Your Directors have pleasure in presenting the 37th Annual Report on the business and operations of your Company along with the Audited Financial Statements for the Financial Year ended March 31, 2016.
MATERIAL CHANGES AFFECTING FINANCIAL POSITION
Your Board of Directors in its meeting held on May 03, 2016, subject to customary regulatory approval and other condition precedents had approved the Divestment of 1000MW power unit of the Subsidiary Company i.e. Jindal Power Limited located in Chhattisgarh to a related party i.e. JSW Energy Limited through a process of scheme or other mechanisms including transfer through special purpose vehicle ("SPV") and thereafter sale of entire share capital and other securities of the said SPV in terms of Share Purchase Agreement for an enterprise value of Rs. 6,500 crore plus value of Net Current Assets as on the closing date. The valuation may vary based upon the achievement of Power Purchase Agreement(s), Fuel sourcing tie-ups as prescribed in the Agreement subject to the minimum of Rs. 4,000 crore plus value of Net Current Assets as on the closing date.
Sale of Steel products in the domestic market was 27.36 Lakh MT as compared to 22.74 Lakh MT in the previous year showing an increase of 20.3% and total export was 2.41 Lakh MT as compared to 4.50 Lakh MT in the previous year showing a decrease of 46.4%.
Profit before tax (PBT) was Rs. (-) 1,659.72 crore as against Rs. (-) 639.41 crore in the previous year and profit after tax (PAT) stood at Rs. (-) 1,018.88 crore against Rs. (-) 310.68 crore in the previous year.
Steel: Production of Finished Steel products during the year under review was 25.10 Lakh MT as against 23.19 Lakh MT in the previous year whereas production of semi steel products was 34.82 Lakh MT as against 30.82 Lakh MT in the previous year.
Power: During the year under review, 6,870 million Kwh of power was generated as against 7,340 million Kwh of power in the previous year.
Sponge Iron: Production of Sponge Iron during the year under review was 19.94 Lakh MT as against previous year production of 16.61 Lakh MT.
On standalone basis the total revenue (net of excise) was Rs. 12,852.46 crore as against Rs. 13,686.79 crore in the previous year showing a decline of 6.1%.
Pellet: 45.89 Lakh MT of pellets were produced during the year under review as against 32.19 Lakh MT in the previous year.
Machinery: Machinery division in Raipur unit produced 1,931 MT of castings and has done machining of 14,088 MT, as against 1,832 MT and 10,592 MT respectively in the previous year.
Mining: The mining of calibrated iron ore at captive mine at Tensa in Odisha was 6.22 Lakh MT as against previous year's mining of 4.90 Lakh MT.
The detailed discussions on the operations have been given elsewhere in the report.
Steel Plant at Angul, Odisha
Your Company has completed following operational facilities under Phase - I of 6 MTPA integrated Steel Plant at Angul in the State of Odisha:
a) Steel Melting Shop: Your Company has implemented 250 T Electric Arc Furnace which is one of the largest in India. This has doubled the Steel production in this Financial Year in comparison to the previous year.
b) Direct Reduced Iron Plant: 1.8 MTPA DRI Plant is a unique plant in the world which utilizes syngas (Produced from Coal) and improved its operational efficiency through various drives and hence doubled the production.
c) Plate Mill: Your Company has one of the widest plate mill (5mtrs. wide) plant with 1.2 MTPA capacity and is producing different types of value added plates for sectors such as Defence, Hydel Projects, Oil Exploration etc.
These plants are supported by 810 MW Captive Power Plant (6x135 MW), Air Separation Unit (2x1200 TPD), Lime Dolomite Plant (2x500 TPD), Coal Washery (6 MTPA) and Process Boilers (3x1800 TPH).
Steel Plant at Raigarh, Chhattisgarh
To enhance the plant's productivity and output, your Company has completed the following new projects in Raigarh during the Financial Year under review:
1. Modification of EAF#01 of SMS-2 to NEOF which uses 85% HM and 15% DRI thus resulting in improved yield % and reduced conversion cost. The technology has been supplied by Tenova SPA, Italy.
