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Directors Report

To,

The Members,

STEEL CITY SECURITIES LIMITED

49-52-5/4, Shanthipuram, Visakhapatnam – 530016

Andhra Pradesh, India.

Your Directors have pleasure in presenting the Twenty- Fifth Annual Report on the business and operations of the Company along with the Audited Financial Statements for the Financial Year ended 31st March, 2019 and the Report of the Auditors thereon.

1. FINANCIAL PERFORMANCE AND REVIEW : (Standalone and Consolidated)

(Rs. in Lakhs)

Particulars Standalone Consolidated
31.03.2019 31.03.2018 31.03.2019 31.03.2018
Gross Income 6148.55 6361.67 6388.71 6613.86
Expenditure 4729.44 4667.40 4938.61 4877.93
Profit/ loss before Depreciation , Finance Costs, Exceptional Items & Taxation 1419.11 1694.27 1450.09 1735.93
Less: Depreciation 92.71 86.28 95.78 89.56
Profit/ loss after Depreciation and before Finance Costs, Exceptional Items & Taxation 1326.40 1607.99 1354.32 1646.37
Less: Finance Costs 31.05 36.14 34.28 40.59
Profit/ loss before Exceptional Items & Taxation 1295.35 1571.85 1320.03 1605.78
Add/ (Less): Exceptional Items 0.00 0.00 0.00 0.00
Profit/ loss before taxation 1295.35 1571.85 1320.03 1605.78
Less: Provision for Taxation
For earlier years 52.72 22.83 52.23 24.00
For current year 386.54 439.54 402.72 451.42
Deferred Tax Liability (10.84) 1.61 (11.04) 1.47
Provision for FBT 0.00 0.00 0.00 0.00
Net Profit after Taxation 866.92 1107.86 876.13 1128.90
Add: Share of Profit in Associate - - 23.90 15.25
Profit after Tax and Share of Profit in Associate - - 900.03 1144.15
Less: Minority Interest - - - (7.42)

 

Particulars Standalone Consolidated
31.03.2019 31.03.2018 31.03.2019 31.03.2018
Profit for the Year 866.92 1107.86 900.03 1136.73
Add: Balance brought forward from earlier year 3458.85 2912.93 4403.75 4018.10
Balance available for appropriations 4325.77 4020.80 5303.78 4976.81
Less: Amount transferred to Reserves 86.69 110.79 87.61 114.56
Less: Interim Dividend and Dividend Tax 364.24 363.65 364.24 363.65
Less: Proposed Dividend and Dividend Tax 91.06 87.51 91.05 94.85
Balance carried forward to P & L A/c 3783.77 3458.85 4760.88 4403.75

2. AMOUNT TRANSFERRED TO RESERVES:

The Board of Directors proposes to transfer an amount of Rs. 86.69 Lakhs to General Reserve for the Financial Year 2018-19.

3. DIVIDEND:

The Board of Directors of the Company at their meeting held on the 12th day of October, 2018 has declared 1st Interim Dividend @ 10% for every Equity Share of Rs. 10/- each and has declared 2nd Interim Dividend @10% for every Equity Share of Rs.10/- each at their meeting held on 18th day of February, 2019 after considering the Provisional Financials of the Company. The Board at their meeting held on 29th May, 2019 further recommends a Final Dividend @ 5% for every Equity Share of Rs. 10/- each after taking into consideration the Financial position of the Company. On the whole the Company has declared a dividend of Rs. 2.50/- i.e, @25% (inclusive of Interim and Final Dividend) for every Equity Share of Rs.10/- each for the Financial Year 2018-19.

4. STATE OF AFFAIRS OF THE COMPANY DURING THE YEAR:

Standalone:

During the year under review, the Company has recorded an Income of Rs. 6148.55 Lakhs as compared to the previous year amount of Rs. 6361.67 Lakhs. The Expenditure incurred before depreciation during the year was Rs. 4760.49 Lakhs as against the amount of Rs. 4703.54 Lakhs during the previous year. The depreciation and provision for taxes provided during the year were Rs. 92.71 Lakhs and Rs. 428.42 Lakhs respectively as compared to the depreciation and provision for taxes provided for the previous year were Rs. 86.28 Lakhs and Rs. 463.98 Lakhs respectively. Hence, the Company has earned a Net Profit of Rs. 866.92 Lakhs as compared to the previous year amount of Rs. 1107.86 Lakhs. During this year, the Net Profit has decreased @ 21.75% as compared to the previous year due to the sluggish market conditions prevailing during the year, especially in the High – Yield cash segment. The Board has taken all necessary steps to expand its activities by establishing new Branches/Centers in other States and also by adding new services and products. The income from the segment of e-Governance also will certainly increase the business of the Company and has opened around 5000+ Franchises during the Financial Year 2018-19. The Company also proposes to get itself registered as a Mutual Fund Intermediary. Hence, the Company expects bright future in the years to come.

