Mar 31, 2023
The Board of Directors hereby submits the 47th Annual Report on the business and operations of your Company ("the Company" or "KIOCL") and its Audited Financial Statements for the financial year ended March 31,2023 (FY''23), together with the Auditors'' Report and Comments on the Accounts by the Comptroller and Auditor General (CAG) of India.
FINANCIAL RESULTS AND STATE OF COMPANY''S AFFAIRS
(H in crores, Except EPS & Book Value) |
||
Particulars |
FY 2023 |
FY 2022 |
Total Revenue / Turnover |
1623.81 |
3080.74 |
Revenue from Operations |
1543.42 |
3006.45 |
Other Income |
80.39 |
74.29 |
Earnings Before Interest and Tax |
(109.12) |
423.24 |
Profit / (Loss) Before Tax |
(122.76) |
411.03 |
Tax Expense / Saving (including deferred taxes) |
25.09 |
97.62 |
Profit / (Loss) After Tax |
(97.67) |
313.41 |
Add: Other Comprehensive Income (Net of Tax) |
4.08 |
3.47 |
Total Comprehensive Income |
(93.59) |
316.88 |
EPS (Basic & Diluted) |
(1.61) |
5.16 |
Average Net Worth |
2072.84 |
2064.81 |
Average Capital Employed |
2290.18 |
2270.62 |
Book Value per Share |
32.94 |
35.27 |
Return (EBDITA) on average Capital Employed (%) |
(3.66) |
20.01 |
Return on Average Net Worth (%) |
(4.71) |
15.18 |
Capital expenditure |
422.83 |
290.45 |
Contribution to Exchequer: - |
||
Central: |
63.44 |
167.97 |
State: |
21.85 |
3.06 |
Export duty @ 45% on Pellets was levied by Govt. of India vide Customs Notice No. 29/2022 - Customs dated 21-05-2022. Accordingly, mainly due to unviable operation in view of levy of export duty, the Company''s Pellet Plant operation was suspended for 187 days and was operated only for 178 days during the year.
However, Govt. of India vide notification No. 58/2022-Customs dated 18-11-2022 withdrew the export duty w.e.f. 19-11-2022.
Despite the aforesaid challenges posed, your Company''s production during the year was 1.510 Million Tonnes (Mt) and dispatch was 1.460 Million Tonnes (against FY''22 production and dispatch of 2.030 Mt and 2.072 Mt respectively).
The year under review was a tumultuous year for the steel industry. Globally, the industry started well on the back of a strong post-Covid recovery and the infrastructure investments that many governments across the world had announced to support this recovery. However, the conflict in Ukraine made worse the inflationary pressures being felt due to supply chain bottlenecks in the post Covid world. Gas prices shot up as did coal prices which led to steel prices shooting up. Economic crisis induced by war caused decreasing steel demand and redirection of trade flows. The war worsened current economic situation globally.
During the year, your Company earned a Revenue from Operations of H1543.42 crores as compared to H 3006.45 crores in the previous year. Revenue from export witnessed a downward trend by 46% to H 1361.43 crores as compared to the previous Financial Year figure of H 2928.97 crores.
Your Company achieved total export sales of 1.273 million tonnes of Pellets, against previous years export of 2.032 million tonnes. Your Company achieved 88% of total revenue from operations through export. Income from Sale of Services (O&M Operations and Mineral Exploration Services) during the year was H 20.47 crores against H 24.91 crores of previous year. Other Income comprising of Income from Treasury Operation and other Miscellaneous Income has increased to H 80.39 crores from H 74.29 crores.
Due to imposition of duty @ 45% on export of Iron Ore Pellets vide Customs Notification dated 21-05-2022, w.e.f. 22-05-2022, your Company was not in a position to export Iron Ore Pellets post duty imposition regime and coupled with high produce prices for domestic market, your Company incurred a Loss Before Tax of H 122.76 crores against a Profit Before Tax of H 411.03 crores in the previous year.
Your Company being a CPSE, pays dividend in compliance with DIPAM guidelines issued from time to time by Ministry of Finance and Board approved Dividend Distribution Policy in terms of the Regulation 43A of SEBI (LODR) Regulations, 2015 which is available at weblink https://kioclltd.in/table. php?id=282&lang=EN.
However, the Board of Directors had not recommended payment of dividend for the year 2022-23 due to absence of distributable profits. The Board has not recommended dividend based on the parameters laid down in the Dividend Distribution Policy. Further no amount is transferred to reserves of the Company.
DIVIDEND HISTORY OF LAST 7 YEARS
(Excluding DDT) |
||||
Years |
Rate (%) |
Per Share (J) |
Amount (J in crs) |
|
201 6-1 7 |
Interim |
1.1 |
0.11 |
6.98 |
Final |
2.6 |
0.26 |
16.50 |
|
201 7-1 8 |
Interim |
2.7 |
0.27 |
17.13 |
Final |
7.9 |
0.79 |
50.13 |
|
2018-19 |
Final |
13.3 |
1.33 |
82.72 |
(Excluding DDT) |
||||
Years |
Rate (%) |
Per Share (J) |
Amount (J in crs) |
|
2019-20 |
Final |
7.0 |
0.70 |
43.54 |
2020-21 |
Final |
16.4 |
1.64 |
99.67 |
2021 -22 |
Interim |
9.8 |
0.98 |
59.56 |
Final |
7.9 |
0.79 |
48.01 |
As on 31-03-2023, the Company had a net cash and Bank Balance of H 773.29 crores as against H 1107.58 crores as on 31-03-2022. The reduction in cash is due to capital expenditure.
The long-term requirements to fund the CAPEX of H 422.83 crores was met through internal resources during the year and Term Loan in the Debt Equity ratio of 2:1 for forward and backward integration of the existing Blast Furnace plant at Mangalore from Canara Bank aggregating to H 21.83 Crores.
The short-term borrowing requirements were met through surplus funds invested with Liquid Fund of Public Sector Mutual Fund and availment of Overdraft against Fixed Deposits from different banks at competitive rate of interest to optimize its cost of working capital.
Your Company has a Board approved policy for investment of surplus funds since 06-04-2016. The policy is being reviewed and amended from time to time by the Board in line with DPE Guidelines.
During the FY 2022-23, the Company has no Subsidiaries, Joint Ventures and Associates.
The Credit rating of the Company is covered in the Corporate Governance Report of the Company.
The Company has not accepted any deposits during the year.
Short Term borrowings of H 380.82 crore (previous year H NIL crore) were outstanding as on 31-03-2023.
Debt equity ratio as on 31-03-2023 was 0.206:1 as compared to 0.004:1 of previous year due to increase in borrowings.
During the year under review the total CAPEX was H 422.83 crores, which was 110% of the Budget Estimate (BE) of H 384.63 crores and against previous years CAPEX of H 290.45 crores.
Your Company had been included amongst the top 500 listed Companies as per Market Capitalization on NSE and BSE and stands at No. 319 and 323 with Market Capitalisation of H 10,243.64 crores and H 10,246.68 crores, respectively, as on 31-03-2023.
MoU - 2021-22 - Performa nce of your Company in terms of the Memorandum of Understanding (MoU) with the Ministry of Steel, Government of India for the Financial Year 2021-22 was rated as "Good".
MoU - 2022-23 - Due to imposition of duty @ 45% on export of Iron Ore Pellets vide Customs Notification dated 21-05-2022, w.e.f. 22-05-2022, the Company was not in a position to export Iron Ore Pellets post duty imposition regime during the FY 2022-23. Accordingly, at the Inter-Ministerial Committee (IMC) Meeting held on 19-10-2022 for finalization of MoU 2022-23, Ministry of Steel informed IMC that the Company was primarily engaged in export of iron pellets which amounts to around 80% of Company''s revenue. However, due to increase in export duty, the export revenue stream was no more viable, and Company''s domestic operations was also not very promising on account of high produce prices. Therefore, the Company was proposed to be exempted from MoU signing. IMC agreed to this view point and based on the request of Company and subsequent confirmation from administrative Ministry, the Company was exempted from signing MoU for the Financial Year 2022-23.
Pursuant to the requirement of Regulation 21 of the Listing Regulations, the Company had constituted a Board level Risk Management Committee w.e.f. 26-03-2019 and has a robust Risk Management Policy framework to identify, evaluate and prevent / reduce impacts of the risks on Company''s Business. Risk preventive work culture with strength to mitigate / reduce the risks impacts are developed within the organisation to enhance Company''s performance. The details of Committee and its terms of reference are set out in the Corporate Governance Report. In line with Risk Management Policy, your Company have an established procedure to proactively identify, analyse and mitigate risks.
The Company has been continuously assessing its risks to ensure sustained business operations aligned with its long-term objectives. The following are the roles and responsibilities for effective implementation of Risk Management System across the organization: -
The Company has undertaken Directors and Officers Liability insurance (''D and O insurance'') Policy for all its Directors, including Independent Directors and Officers.
There was no loan, guarantee or investment made under Section 186 of the Companies Act, 2013.
During the period under review, no transactions were entered with Related Parties as defined under the Section 188 of Companies Act, 2013 read with Regulation 34(3) and Para A of Schedule V of the SEBI Regulations, 2015, as such annexure AOC-2 is not furnished.
Further, details of related party transactions entered by the Company, in terms of Ind AS-24 have been disclosed in the notes no. 28.2.4 to the financial statements forming part of Annual Accounts 2022-23. The same were also disclosed to Stock Exchanges on half yearly basis as required under Regulation 23(9) of SEBI (LODR), Regulations, 2015.
The Board approved Policy on Materiality of Related Party Transactions and dealing with Related Party Transactions is available on the Company''s Website at https://kioclltd.in/ table.php?id=280&lang=EN.
There was no material change / commitment occurred affecting the financial position of the Company after the financial year ended 31-03-2023 till the date of this report and there was no change in business.
The Management''s discussion and analysis report is set out in this Annual Report in terms of the provisions of Regulation 34(2)(e) of the SEBI (LODR) Regulations, 2015.
In accordance with Regulation 34(2)(f) of the SEBI Listing Regulations, the Securities and Exchange Board of India (''SEBI''), in May 2021, introduced new sustainability related reporting requirements to be reported in the specific format of Business Responsibility and Sustainability Report (''BRSR''). BRSR is a notable departure from the existing Business Responsibility Report and a significant step towards giving platform to the companies to report the initiatives taken by them in areas of Environment, Social and Governance. Further, SEBI has mandated top 1,000 listed companies, based on market capitalisation, to transition to BRSR from FY2022-23 onwards. Accordingly, we are glad to present our inaugural
BRSR for FY2022-23, which forms part of this year director''s report.
BUSINESS AND OPERATIONAL REVIEW
Your Company produced 1.510 million tons of Pellets during the year 2022-23 as compared to 2.030 million tons in the previous year and sold 1.460 million tons of Pellets as against 2.072 million tons in the previous year. Out of the total quantity sold, exported quantity was 1.273 million tons which was about 87.19 % of the total sales.
The Blast Furnace Unit (BFU) remained under suspension due to uneconomic price of Pig Iron and high Coke Price since August 2009. Your Company is in the process of implementing the backward integration of BFU (Coke Oven) to make its operations economically viable.
A snapshot of production target vis-a-vis actual achievement with capacity utilization and sales performance during last five years including current year are depicted at Table 1 & 2.
Table 1: |
Capacity Utilisation |
\ |
||
oODll |
||||
(Qty. In Million Tons) |
||||
Year |
MOU Target |
Actual Production |
capacity utilisation (%) |
|
2022-23 |
NIL* |
1.510 |
43 |
|
2021-22 |
2.800 |
2.030 |
58 |
|
2020-21 |
2.500 |
2.210 |
63 |
|
2019-20 |
2.300 |
2.375 |
68 |
|
2018-19 |
2.170 |
2.238 |
64 |
|
(Installed capacity of Pellet Plant is 3.500 million tons / annum). |
||||
* The Company was exempted from |
signing MoU. |
|||
Table 2: Sales Performance |
6% |
|||
(Qty: in Million Tons, |
Value: |
H In crores.) |
||
Year |
Pellets |
Pig Iron |
Total |
|
Qty Value |
Qty Value |
Qty |
Value |
|
2022-23 |
1.460 1518.02 |
0.004 4.71 |
1.464 |
1522.73 |
2021-22 |
2.072 2980.15 |
0.001 1.15 |
2.073 |
2981.30 |
2020-21 |
2.311 2343.80 |
0.003 3.55 |
2.314 |
2347.35 |
2019-20 |
2.356 1878.97 |
0.003 5.20 |
2.359 |
1884.17 |
2018-19 |
2.206 1,825.97 |
0.002 2.80 |
2.208 |
1,828.77 |
(Note: Pig Iron includes Auxiliary) |
A total of nineteen (19) number of Mineral Exploration Projects for NMET, Govt. of Karnataka and M/s JSW Steel Limited with cumulative approved project value of H 134.95crores (including GST) were handled during the year.
Additionally, Mineral Exploration works of Devadari Iron Ore Block (captive mine block) with approved project value of H 24.86 Crores (including GST) was also handled.
Your Company: -
- entered into regime of providing mineral exploration services to private agencies by securing five (5) number of Iron Ore Mine Lease (for assessment of BHQ / silicious ore) Projects from M/s JSW Steel Limited, Tornagallu, Bellary, Karnataka with order value of H 12.27 crores (Including GST).
- carried out G4 level of Mineral Exploration as per the technical directions of National Mineral Exploration Trust (NMET), Ministry of Mines, Govt of India for: -
⢠basemetal minerals in Anaji Basemetal Block, Obalapura Basemetal Block, Chitradurga (Dist.), Karnataka and
⢠kyanite mineral in Kallahalli Kyanite Block, Mysore (Dist.), Karnataka.
- diversified in to the arena of handling basemetal ME Projects through executing copper exploration works at Anaji and Obalapura basemetal blocks in the state of Karnataka.
- Completed G3 level of ME works in HR Gaviyappa Amalgamated Iron Ore Block (Block ID: KIOCL_10_KA) under GoK Funding with submission of Geological Report to DMG, GoK and the Block is under auction by Department of Mines and Geology, Govt of Karnataka.
- Generated a revenue of H 6.40 crores (Including GST) during FY 2022-23 and cumulative revenue of H 23.25 Crores (Including GST) from past 5 years.
- Placed a request to Director General, Geological Survey of India for entering into MoU for carrying out NGPM works (National Geo Physical Mapping Programme - baseline data generation programme) in 22 nos of toposheets over an extent of 15,735 sqkm in the state of Tamilnadu.
- Continual efforts are in place for securing 15 potential blocks in the state of Karnataka for bulk and base metals for future ME works through GoK and NMET funding.
KIOCL has taken up the project of completing the balance works of COBP 2, OMC at South Kaliapani through a mutual contract agreement. The work involves erection, commissioning and handover the chrome ore beneficiation plant of M/s OMC. The work of commissioning of balance of equipment of new COBP plant of M/s OMC has been completed on 27-06-2022. The no load test was carried out during July-October 2022 since tailing pond of OMC was not available. The load test of the plant was conducted during 10-11-2022 to 10-12-2022 as per contract. The plant modification jobs were done from 11-12-2022 to 31-01-2023 to stabilise the plant operation and finally the plant was declared as commissioned on 10-02-2023. M/s OMC has issued commissioning certificate on 16-03-2023. The plant is handed over to M/s OMC for running. Your Company has earned a net revenue of H 56 crores towards works and supply of equipment.
China, being the consumer of more than 50% of the iron ore produced in the world has been the major market for KIOCL Pellets. In continuation with its efforts to sell pellets in the non-Chinese Market to minimize dependency on the Chinese market and to expand its Market presence, about 54.38% of the total exports made were to markets other than China in comparison with about 57.93% during the previous year. Efforts Continued for market share diversification by reaching end-users in Oman, Indonesia, Italy, Turkey, and Netherlands. China controls about 70-80% of sea borne iron ore trade and hence finding market alternative to China for KIOCL pellets is in line with Company''s expansion of business plan.
For long term sustainability / viability of your Company in the competitive market environment and forward consistent steady growth, your Board made the following efforts:
DEVELOPMENT & COMMENCEMENT OF DEVADARI IRON ORE MINE
Govt. of Karnataka vide notification dated 23-01-2017 reserved an area of 470.40 ha in Devadari Range, Sandur Taluk, Bellary District for Iron Ore and Manganese in favour of KIOCL Ltd., under the provisions of Section 17A (2) of MMDR Act, 1957. Director, Mine & Geology, GoK vide letter dated 13-02-2017 directed KIOCL to obtain statutory clearance viz Mining plan approval from IBM, Environment clearance from MoEF&CC, Forest clearance from MoEF&CC, GoI, CFE from KSPCB to take further necessary action for execution of mining lease deed.
Ministry of Environment, Forest and Climate Change (Forest Conservation Division), Government of India vide its Letter dated December 16, 2022 intimated that the Central Government has accorded Final approval / Stage - II approval under the Forest (Conservation) Act, 1980 for the diversion of 401.5761 hectare (388.00 ha for mining 13.5761 ha. for approach road=401.5761 ha.) of forest land in Swamimalai Block Forest, Sandur Taluk, Ballari District, Karnataka state for Iron Ore and Manganese Ore Mining in Devadari Hill Range in favour of M/s KIOCL Ltd, subject to the conditions mentioned in said letter.
Govt. of Karnataka executed the Mining Lease deed on January 2, 2023 with KIOCL Ltd. for grant of a mining lease for Iron Ore and Manganese Ore, over an extent of 388 ha for a period of 50 years in Devadari Range, Sandur Taluk, Ballari District, Karnataka State.
The Mining Lease deed document executed between Govt. of Karnataka and KIOCL has been registered at the Office of Sub-Registrar, Sandur taluk on 18-01-2023 by paying total amount of H 329.17 crores which includes the stamp duty, cess on stamps and fees for registering documents.
Government of Karnataka issued Govt order for final diversion of Forest land 401.57610 ha on 11-04-2023, on handing over of forest land by DCF Ballary to KIOCL, Company will start the activities for commencement & development work at Devadari Iron Ore Mine.
Shri Nagendranath Sinha, IAS, Secretary, Ministry of Steel, Govt. of India visited Devadari iron Ore Mine site on February 25 & 26, 2023 and reviewed the status of commencement and Development work and also chaired the meeting with NMDC, KIOCL & MECON official for the same.
Your Board has appointed Federation of Indian Mining Industries (FIMI) for collection of data / information from KIOCL, review of data / information and compilation of data for preparation of Rehabilitation & Reclamation Plan by Indian Council of Forestry Research and Education (ICFRE) for Devadari Iron Ore Mine. The Board has also appointed Indian Council of Forestry Research and Education (ICFRE) for preparation of Rehabilitation & Reclamation (R&R) Plan for Devadari Iron Ore Mine.
SETTING UP OF COKE OVEN AND DISP PROJECTS OF BFU
Your Company has planned to re-activate the existing Blast Furnace of 350 Cu.M capacity by suitable upgradation with forward integration project of 2.0 lakh TPA DISP and
1.8 Lakh TPA, Coke Oven Plant with waste recovery Power Plant under backward integration projects of existing Blast Furnace Unit. KIOCL''s Board and Public Investment Board (PIB) had approved the project with total capital outlay of H836.90 crores. MoEF&CC has granted environmental clearance (EC) and KSPCB has accorded consent for expansion in June 2021 valid up to June 2026.
M/s MECON has been appointed as EPCM consultant for the project. Main technological packages envisaged are NRHR type Coke Oven Plant, Waste heat recovery Power Plant, Ductile Iron Spun Pipe, Pulverised Coal Injection Plant (PCI), Oxygen and Nitrogen Plants. Captive coke oven and PCI System will reduce the input raw material cost of Blast furnace operation. The Coke Oven Plant agreement was signed with M/s Tuaman Engg. Ltd, Kolkata on 22-11-2021 and Tripartite agreement was entered among KIOCL, M/s Tuaman Engg. Ltd and M/s. CIMFR, Dhanbad, Technology provider under Atmanirbhar Bharath Initiative. The total project cost for Coke Oven is H218.00 crores. The tenders floated for DISP Plant, Power Plant, Pulverized Coal Injection (PCI), Oxygen and Nitrogen plants have been cancelled due to high price and change in procurement policy of GoI. Further process of retendering is being reviewed by Company as per the guidelines of Ministry of Steel.
INSTALLATION OF VERTICAL PRESSURE FILTERS
The existing vacuum disc filters at Pellet Plant are not able to handle Iron ore having high Alumina content and slimy in nature. KIOCL Board approved the project in its 257th Meeting held on 26-03-2019 with the estimated cost of H 158.60 crores. Four (04) vertical Pressure filters have been installed at Pellet Plant supplied by M/s METSO to have flexibility to utilize the ore received from any part of the country. Auxiliary equipments are also being supplied by
various vendors and commissioning of Vertical Pressure filters is expected during the year 2023. Company has appointed M/s MECON as consultant for installation of vertical pressure filters. The total savings in production cost by installation of vertical pressure filters is expected to be H 45.3 crores per annum and it would also improve the capacity utilization with flexibility in using iron ores of different types.
INSTALLATION OF DUAL BURNER SYSTEM
Your Board in its 277th Meeting held on 04-02-2022 as a part of green initiative, has taken up the project of installing dual burner system in the indurating machine of Pellet Plant to utilise Natural Gas as an alternative to the Furnace Oil being used currently. The project cost is H 36.80 Crores. The installation of non-recovery coke plant of capacity 1.8 LTPA with indigenous technology provider Central Institute of Mining and Fuel Research (CIMFR), Dhanbad is taken up under Atma Nirbhar Bharath initiative.
INFORMATION TECHNOLOGY FOR DIGITAL TRANSFORMATION
SAP S/4 Hana ERP on cloud platform has gone live on April 1, 2023 with core modules. The project is named as "Ashwa Megha". The ERP implementation is a major milestone towards digital transformation of the Company.
The network is upgraded with managed L2 and L3 core managed switches with OFC and copper cables with managed network architecture with NMS server having Active Directory (AD) and Authentication, Authorisation and Accounting (AAA) software for central management admin console to monitor the data traffic.
The Company relies on state-of-the-art technologies to ensure that the confidentiality, integrity and availability of all its online services and its data are adequately secured from the prevailing cyber security threats. The Company safeguards its data with advanced security systems and successfully defends the system against malicious virus or other cyber threats. The networks of the Company are secured by using Fortinet Next Generation Firewall and Bit Defender End Point Security for protection of end point devices. IT audit and VAPT was carried out during the year.
HUMAN RESOURCE MANAGEMENT AND INDUSTRIAL RELATIONS
Total number of employees on the rolls of the Company as on 31-03-2023 was 654 consisting of 195 Executives, 41 Supervisors and 418 Non executives.
Table: 3 Breakup of employees on rolls 31, 2023 |
as on March |
||||
Group |
Total Employees |
SC |
ST |
PWD |
Women Employees |
A |
195 |
35 |
16 |
4 |
14 |
B |
41 |
6 |
2 |
3 |
7 |
C |
395 |
57 |
26 |
1 |
2 |
D&D(S) |
23 |
2 |
3 |
3 |
1 |
Total |
654 |
|100 |
|47 |
flu |
24 |
The Company continues to extend welfare benefits to the employees and their dependents by way of comprehensive Medical Facilities for self & dependents, retired employees, Housing Facilities, Canteen Facilities, Sports Facilities, First Aid Centre, Ambulance, Recreation centre etc.
Your Company ensures compliance under Persons with Disabilities act, 1995. Suitable provisions / modifications are made in the work place to meet the requirements of persons with disability.
KIOCL has a zero tolerance towards sexual harassment at the workplace. In line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 (POSH Act), an ''Internal Complaints Committee'' has been constituted in the Company for redressal of complaint(s) against sexual harassment of women employees. No complaint
was filed during the year under the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013.
KIOCL is a Corporate Life Member of the Forum of Women in Public Sector (WIPS) a body functioning under aegis of Standing Conference of Public Enterprises (SCOPE). Women employees are life members of the Forum. Conducting several constructive programmes for the betterment of Women. Several training sessions on empowerment of Women have been conducted for enlightening women and for the contract workers.
Your Company continued to maintain harmonious industrial relations, co-operation between the elected representative bodies of employees and management.
During the year: -
a) Company recruited seven recruited seven (7) Executive Trainees, Eight (8) Graduate Engineer Trainees in group ''A'';
b) Company recruited three (3) employees at lateral entry;
c) Fifty-Two (52) employees superannuated on attaining the age of superannuation.
d) No employee was released under VRS scheme.
Various Training programs including in-house training programs, nominations for external seminars, conferences, participation in training programs organized by DPE etc., were carried out to enhance the skillset of employees.
Ministry of Steel vide its letter dated 10-04-2023 conveyed the presidential directive to your Company to implement revision of perquisites of Board level and below Board level Executives and Non-Unionised Supervisors from existing rate of 20% to 35% w.e.f. the date of issue of presidential directives strictly as per DPE OM dated 03-08-2017 subject to conditions as mentioned in said letter. In pursuance to Presidential directive perquisites of Board level and below Board level Executives and Non-Unionised Supervisors were revised from 20% to 35% w.e.f. 10-04-2023.
The Policy of Remuneration to Directors, KMP & other Employees in pursuance to Schedule II Part D (1) of the SEBI
(Listing Obligations and Disclosure Requirements) Regulations, 2015 is available on Company website at weblink https://www. kioclltd.in/table.php?id=282&lang=EN. Your Company is a Government Company within the meaning of Section 2 (45) of the Companies Act, 2013 and being a Central Public Sector Enterprise under Ministry of Steel, the remuneration and other benefits of the employees of the Company are fixed / decided by the Department of Public Enterprises (DPE), Govt. of India.
The salary and/or allowances of the Whole Time Directors are decided by the President of India.
Independent Directors are appointed by the President of India. The remuneration to Independent Directors is paid by way of sitting fee for attending Board of Directors meeting and Committees meetings thereof. The sitting fee is being paid to Independent Directors within the ceiling limit prescribed under Section 197 (5) read with Rule 4 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
No remuneration either by way of salary / allowances or sitting fee is paid to a Government Director representing Ministry of Steel.
The Salary / allowances of KMPs other than Directors are paid as per the scale of pay determined based on DPE Guidelines.
During the year 6085 of Man-days training was imparted to the employees. Further, the Company in its commitment to good corporate governance, also imparts skill development training to contract workers, apprentices, students from managerial and technical institutes as well as for local population.
In pursuance to the Trade Marks Act, 1999, registration certificates under two applications filed under class 16 were registered during the year 2018 and were valid for a period of ten years from the date of application i.e., upto 06-05-2023. Accordingly, your Company has re-submitted two applications during the year under Class 16 to the Trade Marks Registry. Registrar for Trade Marks has renewed Registration for Trade Mark No. 2526716 and 2526717 in class 16 for a period of ten years from 07-05-2023.
For two applications each filed during the year 2013 under Class 35 (Device Mark - Advertising, Business Management, Business Administration, Office Functions) and Class 6 (Device Mark - Iron Oxide Pellet, Pig Iron Ore Concentrate) of the Act, opposition proceedings are pending.
Ministry of Corporate Affairs vide its notification dated June 5, 2015 exempted Government Company with the applicability of Section 197 of the Companies Act, 2013. However, the remuneration received by the employees of the Company, had not exceeded the limit prescribed under Section 197 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
Your Company has framed a well-defined grievance procedure, evolved under the ''Code of Discipline''. Staff Grievances received are redressed to the satisfaction of the aggrieved. With respect to public grievance, as and when any complaints are received, necessary remedial action is taken promptly. Complaints/ grievances other than the staff grievance are categorized into customer / consumer complaints / grievances from the Contractors, NGOs / General Public etc. The respective project heads are empowered to dispose of the grievances concerning their areas.
Pursuant to Regulation 34(3) and Para-C of SEBI (LODR) Regulations, 2015, a separate section on Corporate Governance along with certificate from Practising Company Secretary confirming the level of compliance is attached and forms a part of the Board''s Report.
As on financial year ended March 31,2023, the Board consists of six members, two of whom were executive or whole-time Directors, two non-executive Director, representing Ministry of Steel and two Independent Directors. Details of sitting fees / remuneration paid to Directors and to KMPs respectively are provided at table no. 15 in Corporate Governance Report.
The Company received necessary declaration from Independent Directors under Section 149(7) of the Companies Act, 2013, that they meet the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Regulation 25 of the Listing Regulations. The Board of Directors at its 285th Meeting held on 05-04-2023, noted the declarations. Independent Directors of the Company have
registered themselves with Independent Directors databank in compliance with Companies (Creation and Maintenance of database of Independent Directors) Rules, 2019 and Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019.
As on Financial Year ended March 31,2023, the Company had two women Directors, Smt. Sukriti Likhi, Non-Executive Govt. Nominee Director representing Ministry of Steel and Dr. Usha Narayan, Independent Director.
Inductions / Cessations
In terms of Article 91 of the Articles of Association of the Company, the President of India is vested with the power to appoint the Directors of the Company from time to time and shall determine the term of office of such Directors. Accordingly, the following appointments/cessations on the Board of your Company were affected as per the directives of the President of India: -
⢠Shri Devidatta Satapathy, Dy. Secretary, Ministry of Steel was appointed as an Additional Director and designated as Govt. Nominee Director on the Board of the Company with effect from 30-04-2022. Having so appointed, Shri Devidatta Satapathy was regularized with the approval of shareholders by way of postal ballot on 23-07-2022 by virtue of Section 110 of the Companies Act, 2013 read with Regulation 17 of SEBI (LODR) Regulations, 2015.
⢠Shri Binay Krushna Mahapatra was appointed as Director (Commercial) w.e.f. 30-08-2022.
⢠Shri Nirmalendu Mohapatra ceased to be the Independent Director on the Board of the Company w.e.f. 20-10-2022 on completion of his tenure.
⢠Shri G. Ramasamy ceased to be the Independent Director on the Board of the Company w.e.f. 21-11-2022 on completion of his tenure.
⢠Shri S. K. Gorai ceased to be the Director (Finance) of the Company w.e.f. close of business hours of 31-01-2023, consequent upon attaining the age of superannuation.
⢠Shri K. V. Bhaskara Reddy ceased to be the Director (Production & Projects) of the Company w.e.f. close of business hours of 31-01-2023, consequent upon attaining the age of superannuation.
⢠Ministry of Steel vide its order dated 03-05-2023 appointed Dr. Sanjay Roy, Joint Secretary, Ministry of Steel as Govt. Nominee Director on the Board of Company vice Shri Devidatta Satapathy, Director, Ministry of Steel.
⢠Shri Ganti Venkat Kiran assumed the charge of Director (Production & Projects) w.e.f. 09-05-2023 pursuant to MoS order dated 08-05-2023.
⢠Shri Manoj Kumar Jhawar assumed the charge of Director (Finance) w.e.f. 26-05-2023 pursuant to MoS order dated 24-05-2023.
⢠Shri T. Saminathan, Chairman-cum-Managing Director was holding the post of Additional Charge of Director (Commercial) upto 30-08-2023. Further, he was holding the post of Additional Charge - Director (Production & Projects), from 01-02-2023 to 09-05-2023.
⢠Shri Binay Krushna Mahapatra, was holding the Additional Charge for the post of Director (Finance), from 01-02-2023 to 26-05-2023.
During the year under review, there was no appointment / resignation of KMP. However, Shri S.K. Gorai, ceased to be Director (Finance) and Chief Financial Officer of the Company w.e.f. close of business hours of 31-01-2023, consequent upon attaining the age of superannuation.
Ministry of Steel vide its order dated 24-05-2023 appointed Shri Manoj Kumar Jhawar as Director (Finance) of the Company and he took the charge of the post w.e.f. 26-05-2023. Further Board appointed Shri Manoj Kumar Jhawar as Chief Financial Officer of the Company w.e.f. 30-05-2023.
In terms of Section 203 of the Act, the Key Managerial Personnel of the Company are Shri T Saminathan, Chairman-cum-Managing Director & Chief Executive Officer, Shri Manoj Kumar Jhawar, Director (Finance) & Chief Financial Officer and Shri P.K. Mishra, Company Secretary & Compliance Officer.
In terms of Section 152 (6) of the Companies Act, 2013, Shri T. Saminathan, (DIN: 08291153) Chairman-cum-Managing Director and Shri Binay Krushna Mahapatra, (DIN: 09613777), Director (Commercial) being longest in office shall retire by rotation at the ensuing AGM and being eligible for reappointment, offers themselves for re-appointment. The Board recommends their re-appointment.
The Board met seven (7) times during the year under review, the details of which are given in the Corporate Governance Report. The maximum interval between any two Meetings did not exceed 120 days. The Meetings were conducted in compliance with relevant regulations of Listing Regulations and Secretarial Standard -1 issued by The Institute of Company Secretaries of India (ICSI).
Pursuant to Section 134 of the Act (including any statutory
modification(s) and/or re-enactment(s) thereof for the time
being in force), the Directors of the Company state that:
a) In the preparation of the Annual Accounts for the Financial Year ended March 31, 2023, the applicable Accounting Standards had been followed along with proper explanation relating to material departure.
b) The Company has selected such Accounting Policies and applied them consistently and made judgments & estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year and of the Profit & Loss of the Company for that period.
c) The Company has taken proper and sufficient care towards 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.
d) The Company have prepared the Annual Accounts on a going concern basis.
e) The Company has laid down Internal Financial Controls, which are adequate and are operating effectively.
f) The Company has devised proper systems to ensure compliance with the provisions of all applicable laws
and that such systems were adequate and operating effectively.
The aforesaid statement has also been reviewed and confirmed by the Audit Committee and the Board of Directors of the Company.
The Annual Return of the Company as on March 31, 2023 in Form MGT-7 in accordance with Section 92(3) read with Section 134(3)(a) of the Act and the Companies (Management and Administration) Rules, 2014, is available on the website of the Company at weblink https://www.kioclltd.in/data. php?id=191&lang=EN.
During the year under review, the Company filed all the statutory forms and returns electronically as per the manner and conditions for filing prescribed under Companies (Registration Offices and Fees) Rules, 2014. The financial statements for the year under review were filed in accordance with the requirements of Section 134 read with Companies (Filing of Documents and Forms in Extensible Business Reporting Language) Rules, 2015.
The Company complies with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI).
Other disclosure |
|
The details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 during the year alongwith their status as at the end of the financial year. |
There was no application made or proceeding pending against the Company under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year under review. |
The details of difference between amount of the valuation done at the time of one-time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof. |
Not Applicable |
The C&AG of India vide its letter dated 30-08-2022 had appointed M/s YCRJ & Associates, Chartered Accountants as the Statutory Auditor of the Company under Section 139 of the Companies Act, 2013 for the financial year 2022-23. The Auditors have confirmed that they are not disqualified from being appointed as Auditors of the Company. The Auditors remuneration for the year was fixed at H8.50 Lakhs plus applicable taxes for Statutory Audit. The total amount paid to the Statutory Auditors for all services rendered to the Company during 2022-23 was H12.15 Lakhs.
The Statutory Auditors have issued an unmodified opinion on the financial statements for the financial year 2022-23 and the Auditor''s Report forms part of Annual Report.
The Company is maintaining the cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Companies Act, 2013. The Cost Audit Report for the Financial Year 2021-22 was filed with the Ministry of Corporate Affairs on 07-10-2022. The Cost Audit Report for Financial Year 2022-23 is under finalisation and will be submitted to the Ministry of Corporate Affairs within the prescribed timeline.
The Company maintains cost records as required under the provisions of the Companies Act. The Company had appointed Cost Auditors for conducting the audit of the cost records maintained for its Pellet Plant Unit during the Financial Year 2022-23. A remuneration of H 50,000/- was fixed by the Board for payment to the cost auditors for Financial Year 2022-23, which was ratified by the shareholders in the last AGM. The cost audit reports are filed with the Central Government in the prescribed form within the stipulated time. For the Financial Year 2023-24,
the Board on the recommendations of the Audit Committee, had re-appointed M/s R. M. Bansal & Co., Cost Accountants to audit the cost records. The remuneration payable to the Auditor being placed before the members in this Annual General Meeting (AGM) for their ratification vide Resolution at Item No. 8 of the Notice convening the AGM.
The Cost Audit Report for the financial year 2022-23 does not contain any qualification, reservation or adverse remark.
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company appointed M/s P.S. Bathla & Company Secretaries, Practicing Company Secretary for conducting the Secretarial Audit for the Financial Year 2022-23. The Secretarial Audit Report for the Financial Year 2022-23 forms part of the Directors Report.
The Secretarial Audit Report and Secretarial Compliance Report for the financial year 2022-23 forms part of this report.
Pursuant to provisions of Section 138 of the Companies Act, 2013 read with rule 13 of Companies (Accounts) Rule 2014 and based on the recommendation of the Audit Committee, the Board of your Company had appointed M/s Manohar Chowdhry & Associates, Chartered Accountants, Bangalore as the Internal Auditor of the Company for conducting Internal Audit for the Financial Year 2022-23 at audit fees of H13,80,000/-. The objective of internal auditing is to assist the Audit Committee/ Management in the effective discharge of their responsibilities by furnishing them with analysis, appraisals, recommendations and pertinent comments concerning the activities reviewed. Besides conducting transaction audit with adherence to legal and regulatory requirements, Internal Audit is to evaluate the adequacy of risk management and internal control system in the Company. While focusing on effective risk management and control in addition to appropriate transaction testing, the Internal Audit offers suggestions for mitigating current risks and also anticipate areas of potential risks. The quarterly Internal Audit Report is being placed before the Audit Committee for its information and review.
During the year under review, Auditors has not reported to the Audit Committee (under Section 143 (12) of the Companies Act, 2013) any instances of fraud committed against the Company by its officers or employees, the details of which would need to be mentioned in the Board''s report.
The Comptroller & Auditor General of India (C&AG) vide its letter dated 21-07-2023 has conveyed "Nil" comments on the
accounts of the Company for the year ended March 31,2023. Copy of the same is annexed to this Report.
In line with the approval of the Board at its Meeting held on 11-02-2020, the proposal for adoption of new set of Memorandum of Association and Articles of Association had been taken up with the Administrative Ministry for its approval vide Company''s letter dated 11-03-2020. The approval from Ministry is awaited.
During the Financial Year 2022-23, the Company has spent H589.96 lakhs towards CSR expenditure, including projects identified as ongoing for FY 2022-23 and to be completed during FY 2023-24 of H196.10 lakhs, set-off of excess CSR spends of H34.98 lakhs, in terms of the CSR activity recommended by the CSR Committee and approved by the Board of Directors, from time to time. The brief outline of the Corporate Social Responsibility (CSR) initiatives undertaken by the Company during the year under review form a part of this Report as an Annexure in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014 and amendments. For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which is a part of this report. The CSR policy is available on weblink https://www.kioclltd.in/table.php?id=282.
Your Company has taken initiatives to address the cause of global environmental issues and as a part of the initiatives, following has been carried out:
⢠A 80 KLD capacity Sewage Treatment Plant is operational in Pellet Plant Unit. A 2 Km length sewerage system is connected to the STP. The sewage is being treated adopting Membrane Bio Reactor. The treated effluent is completely recycled in the process.
⢠A mobile water sprinkler of 6 KLD capacity is continuously operated for suppression of fust in Plant premises.
The Onsite Emergency Plan approved by Director of Factories is in existence for both Pellet Plant and Blast furnace unit. The same will be updated as and when there is a change in plant condition as well as emergency team members and emergency mock drills are conducted to practice the role of each member of emergency teams. The previous mock drill was conducted on 13-12-2022
in CPP-PPU. Worker''s participation in Safety Management System is one of the important subjects as per the Factories Act. The Company has formed area wise safety committees. Worker''s participation in these Safety Committees is ensured in PPU and BFU units of KIOCL. The safety committee meetings are conducted on 24-03-2022, 20-07-2022, 25-10-2022, and 04-01-2023 in PPU and 07-05-2022, 27-01-2023 (BFU). The Safety Audit by an external agency has been conducted in the month of May 2022 through a reputed Govt. agency M/s National Safety Council, Mumbai, as per statutory requirement and to maintain the plant premises in a safe condition. The next is planned in May, 2024. A very effective administrative tool of educating the employee''s regarding safety is tool box talk which is being in practice in both units on daily basis to educate all the workmen including contractors.
Safety Inspections are carried out regularly once in a week and once in two months by the Safety officer/staff along with concerned department engineers and Safety committee members. The observations made during Inspection are noted and reported to concerned departmental heads for compliance.
Internal cross departmental Safety audit has been conducted along with a Committee members, formulated by competent authority to conduct as per Standard checklist IS: 14489. The previous internal safety audit was held in Dec, 2021 and next external audit is planned in the month of May, 2023.
Suitable standard Personal Protective equipment''s such as Safety helmets, Shoes, Respirators, Rain coats, Gloves, Safety Goggles, Face shields, Aprons, Ear plugs/muffs are purchased and issued to all employees including Contract labors to protect them against work place hazards.
Various Training programmes are being conducted to inculcate Safety consciousness and to develop the human resources. The Refresher Training on SOPs and Maintenance activities, first aid, Firefighting training, Awareness programme on Environment, Occupational health, Safety, Vigilance Sustainable development, Productivity. The total training of 4185 Man days, provided for regular employees on the above said subjects and 1779 Man days for contractors'' workmen on Work place Safety asper IMS requirement and statutory requirements. Sixty-nine ATS trainees are given with 50 RI classes each and 3450 Man days training on, on-the job skill development training also 277 Technical college students are provided with one week each Internship training during 2022 and 2023.
As per The Factories Act 1948, the Company is conducting National Safety week celebrations. The previous National Safety week celebration was conducted on March 4, 2023 to March 10, 2023. The Safety Boards and Emergency contact telephone number''s boards are displayed in KIOCL PPU and BFU sites every year.
During the year Rajbhasha Department scheduled Official Language Implementation Committee meetings, organised workshops and conducted Official Language inspections as per targets of the Annual Program 2022-23 of Department of Official Language (Ministry of Home Affairs). During the year Chairman-cum-Managing Director marked his remarkable presence in Hindi Salahkar Samiti Meeting held in Gangtok on 13-05-2022 and Varanasi on 31-08-2022 and received accolades from Honourable Minister of Steel. Chairman-cum-Managing Director received Bhartendu Harishchandra Award on 08-12-2022 from BEL Corporate Office in a competition conducted for Chief of Offices under aegis of TOLIC (PSU), Bengaluru.
Steel Safety code
The Steel Safety Code is studied and adopted in the Company. Regular training is provided for all employees in phased manner to all Executives from top to front line supervisors.
Inspection was carried out by the third Sub-Committee of the Committee of Parliament on Official Language on 04-11-2022 at Corporate Office at Bengaluru. A Hasya Kavi Gosthi was organised on 31-12-2022 at Corporate Office and honourable Union Minister of State for Steel and Rural Development Shri Faggan Singh Kulaste graced the occasion as chief guest.
KIOCL was certified with ISO 9001: 2015 for Quality Management System, ISO 14001: 2015 for Environmental Management System and ISO 45001:2018 for Occupational Health and Safety Management System under registered number R191/9103. The accrediting Agency M/s International Certification Services Pvt Ltd, Mumbai, issued ISO recertification for all above mentioned standards as Integrated Management System (IMS) on 14-01-2022 and it is valid up 08-11-2024. To comply with IMS ISO standards, KIOCL is conducting internal departmental audits, management review meetings and apex committee meetings as per ISO standards. Every year, the certifying agency is conducting surveillance audit for confirming the electiveness of implementation of IMS system in accordance with required ISO standards. The last surveillance audit was done during the month of January 2023 and the agency recommended for continuation of IMS Certificate.
