To the Members of ISMT Limited
The Directors are pleased to present the 25th Annual Report together with the Audited
Financial Statements for the year ended March 31, 2023 of ISMT Limited
("Company"). Below is the state of the Company's affairs during FY2022-23:
Financial Summary (Standalone)
Rs. in Crore
Particulars |
2022-23 |
2021-22 |
| Total Income |
2,581.70 |
2,170.66 |
| Profit before tax |
157.31 |
2,500.05* |
| Tax Expenses |
60.76 |
142.66 |
| Profit for the year |
96.55 |
2,357.39* |
| Other Comprehensive Income |
2.48 |
(5.86) |
| Total Comprehensive Income |
99.03 |
2,351.53 |
* Including exceptional income of Rs. 2,494.10 Crore, mainly due to write back of the
outstanding principle debt and unpaid interest to lenders in view of the onetime
settlement of the entire outstanding debt of the Company.
DIVIDEND
Directors do not propose any dividend for the year ended March 31, 2023, in order to
conserve resources.
Pursuant to Regulation 43A of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015, the Company has adopted the Dividend Distribution Policy
which is available on the website of the Company: www.ismt.co.in
RESERVES
No amount is proposed to be transferred to Reserves.
COMPANY PERFORMANCE
The Company achieved Net Sales of Rs. 2,533.53 Crores as compared to Rs. 2,123.41
Crores in the previous year.
Profit before Tax for the year under review stood at Rs. 157.31 Crores as compared to
Rs. 2,500.05 Crores for the previous year (this includes exceptional income of Rs.
2,494.10 Crore, mainly due to write back of the outstanding principle debt and unpaid
interest to lenders in view of the onetime settlement of the entire outstanding debt of
the Company).
During the year under review:
The Company recorded a growth in Tube business with capacity utilization improvement at
Nagar and Baramati Plant.
Jejuri Steel Plant remained operational throughout the year & contributed both in
volume and value growth of the Company.
SALE OF PRODUCTS
The Company sold 1,57,143 MT of Tubes valued at Rs. 1,977 Crore during FY 2022–23
as compared to 1,39,057 MT of Tubes valued at Rs. 1,503 Crore in the previous financial
year.
The demand for Tubes was good especially from OCTG & Projects throughout the year
under review. The average realisation of Tube, which was at around Rs. 1,08,075 per MT in
the previous year went upto around Rs 1,25,838 per MT during the year under review.
The Company sold 68,165 MT of Steel aggregating to Rs. 556 Crore during FY 2022–23
as compared to 87,214 MT Steel aggregating to Rs. 621 Crore for the previous financial
year. The demand for Steel from Audtomobile and Bearing Sectors was lower during the
financial year under review.
OPERATIONS
Capacity utilization at Steel Plant dropped marginally from 68% to 67%. The Capacity
utilization at Tube Plants gone up from 45% to 49%.
FINANCE COSTS
The Company has availed credit facilities from ICICI Bank Limited, Axis Bank Limited
and Kotak Mahindra Bank Limited. The Company aims for optimization of interest rates by
availing credit facilities at competitive rates and to effectively manage the working
capital thereby reducing the interest expenses.
CAPTIVE POWER PLANT
Captive Power Plant (CPP) continued to be inoperative throughout the year in absence of
banking facility from Maharashtra State Electricity Distribution Company Ltd.
The Company's appeal against wrongful denial of banking facility is pending in Supreme
Court.
Nevertheless, the Company had identified a buyer (viz. Omsairam Steels and Alloys
Private Limited) for CPP and executed Business Transfer Agreement with the said buyer on
December 9, 2022 for sale of CPP on a slump sale basis for Rs. 65.71 Crore. The Plant has
been handed over to the buyer on February 27, 2023.