Consolidated:

During the year under review, the Company has recorded an Income of Rs. 6688.71 Lakhs as compared to the previous year amount of Rs. 6613.86 Lakhs. The Expenditure incurred before Depreciation during the year was Rs. 4972.89 Lakhs as against the amount of Rs. 4918.52 Lakhs during the previous year. The depreciation and provision for taxes provided during the year were Rs. 95.78 Lakhs and Rs. 443.91 Lakhs respectively as compared to the depreciation and provision for taxes provided for the previous year were Rs. 89.56 Lakhs and Rs. 476.88 Lakhs respectively. Hence, the Company has earned a Net Profit of Rs. 876.13 Lakhs before considering Minority Interest and Share of Associate and Rs. 900.03 Lakhs after considering Minority Interest and Share of Associate as compared to the previous year amount of Rs. 1128.90 Lakhs before considering Minority Interest and Share of Associate Rs. 1136.73 Lakhs after considering Minority Interest and Share of Associate. The Net Profit for the year decreased by 22.39% as compared to the Net Profit for the previous year. The Board considered the matter and has formulated necessary business plans to further increase the profit of the Company during the current Financial Year 2018-19.

5. CHANGE IN THE NATURE OF BUSINESS:

There is no change in the nature of Business of the Company during the Financial Year 2018-19.

6. MATERIAL CHANGES AND COMMITMENTS OCCURRED SINCE THE END OF THE FINANCIAL YEAR TILL THE DATE OF THE REPORT:

Your Company got itself migrated from SME Platform, NSE Emerge to the Main Board of NSE from 27th day of June, 2019. Further, Your Company has laid down the Foundation Stone to construct its own building at Seethammapeta, Visakhapatnam on the 27th day of June, 2019.

7. MILESTONES ACHIEVED:

You're Directors are glad to inform that your Company is now migrated to the Main Board of National Stock Exchange of India on June 27th, 2019. Your Company is having its footprint in 34 States and Union Territories across India and is operating through more than 70 owned branches, 8500+ Franchises and is having more than 5000 Authorised Persons working under the Company.

8. GROWTH PROSPECTS FOR INDIAN CAPITAL MARKET IN 2019:

Stock market ended financial year (FY) 2018-19 on a stellar note, thanks to a sharp rally in March after weak global cues and IL&FS crisis during the second half of the fiscal dented the investor sentiment in a big way. The S&P BSE Sensex rallied 17 per cent in FY19 while the broader Nifty 50 index of the National Stock Exchange (NSE) gained 15 per cent. Out of this, 7.23 per cent gain in Sensex and 6.99 per cent in Nifty came in March alone.

Going forward, equities are likely to maintain their upward trajectory and touch new highs; however, intermittent volatility due to general elections, occasional profit booking, global developments such as Brexit, central banks' policy decisions and oil prices cannot be ruled out.

Most experts believe there is a fair chance that it could happen. "The year of FY20 will belong to mid and small-caps, for having handling well the last period of slow businesses, tight liquidity and SEBI norms, which impacted the valuation and growth of such classes. These are likely to lend a brighter period in the new fiscal year," says Vinod Nair, head of research at Geojit Financial Services.

"Our analysis of fundamentals and valuations for mid-caps and comparison of mid-caps versus large-caps on several frontiers suggest that the relative attractiveness of mid-caps has gone up. Hence, we believe the broad underperformance of the mid-caps is overdone and interesting bottom-up opportunities are now available in this space across sectors," says Khemka.

