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To
The Members
Prakash Steelage Limited
Dear Members,
The Directors have pleasure in presenting their 24th Annual Report on
the business and operations of the Company and the audited financial
statements for the Financial Year ended March 31, 2015.
Corporate Overview :
Prakash Steelage Limited is a Company that manufactures and exports
stainless steel tubes and pipes. It has its Registered Office located
at Mumbai, Maharashtra and plants located at Umbergaon, Gujarat and
Silvassa (UT- Dadra & Nagar Haveli ).
Financial Highlights of the Company :
The financial highlights of the Company, for the year ended 31st March,
2015 are summarized below:
(Rs. in Lacs)
Standalone Consolidated
Particulars FY 2014-15 FY 2013-14 FY 2014-15 FY 2013-14
Total Revenue 1,08,455.17 94,833.55 1,13,529.55 1,02,955.72
Less: Expenditure 1,05,179.52 91,493.44 1,10,188.70 99,130.31
Profit Before Tax
and Depreciation 3,275.65 3,340.11 3,340.84 3,825.41
Less: Depreciation 1,135.96 808.66 1,135.96 808.66
Profit Before Tax
(PBT) 2,139.69 2,531.45 2,204.87 3,016.74
Less: Tax 733.69 876.53 733.69 876.53
Net Profit
After Tax (PAT) 1,406.00 1,654.92 1,471.18 2,140.21
Financial Performance :
On Standalone Basis the income from operations fo r the year has
increased to Rs.1,08,455.17 Lacs as compared to Rs.94,833.55 Lacs of
previous year reflecting a growth of 14.36%. The Profit Before Ta x for
the year was Rs.2,139.69 Lacs as against Rs.2,531.45 Lacs. The Net
Profit after Tax is Rs.1,406.00 Lacs as compared to Rs.1,654.92 Lacs
during previous year. The profit percentage both of PBT and PAT were
decreased on account of the increased cost of production and operations
and due to exceptional item.
Subsidiaries :
In accordance with Section 129 (3) of the Companies Act, 2013 and
Accounting Standard (AS) 21, the Company has prepared the Consolidated
Financial Statements of the Company and all its subsidiaries, which
forms part of this Annual Report.
The Company has its Wholly-Owned Foreign Subsidiary at U.A.E. in the
name of Pioneer Stainless & Alloy, F.Z.C. The details with respect to
operations of Wholly-owned Foreign Subsidiary during the year under
review are covered in the Management Discussion and Analysis Report.
The Statement in form AOC-1 (Annexure 1) containing salient features of
the financial statements of Company's Subsidiaries is attached to this
report.
- Wholly-owned Subsidiary / Associate Company :
The Company entered into a Joint Venture Agreement dated 13th February,
2015, executed between theCompany and Tubacex S.A. Spain. Accordingly,
the Company incorporated Joint Venture (JV) Company 'Tubacex Prakash
India Private Limited' as a Wholly Owned Subsidiary, and transferred
its seamless stainless steel tubes and pipes business to JV Company, in
accordance with the provisions of the Business Transfer Agreement dated
25th July, 2015 executed between the Company and the JV Company.
The Company utilized the said consideration in the following manner:
i) Rs.20,601.30 Lac has been utilized towards the repayment of Bank
debts, creditors of seamless division and incidental expenses; and
ii) Rs.314.70 Lac towards investment in the Equity Share Capital in the
JV Company.
The JV Company on July 27, 2015, allotted Equity Shares as per the JV
Agreement, resulting in Tubacex S.A., Spain holds 67.53% and the
Company holds 32.47% of the Equity Share Capital in the JV Company.
Subsequent to the said allotment, the JV Company which had been
incorporated as a Wholly Owned Subsidiary of the Company has become an
Associate Company.
Joint Venture :
- Development of Industrial Park :
During the financial year 2013-14, the Company had formed strategic
alliance with Kargwal Developers Private Limited (Co-promoter Omkar
Group) for developing an Industrial Park in the name of "Krishna
Industrial Park" on its idle land located at Palgam, Umbergaon,
Gujarat. The profit generated through construction business has been
shown as other income of the Company.