2. Long Rail Welding facility at RUBM which is now welding 3 nos. of 87 Mtr Rails into 260 Mtr panels. The Company has now started dispatch of 260 Mtr long rails to DFCC.
3. Upgradation of Plate Mill for improvement in productivity and quality of plates and coils.
Pellet Plant at Barbil, Odisha
Your Company has completed Rapid Loading System and Fines Conveying System from wagon tippler to stock yard.
Machinery Division at Raipur, Chhattisgarh
Your Company has implemented following facilities during the Financial Year under review:
1. Installed CNC Oxyfuel Plate Cutting Machine in Fabrication shop to enhance fabrication capability.
2. Automated Annealing furnace through new Proportional Integral Derivate (PID) Controller to increase the efficiency of the furnace.
3. Enhanced capacity of Quality Lab by procuring equipment such as Extensometer for Universal Testing Machine, Brinell Hardness Tester, Notch Broching Machine and Profile Projector to meet NABL requirements.
Shadeed Iron & Steel, Oman
Shadeed Iron & Steel LLC, Oman, a Subsidiary Company has commissioned the world's largest and most modern state-of-the-art 1.4 MTPA Rebar Mill on January 17, 2016 to supply finished steels, the first time in its five-year-history with the imminent production of Rebar's for the construction industry to cater mainly to domestic and Middle East countries. The Steel-making and Rolling Complex was dedicated to the nation on March 20, 2016.
PROJECTS UNDER IMPLEMENTATION
Steel Plant at Raigarh, Chhattisgarh
Your Company has the following projects under implementation with a view to increase the efficiency of steel plants at Raigarh:
1. Head hardened rails for high speed applications and Metro rails and exports.
2. Installation of new reheating furnace in Rail and Universal Beam Mill to increase throughput.
3. Upgradation of Rail Finishing Facility at RUBM for Capacity and Dispatch Enhancement.
Steel Plant (Phase 1B) at Angul in the state of Odisha
Your Company is expanding the steel plant (Phase 1B) at Angul at brisk pace from the present 1.5 MTPA to 5 MTPA through the conventional integrated steel plant route i.e Coke Oven and ByProduct Plant, Sinter Plant, Blast Furnace, Steel Melting Shop- II, Bar Mill and other allied units.
In Phase 1B units viz. Blast Furnace, Coke Oven and By-Product Plant, Sinter Plant, Steel Melting Shop - II; majority of civil work (~ 80%) has been completed. Structural Fabrication and Erection work is in progress and over 60% Fabrication and 50% Erection has been completed. Equipment erection has also commenced. Your Company is expecting to commission India's biggest Blast Furnace (4554 cu.m) in the third quarter of Financial Year 2016-17.
The Bar Mill situated at Angul, Odisha has been commissioned in first quarter of the Financial Year 2016-17.
Machinery Division at Raipur, Chhattisgarh
In order to enhance the capacity and productivity of the division, your Company has planned the following additional equipment facilities:
1. Plate Bending Machine for higher thickness bending of Plates up to 120 mm (Thk) and 4000 mm (Wid).
2. Plate shearing machine for cutting of CS plates up to 12mm and SS Plates up to 6mm.
3. Upgradation of EOT Crane 25/08 MT in Machine shop (bay no 3).
4. Equipment for Machine shop and assembly shop like Milling Head for CNC floor type Boring Machine (PAMA), In-situ Machine, Induction heater for shrink fitting.
5. New Pit Furnace for Hardening facility.
In view of the losses incurred during the FY 2015-16, your Board of Directors has not recommended any Dividend.
During the year, the unclaimed dividend of Rs. 25,84,017/- (Rupees Twenty Five Lakh Eighty Four Thousand and Seventeen Only) pertaining to interim dividend of Financial Year 2007-08 and Rs. 42,65,953/- (Rupees Forty Two Lakh Sixty Five Thousand Nine Hundred and Fifty Three Only) pertaining to final dividend of the Financial Year 2007-08, have been transferred to the Investor Education and Protection Fund, (IEPF), Government of India. The details including last date of claiming of unclaimed / unpaid dividend amount are given at the end of the Notice of the Annual General Meeting.