SCHEME OF ARRANGEMENT – MERGER
The Board at its meeting held on November 4, 2022 which was adjourned to November 5,
2022 has approved a draft Scheme of Arrangement and Merger between the Company (Transferor
Company) and Kirloskar Ferrous Industries Limited (KFIL/ Transferee Company). Pursuant to
the said Scheme and upon receipt of all the requisite approvals, 17 fully paid up equity
shares of face value of Rs. 5/- each of KFIL will be allotted for every 100 fully paid up
equity shares of face value of Rs. 5/- each of the Company.
As on date, the Company is awaiting approval of the stock exchanges to the aforesaid
draft Scheme.
DIRECTORS
a. Changes in Directors & Key Managerial Personnel (KMP)
Mr. Nishikant Ektare, retires by rotation at the ensuing Annual General Meeting and
being eligible, offers himself for re-appointment.
Changes in Directors during FY2022-23
The shareholders of the Company at the Extra-ordinary General Meeting (EGM) held on
June 9, 2022 regularized the appointment of Mr. Rahul Kirloskar, Mr. Ravindranath Gumaste,
Mr. Nishikant Ektare, Dr. Shalini Sarin and Mr. S Venkataramani as Directors of the
Company. In the EGM, the shareholders approved the appointment of Mr. Nishikant Ektare as
Managing Director of the Company and Dr. Shalini Sarin and Mr. S Venkataramani were also
appointed as Independent Directors of the Company. The Board requires and possesses skills
and expertise in the field of Management, Operations, Strategic Planning, Finance,
Accounts, Legal, Corporate Restructuring, Administration, Sales & Marketing. Dr.
Shalini Sarin brings the desired skills into the Board including but not limited to
Management, Administration, Corporate Restructuring & Strategic Planning whereas Mr. S
Venkataramani brings the desired skills into the Board including but not limited to
Management, Strategic Planning, Finance, Accounts & Legal.
Upon expiry of tenure as Whole-time Director, which tenure was upto September 30, 2022,
Mr. Rajiv Goel resigned as the Chief Financial Officer of the Company w.e.f. October 1,
2022.
Mr. R Poornalingam & Mr. Rajiv Goel resigned as Directors of the Company w.e.f.
March 8, 2023 & March 18, 2023, respectively.
The Board placed on records its sincere appreciation and gratitude for services
rendered by Mr. R Poornalingam & Mr. Rajiv Goel during their association with the
Company.
Changes in KMP during FY2022-23
Mr. Suresh Patil was appointed as the Chief Financial Officer of the Company w.e.f.
November 5, 2022.
b. Statement on declarations by Independent Directors
Independent Directors have given declarations pursuant to Section 149(7) of the
Companies Act, 2013 (Act) & Regulation 25(8) of the SEBI (LODR), Regulations 2015
(Listing Regulations), stating that they meet the criteria of independence. Pursuant to
Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014,
Independent Directors have confirmed that they hold valid registration certificate with
the Databank of Independent Directors.
The Board is assured that Independent Directors possess adequate proficiency,
experience, expertise and integrity. The Company has laid down a Code for the Board of
Directors and Senior Management of the Company (Code). The Code is available on website of
the Company: www. ismt.co.in.
Board Members and Senior Management Personnel's of the Company have affirmed compliance
with the Code.
c. Board Evaluation
The Company has devised Policy for annual performance evaluation of the Board,
Committees & Directors which include criteria for performance evaluation of
non-executive & executive directors. The Board evaluates performance of the Committees
& of the Independent Directors whereas the Chairman of the Board evaluates performance
of the Board. The Independent Directors evaluate the performance of Non-Independent
Directors.
Details of familiarization Programme of Independent Directors with the Company, their
roles, rights, responsibilities in the Company, nature of industry in which the Company
operates, business model of the Company and related matters are on website of the Company:
www.ismt. co.in.
d. Nomination and Remuneration Policy
The Board has adopted a policy for selection and appointment of Directors, Key
Managerial Personnel and Senior Management Personnel, their remuneration and criteria. The
policy is available on website of the Company: viz. www.ismt.co.in
e. Number of meetings of the Board
Six meetings of the Board were held during the year under review. Detailed information
is given in the Corporate Governance report as enclosed herewith.
f. Composition of Audit and other Committees of the Board
Details of composition of committees of the Board, viz. Audit Committee, Nomination and
Remuneration Committee and Stakeholders Relationship Committee etc. are provided in the
Report on Corporate Governance as enclosed herewith.