Share Capital :
The Paid-up Share Capital of the Company as at 31st March, 2015 stood
at 17.50 Crore. During the year under review, the Company has not
issued shares with or without differential voting rights nor has
granted any stock option or sweat equity. As on 31st March, 2015, none
of the Directors of the Company hold instruments convertible into
Equity Shares of the Company.
Dividend :
The Board has, subject to the approval of members at the ensuing Annual
General Meeting, recommended a dividend of Paise 0.50 (Previous Year
Re. 1/-) per Equity Share on the 1,75,00,039 fully paid-up Equity
Shares of Rs.10/- each, for the financial year ended 31st March, 2015.
Details in respect of adequacy of internal financial controls with
reference to the Financial Statements :
The Company has in place adequate internal financial controls with
reference to financial statements, some of which are outlined below.
Your Company has adopted accounting policies which are in line with the
Accounting Standards prescribed in the Companies (Accounting Standards)
Rules, 2006 that continue to apply under Section 133 and other
applicable provisions, if any, of the Companies Act, 2013 read with
Rule 7 of the Companies (Accounts) Rules, 2014 and relevant provisions
of the Companies Act, 1956, to the extent applicable. These are in
accordance with generally accepted accounting principles in India.
Changes in policies, if any, are approved by the Audit Co mmittee in
consultation with the Auditors.
The policies to ensure uniform accounting treatment are prescribed to
the subsidiaries of your Company. The accounts of the subsidiary
companies are audited and certified by their respective Auditors for
consolidation.
Your Company operates in SAP system, and has many of its accounting
records stored in an electronic form and backed up periodically.
The Management periodically reviews the financial performance of your
Company against the approved plans across various parameters and takes
necessary action, wherever necessary. Internal Auditors have been
appointed which report on quarterly basis on the operations of the
Company. The observations, if any, of the Internal Auditors, are
resolved to their satisfaction and are implemented across all the
sites.
Credit Rating :
CRISIL has reaffirmed its rating:
1. BBB for long term and
2. A3 for short term
The ratings reflect the Company's financial risk profile, marked by
healthy net worth and low gearing, and its established market position
in the stainless steel pipes and tubes industry. These rating strengths
are partially offset by the Company's working-capita-intensive
operations and its susceptibility to volatility in prices of inputs and
in foreign exchange rate.
Deposits :
The Company has not accepted any Deposit from the public within the
meaning of provisions of Section 73 of the Companies Act, 2013 read
together with the Companies (Acceptance of Deposits) Rules, 2014.
Statutory Auditors :
M/s. Khandelwal Jain & Co., (Firm Registration No. 105049W) and M/s.
Batliboi & Purohit, (Firm Registration No . 101048W), Chartered
Accountants were appointed as the Joint Statutory Auditors of the
Company for Financial year 2014-15 and holding office upto the
conclusion of the ensuing Annual General Meeting.
However, M/s. Khandelwal Jain & Co., Chartered Accountants (Firm
Registration No. 105049W) have intimated their inability to continue
and therefore not seeking re-appointment, as the Joint Statutory
Auditor at the ensuing Annual General Meeting of the Company.
Your Directors have proposed, on the basis of the recommendation of the
Audit Committee the re-appointment of M/s. Batliboi & Purohit,
Chartered Accountants, (Firm Registration No. 101048W), as the
Statutory Auditor of the Company, and the said firm shall hold office
from the conclusion of this Annual General Meeting till conclusion of
the AGM to be held for the financial year 2019-20 (i.e., for a term of
5 years) (subject to ratification of the appointment by the Members at
every AGM held after this AGM) at such remuneration plus out- of-pocket
expenses as may be agreed to between the Board of Directors of the
Company and the Auditors of the Company.