To ensure compliance of Official Language Policy of the Union, the Rajbhasha Department of KIOCL Limited takes every action. This covers activities broadly divided into three main categories, i.e. (i) Training, (ii) Translation, and (iii) Implementation.
An employee of Company received prestigious Rajbhasha Nistha shield during Hindi Salahkar Samiti meeting chaired by Honourable Union Minister held in Gangtok on 13-05-2022. Shield was received by Chairman-cum-Managing Director, KIOCL Limited. As another achievement Pellet Plant Unit of Company secured third prize for Official Language excellence from TOLIC, Mangaluru.
During the year Company participated in Second All India Conference on Official Language held in Surat on 14-09-2022. Subsequently the Company organised various Hindi competitions during Hindi Pakhwada, 2022 in which all groups of employees participated. Incentive scheme for original work in Hindi has been implemented in the organisation and total 41 employees were rewarded with cash prizes this year. The E-Magazine of Company ''Shrigandha'' was published and the link of the e-magazine was also provided on the website of the Company and Official Language Department (Ministry of Home Affairs) under E-Pustakalay segment.
Preventive vigilance has been the thrust area of Vigilance Department all these years and the same has received focused attention during the year. A climate of preventive vigilance is generated to sensitize officials at all levels about the ill effects
of corruption and malpractices. Regular Structured Meeting of Vigilance with the management is being conducted and issues related to system improvements, e-governance, Leveraging Technology, Tender Management, Award of Works, Recruitment Policy have been discussed.
The Vigilance Department is certified for compliance to ISO certification 9001-2015 standards to ensure continuous improvement in Quality Management System. Certificate is renewed and is valid till January 29, 2025. e-Procurement is in vogue and the threshold value for this is fixed at H 2 Lakhs and above. During the year, 94.51% of contracts by value are covered under this. All payments are being made through electronic mode. During the Year, 196 work/purchase/sale orders have been issued incorporating Integrity Pact Clause, covering 97.48% of contracts by value. No complaints have been received under Integrity Pact. 66 Scrutiny / examinations, 38 checks / inspections were carried out during the period and corrective actions, if any were suggested. Necessary action is taken as regards to the complaints received during the year.
As a new initiative, publication of quarterly "Vigilance Newsletter" commenced from January, 2022. These are circulated among Officers and employees through e-mail, WhatsApp and also available on the website of KIOCL. They bring out the latest O.M.s and Circulars issued by various Ministries/Departments of Government of India and Central Vigilance Commission which have bearing on the working of KIOCL for compliance with a view to keep employees abreast of Rules, Regulations and Guidelines. Also, articles on relevant topics and initiatives taken by other organizations in areas of systemic improvement and preventive vigilance which can be a model for adoption to improve working are shared which would add to the knowledge of the employees and benefit the Company. Vigilance Awareness Week was observed from October 31 to November 6, 2022 at all the locations/offices of KIOCL Limited. The theme of this year''s Vigilance Awareness Week was "Corruption free India for a developed Nation;
^HIMK VRV - IdHiIgV ^kv". Workshops, Guest Lectures,
Sensitization programs & vendor meet were conducted during the week. Essay, slogan writing and quiz competitions were conducted among the employees. Essay writing competitions were also conducted for students of Schools & Colleges. On this occasion, the importance of observing the Vigilance Awareness Week and steps taken to strengthen vigilance activities were highlighted.
Your Company has a Whistle Blower Policy and has established the necessary vigil mechanism for Directors and Employees in confirmation with Section 177(9) of the Act and Regulation 22 of Listing Regulations, to report concerns about unethical behaviour. The details of the policy have been disclosed in the Corporate Governance Report, which forms part of this report and is available on link https://www.kioclltd.in/table. php?id=279. During the period under review, no person was denied access to the Chairman of the Audit Committee.
With the commitment to maintain the highest standard of transparency and governance, your Company has entered into an integrity Pact with Transparency International and has also appointed Independent External Monitors (IEMs). Structured Meetings are held with IEMs on regular intervals and threshold value is H 30 lakhs for signing of Integrity Pact for purchase / works contracts.
Dr. Yatindra Pal Singh, IRSE (Retd.) and Shri. Paul Antony, IAS (Retd.) have been appointed as Independent External Monitors (IEMs) for Implementation of the Integrity Pact Programme in KIOCL Ltd with effect from 27-08-2022 for a period of three years.
Details of cases initiated / disposed-off during 2022-23: -
The details of vigilance cases initiated / disposed-off during 2022-23 are as under: -
- No. of cases pending as on 31-03-2022 |
- 3 |
|
- No. of cases initiated during 2022-23 |
- 0 |
|
- No. of cases disposed-off during 2022-23 |
- 1 |
|
- No. of cases pending as on 31-03-2023 |
- 2 |
|
Nature of pending cases: - 1. Favouritism in various recru in KIOCL. 2. Irregularities in appointmen in Port Trust Hospital, NM KIOCL. Officers involved |
tment and promotions made t of First Aid Superintendent 3T while on deputation from 2 |
|
Charge sheets issued on |
26-08-2021 & 27-04-2022 |
|
Disciplinary proceedings |
One is under finalisation. Second stage advise of CVC awaited in another case. |
There is no pending Audit Para from C&AG during the year under review.
At KIOCL, R&D activities and innovation initiatives are being taken up departmentally based on the need on continuous basis to improve upon the existing process system, bring down the cost of production and to achieve the set targets. The expenses are also covered as per the provisions made in the budget. During the financial year 2022-23, following R&D activities have been taken up: -
⢠The High Efficiency Rotor Assembly is operating at full load most of the time. The design of the impeller is more than 35 years old and presently better design impellers with better efficiency are available. Hence the matter was taken up with various fan manufacturers for supply of better efficiency impeller which can be mounted on the existing foundation, bearing supports and casing. Already an Order no. 407360-I dated 15-12-2020 is placed on M/s. Boldrocchi India Pvt. Ltd. for the supply of high
efficiency impeller. The High efficient Rotor assembly for VZ-31 FAN delivered on April 11, 2022. High Efficiency Rotor Assembly was installed in Recuperation Fan to improve operation. Performance checked and found satisfactorily. The expenditure on Design, manufacture and supply of High Efficiency Rotor Assembly is H 72,00,000/-
⢠Reduction in length of CB92 conveyor: - As the fines storage Silo is not being used, the length of the pellet loading conveyor CB92 was reduced by 120m by relocating the tail pulley. The advantages of this modification are (a) Reduced power consumption to the extent of 20% and (b) Reduced maintenance cost. Due to the reduction in length, we were able to reduce installed quantity of idlers, brackets, conveyor belts amounting to a cost of H 26,10,600/- there by leading to equivalent reduction in inventory costs.
⢠Fixing of VFD for Thickener underflow pump PS125, in place of fixed speed drive. With the fixed speed drive, PS125 was running at full load, which is not always desirable. Sometimes it is required to run at lesser RPM to control the pump density. With the fixing of VFD for PS125, the following advantages are achieved:
1) Better control of pump density which improves the process efficiency.
2) Reduction in power consumption, as the pump needs to run at on average of 75% of full load to achieve the desired density. The cost of VFD is H 3,78,800/-. This cost will be paid back in one year even if the pump runs at 75% load for 6 hours in a day for 300 days in a year.
During the year under review, your Company has procured around 20,616 MT of Iron Ore Fines from sources other than NMDC.
As per MSME Development Act 2006, where any MSME vendor supplies any goods or renders any services to any buyer, the buyer shall make payment within 45 days from the day of acceptance of goods/ services. Where any buyer fails to make payment to the supplier within 45 days, the buyer shall be liable to pay interest on that amount.
A total amount of H84.80 crores was paid to MSME vendors during the Financial Year 2022-23 and the details of the amount released and the number of days to which the payments were released are furnished below:
(H in crores) |
||||
0 - 15 days |
15 - 30 days |
30 - 45 days |
> 45 days |
Total |
71.93 |
10.70 |
2.17 |
- |
84.80 |
The Ministry of Corporate Affairs (MCA) issued a notification on 22-01-2019 states that specified Companies having outstanding dues to the MSME (Micro, Small and Medium) enterprises have to file the particulars of all current outstanding dues in Form MSME-1 with the ROC (Registrar of Companies). Since, your Company had no payments outstanding for more than 45 days to the MSME supplier, form MSME-1 was not required to be filed during the year. Implementation of Public Procurement Policy for MSEs In line with the Govt. of India guidelines as per MSME Development Act 2006 and keeping in view of the effective implementation of Public Procurement Policy for Micro and Small Enterprises (MSEs) Order 2012, following steps were taken by the Company: ⢠List of item components that could be sourced from MSEs were posted on the Company''s website at www.kioclltd.in for the information of MSE vendors. ⢠Communication sent to all the registered vendors regarding the said policy with the objective of achieving an overall procurement from MSEs. Further, for enhancing the procurement from MSEs owned by SC/ST, all the vendors were approached for capturing necessary details and update the data bank. ⢠During the FY 2022-23, Company placed orders for Goods & Services for a value of H 163.48 crores from MSE''s which constituted 39.15% of the total procurement value of H 417.62 crores (excluding iron ore fines and furnace oil). The procurement from MSMEs complies to Public Procurement Policy during the financial year 2022-23 as placed below: |
(H in crores) 1 Total annual procurement 417.62 2 Target %age of annual procurement 25% 3 Total value of goods and services procured 163.48 from MSEs (including MSEs owned by SC/ST entrepreneurs) 4 Total value of goods and services 4.38 procured from only MSEs owned by SC/ST entrepreneurs |
(H in crores) 5 % age of procurement from MSEs (including 39.15% MSEs owned by SC/ ST entrepreneurs) out of total procurement 6 % age of procurement from only MSEs 2.68% owned by SC/ ST entrepreneurs out of total procurement 7 % age of procurement from Women MSEs 3.62% |
The deficit under the targets and sub-targets was due to non-availability of vendors, several initiatives were undertaken to identify the entrepreneurs for procurement of goods and services from MSEs owned by SC / ST enterprises.
In exercise of powers conferred by Section 9 of the Micro, Small and Medium Enterprise Development Act, 2006 (27 of 2006), the Central Government has issued instructions that all CPSEs shall be required to get themselves on boarded on the Trade Receivables Discounting System (TReDS) platform, set up as per the notification of the Reserve Bank of India. In compliance with the above instruction, your Company is on the TReDS platform to facilitate financing of trade receivables of MSEs by discounting of their receivables and realisation of their payment before the due date. During FY 2022-23, no complaint was filed by the MSEs, on MSME SAMADHAN -Delayed Payment Monitoring System.
During the Financial Year 2022-23, the Company had placed 438 orders on GeM amounting to H315.91 crores against H 260.72 crores during the previous Year
In consonance with the spirit of Right to Information Act, 2005 the Company has created necessary mechanism as required under the Act. The Public Information Officers and Appellate Authorities are effectively responding to the requests and appeals of the applicants. The names of all PIOs/ Appellate Authorities are displayed on the Company''s website. During the year, 40 RTI applications were received and were disposed-off within stipulated time.
Details of Energy Conservation, R&D, Technology Absorption and foreign exchange earnings and outgo stipulated under Section 134(3) (m) of the Companies Act, 2013 read with Rule, 8 of the Companies (Accounts) Rules, 2014, is annexed to this report.
Your Directors gratefully acknowledge the support, co-operation and guidance received from the Hon''ble Minister of Steel, Hon''ble Minister of State for Steel, Hon''ble Chief Minister of Karnataka, the Secretary, Ministry of Steel and other officials of the Ministry of Steel as well as other Ministries of the Government of India, Government of Karnataka, Odisha, Tamil Nadu and all other departments / agencies of Central and State Government in all the endeavours of the Company. The Board is also thankful to all its stakeholders, including bankers, investors, members, customers, consultants, technology licensors, contractors, vendors, etc., for their continued support and confidence reposed in the Company.
Your Directors appreciate and value the contribution made by every member of the KIOCL family.
Mar 31, 2022
It gives me great pleasure to present, on behalf of the Board of Directors of your Company, the 46th Annual Report on the business and operations of your Company (âthe Companyâ or âKIOCLâ) and its Audited Financial Statements for the financial year ended March 31, 2022 (FYâ22), together with the Auditorsâ Report and Comments on the Accounts by the Comptroller and Auditor General (CAG) of India.
(T in crores, Except EPS & Book Value) |
||
Particulars |
FY 2022 |
FY 2021 |
Total Income |
3080.74 |
2477.78 |
Revenue from Operations |
3006.45 |
2376.44 |
Other Income |
74.29 |
101.34 |
Earnings Before Interest and Tax (EBIT) |
423.24 |
425.09 |
Profit Before Tax (PBT) |
411.03 |
410.23 |
Tax Expense (including deferred taxes) |
97.62 |
109.06 |
Profit After Tax (PAT) |
313.41 |
301.17 |
Add: Other Comprehensive Income (Net of Tax) |
3.47 |
1.37 |
Total Comprehensive Income |
316.88 |
302.54 |
EPS (Basic & Diluted) |
5.16 |
4.87 |
Average Net Worth |
2064.81 |
1950.96 |
Average Capital Employed |
2270.62 |
2152.16 |
Book Value per Share |
35.27 |
32.68 |
Return (EBDITA) on average Capital Employed (%) |
20.01 |
21.03 |
Return on Average Net Worth (%) |
15.18 |
15.44 |
Capital expenditure |
290.45 |
41.05 |
Contribution to Exchequer: - |
||
Central |
167.97 |
147.97 |
State |
3.06 |
2.00 |
Since the outbreak ofCOVID-19 Pandemic, International market for iron ore Pellet was under severe pressure as manufacturing and economic activities across the globe were affected. Further, due to outbreak of 2nd and 3rd wave of COVID-19 pandemic in India, movement of raw material was affected. KIOCL being a shore-based pellet plant, could continue its sales activities without much hindrance and service the contracts. Due to outbreak of pandemic in India during the FY 2021-22, lockdown was imposed across the countries and quarantine measures were introduced for Indian Vessels in China. Further, several international traders were not showing interest in Indian Pellet cargoes due to quarantine restrictions. However, your Company could overcome the challenges posed by pandemic, by making specific agreements with its customers. During the period, your Company faced two-fold responsibility of uninterrupted operations of plant and protecting the health and safety of its employees. The Company responded with a mix of cautious engagement, social distancing, virtual engagement and 100% vaccination of the employees including contractual workers and their dependents.
While the country was on track to a healthy recovery from the strict lockdown during 2020, Indiaâs economy got another shock from a more severe second wave in April-June 2021, which caused output across all sectors to fall. However, the economic impact of the third wave was much less severe compared with the 1st and 2nd wave, due to more localized lockdowns. Since July, a healthy recovery has resumed for all sectors. As a result, Indiaâs steel demand suffered only a minor downward revision and showed a strong recovery in 2021.
Despite the challenges posed by the COVID-19 pandemic, your Companyâs production during the year was 2.030 Million Tonnes (Mt) and dispatch was 2.072 Million Tonnes (against FYâ21 production and dispatch of 2.210 Mt and 2.311 Mt respectively).
Impact of Russia-Ukraine War
The Indian Pellet Export market has seen a significant shift during the end of FY 22 after global tensions erupted due to Russia-Ukraine War. Seaborne Indian Pellet Market to China was almost silent and with better price realisations in Europe, Indian Producers were not actively chasing the Chinese market. There was demand gap between China and Europe and the price difference was very wide but Chinese buyers were not willing to pay such prices. However, quality was the main concern in Europe and low Fe content and high alumina pellets were facing some head winds in Europe.
Revenue
During the year, your Company earned a Revenue from Operations of ^ 3006.45 crores as compared to ^ 2376.44 crores in the previous year, with a growth of 26.51%. Revenue from export sales increased by 58.66% to ^2928.97 crores as compared to the previous Financial Year figure of ^1846.06 crores. Your Company achieved export sales of 2.032 million tonnes of Pellets, which is highest since closure of captive mine at Kudremukh, against previous years export of 1.844 million tonnes. Your Company achieved 97.42% of total revenue from operations through export. Income from Sale of Services (O&M Operations and Mineral Exploration Services) during the year was ^24.91 crores against ^14.01 crores of previous year. Other Income comprising of Income from Treasury Operation and other Miscellaneous Income has decreased to ^ 74.29 crores from ^101.34 crores, mainly due to payment of final dividend and interim dividend of approx. ^ 159.23 crores during the FY 2021-22 and payment of ^ 174.14 crores towards statutory dues to Govt. of Karnataka for Stage-I forest clearance of Devadari Iron Ore Mine.
Profits
Your Company continued to deliver promising financial performance and had earned a Profit Before Tax of ^ 411.03 crores against a Profit Before Tax of ^410.23 crores in the previous year, an increase of 0.19%. Your Company had
earned a Profit After Tax of ^ 313.41 crores during the year as compared to ^301.17 crores during previous year, an increase of 4.06%.
Your Company being a CPSE, pays dividend in compliance with DIPAM guidelines issued from time to time by Ministry of Finance and Board approved Dividend Distribution Policy in terms of the Regulation 43A of SEBI (LODR) Regulations, 2015 which is available at weblink https://kioclltd.in/table. php?id=282.
During the year the Board of Directors of the Company at its Meeting held on 12/11/2021 declared an interim dividend of ^ 0.98/- per equity share of face value of ^ 10/-each for the FY 2021-22 (9.8% on the paid-up equity share Capital). The Interim Dividend amounting to ^ 59.56 crores was disbursed to all the shareholders of the Company on 07/12/2021.
Your Directors have recommended a final dividend of ^ 0.79 per equity share of face value of ^10/- each for the FY 22 (7.9% on the Paid-up Share Capital), subject to the approval of Members at the ensuing AGM to be held on 17/09/2022.
The total dividend pay-out for FY 2021-22 will thus amount to ^ 107.57 crores (inclusive of TDS) i.e., ^ 1.77 per equity share of face value of ^10/- each for FY 22 (17.7% on the paid-up equity share capital) against ^1.64/- per equity shares during the previous year. The total outflow towards dividend payment would be ^107.57 crores against previous years dividend cash outflow of ^ 99.67 crores. The total dividend pay-out for the FY 22 represents 34.32% of the profit after tax and 5.01% of Net Worth. The Dividend history of last 6 years including the current FY is as: -
(Excluding DDT) |
|||
Years |
Rate (%) |
Per Share (t) |
Amount (t in crs) |
2016-17 |
|||
Interim |
1.1 |
0.11 |
6.98 |
Final |
2.6 |
0.26 |
16.50 |
2017-18 |
|||
Interim |
2.7 |
0.27 |
17.13 |
Final |
7.9 |
0.79 |
50.13 |
2018-19 |
|||
Final |
13.3 |
1.33 |
82.72 |
2019-20 |
|||
Final |
7.0 |
0.70 |
43.54 |
2020-21 |
|||
Final |
16.4 |
1.64 |
99.67 |
2021-22 |
|||
Interim |
9.8 |
0.98 |
59.56 |
Final (Proposed) |
7.9 |
0.79 |
48.01 |
The Company remits payment of dividend in the registered banking details as available in the records of members / beneficial holders through ECS / NEFT. In case of nonavailability of bank account number, shareholders concerned are requested to submit cancelled cheque along with copy of identification proof for remittance of dividend.
Your Company maintains sufficient cash to meet its strategic and operational requirements. As on March 31, 2022, the Company had a net cash and cash equivalent balance of ^1107.58 crores as against ^1422.04 crores as on 31/03/2021.
During the year, the total CAPEX was ^ 290.45 crores, which was 44.44% of the Budget Estimate (BE) of ^ 653.60 crores. The shortfall was mainly on account of Forward and Backward integration project of Blast Furnace Unit not taking off as the Public Procurement Policy for domestic tendering for less than ^200 crores entailed re-tendering of the same; delayed finalization of Pressure Filters project for Pellet Plant Unit and pending stage-II forest clearance for Devadari Iron Ore Mine.
During the year, your Companyâs credit worthiness for availing Bank Facilities were evaluated by ICRA Limited and Brickwork Ratings India Pvt Ltd as under: -
Name of Agency |
Amount |
|||
Facilities |
(t in crores) |
Rating |
Remarks |
|
ICRA Limited |
Line of Credit (LOC) |
1050 |
Long-term rating at [ICRA] AA-(Pronounced ICRA double A minus). |
The rating of [ICRA] AA-is one notch lower than [ICRA] AA. |
Short-term rating at [ICRA] A1 (Pronounced ICRA A1 ). |
The rating of [ICRA] A1 is one notch higher than [ICRA] A1. |
|||
M/s Brickwork Ratings India Pvt Ltd |
Line of Credit (LOC) |
1050 |
Long-term rating at [BWR] AA-(Pronounced BWR double A minus). |
The rating of [BWR] AA-is one notch lower than [BWR] AA. |
Short-term rating at [BWR] Al (Pronounced BWR A1 ). |
The rating of [BWR] Al is one notch higher than [BWR] A1. |
Your Company had been included amongst the top 500 listed Companies as per Market Capitalization on NSE and BSE and stands at No. 286 and 289 with Market Capitalisation of ^ 12683.77 crores and ^ 12653.38 crores, respectively.
Performance of your Company in terms of the Memorandum of Understanding (MoU) with the Ministry of Steel, Government of India for the Financial Year 2020-21 was rated as âVery Goodâ. The MoU evaluation for the Financial Year 2021-22 is under finalisation and is expected to achieve a âVery Goodâ rating.
There was no loan, guarantee or investment u/s 186 of the Companies Act, 2013.
No transaction entered into with Related Parties as defined under the Section 188 of Companies Act, 2013 read with Regulation 34(3) and Para A of Schedule V of the SEBI (LODR) Regulations, 2015, as such annexure AOC-2 is not furnished. The Board approved Policy on Materiality of Related Party Transactions and dealing with Related Party Transactions is available on the Companyâs Website.
Risk Management
Pursuant to the requirement of Regulation 21 of the Listing Regulations, the Company had constituted a Board level Risk Management Committee w.e.f. 26/03/2019 and has a robust Risk Management Policy framework to identify, evaluate and prevent / reduce impacts of the risks on Companyâs Business. Risk preventive work culture with strength to mitigate / reduce the risks impacts are developed within the organisation to enhance Companyâs performance. The details of Committee and its terms of reference are set out in the Corporate Governance Report. In line with Risk Management Policy, your Company have an established procedure to proactively identify, analyse and mitigate risks.
There was no material change / commitment occurred affecting the financial position of the Company subsequent to the financial year ended March 31, 2022 till the date of this report and there was no change in the nature of business.
However, Department of Revenue, Ministry of Finance vide its notification no. 29/2022-Customs dated 21st May 2022 levied export duty at the rate of 45% on iron ore Pellets w.e.f., 22.05.2022. As a result of which, the sale of Iron Ore Pellets in Export Market and prevailing price in Domestic Market has fallen below the viability level so much so that it is not covering even the Iron Ore Fines landed cost at Pellet Plant at Mangalore. Consequently, the Companyâs Pellet Plant has been under temporary shutdown with effect from 05.06.2022 due to nonviability. The Company has taken up with Ministry for waiver of export duty, since KIOCL is an Export Oriented Unit (EoU).
The Managementâs discussion and analysis report is set out in this Annual Report in terms of the provisions of Regulation 34(2)(e) of the SEBI (LODR) Regulations, 2015.
Your Company continued to be in top 500 listed companies in term of market capitalization. Accordingly, in compliance with the Regulation 34(2)(f) of SEBI (LODR) Regulations, 2015, BRR disclosures have been integrated in the Annual Report.
Your Company produced 2.030 million tons of Pellets during the year 2021-22 as compared to 2.210 million tons in the previous year and sold 2.072 million tons of Pellets as against 2.311 million tons in the previous year, against a MoU target of 2.800. Out of the total quantity sold, exported quantity was 2.032 million tons which was about 98% of the total sales, which is the highest since closure of captive mines at Kudremukh and balance 0.04 million tons was sold to domestic customers.
(Qty: in Million Tons, Value: ^ In Crs.) |
||||||
Year |
Pellets |
Pig Iron |
Total |
|||
Qty |
Value |
Qty |
Value |
Qty |
Value |
|
2021-22 |
2.072 |
2980.15 |
0.001 |
1.15 |
2.073 |
2981.30 |
2020-21 |
2.311 |
2343.80 |
0.003 |
3.55 |
2.314 |
2347.35 |
2019-20 |
2.356 |
1878.97 |
0.003 |
5.20 |
2.359 |
1884.17 |
2018-19 |
2.206 |
1,825.97 |
0.002 |
2.80 |
2.208 |
1,828.77 |
2017-18 |
2.301 |
1,553.09 |
0.003 |
0.40 |
2.304 |
1,553.49 |
The Blast Furnace Unit (BFU) remained under suspension due to uneconomic price of Pig Iron and high Coke Price since August 2009. Your Company is in the process of implementing the backward integration of BFU (Coke Oven) to make its operations economically viable.
A snapshot of production target vis-a-vis actual achievement with capacity utilization and sales performance during last five years including current year are depicted at Table 1 & 2.
Table 1: Capacity Utilisation
(Qty. In Million Tons) |
||||
Year |
MOU Target |
Actual Production |
Capacity utilisation (%) |
|
2021-22 |
2.800 |
2.030 |
58 |
|
2020-21 |
2.500 |
2.210 |
63 |
|
2019-20 |
2.300 |
2.375 |
68 |
|
2018-19 |
2.170 |
2.238 |
64 |
|
2017-18 |
1.925 |
2.327 |
66 |
(Note: Pig Iron includes Auxiliary)
Performance highlights of Mineral Exploration Works during
the Year was as under: -
> Entered into regime of carrying out Mineral Exploration works of base metals by securing 2 base metal projects from NMET, Ministry of Mines, Govt of India.
> Received sanction orders for carrying out G4 level of Exploration works for base metals in Anaji Basemetal Block in Davangere and Bellary Districts and Obalapura Basemetal Block in Chitradurga District of Karnataka with a project approved cost of ^ 3.06 crores (including GST). Projects are planned for execution during the Financial Year 2022-23.
> 14 numbers of Projects with cumulative project cost of ^122.68 crores (including GST) were handled, including Detailed Geological Mapping works at Devadari Iron Ore Block (captive mine). However, the Project Cost for works in captive mine are not included in the above annual projections.
Mineral Exploration Laboratory established at BFU, Mangalore acquired NABL (National Accreditation Board for Testing and Calibration Laboratories) certification in accordance with ISO/IEC 17025 on 13.04.2022.
> Total revenue of ^ 67,55,303 and interest free advance amount (mobilization amount) of ^ 1,99,10,344/-(including GST) were received.
KIOCL has taken up the project of completing the balance works of COBP 2, OMC at South Kaliapani through a Mutual contract agreement. The work involves erection, commissioning and handover the chrome ore beneficiation plant of OMC, which also includes procurement of required equipment, components on cost plus basis. The total project cost is estimated around 27 crores. The work is increased by 40% of initial estimate. All equipment erection jobs are completed. The plant is expected to be commissioned by end Sept. 2022.
> Continual efforts are in place for securing addition al ME works. 17 potential areas in the State of Karnataka for bulk and base metals are identified for future ME works through GoK and NMET funding.
Global crude steel production reached 1,950.5 Mt. in 2021, a 3.78% increase compared to 1,880.40 Mt. in 2020. China''s crude steel production in 2021 reached 10312.8 Mt, dowr by 3.088 on 2020 at 1064.7 Mt. China''s sh tre of global coude steel production decreas ed from 56.15088 in 2020 to 52.0588 in 2t21. Indiaâs crude steel production for- 202 1 wac 1 18.10 Mt, up by 17.80% on 20120 at 100.3 0 Mf. India remained as the second largest steel producer in the wo rld. Japan produce d *06.30 Mt in 2021, up by 15.80% on 2020. The United States produced 86.0 COt; in 2021, up by 18.30% on 2020. Japan and United States remained at third and fourth largest steel producers in the world during 2021.
DIVERSIFICATION OF EXPORT MARKET
Your Company had continued efforts to develop non-Chinese Market and during the year under review about 58 % of the total exports made were to markets other than China vis-a-vis 56% during the previous year. Pellets were sold to the nonChinese steel Mills in Oman, Brazil, Malaysia, Bahrain, South Korea, Indonesia, Austria, Finland, Romania and Poland.
CAPEX AND GROWTH PLAN
For long term sustainability / viability of your Company in the competitive market environment and forward consistent steady growth, your Board made the following efforts:
Statutory clearances for Commencement and Development of Devadari Mine
Company had initiated actions for obtaining statutory clearances like Mining Plan approval, Environment Clearance, Forest Clearance and Consent for Establishment (CFE) from regulatory bodies for execution of mining lease deed for the reserved area of 470.40 ha in Devadari Range, Sandur Taluk, Bellary District.
On obtaining Stage-I Forest clearance, as per additional details sought by EAC, the EC proposal was presented in 33rd EAC meeting held on 13.07.2021 and EAC recommended the EC proposal for Devadari mine vide Minutes of meeting issued on
27.07.2021.
MoEF&CC, Gol vide letter dated 13.08.2021 accorded Environmental Clearance for Devadari Iron Ore Mine with a mine capacity of 2 MTPA Iron ore (ROM) and 500TPA manganese ore with 2 MTPA wet Beneficiation plant.
On obtaining Environmental Clearance, Company submitted online application for CFE (Air / Water) on 20.12.2021 through KSPCB portal. Regional Office, Ballari made inspection on 08.02.2022 and submitted the inspection report to KSPCB, Bengaluru for recommendations of Senior Environment Officer (SEO). MoEF&CC, GoI accorded In-Principle approval of Stage-I forest clearance for Devadari Mine project on 24.06.2021 with standard/specific conditions.
As a compliance, on receipt of demand notice from the Dy. Conservator of Forest, Ballari, the Company paid ^174.14 Crores to âKarnataka CAMPAâ account on 29.10.2021 towards payment of NPV, Compensatory afforestation charges for double the degraded forest land, safety zone plantation charges, Fencing of Safety zone charges and afforestation charges 1.5 times of safety zone. For compliance to phase-I, FC conditions, Company has obtained Catchment Area Treatment plan approval, Wildlife management Plan approval from state forest department, Form II under FRA, 2006 was issued by DC, Ballari. Company submitted condition-wise compliance report of Stage-I FC conditions to DCF, Ballari on 15.03.2022 for obtaining Stage-II forest clearance. Currently, the compliance report of Stage-I FC conditions is under process with State Govt.
On obtaining FC Stage-II from MoEF&CC, GoI, Mining lease deed will be executed with the Government of Karnataka for commencement of mine development and setting up of infrastructure. Mining lease deed registration is expected to complete by the end of August 2022.
KIOCL Limited has planned to re-activate the existing Blast Furnace of 350 cu m capacity by suitable upgradation and simultaneously go for forward and backward integration of the plant by expanding its activities towards manufacturing of Ductile Iron Spun pipes. In line with this, KIOCL had envisaged for setting up of 1.8 Lakh TPA capacity of Coke Oven plant with waste recovery Power Generation Plant under back ward integration and 2.0 Lakh TPA capacity Ductile Iron Spun pipe (DISP) project under forward integration projects of existing Blast Furnace Unit of KIOCL Ltd, Mangaluru. KIOCL''s Board and PIB has approved the project with total capital outlay of ^ 836.90 Crores. MoEF & CC has granted environment clearance (EC) and KSPCB has accorded Consent for Expansion (CFE) in June 2021 which is valid up to June 2026.
5 MW Solar Power Plant at Tumkur Dist. Karnataka
KIOCL has set up a 5 MWac (6.5 MWp) Solar Power Plant at Katrikehal village in Chikkanayakanhalli Taluk, Tumkuru District in order to fulfil the Government''s commitment to develop Renewable Energy Projects, support the Golâs National Solar Mission and meet the partial power requirements at Mangalore Unit. The Project was commissioned in the year 2021-22 and total 77,17,200 kWh energy units were generated during the year and was wheeled to Pellet Plant Unit for captive consumption resulting into total savings of ^ 4.94 Crores.
M/s MECON has been appointed as EPCM Consultant for the project. Main technological packages envisaged are NRHR type Coke Oven Plant, Waste heat recovery Power Plant, DISP Plant, Pulverised Coal Injection plant (PCI), Oxygen and Nitrogen plants. Captive coke oven and PCI system will reduce the input raw material cost of Blast furnace operation.
The existing vacuum disc filters at Pellet Plant are not suitable to filter the iron ore having high alumina content and slimy in nature. Accordingly, the Board approved the project in its 257th Meeting held on 26/03/2019 with the estimated cost of ^ 158.60 crores. The Company is installing vertical pressure filter equipment to have flexibility to utilize ore received from any part of the country at a competitive price. Company appointed M/s MECON as consultant for installation of vertical pressure filters.
Due to COVID-19 pandemic and change in GFR Rules of GoI under the ''Atmanirbhar Bharat'', tenderâs finalisation for various packages is getting delayed especially for the DISP & PCI Packages. Further, as per the revised Public Procurement Policy of Govt. of India, foreign companies sharing border with India require mandatory registration at DPIIT, GoI for participation in the tender. Site Levelling and retaining wall jobs are completed. Contract for setting up of 1.8 LTPA capacity Non-Recovery Coke Oven Plant project has been awarded. Civil and piling jobs are under progress at site for Coke Oven Plant. The other main technological packages viz captive power plant, PCI, DISP, Oxygen & Nitrogen Plants, BFU upgradation etc are under tendering stage. Finalization of tender for placement of order delayed due to COVID-19 pandemic.
Purchase Order was placed on M/s METSO for procuring main equipment and major portion of the equipment is received at site. Auxiliary equipment and Electrical equipment are being procured. Civil and Structural jobs are at the verge of completion. Erection of the main equipment is under progress. The total savings in production cost by installation of vertical pressure filters is expected to be ^ 45.3 crores per annum and it would enable the plant to improve capacity utilization with flexibility in using various types of ores.
Single Integrated Information System / ERP
M/s Tech Mahindra Limited is engaged as System Integrator (SI) for end-to-end implementation of ERP solution i.e., SAP S/4 HANA on (IaaS) Cloud as ''Ctrl-S ''being the MeitY empanelled Cloud Service Provider. The Design and Development work i.e., realisation phase is completed and the project is in the testing phase. The project is expected to Go-Live in the month of September, 2022.
Upgradation of Networking System
Upgradation of existing network with managed L2 and L3 core managed switches with OFC and copper cables with managed network architecture with NMS server having Active Directory (AD) and Authentication, Authorisation and Accounting (AAA) software for central management admin console to monitor the data traffic is completed.
Human Assets
Total number of employees on the rolls of the Company as on 31.03.2022 is 699 consisting of 201 Executives, 37 Supervisors and 461 Non executives.
Table: 3 Breakup of employees on rolls as on March 31, 2022
Group |
Total No. of employees |
SC |
ST |
Ex Servicemen |
PWD |
No of women employees |
A |
201 |
38 |
15 |
-- |
4 |
12 |
B |
37 |
5 |
2 |
-- |
3 |
7 |
C |
433 |
63 |
27 |
-- |
1 |
3 |
D&D(S) |
28 |
4 |
4 |
-- |
3 |
1 |
Total |
699 |
110 |
48 |
-- |
11 |
23 |
Your Company has duly constituted an Internal Complaint Committees (ICC) to redress Sexual Harassment Complaints. No complaint was filed during the year under the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. Further, the Internal Complaint Committee is also imparting training about Sexual Harassment Act to all male and female employees of the Company.
KIOCL is a Corporate Life Member of the Forum of Women in Public Sector (WIPS) a body functioning under Aegis of Standing Conference of Public Enterprises (SCOPE). Women employees are life members of the Forum. Conducting several constructive programmes for the betterment of Women. Several training sessions on empowerment of Women have been conducted for enlightening women and for the contract workers.
Your Company continued to maintain harmonious industrial relations, co-operation between the elected representative bodies of employees and management.
Your Company ensures compliance under Persons with Disabilities act, 1995. Suitable provisions / modifications are made in the work place to meet the requirements of persons with disability.
During the year: -
a) Company recruited ten (10) Graduate Engineer Trainee in group ''A'';
b) Forty-eight (48) employees superannuated on attaining the age of superannuation.
c) No employee was released under VRS scheme.
Various activities were carried out during the year for Human Resource Development. Assessment study of People Capability Maturity Model (PCMM) was undertaken and Company achieved level 2 of PCMM. This study was carried out through external agency M/s. QAI India Limited. Promotions for Executives and Non-executives were held and orders were issued on time as per Promotion Policy. Various Training programs including inhouse training programs, nominations for external seminars, conferences, participation in training programs organized by DPE etc., were carried out to enhance the skillsets of employees.
During the year 3675 number of man-days training was imparted to the employees. Further, to enhance the employability skills of students, training program was conducted for students in the Company and around 35 number of students were trained on employability enhancement training program through an external agency. The Company has provided various amenities to its employees, such as well-planned Township, First Aid Centre, Ambulance, Recreation centre, Sports events, Canteen, Parks, Auditorium, IT infrastructure to conduct various virtual, Meeting, Training etc. To combat COVID-19, the Company arranged thermal scanners while entering the office premises, vaccination was arranged for all employees and their family members including Contract labours. 100% vaccination drive was achieved to prevent COVID-19. As a preventive measure Company issued Face mask, Hand Sanitizers etc. to employees.
In pursuance to the Trade Marks Act, 1999, your Company had filed four applications during the year 2018. Two applications were filed under Class 16 (Device Mark - Kudremukh - Paper, Cardboard & Goods Made from These Materials, Not Included in Other Classes; Printed Matter; Bookbinding Material; Photographs; Stationery; Adhesives For Stationery or Household Purposes; Artists Materials; Paint Brushes; Typewriters and Office Requisites (Except Furniture); Instructional And Teaching Material (Except Apparatus); Plastic Materials For Packaging (Not Included In Other Classes); Printers Type; Printing Blocks) and two application each under Class 35 (Device Mark - Advertising, Business Management, Business Administration, Office Functions) and Class 6 (Device Mark - Iron Oxide Pellet, Pig Iron Ore Concentrate) of the Act during the year 2013. Registration certificates under two applications filed under class 16 were registered during the year 2018 whereas for applications under Class 35 and Class 6 hearing is awaited.
Ministry of Corporate Affairs vide its notification dated June 5, 2015 exempted Government Company with the applicability of Section 197 of the Companies Act, 2013. However, the remuneration received by the employees of the Company, had not exceeded the limit prescribed under Section 197 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 during the Financial Year 2021-22.
Your Company has framed a well-defined grievance procedure, evolved under the ''Code of Discipline''. Staff Grievances received are redressed to the satisfaction of the aggrieved. With respect to public grievance, as and when any complaints are received, necessary remedial action is taken promptly. Complaints/ grievances other than the staff grievance are categorized into customer / consumer complaints / grievances from the Contractors, NGOs / General Public etc. The respective project heads are empowered to dispose of the grievances concerning their areas.
Pursuant to Regulation 34(3) and Para-C of SEBI (LODR) Regulations, 2015, a separate section on Corporate Governance along with certificate from Practising Company Secretary confirming the level of compliance is attached and forms a part of the Boardâs Report.
As on financial year ended 31st March, 2022, the Board consists of eight members, three of whom were executive or whole-time Directors, one non-executive Director, representing Ministry of Steel and four Independent Directors. Details of sitting fees / remuneration paid to Directors and to KMPâs respectively are provided at table 15 in Corporate Governance Report.
The Company received necessary declaration from Independent Directors under Section 149(7) of the Companies Act, 2013, that they meet the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Regulation 25 of the Listing Regulations. The Board of Directors at its 278th Meeting held on 05/04/2022, noted the declarations. Independent Directors of the Company have registered themselves with Independent Directors databank in compliance with Companies (Creation and Maintenance of database of Independent Directors) Rules, 2019 and Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019.
During the year ended 31st March 2022, the Company had two women Directors, Smt Sukriti Likhi, Non-Executive Nominee Director with effect from 23.04.2021 and Dr. Usha Narayan, Independent Director w.e.f. 01.11.2021.
In terms of Article 91 of the Articles of Association of the Company, the President of India is vested with the power to appoint the Directors of the Company from time to time and shall determine the term of office of such Directors. Accordingly, the following appointments/cessations on the Board of your Company were affected as per the directives of the President of India: -
> Smt Sukriti Likhi, Additional Secretary and Financial Advisor, Ministry of Steel was appointed as an Additional Director and designated as Govt. Nominee Director on the Board of the Company with effect from 23.04.2021 vice Shri Shashank Priya, Ex-Additional Secretary and Financial Advisor, Ministry of Steel. Shri Shashank Priya ceased to be Director on the Board of the Company w.e.f. 23.04.2021. Having so appointed, Smt Sukriti Likhi was regularised at 45th Annual General Meeting of the Company held on
15.09.2021.
> Shri M.V. Subba Rao ceased to be the Chairman-cum-Managing Director on the Board of the Company w.e.f.
30.06.2021, consequent upon attaining the age of superannuation.
> Shri S.K. Gorai, Director (Finance) was assigned additional charge for the post of CMD w.e.f. 01.07.2021 and he continued to hold the additional charge up to 7th September 2021 (F/N).
> Ministry of Steel vide its Order dated 7th September 2021 had appointed Shri T. Saminathan, Director (Commercial) as the Chairman-cum-Managing Director of the Company. In pursuance to aforesaid order, Shri T. Saminathan, Director (Commercial) had assumed the charge of Chairman-cum-Managing Director, KIOCL w.e.f. 7th September 2021 (A/N). Further, Shri T. Saminathan is also holding the additional charge of Director (Commercial) w.e.f. 7th September, 2021.
> Dr. Usha Narayan and Shri Changdev Sukhadev Kamble were appointed as an Additional Directors and designated as Independent Directors on the Board of the Company w.e.f. 01.11.2021. Having so appointed, Dr. Usha Narayan and Shri Changdev Sukhadev Kamble were regularized with the approval of shareholders by way of postal ballot on 23.07.2022 by virtue of Section 110 of the Companies Act, 2013 read with Regulation 17(IC) of SEBI (LODR) Regulations, 2015.
> Shri Jagdish P. Joshi ceased to be the Independent Director on the Board of the Company w.e.f. 13/12/2021 on completion of his tenure.
> With deep regret, we report the sad demise of our Independent Director, Shri Ranjit Sreenivas on 19/12/2021. Your Directors would like to place on record their gratitude and appreciation for the guidance given by Shri Ranjit Sreenivas to the Board during his tenure as an Independent Director.
> Shri T. Srinivas ceased to be Govt. Nominee Director on the Board of the Company w.e.f. 28/02/2022 upon his resignation consequent upon superannuation from Ministry of Steel.
During the year, pursuant to Ministry of Steel Order F. No. 5/3/2017-BLA dated 30/01/2018, Shri MV Subba Rao, ceased to be the Chairman-cum-Managing Director of the Company w.e.f. 30.06.2021 on account of his retirement from the Company on attaining the age of superannuation. Further, Ministry of Steel vide its Order F. No. 5/1/2020-BLA dated 30/06/2021 had assigned the Additional Charge of the post of Chairman-cum-Managing Director, KIOCL to Shri S.K. Gorai, Director (Finance), w.e.f. 01.07.2021 for a period of three months or till the joining of a regular incumbent or until further orders, whichever is the earliest.
Ministry of Steel vide its Order F. No. 5/1/2020-BLA dated 7th September, 2021 appointed Shri T. Saminathan, Director (Commercial) as the Chairman-cum-Managing Director of the Company from the date of his assumption of charge till the date of his superannuation i.e., 31.05.2024 or until further orders, whichever is earlier. In pursuance to aforesaid order, Shri S.K. Gorai, Director (Finance) relinquished the additional charge of Chairman-cum-Managing Director of the Company and Shri T. Saminathan, Director (Commercial) assumed the charge of Chairman-cum-Managing Director, KIOCL w.e.f. 7th September 2021.
Ministry of Steel vide its order F. No. 05/01/2021-BLA dated 14.09.2021 had assigned additional charge of Director (Commercial) to Shri T. Saminathan for a period of three months w.e.f. 07.09.2021, which was further extended vide order No. 5(1)/2021-BLA dated 30.11.2021 and order No. 5(1)/2021-BLA dated 21.03.2022, upto 06.09.2022.
In terms of Section 152 (6) of the Companies Act, 2013, Smt. Sukriti Likhi, Govt. Nominee Director and Shri S. K. Gorai, Director (Finance) being longest in office shall retire by rotation at the ensuing AGM and being eligible for re-appointment, offers themselves for re-appointment. The Board recommends their re-appointment.
The Board met Six (6) times during the year under review, the details of which are given in the Corporate Governance Report. The maximum interval between any two Meetings did not exceed 120 days. The Meetings were conducted in compliance with relevant regulations of Listing Regulations and Secretarial Standard -1 issued by The Institute of Company Secretaries of India (ICSI).
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors
make the following statement in terms of Section 134 (5) of the Companies Act, 2013 that:
a) In the preparation of the Annual Accounts for the Financial Year ended March 31, 2022, the applicable Accounting Standards had been followed along with proper explanation relating to material departure.
b) The Company has selected such Accounting Policies and applied them consistently and made judgments & estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year and of the Profit & Loss of the Company for that period.
c) The Company has taken proper and sufficient care towards 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.
d) The Company have prepared the Annual Accounts on a going concern basis.
e) The Company has laid down Internal Financial Controls, which are adequate and are operating effectively.
f) The Company has devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Pursuant to Section 134(3)(a) and Section 92(3) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, the Annual Return of the Company as on March 31, 2022 in the format MGT-7 is available on the Company''s website at weblink https://kioclltd.in/data.php?id=191.
The Company complies with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI).
The C&AG of India vide its letter dated 18.08.2021 had appointed M/s YCRJ & Associates, Chartered Accountants as the Statutory Auditor of the Company under Section 139 of the Companies Act, 2013 for the financial year 2021-22. The Auditors have confirmed that they are not disqualified from being appointed as Auditors of the Company. The Auditors remuneration for the year was fixed at ^ 8.50 Lakhs plus applicable taxes for Statutory Audit. The total amount paid to the Statutory Auditors for all services rendered to the Company during 2021-22 was ^ 12.05 Lakhs.
The Company is maintaining the cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Companies Act, 2013. The Cost Audit Report
for the Financial Year 2020-21 was filed with the Ministry of Corporate Affairs on 31/08/2021. The Cost Audit Report for Financial Year 2021-22 is under finalisation and will be submitted to the Ministry of Corporate Affairs within the prescribed timeline.
The Company maintains cost records as required under the provisions of the Companies Act. The Company had appointed Cost Auditors for conducting the audit of the cost records maintained for its Pellet Plant Unit during the FY 22. A remuneration of ^ 50,000/- was fixed by the Board for payment to the cost auditors for FY 2021-22, which was ratified by the shareholders in the last AGM. The cost audit reports are filed with the Central Government in the prescribed form within the stipulated time. For the FY 23, the Board on the recommendations of the Audit Committee, had re-appointed M/s R. M. Bansal & Co., Cost Accountants to audit the cost records. The remuneration payable to the Auditor being placed before the members in this Annual General Meeting (AGM) for their ratification vide Resolution at Item No. 6 of the Notice convening the AGM.
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company appointed Shri S. N. Mishra, Practicing Company Secretary for conducting the Secretarial Audit for the Financial Year 2021-22. The Secretarial Audit Report for the Financial Year 2021-22 forms part of the Directors Report.
The Auditors in their report for the year have not reported any instance of fraud committed by the officers / employees of the Company.
The Comptroller & Auditor General of India (C&AG) vide its letter dated 28/07/2022 has conveyed âNilâ comments on the accounts of the Company for the year ended March 31, 2022. Copy of the same is annexed to this Report.
In line with the approval of the Board at its Meeting held on 11.02.2020, the proposal for adoption of new set of Memorandum of Association and Articles of Association had been taken up with the Administrative Ministry for its approval vide Companyâs letter dated 11.03.2020. The approval from Ministry is awaited.
The brief outline of the Corporate Social Responsibility (CSR) initiatives undertaken by the Company during the year under review form a part of this Report as an Annexure in the format prescribed in the Companies (Corporate Social Responsibility
Policy) Rules, 2014 and amendments. For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which is a part of this report. The CSR policy is available on weblink https://kioclltd.in/table. php?id=310.
KEY INITIATIVES
Environmental Management and Pollution Control Measures
Your Company has taken initiatives to address the cause of Global environmental issues and as a part of the initiatives, following has been carried out:
> Plantation activity is taken up every year with-in the plant premises and neighbouring areas around Mangaluru.
> The solid wastes generated in the plant premises are composted and used as manure.
> The Hazardous wastes are segregated at source and stored in closed sheds category wise. These wastes are sold to agencies authorised by CPCB and KSPCB.
> Action has been taken to implement energy efficient lighting systems such as Solar and LED in the plant areas.
> Solar panels have been installed over roof top of buildings with 294 KW peak capacity. Additionally, two more Solar plants of capacity 1 MW and 5 MW have been commissioned and are operational.
> At the Blast Furnace Unit, the process has in-built online Dust Catcher and Gas Cleaning Plant for processing the gases generated in the Blast Furnace. Further, the CO gas, which is a by-product of Blast Furnace, is not let out to the atmosphere but effectively utilised to generate power in our 2 x 3.5 MW Captive Power Plant. A part of this gas is also used to preheating process air at stoves.
> KIOCL is equipped with following facilities to monitor various pollutants in the plant: -
⢠Three high volume air samplers for AAQ status.
⢠Apart from this all the stack gas emissions are regularly monitored by a recognized laboratory.
⢠Noise level meter
⢠Other facility-Occupational Health & Safety-Health Center in the plant premises with qualified doctor and staff nurses.
Safety
Pellet Plant and Blast Furnace Units are covered under Factories act and all the safety parameters, standards are complied with as per the Rules and Regulations provided therein the Factories act 1948 and its subsequent amendments. Following are the activities of Training & Safety Department during the year 2021-22: -
1. The Onsite emergency plan approved by Director of Factories is in existence for both Pellet plant and Blast
furnace unit. The same will be updated as and when there is change in plant condition or emergency team members and emergency mock drills are conducted to practice role of each member of emergency teams.
2. Workerâs participation in Safety Management system is one of the important subjects as per factories act. The Company has formed area wise safety committees. Workerâs participation in these Safety Committees is ensured in PPU and BFU units of KIOCL.
3. Safety Inspections are carried out regularly once in a week and once in two months, by the Safety officer along with concerned department engineers and Safety committee members.
4. The Internal Safety audit has been conducted as per Standard checklist IS: 14489. In the year - 2020 a safety audit by third party is planned in year - 2022.
5. Suitable standard Personal Protective equipmentâs such as Safety helmets, Shoes, Respirators, Raincoats, Gloves, Safety Goggles, Face shields, Aprons, Ear plugs/muffs are purchased and issued to all employees including Contract labours to protect them against workplace hazards.
6. Various Training programmes are being conducted to inculcate Safety consciousness and to develop the human resources. The Refresher Training on SOPs and Maintenance activities, first aid, Firefighting training, Awareness programme on Environment, Occupational health, Safety, Vigilance Sustainable development, Productivity. A total man days 3322 training is provided to company regular employees on the above said subjects. A total 775 contractors workmen are provided with training on Workplace Safety.
7. 36 ATS trainees were provided with 50 RI classes each as per ATS act 1961 which amounts to 1800 Man days along with 12000-man days of on-the-job training to them. Also 120 Technical UG students are provided with one week Internship training during year 2021 - 22.
8. The Onsite Emergency Mock drills are conducted in Pellet plant and Blast furnace unit, to check the Emergency preparedness for any Major accident.
9. The Safety Boardâs and boards having Emergency contact telephone numbers are Purchased and displayed in KIOCL PPU and BFU sites to increase the Safety awareness among the employees.
10. Regular tool box talk is conducted by safety dept on daily basis at both units (PPU and BFU) which resulted in continuously reducing of accidents.
11. The safety committee meetings were conducted on regular interval on 21-08-2021, 30-12-2021 and 24-032022 in PPU with worker participation
12. Productivity Week was celebrated during the year and lectures on productivity were conducted for one week
besides conducting competitions.
13. National Safety Week was celebrated during the year.
As a part of safety week celebrations, Safety training programs were conducted for a week through internal as well as external faculties. Many safety competitions were conducted such as Safety slogans (in Kannada, English and Hindi), Safety Posters and Safety poem (in Kannada, English and Hindi) and prizes were distributed to the winners on 12.03.2022 during the function.
Your Company is certified with ISO 9001: 2015 for Quality Management System, ISO 14001:2015 for Environmental Management System and ISO 45001:2018 for Occupational Health and Safety Management System. All certifications are valid up to 08/11/2024.
To ensure compliance of Official Language Policy of the Union the Rajbhasha Department of KIOCL takes proactive action. This covers activities broadly divided into three main categories, i.e. Training, Translation, and Implementation. It was a successful year in terms of Official Language Excellence and KIOCL was awarded with Ispat Rajbhasha Prerana Puraskar during Hindi Salahkar Samiti meeting chaired by Honourable Union Minister held in Madurai on 9th March, 2022. Ispat Rajbhasha Prerana Shield was received by CMD, KIOCL. As another achievement Corporate Office of KIOCL Limited secured third prize from TOLIC (PSU), Bengaluru. Award was received by Director (Finance). On similar note Pellet Plant Unit of KIOCL Limited also grabbed third prize for Official Language excellence from TOLIC, Mangaluru.
These achievements motivate us to act promptly to ensure compliance of Official Language Policy of the Union and the Rajbhasha Department of KIOCL Limited takes various initiatives to promote Hindi in its offices. During the year Rajbhasha Department scheduled Official Language Implementation Committee meetings, organised workshops & conducted Official Language inspections as per targets of the
Annual Program, 2021-22 of Department of Official Language (Ministry of Home Affairs). In view of Corona pandemic this year activities were scheduled by ensuring safety measures of COVID-19 and by maintaining social distancing norms.
Rajbhasha Department organised various Hindi competitions through online mode as well as through offline mode by maintaining social distance during Hindi Pakhwada, 2021 in which all groups of employees participated. An online webinar was organised by Pellet Plant Unit of KIOCL Limited Mangaluru, in which participants from member offices of TOLIC, Mangaluru, along with KIOCL employees made their presence. Incentive scheme for original work in Hindi has been implemented in the organisation and total 38 employees were rewarded with cash prizes this year.
Various documents pertaining to website of the company, correspondence with Ministry of Steel, Reports on Standing Committees, Annual Report, House Journals, Press Releases, RTIs and other documents along with documents as per section 3(3) of OL Act and rule 5 of OL rule made available for translation were translated by the Rajbhasha department. The E-Magazine of KIOCL Limited ''Shrigandha'' was published on quarterly basis and it was circulated through Email & WhatsApp. The link of the E-magazine was also provided on the website of the company and web-portal of Official Language Department (Ministry of Home Affairs) under E-Pustakalay segment.
During the year employees were nominated for classes conducted through online mode and for Correspondence courses of Hindi Teaching Scheme conducted by Central Hindi Training Institute, Department of Official Language, Ministry of Home Affairs. After successful completion of respective courses employees were rewarded with cash prizes. One employee was given one increment for one year after clearing final examination of Hindi Teaching Scheme.
Preventive vigilance has been the thrust area of Vigilance Department all these years and the same has received focused attention during the year. A climate of preventive vigilance is generated to sensitize officials at all levels about the ill effects of corruption and malpractices. Regular Structured Meeting of Vigilance with the management is being conducted and issues related to e-governance, Leveraging Technology, Tender Management, Award of Works, Recruitment Policy have been discussed. The Vigilance Department is certified for compliance to ISO certification 9001-2015 standards to ensure continuous improvement in Quality Management System. Certificate was renewed and is valid till 29th January, 2025. E-Procurement is in vogue and the threshold value for this is fixed at ^2 Lakhs and above. During the year, 93.87% contracts by value are covered under this. All payments are being made through electronic mode.
During the Year, 158 work/purchase/sale orders have been issued incorporating Integrity Pact Clause, covering 98.56% of contracts by value. No complaints have been received
Nature of pending cases: -
1. Favouritism in various recruitment and promotions made in KIOCL.
under Integrity Pact. 46 Scrutiny/examinations, 65 checks/ inspections are carried out during the period and corrective actions, if any are suggested. Necessary action is taken as regards to the complaints received during the year.
Vigilance Awareness Week was observed from 26th October to 1st November, 2021 at all the locations/offices of KIOCL Limited. The theme of this yearâs Vigilance Awareness Week is âIndependent India @ 75: Self-Reliance with Integrity; ^TTT @ 75: ur^Rai U ^ifflR4wi''â. Workshops, Guest Lectures and Sensitization programs were conducted during the week through web based/ hybrid mode observing Covid-19 prevention guidelines. Essay, slogan writing and quiz competitions were conducted among the employees. On this occasion, the importance of observing the Vigilance Awareness Week and steps taken to strengthen vigilance activities were highlighted.
Your Company has a Whistle Blower Policy and has established the necessary vigil mechanism for Directors and Employees in confirmation with Section 177(9) of the Act and Regulation 22 of Listing Regulations, to report concerns about unethical behaviour. The details of the policy have been disclosed in the Corporate Governance Report, which forms part of this report and is available on link https://kioclltd.in/table.php?id=279.
Details of cases initiated / disposed-off during 2021-22: -
The details of vigilance cases initiated / disposed-off during 2021-22 are as under: -
- |
No. of cases pending as on 31-03-2021 |
1 |
- |
No. of cases initiated during 2021-22 |
3 |
- |
No. of cases disposed-off during 2021-22 |
1 |
- |
No. of cases pending as on 31-03-2022 |
3 |
2. Excess payment of ^ 30.66 lakhs in empanelment of medical shops tender 2018-19 at NMPT while on deputation from KIOCL.
3. Irregularities in appointment of First Aid Superintendent in Port Trust Hospital, NMPT while on deputation from KIOCL.
Officers involved : 2 |
Charge sheets issued on : 26.08.2021& 07.09.2021 |
Disciplinary proceedings : Under progress. |
There is no pending Audit Para from C&AG during the year under review.
At KIOCL, R&D activities and innovative initiatives are being taken up departmentally based on the need on continuous basis to improve upon the existing process system, bring down the cost of production and to achieve the set targets. The expenses are also covered as per the provisions made in the budget. It is also part and parcel of the MoUs being signed annually with Ministry of steel. During the financial year 2021-22, following R&D activities have been taken up.
⢠The Agitator blades of Slurry storage tank TK 204 in Port Facilities department have been modified during the year 2021-22 which has ensured smooth evacuation of slurry from the tank thus avoiding housekeeping problems, damage to equipment and saving in cost and manpower while retaining the same production efficiency of the Agitator as before. The expenditure on supply of Modified Agitator Impellor Blade is ^ 5,81,424/-. The above Blades received at site and commissioned on 25th Sept. 2021.
Expenditure on Innovations Initiatives -ERP
An expenditure of ^ 4.91 crores incurred during the year for development and end-to-end implementation of ERP solution in the company.
The savings from IEX, wind energy and MESCOM special incentive scheme for FY 2021-22 is as following: -
Sl. No. |
Innovations |
Savings |
1. |
IEX utilised energy - 55,16,133 kWh units |
^ 0.52 Crores |
2. |
Wheeling of Wind Energy - 66,00,000 kWh units. Savings |
^ 0.90 Crores |
3. |
Savings from availing MESCOM special incentive scheme |
^ 5.03 Crores |
Total Savings from above three for FY 2021-22 |
^ 6.45 Crores |
Implementation of Public Procurement Policy for MSEs
In line with the Govt. of India guidelines as per MSMED Act 2006 and keeping in view of the effective implementation of Public Procurement Policy for Micro and Small Enterprises (MSEs) Order 2012, following steps were taken:
⢠List of item components that could be sourced from MSEs were posted on the Company''s website at www.kioclltd.in for the information of MSE vendors.
⢠Communication sent to all the registered vendors regarding the said policy with the objective of achieving an overall procurement from MSEs. Further, for enhancing the procurement from MSEs owned by SC/ST, all the vendors were approached for capturing necessary details and update the data bank.
⢠During 2021-22, Company placed orders for Goods & Services for a value of ^111.19 crores from MSEâs which constituted 33.92 % of the total procurement value of ^327.75 crores (excluding iron ore fines and furnace oil).
Procurement from Government e-Marketplace (GeM)
During the Financial Year 2021-22, your Company placed 722 orders on GeM amounting to ^ 260.72 crores against 6.97 crores during the previous Financial Year.
Right to Information
The Company has put in place an elaborate mechanism to deal with matters relating to the RTI as required under the Right to Information Act, 2005 to provide information to citizens and to maintain accountability and transparency. The RTI manual
have been hosted on Company''s website and had designated Central Public Information Officers (CPIOs), Assistant Public Information Officers (APIOs) and Appellate Authorities to provide information''s to the applicants. During the year, 29 RTI applications were received and were disposed-off within stipulated time.
Details of Energy Conservation, R&D, Technology Absorption and foreign exchange earnings and outgo stipulated under Section 134(3) (m) of the Companies Act, 2013 read with Rule, 8 of the Companies (Accounts) Rules, 2014, is annexed to this report.
Your Directors gratefully acknowledge the support, cooperation and guidance received from the Hon''ble Minister of Steel, Hon''ble Minister of State for Steel, Hon''ble Chief Minister of Karnataka, the Secretary, Ministry of Steel and other officials of the Ministry of Steel as well as other Ministries of the Government of India, Government of Karnataka, Odisha, Tamil Nadu and all other departments / agencies of Central and State Government in all the endeavours of the Company.
The Board is also thankful to all its stakeholders, including bankers, investors, members, customers, consultants, technology licensors, contractors, vendors, etc., for their continued support and confidence reposed in the Company.
Your Directors appreciate and value the contribution made by every member of the KIOCL family.
Mar 31, 2021
Your Board of Directors are pleased to present the 45th Annual Report on the business and operations of your Company (âthe Companyâ or âKIOCLâ) along with Audited Financial Statements for the Financial Year ended March 31, 2021, together with the Auditorsâ Report on the Annual Financial Statements and Comments on the same by the Comptroller & Auditor General (C&AG) of India.
The Audited Financial Statements of the Company for the year ended March 31, 2021 are prepared in accordance with the relevant applicable Ind AS and Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âSEBI Listing Regulationsâ) and provisions of the Companies Act, 2013 (âActâ).
1. FINANCIAL RESULTS AND STATE OF COMPANY''S AFFAIRS
(t in crores, Except EPS & Book Value) |
||
Particulars |
FY 2021 |
FY 2020 |
Total Income |
2477.83 |
2056.53 |
Revenue from Operations |
2383.61 |
1937.65 |
Other Income |
94.22 |
118.88 |
Earnings Before Interest and Tax (EBIT) |
425.09 |
73.65 |
Profit Before Tax (PBT) |
410.23 |
63.68 |
Tax Expense (including deferred taxes) |
109.06 |
20.20 |
Profit After Tax (PAT) |
301.17 |
43.48 |
Add: Other Comprehensive Income (Net of Tax) |
1.37 |
(0.21) |
Total Comprehensive Income |
302.54 |
43.27 |
EPS (Basic & Diluted) |
4.87 |
0.70 |
Average Net worth |
1950.96 |
1,954.94 |
Average Capital Employed |
2152.16 |
2,104.38 |
Book Value per Share |
32.68 |
30.81 |
Return (EBDITA) on Average Capital Employed (%) |
21.03 |
4.81 |
Return on Average Net Worth (%) |
15.44 |
2.22 |
Capital expenditure |
41.05 |
21.93 |
Contribution to Exchequer: - |
||
Central |
147.97 |
84.62 |
State |
2.00 |
1.66 |
Despite uncertainty in international market for iron ore Pellets since outbreak of COVID-19 Pandemic, your Company, produced 2.210 Million Tons and dispatched 2.311 Million Tons of Pellets during the year and achieved a record total income of t 2477.83 crores, which is highest since inception of the Company as against t 2056.53 crores in the Financial Year 2019-20, registering growth of 20.49%. Your Company achieved its best financial performance, since closure of its captive mine and has earned a PBT of t 410.23 crores and PAT of t 301.17 crores during the year as against PBT of t63.68 crores and PAT of t 43.48 crores during previous Financial Year. The net profit includes an operating profit t 316.01 crores as against operating loss of t 55.21 crores during previous Year.
COVID-19 Pandemic, its Impact and KIOCL''s Response
Since the outbreak ofCOVID-19 Pandemic, International market for iron ore Pellet was under severe pressure as manufacturing and economic activities across the globe were affected. KIOCL being a shore-based pellet plant, could continue its sales activities without much hindrance and service the contracts. Due to lockdown imposed across the countries, your Company faced initial difficulties in timely collection and negotiation of shipping / sales documents through banks for realisation of sales proceeds. However, your Company could overcome the difficulty by making specific agreements with its customers.
COVID-19 outbreak in India, followed by the lockdown, had impacted the domestic steel industry severely. It had affected demand, output of steel players and the supply chain. Hit by the pandemic, steel production in India was down by 10% at 100 million tons in 2020, against the 111 million tons logged in the same period during the previous year. Effects of COVID-19 being unclear, it would be extremely difficult to predict market behaviour. Europe is yet to start full scale operations, Japan and South Korea are also going through scaled down production activities. Though presently Chinese market is depicting slightly positive trend, its sustainability needs to be observed. Volatile Geopolitical situation is also a matter of concern and its effects are tough to envisage.
If not for the Governmentâs spending on infrastructure, steel demand would have fallen even sharply as the pandemic has taken a heavy toll on the industry. However, timely measures such as push for housing and infrastructure projects, aid to MSMEâs, Mining reforms and âAtmanirbhar Bharatâ scheme by Government have helped industry to recover the turbulence. Though domestic demand recovered to pre-COVID levels in the month of August 2020 with economic activities limping back to normalcy, a full-blown recovery was seen only in the month of November 2020 when sales volume surged to 11% year-on-year. However, with second wave of Pandemic gaining momentum, its impact on the industry is yet to be ascertained.
Revenues
During the year, your Company earned Revenue from Operations of K 2,383.61 crores as compared to K1,937.65 crores in the previous year, a growth of 23.02 %. Revenue from export sales increased by 17.27 % to K 1846.06 crores as compared to the previous Financial Year figure of K 1574.13 crores. Your Company achieved export sales of 1.84 million tonnes of Pellets against previous years export of 1.99 million tonnes. Your Company achieved 77.45 % of total revenue from operations through export. Income from Sale of Services (O&M Operations and Mineral Exploration Services) during the year was K 14.01 crores against K 41.30 crores of previous year. Other Income comprising of Income from Treasury Operation and other Miscellaneous Income has decreased to K 94.22 crores from K 118.88 crores, mainly due to corpus reduction on account of buyback, dividend payment totaling approx. K 300 crore during the year and reduction of interest rates of Fixed Deposits.
Your Company earned a record Profit Before Tax of K 410.23 crores against a Profit Before Tax of K 63.68 crores in the previous year, an increase of 544 %. The increase is primarily due to realisation of contribution to K 2475 per ton, an increase of K 1724 per ton, compared to K 751 per ton during the previous year. Your Company had earned Profit After Tax of K 301.17 crores during the current year as compared to K 43.48 crores during previous year.
2. RETURN OF SURPLUS FUNDS TO SHAREHOLDERSDividend
In view of the Companyâs encouraging performance, your Directors have recommended to distribute 33.09% of PAT i.e. a final dividend of K 1.64 per equity share on face value of K 10/- each for the FY 2021 (16.40% on the Paid-up Share Capital) against K 0.70 per equity shares during the previous year, subject to the approval of Members at the ensuing AGM to be held on 15/09/2021. The final dividend, if approved by the Members, would involve a cash outflow of K 99.67 crore, against a cash outflow of K 43.54 crore during the previous Financial Year.
The Board ofyour Company in its Meeting held on 19/10/2020, approved the buyback of fully paid-up equity shares of K 10/-each not exceeding 1,41,74,469 equity shares (representing 2.28% of the total number of equity shares in the paid-up share capital of the Company) at a price of K 110/- per equity share payable in cash for an aggregate consideration not exceeding K 155.92 crores (excluding tax) being 8.25% of the aggregate of the fully paid-up equity share capital and free reserves as per the audited financial statements of the Company for the financial year ended March 31, 2020. This
Credit Rating
During the year, your Companyâs credit worthiness for availing Bank Facilities was evaluated by ICRA Limited and the following Credit Rating was assigned: -
was within the statutory limits of 10% of the aggregate of the fully paid-up equity share capital and free reserves under the Board of Directors approval route as per the provisions of the Companies Act from the equity shareholders of the Company, as on the record date, on a proportionate basis, through the Tender Offer route as prescribed under the Buyback Regulations. The total outflow of funds on account of buyback including taxes was ^ 188.94 crores.
Your Company completed buyback in accordance with provisions contained in Companies Act, 2013 and SEBI (Buyback of Securities) Regulations, 2018. The President of India acting through Ministry of Steel, Govt. of India being the Promoter of the Company had tendered Buy Back offer through Stock Exchange Mechanism and 1,41,73,577 Equity Shares were accepted in the Buy-back and 892 Equity Shares were accepted from other non-promoter shareholders.
The Company concluded buy-back on 24/12/2020, consequently 1,41,74,469 Equity Shares were extinguished. The Company utilized its general reserve for the buy-back of its shares. In accordance with Section 69 of the Companies Act, 2013, the Company created a Capital Redemption Reserve of ^ 14.17 crore equal to the nominal value of shares bought back as an appropriation from the general reserve.
The Shareholding Pattern of the Company, pre-Buyback and post-Buyback is as under:
Name of Agency |
Amount |
|||
Facilities |
(t in crores) |
Rating |
Remarks |
|
ICRA |
Line of |
1049 |
Long Term |
Assigned |
Limited |
Credit |
Rating: ICRA AA- |
two |
|
(LOC) |
[ICRA Double A |
notches |
||
Minus; |
below the |
|||
Outlook: Stable] |
highest rating. |
|||
Short Term |
Highest |
|||
Rating: ICRA A1 [ICRA A One Plus] |
rating. |
Market Capitalization - Top 500 Companies
Your Company had been included amongst the top 500 listed Companies as per Market Capitalization on NSE and BSE and stands at No. 291 and 295 with Market Capitalisation of ^ 8715.15 crore and ^ 8730.34 crore, respectively.
Particulars |
Pre-Buyback |
Post Buyback |
||
No. of Equity Share |
% of existing Equity Share Capital |
No. of Equity Share |
% of the Post Buyback Equity Share Capital |
|
Govt. of India |
61,60,51,204 |
99.06 |
60,18,77,627 |
99.03 |
Public Shareholding |
58,74,361 |
0.94 |
58,73,469 |
0.97 |
Total |
62,19,25,565 |
100 |
60,77,51,096 |
100 |
MoU Performance
Performance of your Company in terms of the Memorandum of Understanding (MoU) with the Ministry of Steel, Government of India for the Financial Year 2019-20 was provisinally rated as "Fair". Final rating from DPE is awaited. The MoU evaluation for the Financial Year 2020-21 is under finalisation and is expected to achieve a âVery Goodâ rating despite uncertainty in business environment due to COVID-19 Pandemic.
Risk Management
Pursuant to the requirement of Regulation 21 of the Listing Regulations, the Company had constituted a Board level Risk Management Committee w.e.f. 26/03/2019. The details of Committee and its terms ofreference are set out in the Corporate Governance Report forming part of the Boardâs Report. The Company has a robust Risk Management framework to identify, evaluate business risks and opportunities.
Your Company continue to be debt-free and maintain sufficient cash to meet its strategic and operational requirements. As on March 31, 2021, the Company had a net cash and cash equivalent balance of ^ 1454.87 crores as against ^ 1530.09 crores as on 31/03/2020.
During the year, the total CAPEX was ^ 41.05 crores, which was 14.40% of the Budget Estimate (BE) of ^ 285 crores and 12.07% of the Revised Estimate (RE) of ^ 340 crores. The shortfall was mainly on account of Forward and Backward integration project of Blast Furnace Unit not taking off as the Public Procurement Policy for domestic tendering for less than ^200 crores entailed re-tendering of the same; delayed finalization of Pressure Filters project for Pellet Plant Unit and pending forest clearance for Devadari Iron Ore Mine.
years includ |
ing current year are depicted |
at Table 1 & 2. |
||
Table 1: Capacity Utilisation |
(Qty. In Million Tons) |
|||
Year |
MOU Target (Very Good) |
Actual Production |
Utilisation of installed capacity in % |
|
2020-21 |
2.500 |
2.210 |
63 |
|
2019-20 |
2.300 |
2.375 |
68 |
|
2018-19 |
2.170 |
2.238 |
64 |
|
2017-18 |
1.925 |
2.327 |
66 |
|
2016-17 |
1.300 |
1.460 |
42 |
|
(Installed capacity of Pellet Plant is 3.500 million tons / annum) |
Particulars of Loans, Guarantees or Investments
During the year 2020-21 there was no loan, guarantee or investment made by your Company under Section 186 of the Companies Act, 2013.
Particulars of Contracts or Arrangements made with Related Parties
No transactions were entered into with Related Parties as defined under the Section 188 of Companies Act, 2013 read with Regulation 34(3) and Para A of Schedule V of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015, during the Financial year, as such annexure AOC-2 is not furnished. There was no materially significant transactions with related parties which were in conflict with the interest of the Company. The Board approved Policy on Materiality of Related Party Transactions and dealing with Related Party Transactions is available on the Companyâs Website.
Material Changes and Commitments, if any, affecting Financial Position
There was no material change / commitment occurred affecting the financial position of the Company subsequent to the financial year ended March 31, 2021 till the date of this report and there was no change in the nature of business of the Company during the year.
Disinvestment through Follow-on Public Offer
The disinvestment of 15% KIOCL Equity Shares by Follow-on Public Offer (FPO), as approved by the Cabinet Committee on Economic Affairs (CCEA) had not been achieved by Govt. of India during the year.
Management Discussion and Analysis Report
The Managementâs discussion and analysis report is set out in this Annual Report in terms of the provisions of Regulation 34(2)(e) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Business Responsibility Report (BRR)
During the year, your Company continued to be in top 500 listed companies in term of market capitalization. Accordingly, in compliance to Regulation 34(2)(f) of SEBI (LODR) Regulations, 2015, BRR disclosures have been integrated in the Annual Report.
3. BUSINESS AND OPERATIONAL REVIEW Pellet Plant Unit
Your Company produced 2.210 million tons of Pellets during the year 2020-21 as comparison to 2.375 million tons in the previous year and sold 2.311 million tons of Pellets as against 2.356 million tons in the previous year, against a MoU target of 2.500 (Very Good). The Company missed the MoU target due to non-availability of raw material due to frequent cyclones in the eastern region coupled with COVID-19 Pandemic affecting the mining activities at NMDC mines at Chhattisgarh. Out of the total quantity sold, exported quantity was 1.84 million tons which was about 80% of the total sales and balance 0.47 million tons was sold to domestic customers.
The Blast Furnace Unit (BFU) remained under suspension due to uneconomic price of Pig Iron and high Coke Price.
A snapshot of production target vis-a-vis actual achievement with capacity utilization and sales performance during last five years including current year are depicted at Table 1 & 2.
Table 2: Sales Performance
(Qty: in Million Tons, Value: ^ In Crs.) |
||||||
Year |
Pellets |
Pig Iron |
Total |
|||
Qty |
Value |
Qty |
Value |
Qty |
Value |
|
2020-21 |
2.311 |
2343.80 |
0.003 |
3.55 |
2.314 |
2347.35 |
2019-20 |
2.356 |
1878.97 |
0.003 |
5.20 |
2.359 |
1884.17 |
2018-19 |
2.206 |
1,825.97 |
0.002 |
2.80 |
2.208 |
1,828.77 |
2017-18 |
2.301 |
1,553.09 |
0.003 |
0.40 |
2.304 |
1,553.49 |
2016-17 |
1.387 |
868.72 |
0.000 |
0.07 |
1.387 |
868.79 |
Highlights of performance during the Financial Year 2020-21
are: -
¦ Fifteen (15) Mineral Exploration Projects with cumulative project approved value of ^ 129.81 crores (including GST) were handled;
¦ Total revenue of ^ 4.57 crores (including GST) was received from NMET and Govt. of Karnataka. Interest free advance of an amount (mobilization amount) of ^ 7.62 crores (including GST) was received from Govt. of Karnataka.
¦ Four (4) Mineral Exploration projects were completed as per the approved timelines of National Mineral Exploration Trust (NMET), Ministry of Mines, GoI. Geological Reports were submitted to NMET.
mpyara at reiiet riant]
Details of Mineral Exploration Projects executed: -Projects approved and funded by NMET: -
Mineral Exploration works of below indicated four (4) blocks
completed and GR submitted to NMET: -
¦ Udbur Gold Block, Mysore (District), Karnataka: G4 level ME works for Gold & Associated elements (NICKEL PHASE);
¦ Neerbudhihal Limestone & Dolomite Blocks (East & West), Bagalkote, Karnataka (02 Blocks): G4 level ME works for limestone and dolomite;
¦ Reddipalayam Amalgamated Limestone Block, Ariyalur (Tq & Dist), Tamil Nadu: G2 level ME works for limestone.
Total revenue of ^ 4.41 crores (inclusive of GST) was generated from NMET. The Company received the sanction order for carrying out G4 level of ME works for Kyanite in Kallahalli Kyanite Block, Mysore (Dist), Karnataka with project approved cost of ^ 1.92 Crores (Including GST). Project is planned for execution during the Financial Year 2021-22.
Six (6) potential areas in the State of Karnataka for precious and base metals were identified for future Mineral Exploration works through NMET funding. Mineral Exploration Project Proposals (MEPP) were placed before Department of Mining and Geology (DMG), Govt of Karnataka (GoK) for scrutiny and consent.
Projects approved and funded by DMG, GoK: -
Iron Ore and Manganese - 10 Blocks (Lot No 01, Lot 02 and Haddinapade) for G3 and G2 level situated in Bellary and Chitradurga (Dists) of Karnataka:
¦ Detailed Geological Mapping works completed and Technical Committee of GoK approved the borehole plan.
¦ Proposal seeking permission for diversion of forest land is under process and forest clearance is awaited.
¦ Revenue of ^ 15.68 Lakhs (inclusive of GST) is generated from GoK blocks.
M/s. OMC had awarded the work to your Company to take up balance works of construction of Chrome Ore Beneficiation Plant and commissioning. The total awarded contract price for the balance work was ^ 28.60 crores plus GST and subsequently to carry out the operation and maintenance for at least five years period after commissioning. KIOCL had procured equipments worth ^ 13 crores to M/s OMC for the project as per the contractual terms. The jobs were expected to be completed by 30/11/2020. However, the same got extended due to non-supply of mechanical equipment and other items at site by various suppliers due to COVID 19
Pandemic. Construction works is expected to be completed by August, 2021.
Global crude steel production reached 1,864 million tonnes (Mt) for the year 2020, down by 0.9% compared to 2019. Asia produced 1,374.9 Mt of crude steel in 2020, an increase of 1.5% compared to 2019. China''s crude steel production in 2020 reached 1,053 Mt, up by 5.2% on 2019. China''s share of global crude steel production increased from 53.3% in 2019 to 56.5% in 2020. India''s crude steel production for 2020
was 99.6 Mt, down by 10.6% on 2019. India remained as the second largest steel producer in the world. Japan produced 83.2 Mt in 2020, down 16.2% on 2019. South Korea produced 67.1 Mt, down 6.0% on 2019. The United States produced 72.7 Mt in 2020, down 17.2% on 2019. The EU produced 138.8 Mt of crude steel in 2020, a decrease of 11.8% compared to 2019.
Russia was estimated to have produced 73.4 Mt in 2020, up by 2.6% against 2019. The Middle East produced 45.4 Mt of crude steel in 2020, an increase of 2.5% on 2019. Iran was estimated to have produced 29.0 Mt in 2020, up 13.4% on 2019. Africa produced 17.2 Mt of crude steel in 2020, the same as the 2019 production figure.
DIVERSIFICATION OF EXPORT MARKET
Your Companyis making all efforts to diversify its market base and minimize dependence on few markets. During the year about 156% of the total exports were made to markets other than China, in Middle East, Brazil, Bahrain and Malaysia.
For long term sustainability / viability of your Company in the competitive market environment and forward consistent steady growth, yourBoard madethe following efforts:
Commencement and Development of Devadari Ioon Ore Mine
Govf. of karnataka vide Gazette Notification dated 23/01/2017 reserved an area of 470.40 ha in kevadari Rarge, S andur Taluk, Bellary District formininn least od Iron and Maaganese ore for captive utilization at Pellet Plant and Blast Furnace Unit at Mangaluru. Company had initiated actions for obtaining statutory clearances from authorities for execution of mining lerse deed.
Mining Plan was approved on 08/03/2018 for production of 2 mtpa iron ore and setting up of 2 mtpa crushing, conveying and beneficiation plant from IBM.
Company had submitted Form-I through online portal of MOEF&CC, GoI on 18.01.2018. EIA/EMP report was prepared based on Terms of Reference issued on 16.05.2018 by the Environment Appraisal Committee (EAC), MoEF&CC, GoI. On conducting Public Hearing on 25.06.2019, Company submitted Form-II along with Final EIA/EMP report to MoEF&CC, GoI on 12.09.2019 for grant of EC. Environmental Clearance (EC) presentation was made on 19.12.2019 before EAC. On 07/02/2020 EAC had issued summary records of Meeting of environment appraisal and directed KIOCL to submit additional information / documents including status of forest clearance of the project and approval for the allocation of water from Tungabhadra Dam to the project.
EC proposal was presented once again in the 20th EAC Meeting held on 19.08.2020. The EC proposal was deferred for want of Additional Details sought like Submission of Stage - I forest clearance, approval for drawl of 4 MLD water from TB Dam from GoK.
Water permission proposal was submitted on 12.10.2018 to Principal Secretary, Water Resource Department, Govt. of Karnataka for allocation of water for DIOM. The application was under process with Water Resource Dept., GoK. Meanwhile, Company had engaged M/s MECON Ltd for Water availability study and preparation of Feasibility report for drawl of 4MLD of water from TB Dam or down stream of TB dam or Narihalla reservoir. M/s MECON has submitted report to KIOCL. This Report was submitted to Chief Engineer, KNNL, TB Dam, Munirabad and accordingly chief engineer recommended on 27.01.2021 to State Govt for according permission for water drawl from downstream of TB dam. Water allocation proposal is under active consideration at Water Resource Dept., GoK.
The Company submitted Forest Clearance application in Form âAâ on 16/03/2018 through online portal of MoEF & CC, GoI for forest clearance. Govt. of Karnataka on 09.10.2020 recommenced the Forest clearance proposal to MoEF&CC, GoI for In-Principle (Stage I) clearance for an extent of401.5761 ha i.e., 388 ha for mining area 13.5761 ha for conveyor corridor, power line, approach road etc. DDG, IRO Bengaluru, MoEF&CC, GoI visited the project site on 09.02.2021 for submission of Site Inspection Report (SIR) to MoEF&CC, GoI. SIR was submitted on 15.02.2021 to MOEF&CC, GoI.
The Agenda for in-principal stage-I Forest Clearance for Devadari Iron Ore Mine was put up in Forest Advisory Committee (FAC) Meeting held on 17.02.2021 for deliberations and recommendations. As per the recommendations of FAC, a sub-committee visited Devadari Mine site on 19.03.2021 and had interaction with officials of Forest Dept., GoK, Directorate of Mines & Geology, GoK and KIOCL. Sub-committee had submitted the report to MOEF&CC. FC proposal would be
placed before the FAC in its Meeting to be held during May-June 2021 for according in-principle (Stage I) approval.
On obtaining statutory clearance, Mining lease deed would be executed with the Government of Karnataka for commencement of Mining operation.
The Company would undertake development of mine, construction and commissioning of beneficiation plant along with infrastructure development viz railway siding, water pipeline, power transmission line, conveyor corridor with capital investment of around ^ 1500 - 2000 crores. The iron ore produced from the mine would be utilized in the Pellet Plant Unit and Blast Furnace Unit of the Company at Mangaluru. Setting up of Pellet Plant at Devadari site had been envisaged at later stage.
Setting up of Coke Oven and DISP projects of BFU
In order to make the Blast Furnace Unit (BFU) viable on standalone basis, your Company had envisaged setting up of 1.8 Lakh TPA capacity of Non-recovery Coke Oven plant with waste recovery Power Generation Plant as back ward integration project and 2 Lakh TPA capacity Ductile Iron Spun pipe (DISP) project as forward integration project at the existing BFU of KIOCL at Mangaluru. KIOCL''s Board and PIB has approved the project with total capital outlay of ^ 836.90 Crores. MoEF & CC has granted Environment clearance (EC) in Feb 2020.
Company had appointed M/s MECON as EPCM Consultant for the project. Main technological packages envisaged are installation of Coke Oven Plant, Waste heat recovery Power Plant, DISP Plant, Pulverised Coal Injection plant, Oxygen and Nitrogen plants.
Site Levelling and some of civil jobs have started at the proposed site. Main technological packages are under tendering stage. Due to COVID -19 pandemic the tender process is also getting delayed.
Due to change in General Finance Rules of GoI under the ''Atmanirbhar Bharat'', finalizing tenders is getting delayed. Further, change in GFR and Procurement Policy of Govt. of India, registration of DPIIT is mandatory for participation of foreign companies in the bid sharing the country border.
Setting up of 5.0 MWac Captive Solar Power Plant
In order to meet the power requirement of Companyâs plant at Mangaluru and further to reduce the cost of power of Pellet production, Company envisaged for setting up of Captive Solar Power Plant with an estimated cost of ^ 24.17 crores. Company engaged an EPC contractor for land identification, Engineering and Construction for setting of 5.0 MWac (6.5 MWp) captive solar plant in Karnataka and appointed M/s IDeCK as technical consultant for Project monitoring. The EPC Contractor have identified 20 acres of land for setting up of Solar Power Plant at Kathrikehal Village, Chikkanayakanahalli Tq, Tumku dist. Land
SAIL to withdraw from the setting up of pellet plant project to augment its resources for its own projects.
MODERNIZATION OF PELLET PLANT UNIT Installation of a Barrel Type Blender Reclaimer
For modernization and to fulfil the current requirement of Pellet Plant, Company has installed 1000 tph capacity barrel type blender reclaimer with associated civil and structural works, electrics, instrumentation & control etc.
had been registered in the name of Company on 29.07.2020. All statutory clearances have been obtained for Solar Power Plant. Installation of all solar panel and necessary equipment have been completed. Performance test is being conducted. Long Term Open Access (LTOA) agreement for Wheeling was entered among BESCOM, MESCOM and KPTCL. Solar Power generated is being pumped to Kathrikehal KPTCL substation w.e.f 11.03.2021.
JOINT VENTURE / MOUSetting up 2 MTPA Pellet Plant on JV basis between KIOCL & RINL
Your Company had signed a MoU with M/s RINL Visakhapatnam for setting up a 2 MTPA capacity Pellet Plant at RINL premises, Visakhapatnam on Joint Venture Basis. To take the project forward, the Techno-Economic Feasibility Report (TEFR), Detailed Project Report (DPR) and Shareholders Agreement was approved by the Boards of both KIOCL and RINL. M/s MECON was engaged as Technical Consultant for obtaining the Environmental Clearance from MoEF and Consent for Establishment (CoE) from Andhra Pradesh State Pollution Control Board.
Meanwhile, M/s RINL had floated an EoI for setting up of 2 MTPA Pellet Plant at Vizag on âBuild, Operate and Maintain Modeâ Basis. RINL have informed your Company to hold the Joint Venture (JV) activities at present, however, JV is still open till clarity emerges on outcomes of EoI. In view of the above, KIOCL has informed MECON to hold further study / work on preparation of draft report of EIA / EMP study.
Your Company had entered into a MoU with M/s SAIL for exploring the Techno-economic feasibility for consideration of setting up of pellet plant under a Joint Venture (JV). M/s MECON was entrusted for preparation of bankable TEFR for identifying the best suited ISP of M/s SAIL for setting up of pellet plant. With due consultation, it is decided to set up 4 mtpa pellet plant at Bokaro Steel Limited of M/s SAIL. Discussion was under progress with M/s SAIL to finalize the JV agreement for setting up of pellet plant under JV. Meanwhile, KIOCL has started the work of setting up of Coke Oven Plant & DISP Plant at BFU, Mangalore and Devadari Iron Ore Mining project was also under advance stage, so, KIOCL intimated
Installation of Vertical Pressure Filters
The existing vacuum disc filters are not suitable to filter the iron ore having high alumina content and slimy in nature. Considering the present scenario and market conditions for the raw materials, KIOCL intends to develop the operations to have flexibility in the blending of ore from any part of the country. Your Company appointed M/s MECON as consultant for installation of vertical pressure filters to handle ore sourcing from Bellary-Hospet belt, Bailadala region or Odisha region. The Board of your Company had approved the project in its 257th Meeting with the estimated cost of ^ 158.60 crores.
Purchase Order on M/s METSO for procuring main equipment had been placed. Auxiliary equipments and Material handling systems are being procured. Dismantling part of SPF building,
Civil and Structural jobs are under progress for erection of the main equipment. The total savings in production cost by installation of vertical pressure filters is expected to be ^ 45.3
crores per annum and it would enable the plant to improve capacity utilization with flexibility in blending of ores from various sources.
Persons with Disabilities Act, 1995
Your Company ensures compliance under the Persons with Disabilities Act, 1995.
Industrial Relations and Employees Welfare
Your Company continued to maintain harmonious industrial relations, co-operation between the elected representative bodies of employees and management ensuring no loss of mandays during the year. During the Financial Year, Wage Revision for Non-Executives Employees w.e.f. 01.01.2017 was implemented as per the Memorandum of Settlement arrived between three unions and Management of KIOCL before Dy. Chief Labour Commissioner (Central) on 07.10.2020.
Recruitment, VRS & Superannuation
During the year: -
(a) Company recruited thirteen (13) Executives in different levels;
(b) Thirteen (13) employees separated under Voluntary Retirement Scheme; and
(c) Fifty-Six (56) employees superannuated on attaining the age of superannuation.
During the Financial Year 2020-21, various activities were carried out as per the guidelines / instructions of Department of Public Enterprise, in the area of Human Resource Development. Management Development Program (MDP) was conducted for middle and senior level officers by NITK-Mangaluru. Various Training programs including in-house training programs, weblearning programs on various topics were carried out to enhance the skill sets of employees and to build their technical and managerial competencies. Appraisal Team Members training was also conducted as part of PCMM level-2 implementation. During the year 2247 number of mandays of training were imparted to the employees of the Company.
Ministry of Corporate Affairs vide its notification dated June 5, 2015 exempted Government Company with the applicability of Section 197 of the Companies Act, 2013. However, the remuneration received by the employees of the Company, had not exceeded the limit prescribed under Section 197 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 during the Financial Year 2020-21.
Public/Staff Grievance Redressal
Your Company has framed a well-defined grievance procedure, evolved under the ''Code of Discipline''. Staff Grievances received are redressed to the satisfaction of the aggrieved. With respect to public grievance, as and when any complaints are received, necessary remedial action is taken promptly. Complaints/ grievances other than the staff grievance are categorized into customer / consumer complaints / grievances from the Contractors, NGOs / General Public etc. The respective project heads are empowered to dispose of the grievances concerning their areas. Linkage has been provided to Centralized Public Grievances Redressal & Monitoring System (CPGRAMS) with effect from May 1, 2011. A Public Service Delivery (SEVOTTAM) portal has been created by Govt. of India for assessing and improving the quality of services delivered to the citizens. The same is also available on the Company''s website.
Pursuant to Regulation 34(3) and Para-C of SEBI (LODR) Regulations, 2015, a separate section on Corporate Governance along with certificate from Practising Company Secretary confirming the level of compliance is attached and forms a part of the Boardâs Report.
Directors and Other Key Managerial Personnel
During the year, the Board consists of ten members, four of whom are executive or whole-time Directors, two are nonexecutive Directors, representing Ministry of Steel and four are Independent Directors. Sitting Fees/Remuneration paid to Directors and to KMPâs respectively are provided at table 14 in Corporate Governance Report.
Declaration by Independent Directors
The Company received necessary declaration from Independent Directors under Section 149(7) of the Companies Act, 2013, that they meet the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Regulation 25 of the Listing Regulations. The Board of Directors at its 272nd Meeting held on 27/05/2021, noted the declarations. Independent Directors of the Company have registered themselves with Independent Directors databank in compliance with Companies (Creation and Maintenance of database of Independent Directors) Rules, 2019 and
Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019.
Independent Woman Director
In terms of the provisions of Section 149 of the Companies Act, 2013 and Regulation 17(1)(a) of SEBI (LODR) Regulations, 2015, your Company does not have Independent Woman Director on its Board. The aforesaid non-compliance is being continuously brought to the notice of Ministry of Steel for its needful action.
Changes in the Composition of the Board Inductions / Cessations
In terms of Article 91 of the Articles of Association of the Company, the President of India is vested with the power to appoint the Directors of the Company from time to time and also shall determine the term of office of such Directors. Accordingly, the following appointment/cessations on the Board of your Company were effected as per the directives of the President of India: -
¦ Sri Shashank Priya, Additional Secretary and Financial Advisor, Ministry of Commerce & Industry having Additional charge of Financial Advisor in Ministry of Steel was appointed as an Additional Director and designated as Govt. Nominee Director on the Board of the Company with effect from 17.12.2020 vice Sri Vijoy Kumar Singh, Ministry of Steel who ceased to be Director on the Board of the Company w.e.f. 05.11.2020.
¦ Smt Sukriti Likhi, Additional Secretary and Financial Advisor, Ministry of Steel was appointed as an Additional Director and designated as Govt. Nominee Director on the Board of the Company with effect from 23.04.2021 vice Sri Shashank Priya, Ex-Additional Secretary and Financial Advisor, Ministry of Steel. Having so appointed, Smt Sukriti Likhi shall hold office till the date of ensuing Annual General Meeting by virtue of Section 160 of the Companies Act, 2013 and Sri Shashank Priya ceased to be Director on the Board of the Company w.e.f. 23.04.2021.
Appointments / Resignations of the KMP
During the year, there was no appointment / resignation of KMP. However, pursuant to Ministry of Steel Order F. No. 5/3/2017-BLA dated 30/01/2018, Sri MV Subba Rao, ceased to be the Chairman-cum-Managing Director of the Company w.e.f. 30.06.2021 on account of his retirement from the Company on attaining the age of superannuation.
Further, Ministry of Steel vide its Order F. No. 5/1/2020-BLA dated 30/06/2021 had assigned the Additional Charge of the post of Chairman-cum-Managing Director, KIOCL to Sri S.K. Gorai, Director (Finance), w.e.f. 01.07.2021 for a period of three months or till the joining of a regular incumbent or until further orders, whichever is the earliest.
Directors Retiring by Rotation
In terms of Section 152 (6) of the Companies Act, 2013, Sri T. Saminathan, Director (Commercial) and Sri K. V Bhaskara Reddy, Director (Production and Projects) being longest in office shall retire by rotation at the ensuing AGM and being eligible for re-appointment, offers themselves for re-appointment. The Board recommends their re-appointment.
Number of Meetings of the Board
The Board met eight (8) times during the year under review, the details of which are given in the Corporate Governance Report. The maximum interval between any two Meetings did not exceed 120 days. The Meetings were conducted in compliance with relevant regulations of Listing Regulations and Secretarial Standard -1 issued by The Institute of Company Secretaries of India (ICSI).
Directors Responsibility Statement
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 134 (5) of the Companies Act, 2013 that:
(a) In the preparation of the Annual Accounts for the Financial Year ended March 31, 2021, the applicable Accounting Standards had been followed along with proper explanation relating to material departure.
(b) The Company has selected such Accounting Policies and applied them consistently and made judgments & estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year and of the Profit & Loss of the Company for that period.
(c) The Company has taken proper and sufficient care towards 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.
(d) The Company have prepared the Annual Accounts on a going concern basis.
(e) The Company has laid down Internal Financial Controls, which are adequate and are operating effectively.
(f) The Company has devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
In terms of Section 92(3) of the Companies Act, 2013, the Annual Return in form MGT - 7 filed for the year 2019-20 with MCA during the FY 2020-21 is available at weblink https:// www.kioclltd.in/user/cms/371. The Annual Return for the year 2020-21 will be filed within 60 days from the date of 45th AGM of the Company.
The C&AG of India vide its letter dated 10.08.2020 had appointed M/s YCRJ & Associates, Chartered Accountants as the Statutory Auditor of the Company under Section 139 of the Companies Act, 2013 for the financial year 2020-21.
The Company is maintaining the cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Companies Act, 2013. The Cost Audit Report for the Financial Year 2019-20 was filed with the Ministry of Corporate Affairs on 16/09/2020. The Cost Audit Report for Financial Year 2020-21 is under finalisation and will be submitted to the Ministry of Corporate Affairs.
Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the Cost Audit records of the Pellet Plant Unit of the Company is required to be audited. The Board on the recommendations of the Audit Committee, had appointed M/s R. M. Bansal & Co., Cost Accountants to audit the cost records for the Financial Year 2021-22. The remuneration payable to the Auditor being placed before the members in the Annual General Meeting (AGM) for their ratification vide Resolution at Item No.7 of the Notice convening the AGM.
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed Sri S. Viswanathan, Practicing Company Secretary for conducting the Secretarial Audit of the Company for the Financial Year 2018-19 to 2020-21. The Secretarial Auditor Report for the Financial Year 2020-21 forms part of the Directors Report.
The Comptroller & Auditor General of India (C&AG) vide its letter dated 15.07.2021 has conveyed âNILâ comments on the accounts of the Company for the year ended March 31, 2021. Copy of the same is annexed to this Report.
Adoption of new set of Memorandum of Association and Articles of Association
In line with the approval of the Board at its Meeting held on 11.02.2020, the proposal for adoption of new set of Memorandum of Association and Articles of Association had been taken up with the Administrative Ministry for its approval vide Companyâs letter dated 11.03.2020. The approval from Ministry is awaited.
7. CORPORATE SOCIAL RESPONSIBILITY
The brief outline of the Corporate Social Responsibility (CSR) initiatives undertaken by the Company during the year under review form a part of this Report as an Annexure in the format
prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014 and amendments. For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which is a part of this report. The CSR policy is available on weblink https://www.kioclltd.in/user/ cms/344.
8. KEY INITIATIVESEnvironmental Management and Pollution Control Measures
Your Company has taken initiatives to address the cause of Global environmental issues and as a part of the initiatives, following has been carried out:
¦ Increased the green cover by planting a number of trees in the plant premises and other areas. As a part of green belt development initiative, about 200 saplings of local variety were planted near the pipe line corridor area.
¦ About 110 saplings were donated by Pilikula Nisargadam in this year and they were planted in the Blast Furnace Unit premises. Additionally, 250 saplings have also been planted departmentally / CISF at BFU.
¦ The formation of concrete road taken up for a length of about 872 meters at OBL area, Pellet Plant premises to ensure dust free atmosphere. The entrance to Shed-1 is also being concreted for smooth movement of trucks and to control dust. The work is under completion stage.
¦ Many trees were transplanted at new site project in BFU.
¦ The environmental monitoring is being carried out as stipulated in the ''Consent to Operate'' issued by the KSPCB.
¦ Company reduced emission of Green House Gases by adopting various energy conservation measures as under:
(a) The energy generated from roof top and ground based solar plants at Mangalore was as under: -
(i) Roof top solar plant at CPP = 104912 Kwh Units
(ii) Roof tops solar plant at BFU = 391096 Kwh Units
(iii) 1MW ground based solar system =1666958 Kwh Units.
(b) Purchased renewable energy of 17.87 GWh through wheeling which is 10.87% of total energy utilized in the Pellet Plant Unit, thereby saving energy cost as well as fulfilling Renewable Energy Purchase Obligation.
(c) Energy efficient Motors installed in place of conventional motors.
(d) Conventional light fittings replaced by LED Light fittings.
(e) Old ACs replaced with energy efficient inverter type ACs.
The Onsite emergency plan approved by Director of Factories is in existence for both PPU and BFU. The same was updated as and when there was change in plant condition as well as emergency team members. Worker''s participation in Safety Management system was one of the important subjects as per the Factories Act. The Company had formed area wise safety committees. Worker''s participation in these Safety Committees were ensured. The safety Committee Meetings were conducted at regular intervals.
Safety Inspections were carried out regularly by the Safety Officer along with concerned Department Engineers and Safety Committee members. The observations made during the Inspection were noted and reported to the concerned Departmental Heads for compliance. An Internal cross Departmental Safety Audit was conducted on 18.08.2020 along with a Committee formulated by Competent Authority as per Standard checklist IS:14489.
Suitable Personal Protective Equipment''s were issued to all employees to protect them against work place hazards. Various Training programmes were conducted to inculcate safety consciousness and develop the human resources. Forty-five ATS trainees were given with 1800 RI classes and 13500 Man days on the job skill development training classes and 150 Technical college students were provided with one week each Internship training during the year.
National Safety week celebrations were conducted on 4th to 10th March 2021 and Productivity Week celebrations were conducted from 12 th to 18th February 2021. The Onsite Emergency Mock drills were also conducted in Pellet Plant Unit and Blast Furnace Unit, to check the emergency preparedness for any major accident.
Your Company is certified with ISO 9001: 2015 for Quality Management System, ISO 14001:2015 for Environmental Management System and ISO 45001:2018 for Occupational Health and Safety Management System. All certifications are valid up to 08/11/2021.
Rajbhasha Department of the Company is entrusted with the responsibility of ensuring compliance of the Official Language Act, 1963. During the year, Rajbhasha Department scheduled Official Language Implementation Committee Meetings, organised workshops & conducted Official Language inspections as per targets of the Annual Program 2020-21 of Department of Official Language (Ministry of Home Affairs).
Employees of the Company made their significant presence during online workshops and other virtual activities conducted under the aegis of TOLIC (PSU), Bengaluru & Mangaluru.
As a remarkable initiative the Rajbhasha Department prepared its first Rajbhasha E- House Magazine âSrigandhaâ during lockdown period utilising creative use of work from home duration and inaugural issue was formally released during Hindi Pakhwada, 2020. The magazine was circulated through Email & WhatsApp. The link of the e-magazine was also provided on the website of the company and web-portal of Official Language Department (Ministry of Home Affairs) under E-Pustakalay segment.
The Company was awarded a citation as an appreciation by TOLIC (PSU), Bengaluru; based on the recommendation
of the evaluation committee, to retain the first prize awarded in the last two years of outstanding performance in the implementation of Official Language.
Preventive vigilance has been the thrust area of Vigilance Department all these years and the same has received focused attention during the year. A climate of preventive vigilance is generated to sensitize officials at all levels about the ill effects of corruption and malpractices. Regular Structured Meeting of Vigilance with the management is being conducted and issues related to e-governance, Leveraging Technology, Tender Management, Award of Works, Recruitment Policy have been discussed. The Vigilance Department is certified for compliance to ISO certification 9001-2015 standards to ensure continuous improvement in Quality Management System. Certificate is valid upto 29th January, 2022. Vigilance Awareness Week was observed from 27th October to 2nd November, 2020 at all the locations/offices of the Company. Workshops, Trainings, Guest Lectures and awareness programmes were conducted during the week through web based/hybrid mode observing COVID-19 prevention guideline. E-Procurement is in vogue and the threshold value for this is fixed at ^ 2 Lakhs and above. During the year, 95.15% contracts by value are covered under this. All payments are being made through electronic mode. During the Year, 143 work/purchase/sale orders have been issued incorporating Integrity Pact Clause, covering 98.71% of contracts by value. No complaints received under Integrity Pact. 49 Scrutiny/examinations, 44 checks/inspections carried out during the period and corrective actions suggested. Necessary action is taken as regards to the complaints received during the year. Vigilance Department conducted 13 training programmes at three different locations, covering 1930 man-hours. Topics such as Preventive Vigilance, Digital Vigilance, Indenting & Tendering procedures, Role of Technology in combating corruption and enhancing competitiveness etc. were covered. During the year, five training programs on Preventive Vigilance for Mid-Career & Induction level employees as per CVC PV training module were conducted through video conference / hybrid mode covering 1480 man-hours.
Compliance of recommendations made by the Committee on Papers Laid on the Table (Rajya Sabha) in its 150th ReportDetails of cases initiated / disposed-off during 2020-21: -
The details of vigilance cases initiated / disposed-off during 2020-21 were as under: -
- No. of cases pending as on 31.03.2020 :- NIL
- No. of cases initiated during 2020-21 :- 1
- No. of cases pending as on 31.03.2021 :- 1
Nature of Pending case: -The pending case is regarding procedural lapses in procurement of medicines while on deputation to other PSU.
- Charge sheet issue on :- 29.03.2021
- Disciplinary proceedings :- Yet to conclude
Audit Para No. 3.7.2.2 of Audit Report No. 2 of 2009-10, 19.1.1 of Audit Report No. 9 of 2009-10, Para No. 15.2 of Audit Report No. 8 of 2012-13 and Para No. 17.1 of Audit Report No. 13 of 2014 were dropped by C&AG during the year under review.
The Company had received a grant-in-aid from Ministry of Steel, Govt. of India for an amount of ^ 11,20,260/- on 05/12/2018 for carrying out R&D for "Synthesis of Kudremukh Iron Ore Mine Tailings based Geopolymer Aggregates using Fly ash as precursor in Construction Industry" by KIOCL Limited in association with
Dayananda Sagar College of Engineering (DSCE), Bengaluru. DSCE carried out the R&D work for a period of 24 months and objectives of the Project was to arrive at design specifications and identify optimum mix of fly ash, bottom ash and iron ore tailings for manufacture of geopolymer aggregates for using in Construction Industry. R&D work had been completed and final report preparation was under progress.
Collection of tailing samples, preparation and lab analysis was completed. Draft R & D report was submitted by DSCE for evaluation. Final report would be submitted to Ministry of Steel, GoI, shortly.
Implementation of Public Procurement Policy for MSEs
In line with the Govt. of India guidelines as per MSMED Act, 2006 and keeping in view of the effective implementation of Public Procurement Policy for Micro and Small Enterprises (MSEs) Order 2012, following steps were taken:
¦ List of item components that could be sourced from MSEs were posted on the Companyâs website at www.kioclltd.in for the information of MSE vendors.
¦ Communication sent to all the registered vendors regarding the said policy with the objective of achieving an overall procurement from MSEs. Further, for enhancing the procurement from MSEs owned by SC/ST, all the vendors were approached for capturing necessary details and update the data bank.
¦ During 2020-21, Company placed orders for Goods & Services for a value of ^ 14.23 crores from MSEâs which constituted 33.02 % of the total procurement value of ^ 43.09 crores (excluding raw materials, imported items, proprietary items, capital items, petroleum oil & Lubricants).
Energy Conservation, R&D, Technology Absorption, Foreign Exchange Earnings & Outgo
Details of Energy Conservation, R&D, Technology Absorption and foreign exchange earnings and outgo stipulated under Section 134(3) (m) of the Companies Act, 2013 read with Rule, 8 of The Companies (Accounts) Rules, 2014, is annexed to this report.
Dividend Distribution Policy
In terms of the Regulation 43A of SEBI (LODR) Regulations, 2015, the Board of your Company have adopted a Dividend Distribution Policy, which is available on the website of the Company under weblink https://www.kioclltd.in/user/ cms/344.
Appreciations and Acknowledgement
Your Directors gratefully acknowledge the support, co-operation and guidance received from the Honâble Minister of Steel, Honâble Minister of State for Steel, Honâble Chief Minister of Karnataka, the Secretary, Ministry of Steel and other officials of the Ministry of Steel as well as other Ministries of the Government of India, Government of Karnataka, Odisha, Tamil Nadu and all other departments / agencies of Central and State Government in all the endeavours of the Company.
Your Directors acknowledge the support extended by the valued and esteemed customers, shareholders, bankers, suppliers and other stakeholders for their support and co-operation.
Your Directors appreciate and value the contribution made by every member of the KIOCL family.
For and on behalf of the Board of Directors
Sd/-
Date: 05/08/2021 S.K. Gorai
Place: Bengaluru Chairman-cum-Managing Director (Addl. Charge)
45th
C a t |
Attendance / Total |
Whether attended |
Number of Committees# |
Shareholding |
No. of Directorships |
Name of other Listed Co.âs in which |
Category of Directorship |
||
(S/SrD |
g o |
last AGM |
(Equity shares of ^ 10/- each) |
in other public companies as |
Directors holds Directorship as on |
in other companies |
|||
y |
on 31.03.2021 |
31.03.2021 |
|||||||
Vijoy Kumar Singh*1 |
5/5 |
No3 |
-- |
-- |
NA |
NA |
-- |
-- |
|
(DIN 00592638) |
|||||||||
Shashank Priya *2 |
N |
1/1 |
NA |
-- |
-- |
NIL |
7 |
1. NMDC Limited |
G |
(DIN 08538400) |
O N |
2. Steel Authority of |
O |
||||||
India Limited |
V |
||||||||
E |
3. H.M.T. Limited |
T |
|||||||
X E |
4. MMTC Limited |
||||||||
C |
5. The State Trading |
N |
|||||||
U |
Corporation of |
O |
|||||||
T I |
India Limited |
M |
|||||||
V |
6. Bharat Heavy |
I |
|||||||
E |
Electricals Limited |
N |
|||||||
T. Srinivas * |
8/8 |
No3 |
-- |
-- |
NIL |
1 |
1. MOIL Limited |
E |
|
(DIN 07238361) |
|||||||||
Jagdish P. Joshi |
I |
8/8 |
Yes |
1 |
1 |
NIL |
-- |
-- |
|
(DIN 03385677) |
N |
||||||||
Nirmalendu Mohapatra |
D E |
8/8 |
Yes |
-- |
-- |
NIL |
-- |
-- |
-- |
(DIN 07352648) |
P |
||||||||
Ranjit Sreenivas |
E |
8/8 |
Yes |
2 |
-- |
NIL |
-- |
-- |
-- |
(DIN 08539909) |
N D |
||||||||
G Ramasamy |
E |
8/8 |
Yes |
1 |
1 |
NIL |
-- |
-- |
-- |
(DIN 08632590) |
N T |
Notes:
#Chairmanship and membership of Audit and Stakeholder Relationship Committee in KIOCL Limited only are considered.
* Nominees of Govt. of India (Non-Executive & Non-Independent Directors).
1. Sri Vijoy Kumar Singh ceased to be Director w.e.f. 05/11/2020 vide Ministry of Steel''s Letter No.1/16/2015-BLA dated 14/12/2020. Sri Singh was granted leave of absence for 269th Board Meeting held on 11/11/2020, however Sri Singh ceases to be Director on the Board of the Company with retrospective effect. Accordingly, LOA granted at 269th Board Meeting was not considered for the purpose of calculating attendance at the Board Meeting.
2. Sri Shashank Priya was appointed as Govt. Nominee Director w.e.f. 17/12/2020 vide Ministry of Steelâs Letter No.1/16/2015-BLA dated 17/12/2020. Further, Sri Shashank Priya, Government Nominee Director ceased to be on Board of the Company w.e.f. 23/04/2021 as intimated by Ministry of Steel vide its letter no. 1/16/2015-BLA dated 23/04/2021.
3. Due to Pre-Occupation, Sri Vijoy Kumar Singh and Sri T Srinivas did not attended the 44th AGM of the Company held on 29/09/2020.
Details of Meetings of the Board held along with the dates are given at Table 2 below:
Table 2: Meetings of the Board of Directors
Sl. No. |
Meeting No. |
Date of Meeting |
Intervening Gap |
1. |
264th |
18/05/2020 |
- |
2. |
265th |
25/06/2020 |
37 |
3. |
266th |
10/08/2020 |
45 |
4. |
267th |
09/09/2020 |
29 |
5. |
268th |
19/10/2020 |
39 |
6. |
269th |
11/11/2020 |
22 |
7. |
270th |
16/12/2020 |
34 |
8. |
271st |
09/02/2021 |
54 |
Due to the exceptional circumstances caused by the COVID-19 pandemic all Board Meetings in FY 2021 were held through Video Conferencing. The intervening gap between the Meetings were within the prescribed limit under the Companies Act, 2013.
Disclosure of Relationships between Directors inter-se
As per declarations received from Directors, there is no interse relationship between Directors of the Company.
Familiarization Programme to Independent Directors
The Independent Directors of the Company are nominated for suitable training / programmes / seminars / plant visit from time to time. During the year under review, Independent Directors were nominated to familiarization program conducted by the Indian institute of Corporate Affairs at Goa. The details of the familiarization programmes imparted to Independent Directors is available on Company website at weblink https://www.kioclltd.in/user/cms/360.
32 KIOCL Limited
Mar 31, 2018
Dear Members,
The Board of Directors of your Company (âthe Companyâ) is pleased to submit the reports of the business and operations of your Company for the Financial Year ended March 31, 2018, together with the Auditorsâ Report on the Annual Financial Statements and Comments on the same by the Comptroller & Auditor General (C&AG) of India. Your Directors are happy to inform you that the Company had a very successful year in 2017-18.
Your Company could achieve Pellet production of 2.327 million tons exceeding the excellent MOU target of 1.925 million tons, resulting into capacity utilization of 66% as compared to production of 1.460 million tons a year before. During the year, your Company has achieved Pellet dispatch of 2.300 million tons as compared to 1.387 million tons during the previous year. This is the highest volume of pellets produced and dispatched in any single year since the closure of its captive mines.
Financial Results and State of Companyâs Affairs
(Rs. in Crores)
Particulars |
FY 2018 |
FY 2017 |
Revenue from Operations |
1605.41 |
929.36 |
Other Income |
179.03 |
156.37 |
Profit before Exceptional Item and Tax |
86.09 |
32.95 |
Less : Exceptional Items - Expenses |
- |
1.73 |
Profit before Tax |
86.09 |
31.22 |
Tax Expense (including deferred taxes) |
4.61 |
(16.71) |
Profit after Tax |
81.48 |
47.93 |
Less : Other Comprehensive Income (Net of Tax) |
3.07 |
(0.33) |
Total Comprehensive Income |
84.55 |
47.59 |
EPS (Basic & Diluted) |
1.28 |
0.76 |
Networth |
2145.63 |
2101.56 |
Capital Employed |
2320.05 |
2277.81 |
Book Value per Share |
33.82 |
33.12 |
Return on Capital Employed |
0.04 |
0.01 |
Return on Net Worth |
0.04 |
0.02 |
Capital expenditure |
0.80 |
4.15 |
Revenues
Your Companyâs increased volume of production and dispatch resulted into significant increase in operating income at Rs. 1605.41 Crores as compared to Rs. 929.36 Crores in the previous year, achieving a growth of 73 %. During the year, Revenue from export sales increased by 85 % to Rs. 959.58 Crores from Rs. 517.51 Crores and domestic sales increased from Rs. 351.28 Crores to Rs. 610.56 Crores, an increase of 74%. The share of Exports and DTA in operating revenue stood at 60% and 40% respectively. Income from Sale of Services (O&M Operations) during the year was Rs. 35.26 Crores against Rs.32.98 Crores of previous year. Other Income comprising of Income from Treasury Operation and other miscellaneous Income has decreased to Rs. 125.03 Crores from Rs.149.93 Crores, due to lower yields on fixed deposits.
Profits
Your Companyâs Profit before Tax has increased to Rs. 86.09 Crores from Rs. 31.22 Crores in the previous year, an increase of 176%. Your Company has also achieved a 70% higher Profit after Tax at Rs. 81.48 Crores during the current year as compared to Rs. 47.93 crores during previous year.
Dividend
Your Directors are pleased to recommend a final dividend of Re.0.79/- per equity share on face value of Rs.10/- each for the year ended 31st March, 2018. Subject to the approval of Members at the Annual General Meeting 31.08.2018, the final dividend will be paid on or before 29.09.2018 to the Members whose names appear in the Register of Members, as on the Book Closure dates, i.e. 25.08.2018 to 31.08.2018 (both days inclusive). The total dividend for the financial year, including the interim dividend of Re.0.27 per share already paid works to Rs.1.06/-per equity share and will absorb Rs.81.05 crores, including dividend distribution tax of Rs.13.77 crores.
The Register of Members and Share Transfer Books will remain closed from 25.08.2018 to 31.08.2018 (both days inclusive) for the purpose of payment of the dividend for the Financial Year ended March 31, 2018 and the AGM.
Liquidity
Your Company manages cash and cash flow processes involving all parts of the business operation quite assiduously. As on 31st March, 2018, there was a net cash surplus of Rs.1863.39 crores (Rs.1845.01 crores as on 31.03.2017). During the year, your Company maintained a zero debt status thereby retaining its full capability for gearing the Balance Sheet, as and when need arises.
Listing on BSE
To enhance further visibility in the secondary market, equity shares of your Company got listed on the Bombay Stock Exchange (BSE) and was admitted to dealings w.e.f. 22.08.2017 under the Scrip Code â540680â, Scrip ID on BOLT Plus System âKIOCLâ.
Market Capitalization - Top 500 Companies
Your Board of Directors is very pleased to inform you that based on market price traded in the stock exchanges, as on March 31, 2018 your Company has been included amongst the top five hundred listed Companies on Market Capitalization. As per list released by NSE, your Company is standing at 182nd number in top 500 list on that date.
MoU Performance
Performance of your Company, in terms of the Memorandum of Understanding (MoU) signed with the Ministry of Steel, Government of India, was rated as âGoodâ for the Financial Year 2016-17. The MoU evaluation for 2017-18 is under finalization.
Particulars of Loans, Guarantees or Investments
During the year 2017-18, there was no loan, guarantee or investment made by your Company under Section 186 of the Companies Act, 2013.
Particulars of Contracts or Arrangements made with Related Parties
During the financial year, no transactions were entered into with Related Parties as defined under the Companies Act, 2013 and Regulation 53(f) and Para A of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, which attract the provisions of Section 188 of the Companies Act, 2013, as such annexure AOC is not furnished. There were no materially significant transactions with related parties which were in conflict with the interest of the Company. The Board has approved a Policy on Materiality of Related Party transactions and dealing with Related Party transactions, which is available on the Company website.
Material Changes and Commitments, if any, affecting Financial Position
1) The Board, at its meeting held on May 22, 2018 approved the Techno Economic Feasibility Report for forward and backward integration projects at Blast Furnace Unit Mangalore at an estimated project cost of Rs.843.90 crores. The Detailed Project Report is under preparation and the same is subject to necessary approval of Central Government.
2) The Board, at its meeting held on May 22, 2018 approved the Techno Economic Feasibility Report for setting up of 2 MTPA pellet plant on Joint Venture basis with M/s Rashtriya Ispat Nigam Limited at their premises at Vishakhapatnam. The project involved capital investment of Rs.996 crores and is subject to necessary approval of Central Government.
Management Discussion and Analysis
In terms of the provisions of Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Managementâs discussion and analysis is set out in this Annual Report.
Business Responsibility Report
Regulation 34 (2)(f) of SEBI (Listing Obligations & Disclosure Requirements); Regulations, 2015 specified that top five hundred listed entities based on market capitalization as on March 31 of every financial year) is required to publish Business Responsibility Report describing the initiatives taken from an environmental, social and governance perspective. Your Company is amongst the top 500 listed companies in the country based on market capitalization, have therefore integrated BRR disclosures in the Annual Report.
2. BUSINESS AND OPERATIONAL REVIEW
During the year under review, your Company produced 2.327 million tons of Pellets in comparison to 1.460 million tons produced in the previous year, thereby recorded a quantum jump of 59% on Y-o-Y basis. The quantity produced also surpassed the âExcellentâ Target of 1.925 million tons as set in the MoU signed with Govt. of India for the year 2017-18. The Company had also utilized its expertise of handling different types of ore to produce pellets because of its locational advantage by entering into back to back contracts to the tune of about 0.6 million tons.
Similarly, Your Company had sold 2.30 million tons of Pellets in FY 2017-18 as against 1.387 million tons in the previous year, a jump of 66% on Y-o-Y basis. Out of the total quantity sold, exported quantity was 1.460 million tons which is almost 63% and balance 0.840 million tons was sold to domestic customers.
As regards Blast Furnace Unit, the Company intended to restart BFU operation, but due to uneconomic price of Pig Iron and high Coke Price, the unit could not be operated. Steps have been taken to make the unit viable on standalone basis through setting up backward & forward integration projects. The Company appointed consultant to carry out assessment of the plant and to submit Techno-Economic Feasibility Report. The Board of Directors in their 251st Meeting held on 22.05.2018, accepted the TEFR outlining CAPEX of Rs.843.90 crores. Detailed Project Report is under preparation.
A snapshot of production target vis-a-vis actual achievement with capacity utilization and sales performance during last five years including current year are depicted at Table 1 & 2.
Table: 1
(Qty. In Million Tons)
Year |
MOU Target |
Actual Production |
Utilization of installed capacity in % |
2017-18 |
1.925 |
2.327 |
66 |
2016-17 |
1.300 |
1.460 |
42 |
2015-16 |
1.800 |
0.100 |
3 |
2014-15 |
1.800 |
0.785 |
22 |
2013-14 |
1.700 |
1.710 |
49 |
(Installed capacity of Pellet Plant is 3.500 million tons/annum).
Table: 2
Qty : in Million Tons, Value: Rs. In Lakhs
Year |
Pellets |
Pig Iron |
Total |
|||
Qty |
Value |
Qty |
Value |
Qty |
Value |
|
2017-18 |
2.300 |
1553.09 |
0.000 |
40 |
2.300 |
1,553,49 |
2016-17 |
1.387 |
868,72 |
0.000 |
7 |
1.387 |
868,79 |
2015-16 |
0.409 |
198,45 |
0.001 |
135 |
0.410 |
199,80 |
2014-15 |
0.680 |
626,87 |
0.001 |
197 |
0.681 |
628,84 |
2013-14 |
1.615 |
1530,07 |
0.002 |
230 |
1.617 |
1,532,37 |
(Note: Pig Iron includes Auxiliary)
Mineral Exploration Contracts
On 16th February 2015, Ministry of Mines, Govt of India notified your Company as Mineral Exploration entity under second proviso of sub section (1) of Section 4 of the Mines and Minerals (Development and Regulation) Act, 1957. This has qualified the Company to take up prospecting and exploration works of various minerals across the Country as âNotified Exploration Agencyâ. Ministry of Mines allotted following two blocks for G4 level mineral exploration works to the Company: -
- Tirumankaradu Iron Ore Block (TIOB) (SR-TN-04) situated in Tirupur (Dist) of Tamil Nadu - Investigation of Iron ore over an extent of 100 Sq. kms.
- Udbur Gold Block (UGB)(SR-KAR-07) situated in Mysore (Dist) of Karnataka - Investigation of Gold and Associated elements over an extent of 202 Sq. kms.
As per work Plan approved by National Mineral Exploration Trust (NMET), Ministry of Mines, your Company is presently carrying out site works of the allotted blocks in three stages i.e. Stage 01- Large scale geological mapping, Stage 02 - Detailed geological mapping and Stage 03 - Scout drilling.
Status of work at Tirumankaradu Iron Ore Block: Stage 01 field works of TIOB were initiated on 06th December 2017 and completed on 08th February 2018. The large scale (1:12500) geological mapping works are completed to an extent of on field traversing, geological mapping of 100 Sq. kms.and collection of Bedrock samples. Additionally, reconnaissance works in the adjacent blocks were undertaken with on field traverse, geological mapping and collection of representative surface samples for ascertaining the extension of mineral bands beyond the exploration block or otherwise. The Company prepared the Stage 01 Report and submitted to Technical Cum Cost Committee (TCC) of NMET, Ministry of Mines for necessary consideration of works executed and consent for Stage 02 works.
Status of work at Udbur Gold Block: Stage 01 field works of UGB were initiated on 14th December 2017 and completed on 16th February 2018. The large scale (1:12500) geological mapping works are completed to an extent of on field traversing, geological mapping of 202 Sq. kms., collection of 300 nos of bedrock samples and 150 nos of stream sediment samples.
Status of proposed acquisition of Equity Stake in M/s iDcOL, Odisha
The Company had submitted a conditional Financial Bid for acquisition of 51% stake with management control in IDCOL. The bid was extended twice and was valid up to 24.08.2017. Subsequently, IDCOL had requested your Company to extend the bid validity by another 6 months. The Board of Directors of your Company reviewed status and in view of the slow progress of the conditions as stipulated in the financial bid, the Board decided not to accede to the request for further extension of financial bid validity. The same was communicated to IDCOL on 24.08.2017.
Operation and Maintenance Portal
In order to gainfully utilize its expertise in mining and mineral processing, the company has entered into Operation and Maintenance contracts with other CPSUs/ State Govt. PSUs. Performance of the portals are given below.
- M/s NMDC, Donimalai: - The Company entered into Contract Agreement on 7th January 2015 for Operation and Maintenance of their 1.89 MTPA capacity Beneficiation Plant and Pellet Plant of 1.2 MTPA at Donimalai for a period of three years till 31.07.2018 and extendable by additional 2 years with mutual consent. The Company deployed around 170 of its skilled manpower at Donimalai, who are working to make the venture successful right from the day of handing over the plant. The Company has successively commissioned the plant, conducted performance guarantee test and stabilized the operations of the plant. Your Company is recovering the salary of its manpower deployed at the NMDC with average revenue of Rs. 30 crores per annum.
- M/s OMC, South Kaliapani Mines: - The Company entered into O&M contract with M/s Odisha Mining Corporation Limited, a PSU of Govt. of Odisha, for Operation and Maintenance of their Chrome Ore Beneficiation Plant (COBP) at South Kaliapani Mines, Odisha. Company has signed a Contract with M/s OMC on 01.04.2015 for 2 years period with an option for extension for further one year. Your Company has successfully completed the 2 years contract on 31.03.2017. However, due to environmental issues connected to tailing disposal, the COBP was shutdown till the tailing pond was made ready. Accordingly, the contract with your Company was terminated by M/s OMC on 31.03.2017.
- EPC Portal: M/s. OMC has offered the Company to take up and complete the balance works of their second Chrome Ore Beneficiation plant at Kaliapani (the plant was under construction and jobs were abandoned midway by the contractor and pending for completion for more than 5 years) and also to take over Operation and Maintenance of the same plant after commissioning. Your Company has since accepted this offer with an estimated contract value of Rs.27.21 crores. On completion of this project, the company looks forward to gain expertise of constructing Mineral Processing Plant.
MARKET SCENARIO
During 2017, the World steel market looked positive. World crude steel production reached 1,691.2 million tons for the year 2017, up by 5.3% compared to 2016. Crude steel production increased in most of the regions in 2017.
Annual production of crude steel in Asia was 1,162.5 million tons in 2017, an increase of 5.4% compared to 2016. Worldâs largest steel producer China accounted for 49.2% of the total steel produces. Chinaâs crude steel production reached 831.7 million tons, up by 5.7% on 2016. Japan produced 104.7 million tons in 2017, down by -0.1% compared to 2016. India became the third largest steel producer with a production of 101.4 million tons, up by 6.2% on 2016.
During 2017, in order to deal with this long standing issues of overcapacity, tepid demand and also phase out low-efficient steel plants and crack down illegal production Chinese Government succeeded reduction in capacity by more than 50 million tons. To control pollution, sintering plant operations were halted and encouraged merger of steel companies to upgrade technologies to achieve higher productivity. These measures improved demand for pellets during 2017.
Government of India initiated measures to encourage domestic steel manufacturers to increase domestic steel production and consumption through National Steel Policy 2017- DMI & SP to encourage use of domestic steel products. Government also imposed anti dumping duty on some of the products. All these measures buttressed Indian steel industry. As a result, while steel exports was doubled, imports decreased by 1%.
The IMF has predicted that the momentum seen in 2017 may prop up global economy in 2018. Steel industry is also expected to benefit from such momentum. However, as China accounts for about 50% of global steel production, performance of Chinese Steel industry is extremely important. It is reported that due to moderate domestic demand from infrastructure and industrial sector coupled with closure of illegal steel mills, growth in Chinaâs crude steel output in 2018 is expected to be very much low.
While positive impulses to steel demand is seen coming from developed and developing economies, the reality is that steel demand in China is close to peaking. The above development enables your companies to be guardedly optimistic about 2018.
3. CAPEX AND GROWTH PLAN
The Company is in the process of strategic expansion and diversification aiming at higher growth level for long term sustainability/viability in the competitive market environment. Consequent upon the closure of mining activities at Kudremukh, the Company has been exploring options for mining at different locations within Karnataka and also in other States. Following efforts have been made to get iron ore mining lease, setting up of value added plants, etc., for diversification :-
Development of Devadari Iron Ore Block
Govt. of Karnataka issued Gazette Notification on 23.01.2017 reserving an area of 470.40 ha in Devadari Range, Sandur Taluk, Bellary District for mining lease of iron and Manganese ore. DMG, Govt. of Karnataka directed the Company to submit Mine Plan, Forest Clearance and Environment Clearance for execution of Mining Lease deed. The Company has initiated action for obtaining statutory clearances from authorities for execution of mining lease deed. Regional Controller of Mines,
Bangalore, Indian Bureau of Mines has approved the Mining Plan on 08.03.2018 for production of 2 mtpa iron ore and setting up of 2 mtpa crushing, conveying & beneficiation plant. The Company has submitted Form-I through online portal of MoEF&CC, GoI on 18.01.2018 to obtain Terms of Reference (ToR) for conducting base line study and EIA/EMP for Environmental Clearance. The Company made project presentation before Expert Appraisal Committee on 24.04.2018 for issue of TOR for EC. Company has submitted Forest Diversion Proposal (Stage 1 forest clearance) through online portal of MoEF&CC, GoI on 16.03.2018. Forest Diversion Proposal is being examined in the office of Nodal Officer, Forest Dept., GoK.
It is expected that, Company will obtain necessary statutory clearances by end of 2019 to execute the mining lease deed with Govt. of Karnataka. Company will undertake development of iron ore mines, setting up of Beneficiation and Pellet Plant with capital investment of around Rs. 1500-2000 Crores.
Backward and Forward Integration Projects at BFU
In order to make Blast Furnace Unit viable on standalone basis, the Company has envisaged setting up of Coke Oven Plant as Backward integration project, Ductile Iron Spun Pipe project as forward integration project along with 10MW Cogen Power Plant and Pulverized Coal Injection system and modification to the existing Blast Furnace Unit. To take these projects forward, KIOCL has appointed M/s MECON as Technical Consultant for preparing Techno-Economic Feasibility Report (TEFR) for the project.
At its 251st Meeting held on 22.05.2018, the Board approved the TEFR for setting up of the identified forward and backward integration projects i.e. DISP plant in the forward and Coke Oven Plant with Cogen Power Plant of 10MW in the backward integration and carrying out the necessary modifications to the Blast Furnace Unit such as introduction of a PCI system new Stave Coolers & Recirculating Water Cooling System to make the unit economically viable at a total estimated capital cost of Rs. 843.90 crores.
Setting up a 1 MWac Solar Plant at BFU premises Mangalore
The Company has committed to the Government of India to develop Renewable Energy Projects during the five year period of 2015-19. Towards this purpose, the Company has engaged an EPC contractor for setting up of 1MW solar power plant in its existing land available at Blast Furnace Unit, Mangaluru with capital cost of Rs. 6.10 Crores. This project also supports Govt. of Indiaâs National Solar Mission. The Company appointed M/s Infrastructure Development Corporation (Karnataka) Limited (M/s iDECK) as Technical Consultant for implementation of the project. M/s Enerparc Energy Pvt. Ltd has been identified as EPC contractor for carrying out the Design, Engineering, Procurement, Supply, Erection, Testing, Installation and Commissioning of a 1 MWac Solar PV Power Plant with fixed tilt in the premises of Blast Furnace Unit, Mangaluru and to undertake comprehensive maintenance services for next five years. The work is progressing and is expected to be commissioned by the 1st half of 2018-19.
JOINT VENTURE / MOU
MoU with M/s RINL for setting up 2 MTPA Pellet Plant at Vishakhapatnam
Keeping in view of the expansion of the operations of the company through investment, the Board of your Company at its 251st Meeting held on 22.05.2018 has approved the Techno-Economic Feasibility Report for setting up of 2 MTPA capacity Pellet Plant on JV basis with RINL at Vishakhapatnam at a total estimated capital cost of Rs. 996 crores.
MoU with MECON
Your Company signed a MoU with MECON on 08.01.2018, a sister CPSU under Ministry of Steel to co-operate with each other on non-exclusive basis in order to participate in tenders, bids and Contracts related to Engineering / EPC / Turnkey /BOO/BOT/BOOT basis for new installation or upgrading / revamping, repair of Beneficiation and Pelletisation Plants & coal washery plants in India. This MoU shall initially remain valid for a period of 03 years from the date of signing and shall thereafter be extended on mutual consent of both the parties.
Development of Nemakal Iron Ore Deposit in Ananthapuram Dist., Andhra Pradesh
A MoU was signed among KIOCL, APMDC and RINL on 22 June 2013 at Hyderabad for exploration and exploitation of Nemkal iron ore deposit in Ananthapur Dist., of Andhra Pradesh. Govt. of Andhra Pradesh issued notification dated 30 Nov 2015 reserving area over an extent of 1327 hectares for iron ore in Comp. Nos.692, 693, 694 in Minchery R.F. of Kalyandurg Range Ananthapur District in favour of M/s A.P.Mineral Development Corporation Limited (APMDC) under Section 17A(2) of the Mines and Minerals (D&R) Act, 1957. APMDC submitted proposal for forest clearance on 14.12.2017 through online in the Forest Clearance Portal of MoEF&CC, GoI to undertake exploratory drilling at Minchery Reserve Forest, Nemakal Project. On receiving the forest clearance for exploratory drilling, work will be undertaken jointly by KIOCL and APMDC. TEFR for the setting up of beneficiation plant and pellet plant will be prepared based on the outcome of the exploratory drilling.
4. DIGITAL INDIA
Towards fulfillment of the âDigital Indiaâ initiative of the Government of India and digital transformation of your Company by leveraging with latest Information and Communication Technology (ICT) towards building a competitive edge in the market place, your Company has embarked on the path of having Single Integrated Information System/ERP along with up gradation of ICT infrastructure to position the company as efficient and competitive in the field of Pellet and Beneficiation segment of Steel Industry
Currently, certain application developed in-house by Systems department and also a few applications outsourced for online accessibility in departmental level, are running in standalone mode and these systems are not integrated with other applications, thereby having a scope for optimization through integration.
Towards this objective, your Company has engaged M/s. Ernst & Young, LLP as an IT consultant to assess the existing IT infrastructure including hardware, software, organizational structure etc., and recommend a futuristic IT infrastructure with state of the art technology to take care of the needs of the organization.
M/s. Ernst & Young have made a detailed study by conducting series of workshops at Mangalore and Bangalore locations involving all the departments and assessed the existing IT infrastructure including hardware, software, organizational structure etc., and submitted the draft report recommending a futuristic IT infrastructure with state of the art technology to take care of the needs of the organization including costing for proposed modules. The Implementation of ERP will be taken through a system integrator once it is approved by Board.
5. HUMAN RESOURCE MANAGEMENT & INDUSTRIAL RELATIONS
Manpower Profile
As on March 31, 2018, the Company had 888 employees on its rolls comprising of 283 Executives including Non-unionized Supervisors (32%) and 605 Non Executive Employees (68%).
Table: 3 show the breakup of employees under different categories on rolls of the Company as on March 31, 2018.
Table: 3
Group |
Total No. of employees on rolls |
SC |
ST |
Women employees |
Ex servicemen |
PwD |
A |
244 |
45 |
12 |
11 |
-- |
05 |
B |
39 |
02 |
02 |
06 |
-- |
- |
C |
567 |
84 |
30 |
09 |
-- |
05 |
D |
38 |
07 |
06 |
01 |
-- |
03 |
Total |
888 |
138 |
50 |
27 |
-- |
13 |
Compliance under the Persons with Disabilities Act, 1995
Your Company ensures compliance under the Persons with Disabilities Act, 1995. Suitable provisions/ modifications are made in the workplace to meet the requirements of such persons with disability.
Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
Your Company is following Sexual Harassment prevention procedures in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Your Company has constituted Internal Complaint Committees in two major locations i.e. Corporate Office, Bangalore and Plant level at Mangalore to redress sexual harassment complaints. All employees (permanent, contractual, temporary, trainees) are covered under this policy. During the year, no complaint was reported. To build awareness in this area, your Company has been conducting conselling seession/ induction / refresher programmes in the organization on a continuous basis.
Empowerment of Women
A Womenâs Forum - KIOCL is a Corporate Life Member for Forum of Women In Public Sector [WIPS] under the aegis of SCOPE. All women employees are Life Members of the said Forum. Co-ordinators are being nominated on rotation basis from KIOCL to liaison with WIPS Apex Body & Southern Region. Every year, the Company nominates women employees to attend Annual meet & Regional meet of Forum of WIPS. International Womenâs Day was celebrated on 8th March 2018 in a befitting manner.
During the year 2017-18, apart from participating in Swachh Bharat Abhiyan, WIPS Cell has actively undertaken various activities such as organizing Medical Camps, distribution of Education kits to girl students from financially backward family for pursuing higher studies, awareness classes on health & hygiene, extended domestic support to orphanages, self defense workshop for women employees and other CSR activities.
KIOCL has bagged âRecognition for WIPS Activities Awardâ for the year 2017 during 28th National Convention of Forum of Women in Public Sector [WIPS] held on 12th & 13th February 2018 at Srimanta Sankaradev Kalakshetra, Guwahati, Assam. The award was presented by Shri Sarbananda Sonowal, Honâble Chief Minister of Assam. The winning streak continues with the third award in succession.
Industrial Relations and Employees Welfare
During the year, your Company continued to maintain harmonious industrial relations, co-operation between the elected representative bodies of employees and management ensuring no loss of man-days during the year. Personnel policies and welfare schemes were continuously aligned with the Companyâs goals and objectives.
The Company has implemented wage revision for Unionized Workers w.e.f. 01.01.2012 in line with DPE OM NO.2 (110)/11-DPE (WC)-GL-XVI/13 DATED 13.06.2013 through Tri-partite Agreement in the presence of Dy.Chief Labour Commissioner (C) on 27.02.2017.
Human Resource Development
A series of initiatives were taken towards human resource development by your Company which includes in-house training programmes to enhance skills, nomination to various seminars and conferences. During the year, 6341 man-days of training were imparted to its employees.
Public/Staff Grievance Redressal
Your Company has framed a well defined grievance procedure, evolved under the Code of Discipline since its inception. Grievances received are being redressed to the satisfaction of the aggrieved employees. With respect to public grievance, as and when any complaints are received, necessary remedial action, if any, is taken promptly. Complaints/grievances other than the staff grievance are categorized into customer/consumer complaints/grievances from the Contractors, NGOs/General Public etc. The respective project heads are empowered to dispose off the grievances concerning their areas. Linkage has been provided to Centralized Public Grievances Redressal & Monitoring System (CPGRAMS) with effect from May 01,2011.
The grievances received and disposed off by the Company are reported to the administrative Ministry on monthly and quarterly basis. The guidelines laid down by the Government of India in this regard are being strictly followed. A Public Service Delivery (SEVOTTAM) portal has been created for assessing and improving the quality of services delivered to the citizens. The system also involves the identification of the services delivered, quality of service, its objective, improvement of quality, using innovative methods for developing business processes and being more informative with the help of advanced information technology. The same is also available in the Companyâs website.
During the year, 9 (Nine) grievances from public / exemployees were received directly/ CPGRAM portal and all of them were disposed off.
Particulars of Employees
Ministry of Corporate Affairs vide its notification dated June 05, 2015 has exempted Government Company with the applicability of section 197 of the Companies Act, 2013. However, the remuneration received by the employees of the Company, has not exceeded the limit prescribed under section 197 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 during the Financial Year 2017-18.
6. CORPORATE GOVERNANCE
Pursuant to Regulation 34(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate section on Corporate Governance along with certificate from Practicing Company Secretary confirming the level of compliance is attached and forms a part of the Boardâs Report.
Directors and Key Managerial Personnel
The Board consists of seven members, three of whom are executive or whole-time Directors, two are nonexecutive Directors, representing Ministry of Steel and two are Independent Directors. Remuneration and other details of the KMPâs are mentioned in the extract of the Annual Return which forms part of this Report.
Independent and Non-Independent Non Executive Directors
Your Company has received necessary declaration under section 149(7) of the Companies Act, 2013 from each Independent Director that he/she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Board of Directors at its 251st Meeting held on 22.05.2018, has noted the declaration, as made by the Independent Directors.
Woman Director
In terms of the provisions of Section 149 of the Companies Act, 2013 and Regulation 17(1)(a) of SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, for the year ended March 31, 2018, your Company has one Women Independent Director on its Board.
Changes in the Composition of the Board of Directors
Inductions
The President of India appointed Sri M V Subba Rao, Director (Commercial) as the Chairman-cum-Managing Director of KIOCL who assumed the charge on 30.01.2018.
Retirement/Cessation
During the year under review consequent upon completion of his 5 years term Sri Malay Chatterjee, Chairman-cum-Managing Director ceased to be the member of the Board w.e.f. 30.06.2017. The Board places on record its deep appreciation for the valuable contribution made by Shri Chatterjee.
Appointments/Resignations of the Key Managerial Personnel
Sri M V Subba Rao, Director (Commercial) was appointed as Chairman-cum-Managing Director and Chief Executive Officer during the year under review.
Directors Retiring by Rotation
In terms of Section 152 (6) of the Companies Act, 2013, Sri. T. Srinivas and Sri S.K. Gorai being longest in the office shall retire by rotation at the ensuing AGM and being eligible for re-appointment, offers themselves for re-appointment. The Board recommends their re-appointment.
Number of Meetings of the Board
The Board met six times during the Financial Year, the details of which are given in the Corporate Governance Report. As prescribed in the Act the maximum interval between any two meetings did not exceed 120 days. The Meetings were conducted in compliance with relevant regulations of the SEBI (LODR) Regulations, 2015 and Secretarial Standard on Meetings of the Board of Directors (SS-2) issued by The Institute of Company Secretaries of India (ICSI).
Directorsâ Responsibility Statement
The Financial Statements are prepared in accordance with Indian Accounting Standards (Ind AS) under the historical cost convention on accrual basis except for certain instruments, which are measured at fair values. The Ind AS is prescribed under Section 133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016. Effective April 1, 2016 the Company has adopted all the Ind AS standards and adoption was carried out in accordance with applicable transition guidance. Accounting Policies have been consistently applied except where a newly issued Accounting Standard is initially adopted or a revision to an existing Accounting Standard requires a change in the Accounting Policy hitherto in use.
Your Directors confirm that:
a) In the preparation of the Annual Accounts for the Financial Year ended March 31, 2018, the applicable Accounting Standards had been followed.
b) The Company has selected such Accounting Policies and applied them consistently and made judgments & estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year and of the Profit & Loss of the Company for that period.
c) The Company has taken proper and sufficient care towards 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.
d) The Company have prepared the Annual Accounts on a going concern basis.
e) The Company has laid down Internal Financial Controls, which are adequate and are operating effectively.
f) The Company has devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Extract of Annual Return
The details forming part of the extract of the Annual Return in form MGT-9 is annexed to this Report.
7. AUDITORS
Statutory Auditors
Pursuant to Section 139 of the Companies Act, 2013, the Comptroller and Auditor General of India shall appoint the Statutory Auditors of the Company for the year 2018-19. The Statutory Auditors Report on the Accounts of the Company for the Financial Year ended March 31, 2018 is annexed.
The Notes on financial statement referred to in the Auditorsâ Report are self-explanatory and do not call for any further comments. The Auditorsâ Report does not contain any qualification, reservation, adverse remark or disclaimer.
Cost Auditors
Pursuant to Section 148 of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Amendment Rules, 2014, the Cost Audit records of the Pellet Plant Unit of the Company is required to be audited. The Board on the recommendations of the Audit and Risk Management Committee, has appointed M/s PKR & Associates, LLP, Cost Accountants, Hyderabad to audit the cost accounts of the Company for the Financial Year 2018-19 at a remuneration of Rs.50,00/- plus applicable taxes.
As required under the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be placed before the Members in an Annual General Meeting for their ratification. Accordingly, a Resolution seeking Memberâs ratification for the remuneration payable to M/s PKR & Associates, LLP, Cost Auditors is included at Item No.6 of the Notice convening the Annual General Meeting.
The Cost Audit Report for the Financial Year 2016-17 was filed with the Ministry of Corporate Affairs on 19.09.2017. The Cost Audit Report for Financial Year 2017-18 is under finalization and will be submitted to the Ministry of Corporate Affairs within the prescribed period.
Secretarial Auditors
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed, Sri S. Viswanathan, Practising Company Secretary to undertake the Secretarial Audit of the Company for the Financial Year 2017-18.
The Secretarial Auditor had observed that the company is not having adequate number of independent directors. The remarks of the directors on the same are that the independent directors in the company are appointed by President of India, through Ministry of Steel, Government of India. The Company has requested Ministry of Steel, Government of India for appointment of requisite number of independent directors on its Board.
The Secretarial Auditors also pointed out that present public shareholding is 1.0039% against the minimum public shareholding of 25% to be achieved on or before 21.08.2018. The Board remarks that this being a policy issue of Government of India, has requested Ministry of Steel to take up with DIPAM for diluation of Government holding to achive the same within the stipulated period.
C&AG Audit
The Comptroller & Auditor General of India (C&AG) vide its letter dated 11.06.2018 has conveyed âNILâ comments on the accounts of the Company for the year ended March 31, 2018. Copy of the same is annexed to this Report.
8. CORPORATE SOCIAL RESPONSIBILITY
In compliance with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules 2014, the Company has established Corporate Social Responsibility (CSR) Committee. A Board approved Corporate Social Responsibility Policy is in existence in the Company which is available under the link https:// www.kioclltd.in/user/cms/344. The statutory disclosures with respect to the CSR Committee and an Annual Report on CSR activities form a part of this Report as Annexure.
9. Awards & Recognitions
During FYâ18 the Company has received following Awards & Recognitions:
- Received âGovernance Now PSU Awardâ during the 5th Edition of Governance for its contribution towards turnaround in business.
- Received âSubstantial Growth in Exportsâ from Custom Commissionerate, Mangalore for achieving highest exports & best business performance for FY 2017-18.
- Received First prize in recognition of its outstanding performance in implementation of Official Language for Mangalore Region.
- Received âRecognition for WIPS Activities Awardâ for the year 2017 at 28th International Convention of Forum of WIPSs held at Guwhati.
10. Key Initiatives Environmental Management and Pollution Control Measures
Your Company is committed towards preservation of ecology and prevention of pollution in its production activity. Companyâs Environmental Management System is certified with ISO 14001:2004 Standards. Some of the initiatives taken at plant level during the year 2017-18 are as under:
- Additional number of Mist type water sprinklers for dust suppression along the approach road adjacent to MSDS has been installed.
- The Composting facility has been created for disposal of canteen waste to prevent pollution in the premises and the same is used as manure.
- The standard norms as prescribed by KSPCB in respect of air, noise and water quality is being monitored and adhered to in all the areas of work.
- The Company has complied with requirement of Battery management, Hazardous waste management, Bio-medical waste management, water act, air act and EP Acts.
- Environmental friendly and pollution free Roof Top Solar Power Plants at Pellet Plant unit and Blast Furnace unit were installed and commissioned during this year.
- World Environment Day was celebrated the greener way on 05.06.2017 and several rare varieties of plant saplings totaling to 20 Nos were planted in the factory premises.
Safety
All the Departments have Standard Operating Procedures and the same is made available in their departmental Integrated Management System (IMS) Manuals for adherence. The Onsite emergency plan approved by the Director of Factories is in existence for both Pellet plant and Blast furnace unit. The Onsite Emergency Mock drills are being conducted once in 6 months to check the efficacy of preparedness for handling any Major accidents. Safety Inspections are carried out regularly by the Safety officer along with concerned Department Engineers and Safety Committee members.
National Safety Week was observed from 4th March 2018 to 10th March 2018. Suitable Personal Protective equipments such as Safety helmets, Shoes, Gloves, Safety Goggles, Face shields, Aprons, Ear plugs/muffs have been issued to all employees including contract labours to protect them against work place hazards. Various training programmes are being conducted to inculcate Safety consciousness among employees and labourers.
ISO Certification
Your Company is certified with Environment Management System - ISO 14001: 2004, Quality Management System - ISO 9001: 2008 and Occupational Health & Safety Management System OHSAS - 18001: 2007. All certifications are valid up to 08-1 1-2018.
Implementation of Official Language Policy
Your Company follows and implements the directives issued from time to time by the Department of Official Language, Ministry of Home Affairs and Ministry of Steel, Government of India for the progressive use of Official Language Hindi. Employees of the Company are encouraged to work in Hindi with regular training, cash awards and increments as per the Government directives. Hindi Workshops, Orientation programmes are conducted regularly to create awareness, impart knowledge and encourage the employees to do their Official work in Hindi. Official Language Implementation Committee Meetings take place at all the locations regularly and the progress during the previous quarters is reviewed in such Meetings. Hindi Fortnight was celebrated at all locations of the Company during September 2017.
Hindi Programmes and several Hindi Competitions were held and prizes distributed to the winners. A valedictory function was organized on October 27, 2017.
Your Company is the Convener of Bangalore Town Official Language Implementation Committee (Undertakings) (TOLIC) and conducts regular meetings and Joint Hindi Month programmes for all Central PSUs in Bangalore. During the Year, 04 Hindi Workshops were conducted to impart training to the employees for doing their official work in Hindi.
Vigilance
The Company is having an independent Vigilance Department headed by the Chief Vigilance Officer.
Preventive vigilance has been the thrust area of Vigilance Department all these years and the same has received focused attention during the year. A climate of preventive vigilance is generated to sensitize officials at all levels about the ill effects of corruption and malpractices. Regular Structured Meeting of Vigilance with the management is being conducted and issues related to e-governance, Leveraging Technology, Tender Management, Award of Works, Recruitment Policy have been discussed. Vigilance Awareness Week was observed from 30th October 2017 to 4th November 2017 at all the locations/offices of the Company and workshops & seminars were conducted during the week. Procurement by tendering-cum-e-reverse auction is in vogue from September 2010. The threshold value for this is fixed at Rs. 5 lakhs and above. During 2017, 98.80% of cases by value are covered under this. All payments are being made through electronic mode. During the year, 153 work/purchase/sale orders have been issued incorporating Integrity Pact clause, covering 98.75% of contracts by value. No complaints was received under IP. 58 scrutiny/examinations, 71 checks/inspections are carried out during the year and corrective actions, if any are suggested. Necessary action is taken with regard to the complaints received during the year. Vigilance Department conducted 8 training programmes at three different locations, covering 1030 man hours. Topics such as Good governance- Vigilance & other developments, Vigilance Awareness & Preventive Vigilance, Public Procurement etc. were covered.
Compliance of recommendations made by the Committee on Papers Laid on the Table (Rajya Sabha) in its 150th Report Details of cases initiated/disposed off during:
1. |
No. of cases pending as on 31.03.2018 |
NIL |
2. |
No. of cases initiated during 2017-18 |
1 |
3. |
No. of cases pending |
1 |
The pending case is regarding wrong acceptance and release of payment towards supply of 6 numbers of 1.5 ton split air conditioners along with stabilizer.
Officers involved:- 2
Charge sheet issued on 21.10.2017.
Disciplinary proceedings started on 24.04.2018 and is yet to conclude.
Pending Audit Paras: -
Sl. No |
Ref. to Para No./ Audit Report/title |
Audit Observation |
Status |
1 |
Para no.3.7.2.2 of Report no.2 of 2009-10. Inventory holding - Stores & Spares. |
KIOCL has not fixed the level for all the items of stores and spares. Further, it was having Rs.55 crores as Non-moving stores and spares as on 31.03.2009. |
Inventory holding norms were fixed for Raw materials and major stores and spares in April 2014 and the same was intimated to MOS on 21st April 2014. The non-moving stores & spares stood at Rs.4.76 crores including surplus stores of Rs.1.48 crores as on 31.03.2018. |
2 |
Para no.19.1.1 of Audit Report No.9 of 2009-10. Extra expenditure due to payment of higher tariff & congestion surcharge on transportation of iron ore. |
Failure of the Company to get its railway siding declared as âother than stations/ sidings serving portâ immediately on starting the operations resulted in payment of higher tariff of Rs.6.05 crore and surcharge of Rs.73.15 crore on transporta-tion of iron ore. |
The Company has made claims for refund before Railway Claims Tribunal (RCT) at Bangalore and Bhubaneswar. As the claim lodged with RCT, Bhubaneswar was dismissed; the Company has filed a case in the High Court, Bhubaneswar during January 2018. The claim before RCT, Bangalore is pending. |
3 |
Para no. 15.2 of Audit Report No. 8 of 201213. |
Irregularities in procurement & inventory management of Lam Coke. The decision of not procuring a third shipment of LAM Coke at the lower rates offered during the Empowered Joint Committee (EJC) meeting held in February 2008 resulted in extra expenditure of Rs.54.85 crore. Writing off of stock shortage of 9,144.153 MT Coke valued at Rs.32.41 crore was for reasons not justifiable. |
The Company procured two shipments with different lay cans to avoid overlapping and logistic issues. Also, the decision to procure two shipments only was based on market report âSTEELGURUâ dated 27.01.2008 which indicated that there was a possibility of reduction in the price of Coke beyond March 2008. Difference of 9,144.153 MT of LAM Coke had arisen as a cumulative effect since the inception of the Company while handling 10,08,308 MT of LAM Coke receipt and the this difference is 0.906% of quantity received. The shortage was attributable to (a) Moisture adjustment (b) Difference due to transit loss (c) Difference due to handling loss and difference due to less accountal of fines generated. The transit loss was 0.356% of total receipts and handling loss was 0.173% of total quantity handled. The total shortage of 9,144 MT constitutes 0.906% of total receipts since inception which is also much below the norm of 3% followed by RINL, other PSY of Ministry of Steel. |
4 |
Para no. 17.1 of Audit Report No. 13 of 2014. Injudicious expenditure on Pig Casting Machine in Blast Furnace Unit. |
Despite knowing that Blast Furnace Unit (BFU) was not viable on standalone basis and having closed its operations, KIOCL ordered for setting up a third Pig Casting Machine (PCM) which has been idle for the past 26 months and would remain idle for a minimum of another 24 months from the issue of letter of intent, which has also not been issued so far (September 2013). This has resulted in idling of funds and injudicious expenditure of Rs. 4.20 crore. |
In order to improve the productivity of BFU, M/s MECON have suggested several modifications. Installation of 3rd PCM and introduction of pulverizing coal injection system were two prominent proposals. As the system of injection of coal requires high investment, only installation of 3rd PCM was undertaken in the 1st Phase modification. However, by the time the installation was completed, the same could not be put to use due to suspension of operations of BFU because of commercial non-viability. The machine will be put to use as and when the plant starts its operation. The benefits/ improvements are: (a) Safe working environment for maintenance personnel (b) Shorter waiting period for Hot Metal collected in ladles. This avoids solidification of top layer of metal in the ladle (reduced skull formation) (c) Better surface finish of Pig Iron Cubes/Blocks |
(enhances marketability) and (d) Reduced interruption in tapping of metal from Blast Furnace. Higher productivity under constant blast volume and smoother furnace operation. The BFU is shut down due to economical non-viability from August 2009. As and when the BFU operations resume, the PCM3 will be put to use. |
Implementation of new Public Procurement Policy for MSEs
The Company has adopted a Micro & Small Enterprises (MSEs) Policy for MSEs Sector, in line with the Govt. of India guidelines as per MSMED Act 2006 and keeping in view the effective implementation of Public Procurement Policy for Micro and Small Enterprises (MSEs) Order 2012, following steps have been taken:
- List of item components that could be sourced from MSEs are posted on the Companyâs web-site at www.kioclltd.in. for the information of MSE vendors.
- Communication has been sent to all the registered vendors regarding the said policy with the objective of achieving an overall procurement of 20% from MSEs. Further, for enhancing the procurement from MSEs owned by SC/ST, all the vendors are approached for capturing necessary details and updated the data bank.
- During 2017-18, your Company placed orders for goods and services to the extent of Rs.6.97 Crores from MSEs which constituted 23.11% of the total procurement value of Rs.30.17 Crores.
Right to Information
Under the Right to Information Act, 2005, the Company has set up an exclusive Right to Information Act outfit to provide information and bring in transparency. As per the requirement of section 4(1) (b) of the Act, general information required to be provided to citizens are displayed on Companyâs website, The Company has nominated Public Information Officers and Appellate Authorities in all its 3 locations (Corporate Office & Pellet Plant / Project Site) to provide information to the applicants. All applications and queries received under RTI were disposed off as per the provisions of the Act.
During the year 2017-18, the Company received 25 RTI applications and one first appeal and the same were disposed off. Apart from above, the Company has received RTI applications and first appeals from web Portal RTI Online with URL https:// rtionline.gov.in launched by DoP&T. This is a facility for the Indian citizens to file online application RTI applications and first appeals and also to make payment of RTI Fees. Your Company has provided the link of above portal on its website.
Energy Conservation, R&D, Technology Absorption and Foreign Exchange Earnings and Outgo
Details of Energy Conservation, R&D technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3) (m) of the Companies Act, 2013 read with Rule, 8 of The Companies (Accounts) Rules, 2014, is annexed to this report.
In terms of the Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of Directors of your Company has adopted Dividend Distribution Policy. The Policy is available on the website of the Company under link https://www.kioclltd.in/user/ cms/344. The Dividend Distribution Policy forms a part of this Report.
Updation of PAN and Bank Particulars
Shareholders are requested to update the bank particulars and PAN details with Registrar and Transfer Agent (RTA), if not already updated.
Green Initiatives
Electronic copies of the Annual Report 2017-18 and the Notice of the 42nd Annual General Meeting are sent to all members whose email addresses are registered with the Company / depository participants(s). For members who have not registered their email addresses, physical copies are sent in the permitted mode.
Your Directors gratefully acknowledge the support, co-operation and guidance received from the Honâble Minister for Steel, Honâble Minister of State for Steel, Honâble Chief Minister of Karnataka, the Secretary, Ministry of Steel and other officials of the Ministry of Steel as well as other Ministries of the Government of India, Government of Karnataka, Andhra Pradesh, Odisha and all other departments / agencies of Central and State Government in all the endeavors of the Company.
Your Directors acknowledge the support extended by the valued and esteemed customers, shareholders, stakeholders, bankers and suppliers for their support and co-operation.
The Directors also appreciate the continued and dedicated efforts put in by all the employees to overcome challenges faced during the year.
For and on behalf of the Board of Directors
(MV Subba Rao)
Chairman-cum-Managing Director
Date : New Delhi
Place: 31.07.2018
Mar 31, 2017
Dear Members,
The Board of Directors of your Company is pleased to submit the reports of the business and operations of your Company for the Financial Year ended March 31, 2017, together with the Auditorsâ Report on the Annual Financial Statements and Comments on the same by the Comptroller & Auditor General (C&AG) of India. Your Directors are happy to inform you that the Company had a very successful year in 2016-17. Overcoming the gloomy situation of previous year, your Company could achieve Pellet production of 1.460 Million Tons resulting in capacity utilization of 42% as compared to production of 0.100 Million Tons a year before. During the year, your Company has achieved Pellet dispatch of 1.387 Million Tons as compared to 0.409 Million Tons during the previous year. The details of financial performance are given below:
1. Financial Results and State of Companyâs Affairs
(Rs, in Crore)
Particulars |
Financial Year 2017 |
Financial Year 2016 |
Revenue from Operations |
929.36 |
205.57 |
Other Income |
156.37 |
213.81 |
Profit before Exceptional item and Tax |
32.95 |
(89.67) |
Less : Exceptional Items-Expenses |
1.73 |
0 |
Profit before Tax |
31.22 |
(89.67) |
Tax Expense (including deferred taxes) |
(16.71) |
(9.52) |
Profit after Tax |
47.93 |
(80.15) |
Less : Other Comprehensive Income (Net of Tax) |
(0.33) |
0.51 |
Total Comprehensive Income |
47.59 |
(79.64) |
EPS (Basic & Diluted) |
0.76 |
(126) |
Note: Figures for Financial Year 2016 are re-arranged as per Ind AS.
Indian Accounting Standards
The Ministry of Corporate Affairs (MCA), vide its notification in the Official Gazette dated February 16, 2015, notified the Indian Accounting Standards (Ind AS) applicable to certain classes of companies. Ind AS has replaced the existing Indian GAAP prescribed under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014. For your Company, Ind AS is applicable from April 1, 2016, with a transition date of April 1, 2015.
The following are the areas which had an impact on account of transition to Ind AS:
- Property, Plant & Equipment (PPE)
- Intangibles and Deferred taxes
The reconciliations and descriptions of the effect of the transition from IGAAP to Ind AS have been provided in Note 23 âFirst time adoption of Ind ASâ.
Revenues
Acting promptly on the favorable market movement during the year, your Company could increase the volume of production and dispatch resulting into significant increase in income from plant operations at Rs.929.36 Crores as compared to Rs.205.57 Crores in the previous year, achieving a growth rate of 353%. During the year, Revenue from export sales increased by 617.07% to Rs.517.51 Crores from Rs.72.17 Crores and Domestic Sales increased to Rs.351.28 Crores from Rs.127.23 Crores, an increase of 175.23%. Of the Total Revenue for the year ended March 31, 2017, the share from exports vis-a-vis DTA sales stood at 60% and 40% respectively. Income from Sale of Services (O&M Operations) has also increased to Rs.32.98 Crores from Rs.5.77 Crores. Other Income comprising of Interest Income on fixed deposits and other miscellaneous Income has decreased to Rs.156.37 Crores from Rs.213.82 Crores due to lower yields on fixed deposits.
Profits
Your Companyâs Profit before Tax has increased to Rs.31.22 Crores from a net loss Rs.89.67 Crores in the previous year. Your Company has achieved even a higher Profit after Tax at Rs.47.93 Crores primarily due to deferred tax on account of timing difference and MAT credit entitlements as compared to a Loss after Tax of Rs.80.15 Crores during the previous year.
Liquidity
Your Company continues to maintain debt free status conserving sufficient cash to meet the strategic operational objectives. Your Company recognizes that liquidity has to be balanced between earning adequate returns on Capital employed and needs to cover financial and business risk. Liquidity enabled your Company to make a rapid shift in direction as a response to changing market dynamics and to overcome the adverse market condition faced during the previous year.
Listing of Equity Shares in NSE
In pursuance to SEBI Circular dated May 22, 2014 and April 17, 2015 relating to de-recognition of Regional Stock Exchanges, outlining the roadmap for Companies listed exclusively on such Regional Stock Exchanges, your Company opted for listing on a national level stock exchange and promptly got its equity shares listed with Metropolitan Stock Exchange of India in 2015-16. As a step forward, to enhance further visibility in the market, your Board of Directors in their 238th meeting held in April, 2016, approved listing of Equity Shares with National Stock Exchange. The Company thereafter applied for and got listed in National Stock Exchange w.e.f. November 29, 2016 under stock code âKIOCLâ.
Listing in two of the National Stock Exchanges resulted into high degree of liquidity of your investment and your Directors were extremely happy to participate in the Bell Ceremony organized by the NSE, when your share debuted at a quote of Rs.10.50, which is being quoted at above Rs.75/- in recent past thereby increasing the market capitalization of your Company by about 7.5% time.
Credit Rating
During the year, your Companyâs credit worthiness was evaluated by Credit Analysis and Research Ltd. (CARE), who has assigned following Credit Rating to your Company for availing Bank Facilities.
Facilities |
Amount (Rs,in crore) |
Rating |
Long Term Bank Facilities |
1.00 |
CARE AA; Stable (Double A; outlook Stable) |
Long term/Short term Bank Facilities |
369.00 |
CARE AA; Stable/CARE A1 (Double A; Outlook:Stable/A One Plus) |
Total |
370.00 |
The above rating indicates that your Company enjoys highest short term credit rating and a notch below the highest rating for long term borrowing. This credit ratings implies your Companyâs capability to leverage for its operation and capital expenditure as and when need arise.
Dividend
Complying with the directives from the Committee on Management of Government Investment in CPSEs (CMGIC), Govt of India, on February 10, 2017 your Company paid an Interim Dividend @1.1% of the Paid up Share Capital amounting to Rs.6.97 Crores (i.e. Re.0.11 per share), out of its free reserve of previous year. In view of improved financial performance during the year, your Board of Directors were happy to pass a resolution in its meeting held on May 29, 2017, recommending a final dividend of 50% of Profit after Tax for the Financial Year ended March 31, 2017, which works out to be Rs 0.37 per Equity Share including the Interim Dividend already paid. The proposal to pay final dividend is subject to the approval of shareholders at the ensuing Annual General Meeting to be held on 31.08.2017. The total dividend (excluding dividend tax) for the current year is Rs 23.47 Crores. Dividend (including dividend tax) as a percentage of Profit after Tax is 59%.
The Register of Members and Share Transfer Books will remain closed from 25.08.2017 to 31.08.2017 (both days inclusive) for the purpose of payment of the dividend for the Financial Year ended March 31, 2017 and the AGM.
Performance vis-a-vis MoU
Performance of your Company, in terms of the Memorandum of Understanding (MoU) signed with the Ministry of Steel, Government of India, was rated as âFairâ for the Financial Year 2015-16. Performance Evaluation of the Company for the years 2016-17 vis-a-vis MoU Targets on provisional basis result would be âGoodâ rating.
Particulars of Loans, Guarantees or Investments
No loan, guarantee or investment made by your Company under Section 186 of the Companies Act, 2013 during the Financial Year 2016-17.
Particulars of Contracts or Arrangements made with Related Parties
During the Financial Year, no transactions were entered into with Related Parties as defined under the Companies Act, 2013 and Regulation 53(f) and Para A of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, which attract the provisions of Section 188 of the Companies Act, 2013, as such annexure AOC is not furnished. There were no materially significant transactions with related parties which were in conflict with the interest of the Company. The Board has approved a Policy on Materiality of Related Party transactions and Dealing with Related Party transactions, which is available on the Company website.
Material Changes and Commitments, if any, affecting Financial Position
No material changes and commitments occurred between the end of the Financial Year of your Company to which the Financial Statements relates and the date of the report which have affected on the financial position of your Company.
Management Discussion and Analysis
In terms of the provisions of Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulation, 2015, the Managementâs discussion and analysis is set out in this Annual Report.
2. BUSINESS AND OPERATIONAL REVIEW
During the year under review, your Company achieved stellar performance and produced
1.460 Million Tons of Pellets in comparison to 0.100 Million Tons produced in the previous year, thereby recorded a quantum jump of 1360% on Y-o-Y basis. The quantity produced also surpassed the âVery Goodâ Target set in the MoU for the year 2016-17.
During the year, Your Company had sold 1.387 Million Tons of Pellets as against 0.409 Million Tons in the previous year, a jump of 239.12% Y-o-Y. Out of the total 1.387 Million Tons sold, exported quantity was 0.898 Million Tons which is almost 65% and balance 0.489 Million Tons was sold to domestic customers.
The Pellet Plant Unit of your Company is strategically located and ideal for overseas customers. However, after the imposition of Distance Based Charge by Indian Railways on Iron ore moved through Railway Network for Pelletisation and subsequent exports, coupled with high logistics cost on input raw material like Iron Ore, the products became uneconomical in the overseas market causing adverse impact on the capacity utilization during last couple of years. During the year under review, Indian Railways provided relief by suspending levy of DBC till March 31, 2017 which is now extended till March 31, 2018. In addition to this, Government of India withdrew Export Duty on Pellets from January 04, 2016. These favorable developments supported by upward movement of price in the International market from second half of Financial Year 2016-17, contributed to improved performance of the Company.
Due to increased sales in export market, your Company could be able to nullify the deficit in foreign exchange earnings and turned into a positive Net Foreign Exchange earner as per the Foreign Trade Policy.
Revival of Blast Furnace Unit
The operation of the Blast Furnace Unit continues to remain under suspension since August 05, 2009. Considering early signs of improvement in price scenario of input raw materials, the Board of Directors of the Company in its 238th meeting held in April 06, 2017 approved re-starting of the Blast Furnace operation immediately after refurbishment works.
The execution of all planned jobs for refurbishment, of Blast Furnace and associated equipments were completed on time within the approved cost. All equipments of Blast Furnace, Staves, Pump houses and Raw material handling system have been tested and found to be working satisfactorily. Erection of new cooling tower for BF and CPP has been completed. A schedule has been prepared for regular running of all equipments in the Plant and the same is being followed.
However, due to frequent floods in Australia, increased demand for Coke, the prices of Low Ash Metallurgical (LAM) coke, a major component of raw material for operating BFU has doubled in International market. Your Company is keeping a watch on the LAM Coke prices. Once the price stabilizes, the procurement action will be taken and the plant operation shall be commenced.
A snapshot of production target vis-a-vis actual achievement with capacity utilization and sales performance during last five years including current year are depicted at Table 1 & 2.
Table: 1
(Qty. In Million Tons)
Year |
MoU Target |
Actual Production |
Utilization of installed capacity in % |
2016-17 |
1.300 |
1.460 |
42 |
2015-16 |
1.800 |
0.100 |
3 |
2014-15 |
1.800 |
0.785 |
22 |
2013-14 |
1.700 |
1.710 |
49 |
2012-13 |
2.500 |
1.265 |
36 |
(Installed capacity of Pellet Plant is 3.500 Million Tons / Annum).
Table: 2
Qty: in Million Tons, Value: Rs, In Lakhs
Year |
Pellets |
Pig Iron |
Total |
|||
Qty |
Value |
Qty |
Value |
Qty |
Value |
|
2016-17 |
1.387 |
86872 |
0.000 |
7 |
1.387 |
86879 |
2015-16 |
0.409 |
19845 |
0.001 |
135 |
0.410 |
19980 |
2014-15 |
0.680 |
62687 |
0.001 |
197 |
0.681 |
62884 |
2013-14 |
1.615 |
153007 |
0.002 |
230 |
1.617 |
153237 |
2012-13 |
1.236 |
115252 |
0.004 |
660 |
1.240 |
115912 |
(Note: Pig Iron includes Auxiliary)
Performance of Operation & Maintenance Portal
The Operation and Maintenance Portal was created with primary objective of providing expertise of your Company to other organisation in helping them to improve their efficiency level and in the process, optimizing the resource utilization of the Company. The portal is structured on a fee based interlinking with the number of engineers and support staff deployed to the concerned organization. Under this platform, your Company is managing following two operations:
- NMDCâs 1.89 mtpa beneficiation and 1.2 mtpa Pellet Plant at Donimalai, Karnataka. Your Companyâs technical manpower were involved in pre-commissioning activities, trial runs of the equipments, etc. and the plant has been successfully commissioned and is operating. Modification jobs were carried out by O&M team during the commissioning stage and continuous Pellet production commenced from September 30, 2016.
- Orissa Mining Corporationâs Chromite Ore Beneficiation Plant at South Kaliapani, Jajpur, Odisha.
MARKET SCENARIO
During the Financial Year 2016-17, steel production in India witnessed a jump of about 9.3% Y-o-Y. The crude steel production stood at 98.11 Million Tons. Good internal demand combined with backing of Government in the form of levy of Minimum Import Price (MIP) to rein in cheaper imports resulted into enhanced performance of steel sector.
Good performance of steel sector boosted iron ore production. It was reported that, during Financial Year 2016-17 Indian iron ore production surged by 28% Y-o-Y to 182.33 Million Tons against 142.5 Million Tons in Financial Year 2015-16. Iron ore movement across major producing states of the Country was recorded at 123.29 Million Tons in Financial Year 2016-17, up 21% Y-o-Y. Indian iron ore exports have seen fourfold increase in Financial Year 2016-17. India has exported 24.35 Million Tons material in Financial Year 2016-17 compared with 6.04 Million Tons in Financial Year 2015-16 which is 303% higher Y-o-Y. Iron ore exports from Goa increased sharply from 3.86 Million Tons in Financial Year 2015-16 to 14.56 Million Tons in Financial Year 2016-17. Indian pellet exports which were recorded at 0.83 Million Tons in Financial Year 2015-16 moved up to 8.26 Million Tons in Financial Year 2016-17.
In the Domestic market, iron ore prices initially witnessed declining trend and then started moving up. The prices touched a bottom of Rs.1,450 per Ton at the end of first quarter and started moving up from the third quarter. The pellet prices have also followed a more or less similar pattern. The prices remained low till first half of the year and started moving up from second half.
In the International market, during calendar year 2016, the steel production went up marginally by 0.8% to 1628.5 Million Tons. China production went up by 1.2% producing 808.37 Million Tons. India was the third largest steel producer after China and Japan. During Financial Year 2016-17, the iron ore prices depicted high turbulence during the beginning and the declining trend continued till June 2016. Both iron ore and pellets started moving up from July 2016. By September 2016, the pellet prices touched US$ 80 per Metric Ton and Iron ore & pellet producers capitalized on the positive market sentiment. The pellet prices crossed US$ 100 per Metric Ton in Dec 2016. This sentiment continued till March 2017. The improved demand for iron ore and pellets in China was mainly due to improved demand for Steel in China as Chinese Government infused about RMB 14 trillion into Chinese economy. China imported around 1020 Million Tons of Iron ore during calendar year an increase of 7.8% Y-o-Y. Increased iron ore and pellet output and higher global prices resulted in sharp increase in iron ore & pellet exports from India in Financial Year 2016-17.
3. GROWTH STRATEGY
The Company is in the process of strategic expansion and diversification aiming at exponential growth for long term sustainability/viability in the competitive market environment. A part of the expansion and diversification plan of the Company has already been taken forward. Consequent to closure of mining activities at Kudremukh, the Company has been exploring various alternatives for mining at other locations within Karnataka and also in other States. The following efforts have been made to get iron ore mining lease, setting up of value added Plants, etc., for diversification.
Development of Devadari Iron Ore Block
Ministry of Mines, GoI vide its letter dated December 05, 2016 to Govt. of Karnataka has conveyed the approval under Section 17A(2) of MMDR Act, 1957 for reserving area of 470.40 ha in Devadari Range, Sandur Taluk, Bellary District in favour of your Company. Govt. of Karnataka issued Gazette notification on January 23, 2017 for reservation of said area in favour of your Company for mining of iron and Manganese ore.
DMG, Govt. of Karnataka vide letter dated February 13, 2017, informed your Company to submit approved Mine Plan obtained from IBM, Forest Clearance under Section 2 of FC Act, 1980, Environment Clearance obtained under EIA Notification 2006 and CFE obtained from KSPCB for execution of Mining Lease deed.
Your Company has initiated action for obtaining statutory clearances from authorities for execution of mining lease deed.
Your Company will undertake development of iron ore mines, setting up of Beneficiation and Pellet Plant with capital investment of around Rs.1500 Crores. Initially, the iron ore produced from this mine will be utilized in the existing Pellet Plant and Blast Furnace Units at Mangaluru. Your Company has plans to set up Pellet Plant at Mine site at a later stage and on reaching mine peak production level of 4 mtpa to optimize production of existing PPU and BFU in Mangaluru.
Development of Chikkanayakanahalli Iron Ore Deposit
Govt. of Karnataka accorded in principle approval for grant of ML for a period of 30 years over an area of 116.55 ha vide letters dated 01 Aug 2008 and 02 Aug 2008 with the prior approval of Govt. of India under section 5(1) of MMDR Act 1957. During Joint Survey ML map was issued with overlapping of adjacent areas. The application for Forest Clearance was kept pending by Forest Department at Tumkur. Writ Petition was filed in Honâble High Court, GoK on the issue of overlapping of ML boundaries. Judgment was passed by Honâble High Court of Karnataka on 14.12.2016 and same is challenged in Honâble Supreme Court. Stay granted for the Special Leave Petition (SLP).
Backward and Forward integration of BFU
M/s MECON LIMITED, Bengaluru was assigned the work of preparation and submission of a Techno Economic Feasibility Report for setting up of backward and forward integration projects to the 350 M3 capacity Blast Furnace Unit to make the unit economically viable. MECON has submitted the final TEFR on which your Company is in the process of obtaining necessary approvals to implement the same.
Setting up of R&D and Training Centre
With an objective of providing expertise in the fields of Mining, Beneficiation and Pelletisation by utilizing the expertise available, your Company proposes to establish an R&D and Training Centre with state of the art facilities for the benefit of steel industry in Karnataka State as well as other States of India with an aim to improve the technologies in terms of quality, productivity, marketability etc., besides diversifying into many other innovative areas of business.
Based on your Companyâs request, M/s KIADB has allotted 4.32 Acres of land in Plot No.7 of Obadenahalli Industrial Area, Doddabalapur, Bengaluru Rural District for setting up of R&D and Training Centre. With due approval of the Board, the allotted land was procured from KIADB. The total amount, towards land cost as per Lease Deed is Rs. 5,57,29,663/- (Rupees Five Crores fifty seven lakhs twenty nine thousand six hundred sixty three only). The preliminary estimated project cost projected for setting up of Research & Development and Training Centre along with Lab facilities for testing Ferrous & Non-Ferrous Minerals, Food, Pharmaceuticals etc. is Rs.26.00 Crores inclusive of the land, building and other facilities. An Expression of Interest (EoI) floated to identify an agency for preparation of Detailed Project Report (DPR) for setting up the R&D and Training Centre.
Setting up of Grid connected Solar Roof Top Power Plant
With an objective of participating in Government of Indiaâs initiative of achieving ambitious target of 40GW of Rooftop Solar Power by 2022, KIOCL had setup 380 kwp grid connected solar roof top plant at available roof top area of 3940 sq. mtrs. on the existing buildings located at Blast Furnace Unit (BFU) and Pellet Plant Unit (PPU), at Mangaluru. Your Company had approached Solar Energy Corporation of India (SECI), a CPSU under the administrative control of the Ministry of New and Renewable Energy (MNRE), which has been entrusted by MNRE for implementation of a Large scale Grid connected Rooftop pilot projects to the PSUs under the Ministry of Steel. Solar Energy Corporation of India (SECI) informed KIOCL that M/s Clean Max Enviro Energy Solutions Pvt Ltd., is one of the approved agency for executing the Roof top solar plants in RESCO mode on Net metering Basis.
A Power Purchase Agreement (PPA) has been signed between M/s Clean Max Enviro Energy Solutions Pvt. Ltd and your Company for a period of 25 years for setting up of 380 Kwp capacity Grid connected Solar Roof Top Power plant as per mandate given by the MNRE, Govt. of India.
JOINT VENTURE/MOU
Development of Nemkallu Iron Ore Deposit in Anathapuram District, Andhra Pradesh
A MoU was signed among your Company, APMDC and RINL on June 22, 2013 at Hyderabad for exploration and mining of Nemakal iron ore deposit in Ananthapuram District, Andhra Pradesh. Subsequently, Govt. of AP issued notification dated 30 Nov 2015 reserving an area over an extent of 1327 hectares for Iron Ore in Minchery R.F. of Kalyandurg Range in Ananthapuram District in favour of M/s A.P.Mineral Development Corporation Limited (APMDC) under Section 17A(2) of the Mines and Minerals (D&R) Act,1957. APMDC has submitted proposal to PCCF, Govt. of Andhra Pradesh for seeking permission to carry out exploratory drilling (20 holes) in the aforesaid area. DGPS survey to demarcate the drilling area is under progress. On receiving the forest clearance for exploratory drilling, work will be undertaken jointly by KIOCL and APMDC. TEFR for the setting up of Beneficiation Plant and Pellet Plant will be prepared based on the outcome of the exploratory drilling.
MoU with M/s WBMDTCL
Your Company has entered into MoU on January 08, 2016 for setting up Joint Venture with WBMDTCL for exploration and development of iron ore mines and for other minerals in the State of West Bengal. WBMDTCL and your Company will form Joint Venture Company in 51:49 equity. Your Company and WBMDTCL to jointly identify an iron ore blocks to put up proposal to State Govt. for reservation of iron ore blocks in favor of JV Company.
Your Company appointed Consultant for preparation of Joint Venture Agreement (JVA) and other documents and incorporation of JV Company. Joint discussions were held in the month of April, 2017 among WBMDTCL, your Company and Consultant. JVA is under finalization for incorporation of the company with due approvals.
DIVERSIFICATION Mineral Exploration Field
Ministry of Mines, Govt. of India notified the Company as Mineral Exploration Entity on February 16, 2015 under second proviso of sub-section (1) of Section 4 of the Mines and Minerals (Development and Regulation) Act, 1957. This will facilitate the Company to take up prospecting and exploration works of various minerals across the Country.
Ministry of Mines allotted two Nos. G4 stage of mineral investigation blocks to the Company. The blocks were allotted to the Company on September 12, 2016 during the meeting held under the Chairmanship of Secretary, Ministry of Mines, GoI for allocation of exploration blocks to PSUs. The blocks includes, investigation of Iron Ore over an area of 100 Sq. Kms at Tirumankaradu region of Tiruppur District in Tamilnadu State and investigation of Gold and associated minerals over an area of 202 Sq. Kms at Udbur region of Mysore District in Karnataka State.
The work plans of both the blocks allotted to the Company is technically approved in the 6th National Mineral Exploration Trust (NMET) Technical Committee meeting, which was held on 2nd and 3rd December 2016. The financial proposals of both the blocks were also approved in the 4th NMET Executive Committee meeting, which was held on February 21, 2017 under the Chairmanship of Secretary, Ministry of Mines, GoI. The exploration works of both the allotted blocks will be taken up soon by the Company as per the directions of NMET and the same will add up to the profitability and would demonstrate the expertise of your Company in the field of mineral exploration.
INORGANIC GROWTH Acquisition of Equity Stake in M/s IDCOL, Odisha
With an objective to capitalize on the emerging opportunities in the mineral rich State of Odisha, your Company approached the Chief Secretary, Govt. of Odisha, with a proposal to set up 1.5 to
2 MTPA Pellet Plant in the State subject to the State committing an ore-linkage for the purpose. During the meeting held on May 13, 2015, Govt. of Odisha decided a Central PSU may be inducted as a strategic investor in IDCOL, Odisha with an equity participation up to 51% along with Management Control. In case of becoming successful in acquiring management control in IDCOL, the Company has plans :
- To set up iron ore beneficiation and pellet plant at free land available at IDCOL Kalinga Iron Works Ltd. (IKIWL), Barbil.
- Up-gradation of existing furnaces and establishing a Captive Power Plant at IDCOL Ferro-Chrome & Alloys (IFCAL).
- Expansion and modernization of existing Chrome Ore Beneficiation Plant to enhance production capacity.
- Development of Mines and a Concentrator Plant at Telangi âBâ mine for the commencement of mining.
The Board of Director in its Meeting held on April 06, 2016 accorded approval for submitting conditional Financial Bid to IDCOL to acquire 51% of the paid up Equity of IDCOL with management control in line with the financial due diligence report of M/s YES Securities (India) Limited. Your Company submitted conditional financial bid on April 25, 2016 to IDCOL with following conditions:-
a) The Govt of Odisha to reserve and notify a suitable iron ore mine having reserves of atleast 100 million tons with average grade of Fe 60-62%, in favour of IDCOL , for the purpose of establishing a suitable mineral based manufacturing plant at the premises of M/s IDCOL Kalinga Works, Barbil, Odisha;
b) The Govt. of Odisha to reserve and notify a suitable chrome ore mine having reserves of at least 1 million tons, in favour of IDCOL , for the purpose of expanding the Ferro chrome manufacturing plant at the premises of M/s IDCOL Ferro-Chrome &Alloys (IFCAL), Jajpur Road, Odisha;
c) The Govt. of Odisha shall ensure coal linkage for the proposed captive power plant at IFCAL, Jajpur;
d) The Govt. of Odisha shall take over the responsibility of settling all outstanding Contingent Liabilities as on date of acquisition.
Further bid validity has been extended till 23 August 2017.
Compliances on financial bid conditions submitted by your Company are being discussed with Govt. of Odisha. Allotment of Iron Ore mines and Chromite mine to IDCOL and settling all outstanding Contingent Liabilities of IDCOL has been made prerequisite for acquisition of IDCOL.
4. HUMAN RESOURCE MANAGEMENT & INDUSTRIAL RELATIONS Manpower Profile
As on March 31, 2017, the Company had 922 employees on its rolls comprising of 303 Executives including Non-unionized Supervisors (33%) and 619 Non Executive Employees (67%).
Table: 3 show the breakup of employees under different categories such as SCs, STs, Women employees, Ex-servicemen and PwD under different categories on rolls of the Company as on March 31, 2017.
Table: 3
Group |
Total No. of employees on rolls |
SC |
ST |
Women employees |
Ex-servicemen |
PwD |
A |
254 |
44 |
12 |
12 |
-- |
5 |
B |
49 |
04 |
2 |
6 |
-- |
-- |
C |
578 |
86 |
30 |
10 |
1 |
5 |
D |
41 |
7 |
6 |
1 |
-- |
3 |
Total |
922 |
141 |
50 |
29 |
1 |
13 |
Compliance under the Persons with Disabilities Act, 1995
Your Company ensures compliance under the Persons with Disabilities Act, 1995. Suitable provisions/modifications are made in the workplace to meet the requirements of such persons with disability.
Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
Your Company is following Anti Sexual Harassment procedures in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Your Company has constituted Internal Complaint Committees in two major locations i.e. Corporate Office at Bengaluru and Plant level at Mangaluru to redress sexual harassment complaints. All employees (permanent, contractual, temporary, trainees) are covered under this policy. During the year, no complaints were reported.
Empowerment of Women
A Womenâs Forum - Women in Public Sector (WIPS) is operating in your Company and all the women employees are Life Members of the said Forum. your Company is a corporate Life Member for Forum of WIPS under the aegis of SCOPE. Women employees are being regularly nominated to attend the meets of WIPS. International Womenâs Day was celebrated on 8th March 2017 in a befitting manner. WIPS, your Company has bagged the Best Recognition Award for WIPS Activities for the year 2016 during 27th National Convention of Forum of WIPS held on 11th and 12th February 2017 at Nagpur. During the year 2016-17, apart from participating in Swachh Bharat Abhiyan, WIPS Cell has actively undertaken various activities such as organizing Medical Camps, monetary assistance to girl students from financially backward family for pursuing higher studies, awareness classes on health and hygiene, extended domestic support to orphanages, self defense workshop for employees, workshops on cashless transactions and other CSR activities.
Industrial Relations and Employees Welfare
During the year, your Company continued to maintain harmonious industrial relations, co-operation between the elected representative bodies of employees and management ensuring no loss of mandays during the year. Personnel policies and welfare schemes were continuously aligned with the Companyâs goals and objectives.
Human Resource Development
A series of initiatives were taken towards human resource development by your Company which includes in-house training programmes to enhance skills, nomination for various seminars and conferences. During the year, 3960 mandays of training was imparted to the employees.
Public/Staff Grievance Redressal
Your Company has framed a well defined grievance procedure evolved under the Code of Discipline since its inception. Grievances received are being redressed to the satisfaction of the aggrieved employees. With respect to public grievance, as and when any complaints are received from the public, necessary remedial action, if any, is taken by your Company immediately. Complaints/grievances other than the staff grievance are categorized into customer/consumer complaints/grievances from the Contractors, NGOs/General Public etc. The respective project heads are empowered to dispose of the grievances concerning their areas. Linkage has been provided to Centralized Public Grievances Redressal & Monitoring System (CPGRAMS) with effect from May 01, 2011.
The grievances received and disposed off by the Company are reported to the Administrative Ministry on monthly and quarterly basis. The guidelines laid down by the Government of India in this regard are being followed. A Public Service Delivery (SEVOTTAM) has been created for assessing and improving the quality of services delivered to the citizens. The system also involves the identification of the services delivered, quality of service, its objective, improvement of quality, using innovative methods for developing business processes and being more informative with the help of advanced information technology. The same is also available in the Companyâs website.
During the year, nine grievances from public/ex-employees were received directly/ CPGRAM portal and all of them were disposed off.
Particulars of Employees
Ministry of Corporate Affairs vide its notification dated June 05, 2015 has exempted Government Company with the applicability of section 197 of the Companies Act, 2013. However, the remuneration received by the employees of the Company has not exceeded the limit prescribed under section 197 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 during the Financial Year 2016-17.
Skill India Initiatives
Your Company has undertaken Skill Development Initiative and signed MoU with National Skill Development Corporation (NSDC) and started Skill Development Centre âKIOCL Quess Skill Academyâ in the BFU premises at Mangaluru in partnership with M/s Quess Corp, an approved agency of NSDC. The Centre of Excellence was inaugurated on February 05, 2016 and so far around 60 locals got trained in this centre.
The various topics covered under for Skill Development are Heavy Earth Moving Machinery Mechanic, Safety Operator, Raw Material Handling Operator, Conveyor and Other Bulk Material Handling Technician. This copies are provided by Mining Sector Skill Council/ Steel Sector Skill Council.
5. CORPORATE GOVERNANCE
Pursuant to Regulation 34(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate section on Corporate Governance along with certificate from Practicing Company Secretary confirming the level of compliance is attached and forms a part of the Boardâs Report.
Directors and Other Key Managerial Personnel
The Board consists of eight members, four of whom are executive or whole-time Directors, two are non-executive Directors representing Ministry of Steel and two are Independent Directors. Remuneration and other details of the KMPâs are mentioned in the extract of the Annual Return which forms part of this Report.
Independent and Non-Independent Non-Executive Directors
Your Company has received necessary declaration under section 149(7) of the Companies Act, 2013 from each Independent Director that he/she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Woman Director
In terms of the provisions of Section 149 of the Companies Act, 2013 and Regulation 17(1) (a) of SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, for the year ended March 31, 2017, your Company has one Women Director on its Board.
Changes in the Composition of the Board of Directors
Inductions
During the year, following Directors were appointed by the President of India
- Sri S K Gorai, Director (Finance) in the category of Functional Director w.e.f. 11.11.2016.
- Sri Saraswati Prasad, Additional Secretary and Financial Adviser, Ministry of Steel in the category of Govt. Nominee Director w.e.f. 08.02.2017.
- Dr. Deepika Sharma in the category of Independent Director w.e.f. 10.02.2017.
A proposal for appointment of aforesaid Additional Directors in pursuance to Section 161 of the Companies Act, 2013 is being placed before the shareholders for approval; the relevant details form a part of the AGM notice.
Retirement/Cessation
During the year under review, following Directors ceased to be the Members of Board:-
- Sri Laxminarayana, Director (Finance) w.e.f. 31.05.2016 consequent upon attaining the age of superannuation.
- Sri S. Manoharan, Sri P K Bajaj and Dr. S. Raghunath Independent Directors w.e.f. 04.07.2016 after completion of three years tenure.
- Dr. B.K. Sahoo, Independent Director w.e.f 29.01.2017 after completion of three years tenure.
- Smt. Bharathi S. Sihag, Government Nominee Director w.e.f. 30.11.2016 tendered her resignation as Director from the Board of KIOCL consequent upon her appointment as Officer on Special Duty in the Department of Fertilizers and release from the duties as Special Secretary and Financial Adviser, Ministry of Steel.
The Board placed on record its deep appreciation of the valuable services rendered by the Directors whose term of office ended during the year.
Appointments/Resignations of the Key Managerial Personnel
Sri S.K. Gorai, Director (Finance) and CFO was appointed during the year.
Directors Retiring by Rotation
In terms of Section 152 (6) of the Companies Act, 2013, Sri. M V Subba Rao, and Sri N. Vidyananda being longest in the office shall retire by rotation at the ensuing AGM and being eligible for re-appointment, offers themselves for re-appointment. The Board recommends their re-appointment.
Number of Meetings of the Board
The Board met seven times during the Financial Year, the details of which are given in the Corporate Governance Report. The maximum interval between any two meetings did not exceed 120 days, as prescribed in the Act. The Meetings were conducted in compliance with relevant regulations of the SEBI (LODR) Regulations, 2015 and Secretarial Standard on Meetings of the Board of Directors (SS-2) issued by The Institute of Company Secretaries of India (ICSI).
Directorsâ Responsibility Statement
The Financial Statements are prepared in accordance with Indian Accounting Standards (Ind AS) under the historical cost convention on accrual basis. The Ind AS is prescribed under Section 133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016. The Company has adopted all the Ind AS standards and adoption was carried out in accordance with applicable transition guidance. Accounting Policies have been consistently applied except where a newly issued Accounting Standard is initially adopted or a revision to an existing Accounting Standard requires a change in the Accounting Policy hitherto in use.
The Directors confirm that :
a) In the preparation of the Annual Accounts for the Financial Year ended March 31, 2017, the applicable Accounting Standards had been followed.
b) The Company has selected such Accounting Policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year and of the Profit & Loss of the Company for that period.
c) The Company has taken proper and sufficient care towards 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.
d) The Company have prepared the Annual Accounts on a going concern basis.
e) The Company has laid down Internal Financial Controls, which are adequate and are operating effectively.
f) The Company has devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Extract of Annual Return
The details forming part of the extract of the Annual Return in form MGT-9 is annexed to this Report.
6. AUDITORS Statutory Auditors
Pursuant to Section 139 of the Companies Act, 2013, the Comptroller and Auditor General of India shall appoint the Statutory Auditors of the Company for the year 2017-18. The Statutory Auditors Report on Accounts of the Company for the Financial Year ended March 31, 2017 are annexed.
Cost Auditors
Pursuant to Section 148 of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Amendment Rules, 2014, the Cost Audit records of the Pellet Plant Unit of the Company is required to be audited. The Board on the recommendations of the Audit and Risk Management Committee, has appointed PKR & Associates LLP, Cost Accountants, Bengaluru to audit the cost accounts of the Company for the Financial Year 2017-18 at a remuneration of Rs.50,000/- plus applicable taxes.
As required under the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be placed before the Members in a Annual General Meeting for their ratification. Accordingly, a Resolution seeking Memberâs ratification for the remuneration payable to PKR & Associates LLP, Cost Auditors is included at Item No. 9 of the Notice convening the Annual General Meeting.
The Cost Audit Report for the Financial Year 2015-16 was filed with the Ministry of Corporate Affairs on 04.10.2016. The Cost Audit Report for Financial Year 2016-17 is under finalization and will be submitted to the Ministry of Corporate Affairs within the prescribed period.
Secretarial Auditors
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed, M/s NG Joshi and Co., Company Secretaries, a firm of Company Secretaries in practice to undertake the Secretarial Audit of the Company for the Financial Year 2016-17.
The Secretarial Audit Report and comments of Management on the adverse remarks are annexed to this Report.
C&AG Audit
The Comptroller & Auditor General of India (C&AG) vide its letter dated June 6, 2017 has conveyed âNILâ comments on the accounts of the Company for the year ended March 31, 2017. Copy of the same is annexed to this Report.
7. CORPORATE SOCIAL RESPONSIBILITY
Your Company has been an early adopter of Corporate Social Responsibility (CSR) initiatives. Your Company has undertaken projects in the areas of Education, Community Development, Health, Water, Sanitation etc. In compliance with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules 2014, the Company has established Corporate Social Responsibility (CSR) Committee. A Board approved Corporate Social Responsibility Policy is in existence in the Company which is available under the link https://www.kioclltd.in/ user/cms/95.
The statutory disclosures with respect to the CSR Committee and an Annual Report on CSR activities forms a part of this Report as Annexure.
8. KEY INITIATIVES Environmental Management & Pollution Control Measures
As in the past, your Company continued to stress upon measures for the conservation and optimal utilization of energy in all its areas of operations, including those for energy generation and effective usage of sources/equipments used for generation. Within the factories, there have been continuous efforts to improve operational efficiencies, minimizing consumption of natural resources and reducing water, energy while maximizing production volumes. Some of the Environmental Mitigation initiatives taken during the year 2016-17 are as under:-
- Tree saplings around 100 Nos. in the plant and township area have been planted to augment the existing tree plantations during World Environment day celebrations.
- Work proposal has been initiated to utilize Lakya Dam water head at Pellet Plant during the non production time for miscellaneous activities with some modification works in the existing pumping arrangement. The utilization of gravity head will help conserve energy.
- Combined Air and Water consent has been renewed for Pellet Plant Unit and is valid from 01.07.2016 to 30.06.2021.
- Awareness programme conducted during World Environment day celebrations on utilization of Kitchen waste in houses for developing and maintaining roof top garden to reduce waste generation at Source.
- Composting facility created for disposal of canteen wastes scientifically to prevent the pollution in the premises.
- Large sprinklers and Mist type sprinklers have been extensively installed in the Plant area to suppress fugitive dust generated a long haul roads, raw material storage sheds and loading areas.
- The standard norms prescribed by KSPCB in respect of air and water quality monitoring are being adhered to. The company has complied with the requirements specified under Battery Management, Hazardous waste management, Bio medical waste management Rules, Water Act, Air Act and EP Acts.
Safety
The onsite emergency plan approved by Directorate of Factories is in existence at both Pellet Plant and Blast Furnace units and the same is updated as and when there is any change in plant condition as well as emergency team members. Safety Inspections are carried out regularly once in two months by the Safety officer along with concerned Department Engineers and Safety Committee members.
Suitable Personal Protective equipments such as Safety helmets, Shoes, Rain coats, Gloves, Safety Goggles, Face shields, Aprons, Ear plugs/muffs are issued to all employees including Contract laborers to protect them against work place hazards. Various training programmes are being conducted to inculcate Safety consciousness among employees and laborers. Your Company has conducted the National Safety Week celebration from 4th March 2017 to 10th March 2017 during which, different training programmes on Occupational Health, Electrical Safety and Safety Management System were conducted. The Onsite Emergency Mock drills are conducted once in six months in Pellet Plant and Blast Furnace units to check the efficacy of preparedness to handle any major accident.
ISO Certification
Your Company is certified with Environment Management System: ISO-14001:2004, Quality Management System: ISO-9001:2008 and Occupational Health & Safety Management System: OHSAS-18001:2007.
Implementation of Official Language Policy
Your Company follows and implements the directives issued from time to time by the Department of Official Language, Ministry of Home Affairs and Ministry of Steel, Government of India for the progressive use of Official Language Hindi. Employees of the Company are encouraged to work in Hindi with regular training, cash awards and increments as per the Government directives. Hindi Workshops, Orientation programmes are conducted regularly to create awareness, impart knowledge and encourage the employees to do their Official work in Hindi.
Your Company has been conferred with the Ispat Rajbhasha Trophy for the progressive use of Official Language for the year 2015-16 from Honâble Minister of State for Steel, Government of India on November 19, 2016 on the eve of Hindi Salahakar Samithi Meeting.
Official Language Implementation Committee Meetings take place at all the locations regularly and the progress during the previous quarters are reviewed in such Meetings. Hindi Fortnight was celebrated at all locations of the Company during September 2016. Hindi Programmes and several Hindi Competitions were held and prizes distributed to the winners. A valedictory function was organized on October 28, 2016.
Your Company is the Convener of Bengaluru Town Official Language Implementation Committee (Undertakings) (TOLIC) and conducts regular meetings and Joint Hindi Month programmes for all Central PSUs in Bengaluru.
Honâble Governor of Goa graced the first Meeting of TOLIC in July 27, 2016. During the Meeting, 17 different Public Sector Undertakings were awarded shields and certificates for their contribution towards Official Language Implementation and for the publication of the best house Journal in Hindi. During the Year, 04 Hindi Workshops were conducted to impart training to the employees for doing their official work in Hindi.
Your Company was awarded the third prize for best performance in implementation of Official Language in âCâ region for the year 2015-16 by TOLIC (Undertaking), Bengaluru.
Vigilance
The Company has an independent Vigilance Department headed by the Chief Vigilance Officer. âPreventive vigilanceâ has been the thrust area of Vigilance Department all these years and the same has received focused attention during the year. A climate of preventive vigilance is created to sensitize officials at all levels about the ill effects of corruption and malpractices. Structured Meeting of Vigilance with the management is being conducted regularly and issues related to e-governance, Leveraging Technology, Tender Management, Award of Works, Recruitment Policy have been discussed. Vigilance Awareness Week was observed from October 31, 2016 to November 05, 2016 at all the locations/offices of your Company. Workshops, seminars and various competitions were conducted during the week.
Procurement by tendering-cum-e-reverse auction is in vogue from September 2010. The threshold value fixed for contracts at Rs.5 lakhs and above. During the Financial Year 2016-17, 98.80% of cases by value are covered under e-reverse auction. All payments above the threshold value of Rs.1 lakh are being made through electronic mode. During the year 2016-17, 99.6% of the cases by value are covered under electronic mode. During the year, 78 work/purchase/sale orders have been issued incorporating Integrity Pact clause, covering 96.29% of contracts by value. No complaints have been received under IP. Vigilance Department conducted 13 training programmes at three different locations, covering 800 man hours on topics such as Good Governance, Vigilance and other developments, Lokpal & Lokayukta Act 2013, Vigilance Awareness and Preventive Vigilance, Public participation in promoting integrity and eradicating corruption etc.
Implementation of new Public Procurement Policy for MSEs
Keeping in view the effective implementation of Public Procurement Policy for Micro and Small Enterprises (MSEs) Order 2012, following steps have been taken:
- List of item components that could be sourced from MSEs are placed on the Companyâs web-site at www.kioclltd.in for the information of MSE vendors.
- Communication has been sent to all the registered vendors regarding the said policy with the objective of achieving an overall procurement of 20% from MSEs. Further, for enhancing the procurement from MSEs owned by SC/ST, all the vendors are approached for capturing necessary details and update the data bank.
- Appropriate weight age was given for MSEs in the MoU from year 2016-17 onwards in order to ensure effective implementation of the policy.
- During 2016-17, your Company placed orders for goods and services to the extent of Rs.3.39 Crores from MSEs which constituted 20.72% of the total procurement value of Rs.16.36 Crores.
Right to Information
Under the Right to Information Act, 2005, the Company has set up an exclusive Right to Information Act outfit to provide information and bring in transparency. As per the requirement of section 4(1)
(b) of the Act, general information required to be provided to citizens are displayed on Companyâs website, www.kioclltd.in
The Company has nominated Public Information Officers and Appellate Authorities in all its 3 locations (Corporate Office & Pellet Plant / Project Site) to provide information to the applicants. All applications and queries received under RTI were disposed off as per the provisions of the Act.
A Web Portal RTI Online with url https://rtionline.gov.in has been launched by DoP&T. This is a facility for the Indian citizens to file RTI applications and first appeals online and also to make payment of RTI Fees online. On the instructions, your Company has provided the link to above site.
Further, during the year 2016-17, the Company received 15 applications and queries related to human resources, contracts, tenders, business related matters etc., and the same were disposed off.
Energy Conservation, R&D, Technology Absorption and Foreign Exchange Earnings and Outgo
Details of Energy Conservation, R&D technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3) (m) of the Companies Act, 2013 read with Rule, 8 of The Companies (Accounts) Rules, 2014, is annexed to this report.
Green Initiatives
As in the previous years, this year too, your Company is publishing only the statutory disclosures in the print version of the Annual Report. Electronic copies of the Annual Report 2016-17 and Notice of the 41st Annual General Meeting are being sent to all members whose email addresses are registered with the Company/Depository Participant(s). For members who have not registered their email addresses, physical copies are sent in the printed mode.
Acknowledgement
The Directors gratefully acknowledge the support, co-operation and guidance received from the Honâble Minister for Steel, Honâble Minister of State for Steel, Honâble Chief Minister of Karnataka, the Secretary, Ministry of Steel and other officials of the Ministry of Steel as well as other Ministries of the Government of India, Government of Karnataka, Andhra Pradesh, Odisha, West Bengal, Jharkhand, Haryana and all other departments/agencies of Central and State Government in all the endeavors of the Company.
The Directors acknowledge the support extended by the valued and esteemed customers, shareholders, stakeholders, bankers and suppliers for their support and co-operation.
The Directors also appreciate the continued and dedicated efforts put in by all the employees to overcome challenges faced during the year.
For and on behalf of the Board of Directors
Date : 01-08-2017 (M.V. Subba Rao)
Place: New Delhi Chairman-cum-Managing Director (Addl. Charge)
and Director (Commercial)
Mar 31, 2016
Dear Members,
The Board of Directors hereby submit the reports of the business and operations of your Company (''the Company'' or ''KIOCL'') along with Audited Financial Statements, for the financial year ended March 31, 2016, together with the Auditors'' Report and Comments on the Accounts by the Comptroller & Auditor General (C&AG) of India.
Results of our Operations:
During the fiscal year ended on March 31, 2016 the operating results were affected negatively due to subdued activity in steel sectors. Owing to reduced sales, the operating revenue declined by 68% on Y-o-Y basis. A summary results of our operations for the year ended March 31, 2016 vis-a-vis corresponding year is furnished as under:-
(Rs. in crores)
Particulars |
For the year ended March 31, 2016 |
For the year ended March 31, 2015 |
Gross Revenue from operations |
199.80 |
628.84 |
Profit before Depreciation, Interest & Tax |
(66.40) |
63.35 |
Profit before Tax |
(89.40) |
31.26 |
Less : Provision for Taxes (including deferred taxes) |
11.74 |
0.44 |
Profit after Tax |
(77.66) |
30.82 |
EPS (Basic & Diluted) |
(1.22) |
0.49 |
Dividend:
Your Directors have not recommended any dividend for the year ended 31st March 2016.
Business & Operational Overview:
During the year under review, the Company has produced 1.00 lakh Tons of Pellets against a target of 18.00 Lakh Tons thus achieving 6% of annual target. The Company recorded a negative growth of 87% over the previous year''s production of 7.85 Lakh Tons. In domestic market, steel demand remained challenging during current financial year due to subdued activity in steel using sectors. The Company has been facing difficulty in utilizing the full production capacity of the Pellet Plant due to weakening of Chinese market and higher logistic costs involved in transportation of iron ore fines from Bailadila mine of NMDC. Added to this, most of the Integrated steel plants equipped themselves with captive Pellet Plants and Mini Steel Plants in Gujarat have completely shifted to the use of high grade imported lumps which also affected Company''s pellet sales. During the year under review, the Company has achieved the sales figures of 4.09 Lakh Tons as against 6.80 Lakh Tons sold in the previous year thereby recorded a decrease of 40% on Y-o-Y basis.
The operation of the Blast Furnace Unit continues to remain under suspension since 05.08.2009. However, in the prevailing scenario the commodity prices are under downward trend, the Company is exploring the possibilities to revive the operations.
A snapshot of production target vis-a-vis actual achievement with capacity utilization and sales performance during last five years including current year is depicted at Table 1 & 2.
Table 1 : Pellet Production Targets vis-a-vis Actual
(Qty. in Million Tons)
Year |
MOU Target |
Actual Production |
Utilization of Installed capacity in % |
2015-16 |
1.800 |
0.100 |
3 |
2014-15 |
1.800 |
0.785 |
22 |
2013-14 |
1.700 |
1.710 |
49 |
2012-13 |
2,500 |
1.265 |
36 |
2011-12 |
3,000 |
1.710 |
49 |
(Installed capacity of Pellet Plant is 3.500 million tons / annum).
Table 2 : Despatch Quantity with Value
(Qty. in Million Tons, Value : Rs. in Lakhs))
Year |
Pellets |
Pig Iron |
Total |
|||
Qty. |
Value |
Qty. |
Value |
Qty. |
Value |
|
2015-16 |
0.409 |
19845 |
0.001 |
135 |
0.410 |
19980 |
2014-15 |
0.680 |
62687 |
0.001 |
197 |
0.681 |
62884 |
2013-14 |
1.615 |
153007 |
0.002 |
230 |
1.617 |
153237 |
2012-13 |
1.236 |
115252 |
0.004 |
660 |
1.240 |
115912 |
2011-12 |
1.716 |
150364 |
0.010 |
1744 |
1.726 |
152108 |
(Note : Pig Iron includes Auxillary)
MARKET SCENARIO
Throughout FY 2015-16, both domestic as well as international markets for iron ore & pellets remained weak. In the International market, the iron ore prices touched a decade low at US$ 39.5 / MT CFR China for 63% Fe grade fines. The pellet prices also touched a low of US$ 51/MT, CFR China. The market remained highly volatile. The average price of iron fines and pellets (63% Fe) plunged by about 37% & 38% respectively on Y-o-Y basis. Substantial slowdown in Chinese growth, a shift in the demand for Steel in China from infrastructure driven to consumption driven, continued flooding of the market with iron ore at highly competitive prices by the big three miners. Difficulties in corporate financing were some of the reasons for poor market conditions. Diminished demand for steel in China prompted Chinese Steel Manufacturers to export finished steel at highly competitive prices, striking down global steel prices. The global steel production was reduced by 2.8% from 1670.2 million tons in 2014 to 1622.8 million tons in 2015. Chinese steel production declined by 2.3% to 803.8 million tons. Even with this decline, production overshot demand by around 130 million tons resulting in large scale exports flooding world steel markets, prompting governments to take protective measures.
Most of the major Steel Mills across the world suffered badly due to cheaper imports of Chinese steel. As a result, global pellet industry also suffered. Chinese Steel Mills preferred to use sinter and lumps in place of pellets forcing the spot pellet premium to remain very low. Continuous dumping of iron ore in the International market by three big miners, viz. VALE, Rio Tinto & BHP Billiton at predatory prices kept the high cost miners away from the market.
The year 2015 was marked by deflation of commodity prices globally bringing down steel prices. In the Indian context, the drop was steeper than that of other raw materials, leading to severe pressures on operating margins of Steel Plants. The over $100 billion Indian Steel Industry struggled to counter predatory pricing and import glut that haunted the sector. Steel imports increased by 25.6 per cent to 11.71 million tons in the 2015-16, compared to 9.32 million tons in
2014-15. The domestic production of finished steel in the last financial year declined to 89.78 million tons, over 92.16 million tons in 2014-15. In order to protect Indian Steel Industry, Govt. of India introduced Safeguard Duty on certain categories of imported steel. Government also introduced Minimum Import Price on steel imported to India.
During FY 2016, the Indian iron ore market also witnessed steep drop in prices. Odisha and Chhattisgarh, two major iron ore producing states witnessed iron ore prices slashed by about 43%. Indian iron ore production has reached 155 million tons as against 129 million tons in FY15, registering annual growth rate of 23%. Significant increase in production has been witnessed in Odisha, Karnataka & Goa due to resumption of mining activities which were halted due to various legal issues. The iron ore production overshoot the demand, resulting in severe pressure on the prices. The iron ore lump prices witnessed a steeper drop vis-a-vis iron ore fines which severely affected the pellet market.
Cheaper import of high grade lumps captured entire coastal market including Gujarat, Goa, and Tamil Nadu etc. Most of the coal based sponge iron plants took longer shut-downs. Pellet premium also dropped by more than 50% in both domestic and International spot markets. These also affected the pellet market very badly. Further, rising imports on the back drop of falling international prices exerted pressure on domestic iron ore market.
Initiatives under "MAKE IN INDIA" Programme
Government of India has launched the "Make in India" programme, an initiative encouraging overseas companies to manufacture their products in India. The Company is an active partner to the Govt. of India''s programme as the Companyâs plants are strategically located on the west coast of India, with proximity to middle east/Iran markets where steel production is growing. Accordingly, maiden attempt was made during the year and one ship of high quality Iron ore concentrate from Brazil was imported and the same after conversion into pellets in our plant was exported to Iran. On successful completion of the trial shipment, the Company is making concerted efforts to go for higher volumes in order to improve its capacity utilization and also earn precious foreign exchange for the country.
CMD and Functional Directors at the launch of KIOCL''s scheme under ''Make in India" at Pellet Plant, Mangalore
Listing of Equity Shares with MSEI
Consequent upon receipt of listing permission from Metropolitan Stock Exchange of India Limited vide its circular No. MSEI/LIST/3829/2016 and letter No.MSEI/LIST/SL/2016/517 dated 10.02.2016 the Company''s 634513800 equity shares are listed and admitted for dealing on Capital Market segment with symbol ''KIOCL'' w.e.f.
12.02.2016. Further, the Company has signed listing agreement with Metropolitan Stock Exchange of India Limited.
Operation & Maintenance Vertical
The Operation and Maintenance vertical was created with basic objective to provide expert services to the Industry and helping them to improve their efficiency level. The portal is structured on a fee based interlinking with the number of engineers and support staff deployed to the concerned organization. At present, the following two contracts are under progress:-
- NMDC 1.89 mtpa beneficiation & 1.2 mtpa Pellet Plant at Donimalai, Karnataka;
- Orissa Mining Corporation''s Chromite Ore Beneficiation Plant at South Kaliapani, Jajpur, Odisha
CAPEX & Growth Plans
The Company is in the process of strategic expansion and diversification for its exponential growth and long term sustainability/viability in the present competitive market. The expansion & diversification activities of the Company have
Shri Siddaramaiah, Hon''ble Chief Minister of Karnataka Chaired the meet with official of KIOCL on allotment of mining leases on 26.06.2016 already been taken forward. Consequent to closure of mining activities at Kudremukh, the Company has been exploring various alternatives for mining at other locations within Karnataka and also in other States. The following efforts have been made to get iron ore mining lease, setting up of value added Plants, etc., for diversification:
- Reservation of Devadari iron ore block, Sandur Taluk, Bellary, Karnataka
The Company submitted detailed proposal to Secretary (Mines & MSME), Govt. of Karnataka on 25 July 2015 for reservation of Devadari iron ore block, Sandur Taluk, Bellary District over an area of approx. 473.24 hectares of Iron Ore & Manganese under the provisions of section 17 A2(A) of MMDR Amendment Act, 2015. On site verification, Director of Mines & Geology, Bengaluru on 30.11.2015 has forwarded proposal to the Secretary to Government (MSME and Mines) for reservation of an area of 470.40 ha.
Govt. of Karnataka on 22.03.2016 recommended the proposal to Ministry of Mines, Govt. of India for reservation of an area of 470.40 ha in Devadari Range, Sandur Taluk, Bellary District for iron ore and manganese in favour of the Company, under the provisions of Section 17A(2) & 17A (2A) of MMDR Act, 2015.
- Chikkanayakanahalli Iron Ore mining
Govt. of Karnataka allocated Chikkanayakanahalli Iron Ore mining lease in block no.02 over an area of 116.55 Ha in Hombalghatta & Hosahalli villages in favour of the Company during 2008. During the joint survey, it was noticed that ML area of the Company with other 02 MLs are overlapping. Govt of Karnataka is yet to sort out the issue among all ML allottees and issue rectified sketch for obtaining from Forest Department & other agencies clearances.
Meanwhile, M/s Banshankari Mining Corporation filed a Writ petition in High Court of Karnataka. Hon''ble High Court passed an order dated 3rd September 2015 with the recording in order, that learned advocate of Banshankari submits that there has been no notification proposing to grant mining lease in favour of the Company, therefore irrespective of such settlement, the petitioner is entitled to receive entire 18 acres of land as there could not be any overlapping with the Company. In the above WP, the Company was not made a party. Therefore to bring the facts of the Company mining lease in respect of Hombalghatta and Hosahalli before Hon''ble High Court, a WP No.45745/2015 was filed by the Company. Hon''ble High Court of Karnataka on 23 March 2016 has given direction to Govt. of Karnataka for survey of entire Sarangpani area and to submit survey map by 2nd week of June 2016 to the Hon''ble High court.
- Exploration and Exploitation of Nemkallu Iron Ore deposit in Anathapuram
A MoU was signed among KIOCL, APMDC and RINL on 22 June 2013 for exploration and exploitation of Nemkallu iron ore deposit in Anathapuram Dist., of Andhra Pradesh. During the year Ministry of Mines, Govt. of India approved the proposal for reservation of iron ore deposit in favour of M/s. APMDC Limited.
Subsequently Govt. of Andhra Pradesh issued notification on 30 Nov 2015 reserving an area over an extent of 1327 hectares for iron ore in favour of M/s APMDC Limited under Section 17A(2) of the Mines and Minerals (D&R) Act,1957. On receiving the forest clearance for exploratory drilling, work will be undertaken jointly with APMDC. The Company is having plans to set up suitable capacity beneficiation and Pelletization plant based on the feasibility study.
- Acquisition of equity stake in Industrial Development Corporation of Odisha Limited (IDCOL)
To capitalize on the emerging opportunities in the mineral rich State of Odisha, the Company had approached the Government of Odisha for setting up of value added Plants with assured iron ore linkage. In a meeting held on 13 May 2015 Govt. of Odisha decided to induct Central PSU as a strategic investor in IDCOL, Odisha with equity participation along with Management Control. Govt. of Odisha communicated to the Company for submission of financial bid to acquire controlling stake in IDCOL. The Board of Directors agreed in principle for participation and advised to engage consultants for carrying out the due-diligence of IDCOL & its group Companies. Accordingly, the Company engaged technical consultant and Merchant Banker for due diligence and valuation of the equity of IDCOL to submit prudent offer to Govt. of Odisha. The due diligence is under process.
- MOU with West Bengal Mineral Development and Trading Cooperation (M/s WBMDTC)
The Company has entered into a MoU for Joint Venture with M/s WBMDTCL on 8 January 2016 for exploration and development of iron ore mines and for other minerals in the State of West Bengal. WBMDTCL and KIOCL will form Joint Venture Company in the ratio of 51% & 49%. As per MoU both partners will jointly identify iron ore blocks for allocation by the State Government in favour of JVC.
Setting up 1.5 MTPA Pellet plant Greenfield Project at Bokaro Steel Plant, SAIL
M/s SAIL had floated a Limited tender enquiry for "Setting up of 1.5 MTPA capacity Pellet Plant at Bokaro Steel Plant on Build-Own-Operate (BOO) Basis". The Company submitted its bid on due date i.e. 2.5.2015. Negotiation of price is under discussion with M/s SAIL.
Joint Venture with NMDC & RINL for setting up of 13 mtpa Slurry pipeline, 8 mtpa Filter Plant and 6mtpa Pellet Plant
M/s NMDC and M/s RINL invited RFQ for selection of Joint Venture Partner for setting up of 13mtpa slurry pipe line from Nagarnar to Visakhapatnam and 6 mtpa Pellet Plant at Visakhapatnam in August 2013. The Company submitted its RFQ for the projected investment of Rs.6000 crores, to be funded through debt equity ratio of 65:35. NMDC and RINL together will hold 52% stake in the JV with management control. Other JV partners can hold 10% to 24% stake in the JVC. The Company has expressed its willingness to take 16% equity to the Company in the proposed JVC. The draft JV Agreement is under scrutiny.
Other Diversification - Mineral Exploration Field
Ministry of Mines, Govt. of India notified the Company as exploration entity on 16.02.2015 under second proviso of sub-section (1) of Section 4 of the Mines and Minerals (Development and Regulation) Act, 1957. This will facilitate the Company to take up prospecting operation & exploratory drilling of mineral deposits. The Company has opened Mineral Exploration Department to undertake prospecting and exploratory drilling of mineral deposits on behalf of Government of India and State Governments.
MoU PERFORMANCE
The Company has been signing MoU with the Ministry of Steel right from 1991-92. The performance of the Company was rated "FAIR" by the Department of Public Enterprises for 2014-15. The MoU evaluation for 2015-16 is under finalization.
ENVIRONMENTAL MANAGEMENT & POLLUTION CONTROL MEASURES
The Company is committed to preserve the ecology and prevention of pollution in its production activities and has been accredited with ISO 14001-2004 EMS.
Environmental Mitigation Initiatives
The initiatives and continued efforts taken up on the environmental management and pollution control measures during the year 2015-16 are mentioned below:-
- Mist type Sprinkler for a length of 295 Mtrs. has been completed. Large area Sprinklers have been installed for a length of 385 meters in the Pellet plant.
- The water Sprinklers already installed in the plant premises.
- Tree Park with 80 saplings developed in the plant area.
- Development of Tree Park at Pilikula Nisarga Dhama for the conservation of rare and endangered plant species of Western Ghats.
- Concreting of road for an additional length of 280 meters between Shed No.2 and Pellet stock yard has been completed.
- The upgraded Sewerage Treatment Plant is being maintained for re-cycling.
- The runoff water, floor washings and spillages are being recycled.
- The consents/authorizations are being renewed on schedule.
- Under Swachh Bharat Mission, cleaning campaign was taken up in the Company premises, township and surroundings.
- The standard norms prescribed by KSPCB in respect of air and water quality monitoring are being adhered to in all areas of work. The Company has complied with the requirement of battery management, hazardous waste management, bio-medical waste management, Water Act, Air Act and EP Act.
- The compliance status with respect to the conditions stipulated in the consents is being reported regularly to the concerned authorities. The compliance to consent conditions is satisfactory.
SAFETY
The Company has implemented the Occupational Health and Safety Management system as per OHSAS 18001. The Onsite emergency plan approved by the Director of Factories is in existence for both Pellet plant and Blast Furnace Unit. The safety committee meetings were conducted at regular intervals. Safety inspections were carried out regularly. The Company has observed National Safety Day on 4th March 2016. Onsite Emergency Mock drills are conducted once in 6 months to check the Emergency preparedness.
PUBLIC/STAFF GRIEVANCE REDRESSAL
The Company has framed a well defined grievance procedure evolved under the Code of Discipline since its inception. Grievances received are being redressed to the satisfaction of the aggrieved employees. With respect to public grievance, as and when any complaints are received from the public, necessary remedial action, if any, is taken by the Company immediately. Complaints/ grievances other than the staff grievance are categorized into customer/consumer complaints/ grievances from the Contractors, NGOs/General
Public etc. The respective project heads are empowered to dispose of the grievances concerning their areas and the general public. Linkage has been provided to Centralized Public Grievances Redressal & Monitoring System (CPGRAMS) with effect from 01.05.2011.
The grievances received and disposed off by the Company are reported to the Administrative Ministry on a monthly and quarterly basis. The guidelines laid down by the Government of India in this regard are being followed.
A Public Service Delivery (SEVOTTAM) has been created for assessing and improving the quality of services delivered to the citizens. The system also involves the identification of the services delivered, quality service, its objective, improvement of quality, using innovative methods for developing business processes and being more informative with the help of advanced information technology. The same is also available in the Company''s website.
IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY
The company follows and implements the directives issued from time to time by the Department of Official Language, Ministry of Home Affairs and Ministry of Steel, Government of India for the progressive use of Official Language -Hindi.
During the year, Hindi workshops & orientation programmes are conducted regularly to create awareness, impart training and encourage the employees to carry out their Official work in Hindi. Hindi Fortnight was celebrated at all locations of the company during September 2015. The 10th issue of "Deepika" brought under TOLIC banner was released.
The Company is the Convener of Bengaluru Town Official Language Implementation Committee (undertakings) and conducts regular meetings and Joint Hindi Month programmes for all Central PSUs in Bengaluru. The meetings were conducted on 31st July and 21st December 2015.
In recognition of TOLIC activities for the Year 2014-15, TOLIC (Undertakings) Bengaluru stood first & was awarded Rajbhasha Kirti Purskar (Shield) by Govt of India, Ministry of Home Affairs on 1st September 2015. The award was conferred by His Excellency the President of India Shri Pranab Mukherjee.
TOLIC (undertakings), Bengaluru won first prize for best performance in implementation of Official Language in ''C'' region for the year 2014-15 constituted by Govt of India, Ministry of Home Affairs, Department of Official Language. The prizes were distributed in the South & South Western Regional Official Language Conference held at Kochi on 19th February 2016.
ISO CERTIFICATION
The Company is certified with Environment Management System - ISO 14001: 2004, Quality Management System- ISO 9001: 2008 and Occupational Health & Safety Management System OHSAS - 18001: 2007.
MANPOWER PROFILE
As on March 31, 2016, the Company had 938 employees on rolls comprising of 313 Executives including Non-Unionized Supervisors (33.4%), 625 Non executives (66.6%).
Table: 3 show the number of SCs, STs, women employees, Ex-servicemen and PwD as against the total number of employees in different Groups on rolls of the Company as on 31.03.2016.
VOLUNTARY RETIREMENT SCHEME
Group |
Total No. of employees on rolls |
SC |
ST |
No. of Women Employees |
Ex Serviceman |
PwD |
A |
265 |
44 |
13 |
12 |
- |
5 |
B |
48 |
3 |
2 |
6 |
1 |
- |
C |
584 |
89 |
30 |
10 |
1 |
5 |
D |
37 |
4 |
6 |
- |
- |
- |
D (Sweepers) |
4 |
3 |
- |
1 |
- |
3 |
Total |
938 |
143 |
51 |
29 |
2 |
13 |
In order to further rationalize the manpower, VR scheme was introduced during the year and remained operational till 24th March 2016.
COMPLIANCE UNDER THE PERSONS WITH DISABILITIES ACT, 1995
The Company ensures compliance under the Persons with Disabilities Act, 1995. Suitable provisions/ modifications are made in the work place to meet the requirements of such persons with disability.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has adopted an Anti Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. The Company has constituted Internal Complaint Committees in two locations to redress sexual harassment complaints. During the year, no complaint was reported.
INDUSTRIAL RELATIONS AND EMPLOYEES WELFARE
During the year, the Company continued to maintain harmonious industrial relations, cooperation between the elected representative bodies of employees and management. It was ensured that no man-days were lost during the year. Personnel policies and welfare schemes were continuously aligned with the Company''s goals and objectives.
HUMAN RESOURCE DEVELOPMENT
A series of initiatives were taken towards human resource development by the Company which includes in-house training programmes to enhance skills, nomination for various seminars and conferences. During the year, 3317 man days of training was imparted to the employees.
SKILL INDIA INITIATIVES
The Company has taken skill development initiative and signed a MoU with National Skill the prominent awards presented to the Company are listed below:
Development Corporation (NSDC) on 28th December 2015 for collaboration to support skill development initiatives. In continuation to this, to develop skill excellence at Mangaluru, the Company has identified Skill Development Centre at Mangaluru for Skill Development activities and MoU signed with Quess Corp Ltd. (Formerly IKYA Human Capital Solutions), an approved agency of NSDC on 31st December 2015 with an objective to support and participate in National Policy on Skill Development, Government of India.
AWARDS AND RECOGNITIONS
During the year, the Company was applauded in various ways by different institutions and some of
- Rajbhasha Kirti Purskar (Shield) from His Excellency the Hon''ble President of India.
- First prize for implementation of Official Language in ''C'' region for the year 2014-15.
VIGILANCE
The Company has an independent vigilance department headed by the Chief Vigilance Officer. ''Preventive vigilance'' has been the thrust area of
Vigilance Department all these years and the same has received focused attention during the year. A climate of preventive vigilance is created to sensitize officials at all levels about the ill effects of corruption and malpractices. Vigilance Awareness Week was observed from 26th October 2015 at all the locations/offices of KIOCL Limited and workshops and seminars were conducted during the week.
Procurement by tendering-cum-e-reverse auction is in vogue from September 2010. The threshold value fixed for contracts at Rs.5 lakhs and above. During the FY 2015-16, 96.23% of cases by value are covered under e-reverse auction. All payments above the threshold value of Rs.1 lakh are being made through electronic mode. During FY 2015-16, 99.5% of the cases by value are covered under electronic mode. During the year, 44 work/ purchase/sale orders have been issued incorporating Integrity Pact clause, covering 96.99% of contracts by value. No complaints have been received under IP. Vigilance Department conducted 8 training programmes at three different locations, covering 685 man hours on topics such as Preventive Vigilance as a tool for Good Governance, Lokpal & Lokayukta Act 2013, & Preventive Vigilance, etc.
IMPLEMENTATION OF NEW PUBLIC PROCUREMENT POLICY FOR MSEs
The Company has adopted a Micro & Small Enterprises (MSEs) policy for MSEs Sector, in line with the Government of India guidelines as per MSMED Act 2006. The following benefits are extended for the MSEs as per Govt. Guidelines:
- The Company has identified 85 items, which have been reserved for exclusive purchase from Micro and Small Enterprises.
- MSEs are exempted from payment of tender document fee & earnest money deposit (EMD)
- If the price quoted by the MSE in a Tender is within the price band of L1 15% of the price quoted by a firm other than MSE, then the MSE is allowed to bring down the price to match the L1 price and supply up to 20% of the total tender value, of which 4% is for MSEs owned by SC/ST. In case of more than one such MSEs, the supply is shared proportionately.
Table 4 : Depict the target set by the Company for implementation of Public Procurement Policy for MSEs.
Table 4: Annual Procurement through MSEs
Sl. No. |
Particulars |
2015-16 |
2012-2016 (for last 4 Yrs.) |
Target for 2016-17 |
1. |
Total annual procurement (excluding Raw Material, Imported items, Capital items and POL) |
4.47 |
39.80 |
|
2. |
Total value of goods and services procured from MSEs (Including MSEs owned by SC/ST entrepreneurs) |
1.04 |
8.07 |
20 (Min) |
3. |
% of procurement from MSE (Including MSEs owned by SC/ST entrepreneurs) out of total procurement |
23.34 |
20.29 |
|
4. |
% of procurement from MSEs owned by SC/ST entrepreneurs out of total procurement |
- |
- |
4 |
5. |
Total number of vendor development programmes for MSEs |
Once in 6 months |
Once in 6 months |
Once in 6 months |
RIGHT TO INFORMATION
Under the Right to Information Act, 2005, the Company has set up an exclusive Right to Information Act outfit to provide information and bring transparency. As per the requirement of section 4(1) (b) of the Act, general information''s required to be provided to citizens are displayed on Company''s website, www.kioclltd.in. The
Company has nominated Public Information Officers and Appellate Authorities in all its 3 locations (Corporate Office & Pellet Plant / Project Site) to provide information to the applicants. During FY 2015-16, Company received twenty-five applications and queries under RTI and same were disposed off as per the provisions of the Act.
DIRECTORS AND OTHER KEY MANAGERIAL PERSONNEL
The Board consists of eleven members, four of whom are executive or whole-time Directors, two are non-executive Directors representing Ministry of Steel & five are Independent Directors.
Remuneration and other details of the KMP''s are mentioned in the extract of the Annual Return which forms part of this report.
Independent and Non-Independent Non Executive Directors
The Company has received necessary declaration from each Independent Directors under section 149(7) of the Companies Act, 2013 that he meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Woman Director
In terms of the provisions of Section 149 of the Companies Act, 2013 and Regulation 17(1) (a) of SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, for the year ended 31st March 2016 the Company had one Women Director on its Board.
Changes in the composition of the Board of Directors
During the year under review, Shri Madhav Lal (DIN 06547581) was appointed as Independent Director for a period of three years or till further orders. The proposal for appointment of Shri Madhav Lal (DIN 06547581) as Director is being placed before the shareholders for approval; the relevant details form a part of the AGM notice.
Appointments/Resignations of the Key Managerial Personnel
None of the Key Managerial Personnel had resigned or were appointed during the year under review.
Directors Retiring by Rotation
In terms of Section 152 of the Companies Act, 2013, Shri Malay Chatterjee & Smt. Bharathi
S Sihag being longest in the office shall retire at the ensuing AGM and being eligible for re-appointment, offers himself/herself for re-appointment.
Number of meetings of the Board
The Board met 5 times during the financial year, the details of which are given in the Corporate Governance Report. The maximum interval between any two meetings did not exceed 120 days, as prescribed in the Act. The meetings were conducted in compliance with Secretarial Standard on Meetings of the Board of Directors (SS-2) issued by The Institute of Company Secretaries of India (ICSI).
Directors'' Responsibility Statement
Pursuant to the requirements under Section 134(5) of the Companies Act, 2013, it is hereby confirmed that:
1) In the preparation of the annual accounts for the financial year ended March 31, 2016, the applicable accounting standards had been followed.
2) They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit & loss of the Company for that period.
3) They have taken proper and sufficient care towards 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.
4) They have prepared the annual accounts on a going concern basis;
5) They have laid down internal financial controls, which are adequate and are operating effectively.
6) They have devised proper systems to ensure compliance with the provisions of all applicable laws and 100 such systems were adequate & operating effectively.
AUDITORS
Statutory Auditors
Pursuant to Section 139 of the Companies Act, 2013, the Comptroller and Auditor General of India shall appoint the Statutory Auditors of the Company for the year 2016-17. The Statutory Auditors Report on Accounts of the Company for the financial year ended March 31, 2016 along with Management''s replies thereto are annexed.
The Comptroller & Auditor General of India (C&AG) vide its letter dated 08.06.2016 has given "NIL" comments on the accounts of the Company for the year ended March 31, 2016. Copy of the same is annexed to the report.
Cost Auditors
Pursuant to Section 148 of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit records of the Pellet Plant Unit of the Company is required to be audited. The Board on the recommendations of the Audit & Risk Management Committee appointed PKR & Associates LLP, Cost Accountants, Bengaluru to audit the cost accounts of the Company for the financial year 2016-17 on a remuneration of Rs.50000/- plus applicable taxes.
As required under the Companies Act, 2013, the remuneration payable to the cost auditor is required to be placed before the Members in a General meeting for their ratification. Accordingly, a Resolution seeking Member''s ratification for the remuneration payable to PKR & Associates LLP, Cost Auditors is included at Item No. 6 of the Notice convening the Annual General Meeting.
The cost audit report for the financial year 2014-15 was filed with the Ministry of Corporate Affairs on 21.09.2015. The Cost Audit Report for FY 2015-16 is under finalization and will be submitted to the Ministry of Corporate Affairs within the prescribed period.
Secretarial Auditors
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed, M/s NG Joshi & Co., Company Secretaries, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company for the financial year 2015-16. The Secretarial Audit Report along with Managements Reply. thereto are annexed.
CORPORATE SOCIAL RESPONSIBILITY
In compliance with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules 2014, the Company has established Corporate Social Responsibility (CSR) Committee. A Board approved Corporate Social Responsibility Policy is in existence in the Company which is available under the link http://www.kioclltd.in/downloads/CSR% 20POLICY.pdf. The statutory disclosures with respect to the CSR Committee and an Annual Report on CSR activities is attached and form a part of the Board Report.
CORPORATE GOVERNANCE
Pursuant to Regulation 34(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate section on Corporate Governance along with a certificate from the Practicing Company Secretary confirming the level of compliance is attached and forms a part of the Board''s Report.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report for the year under review as stipulated under Regulation 34(3) read with Para B of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 is presented in a separate section forming part of this Annual Report.
ENERGY CONSERVATION, R&D, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Details of energy conservation, R&D technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014, is annexed to this report.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
No loan, guarantee or investment made by the Company under section 186 of the Companies Act, 2013 during the financial year 2015-16.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form MGT-9 is annexed to this report.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
No related transactions entered into with Related Parties as defined under the Companies Act, 2013 and Regulation 53(f) and Para A of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 during the financial year 2015-16 which attract the provisions of Section 188 of the Companies Act, 2013, as such annexure AOC is not furnished. There were no materially significant transactions with related parties during the financial year which were in conflict with the interest of the Company. The Board has approved a Policy on materiality of related party transactions & dealing with related party transactions, which is available on the Company website.
MATERIAL CHANGES & COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION
No material changes and commitments occurred between the end of the financial year of the company to which the financial statement relates and the date of the report which have affected on the financial position of the company.
PARTICULARS OF EMPLOYEES
Ministry of Corporate Affairs vide its notification dated 5th June 2015 has exempted Government Company with the applicability of section 197 of the Companies Act, 2013. However, the remuneration received by the employees of the Company has not exceeded the limit prescribed under section 197 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 during the FY 2015-16.
ACKNOWLEDGEMENT
The Directors gratefully acknowledge the support, co-operation and guidance received from the Hon''ble Minister for Steel & Mines, Hon''ble Minister for State for Steel & Mines, Hon''ble Chief Minister of Karnataka, the Secretary, Ministry of Steel and other officials of the Ministry of Steel as well as other Ministries of the Government of
India, Government of Karnataka, Andhra Pradesh, Odisha, West Bengal, Jharkhand, Haryana and all other departments/agencies of Central and State Government in all the endeavors of the Company.
The Directors acknowledge the support extended by the valued and esteemed customers, shareholders, stakeholders, bankers and suppliers for their support and co-operation.
The Directors also appreciate the continued and dedicated efforts put in by all the employees to overcome many challenges faced during the year.
For and on behalf of the Board of Directors
(Malay Chatterjee)
Chairman-cum-Managing Director
Date : 02.08.2016
Place: Bengaluru
Mar 31, 2012
Dear Shareholders,
The behalf of the Directors of your Company, I have great pleasure in
presenting:-
A. 36th Annual Report of your Company
B. Audited accounts for the year ending 31.03.2012
C. Statutory Auditor''s Report and
D. Review of the Accounts by the Comptroller and Auditor General of
India.
2.0 YEAR''S HIGHLIGHTS AT A GLANCE
- Company achieved a Pellet production of 2.93 lakh tons during the
month of October 2011, which is the record production for any month
after switching over to use of Hematite Ore since January 2006;
- Company also achieved a record Pellet despatch of 3.27 lakh tons
which is also a record during the month of July 2011.
- The Company could record a growth of 15% in profit before tax
during 2011-12 despite dip in production and despatches.
- Apart from investing Rs. 51.52 crores in Capital project, the Fixed
deposit of the Company with various banks stood at Rs. 1454.42 crores as
on 31.03.2012 representing an increase by Rs. 19.81 crores over the same
date in the previous year.
- KIOCL remains a debt free Company.
- In provisional MOU rating for 2011-12, the Company has achieved
''Very Good'' rating.
- Three numbers of Horizontal Pressure Filters alongwith auxiliaries
have been successfully commissioned on schedule at the Pellet Plant.
- MOU was signed between KIOCL Limited and Kerala State Industrial
Development Corporation Limited for Iron Ore mining, setting up of
beneficiation and Pelletisation plant in Kasargod/Kozhikode District in
the State of Kerala on 22.09.2011. The MOU was signed in presence of
the Hon''ble Minister of Steel, Govt. of India and Hon''ble Chief
Minister of Kerala.
- There is a need to focus on enlarging ore supply basket around the
world for augmenting raw material source through a process of acquiring
mineral assets abroad. With this objective in mind, an MOU was signed
on 05.03.2012 with M/s CURVE Capital Ventures, a London based
Proprietary Investment Company and Prospecting License holder in
Islamic Republic of Mauritania, Africa for exploration, development &
mining in Akjoujt Iron Ore project.
- It is imperative to explore alternative source of water supply to
our Mangalore plants in view of pending IA-1458 before Hon''ble Supreme
Court. Matter was taken up with Mangalore City Corporation (MCC). It
has resolved to supply water to KIOCL units at Panambur as per the bye
laws adopted by the Corporation. Further action is in progress.
- To ensure uninterrupted movement of Iron Ore Fines from Bacheli and
Kirandul, a second Port at Kakinada has been identified apart from
Vizag, Movement of Ore through this Port has commenced, on end-to-end
logistic solution basis.
3.0 PHYSICAL AND FINANCIAL HIGHLIGHTS
During the year 2011-12, the important physical and financial
highlights are as under :
3.1 Physical Highlights (Qty. in million tonnes)
Particulars 2011-12 2010-11 percentage
MOu
Target Actual MOu
Target Actual Change
(Good) Achieve
ment (Good) Achieve (Actual)
ment
production
Pellets
including 3.000 1.710 2.780 2.124 (-)19%
Pellet
Fines
Pig Iron and 0.100
Auxiliary
Materials
Sales
Pellets
including 3.000 1.716 2.780 2.090 (-)18%
Pellet
Fines
Pig Iron
and 0.010 0.100 0.020 (-)50%
Auxiliary
Materials
3.2 Financial Highlights ( Rs. in Crores )
particulars 2011-12 2010-11
Turnover 1521.08 1803.46
Profit /(Loss) Before Tax 115.39 99.95
Profit /(Loss) After Tax 94.30 76.27
4.0 SEGMENT-WISE PERFORMANCE
4.1 pellets
MOU target was 3 million tonnes of Pellet production under ''Good''
category. Against this actual production during 2011-12 was 1.710
million tonnes which is 57% of the target.
Hon''ble Supreme Court of India on the advice of Central Empowered
Committee:
a. Banned the mining activities of Iron Ore in Karnataka with few
exception in mining done by Companies like NMDC.
b. Suspended the operation of long term agreement for sale of Iron
Fines and directed that the Ore should be sold only through e-auction.
c. Banned trading of Iron Ore Fines.
This resulted in NMDC and other private supplier invoking "Force
Majeure" clause, to suspend Ore supply thereby adversely effecting
its availability. This led to low capacity utilization at the Pellet
plant.
4.2 Pig Iron and Auxiliary
Owing to generation of ''Negative Contribution'', operation of Blast
Furnace Unit (BFU) is suspended since 05-08-2009. The situation remains
the same in 2011-12. Accordingly no target was set for Pig Iron
production.
To make the unit viable, KIOCL Board has approved:-
a. Setting up of 3 lakh ton capacity Coke Oven Battery along with 25
Mw capacity Captive Power Plant as backward integration and
b. Identification of joint venture partner for setting up of Ductile
Spun Pipe Plant as forward integration.
The Company has initiated action for the same.
4.3 The following table summarises the production performance during
the last three years:-
PP : Pellet plant, PI : Pig Iron (Qty. In million tonnes)
Year MOU
target Actual
production Capacity utilisation of
installed capacity in %
PP PI PP PI PP PI
2011-12 3.000 1.710 49
2010-11 2.780 0.100 2.124 61
2009-10 2.650 0.170 1.273 0.062 36 29
(Installed capacity of Pellet Plant is 3.500 million tonnes and Pig
Iron is 0.216 million tonnes).
4.4 The production performance in respect of Pellets and Pig Iron (in
thousand dry metric tonnes) for the last three years is reproduced
below in a graphic form:-
5.0 marketing AND exports:
During the year, Pellets were sold to overseas and domestic buyers.
From the existing stock, Pig Iron & Auxiliary were sold in the Domestic
market.
Sale of pellets in the DTA represented 69% and 72% of the total sale in
quantitative and monetary terms respectively.
5.1 Country-wise details of shipments made during the year are as
under:-
(In Dry Metric Tonnes)
Pellets
Export sales
China 536618
DTA sales
JSW Ispat Industries Ltd 413616
Essar Steel Ltd 388292
Welspun Power & Steel Limited 138871
Bhushan Power & Steel Ltd 70402
Steel Authority of India Ltd 153163
Nova Iron & Steel Ltd 14901
Total 1715863
9,763 tonnes of Pig Iron Auxiliary was sold in the domestic market
during the year.
5.2 Sales performance during the past three years is summarised below:-
Qty: in Million Tonnes, Value: Rs. In Lakhs
Year Pellets Pig Iron Total
Qty Value Qty Value Qty Value
2011-12 1.716 150364 0.010 1744 1.726 152108
2010-11 2.090 174931 0.020 5415 2.110 180346
2009-10 1.456 79226 0.094 20046 1.550 99272
(Note: Pellets includes Pellet Fines, Pig Iron includes Auxiliary.)
5.3 Despatches in terms of quantity (in thousand dry metric tonnes)
during the last three years are represented in graphic form below:
5.4 During the year, 38 shipments of Pellets were sold through New
Mangalore Port as compared to 44 during 2010-11.
5.5 Market Scenario:
During the year 2011, World Iron Ore market witnessed high degree of
volatility. Iron Ore prices experienced volatility. Inspite of this,
the World crude Steel production reached a level of 1,490.06 million
tonnes which is about 5.4% higher year on year. China contributed for
about 49% of the total World Steel production and India''s share in
World production is about 4.9% and occupied 4th position.
World Steel consumption is expected to grow by 4% - 6% during 2012
mainly due to expected increase in demand for creating infrastructural
facilities in the emerging markets. Even though the growth projections
are low, it is expected to increase demand stimulating additional
production of Iron Ore.
Uncertainties associated with raw material supply in the World market
are likely to continue in 2012. Existing supply sources face export
restrictions in major exporting Countries. Abnormal weather conditions
in countries like Australia are also likely to hamper Iron Ore
supplies. New project realisation could be seriously limited due to
difficulties in acquiring environmental clearances. In spite of
uncertainties, Iron Ore prices are likely to remain stable during 2012.
The domestic Steel consumption is expected to grow by about 8%.
However, the prices are likely to fluctuate due to delay in obtaining
mining lease renewals & ban on Iron Ore mining in Karnataka. Pellet
market is expected to witness over-supplies due to additional
capacities that are being created both inside and outside the Country.
Distance based charges: The Company is a Port based manufacturing unit
having its Pelletisation Complex at Mangalore. It enjoys 100% Export
Oriented Unit status thereby clearly indicating that the Company''s
operations are export oriented for its product- Pellets. With the
suspension of mining operations at Kudremukh mine site, the Company is
procuring Iron Ore fines from NMDC Mines & transporting the same to its
plants at Mangalore by Rail or Rail cum Sea route. Railways have
raised an issue regarding applicability of Distance based charges over
and above normal freight on Iron Ore transported through Railway
network for manufacture of Pellets meant for export. This has turned
Pellets uneconomical for sourcing by overseas market. However, the Iron
Ore so moved and utilised in the Steel plants for manufacture of steel
and subsequent export does not attract Distance based charges. This
benefit is not available for Pellets though it is a manufactured and a
value added product, technically & commercially, like Steel but
distinct from Iron Ore fines and Lumps. It is a clear violation of
Article XIV of Constitution of India.
Accordingly, the issue of Distance Based Charge raised by Railways is
challenged before the Hon''ble High Court of Karnataka through a writ
petition. The Writ Petition is duly admitted and is pending before the
Hon''ble Court.
6.0 profit and dividend
During the year under review, your Company has earned profit before tax
of Rs. 115.39 crores on a turnover of Rs. 1521.08 crores in comparison to
previous year''s achievement of Rs. 99.95 crores and Rs. 1803.46 crores
respectively. Subject to shareholder''s approval, the Board has
recommended payment of dividend @ 20.19% of Profit after Tax (Re 0.30
per share). The total financial implication will be Rs. 19.04 crores
excluding Dividend Tax.
7.0 memorandum of understanding WITH GOVERNMENT OF INDIA
Your Company has been signing the Memorandum of Understanding every
year with its Administrative Ministry, i.e., Ministry of Steel. MoU for
the year 2012-13 was signed on 13.03.2012, with a production target of
2.5 million tonnes of Pellets for achieving the "Good" rating along
with thrust on holistic growth encompassing customer satisfaction, HRD,
R&D, Sustainable Development and CSR initiatives.
The performance evaluation of the Company for the year 2010-11
vis-a-vis MoU targets is rated as ''Very Good''.
Performance Evaluation of the Company for the year 2011-12 vis-a-vis
MoU targets on provisional basis results in KIOCL achieving "Very
Good" rating again.
8.0 PROJECT EXPANSION AND BuSINESS DIVERSIFICATION
8.1 Ductile Iron Spun Pipe Project
8.1.1 The Company has proposed to set up Ductile Iron Spun Pipe Project
(DISP) Plant, under forward Integration in Blast Furnace Unit complex.
M/s ICRA Management Consulting Services Limited has updated the Market
Assessment study report of the Ductile Pipes in India. M/s. Ernst &
Young has studied and submitted the Financial Analysis (Business Plan)
for the setting up of a DISP Plant. Both the reports have been reviewed
by KIOCL.
8.1.2 As decided by KIOCL Board, work order was placed on M/s. MECON
for the preparation of Detailed Project Report (DPR) for DISP project
as forward integration to Blast Furnace Unit. M/s. MECON has submitted
the final DPR. During the 206th meeting of the Board, the DPR has been
approved and advised KIOCL to identify a partner for setting up of
1,00,000 TPA DISP plant at an estimated cost of Rs. 308.612 Crores at BFU
Mangalore. On identifying the partner, a Special Purpose Vehicle (SPV)
has to be created for implementation of DISP project. Action has been
initiated for fixing up a consultant for identification of a partner
through an open tender enquiry for setting up of 1,00,000 TPA capacity
DISP Plant.
8.2 Procurement and installation of Horizontal Pressure Filters
8.2.1 Three Numbers of Pressure Filters along with Auxiliary equipments
were received and Pressure Filters are commissioned on 28-09-2011. The
Pressure Filters are in operation.
8.2.2 With the installation of above filters, the Filter plant capacity
is adequate to produce 3.5 million tonnes of Pellets per annum. Hence,
the requirement of further installation of Horizontal Pressure Filters
is not considered at this stage.
8.3 Bulk Material Handling and Railway Siding Facilities:
8.3.1 The Company has purchased a total of 56.05 acres of land from
M/s. Karnataka Industrial Area Development Board (KIADB) and Private
land owner. M/s MECON Limited have furnished the Detailed Project
Report for the Bulk Material Handling Project with the revised estimate
costing Rs. 173 Crores.
8.3.2 M/s. Konkan Railway Corporation Limited has submitted the revised
track alignment route avoiding the Diamond Crossing for safety reasons.
The revised alignments necessitated swapping of a small area of land
from KIADB and also purchase of a few acres of land from the private
land owners. Matter has been taken up with KIADB and private land
owners based on the requirement of additional land. 3.19 acres of land
has already been purchased and efforts are on to purchase the balance
quantity of 2.04 acres also.
8.4 Construction of Storage Silos with handling facilities
As approved by the Board, the augmentation of the Iron Ore feeding
system for uninterrupted supply of Ore for the existing ball mills by
providing 8000 MT capacity RCC Silo and its associated material
handling system along with screens in the grinding circuit is at the
final stage of completion at Pellet Plant, Mangalore.
8.5 Non-Recovery Coke Oven Plant with 25 MW CPP at Mangalore:
8.5.1 In order to make the Blast Furnace Unit (BFU) economically viable
on standalone basis, it is proposed to set-up a Coke Oven Battery with
Captive Power plant as backward integration project. The total
investment for this project is estimated at Rs. 452.22 crores for setting
up of 3 lakh tonnes per annum non recovery type Coke Oven Plant with 25
MW Captive Power plant by utilizing the hot flue gases from the Coke
ovens. The total area earmarked for the project is 48 acres available,
within the Blast Furnace unit.
8.5.2 The Board of Directors at their 201st meeting held on 25-03-2011
has approved the proposal with a debt equity ratio of 1:2.
8.5.3 Your Company has submitted the necessary forms & feasibility
report to Ministry of Environment and Forest (MoEF), New Delhi and
obtained the Terms of Reference (TOR). The Final EIA/EMP report for the
project was submitted to MoEF, New Delhi and made a presentation on
30th March 2012 for issue of Environment Clearance (EC). Further, MoEF
had sought KIOCL to submit details on Coal Linkage & other project
related information. Company is in the process of submitting the same
to MoEF.
8.5.4 The Company has already finalized an agency for the detailed
engineering services (consultancy part) for the project. Subsequent to
finalization of tender terms, proposal has been put up for approval to
float the tender for Coke Oven batteries along with Coal and Coke
handling system.
8.6 Eco-Tourism at Kudremukh
8.6.1 While exploring alternate measures to utilize its assets and
infrastructural facilities available at Kudremukh, KIOCL approached
Govt. of Karnataka with a plan of developing eco-tourism and sought for
renewal of revenue land lease (1220 ha). Govt. of Karnataka agreed in
principle to accord permission for change of purpose from mining to eco
tourism and advised KIOCL to prepare Detailed Project Report (DPR) and
also to work jointly with Jungle Lodges & Resorts Limited (JLR) (A
Govt. of Karnataka Undertaking) for the project.
8.6.2 DPR has been prepared for the project. KIOCL also submitted the
draft MoU to JLR for their consent and participation in the project.
KIOCL also provided Executive Summary of master plan and business plan
to JLR for reference. However, vide their letter no: JLR: 2012-13/96
dated 20 Apr 2012, JLR have informed that they are not interested in
proposed Creation of Eco-Tourism facilities at Kudremukh. In view of
the above, with necessary approvals from the concerned, KIOCL shall
pursue the eco-tourism project on stand-alone basis.
8.7 Removal of Secondary Weathered Ore in already broken up area at
Kudremukh Iron
Ore Mine, Kudremukh
8.7.1 Govt. of India, Ministry of Steel filed IA No. 3087, before the
Hon''ble Supreme Court on 16.12.2010, seeking directions to remove the
secondary weathered ore lying in the already broken up area at
Kudremukh.
8.8 Under Ground Mining Technology for Mining in western gat area
8.8.1 Indian Council for Forestry Research and Education (ICFRE) while
submitting a report w.r.t. illegal mining activities in the State of
Karnataka to Central Empowered Committee (CEC) as per the directive of
Hon''ble Supreme Court, suggested for exploring the possibility of
adopting Underground Mining Technology for mining in Western Ghat area.
8.9 Removal of Lakya Dam Tailings
A Detailed Project Report on desilting of Lakya Dam for safety and
environmental reasons and commercial utilization of the tailings has
already been prepared by KIOCL and submitted to Ministry of Steel.
Company has requested Govt. of Karnataka to accord permission for
removal of tailings deposited in the Lakya Dam.
8.10 MOU with Government of Kerala
8.10.1 A MoU was signed between KIOCL Limited (KIOCL) and Kerala State
Industrial Development Corporation Limited (KSIDC) for Iron Ore mining,
setting up of beneficiation and Pelletisation Plant in the Kasaragod /
Kozhikode Dist. in the state of Kerala on 22 September 2011 at Udyog
Bhavan, New Delhi in the presence of Hon''ble Minister of Steel, Govt.
of India and Hon''ble Chief Minister of Kerala.
8.10.2 The first joint meeting of Steering Committee was held at
Thiruvananthapuram. In the said meeting it was concluded that KSIDC
shall approach Director, Mines and Geology, Govt. of Kerala to identify
the free hold Iron Ore deposits in the District of Kozhikode for grant
of PL/Mining Lease and thereafter to take up jointly the exploration
and development of Iron Ore deposit for mining and setting up of
beneficiation, Pelletisation plant. However, KSIDC confirmed that the
land at Alampara falls under forest and the free lands containing Iron
Ore is not available in Kozhikode dist. In view of this KSIDC would
search alternate Iron Ore deposit in Kasargod dist for the project.
8.11 Strategic Partnership with CURVE CAPITAL VENTURES LIMITED (CURVE
CAP) for Iron Ore mining in Mauritania, West Africa
KIOCL is consistently putting efforts to explore the opportunities of
acquiring the Iron Ore and other mineral assets overseas. One such
opportunity came across was the bid floated by CURVE CAP in the month
of August 2011 for a strategic partner to further explore, develop and
mining of Iron Ore in Prospecting License area under PL no. 1178
granted to CURVE CAP by Islamic Republic of Mauritania, Africa covering
an area of 983 sq km located near Akjoujt town. In response to the bid,
KIOCL submitted its bid on 31 Aug 2011.KIOCL was selected as the
preferred bidder and further as strategic partner for the development
and operation of Akjoujt Iron Ore project. KIOCL officers also visited
Akjoujt Iron Ore Project, Mauritania to have initial assessment and
opined that Ajkoujt Iron Ore Deposit has potential to pursue further.
In accordance with the approval of the KIOCL Board, MoU was signed
between KIOCL and CURVE CAP on 5th March 2012, to take the proposal
forward.
Further as directed by the Board, action has been initiated to carry
out the due diligence on Technical, Financial and Legal aspect of the
proposed mining site and of CURVE CAP. The same shall have the coverage
of 3600 and shall be completed before entering into any formal
agreement with financial commitments.
9. MINING LEASES FOR IRON ORE DEPOSIT
9.1 CHIKKANAYAKANAHALLI IRON ORE MINING LEASE, RAMANDURGA IRON ORE
DEPOSIT AND OTHER APPLIED MINING LEASES IN THE STATE OF KARNATAKA
The above ML applications are at different stages of processing by
State Government.
Subsequent to banning of Mining Activities in the districts of Bellary,
Chitradurga and Tumkur covering the above stated deposits and further
recommendation of CEC to Hon''ble Supreme Court which inter-alia states
that no new mining leases, including for which notifications have
already been issued will be granted without obtaining the permission of
the court, issue of ML to KIOCL are further expected to get delayed.
9.2 Khandadhar Iron ore Deposit
KIOCL has contested the rejection of its application for grant of ML
for Iron and Manganese ore by Govt. of Odisha at various Courts
including Hon''ble Supreme Court. Pending the judgment no further
activities are undertaken towards this proposal.
9.3 Iron ore mining in the State of Andhra Pradesh
In an effort to get mining leases for Iron Ore deposit in the State of
Andhra Pradesh a meeting was held on 10.02.2012 and 20.04.2012 with
Hon''ble Chief Minister of Andhra Pradesh wherein Hon''ble Revenue,
Relief and Rehabilitation, Govt. of Andhra Pradesh was also present.
The Company has requested for allocation of Iron Ore mining leases for
its proposed Integrated Steel project to be set up in the State of
Andhra Pradesh. Hon''ble Chief Minister has directed concerned officials
to convene a high level meeting at the earliest to examine KIOCL''s
proposal.
In this direction the Company has submitted the following applications
on 26-03- 2012 at the office of Assistant Director (Mines & Geology),
Ananthapur District in the State of Andhra Pradesh viz.,
a. Prospecting licence (PL) application for a prospecting area of 1200
ha. in the Nemakallu & Hiradahalu villages, Bommanhal & D. Hirehal
Mandal, Ananthapur District; and
b. Mining Lease (ML) application for an area of 1600 ha. in Oblapuram,
Siddapuram & Malpanagudi villages of D. Hirehal Mandal of Ananthapur
District.
10. environmental management
10.1 Your Company has been accredited with ISO 14001-2004 EMS by M/s
DNV The EMS Certification is valid up to 09-11-2012.
10.2 Over the years, your Company is committed to preserve the Ecology
and prevention of pollution in its mining/manufacturing activities. In
this direction, some of the major initiatives taken by the Company
which include the following:
- 150 water sprinklers are installed and are in operation for
suppression of dust in the plant premises
- Stacks installed in the Pellet Plant and Captive Power Plant at
Mangalore for discharge of emissions have been provided with Air
pollution control equipments such as Wet scrubbers, Bag filters,
Multiclones and Fuel Gas Desulphurisation. The discharges from the wet
scrubbers are recycled in the process and the dust collected in the
Multiclones /Bag filters are recycled. The cost towards operation and
maintenance of Air pollution control equipments is Rs. 1 Crore.
- A pit with pumping arrangement has been provided in the Ball Mill
area for recirculation of the floor washings and spillages.
- The upgradation of the existing STP adopting MBR technology and
laying of a new sewerage network to divert the sewage to the
centralized STP is in progress. The cost of the up gradation is Rs.
95.20 lakhs.
- Your Company has decided to switch over to Low sulphur furnace oil
(S < 2.0 %) at the Captive Power Plant from existing Sulphur content of
3.20 %. The change over in the fuel helps to meet the stipulated
emission norms and also forego the existing Flue Gas Desulphurisation
units which generated 50 KLD of effluent.
- Asphalting of 450 metres of internal road is being done within the
plant area. The asphalting will prevent the dust emissions generated
during the movement of Iron Ore laden dumpers and heavy earth moving
equipments. The cost of the project is Rs. 46 lakhs.
- A coke shed for storage of additional quantity of 1000 tonnes is
being constructed adjacent to the existing Coke shed. The cost of the
project is Rs. 50 lakhs. The construction of the shed prevents dust
emissions during handling of Coke fines and also prevents the wash off
during monsoon.
- Storm Water Drain for a length of 280 metres is being upgraded in
Pellet plant area. The cost of the project is Rs. 15 lakhs.
- Cement concrete platforms are proposed to be constructed at 10
locations to prevent oil seepage from air compressor area and other
maintenance sheds. The cost of the project is Rs. 10 lakhs.
- KIOCL has provided a financial assistance of Rs. 19.70 lakhs to
Karnataka Forest Dept for planting 2600 saplings and maintaining them
for 3 years continuously.
- The ambient air, stack monitoring and waste water monitoring is
being carried out as per the requirements stipulated in the KSPCB
consent. The monitoring is being carried out by engaging KSPCB
empanelled agencies. An expenditure of Rs. 12 lakhs is being spent on
environmental monitoring.
- The Bio medical wastes generated at the health centres are being
disposed scientifically through KSPCB and MOEF approved agencies.
- KIOCL strictly adheres to the norms and guidelines of the CPCB and
the KSPCB and has achieved good compliance status.
11. SAFETY
11.1 Although the mining activities at Kudremukh has been stopped with
effect from 01-01-2006 as per the Hon''ble Supreme Court''s verdict,
regular safety inspections are being carried out to ensure safety and
occupational health of employees engaged in upkeep and maintenance of
Mining Equipments, essential services like water pumping, watch and
ward etc. Safety awareness training is being imparted to the new
contract labourers who are coming for dismantling the structures and
other related works at Kudremukh.
11.2 Workers participation in Safety Management System is one of the
important criteria adopted by the Company. Area wise Safety Committees
are formed. Workers participation in these Safety Committees is
ensured. The Committee meetings are conducted at regular intervals.
11.3 Safety inspections are carried out regularly by the safety Officer
along with Safety Committee members. Safety points are discussed in the
Safety meetings held once in three months. Suitable action is taken for
implementation of the shortfalls if any for improvement.
11.4 Various training programmes are being conducted to inculcate
safety consiousness and to develop human resourses. Refresher training
covering their area of working, First Aid Training, Fire Fighting,
Awareness programme on Quality, Environment, Health & Safety Management
System are conducted on need base regularly and covered 3317 mandays of
training for workmen, 1269 mandays for executives and 150 mandays for
contract employees. First Aid training has been conducted for a batch
of 30 non-executive employees.
11.5 As the Mangalore unit is under the aegis of the Factories Act from
January 2006, the National Safety Day & Safety week is celebrated from
4th to 10th March every year. National Safety Flag hoisting, Safety
Essays, Safety Slogan competition in Hindi, English & Kannada languages
and Drawing competitions are conducted.
12. quality control - ISO 9001: 2008
The Company''s Quality Management System is certified under ISO
9001:2008 International Standard. This Certificate is valid upto
09-11-2012.
13. occupational HEALTH & SAFETY MANAGEMENT SYSTEM - OHSAS 18001:2007
The Company''s Occupational Health and Safety Management System is
certified as per International Standard OHSAS - 18001:2007. This
Certificate is valid upto 09-11-2012.
14. public/staff grievance redressal
14.1 Your Company has framed a well defined grievance procedure evolved
under the Code of Discipline from the very inception of the Company.
Since its introduction, the Scheme has been working satisfactorily
without any complaint from any corner, either from the recognised Union
or Officers Association of the Company. Grievances received have been
redressed to the satisfaction of the aggrieved employees. As regards
public grievance, as and when any complaints are received from the
public, necessary remedial action, if any, is taken by the Company
immediately.
14.2 Complaints/grievances other than the staff grievance are
categorised into customer/ consumer complaints/grievances from the
Contractors, NGOs/ General Public etc. The respective project heads are
empowered to dispose off the grievances concerning their areas and the
general public. Linkage has been provided to Centralized Public
Grievances Redressal & Monitoring System (CPGRAMS) with effect from
01.05.2011.
14.3 As regards women employees, the guidelines laid down by the
Hon''ble Supreme Court in the matter relating to sexual harassment of
women in work place are strictly followed.
14.4 The grievances received and disposed off by the Company are
reported to the Administrative Ministry on a monthly basis. The
guidelines laid down by the Government of India in this regard are
being followed. The Government also reviews the subject matter
periodically.
14.5 The Second Administration Reforms Commission in its 12th report
"Citizens Centric Administration" - the Heart of Governance
recommended for making organisation transparent, accountable and
citizens friendly through making citizen charter more effective and
mandatory. It also makes all Responsibility Centre to have Citizen
Charter. Based on above recommendation, a Public Service Delivery
(Sevottam) created for assessing and improving the quality of services
delivery for the citizens. The system also involves the identification
of the services delivered to the citizens, quality service, its
objective, improvement of quality, by using innovative methods for
developing business process and more informative with the help of
information technology. The same is also available in Company''s
website.
15. CORPORATE SOCIAL RESPONSIBILITY (CSR)
Company''s Corporate Social Responsibility (CSR) Policy has identified
the following broad areas for providing benefit to the stakeholders:
- Education
- Community Development
- Promotion of Art, Culture & Sports
- Health Care
During the year 2011-12 the Company has spent Rs. 119 lakhs as against
budget allocation of Rs. 230 lakhs on various activities. Some of the
schemes undertaken during the year 2011-12 and amount spent against
them are as under:-
Sl. Name of the
project Purpose for which sponsored Amount
No. spent in
Rs. lakhs
1 Infrastructural
facilities Shoes, Shocks, ties & Belts
to SC School, 35.62
to educational Lab equipments to Horanadu
School,
Institutions - construction of class rooms
for Deaf &
Dumb School to Tumkur Red
Cross Society,
Construction of Class rooms
to Baikampady Mogaveera
Mahasabha and
Bharathi Colege,
Construction of Dormitry
for Visually impaired,
Computers to Snehadeepa
Trust for Visually challenged,
School bus to Sheva Bharathi
Chetana Spastic Society,
Brailee Computer printer for
Bhima Bhoi School for Blind,
Odisha etc.
2 Community
Development
a) Drinking
water
facility Water supply to Kalasa,
Bore well to 13.80
Saraswathi Vidyaniketan,
Drinking water facility at
Suratkal, Kulur & Mulki
Bus Stands.
b) Roads,
Electricity & Bus shelter at Madivala and
Generator set 7.42
Traffic signaling, for Ava Maria Palliative
center, Mangalore
Bus shelter etc.,
3 Promotion of Art,
Culture, Taluk level sports meet,
sports activities in 18.12
Sports Chikkanayakanahalli, Little
Sisters of the
Poor -old age home, Badminton
Association of India for
challenged, Pilikula
Nisarga Dhama
for adoption of Leopard,
sponsorship of Air Ticket to
participate in Mr. Universe
championship, National
youth festival, Volly ball
tournament by Mangala Sports
and shifting of Nagabana
4 Medical/ Health
care
a) Provision of Hospital equipments to Kalasa
Hospital, 26.90
infrastructural
facilities- construction of ICU etc for
Old age Home-
Little Sisters of the Poor,
Provision of Tele-
Rehabilitation centre to
Spastic
Society, Medical equipments
to Govt. TB Hospital,
Ambulance Van to Old Age
Home, Mandur, Investigation
Room to Govt. Primary Health
Centre Katipala,
Construction of Health
Centre at Kenkanagondaa,
Medical equipment to Govt.
Goschen Hospital.
b) Provision of Medical Medical camp at
Meenakaliya & Jyothinagar, 1.85
facility for BPL medical facility to outsiders
at Kudremukh
families/Citizen Hospital, Medical aid to
Mr. Ranjit, Master Manjunath,
Baby Ramya & Rekha and
Smt. Heeramma
5 Recurring items
& others School fees to students of
KVES 15.29
Chikkaballapur, School fees
to KV Students of
Kudremukh, Dining table &
chairs to disabled-
M/s Asaniketan, School fee
for outside children at KV,
Kudremukh and School Bus
facility to outsiders from
Kudremukh to Kalasa,
TOTAL 119.00
16. PARLIAMENTARY COMMITTEE
During the year, your Company was honoured by the visit of Standing
Committee on
Coal & Steel on 6th June 2011.
17. IMPLEMENTATION OF OFFICIAL LANGuAGE POLICY
17.1 The Company follows the directives issued from time to time by the
Department of Official Language, Ministry of Home Affairs and Ministry
of Steel, Govt of India for progressive use of Official Language Hindi.
17.2 Hindi training is given to the employees. Cash awards and
increments are given as per Government directives. Hindi Workshops,
Orientation programmes are conducted regularly to create awareness,
impart knowledge and encourage the employees to do their Official work
in Hindi. Cash awards are given to such of those employees who do the
official work in Hindi.
17.3 All the stationery, Name plates and Name boards of the Company are
in bilingual form. Annual Report, MoU, House Magazine, Employees''
Pension Scheme etc., are printed in Hindi also. Hindi Software is
provided in Computers in all Departments. Unicode is being activated
in all the Computers and being used in all the locations of the
Company.
17.4 Official Language implementation committee meetings take place
regularly and the progress during the previous quarter is reviewed in
such meetings. Hindi Fortnight was celebrated at all locations of the
Company. Hindi programmes and several Hindi competitions are held and
prizes distributed to the winners. A presentation on "Chandrayan" and
also an orientation programme were arranged for the senior executives
of the Company on 14.09.2011. During this occasion Hindi website of the
Company was also launched by Director (Commercial) on 24.09.2011.
17.5 During the year, 04 workshops one each in each quarter were
conducted to impart practical training to employees for doing their
official work in Hindi.
17.6 Your Company was conferred with Rajbhasha Shield by Town Official
Language Implementation Committee (Undertaking), Bangalore on
04.07.2011 for its Official Language Implementation. The award was
received by Director (Commercial) and other Sr. Executives of the
Company.
17.7 Shri Ashok Kumar, Joint Director, Ministry of Steel, New Delhi
visited our New Delhi and Bhubaneswar Offices on 09-03-2011 &
29-07-2011 and inspected the official Language Implementation in the
Office. Joint Director appreciated the efforts of the Company for
implementation of Official Language Policy.
17.8 Your Company is Convenor of Bangalore Town Official Language
Implementation Committee (Undertakings) and conducts regular meetings
and Joint Hindi Fortnight programmes for all Central PSUs in Bangalore.
The meetings were conducted on 4th July, 2011 and 5th December, 2011
and presided by Shri. K. Ranganath, Chairman- cum-Managing Director.
During these meetings Ms. B.S. Shantha Bai, General Secretary,
Karnataka Mahila Hindi Seva Samiti, Bangalore and Shri. Rajendra Singh
Narooka, Chief Editor, Rajasthan Patrika were honoured for their
services in the field of propagation of Hindi.
17.9 The Company organised a Joint Hindi Fortnight for Town Official
Language Implementation Committee (Undertakings) members and 16
Competitions were conducted. Most of the PSU Offices in Bangalore have
participated in these competitions. Prize distribution function was
organized in December. Offices of Official Language Department,
Ministry of Home were also invited to address the members.
17.10 The Company has published 6th and 7th issues of half yearly Hindi
Magazine "Deepika" under TOLIC banner which covered Official Language
Implementation activities of Bangalore PSUs and other articles on Hindi
promotion.
17.11 The Company has arranged "Hindi Kavya Sandhya" under TOLIC Banner
on 13.02.2012. Shri. K. Ranganath, Chairman-cum-Managing Director
presided the Function and Dr. Chiranjeev Singh, IAS graced the occasion
and he commended the Company and TOLIC for having conducted the Kavya
Sandhya. 25 Poets from the Member Offices and PSU''s have participated
and recited their poems.
17.12 The Company has arranged an Orientation Programme for Official
Language Staff of PSUs on 27.03.2012 under TOLIC Banner. 73
Participants from different PSUs have participated in the Programme.
Faculties were arranged for the programme from Mumbai and Bangalore.
18. PERSONNEL
18.1 Total number of employees on the rolls of the Company as on
31.3.2012 was 1319 consisting of 854 workmen, 421 Executives and 44
Supervisors as against 1347 on
31.3.2011.
18.2 Recruitment: 2 candidates in Group ''A'' (Executives) were
appointed during the financial year 2011-12. Out of 2 candidates, 1 SC
candidate was recruited and 1 SC candidate was reappointed as per the
Court Order. There was no recruitment in Group ''B'', ''C'' ''D'' &
''D(S)''.
18.3 SCs/STs and women employees
The following table shows the number of SCs, STs, women employees,
Ex-servicemen and Persons with Disabilities as against the total number
of employees in different Groups on rolls of the Company as on
31.3.2012:
Group Total
No.of SC ST No.of Ex- Persons with
employees women
servicemen Disabilities
on rolls emplo
yees
A 421 52 14 23 01 08
B 44 05 01 06 02
C 785 114 35 17 07 08
D 62 14 08 03 03
D
(Swee
pers) 07 06 02
Total 1319 191 58 51 10 19
18.4 Voluntary Retirement Scheme:
During the year 2011-12 (April 2011 to March 2012), Company has
introduced VR Scheme during January 2012 & February 2012. 27 employees
of the Company have opted for VR. Out of them, one has been released
during the year and the remaining 26 employees will be released during
the year 2012-13 on their specific request.
18.5 Compliance under persons with Disabilities Act, 1995
Your Company ensures compliance under the Persons with Disabilities
Act, 1995. Suitable provision/modification is made in the working
place to meet the requirements of such persons with disability.
19. industrial relations and employees welfare :
19.1 The Industrial Relations situation remained peaceful throughout
the year in all the establishments of the Company. Issues relating to
productivity, safety, welfare, etc., are mutually discussed with
employee representatives.
19.2 Right from inception, the Company has provided various amenities
to its employees, such as well planned Township, Hospitals, Schools,
Recreation, Cable TV Net work, Parks, Temples, Church, Mosque, etc.,
besides Grant of Scholarships, Reimbursement of School Fees, Uniforms,
Children''s Out-station Education Allowance, Entertainment, Internet,
Magazine and Technical journal allowance etc.
19.3 10% of type ''A'' and ''B'' quarters and 5% of ''C'' and ''D''
type quarters are reserved for SC/ST employees.
19.4 As in the previous years, Dr. Ambedkar Jayanthi was celebrated at
all locations on 14th April 2011.
20. human resource development
20.1 Human Resource Development is a continuous process. Training and
Development at all levels of employees is given priority by the Company
to improve their skills and contribute productively to the Company.
During the year, the achievement in the area was 1197 Executive trained
mandays, 2660 Non-Executive trained mandays and 1005 trained mandays on
Sustainable Development inclusive of safety training.
20.2 In- house training Progarmmes:
During the year 2011-12, the following in-house training programmes
were organized for Executives and Non-executives to enhance their
skills and knowledge like Inter- personal Communication Skills, Stress
Management, Managerial Effectiveness, Women Empowerment, Healthy Life
and Happy Living, Midlife in Women - Crisis or Opportunities, Finance
for Non-Finance, First Aid training, Awareness Programmes on Vigilance,
IMS, SA: 8000, Fire fighting Instruments, HIV/AIDS, Productivity.
20.3 Nomination to External Trainings/ Seminars/ Workshops:
Company has also nominated employees for various seminars and
conferences conducted at different locations on subjects like Earthing
for Power Systems, Export/ Import Documentation and Procedures,
Understanding Revised Schedule VI - Presentation and Disclosures,
Mines, Safety and Legislation, Man Management, Discipline & Domestic
Enquiry, Excellence in Execution of CSR Projects, Quest for Excellence,
Imperatives for Indian PSU''s, Implementation of Reservation Policy on
SC''s, ST''s, OBC''s & Persons With Disabilities in PSE''s , Mining
Exploration Convention & Trade Show, Photogrammetry and Remote sensing,
Maintenance of Switchgear & Instrument Transformers, Mineral Process
Technology, HR Practices for Organizational Excellence, Cost Accounting
Records Rules 2011 and Cost Audit Report Rules 2011, 22nd National WIPS
Meet, High Performance Leadership (HPL) in India, Contractual Risk,
Insurance and Indemnities, Recent Development''s in Mining Equipments &
Machineries, Processing of Iron Ore Fines and Slimes, 7th Asia Gas
Partnership Summit, Competition Law & Public Procurement etc
20.4 Training on Management Systems:
- Apart from the above, during the year about 40 executives were
trained as Internal Auditor under the Integrated Management System
(IMS) ISO: 9001, ISO: 14001 and OHSAS: 18001.
- About 15 Executives were trained as Internal Auditor under SA: 8000
Standards.
20.5 Training for Directors:
- Company has sponsored Shri V K Agarwal - Independent Director, to
attend the Programme on "Corporate Governance" organized by SCOPE on
14 - 15 December 2011 at New Delhi.
- Company has nominated Shri Laxminarayana - Director (Finance), to
the programme on "Master class for Directors" organized by Institute
of Directors on 24-26 February 2012 at Bangalore.
21. AWARD AND RECOGNITION
Company was conferred with Rajbhasha Shield by Town Official Language
Implementation Committee (Undertaking), Bangalore on 04.07.2011 for its
Official Language Implementation.
The award was received by Director (Commercial) and other Sr.
Executives of the Company.
22. VIGILANCE
22.1 ISO 9001-2008: Vigilance Department of KIOCL obtained
ISO-9001:2008 Certificate on 07.11.2006 with a validity of 3 years. On
Completion of 3 years, certifying agency revalidated the certificate up
to 8th December, 2012.
22.2. Integrity Pact Programme: Integrity Pact Programme was introduced
in KIOCL from 01.01.2008. At present, IEMs are Sri. Abhijit Sengupta,
IAS (Retd) and Sri. Lukose Vallatharai, IAS (Retd.) and their term is
valid till 31.12.2013. During the last one year, 114 tenders have been
issued incorporating IP clause. Till date, no complaints have been
received under Integrity Pact.
22.3 Inspections: CTE type inspections are being carried out regularly
to ensure strict adherence to norms and eliminate deviations. During
this period, total 7 CTE inspections, 29 surprise checks, 31 general
inspections and 44 scrutiny of files were carried out during the period
under review. i.e. from April 2011 to March 2012.
22.4 Submission of Annual Property Returns: Submission of Annual
Property Returns has been made online. There are 481 officers in the
organization. As per the CVC guidelines 20% of above is to be
scrutinized every year. Accordingly scrutiny of Annual Property Returns
of 96 officers commenced in the month of April and completed by
October, 2011.
22.5 Structured Meetings of Vigilance: As per the instructions of CVC
and Ministry of Steel, Structured Meeting of Vigilance with the
management is being conducted regularly. During the current year, two
such meetings have been conducted. Issues related to e-governance,
Leveraging Technology, Integrity Pact, Tender management, Award of
works, Recruitment policy have been discussed.
22.6 Leveraging Technology: With reference to Commission''s circular,
emphasizing the effective use of website and leveraging technology in
discharge of regulatory, enforcement activities and dealing with
complaints. KIOCL has been using website in various areas from 2001.
The main areas concerning KIOCL are Contracts & Procurements,
Applications for Registration of Contractors/ suppliers/ consultants /
vendors etc. and status of bill payments to contractors / suppliers.
All Tender documents, Notices and other proformas are posted on the
websites. In order to encourage flow of genuine complaints, the
procedure for making complaints it outlined in the website. Status of
individual applications on website is updated every month. A summary of
works/contracts/ purchases awarded above a predetermined threshold
value is posted on website, every month.
22.7 E-governance: Disposal of scrap/ surplus items is being done by
e-auction, since September 2004. Regularly, e-auctions are being held
at Mangalore and Kudremukh. E-sales are in practice since two years.
E-procurement auction by tendering-cum- reverse auction has been
commenced from September 2010. The threshold value for e-procurement is
fixed at Rs. 5 lakhs and above. All payments above the threshold value of
Rs. 1 lakh and above are being made through electronic mode.
22.8 Vigilance Awareness Week : Vigilance Awareness Week was observed
from 31st October to 5th November 2011 in KIOCL Limited. On this
occasion a programme was arranged on 3rd November 2011 at Corporate
office Community Hall, Bangalore. Sri. Arvind Shrivatsava, IAS,
Managing Director, Karnataka Urban Development Infrastructure Finance
Corporation, Govt. of Karnataka was the Chief Guest. On this occasion,
the Company honoured three officers for very high integrity who have
scored excellent grading in respect of four traits such as fairness,
transparency, discipline & ethical behaviour in their annual appraisals
for three continuous years with an "Integrity Recognition
Certificate". For easy reference, a Hand Book containing compilation
of CVC circulars item wise was released at Bangalore.
At Mangalore Plant, on 5th November, interactive session was organized.
Shri. Dharmaiah, DCP (Crime) and Sri. Muthuraya, DCP (Law & Order),
Mangalore were the Chief Guests. Workshops and seminars were conducted
from 31st October to 5th Nov-2011 for the employees of Mangalore
location. About 211 employees and 57 Students from Professional
Colleges from Mangalore have attended the workshop. Focus was given on
"Vigilance Administration in Public Sector", "Preventive
Vigilance", "White Collar Crimes in Cities.
22.9 Training Programmes: During the period from 01.04.2011 to
31.03.2012, Vigilance Department conducted 7 training programmes at
three different locations. 708 employees have participated in these
programmes. Important topics such as Integrity Pact, leveraging
technology, Handling of tenders & contracts, preventive vigilance,
etc., were covered. All efforts are made to educate all the concerned
to understand procedures/rules/instructions/etc., by organizing classes
and interactive sessions.
22.10 Updation of Manuals: Various manuals such as Purchase Manual,
Works Manual, Personnel Manual, Vigilance Manual, Stores Manual,
Contracts Manual, Projects Manual, Commercial Manual, etc, have been
prepared and put in practice since August 2009. As per the instructions
of the CVC and the Ministry, Manuals are posted on the Company''s
website. Updation of manuals has been taken up recently and the same is
completed.
22.11 Fraud Prevention Policy: As per the guidelines by the Department
of Public Enterprise on Corporate Governance, Company adopted Fraud
Prevention Policy on 12.08.2011. It provides a system for prevention/
detection/ reporting of any fraud that is detected or suspected and
fair dealing of matters on the subject. Chief Vigilance Officer is the
Nodal Officer.
23. RISK ASSESSMENT AND MINIMISATION pOLICY
The Company has well laid down systems, procedures, guidelines, manuals
in various areas providing for management of risks.
The Company has identified potential risk area and built checks have
been put in place to mitigate risks, including the following:
- Public Procurement
- Market Security for sale of Pellets
- Security of Iron Ore Supplies
- Competitiveness of the product
- Non-Allotment of mining lease
- Environmental Issue
- Change in Technology
- Govt duties and taxes, interest volatility and shift in Govt.
policies
- Diversification
- Production Risk
- Excess manpower
- Industrial relations
- Process water supply
- Corruption, fraud and white collar crimes
- Succession Plan
- Non Availability of qualified technical personnel to handle new
projects.
- Manpower attritions
24. DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956 with respect to Directors'' Responsibility Statement, it is
hereby confirmed that -
i. In the preparation of the Annual Accounts for the financial year
2011-12, the applicable Accounting Standards have been followed along
with proper explanation relating to material departures;
ii. The Directors have selected such Accounting Policies and applied
consistently, that made judgements 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 on 31.03.2012 and of the Profit/(Loss) of the Company
for the said period;
iii. The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities; and
iv. The Directors have prepared the Accounts for the financial year
ended 31.03.2012 on a going concern basis.
25. BOARD OF DIRECTORS
During the year under review, the following were appointed as Directors
of the Company pursuant to orders of Ministry of Steel, Government of
India:
Name of the Director w.e.f.
i) Shri Upendra Prasad Singh 09.05.2011
ii) Shri K Subba Rao 09.06.2011
iii) Shri K Narasimha Murthy 02.08.2011
iv) Shri Vinai Kumar Agarwal 02.08.2011
v) Shri Laxminarayana 01.09.2011
The following Directors ceased to be Directors on the Board of the
Company for the year under review:
Name of the Director w.e.f.
i) Shri MB Padiyar 31.05.2011
ii) Shri TMGK Bhat 31.08.2011
The Board of Directors places on record its deep appreciation of the
valuable services rendered by Shri MB Padiyar and Shri TMGK Bhat during
their tenure on the Board of the Company.
In accordance with the provisions of the Articles of Association of the
Company, Prof VR Sastry, Director would retire by rotation, at the
ensuing Annual General Meeting, being eligible, offer himself for
reappointment.
In accordance with the provisions of the Companies Act, 1956, Shri
Laxminarayana, Shri K Narasimha Murthy and Shri Vinai Kumar Agarwal who
were appointed as Additional Directors after the date of last Directors
Report, shall vacate their offices at the ensuing Annual General
Meeting. Necessary notices have been received from the Members of the
Company under Section 257 of the Companies Act, 1956, proposing their
candidature for appointment. The Board recommends their appointment.
Brief resume of the Directors seeking appointment/reappointment
together with the nature of their expertise in specific functional
areas, name of companies in which they hold directorships and the
membership of Committees of the Board and shareholding of Non-Executive
Directors as stipulate under clause 49 of the Listing Agreement are
given in the Corporate Governance Report.
26. LISTING REQuiREMENTS
I. The Company''s shares are listed on the following Stock exchanges:
Bangalore Stock Exchange Limited, Madras Stock Exchange Limited,
"Stock Exchange Towers", Exchange Building,
No.51, 1st Cross, J.C.Road, PO.Box No.183, 11 Second Line Beach,
Bangalore - 560 027. Chennai - 600 001.
II. The Company has paid the Annual listing fee to each of these Stock
Exchanges for the year 2011-12.
III. A report on the Corporate Governance is at Annexure-II.
IV. A declaration by the Chairman-cum-Managing Director regarding the
Code of Conduct for the Board Members and the Senior Management of the
Company is at Appendix-I to Annexure-II.
V. A Certificate from the Chairman-cum-Managing Director and the
Director (Finance) regarding the Financial and Cash Flow statements is
at Appendix-II to Annexure-II.
VI. A certificate from a Company Secretary in Practice regarding
compliance of conditions of Corporate Governance is at Annexure-III.
VII. There is no pecuniary relationship or any transactions by any of
the non-executive Directors vis-a-vis the Company.
27. STATuTORY AuDITORS
Pursuant to Section 619(2) of the Companies Act, 1956 the Comptroller
and Auditor General of India has appointed M/s SRRK Sharma &
Associates, Chartered Accountants as Statutory Auditors of the Company
for the year 2011-12.
28. STATuTORY AuDITORS REpORT, COMMENTS OF C&AG AND MANAGEMENT REpLY
The Statutory Auditors observations in their report and management
replies thereto and the comments of C&AG under Section 619(4) of the
Companies Act, 1956 on the accounts of the Company for the year ended
31st March 2012 are annexed to the report.
29. IMpLEMENTATION OF RIGHT TO INFORMATION ACT, 2005
The information required to be provided to citizens under Section 4(1)
(b) of the RTI Act 2005 has been posted and updated on the website of
the Company, www.kioclltd. com. The information posted on the website
contains general information about the Company, powers and duties of
the employees, information about decision making, rules, regulations,
manuals and record held by KIOCL, directory of the Company''s officers,
pay scales, procedure for requesting additional information about the
Company by citizens and associated request formats. During the year
2011-12 the Company received and attended to 35 requests for
information under RTIA.
30. ENERGY CONSERVATION
The electricity consumption per tonne of Pellet production in kwh was
lower during the year as compared to the previous year. Energy
conservation day was celebrated on 14-12-2011 at Mangalore by the
energy conservation cells of both Pellet plant unit and Blast Furnace
unit. Prizes for various competitions like Quiz, Slogan writing in
Kannada, Hindi and English languages were distributed during the
celebration. A training programme about Energy Conservation was also
conducted for sensitizing employees about the importance of Energy
Conservation. Electricity consumption during 2011-12 as compared to
2010-11 was as under:-
Various Energy Conservation measures like introduction of Electronic
Lighting Energy saver, replacement of incandescent indication lamps
with LED indication lamps, replacement of Sodium vapour street light
fittings with LED street light fittings and introduction of timers for
automatic switching ON & Off of out door area lighting were undertaken
in BFU Unit during the financial year 2011-12. Similarly at Pellet
plant unit, installation of fanless cooling towers, induction lamps,
LED lamps, solar powered street lights, LED street light fittings,
downsizing of certain motors as per recommendations of Energy Auditor,
introduction of VFDs for pumps at PF plant etc., have been undertaken
during the financial year 2011-12. Energy Conservation Cells both at
Pellet plant and Blast Furnace Unit with members drawn from different
departments regularly meet and monitor the energy conservation pattern
in the plant. Various energy conservation measures are deliberated in
all cell meetings before implementation.
31. ENERGY AuDIT
The Company''s operations are highly energy intensive. Keeping in view
the importance of energy conservation, Energy Audit was carried out in
the plants during 2009 through a BEE (Bureau of Energy Efficiency)
accredited Energy Auditor - M/s Petroleum Conservation
& Research Association (PCRA). After a detailed audit, they have
suggested various conservation measures. The suggestions are under
consideration and are being taken up for implementation based on
techno-economic feasibility.
However, as the previous audit was done during 2009 under lower
production rate by M/s PCRA, a fresh energy audit proposal has been
floated for tendering to fix up the agency to carry out energy audit in
2012.
32. R&D, TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
The information relating to Technology Absorption, Adaptation and
Innovation, R&D and foreign exchange earning & outgo to be disclosed in
Companies (Disclosure of particulars in the Report of Board of
Directors) Rules, 1988 is given and forms part of this report.
33. PARTICuLARS OF EMPLOYEE OF SECTION 217 (2A) OF THE COMPANY READ
WITH COMPANIES (PARTICuLARS OF EMPLOYEES) AMENDMENT RuLES, 2011
During the year none of the employee was covered under the purview of
Section 217(2A) of the Companies Act, 1956 read with Companies
(Particulars of Employees) Amendment Rules, 2011.
34. ACKNOWLEDGEMENT
34.1 Your Directors gratefully acknowledge the support, cooperation and
guidance received from the Hon''ble Minister for Steel, the Secretary,
Ministry of Steel and other officials of the Department of Steel as
well as other Ministries of the Government of India, Government of
Karnataka, Govt. of Andhra Pradesh and all other departments/ agencies
concerned in all the endeavours of the Company.
34.2 Your Directors also acknowledge the timely advice and assistance
rendered by the Indian Embassies abroad during the year in the
Company''s marketing efforts.
34.3 Your Directors sincerely thank all the customers and suppliers for
their support and co-operation.
34.4 The Directors also appreciate the continued and dedicated efforts
put in by all the employees to overcome many challenges faced during
the year.
34.5 Last but not the least, your Directors express their gratitude to
the Shareholders'' for the confidence reposed by them in the management
of the Company.
For and on behalf of the Board of Directors
Place: Bangalore (K.Ranganath)
Dated: 26-05-2012 Chairman-cum-Managing Director
Mar 31, 2011
Dear Shareholders,
On behalf of the Directors of your Company, I have great pleasure in
presenting the 35th Annual Report of your Company together with the
audited accounts for the year ended on 31.03.2011. The Auditors''
Report and the Comments on the accounts of the Company by the
Comptroller and Auditor General of India thereon are annexed to this
report.
2.0 YEAR''S HIGHlIGHTS AT A GLANCE
- Production of 2.124 million tonnes of Pellets during 2010-11 is the
highest quantity produced in any year after switching over to use of
Hematite ore procured from outside source since January 2006.
- Despatch of 2.090 million tonnes of Pellets during 2010-11 is the
highest quantity despatched in any year since 2006-07.
- Production of 7.26 lakh tonnes of Pellets during the fourth quarter
of 2010-11 is the highest quantity produced in any quarter since
January 2006, surpassing the previous high of 7.0 lakh tonnes produced
during fourth quarter of 2009-10.
- Production of 2.68 lakh tonnes of Pellets during the month of January
2011 is the highest quantity produced in any month since January 2006;
- Despatch of 2,95,626 DMT of Pellets during the month of February 2011
is the highest quantity despatched in any month after January 2006.
- Turnover of Rs. 1803.46 crores during 2010-11 is the highest turnover
in any financial year after the closure of captive mine at Kudremukh.
3.0 PHYSICAl AND FINANCIAL HIGHLIGHTS
During the year 2010-11, the important physical and financial
highlights are as under :
3.1 Physical Highlights (Qty. in million tonnes)
Particulars 2010-11 2009-10 Percentage
MOU Actual MOU Actual Change
Target Achievement Target Achievement (Actual)
(Good) (Very
Good)
Production
Pellets including 2.780 2.124 2.650 1.273 67%
Pellet Fines
Pig Iron and 0.100 - 0.170 0.062 -
Auxiliary Materials
Sales
Pellets including 2.780 2.090 2.650 1.456 44%
Pellet Fines
Pig Iron and 0.100 0.020 0.170 0.094 (-)79%
Auxiliary
Materials
3.2 Financial Highlights (Rs. in Crores)
particulars 2010-11 2009-10
Turnover 1803.46 992.72
Profit /(Loss) Before Tax 99.95 (194.95)
Profit /(Loss) After Tax 76.27 (177.27)
4.0 SEGMENT-WISE PERFORMANCE
4.1 pellets
Target set for production of Pellets during the year 2010-11 under MOU
''Good'' category was 2.78 million tonnes. Actual production was 2.124
million tonnes which is 76% achievement of the target. Due to depressed
market condition, Pellet plant was kept under shut down during July
2010 and plant resumed operation on 09- 08-2010. Plant was also not in
operation during major parts of October, 2010 and December 2010.
4.2 Pig Iron and Auxiliary
Target set for production of Pig Iron including Auxiliary (MOU Good
category) during the year 2010-11 is 1,00,000 tonnes. Due to
un-economical price of Pig Iron, BF unit was not operated from
05-08-2009 and there was no production during 2010-11. The Company has
initiated action for setting up of Coke Oven plant to make the
operation of Blast Furnace Unit economically viable.
4.3 The following table summarises the production performance during
the last three years:-
PP : Pellet plant, PI : Pig Iron (Qty. In million tonnes)
Year MOU target Actual production Capacity utilisation of
installed capacity in %
PP PI PP PI PP PI
2008-09 2.850 0.196 1.316 0.118 38 55
2009-10 2.650 0.170 1.273 0.062 36 29
2010-11 2.780 0.100 2.124 - 61 -
5.0 MARKETING AND EXPORTS:
During the year, Pellets was supplied to China, Australia and domestic
buyers. Pig Iron & Auxiliary were supplied to the buyers in the
Domestic market. Sales in the DTA represented 56% of the total sale of
Pellets in quantitative terms and 57% in monetary terms.
5.1 Details of shipments made during the year to various customers are
as under:-
(In Dry Metric Tonnes)
Pellets
Export sales
China 872901
Australia 47270
DTA sales
Ispat Industries Ltd 269436
Essar Steel Ltd 726018
Welspun Power & Steel Limited 82876
Bhushan Power & Steel Ltd 91766
Total 2090267
16934 tonnes of Pig Iron and 3391 tonnes of Auxiliary materials was
sold in the domestic market during the year.
5.2 Sales performance during the past three years is summarised below:-
Qty: in Million Tonnes, Value: Rs. In Lakhs
Year Pellets Pig Iron Total
Qty Value Qty Value Qty Value
2008-09 1.131 99410 0.074 23488 1.205 122898
2009-10 1.456 79226 0.094 20046 1.550 99272
2010-11 2.090 174931 0.020 5415 2.110 180346
Pellets includes Pellet Fines, Pig Iron includes Auxiliary
5.4 During the year 44 shipments of Pellets sailed through New
Mangalore Port as compared to 32 during 2009-10.
5.5 In the Central Budget 2011-12, export duty on Pellets was removed.
This has come into force w.e.f. 1st March 2011. The exemption of
Pellets from export duty will help the Company to improve its top &
bottom line growth in years to come.
5.6 Market Scenario  2011-12 : 2010 witnessed continued recovery in
demand for steel which began in the second half of 2009 driven by
stimulus packages globally, the resilience of emerging economies and
overall market recovery. The apparent steel usage grew by 13.2% in 2010
and is expected to see a further growth of about 5.9% during 2011. In
2012, it is expected that world steel demand will grow further by 6.0%
to reach a new record of 1,441 million metric tonne (mmt).
China''s apparent steel use in 2011 is expected to increase by 5.0% to
605 mmt following 5.1% growth in 2010. However, it is expected that the
Chinese government''s efforts to cool down the overheating economy,
particularly the real estate sector, is likely to impact Chinese steel
demand later this year.
India is expected to show strong growth in steel consumption in the
coming years due to its strong domestic economy, massive infrastructure
needs and expansion of industrial production. As per the latest
forecast for 2011 the consumption of Steel in India will grow by 13.3%
to reach 168.7 mmt.
With the positive outlook for the steel market during 2011-12, the
demand for the steel making raw materials is expected to grow. However,
the increasing capacity additions in Iron Ore mining and Pellet
production around the world are likely to put pressure on pricing of
these commodities.
6.0 PROFIT AND DIVIDEND
In view of improvement in the financial performance of the Company the
Directors have recommended payment of Interim Dividend @ 20% of Profit
After Tax (Re.0.08 per share) amounting to Rs. 5.118 crores plus
Dividend distribution Tax as applicable. The Interim Dividend was paid
in January 2011. Keeping in view the good financial performance, your
Directors propose to pay final dividend @20.80% of Profit After Tax
(Re.0.25 per share) including the Interim Dividend already paid. This
works out to Rs. 15.86 crores excluding Dividend Tax.
7.0 MEMORANDUM OF UNDERSTANDING WITH GOVERNMENT OF INDIA
Your Company has been signing the Memorandum of Understanding every
year with its Administrative Ministry, Ministry of Steel. MoU between
KIOCL and the Ministry of Steel for the year 2011-12 was signed on
11.03.2011, envisaging the production target of 3.0 million tonnes of
Pellets for achieving the "Good" performance.
The performance evaluation of the Company for the year 2009-10
vis-a-vis MoU targets is rated as ''Fair''. Performance Evaluation of the
Company for the year 2010-11 vis-Ã -vis MoU targets on provisional basis
works out to "Very Good".
8.0 PROJECT EXPANSION AND BUSINESS DIVERSIFICATION
8.1 Ductile Iron Spun Pipe Project
Board at its 195th Meeting held on 26.06.2010 has agreed in principle
for the formation of a Joint Venture between M/S KIOCL & M/S RINL
towards investment in setting up of DISP Plant, Coke Oven Battery,
Power Plant and Oxygen Plant etc., under forward and backward
Integration in Blast Furnace Unit. KIOCL has placed a work order on M/s
ICRA Management Consulting Services Limited for updating the report on
Market Assessment study of the Ductile Pipes in India. A work order has
also been placed on M/s. Ernst & Young to study the Financial Analysis
(Business Plan) for setting up of a DISP Plant. Both the reports have
been received and are being reviewed by KIOCL. The
same were also forwarded to M/S RINL for their review and the comments
received have been taken up with the two consultants for incorporation
appropriately in their final report.
As per direction of the Board at their 200th meeting, a work order has
been placed on M/s. MECON Limited for preparation of Detail Project
Report for DISP project as forward integration to BFU. M/s. MECON
Limited have submitted the draft DPR to KIOCL for review and
finalization.
8.3 Procurement and installation of Horizontal Pressure Filters
8.2.1 Met-Chem submitted a report after a detailed study conducted on
the ore received from Donimalai (NMDC) for the suitability of the ore
to produce quality pellets. The report suggests for the replacement of
existing vacuum disc filters with pressure filters.
8.2.2 Based on the approval accorded by the Board to procure 3 nos. of
Horizontal Pressure Filters, purchase order for supply of 3 nos. of
Horizontal Pressure Filters and Auxiliary Equipments along with its
commissioning spares on firm price basis except exchange rate variation
was placed on M/s Larox Corporation, Finland (now known as Outotec
(Filters) Oy) at a total price of Euro 11,300,000 ( Rs. 69.41 crores at
a exchange rate of Rs. 61.42 per Euro as on 29-03-2010. The approximate
project cost is Rs. 84.93 crores.
8.2.3 3 nos. Pressure Filters were received in 2nd week of May 2011 and
auxiliary equipment expected to be shipped by mid of May 2011.
Strengthening of Filter plant building for installation of Pressure
Filters is under progress.
8.3 Bulk Material Handling and Railway Siding Facilities:
8.3.1 As per Hon''ble Supreme Court order, the captive mine operation at
Kudremukh was stopped from 1st January 2006. In order to continue the
operation of Pellet Plant at Mangalore, KIOCL has to get the required
quantity of Iron Ore from the indigenous sources by rail. As such a
dedicated railway terminal is required for receiving the Iron Ore
closest to the plant. Bulk material handling system is to handle the
Iron Ore fines received at the permanent railway siding system from
various agencies & convey the same to the plant premises.
8.3.2 KIOCL has identified the location for railway siding & bulk
material handling system, which is about 3 Kms away from the KIOCL
Pellet Plant at Baikampady Industrial Area. For this, KIOCL has already
acquired about 52.86 acres of land from M/s. Karnataka Industrial Area
Development Board (KIADB) and also from the private land owners.
8.3.3 In this connection M/s Konkan Railway Corporation Limited (KRCL)
has prepared Detailed Project Report avoiding Diamond Crossing on the
railway line for safety reasons. Due to the realignment, the proposed
route necessitated swapping of KIADB land and outright purchase of
Private land. The matter was taken up with KIADB and also the private
land owners based on the requirement of additional land.
8.3.4 Part of the private land required has already been procured from
private land owner and registered in the name of Company. The balance
2.3 acre of land is being negotiated for purchase.
8.4 Construction of Storage Silos with handling facilities
8.4.1 KIOCL Board at its 194th meeting held on 04.06.2010 has approved
the proposal for augmentation of the Iron Ore feeding system for
uninterrupted supply of ore for the existing ball mills by providing
8000 MT capacity RCC Silo and associated material handling equipments
along with screens in the grinding circuit at Pellet Plant, Mangalore.
Piling work has been completed.
8.4.2 A tender has been invited for construction of pile cap & RCC
silo. The offers received are being evaluated.
8.5 Non-Recovery Coke Oven Plant with 25 MW CPP at Mangalore:
8.5.1 Your Company proposes to take-up implementation of a 0.3 million
tons per annum (MTPA) coke oven project adopting non-recovery (NR)
route at their Blast Furnace unit at Mangalore. The project is intended
for supply of Low Ash Metallurgical Coke for the existing blast
furnace. The excess Coke, after meeting the demand will be sold in the
market. The project also envisages generation of Power (25MW Captive
Power Plant), by utilizing the sensible heat of the hot flue gas from
the ovens. After meeting the internal demand in the Coke plant, the
surplus Power will be sent to the existing Main Receiving Sub-Station
(MRSS) of Blast Furnace (BF) plant for internal consumption, and the
balance Power to the adjacent Pellet Plant, through the grid of
Mangalore Electricity Supply Company Limited (MESCOM).
8.5.2 The Board at its 201st meeting held on 25.03.2011 has approved
the proposal for setting up of 0.3 million tonnes per annum capacity of
Non-Recovery Coke Oven Plant along with 25 MW Captive Power Plant at an
estimated cost of Rs. 452.22 crores in line with the detailed project
report prepared by M/s. M.N Dastur & Co., Kolkata with a debt equity
ratio of 1:2.
8.5.3 KIOCL has already fixed an agency for obtaining Environmental
Clearance from Ministry of Environment and Forest (MoEF) and Consent
for Establishment (CFE) from Karnataka State Pollution Control Board
(KSPCB). The agency has submitted the Form 1, Feasibility report to
Ministry of Environment and Forest (MoEF), New Delhi.
8.6 Selection of Joint Venture partner for Equity participation for
setting up of an Integrated Steel plant in the State of Karnataka
8.6.1 The Mineral Policy, 2008 of Government of Karnataka clearly
envisages that the State is in favor of Entrepreneurs establishing real
value addition to the Iron ore like setting up of Steel plant in the
State of Karnataka. Such Enterprises will be given preference in mine
allotment. In this process the Company will be able to do forward
integration by making its presence in the Steel sector. The process
will also strengthen the claim of mines allotment for the Company. In
this backdrop the Board of Directors has in-principle agreed for the
equity participation by KIOCL for setting up of an Integrated Steel
Plant (ISP) in the State of Karnataka.
8.6.2 KIOCL had appointed Consultant for preparation of tender document
and floated NIT for the aforesaid purpose. In response to NIT M/s
United Rajpur Steels (India) Pvt. Ltd., had submitted their offer. On
evaluation of the offer Consultant recommended that KIOCL can proceed
further in the matter of drawing up the JV agreement with M/s URSIPL.
KIOCL equity in the Integrated Steel Plant will be 26 %.
8.6.3 KIOCL Board at its 195th meeting held on 26.06.2010 agreed to
initiate the process of drawing up of the draft joint venture agreement
with M/S URSIPL for the equity participation by KIOCL for setting up of
an Integrated Steel Plant in the State of Karnataka. Accordingly the
Consultant has started the work on draft joint venture agreement in
consultation with KIOCL and URSIPL and same is in the final stage.
8.7 Eco-Tourism at Kudremukh
8.7.1 KIOCL stopped mining operations at Kudremukh w.e.f. 01.01.2006 as
per the Hon''ble Supreme Court judgment. Alternatively, