2017-18.

Details in respect of frauds reported by Auditors other than those which are reportable to the Central Government

The Statutory Auditors, Cost Auditors or Secretarial Auditors of the Company have not reported any frauds to the Audit Committee or to the Board of Directors under Section 143(12) of the Companies Act, 2013, including rules made thereunder.

LOANS, GUARANTEES AND INVESTMENTS

The particulars of loans, guarantees and investments given under Section 186 of the Companies Act, 2013 have been disclosed in the financial statements.

CORPORATE SOCIAL RESPONSIBILITY

We at RAMA aim to create economic value and to actively contribute toward the development of a sustainable society by taking up projects for the common good through responsible business practices and good governance. In line with the requirement of Section 135 of the Companies Act 2013 your Company having a Corporate Social Responsibility Committee. The details of Committee and the terms of reference are provided in corporate governance report. The CSR Policy of the Company is available on its website at the link: http://ramasteel.com/cms/ policy-and-code-of-conduct.

During the year the Company has spent '13.41 lakhs on CSR activities for the financial year 2017-18 and '7.52 lakhs for the financial year 2016-17, provision for which was made in the same year as annexed herewith Annexure- IV to this Report.

Aforesaid CSR money paid to Konfyans Charitable Public Trust for purpose of women empowerment and social development.

INTERNAL FINANCIAL CONTROL

The Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.

VIGIL MECHANISM AND WHISTLE BLOWER POLICY

Fraud-free and corruption free work culture has been the core of the Company's functioning. In view of the potential risk of fraud and corruption due to rapid growth and geographical spread of operations, the company has put even greater emphasis to address the risk.

To meet this objective, a Whistle Blower Policy has been laid down. The same policy is approved by the Board was uploaded on the Company's website (www.ramasteel.com).

DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed there under. No complaint has been received for sexual harassment of women at work place by the Company during the financial year 2017-18.

BOARD EVALUATION

The Board of Directors has carried out an annual evaluation of its own performance, Board committees and individual directors pursuant to the provisions of the Companies Act, 2013 and Corporate Governance requirements as prescribed by SEBI(Listing Obligation and Disclosure Requirements), Regulation 2015.

PARTICULARS OF EMPLOYEES RELATED DISCLOSURES

a. Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below :

i. The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year:

Non-executive directors

Ratio to median remuneration

Mr. Bharat Bhushan Sahny

N.A.

Mr. Rajendra Prasad Khanna

N.A.

Mrs. Hannya Dhir

N.A.

Mrs. Anju Gupta

N.A.

Executive directors

Mr. Naresh Kumar Bansal

24.00

Mr. Richi Bansal

20.00

Mr. Surender Kumar Sharma

2.08

ii. The percentage increase in remuneration of each director, chief executive officer, chief financial officer, company secretary in the financial year:

Directors, Chief Financial Officer and Company Secretary

% increase in remuneration in the financial year

Mr. Bharat Bhushan Sahny

N.A.

Mr. Rajendra Prasad Khanna

N.A.

Mrs. Hannya Dhir

N.A.

Mrs. Anju Gupta

N.A.

Mr. Naresh Kumar Bansal, Managing Director

43.33%

Mr. Richi Bansal, Executive Director

56.73%

Mr. Rajkumar Malik, Chief Financial Officer

20.46%

Mr. Kapil Datta, Company Secretary

6.67%

b. The percentage increase in median remuneration of employees in the financial year: 6.84%

c. The number of permanent employees on the rolls of Company : 119

d. Variations in the market capitalisation of the Company, price earning ratio as at the closing date of the current financial year and previous financial year : N.A.

e. Percentage increase over decrease in the market quotations of the shares of the Company in comparison to the rate at which the Company came out with the last public offer: N.A.

f. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:

The average annual increase was 8.14%.

Increase in the managerial remuneration for the year was 47.55%.

g. The Company affirms that the remuneration is as per remuneration policy of the Company.

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, there is no such employee drawing remuneration in excess of the limits set out in the said rules and are required to be disclosed.

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 enclosed as Annexure V.

CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

A) CONSERVATION OF ENERGY :

a) The Company has always been particular to conservation of energy on continuous basis by closely monitoring energy consuming equipment involving use of energy generating diesel set and power purchased from Electricity Board e.g. size of the Equipments is optimum to save energy. The low-efficient Machinery and Equipments are identified and replaced.

b) Keeping in view the nature of the manufacturing process no additional investment is proposed and hence further consumption of energy is ruled out in the near future.

c) No specific studies regarding impact of the above measures of (a) and (b) have been carried out and the cost impact of energy cost and energy saving measures on cost of production of goods is not material, as it forms a very low percentage vis-a vis the cost of Company's product.

d) Total energy consumption and energy consumption per unit of production is given as per Form-A.

B) TECHNOLOGY ABSORPTION, ADOPTION AND INNOVATION :

I. RESEARCH AND DEVELOPMENT (R&D)

i. Specific area in which R & D carried out by the Company :

There is no specific area in which the Company has carried the R & D. However, the Company is continuously making efforts for improvements in its production process for better productivity and cost efficiency.

ii. Future plan of action

The Company plans to monitor continuously the plant efficiency thus reducing the shortage and reducing the cost of production.

iii. Expenditure on R & D

The company did not incur any Expenditure on R & D.

II. TECHNOLOGICAL, ABSORPTION, ADAPTATION & INNOVATION :

i. Efforts made towards Technology Absorption :

For the goods manufactured by the Company there is a simple process of ERW manufacturing technique and the Company has already adopted the same and no innovations have been carried by the company, as there is no other available alternative that would ensure further cost efficiency.

ii. Particulars relating to imported technology :

The Company has not imported any technology and the plant is working with completely Indigenous Technical know-how.

C) FOREIGN EXCHANGE EARNING AND OUTGO :

(Rs. in Lakhs)

Current year

Previous year

a)

Total Foreign Exchange Earning

4240.37

2970.44

b)

Total Foreign Exchange Outgo

38.20

68.07

FORM 'A' POWER AND FUEL CONSUMPTION

Current Year

Previous Year

1. Electricity

(a) Purchased Unit

3866952

3842917

Total amount (in Rs.)

23978501

32023166

Rate/unit

6.20

8.33

(b) Own generation

Through Diesel Generator Unit

66789

108322

Unit per Litre of Diesel Oil

4.68

4.74

Total Amount (in Rs.)

977434

1188341

Cost/Unit

14.63

10.97

2. Furnace Oil Quantity(litres)

160721

195925

Total Amount (in Rs.)

5497804

5850322

Average Rate '/litre

34.21

29.86

CONSUMPTION PER UNIT OF PRODUCTION

NAME OF PRODUCT

UNIT

ELECTRICITY (UNIT)

FURNACE O TRE/SQ. C

)IL/GAS (LI-UBIC MTR)

CURRENT

YEAR

PREVIOUS

YEAR

CURRENT

YEAR

PREVIOUS

YEAR

Black Steel Tubes/Pipes

Per Ton

73.25

66.50

--

--

Galvd. Steel Tubes/Pipes

Per Ton

77.65

70.49

26.60

24.22

ACKNOWLEDGEMENT

The Directors acknowledge the contributions made by the employees towards the success and growth of the company. Your Directors also take this opportunity to express sincere thanks to the Government Authorities, Financial Institutions and the Bankers for their co-operation and assistance to the Company. The Directors would also like to acknowledge the continued support of the Company's shareholders in all its endeavors.

Sd/-

Place: Ghaziabad, UP (Naresh Kumar Bansal)

Date: August 14, 2018 Chairman & Managing Director

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