Your Company's domestic credit rating is "D" (single D) for the long-term debt/facilities/NCDs rated by Credit Analysis & Research Ltd. (CARE), CRISIL and ICRA Limited. CARE, CRISIL Ratings as well as ICRA Limited rated the Company's short term debt/facilities at the level of "D".
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of your Company for the Financial Year 2015-16, is prepared in compliance with the applicable provisions of the Companies Act, 2013, Accounting Standards and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The Authorised Share Capital of the Company is Rs. 2,00,00,00,000/-(Rupees Two Hundred crore only) divided into 2,00,00,00,000 (Two Hundred crore) equity shares of Rs. 1/- (Rupee One) each. The paid up equity share capital as on March 31, 2016 was Rs. 91,49,03,800/- (Rupees Ninety One crore Forty Nine Lakh Three Thousand and Eight Hundred only) comprising 91,49,03,800 (Ninety One crore Forty Nine Lakh Three Thousand and Eight Hundred) equity shares of Rs. 1/- (Rupee One) each.
Your Company has an Employee Share Purchase Scheme namely JSPL ESPS 2013. Relevant Disclosure pursuant to Securities and Exchange Board of India (Share Based Employee Benefits) Regulation, 2014 are given as Annexure - E to this report.
The aggregate outstanding amount of Non-Convertible Debentures (NCDs) of the Company as on March 31, 2016 was Rs. 3,912 crore. Out of Rs. 3,912 crore, the NCDs amounting to Rs. 300 crore were redeemed on April 4, 2016.
The Company has not accepted/received any deposits during the year under report falling within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.
RELATED PARTY TRANSACTIONS
Particulars of contracts or arrangements entered into by the Company with the related parties referred to in Section 188(1) of the Companies Act, 2013, in prescribed Form AOC-2, is attached herewith as Annexure - A to this Report.
All the related party transactions that were entered and executed during the year under review were in the ordinary course of business and at arm's length basis. As per the provisions of Section 188 of the Companies Act, 2013 and Rules made there under read with Regulation 23 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, your Company had obtained the prior approval of the Audit Committee under omnibus approval route before entering into such transactions.
Moreover, on the recommendations of the Audit Committee, your Board had revised the Policy on Related Party Transactions in accordance with Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and as per the amended provisions of the Companies Act, 2013.
The policy is uploaded at the below web link: <http://www.jindalsteelpower.com/img/admin/report/pdf/RPT_> Policy.pdf
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Details of Loans, Guarantees, Securities and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the Notes to Financial Statements.
SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES
Your Company follows its global ambition to build a premium brand name for its quality steel solutions, expertise and with a view of expansion and diversification, it has created multiple subsidiaries, domestic and abroad, associates and joint ventures for facilitating these operations in various countries. A separate statement containing salient features of Financial Statements of Subsidiaries, Associates and Joint Ventures of your Company forms part of Consolidated Financial Statements in terms of Section 129 of the Companies Act, 2013.
The names of companies which have become or ceased to be its Subsidiaries, Associate Companies or Joint Ventures are also disclosed in that statement.
The Financial Statements of Subsidiary Companies are kept open for inspection by the shareholders at the Registered Office of your Company during business hours on all days except Saturdays, Sundays and public holidays upto the date of the Annual General Meeting (AGM) as required under Section 136 of the Companies Act, 2013. Any member desirous of obtaining a copy of the said Financial Statements may write to the Company at its Registered Office or Corporate Office. The Financial Statements including the Consolidated Financial Statements and all other documents required be attached to this Report have been uploaded on the website of your Company viz. www.jindalsteelpower.com
Your Company has framed a policy for determining "Material Subsidiary", in terms of Regulation 16(c) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulation, 2015. Jindal Power Limited is a material subsidiary of the Company in terms of the said policy. The Policy on Material Subsidiary has been uploaded on the Company's website at the following link: <http://www.jindalsteelpower.com/img/admin/> report/pdf/Policy_on_determining_material_subsidiary.pdf
The details of business operations/performance of major subsidiaries are as below:
JINDAL POWER LIMITED
Jindal Power Limited, a subsidiary company (JPL) is operating 2,800 MW power plant at Tamnar, Chhattisgarh.