LOANS, GUARANTEES & INVESTMENTS
Particulars of Loans, Guarantees & Investments covered under Section 186 of the Act
have been mentioned in Notes to the Financial Statements of the Company for FY
2022–23 and forms part of the Annual report for FY 2022-23.
TRANSACTIONS WITH RELATED PARTIES
During the year under review, all related party transactions entered into by the
Company were approved by the Audit Committee and were at arm's length and in the ordinary
course of business. Pursuant to Section 134 of the Act read with Rules thereof, details of
material transaction with related party in Form AOC-2 is enclosed herewith as Annexure
A.
The Policy on materiality of related party transactions and dealing with related party
transactions as approved by the Board is available on website of the Company:
www.ismt.co.in
RESEARCH & DEVELOPMENT
Details of R&D activities undertaken are enumerated in Annexure B as
enclosed herewith.
RISK MANAGEMENT
The Company has constituted a Risk Management Committee consisting of Mr. Ravindranath
Gumaste as Chairman and Dr. Shalini Sarin and Mr. S Venkataramani as Members to address
the organization wide risk including credit, security, property, regulatory and other
risks. The Committee is assisting the Board in ensuring that there is adequate risk
management policy in place capable of addressing the aforesaid risks.
INTERNAL FINANCIAL CONTROLS
The Company has deployed controls including defined code of conduct, whistle blower
policy, management review and MIS mechanisms, internal audit mechanism. The process level
controls have been instituted through the Company policies and procedures and continuous
monitoring of efficiency in operations. There is regular management oversight of the
internal controls environment at the Company. The Audit Committee along-with the
Management oversees reports of the internal audit and reviews implementation, on a
periodic basis.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY
The Board has adopted the Vigil Mechanism/ Whistle Blower Policy to deal with instances
of fraud, unethical behaviour, mismanagement, leakage of Unpublished Price Sensitive
Information etc. The Policy has provided a mechanism for employees and other persons
dealing with the Company to report any such instance to the Chairman of the Audit
Committee. No case was filed during the year. The Policy has been uploaded on website of
the Company: www.ismt.co.in.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION
AND REDRESSAL) ACT, 2013
The Company has in place a Policy for Prevention of Sexual Harassment at workplace
which, inter alia, provides a mechanism for the resolution, settlements or prosecution of
acts or instances of sexual harassment at workplace and to ensure that all employees are
treated with respect and dignity. There was no complaint/ case filed/ pending with the
Company during the year under review. The Company has complied with the provisions
relating to the constitution of Internal Committee under the Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act, 2013.
ANNUAL RETURNS FILED WITH THE MINISTRY OF CORPORATE AFFAIRS
Pursuant to Section 134 read with Section 92(3) of the Act, as amended, copies of the
annual returns filed with the Ministry of Corporate Affairs (MCA) are available on website
of the Company: www.ismt.co.in and Annual Return for FY 2022–23 will be uploaded on
the Company's website in due course.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS & OUTGO
Details on conservation of energy, technology absorption and foreign exchange earnings
and outgo pursuant to Section 134(3) (m) of the Act read with Rule 8 of the Companies
(Accounts) Rules, 2014 are annexed herewith as Annexure B.
CORPORATE SOCIAL RESPONSIBILITY
The Company has always believed in working for the betterment and upliftment of the
society and that Corporate Social Responsibility (CSR) has been practiced over the years
in the Kirloskar Group. Focus areas under CSR includes Education, Health and Hygiene,
Environment and Rural Development. During the period under review, the Company has carried
out CSR activities through an implementing agency. The composition of CSR Committee and
the Report on CSR is annexed herewith as Annexure C.
