As on: Apr 28, 2024 02:53 AM
To
The Members,
Vardhman Industries Limited
We have pleasure in presenting the 35th Annual Report of the Company along with the Audited Statement of Accounts for the financial year ended 31st March, 2019. The consolidated performance of the Company and its Associate Company has been referred to wherever required:
FINANCIAL PERFORMANCE:
The Company has been facing numerous challenges. As the members are aware that the Company has been passing through Insolvency Process under Insolvency and Bankruptcy Code, 2016 vide order dated 16.11.2017 and in terms of order dated 17.01.2018 of Hon'ble National Company Law Tribunal, New Delhi Bench. Mr. Ashok Kumar Gulla has been appointed as Resolution Professional and the Board of Directors has been suspended since 16.11.2017 on commencement of CIRP. The company has registered Turnover and Other Income of Rs. 74.58 Crores as compared to Rs. 131.97 Crores. The total comprehensive loss for the year is placed at Rs. 8.76 Crores as Compared to a loss of Rs. 53.56 Crores in the previous year.
INDUSTRY AND ECONOMIC SCENARIO:
Due to adverse Global conditions and it has also manifested in a series of price cuts for the domestic steel industry during the year, leading to a squeeze on margins earned by steel producers.
India is the third largest steel producer in the world after China and Japan. In the year of 2016, India produced higher finished steel. Driven by rising infrastructure development and growing demand for automotives, steel consumption is expected to grow in future. The Government of India has allowed 100 percent Foreign Direct Investment (FDI) in the steel sector under automatic route. India's prospects are brightening due, the reform momentum and policies to increase infrastructure manufacturing output. India's steel demand is likely to increase in years to come. Going forward, implementation of policy measures already announced, structural reforms and government investment in infrastructure will be critical to India's economy.
EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS:
As stated above the Company is passing through Insolvency Resolution Process, M/s JSW Steel Limited had submitted a proposal for Resolution Plan to the Resolution Professional which when put upto the Committee of Creditors (COC) has been approved and the Company has conveyed this to Bombay Stock Exchange. As on the date of this Report, Resolution Plan is pending for approval with the Hon'ble National Company Law Appellate Tribunal.
CHANGE IN THE NATURE OF BUSINESS; IF ANY:
During the year under review, there have been no changes in the nature of business of the Company.
SHARE CAPITAL:
The Company's paid up equity share capital as at March 31, 2019 stood at Rs. 7,89,52,000/- comprising of 78,95,200 equity shares of Rs. 10/- each. During the year under review, the Company has not issued any fresh shares.
EXPORTS:
There were no Exports during the period under review.
DIVIDEND AND RESERVES:
In view of losses, during the year under review, the Board has not proposed to transfer any amount to reserves further the Board has not recommended any dividend for the financial year 31.03.2019.
LISTING OF SHARES:
The Equity Shares of the Company are listed at BSE Limited, Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai. The company has duly paid the listing fee to BSE Limited, Mumbai upto the Financial Year 2019-20.
PUBLIC DEPOSITS:
Your Company has not accepted any deposits from the Public during the year within the ambit of Section 73 of the Companies Act, 2013 and Companies (Acceptance of Deposits) Rules, 2014.
DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP):
Pursuant to the provisions of the Companies Act, 2013 (Act), Appointment of Mr. Rahul Jain, Managing Director (having DIN No. 00755312), expires on 27th August,2019 and his re-appointment for further period of one year from 28th August,2019 to 27th August,2020 is proposed for approval of shareholders at the upcoming Annual General Meeting of the Company.
Mr. Ashok Kumar Jain who was appointed as an Independent Director and whose term expires at the upcoming AGM and his further appointment for the period of 5 years till the conclusion of 40th Annual General Meeting to be held in the Calendar Year 2024.
In view of the Position explained above and the Company being under Resolution Process the Board of Directors of the Company is under suspension w.e.f. 16.11.2017. Pursuant to the provisions of Section 203 of the Act, the Key Managerial Personnels of the Company are Mr. Anil Kumar Surya, (Chief Financial Officer) and Ms. Reema ( Company Secretary).