During the year under review, 1,000 MW (4x250 MW) power plant generated 5,169 million units of power representing 58.85% Plant Load Factor (PLF) as against 8,113 million units of power representing 92.61% PLF in the previous year.
Commercial operation of first and second unit of 600 MW each of the 2,400 MW (4x600 MW) thermal power project being set up in Tamnar, Raigarh, Chhattisgarh was declared in March 2014.
Commercial operation of third unit of 600 MW of the 2,400 MW (4x600 MW) thermal power project was declared on January 15, 2015. With this, the installed power generation capacity of JPL has increased to 2,800 MW. During Financial Year 2015-16, these units generated 4,372 million units of power.
Jindal Power Limited (JPL) 258 km, 400 kV double-circuit transmission line is being used as an interstate transmission line belonging to the Western Region Interstate Transmission System. The Central Electricity Regulatory Commission (CERC) has granted a transmission license to the Company for carrying on business activity and has fixed provisional tariff for its use. During the year under review, JPL has earned transmission income of Rs. 45.44 crore from this line.
During the year under review, JPL has recorded total revenue of Rs. 3,513.19 crore and the loss after tax was Rs. 102.49 crore.
SHADEED IRON & STEEL LLC, OMAN
Shadeed Iron & Steel LLC, Oman, a subsidiary of Jindal Steel & Power Ltd., is operating 1.5 MTPA or Brigutted Iron plant and Steel melt shop. It has recorded sales of Rs. 2,815.77 crore, in the Financial Year 2015-16 and earned a profit after tax of Rs. 6.18 crore.
JINDAL MINING SA (PTY) LIMITED, SOUTH AFRICA
The operating coal mine, recorded sales of Rs. 110.69 crore in Financial Year 2015-16 and incurred a loss of Rs. 39.64 crore.
JSPL MOZAMBIQUE MINERALS LDA, MOZAMBIQUE
The operating coal mine, recorded sales of Rs. 10.60 crore in Financial Year 2015-16 and incurred a loss of Rs. 267.07 crore.
WOLLONGONG COAL LIMITED (FORMERLY GUJARAT NRE COKING COAL AUSTRALIA LIMITED)
The operating coal mine recorded sales of Rs. 37.02 crore in Financial Year 2015-16 and incurred a loss of Rs. 420.50 crore.
With a view to ensure availability of coal and other raw materials, the Company has, through its other subsidiaries, acquired exploration/ mining interests in Botswana, Indonesia, Madagascar, Namibia, Liberia, Mauritania, Zambia and Tanzania.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the period under review, Mr. Rajeev Rupendra Bhadauria was appointed as an Additional Director and Whole-time Director by the Board of Directors in its meeting held on May 27, 2015. Subsequently, the Shareholders of the Company in the Annual General Meeting held on September 18, 2015 approved the appointment of Mr. Rajeev Rupendra Bhadauria as Director and Whole-time Director of the Company.
Key Managerial Personnel
Mr. Naveen Jindal, Chairman, Mr. Ravi Kant Uppal, Managing Director & Group CEO, Mr. Rajeev Rupendra Bhadauria, Whole-time Director, Mr. Dinesh Kumar Saraogi, Whole-time Director, Mr. Kannabiran Rajagopal, Group Chief Financial Officer and Mr. Jagdish Patra, Vice President & Group Company Secretary are the Key Managerial Personnel of your Company in accordance with the provisions of Sections 2(51) and 203 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
During the year under review, Mr. Harish Dua was appointed as the Acting Chief Financial Officer of the Company from April 01, 2015 till November 30, 2015. Mr. Kannabiran Rajagopal has been appointed as Group Chief Financial Officer of the Company w.e.f. February 13, 2016.