In this regard, the Company has received necessary consent letter from
M/s. Batliboi & Purohit intimating their consent and eligibility to the
effect that their reappointment, if made, will be in accordance with
Section 141 of the Companies Act, 2013.
Auditors' Report :
There is no qualification in the Auditors' report on the financial
statements of the Company. There is an 'emphasis of matter' regarding
non-disclosure of initial disclosures as required by Accounting
Standard (AS) 24 'Discontinuing Operations' for the proposed transfer
of seamless business. The reason for non-disclosure are mentioned in
note no. 40 to the Financial Statements which is self explanatory.
Cost Auditor :
As per Section 148 read with Companies (Audit and Auditors) Rules, 2014
and other applicable provisions, if any, of the Companies Act, 2013 the
Board of Directors of your Company has appointed M/s. Amish Parmar &
Associates, Cost Accountants as the Cost Auditor of your Company for
the financial year 2015-16 on the recommendations made by the Audit Co
mmittee. The remuneration proposed to be paid to the Cost Auditors,
subject to the ratification by the members at the ensuing Annual
General Meeting, would be Rs.95,000/- plus Service Ta x and out of
pocket expenses, if any. Necessary resolution seeking your ratification
for the proposed remuneration to be paid to the Cost Auditor has been
included in the notice of the Annual General Meeting.
The Co st Audit Report fo r the year ended 31st March, 2014 in XBRL
format has been filed on 29th November, 2014.
Significant and Material Orders :
There are no significant and material orders passed by the regulators
or courts or tribunals impacting the going concern status and Company's
operations in future.
Extract of the annual return :
The details forming part of the extract of the Annual Return in Form
MGT- 9 in accordance with Section 92(3) of the Companies Act, 2013 read
with the Companies (Management and Administration) Rules, 2014, are set
out herewith as 'Annexure 2' to this Report.
Disclosure under Section 134 (3) (l) of the Companies Act, 2013 :
Except as disclosed elsewhere in this report, there have been no
material changes and commitments which can affect the financial
position of the Company between the end of the financial year of the
Company and date of this report.
Conservation of energy, technology absorption and foreign exchange
earnings and outgo :
a. Conservation of energy, technology absorption
The details of conservation of energy, technology absorption, foreign
exchange earnings and outgo are as stated in Annexure 3 of this report.
b. Foreign exchange earnings and Outgo
The Foreign Exchange earned in terms of actual inflows during the year
and the Foreign Exchange outgo during the year in terms of actual
outflows (as attached Annexure 3) to this report.
Directors and Key Managerial Personnel :
a. Meetings of the Board of Directors and Audit Committee held during
the year 2014-15 :
The details of the number of Board meetings and Audit Committee
Meetings of your Company are set out in the Corporate Governance Report
which forms part of this Report.
b. Changes in Directors and Key Managerial Personnel
In compliance with the provisions of Sections 149, 152, Schedule IV and
other applicable provisions, if any, of the Companies Act, 2013 read
with Companies (Appointment and Qualification of Directors) Rules,
2014, D r. Bipin C. Doshi, Mr. Himanshu J. Thaker, M r. Gautam C. Jain
and M r. A. Prakashchandra Hegde were appointed as Independent
Directors on the Board of Directors of your Company at the 23rd AGM
held on September 26, 2014 to hold office upto March 31, 2019.
Further during the financial year 2014-15, Ms. Neetta K. Bokaria, was
appointed as Additional/Non-Executive Director of your Company at the
meeting of the Board of Directors held on March 30, 2015 and
subsequently her appointment was approved as a Non-Executive
(Independent) Director by The shareholders through Postal Ballot.
Dr. Bipin C. Doshi, resigned as the Independent Director of the Company
with effect from 31st May, 2015.
Further in terms of Clause 8.1 of the Joint Venture Agreement executed
between the Company and Tubacex S.A., Mr. Ashok M. Seth, resigned as
the Whole-Time Director and Chief Financial Officer of the Company with
effect from 01st August, 2015, on his proposed appointment as an
Executive Director of Tubacex Prakash India Private Limited, and M r.