9. CAPITAL AND DEBT STRUCTURE:

a. AUTHORISED SHARE CAPITAL:

The present Authorised Share Capital of the Company is Rs. 25,00,00,000/- (Rupees Twenty Five Crores Only).

b. ISSUED AND PAID - UP OF EQUITY SHARES:

The present Issued and Paid-up Share Capital of the Company is Rs. 15,10,70,950/- (Fifteen Crores Ten Lakhs Seventy Thousand Nine Hundred and Fifty Only).

c. ISSUE OF EQUITY SHARES:

During the year the Company has not issued any Equity Shares.

d. BUY BACK OF SECURITIES:

The Company has not bought back any of its Securities during the year under review.

e. SWEAT EQUITY:

The Company has not issued any Sweat Equity Shares during the year under review.

f. BONUS SHARES:

No Bonus Shares were issued during the year under review.

g. EMPLOYEES STOCK OPTION PLAN:

The Company has not provided any Stock Option Scheme to the Employees.

h. ISSUE OF EQUITY SHARES WITH DIFFERENTIAL RIGHTS:

The Company has not issued any Equity Shares with differential Rights during the year.

i. PROVISION OF MONEY BY COMPANY FOR PURCHASE OF ITS OWN SHARES BY EMPLOYEES OR BY TRUSTEES FOR THE BENEFIT OF EMPLOYEES:

The Company has not provided any money for purchase of own Shares, by Employees or by Trustees for the benefits of Employees.

10. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND:

Your Company has transferred an amount of Rs. 1,05,800/- of Unclaimed Dividend as and when they became due to Investor Education and Protection Fund (IEPF) during the Financial Year 2018-19.

Pursuant to the provisions of the Investor Education Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with Companies) Rules, 2012, the Company has already filed the necessary form and uploaded the details of unpaid and unclaimed amounts lying with the Company, as on the date of last AGM (i.e., 1st September, 2018), with the Ministry of Corporate Affairs.

11. TRANSFER OF SHARES TO INVESTOR EDUCATION AND PROTECTION FUND:

Pursuant to the provisions of Section 124(6) Companies Act, 2013, the Company is required to transfer Shares of the Company relating to those Shareholders who haven't claimed Dividend for a period of 7(Seven) Consecutive years. Hence, as per the above provisions, Your Company has transferred 62,500 Equity Shares of the Company to Investor Education and Protection Fund during the Financial year 2017-18 and there is no requirement of further transfer of Shares to IEPF during the Current Financial Year.

12. MANAGEMENT:

(a) Change in the Composition of the Board of Directors:

Sri. T. V. Srikanth, Additional Director of the Company was appointed as Whole – Time Director of the Company designated as Director (IT) at the Annual General Meeting of the Company held on 1st September, 2018.

(b) Independent Directors:

Pursuant to the provisions of Sections 149, 152 read with Schedule IV and all other applicable provisions of the Companies Act, 2013 and the Companies (Appointment and Qualification of Directors) Rules, 2014, Sri Godithi Satya Rama Prasad , Sri Murali Krishna Cherukuri, Sri. M. H. Jagannadha Rao and Sri. B. Krishna Rao continue as Independent Directors of the Company.

They have submitted a declaration that each of them meets the criteria of independence as provided in Section 149(6) of the Act and there has been no change in the circumstances which may affect their status as Independent Director during the year.

(c) Retirement by Rotation:

In terms of Section 152 of the Companies Act, 2013, Sri. T. V. Srikanth, Director of the Company is liable to retire by rotation at the forthcoming Annual General Meeting and being eligible, offered himself for re-appointment.

The Board confirms that none of the Directors of the Company is disqualified from being appointed as Director in terms of Section 164 of the Companies Act, 2013 and necessary declaration has been obtained from all the Directors in this regard.

(d) Key Managerial Personnel (KMP):

Pursuant to the provisions of Section 203 of the Act, which came into effect from April 1, 2014, the Board of Directors have approved the appointments of Sri Kamireddi Satyanarayana, Executive Chairman; Sri Satish Kumar Arya, Managing Director; Sri. T. V. Srikanth, Whole – Time Director; Sri Ramu Naraharasetti, Chief Financial Officer (CFO) and Smt. M. Srividya, Company Secretary continue to hold the office as KMP of the Company.

13. COMPANY'S POLICY ON DIRECTOR'S APPOINTMENT AND REMUNEARATION:

The Company has formulated a policy on Director's appointment and Remuneration which is available on the website of the Company www.steelcitynettrade.com .