INFORMATION PURSUANT TO RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF
MANAGERIAL PERSONNEL) RULES, 2014
Information relating to remuneration and other details as required pursuant to Rule 5
of the Companies (appointment and remuneration of managerial personnel) Rules, 2014 is
annexed herewith as Annexure D.
AUDITORS
A. STATUTORY AUDITORS
The Members of the Company at Annual General Meeting (AGM) held on 29 July 2022
appointed P G Bhagwat LLP, Chartered Accountants as Statutory Auditors of the Company to
hold office for term of five years from conclusion of 24th AGM until the conclusion of
29th AGM of the Company. The Statutory Auditors have provided a certificate confirming
that requirements prescribed under provisions of Section 141 of the Act have been
fulfilled. The reports given by the Statutory Auditors on standalone and consolidated
financial statements of the Company forms part of the Annual report for FY 2022-23.
There are no qualification/ reservation/ adverse remark in the aforesaid reports given
by the Statutory Auditors.
B. SECRETARIAL AUDITORS
Pursuant to Section 204 of the Act and rules thereof, M/s. KPRC & Associates,
Company Secretaries have been appointed to conduct the Secretarial Audit of the Company
for FY2022-23. The Secretarial Audit Report issued by them is annexed herewith as Annexure
E.
In respect of the Audit observations, following are the comments of the Board:
a. Shareholding of promoter group not in demat form:
During FY2022-23, the concerned promoter group entity has Dematted its entire
shareholding in the Company.
b. Non-filing of Annual Performance Report:
Opinion will be taken on its applicability and accordingly, corrective steps, if any,
will be taken.
c. Non-filing of e-form CHG-4 – Charge satisfaction:
In view of the technical issue in filing e-form CHG-4 on MCA website, the Company has
requested ROC to take on record the charge satisfaction through back office mechanism.
d. Non receipt of prior approval of the Audit Committee:
Prior approval was, inadvertently, not obtained for reimbursement of expenses to a
related party of Rs. 4 Lakh which was subsequently ratified by the Audit Committee.
C. COST AUDITORS
Pursuant to Section 148 of the Act & rules thereof, the Board appointed M/s.
Dhananjay V. Joshi & Associates & M/s. Parkhi Limaye & Co, Cost Accountants as
the Cost Auditors to conduct audit of cost records maintained by the Company for
FY2022–23.
Payment of remuneration for FY2022-23 to the aforesaid Cost Auditors is subject to
ratification by members at the ensuing AGM.
Cost Audit Report for FY2021-22 was filed within prescribed time limit as per the
Companies (Cost Record and Audit Rules), 2014.
MANAGEMENT DISCUSSION & ANALYSIS
Pursuant to Regulation 34(3) of the Listing Regulations, the Report on Management
Discussion and Analysis forms part of the Annual Report of the Company for FY2022-23.
CORPORATE GOVERNANCE REPORT
The Company conforms to norms of the corporate governance as envisaged in the Listing
Agreement executed with the stock exchanges. Pursuant to Regulation 34(3) of the Listing
Regulations, the Report on Corporate Governance forms part of th Annual Report of the
Company for FY2022-23.
The Managing Director & CFO has certified to the Board with regard to the financial
statements & other matters as required under Regulation 17(8) of the Listing
Regulations.
A certificate from the Practicing Company Secretary, regarding compliance with
conditions of corporate governance, as required pursuant to the Listing Regulations, has
been annexed to the Report on Corporate Governance.
BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT
Pursuant to Regulation 34(2)(f) of the Listing Regulations, the Business Responsibility
& Sustainability Report forms part of the Annual Report for FY 2022-23.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134 of the Act, in respect of Director's Responsibility Statement,
the Directors state that: a) in the preparation of annual accounts, the applicable
accounting standards have been followed and there were no material departures; b)
accounting policies as mentioned in the Notes forming part of the Financial Statements
have been selected and applied consistently. Further, judgments & estimates made are
reasonable & prudent so as to give a true & fair view of the state of affairs of
the Company as at March 31, 2023 & of the Profits of the Company for the year ended on
that date; c) proper and sufficient care has been taken for the maintenance of adequate
accounting records in accordance with the provisions of the Act for safeguarding the
assets of the Company and for preventing and detecting fraud and other irregularities; d)
the annual financial statements have been prepared on a going concern basis; e) proper
internal financial controls were laid down & such financial controls were adequate
& operating effectively; & f) proper systems were in place to ensure compliance
with the provisions of all applicable laws and such systems were adequate and operating
effectively.