Kamal P. Kanugo, resigned as a Whole-time Director of the Company with
effect from 01st August, 2015, on his proposed appointment as an
Executive Director of Tubacex Prakash India Private Limited. Subsequent
to the above-mentioned resignation, M r. Ashok M Seth and Mr. Kamal P.
Kanugo are continuing only as Directors on the Board of Directors of
your Company.
Mr. Hemant Kanugo has been appointed as the Chief Financial Officer of
the Company with effect from 14th August, 2015.
Mr. Prakash C. Kanugo, the Chairman & Managing Director of the Company
is liable to retire by rotation at the ensuing AGM pursuant to the
provisions of the Companies Act, 2013 read with Companies (appointment
and Qualification of Directors) Rules, 2014 and the Articles of
Association of the Company and being eligible has offered himself for
re-appointment. Resolution for his re-appointment is being placed for
your approval at the ensuing AGM. The brief resume of the Director and
other related information has been detailed in the Notice convening
24th AGM. Your Directors recommend his re-appointment.
Mr. Prakash C. Kanugo, Managing Director, M r. Hemant Prakash Kanugo,
Chief Financial Officer are the Key Managerial Personnel of your
Company in accordance with the provisions of Sections 2(51), 203 of the
Companies Act, 2013 read with Companies (Appointment and Remuneration
of Managerial Personnel) Rules, 2014. Ms. Pallavi. P. Shedge tendered
her resignation as the Company Secretary and Compliance Officer of the
Company effective from August 19, 2015.
c. Declaration by an Independent Director(s) and re- appointment, if
any :
Your Company has received declarations from all the Independent
Directors confirming that they meet the criteria of independence as
prescribed under the provisions of Companies Act, 2013 read with the
Schedules and Rules issued thereunder as well as Clause 49 of the
Listing Agreement.
d. Formal Annual Evaluation :
In terms of the provisions of the Companies Act, 2013 read with Rules
issued thereunder and Clause 49 of the Listing Agreement, the Board of
Directors on recommendation of the Nomination and Remuneration
Committee, have evaluated the effectiveness of the Board/Director(s)
for the financial year 2014-15.
Familiarisation Programme for Independent Directors :
Pursuant to provisions of Clause 49 (II) (B) (7) (b) of the Listing
Agreement, during the year under review the Company prepared and
pursued the Familiarization Programme for Independent Directors as
hosted on Company's website at www.prakashsteelage.com.
Audit Committee :
The Company has its Audit Committee constituted under the provisions
of Section 177 of the Companies Act, 2013 and Clause 49 of the Listing
Agreement, with enhanced scope and functions as stipulated under the
law. The Audit Committee of the Company comprises Mr. Gautam C. Jain
as Chairman of the Committee, Mr.A.Prakashchandra Hegde, Mr. Himanshu
J. Thaker and Mr. Ashok M. Seth as members of the Committee. The
scope and functions of the Committee are available on Company's website
www.prakashsteelage.com. All the recommendations of the Audit Committee
were accepted by the Board of Directors during the year.
Vigil Mechanism :
The Company has adopted vigil mechanism details of which have been
provided in the Corporate Governance Report and policy on vigil has
been posted on the website of the Company i.e.,
www.prakashsteelage.com.
Nomination and Remuneration Committee :
In Compliance with the provisions of Section 178 of Companies Act,
2013, your Company re-constituted its "Nomination and Remuneration
Committee" with enhanced scope and functions as stipulated under the
law. The Nomination and Remuneration Committee of the Company
comprises of Mr. Himanshu J. Thaker as Chairman of the Committee, Ms.
Neetta K. Bokaria and Mr. A. Prakashchandra Hegde as members of the
Committee. The scope and functions of the Committee are available on
Company's website www.prakashsteelage.com.
The Nomination and Remuneration Policy as approved by the Board is
attached herewith as Annexure 4 to this report.