14. REMUNERATION OF MANAGING DIRECTOR / WHOLE-TIME DIRECTOR FROM SUBSIDIARY COMPANY:

None of the Whole Time Director's or Managing Director of the Company does not draw any remuneration from the Subsidiary Company.

15. DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to Section 134 (5) of the Companies Act, 2013, Board of Directors of the Company, confirm that:

a) In preparation of the Annual Accounts for the financial year ended 31st March 2019, the applicable Accounting Standards have been followed along with proper explanation to material departures;

b) The Directors have selected Accounting Policies, consulted the Statutory Auditors 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 end of the financial year and of the profit or loss of the Company, for that period.

c) The Directors have taken proper and sufficient care to the best of their knowledge and ability 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 and

d) The Directors have prepared the Annual Accounts of the company on a going concern basis;

e) 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

f) There is a proper system to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

16. PERFORMANCE AND FINANCIAL POSITION OF EACH OF THE SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENT:

Our Company has One (1) Wholly Owned Subsidiary i.e., M/s. Steel City Commodities Private Limited and an Associate Company i.e, M/s. Steel City Financial Services Private Limited. The financial performance of both the Companies is enumerated below:

Steel City Commodities Private Limited

Steel City Commodities Private Limited became Subsidiary of the Company in 2004 and Wholly Owned Subsidiary during the Financial Year 2018-19, is in the business of Commodity Broking and is a Member of Multi Commodity Exchange of India Ltd (MCX), National Commodity & Derivatives Exchange Limited (NCDEX) and Indian Commodity Exchange Limited (ICEX) . Now the Company is fully geared up to take a major plunge into the business of Commodities Broking and the coming year looks more promising. During the Financial Year 2018-19, the Subsidiary has earned a Net Profit of Rs. 9.21 Lakhs as against the Net Profit of Rs. 37.76 Lakhs for the Financial Year 2017-18. The profit of the Company decreased by 75.61% as compared to the F.Y. 2017-18 due to sluggish market conditions.

Steel City Financial Services Private Limited:

Steel City Financial Services Private Limited is an Associate Company of Steel City Securities Limited carrying on the business of Non-Banking Financial Services by providing Personal Loans etc., to its clients. During the Financial Year 2018-19, the Associate Company has earned a Net Profit of Rs. 54.64 Lakhs as against the Net Profit of Rs. 34.86 Lakhs for the Financial Year 2017-18. The Profit of the Company increased by 56.74% as compared to the F.Y. 2017-18.

17. DISCLOSURE UNDER SEXUAL HARAASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013.

The Company has always believed in providing a safe and harassment free workplace for every individual working in premises and always endeavors to create and provide an environment that is free from discrimination and harassment including sexual harassment.

During the year ended 31st March, 2019, the Company has not received any complaint pertaining to sexual harassment.

18. ISO CERTIFICATION:

The Company continues to hold ISO 9001 : 2015 Certification with the scope of "Service Provision for Stock / Securities Market Operations, Depository Participant Services, Other Allied and Customer Support Services" from TUV India Pvt. Ltd. The Company has been complying with the concerned procedure in this regard. Further, we are in the process of complying with ISO 27001 standards which will enhance the cyber and information security of our Company.

19. NUMBER OF MEETINGS OF THE BOARD:

During the F.Y. 2018-19 the Board of Directors met for 9 (Nine) times to discuss about the business and other important matters relating to the Company and the details of the meetings of the Board are mentioned in the Corporate Governance Report, which forms part of this report.

20. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES:

All contracts / arrangements / transactions entered by the Company during the Financial Year with related parties were in the ordinary course of business and on an arm's length basis. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions.

These have been discussed in detail in the Notes to the Standalone Financial Statements in this Annual Report and also a report on related party transactions entered into by the Company is annexed as Annexure – 2.

21. DEPOSITS:

The Company has not accepted any fixed deposits attracting the provisions of the Companies Act, 2013 and, as such, no amount of principal or interest was outstanding as on the Balance Sheet date.

22. AUDITORS:

(a) Statutory Auditors:

At the Annual General Meeting held on the 1st September, 2018, M/s. SARC & Associates, Chartered Accountants, Visakhapatnam (FRN: 006085N) were appointed as Statutory Auditors of the Company and shall hold office for a period of 4 years from the Financial Year 2018-19 till the conclusion of the Annual General Meeting to be held in the calendar year 2022. Since the appointment of the Statutory Auditors is to be ratified at every Annual General Meeting of the Company, the Board recommend the ratification of appointment of M/s. SARC & Associates, Chartered Accountants, Visakhapatnam (FRN: 006085N) as Statutory Auditors of the Company.