Mr. Harish Dua resigned from the position of Acting Chief Financial Officer w.e.f. November 30, 2015, Mr. Ratan Jindal resigned from the position of Non-Executive Director of the Company w.e.f. March 30, 2016 and Mr. Chandan Roy has resigned from the position of Independent Director of the Company w.e.f. June 07, 2016.
Your Directors would like to record their deep sense of appreciation for the enormous contributions made by them during their respective tenures.
Retirement by Rotation
In accordance with the provisions of Section 152 of the Companies Act, 2013 and in terms of the Articles of Association of the Company, Ms. Shallu Jindal, Non-Executive Director and Mr. Dinesh Kumar Saraogi, Whole-time Director are liable to retire by rotation at the ensuing Annual General Meeting and being eligible, seek re-appointment. Your Board of Directors recommends their re-appointment.
The Companies Act, 2013 mandates formal annual evaluation by the Board of its own performance and that of its committees and Individual Directors. Schedule IV to the Companies Act, 2013 provides that the performance evaluation of Independent Directors shall be done by the entire Board of Directors, excluding the Directors being evaluated.
Pursuant to the provisions of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out annual evaluation of performance of Directors individually, Board as a whole and following Committees of the Board of Directors.
i) Audit Committee
ii) Nomination and Remuneration Committee
iii) Health, Safety, CSR and Environment Committee
iv) Stakeholders' Relationship Committee
v) Risk Management Committee and
vi) Investment Committee
The manner in which the evaluation has been carried out is explained in the Corporate Governance Report. The Board approved the evaluation made by the Nomination and Remuneration Committee.
SEPARATE MEETING OF INDEPENDENT DIRECTORS
In term of requirements of Schedule IV of the Companies Act, 2013 and Regulation 25 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate meeting of the Independent Directors was held on March
25, 2016 for the Financial Year 2015-16.
The Independent Directors at the meeting reviewed the following:
a. Performance of Non-Independent Directors and the Board as a whole;
b. Performance of the Chairman of the Company, taking into account the views of Executive Directors and Non-Executive Directors; and
c. Assess the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.
MEETINGS OF THE BOARD AND COMMITTEES
The details of the number of meetings of the Board and various Committees of your Company are set out in the Corporate Governance Report which forms part of this Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
DECLARATION BY INDEPENDENT DIRECTORS
Your Company has received necessary declarations from each Independent Director that he/she meets the criteria of independence as laid down under the Companies Act, 2013 read with Schedule IV and Rules made thereunder, as well as Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Board considered the independence of each of the Independent Directors in terms of the above provisions and is of the view that they fulfil/meet the criteria of independence.
In accordance with the provisions of Section 178 of the Companies Act, 2013 read with Rules made thereunder and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company's policy on Nomination and Remuneration of Directors, KMPs and Senior Management of your Company is uploaded on website of the Company: <http://www.jindalsteelpower.com/img/admin/report/> pdf/Remuneration_Policy.pdf.
Remuneration of Directors, Key Managerial Personnel and Particulars of Employees
The information required to be disclosed in the Board's Report pursuant to Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is being sent to the members and others entitled thereto both electronically, who have registered their email address with the Company and physically to those, who have not registered their email address with the Company.
Members and other entitled persons who have not registered their e-mail address with the Company may access the full version of the Annual Report on the website of the Company or by physically inspecting the full version of the Annual Report at the Registered office or Corporate office of the Company on all working days of the Company, between 10.00 am and 1.00 pm or by requesting a physical copy by writing to the Company Secretary. The aforesaid disclosure is also set out in Annexure-B to this report.
M/S S.R.Batliboi & Co. LLP, Chartered Accountants (Firm Regn. No. 301003E), Statutory Auditors of the Company, have shown their inability for their re-appointment as the Auditors of the Company and therefore resigned upon the conclusion of the ensuing Annual General Meeting.