INTERNAL FINANCIAL CONTROLS:
Your Company has an adequate system of internal control in place which has been designed to provide a reasonable assurance with regard to maintaining of proper accounting controls, monitoring of operations, protecting assets from unauthorized use or losses, compliance with regulations and for ensuring reliability of financial reporting as detailed in Management Discussions and Analysis.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION AND OTHER DETAILS:
The Company's policy on directors' appointment and remuneration and other matters provided in Section 178 of the Companies Act, 2013 has been disclosed in the Corporate Governance Report, which forms part of this report.
MEETINGS:
Since the Company has been undergoing CIRP from 16th November,2017 the Board of the Company has been suspended and hence, there was no Board Meetings held during the period under review.
MANAGEMENT DISCUSSION AND ANALYSIS:
The Designated authority is pleased to present the Management's Discussion and Analysis of operations for the year ended March 31, 2019 attached as Annexure-I which forms part of this Annual Report.
CORPORATE GOVERNANCE:
Your Company is committed to maintain highest standards of Corporate Governance and adheres to the corporate governance requirements as set out by Securities and Exchange Board of India ('SEBI'). Pursuant to the provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a detailed report on Corporate Governance is attached as Annexure-II and forms part of this Annual Report. The Company is in compliance with the various requirements and disclosures that have to be made in this regard. A certificate from the Auditors confirming compliance of the conditions of Corporate Governance as stipulated under the Listing Regulations is attached and forms part of this Annual Report.
VIGIL MECHANISM / WHISTLE BLOWER POLICY:
The Company has a Vigil Mechanism named Fraud and Risk Management Policy to deal with instance of fraud and mismanagement, if any. In staying true to our values of Strength, Performance and Passion and in line with our vision of being one of the respected companies in India, the Company is committed to the high standards of corporate Governance and stakeholder's responsibility.
The Company has established a Whistle Blower Policy and the same has been uploaded on the Company's website www.vardhmanindus.com. The said policy has also been made available at the offices/ manufacturing units to enable the employees to report their concerns, if any, directly to the Chairman of the Board and to the Chairman of the Audit Committee. The new employees are also given details of Whistle Blower Policy at the time of joining the Company. There were no occasions during the year under review where any concerns were reported under the said policy.
REPORT ON PERFORMANCE AND FINANCIAL POSITION OF SUBSIDIARY/ASSOCIATE COMPANY:
Your Company holds 23.10% stake in the Equity Share Capital of JSW Vallabh Tinplate Private Limited which become its Associate Company by virtue of Section 2(6) of the Companies Act, 2013.
CONSOLIDATED FINANCIAL STATEMENTS:
The Consolidated Financial Statements of the Company are prepared in accordance with relevant Accounting Standard issued by the Institute of Chartered Accountants of India (ICAI) and forms an integral part of this report.
Pursuant to Section 129 (3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing performance & salient features of the financial statement of subsidiary is given in Form-AOC-1 attached as Annexure-III which forms integral part of this report.
Further, pursuant to the provision of Section 136 of the Act, the financial statements of the company, consolidated financial statements along with relevant documents and separate report are available on the website of the Company.
RELATED PARTY TRANSACTIONS:
All the related party transactions that were entered into during the financial year were on arm's length basis, in the ordinary course of business and are in compliance with the provisions of the Companies Act, 2013 and the Listing Agreement/ SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Accordingly, particulars of contracts or arrangements with related parties referred to in Section 188(1) along with the justification for entering into such contract or arrangement in Form AOC-2 are attached as Annexure-IV and form integral part of this report. None of the Independent Directors has any pecuniary relationships or transactions vis-a-vis the Company.
There have been no materially significant related party transactions between the Company and the Key Managerial Personnel or other designated Persons, Promoters, Directors, the management or the relatives except for those disclosed in the financial statements which may have potential conflict with the interest of the company at large.
All the related Party Transactions are placed before the Audit Committee and also to the Board for approval. Prior omnibus approval was obtained for transactions and a statement giving details of all related party transactions are placed before the Audit Committee and the Board for review and approval on a quarterly basis. The Policy on Related Party Transactions as approved by the Board of Directors has been uploaded on the website of the Company i.e. www.vardhmanindus.com.