Policy for Selection, Appointment and Remuneration of Directors
including criteria for their performance evaluation :
Clause 49 of the Listing Agreement mandates that the Board shall
monitor and review the Board evaluation framework. The Companies Act,
2013 states that a formal annual evaluation needs to be made by the
Board of its own performance and that of its committees and individual
directors. Schedule IV of the Companies Act, 2013 states that the
performance evaluation of independent directors shall be done by the
entire Board of Directors, excluding the director being evaluated.
The Performance Evaluation of the Directors, the Board and its
Committees was carried out based on the criteria /manner recommended by
the Nomination & Remuneration Committee and approved by the Board of
Directors. Further details in respect of the criteria of evaluation has
been provided in the Corporate Governance Report.
The performance evaluation of the Independent Directors was also
carried out by the entire Board. The performance evaluation of the
Chairman and the Non Independent Directors was carried out by the
Independent Directors who reviewed the performance of the Secretarial
Department. Your directors express their satisfaction with the
evaluation process.
Stakeholders' Relationship Committee :
In Compliance with The provisions of Section 178 of Companies Act,
2013, your Company re-constituted its 'Stakeholders' Relationship
Committee', wi th an enhanced scope and functioning. The stakeholders
Relationship Committee of the Company comprises of M r. A.
Prakashchandra Hegde as Chairman of the Committee and Mr. Himanshu J.
Thaker and Mr. Ashok M. Seth as Members of the Committee. The scope and
functions of the Committee are available on Company's website
www.prakashsteelage.com.
Corporate Social Responsibility Committee :
Your Company has constituted CSR Committee considering the requirements
of the Companies Act, 2013. Details regarding constitution of the
Committee and its meetings have been provided in the Corporate
Governance Report.
The Company has not made any expenditure on CSR as the Company is
still in the process of identifying the eligible project. The Company
intends to contribute the money for CSR activities as soon as the
project is identified.
Risk Management Committee :
Your Company has constituted Risk Management Committee in Compliance
with the Clause 49 of Listing Agreement. The details with respect to
constitution, scope and functions of the Committee are available on
Company's website www.prakashsteelage.com.
Executive Committee :
Your Company has constituted its Executive Committee comprising of
Executive Directors with an enhanced scope and functioning. The
Executive Committee of the Company comprises of M r. Prakash C. Kanugo
as Chairman of the Committee and Mr. Ashok M. Seth, Mr. Hemant P.
Kanugo and Mr. Kamal P. Kanugo as Members of the Committee.
Loans, Guarantees or Investments :
Details of Loans, Guarantees and Investments, if any covered under the
provisions of Section 186 of the Act are given in the notes to the
Financial Statements.
Particulars of contracts or arrangements with related parties:
The particulars of every contract or arrangements entered into by the
Company with related parties referred to in sub-section (1) of section
188 of the Companies Act, 2013 including certain arms length
transactions under third proviso thereto is appended in Form No. AOC -
2 as per Annexure 5 to this report.
Managerial Remuneration:
The table containing the names and other particulars of employees in
accordance with the provisions of Section 197 (12) of the Companies
Act, 2013, read with the Rule 5(1) and Rule 5(2) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 is
appended as Annexure 6 to this report.
Secretarial Audit Report :
Pursuant to the provisions of Section 204 of the Companies Act, 2013
read with the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, your Company has appointed M/s. S. Anantha &
Co., Practising Company Secretary to conduct the Secretarial Audit of
your Company. The Secretarial Audit Report is annexed herewith as
Annexure 7 to this report.
Necessary explanation to the observations made in the Secretarial Audit
Report are given below:
Non-filing of E-Form-MGT10 i.e., Return to be filed with Ministry of
Corporate Affairs, whenever there is an increase or decrease of two
percent or more in the shareholding of the Promoters and top ten
shareholders within 15 days of such change by the Company.
Though the Company has filed the Annual Return on Foreign Liabilities
and Assets with Reserve bank of India, the return of Annual Performance
Report with respect to the foreign subsidiary is not filed.