NCLT PETITION
In relation to an ongoing MCA investigation initiated against the Company, under
Section 212 of the Act, a Petition has been filed by MCA in NCLT, Mumbai against certain
past Key Managerial Personnels of the Company, inter alia, alleging misappropriation of
resources of the Company and seeking freezing of their assets. The Company has been made a
party to the aforesaid Petition as a Proforma Respondent. However, the Company has applied
to the NCLT for removal of its name from the Petition as there is no prayer against the
Company in the said Petition.
The Petition is still being heard before the NCLT.
INVESTMENT IN SOLAR AND WIND MILLS
With an intent to reduce the power cost, the Company has decided to make investments,
upto Rs. 305 Crore, for setting up of solar power plant for captive consumption. For this,
commissioning of 70 MW solar power plant, in phased manner, is in process. Similarly,
consent has been accorded for investment by the Company, upto Rs. 50 Crore, for acquiring
wind-mills, upto 35 MW, for captive consumption, in a phased manner.
REPAYMENT OF UNSECURED LOAN
During the year under review, the Company has repaid the unsecured loan so availed from
KFIL of Rs. 194 Crore.
SUBSIDIARIES
As on date, the Company has ten direct & indirect subsidiaries. In accordance with
Section 129(3) of the Act, statement containing salient features of the financial
statements of the subsidiaries in Form AOC-1 & report on performance & financial
position of each subsidiary is provided in the financial statements for FY2022-23. The
Company has framed the Policy for determining Material Subsidiaries which is available on:
www.ismt.co.in
The Board has in principle agreed to take steps for closure of non-operational
subsidiaries viz. Indian Seamless Inc., USA, ISMT Europe AB, Sweden and PT ISMT Resources,
Indonesia. The Company has also initiated review of operations & future opportunities
of subsidiary viz. Structo Hydraulics AB, Sweden. During the period under review, no
company has become or ceased to be a Subsidiary, Joint Venture or Associate Company.
GENERAL
During the year under review-
1. The Company was required to maintain cost records as specified u/S 148(1) of the Act
& accordingly such accounts/ records are prepared & maintained.
2. The Company has complied with the applicable secretarial standards.
3. The Company has not accepted deposits from the public.
4. There has been no change in nature of business of the Company.
5. To the best of our knowledge, no significant or material orders were passed by the
Regulators, Courts or Tribunals which impact the going concern status & the Company's
operations in future.
6. No case of fraud by any officer or employee of the Company has been reported by the
Auditors of the Company either to the Audit Committee or the Board pursuant to Section
143(12) of the Act.
7. Neither any application has been made nor has any proceeding been pending against
the Company under the Insolvency and Bankruptcy Code, 2016.
8. There was no incidence of settlement in respect of any loan availed from any bank or
financial institution.
There is no material change or commitment occurring after the end of the financial
year, which may affect the financial position of the Company.
CAUTIONARY STATEMENT
Statements in this report, particularly those which relate to the Management Discussion
and Analysis, describing the Company's objectives, projections, estimates and expectations
may constitute ‘forward looking statements' within the meaning of applicable laws and
regulations. Actual results may differ materially from those either expressed or implied.
APPRECIATION
The Directors wish to place on record their appreciation towards the contribution of
all employees of the Company and their gratitude to the Company's valued customers,
bankers, vendors and members for their continued support and confidence in the Company.
|
For and on behalf of |
|
the Board of Directors |
|
ISMT Limited |
| Pune |
Rahul Kirloskar |
| May 03, 2023 |
Chairman |
|