The Company has received a Special Notice under Section 140 (4) read with Section 115 of the Companies Act, 2013 from M/s Opelina Finance and Investment Limited in the capacity of a member of the Company proposing a resolution at the ensuing Annual General Meeting for appointment of M/s Lodha & Co., Chartered Accountants (ICAI Firm Registration No. 301051E) as Statutory Auditors in place of M/s S. R. Batliboi & Co. LLP, Chartered Accountants. M/s Lodha & Co., Chartered Accountants, have agreed to and given their consent for their appointment as the Statutory Auditors of the Company. M/s S. R. Batliboi & Co. LLP, Chartered Accountants have maintained the highest level of governance and substantially contributed in to the efforts of the Company towards strengthening the internal controls, processes and procedures in line with expanding size of operations. The Board places on record its deep sense of appreciation for the services rendered and guidance given by them as the Statutory Auditors of the Company. In terms of Section 139(2) of the Companies Act, 2013, the Board has recommended the appointment of M/s Lodha & Co., Chartered Accountants as the Statutory Auditors of the Company for a period of five consecutive years from the conclusion of the Thirty Seventh Annual General Meeting up to the conclusion of the Forty Second Annual General Meeting, subject to ratification at each Annual General Meeting, at a remuneration that may be decided by the shareholders.
Comments/Qualifications of the Auditors in their report and the notes forming part of the Accounts are self-explanatory. Management representations to these qualifications/comments are as follows:
A. During the previous year, the Hon'ble Supreme Court vide its judgement dated August 25, 2014 read with its order dated September 24, 2014 had cancelled the allocation of certain Coal Blocks, which were allotted from year 1993 onwards through Screening Committee. The Supreme Court also directed the Coal block allottees to pay an additional levy of Rs. 295 per MT on the coal extracted from the operational mines. The review petition filed by the Company and its subsidiary company JPL before the Hon'ble Supreme Court of India against the order challenging cancellation of coal blocks and imposing additional levy of Rs. 295 per MT on coal extracted with retrospective effect, is still pending.
In the meanwhile, the Company has paid Rs. 3,267.43 crore (including Rs. 1,185.20 crore paid by its subsidiary company JPL) under protest on the Run of Mine coal extracted from the operational mines from the commencement of coal mining in the year 1993 to September 30, 2014. Out of the said amount, on the basis of the legal advice obtained by the Company that additional levy of Rs. 295 per MT is payable only on coal extracted and is not payable on shale, rejects and ungraded middlings, an amount of Rs. 1,911.64 crore (including Rs. 1,103.87 crore related to its subsidiary company JPL) computed on coal extracted excluding shale, rejects and ungraded middling has been shown an exceptional item in the Statement of Profit and Loss. The balance amount of Rs. 1,355.79 crore (including Rs. 81.33 crore related to its subsidiary company JPL) being additional levy of Rs. 295 per MT on shale, rejects and ungraded middlings has, accordingly, been shown as recoverable. On the same principle, the Company has accrued additional levy of Rs. 178.18 crore (including Rs. 85.78 crore payable by its subsidiary company JPL) based on coal extracted excluding shale, rejects and ungraded middling from October 1, 2014 to June 30, 2015.
The Board of the Company, based on the legal advice, is sanguine of obtaining appropriate relief in respect of the same.
B. The Board is of the view that as of now there is no requirement for adjustment to the carrying value of investment made in mining assets by the Company and difference, if any shall be accounted for when the matter is finally settled.
Your Board, on the recommendation of the Audit Committee, has appointed M/s Ramanath Iyer & Co., (FRN 00019), Cost Accountants, for auditing the cost records of the Company for the Financial Year 2016-17.
In terms of Section 148 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules 2014, appropriate resolution seeking your ratification of the remuneration of M/s Ramanath Iyer & Co., (FRN 00019), Cost Accountants, is included in the Notice convening the 37th AGM of the Company.