Reply: The Company is required to file e-Form MGT-10 in case of any
change of increase / decrease of 2% or mo re in the shareholding of
shareholding of the Promoters and the top ten shareholders and 2% or
more is calculated on the paid up share capital of the Company.
During the year there was no change in The shareholding of the
promoters and the change, if any, in the shareholding of the top ten
shareholders is less than 2% of the paid-up share capital of the
Company.
The return of Annual Performance Report with respect to the foreign
subsidiary was not filed due to oversight. Proper systems and
processes have been introduced to ensure that the Annual Performance
Report is filed within the stipulated time in the subsequent years.
Corporate Governance Certificate :
The Compliance certificate from The auditors or practicing company
secretaries regarding compliance of conditions of corporate governance
as stipulated in Clause 49 of the Listing agreement shall be annexed
with the report.
Internal Control Systems :
Your Company has an effective internal control and risk mitigation
system, which is constantly assessed and strengthened with new /
revised standard operating procedures.
The Company has entrusted the internal audit to M/s. Anand Jain &
Associates, Chartered Accountants. The initial object of the internal
audit process is test and review of controls, independent appraisal of
risks, business process and benchmarking internal controls with best
practices.
The Audit Committee of the Board of Directors actively reviews, the
adequacy and effectiveness of the internal control systems and suggests
improvements to strengthen them.
The Company has a robust Management Information System, which is an
integral part of the control mechanism.
The Audit Committee of the Board of Directors and Statutory Auditors
are periodically apprised of the Internal Audit findings and corrective
action taken. Internal audit plays a key role in providing assurance to
the Board of Directors.
Policy on Prevention of Sexual Harassment :
The Company has in place Anti Sexual Harassment Policy in line with
the requirements of The Sexual Harassment of Women at the Workplace
(Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Co
mmittee (ICC) has been set up to redress complaints received regarding
sexual harassment. All employees (permanent, contractual, temporary,
trainees) are covered under this policy.
During the financial year 2014-2015, no complaints were received
regarding sexual harassment.
Directors' Responsibility Statement :
Pursuant to Section 134 (3)(c) of the Companies Act, 2013, the Board of
Directors confirm that:
(a) in the preparation of the annual accounts for the year ended March
31, 2015, the applicable accounting standards read with requirements
set out under Schedule III to the Act, have been followed and there are
no material departures from the same;
(b) the Directors have approved the accounting policies and have been
applied consistently and have made judgment 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, 2015 and of the profit 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 this
Act for safeguarding the assets of the Company and for preventing and
detecting fraud and other irregularities;
(d) the annual accounts have been prepared on a 'going concern' basis;
(e) proper internal financial controls are followed by the Company and
that such financial controls are adequate and are operating
effectively; and
(f) proper systems to ensure compliance with the provisions of all
applicable laws are in place and such systems are adequate and
operating effectively.
Acknowledgements :
Your Directors place on record their sincere appreciation to Stock
Exchanges, shareholders, banks, government authorities, business
associates and other stakeholders. The Board also recognizes the
contribution of the valued customers in the growth of the Company and
takes this opportunity to pledge the Company's commitment to serve
them.
Your Directors also wish to place on record their deep sense of
appreciation for the hard work, cooperation, solidarity, dedication and
commitment displayed by all executives, officers and staff during the
year, resulting in the successful performance of the Company.
Regd. Office : On Behalf of the Board of Directors
1402, 14th Floor, For Prakash Steelage Limited
A Wing, Naman Midtown,
Senapati Bapat Marg,
Elphinstone Road,
Mumbai - 400 013
Sd/-
Place: Mumbai Prakash C. Kanugo
Date: 14th August, 2015 (Chairman & Managing Director)
CIN: L27106MH1991PLC061595 DIN: 00286366
Tel.: 022 6613 4500
Fax: 022 6613 4599
Website: www.prakashsteelage.com
E-Mail: investorsgrievances@prakashsteelage.com
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