PERSONNEL AND INDUSTRIAL RELATIONS:
The Management-Employees relations remained cordial throughout the year. The results achieved during the year have been possible only with the dedication and hard work at all levels of workers, staff and executives of the Company.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:
The Company has not employed any individual whose remuneration falls within the purview of the limits prescribed under the provisions of Section 197 of the Companies Act, 2013, read with Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
Disclosure 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 annexed hereto marked as Annexure-V and forms part of this report.
CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES:
Corporate Social Responsibility was not applicable to the Company for the financial year under review. The Philosophy of the company works with objectives of contributing to the sustainable development of the society and to create a greener and cleaner environment around us.
EXTRACT OFANNUALRETURN:
Pursuant to the provisions of section 92(3) of the Act, the details forming part of the extract of the Annual Return in form MGT-9, for the Financial Year 2018-19 is annexed to this Report as Annexure-VI.
AUDITORS & THEIR REPORTS:
a) STATUTORY AUDITORS:
K. R. Aggarwal & Associates, Chartered Accountants (Firm Regn. No. 030088N) were appointed as Statutory Auditors of the Company at the 33rd Annual General Meeting (AGM) of the Company held on 29th September, 2017 for a period of five years i.e. till the conclusion of 38th AGM (to be held in calendar year 2022) subject to ratification of their appointment at every AGM of the Company. However the proviso to Section 139(1) of the Companies Act, 2013 has been omitted w.e.f. 7th May, 2018 by the Companies Amendment Act, 2017 and as such the notice for this 38th AGM does not include the proposal seeking ratification of the appointment of Statutory Auditors. Further the Auditors have confirmed their eligibility under section 141 of the Companies Act, 2013 and the Rules made thereunder.
As required under Regulation 33(1)(d) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.
Audit Report: The Auditors' Report read with the relevant notes on accounts for the year under review is selfexplanatory and do not call for any further comments. The Auditors' Report contains qualifications on significant amount is receivable from related parties under the head loans and capital advances which have been standing in the books of account since long whose recoverability is also doubtful as one of the parties has also went into CIRP process, no provision for such doubtful receivables has been made by the company. It is submitted that the Company has filed its claim with Resolution Professional of the party which has also been undergoing CIRP. There is no incidence of fraud requiring reporting by the Auditors under Section 143(12) of the Companies Act, 2013.
b) COST AUDITORS:
As per the requirement of Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, your Company has been getting audit of cost records of the Company every year.
The Designated Authority has approved the appointment of M/s. Meenu & Associates, Cost Accountants, Ludhiana (Firm Registration no. 100729) as the Cost Auditors of the Company for the year ending 31 March, 2020, on a remuneration of Rs. 30,000/- (Rs. Thirty Thousand) plus service tax as applicable and reimbursement of out of pocket expenses. The remuneration is subject to the ratification of the Members in terms of Section 148 read with Rule 14 of the Companies (Audit and Auditors) Rules, 2014 and is accordingly placed for your ratification in the notice calling the 35 th Annual General Meeting.
Audit Report: M/s. Meenu & Associates have also been the Cost Auditors of the company for the financial year 2018-19. The Cost Audit Report for the financial year 2018-19 will be filed by the company with the Ministry of Corporate Affairs (MCA) within the stipulated time as per the provisions of the Companies Act, 2013.
c) SECRETARIAL AUDITORS:
Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. RCS & Company, Company Secretaries in Practice (C.P. No. 3154) to undertake the Secretarial Audit of the Company for the financial year 2019-20. The Secretarial Auditors has also issued Secretarial Compliance Report for the financial year 2018-19 ended on 31.03.2019. The Secretarial Compliance Report is annexed to this Board Report as Annexure - VII.