(b) Internal Auditors:

M/s. Rao & Manoj Associates, Chartered Accountants, Visakhapatnam were appointed as the Internal Auditors of the Company for the Financial Year 2018-19, who are acting independently and also responsible for regulatory and legal requirements relating to operational processes and internal systems. As the Board is satisfied with the performance of these Auditors the Board proposes to appoint them in the next Board meeting as Internal Auditors for the Financial Year 2019-2020 also. These Auditors Report directly to the Chairman of the Board of Directors.

Sri. Y.S.N. Murthy, Chartered Accountant, Visakhapatnam was appointed as Internal Auditor of the Company for the Financial Year 2018-19, who is acting independently and also responsible for regulatory and legal requirements relating to D.P Operations and the Internal

Audit relating to the Pension Fund Regulatory Authority of India of the company. As the Board is satisfied with the performance of this Auditor the Board proposes to appoint him in the next Board meeting as Internal Auditor for the Financial Year 2019-2020 also. This Auditor Reports directly to the Chairman of the Board of Directors.

M/s. T.R. Chadha & Co, Chartered Accountants, Hyderabad were appointed as Internal Auditors as per the Circular issued by Securities Exchange Board of India for the Financial Year 2018-19. As the Board is satisfied with the performance of these Auditors the Board proposes to Appoint them in the next Board meeting as Internal Auditors for the Financial Year 2019-2020 also.

(c) Systems Auditors:

M/s. Kochar Consultants Private Limited, Chartered Accountants, Mumbai were appointed as the Systems Auditors of the company as per the circulars issued by NSE, BSE and MSEI Exchanges notified Rules & Regulation from time to time for the Year 2018-19. As the Board is satisfied with the performance of these Auditors the Board Proposes to appoint them in the next Board meeting as Internal Auditors for the Financial Year 2019-2020 also.

(d) Secretarial Auditors:

M/s. ASN Associates, Practicing Company Secretaries, Visakhapatnam were appointed as Secretarial Auditors of the Company as per provisions of Section 204 of the Companies Act, 2013 and Rules made there under for the Financial Year 2018-19. The Secretarial Audit Report for the Financial Year 2018 - 19 forms part of the Annual Report as Annexure- 8 to the Board's Report. As the Board is satisfied with the performance of these Auditors, the Board proposes to appoint them in the next Board meeting as Secretarial Auditors for the Financial Year 2019-2020 also.

23. AUDITORS' REPORT:

The Notes on Financial Statement referred to in the Auditors' Report are self-explanatory and do not call for any further comments. The Auditors' Report does not contain any qualification, reservation or adverse remarks.

24. CREDIT & GUARANTEE FACILITIES:

The Company has been availing secured loans, overdraft facilities and bank guarantee facilities from HDFC Bank Limited, Karur Vysya Bank Limited and Karnataka Bank Limited from time to time for the business requirements.

25. PARTICULARS REGARDING ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

Your Company continues to explore all possible avenues to reduce energy consumption. The particulars as prescribed under Sub – Section (3)(m) of Section 134 of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts)Rules, 2014 is enclosed as Annexure - 4 to the Board's Report.

26. COMPLIANCE WITH SECRETARIAL STANDARDS:

The Board hereby declares that the Company hereby follows all the procedures which are in compliance with the Secretarial Standards issued by the Institute of Company Secretaries of India.

27. MANAGEMENT DISCUSSION ANALYSIS:

Management Discussion & Analysis is given as Annexure - 9.

The Board has been continuing its efforts and taken the required steps in the following areas:

1. Industry Structure and Development

2. Growth Strategy.

3. Segment-Wise Performance

4. Internal Control Systems and their adequacy

5. Strengths, Weaknesses, Opportunities and Threats

6. Financial Performance with respect to Operational Performance

7. Material Developments in Human Resources / Industrial Relations

8. Strict Compliances

9. Talent Management, Leadership Development, and Talent Retention.

10. Learning and Development

28. CORPORATE GOVERNANCE:

Your Company has been complying with the principles of good Corporate Governance over the years. In compliance with Regulation 34 of the SEBI (LODR) Regulations 2015, a separate report on Corporate Governance forms an integral part of this report as Annexure –3. The Auditor Certificate on Corporate Governance is also annexed along with the report on Corporate Governance.