Your Board, on the recommendation of the Audit Committee, has appointed M/s MZ & Associates, Company Secretaries to conduct the Secretarial Audit of your Company for the Financial Year 201516. The Secretarial Audit Report is annexed herewith as Annexure - C to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. Your Board of Directors has appointed M/s RSMV & Co. Company Secretaries for the Financial Year 2016-17 to conduct the Secretarial Audit of the Company.
The Company has in place a robust risk management framework which identifies and evaluates business risks and opportunities. The Company recognises that these risks need to be managed and mitigated to protect the interest of the shareholders and stakeholders, to achieve business objectives and enable sustainable growth. The risk management framework is aimed at effectively mitigating the Company's various business and operational risks, through strategic actions. Risk management is embedded in our critical business activities, functions and processes. The risks are reviewed for change in the nature and extent of the major risks identified since the last assessment. It also provides control measures for risk and future action plans.
Pursuant to the provisions of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has a Risk Management Committee of the Board, which looks after the identification of risks and their mitigation planning. More details about this Committee and its role and responsibilities are given in the Corporate Governance Report.
INTERNAL FINANCIAL CONTROLS
The Company has in place adequate Internal Financial Controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operations were observed. The report on the Internal Financial Control issued by M/s S. R. Batliboi & Co. LLP, Chartered Accountants, the Statutory Auditors of the Company in view of the provisions under the Companies Act, 2013 is given elsewhere in this report.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Annual Report on the Corporate Social Responsibility (CSR) activities for the Financial Year 2015-16 as required under Sections 134 and 135 of the Companies Act, 2013 read with Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 and Rule 9 of the Companies (Accounts) Rules, 2014 is attached to this Report as Annexure - D.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant material orders passed by the Regulators/ Courts which would impact the going concern status of the Company and its future operation during the year under review except the following significant orders passed by the Regulators/courts in the previous year.
De-Allocation of Coal Blocks
Following the petition by M L Sharma vs The Principal Secretary & Ors and subsequent other Writs, the Hon'ble Supreme Court of India vide its judgement dated August 25, 2014 read with its order dated September 24, 2014 had cancelled the allocation of Coal Blocks those were allotted from 1993 onwards through Screening Committee. Following the order of the Hon'ble Supreme Court, the Central Government had promulgated The Coal Mines (Special Provisions) Ordinance, 2014 [now an Act], conferring power upon the Government to auction the Coal Blocks falling into Schedule-I consisting of 204 Coal Blocks as mentioned in the said Act.
Subsequently, the Government proceeded with the auction of Coal Blocks falling under Schedule II consisting of total 42 Coal Blocks and as notified through circular of Ministry of Coal. The sale of tender document took place from December 27, 2014 and Company and its subsidiary Jindal Power Limited (JPL) participated in the said auction process where the Electronic Bidding commenced from February 14, 2015 and ended on February 22, 2015 in which JPL won Gare Palma IV/2 & IV/3 Coal Block. Likewise after going through all procedural formalities as mentioned in the Tender Document and as prescribed in The Coal Mines (Special Provision) Ordinance, JPL made the winning bid for Tara Coal Block and the result was declared via MSTC web-site (the Coal Block Auction Platform).
Similarly the tender document sale of Schedule-III Coal Blocks, consisting of total 59 Coal Blocks started on January 7, 2015 and the Electronic Auction took place from March 4, 2015 to March 9, 2015 consisting of only 13 coal blocks in the 1st phase. The Company and JPL participated in the said auction process.
However, on March 20, 2015, JPL received a letter via E-mail from the office of Nominated Authority wherein it was conveyed that JPL was not declared successful bidder for Gare IV/2 and IV/3 and Tara Coal Block on the ground that the highest bidder does not reflect fair value, which has been challenged in Hon'ble High Court of Delhi and the matter is sub-judice.