Audit Report: M/s. RCS & Company have also been the Secretarial Auditors of the Company for the financial year 2018-19. The Report of the Secretarial Audit carried out for the financial year 2018-19 is annexed to this Report as Annexure VIII. As stated in clause 4 of the Secretarial Audit Report, as regards observations of Secretarial Auditors regarding non-transfer of funds to IEPF, we have to state that State Bank of India, where the Company's unpaid dividend account has been maintained and marked a lien on the Account and the Company had informed the IEPF Authorities about the same well within the stipulated date of transfer of funds to IEPF. (11)
RISK MANAGEMENT COMMITTEE:
The Risk Management Committee of the Company is constituted under the chairmanship of Mr. Ajay Singh and other members being Mr. Rahul Jain and Mr. Ashok Kumar Jain. No meeting of Committee was held during the financial year 2018-19.
Risk Management Policy:
The Risk Management Policy is formulated and implemented by the Company. The Policy helps to identify the various elements of risks faced by the Company, which in opinion of the Designated authority threatens the existence of the Company. The Risk Management Policy as approved by the Board is uploaded on the Company's website at the web link www.vardhmanindus.com
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:
As per provisions of Section 186 of the Companies Act, 2013, the company has neither given any loans nor provided any guarantee.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS:
The Resolution Plan as submitted by M/s JSW Steels Limited being Resolution applicant approved by Committee of Creditors (COC) was further approved by Hon'ble NCLT New Delhi Bench on 19th December,2018. The Resolution Applicant chose to appeal before the Hon'ble NCLAT on some issues involved in the orders of Hon'ble NCLT New Delhi Bench which is still pending for disposal.
GENERAL:
Your Directors state that no reporting is required in respect of the following items as there were no transactions on these items during the year under review:
1. Issue of equity shares with differential rights as to dividend, voting or otherwise.
2. Issue of shares (including sweat equity shares) to employees of the Company under any scheme. Further the company does not have a scheme for purchase of its own shares by employees or by trustees for the benefit of employees.
The Company has a zero-tolerance approach towards sexual-harassment at workplace. During the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
The Company is conscious of the importance of environmentally clean and safe operations. The Company's policy requires conduct of operations in such a manner so as to ensure safety to all concerned compliances of environmental regulations and preservations of natural resources.
TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND:
In terms of Section 125 of The Companies Act, 2013, unclaimed or unpaid Dividend relating to the financial year 2009-10 could not be remitted as stated in independent audit report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
Information in accordance with the provisions of Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo is given hereunder:
I. CONSERVATION OF ENERGY:
a) Energy Conservation measure taken: The Company ensures that the manufacturing operations are conducted in the manner whereby optimum utilization and savings of energy is achieved.
b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy: No specific investment has been made.
c) Impact of the measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production: Impact of measures taken is not quantitative and as such cannot be stated accurately.
d) Total Energy consumption per unit of production as per form 'A' to the Rules in respect of industries specified in schedule hereto:
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II. R & D AND TECHNOLOGY ABSORPTION:
Your Company has always been making best efforts towards technology absorption, adaptation and innovation to improve the quality of its products being manufactured at its various units and to reduce the cost of production. The efforts on Research & Development is a continuous process but the expenditure cannot be stated accurately. Further the Company has not procured imported technology.
III. FOREIGN EXCHANGE EARNINGS AND OUTGO:
a) The Management has taken number of initiatives for export of its products i.e., G.P. / G.C. Sheets and Coils. The exports are made to Kuwait, Namibia and Nepal directly as well as through Agents. Besides the company has taken effective steps to improve the quality of its products to capture more international markets.
1. DIRECTORS' RESPONSIBILITY STATEMENT:
To the best of knowledge and belief and according to the information and explanations obtained by them, your directors make the following statements in terms of Section 134 (3) (c) and Section 134 (5) of the Companies Act, 2013:
i. That in the preparation of the annual accounts for the year ended March 31, 2019, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
ii. That they 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 as at March 31, 2019 and the profit or loss of the Company for the year ended on that date;
iii. That the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv. That they had prepared the annual accounts for the financial year ended on 31st March, 2019 on a going concern basis;
v. That the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and
vi. That the directors had devised proper system to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively.
ACKNOWLEDGEMENT:
Your Directors take this opportunity to express their sincere thanks and appreciation to the team of executives, staff members and workers at all levels for their co-operation, hard work, dedication and devotion. Our thanks are also due to the Bankers, Government Authorities and Business constituents for their continued support and co-operation extended from time to time to the Company.