Board diversity

The Company recognizes and embraces the importance of a diverse board in its success. We believe that a truly diverse board will leverage differences in thought, perspective, knowledge, skill, regional and industry experience, cultural and geographical background, age, ethnicity, race and gender, which will help us, retain our competitive advantage.

29. CORPORATE SOCIAL RESPONSIBILITY (CSR):

The key philosophy of all CSR initiatives of the Company is guided by three core commitments of Scale, Impact and Sustainability. During the year, the Company has spent an amount of Rs. 18,89,505.50, which is to be mandatorily spent by the Company on CSR activities as per the provisions of Section 135 of the Companies Act, 2013.

Your Company's CSR Policy Statement and Annual Report on the CSR Activities undertaken during the Financial Year ended 31st March, 2019, in accordance with Section 135 of the Companies Act, 2013 and Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed to this report as Annexure – 5.

30. EXTRACT OF ANNUAL RETURN:

In accordance with Section 134(3)(a) of the Companies Act, 2013, an Extract of the Annual Return as per Section 92 (3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014 in the prescribed Format MGT-9 is available on the website of our Company www.steelcitynettrade.com

31. INTERNAL FINANCIAL CONTROLS:

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

32. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE:

There were no significant and material Orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Company's operations in future.

33. DISCLOSURE RELATING TO REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND PARTICULARS OF EMPLOYEES AS PER SECTION 197(12) UNDER RULE 5(2) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014:

The remuneration paid to the Directors is in accordance with the recommendations of Nomination and Remuneration Committee formulated in accordance with Section 178 of the Companies Act, 2013 and any other re-enactment(s) for the time being in force.

The Managing Director & Whole-Time Directors of your Company did not receive remuneration from any of the Subsidiaries of your Company.

Particulars of employees as required in accordance with the provisions of Section 197(12) of the Companies Act, 2013, read with Rule 5(1) and Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed as Annexure - 6.

34. DECLARATION BY INDEPENDENT DIRECTORS:

Every Independent Director, at the first meeting of the Board in which he participates as a Director and thereafter at the first meeting of the Board in every Financial Year, gives a declaration that he meets the criteria of independence as provided under law. The same Declaration has been made by the Independent Directors of the Company.

35. VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES:

Your Company is committed to highest standards of ethical, moral and legal business conduct. Accordingly, the Board of Directors has formulated a Whistle Blower Policy which is in compliance with the provisions of Section 177(10) of the Companies Act, 2013. Employees can raise concerns regarding any discrimination, harassment, victimization, any other unfair practice being adopted against them or any instances of fraud by or against your Company. Any incidents that are reported are investigated and suitable action taken in line with the Whistle Blower Policy. The Whistle Blower Policy is also available on your Company's website (www.steelcitynettrade.com).

36. RISK MANAGEMENT:

All the risks are discussed at the Senior Management Level at their meetings periodically to ensure that the risk mitigation plans are well thought out and implemented and adverse impact of risks is avoided or kept within manageable proportions. Further, the Board has been identifying the elements of the Risks which may threaten the existence of the Company from time to time.

37. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS PURSUANT TO SECTION 186 OF THE COMPANIES ACT, 2013:

The particulars of loans, guarantees and investments have been disclosed in the financial statements.

38. CONSOLIDATED FINANCIAL STATEMENTS:

In accordance with Accounting Standard AS-21, the Consolidated Financial Statements are furnished herewith and form part of this Report and Accounts.

39. BOARD EVALUATION:

The Board of Directors has carried out an Annual Evaluation of its own performance, Board Committees and Individual Directors pursuant to the provisions of the Act.

The performance of the Board was evaluated by the Board after seeking inputs from all the Directors on the basis of the criteria such as the Board composition and structure, effectiveness of Board processes, information and functioning, etc.

The performance of the Committees was evaluated by the Board after seeking inputs from the Committee Members on the basis of the criteria such as the composition of Committees, effectiveness of Committee meetings, etc.