Despite the aforesaid challenges faced by the Company during the previous year, your Company is fully geared to cater to the coal requirement of its entire planned generation through Coal Linkage and e-auction etc. The Board of the Company is sanguine about winning more Coal Blocks, which are planned to be auctioned in the subsequent rounds.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(3) (c) of the Companies Act, 2013, the Directors state:
(a) that in the preparation of the annual accounts for the year ended March 31, 2016, the applicable accounting standards and Schedule III to the Companies Act, 2013, have been followed and there are no material departures from the same;
(b) that the Directors has selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company as at March 31, 2016 and of the loss of the Company for the year ended on that date;
(c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities;
(d) that the annual accounts have been prepared on a going concern basis;
(e) that proper Internal Financial Controls laid down by the Directors were followed by the Company and that such Internal Financial Controls are adequate and were operating effectively; and
(f) that proper systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively.
Business Responsibility Report
As stipulated under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Business Responsibility Report describing the initiatives taken by the Company from environmental, social and governance perspective is attached as a part of the Annual Report.
Management Discussion and Analysis Report
Management Discussion and Analysis Report for the year under review, as stipulated under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, is annexed herewith as Annexure-F to this Report.
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134(3)(m) read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith as Annexure - G to this Report.
Certificate on Corporate Governance
The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out by Securities and Exchange Board of India. The Company has also implemented several best Corporate Governance practices as prevalent globally. The report on Corporate Governance as stipulated under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms an integral part of this Report. The requisite certificate from M/s RSMV & Co., Company Secretaries in practice confirming compliance with the conditions of Corporate Governance is annexed herewith as Annexure-I to this Report.
Whistle Blower and Vigil Mechanism
Your Company has formulated a vigil mechanism in place namely, Group Whistle Blower Policy (GWB) to deal with instances of unethical behaviour, actual or suspected, fraud or violation of Company's code of conduct or ethics policy. The details of policy is explained in Corporate Governance Report and also uploaded on Company's website under the web link: <http://www.jindalsteelpower.com/img/> admin/report/pdf/whistle.pdf
Prevention of Sexual Harassment at Workplace
As per the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder, your Company has constituted Internal Complaints Committee having designated independent member(s) to redress complaints regarding sexual harassments. During the year, no complaint regarding sexual harassment has been reported.
The Securities and Exchange Board of India (SEBI), vide their notification dated September 02, 2015 issued SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015 with the aim to consolidate and streamline the provisions of Listing Agreement for different segments of Capital Markets to ensure better enforceability. The said regulations were effective from December 01, 2015. Accordingly, all listed entities were required to enter into the Listing Agreement within six months from the effective date. The Company entered into Listing Agreement with BSE Limited and National Stock Exchange of India Limited in the month of January.
Both these Stock Exchanges have nationwide terminals and therefore, shareholders/Investors are not facing any difficulty in trading in the shares of the Company from any part of the country. The Company has paid annual listing fee for the Financial Year 2016-17 to the BSE Ltd. and the National Stock Exchange of India Ltd.
Extract of the Annual Return
The details forming part of the extract of the Annual Return in Form No. MGT - 9 in accordance with the provisions of Section 92 of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, are set out herewith as Annexure - H to this Report.
Statements in the Board's Report and the Management Discussion & Analysis Report describing the Company's objectives, expectations or forecasts may be forward-looking within the meaning of applicable Securities Laws and Regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Company's operations include global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in Government Regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.
Your Company's organisational culture upholds professionalism, integrity and continuous improvement across all functions, as well as efficient utilisation of the Company's resources for sustainable and profitable growth.
The Directors wish to place on record their appreciation for the sincere services rendered by employees of the Company at all levels. Your Directors also wish to place on record their appreciation for the valuable co-operation and support received from the Government of India, various State Governments, the Banks/Financial Institutions and other stakeholders such as, shareholders, customers and suppliers, among others. The Directors also commend the continuing commitment and dedication of the employees at all levels, which has been critical for the Company's success. The Directors look forward to their continued support in future.
For and on behalf of the Board of Directors
DIN : 00001523
Dated : June 21, 2016
Place: New Delhi