The Board and the Nomination and Remuneration Committee reviewed the performance of the Individual Directors on the basis of the criteria such as the contribution of the Individual Director to the Board and Committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the Chairman was also evaluated on the key aspects of his role.

In a separate meeting of Independent Directors, performance of Non-Independent Directors, performance of the Board as a whole and performance of the Chairman as well as the Whole-Time Directors was evaluated, taking into account the views of Executive Directors and Non-Executive Directors. The same was discussed in the Board meeting that followed the meeting of the Independent Directors, at which the performance of the Board, its Committees and Individual Directors was also discussed. Performance evaluation of Independent Directors was done by the entire Board, excluding the Independent Director being evaluated.

40. INSURANCE:

All the assets of the Company wherever necessary and to the extent required have been adequately insured.

41. EMPLOYEE RELATIONS:

The relationship with the staff and workers continued to be cordial during the entire year. The Directors wish to place on record their appreciation of the valuable work done and co-operation extended by them at all levels. Further, the Company is taking necessary steps to recruit the required personnel from time to time.

42. STATUTORY COMPLIANCES:

The Company has complied and continues to comply with all the applicable Regulations, Circulars and Guidelines issued by the MCA, Exchanges, SEBI, other Regulating Agencies, filings, etc.

43. GENERAL:

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

a. Neither the Managing Director nor the Whole-Time Director of the Company receives any remuneration or commission from any of its subsidiary.

b. Issue of Equity Shares with differential rights as to Dividend, voting.

c. Issue of Shares (including Sweat Equity Shares) to employees of the Company under any scheme.

44. ACKNOWLEDGEMENTS:

Steel City Securities Limited is grateful to the Government of India, Securities and Exchange Board of India, National Securities Clearing Corporation Limited, Bombay Stock Exchange Ltd, National Stock Exchange of India Limited, National Securities Depository Limited, Central Depositary Services (India) Limited, , Metropolitan Stock Exchange of India Ltd (MSEI), National Commodities & Derivatives Exchange (NCDEX), Multi Commodities Exchange (MCX), and other Exchanges, Pension Fund Regulatory & Development Authority (PFRDA), Bankers, Rating agencies (CRISIL), Government Authorities, Local Bodies and other agencies for their continued co-operation, support and guidance. Steel City Securities Limited would like to take this opportunity to express sincere thanks to its valued clients and customers for their continued patronage. The Directors express their deep sense of appreciation of all the employees, whose outstanding professionalism, commitment and initiative has made the organizations growth and success possible and continues to drive its progress. Finally, the Directors wish to express their gratitude to the members for their trust and support.

By Order of the Board
For STEEL CITY SECURITIES LIMITED
(K. Satyanarayana) (Satish Kumar Arya)
Place: Visakhapatnam Executive Chairman Managing Director
Date: 29.05.2019 (DIN: 00045387) (DIN: 00046156)

Annexure I Form AOC-1

(Pursuant to first proviso to sub-section (3) of Section 129 read with Rule 5 of Companies (Accounts) Rules, 2014)

Statement containing salient features of the financial statement of Subsidiaries/Associate Companies/Joint Ventures Part "A": Wholly Owned Subsidiary

(Amount in Rs.)
Sl.No. Particulars Steel City Commodities Private Limited
1. CIN of the Subsidiary U51399AP2002PTC039727
2. Reporting period for the subsidiary concerned, if different from the holding company's reporting period 01.04.2018 to 31.03.2019
3. Reporting currency and Exchange rate as on the last date of the relevant Financial year in the case of foreign subsidiaries Rupee (INR)
4. Share Capital Rs. 1,00,00,000
5. Reserves & Surplus Rs. 1,28,02,039.58
6. Total Assets Rs. 18,00,45,362.78
7. Total Liabilities Rs. 4,20,25,322.70
8. Investments (Non- current) Rs. 3,08,90,635.00
9. Turnover Rs. 2,40,15,373.90
10. Profit before taxation Rs. 24,68,306.80
11. Provision for taxation Rs. 15,46,998.19
12. Profit/Loss after taxation Rs. 9,21,308.61
13. Proposed Dividend Rs.0.00
14. % of shareholding 100%

Part "B": Associates

Statement pursuant to Section 129 (3) of the Companies Act, 2013 related to Associate Companies and Joint Ventures

Name of associates/Joint Ventures Steel City Financial Services Private Limited
Associate Company
1. Latest audited Balance Sheet Date 31.03.2019
2. Shares of Associate/Joint Ventures held by the company on the year end 9,60,000 Shares
Amount of Investment in Associates/Joint Venture Rs. 96,00,000/-
Extent of Holding% 21.87%
3. Description of how there is significant influence Holding 43.74% of equity share stake along with its subsidiary
4. Reason why the associate/joint venture is not consolidated NA
5. Net worth attributable to shareholding as per latest audited Balance Sheet Total Networth of the Associate Company is Rs.6,65,39,549.14
6. Profit/Loss for the year Rs. 54,64,807.91
i. Considered in Consolidation Rs.23,90,075.44
ii. Not Considered in Consolidation NA

Annexure - 2 FORM NO. AOC -2

(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014.

Form for Disclosure of particulars of contracts/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 transaction under third proviso thereto.

1. Details of contracts or arrangements or transactions at Arm's length basis.

Name of the Related Party Nature of Relationship Duration of Contracts Salient Terms Amount (Rs. in Lakhs)
The Company has not entered into any contracts / agreements with related parties

ANNEXURE - 4

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

[Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of The Companies (Accounts) Rules, 2014]

(a) CONSERVATION OF ENERGY:

During the year under review and nature of activities which are being carried on by your Company, the particulars as prescribed under Section 134(3)(m) of the Companies Act, 2013 read with Companies' ( Accounts) Rules, 2014 regarding Conservation of Energy, Technology Absorption, are not applicable to the Company. However, the Company has access regarding Conservation of Energy and Technology Absorption, wherever it is applicable.

(b) TECHNOLOGY ABSORPTION:

Not Applicable.

(c) FOREIGN EXCHANGE EARNINGS AND OUTGO:

During the period under review, the Company has not earned any Foreign Exchange and also not incurred any expenditure in Foreign Exchange.

Particulars 2018-19 2017-18
Foreign Exchange Earnings Nil Nil
Foreign Exchange Outgo Nil Nil

 

For Steel City Securities Limited
Date : 29.05.2019 K. Satyanarayana Satish Kumar Arya
Place: Visakhapatnam Executive Chairman Managing Director
(DIN: 00045387) (DIN: 00046156)

ANNEXURE - 6

Statement of Particulars of Employees Pursuant to provisions of Section 197(12) of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Employed throughout the Financial Year 2018-19

There were no employees receiving remuneration in the aggregate, more than Sixty Lakhs Rupees in the Company during the Financial Year.

Details pertaining to remuneration as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

i. The percentage increase in remuneration of each Director, Chief Financial Officer and Company Secretary during the financial year 2018-19, ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the Financial Year 2018-19, and the comparison of the remuneration to Key Managerial Personnel(KMP) against the performance of the Company are as under:

Sl. No. Name of Director/ KMP and Designation Remuneration of Director/ KMP for the financial year 2018-19 % increase in Remuneration in the Financial Year 2018-19 Ratio of Remuneration of each Director/ KMP to median Employees
(Rs. in Lakhs)
1. K. Satyanarayana, Executive Chairman 33.00 6.45 12.96
2. Satish Kumar Arya, Managing Director 30.00 15.38 14.25
3. T. V. Srikanth, Director (IT) 15.00 NA 6.48
4. N. Ramu, Chief Financial Officer 12.13 17.42 5.24
5. M. Srividya, Company Secretary 5.89 10.71 2.55

i. The Median remuneration of Employees of the Company during the Financial Year was Rs.2,31,535/- .

ii. The Percentage increase in the Median remuneration of employees for the Financial Year is Rs. 17,423/- is 12.35%.

iii. In the financial year, there was an increase of Rs. 17,423/- p.a.in the median remuneration of employees.

iv. There were 358 permanent employees on the rolls and 66 probationers working with the Company as on 31st March, 2019.

vi. Average percentile increase made in the salaries of employees other than the managerial Personnel in the financial year 2018-19 was 16.13%, whereas there is a decrease of Rs. 1,92,200/- in the managerial remuneration for the same financial year. The increase in remuneration was in line with the performance of the Company, industrial standards and individual employee performance.

vii. Affirmation that the remuneration is as per the remuneration policy of the Company:

The Company affirms that the remuneration paid is as per the Nomination and Remuneration policy of the Company.

   

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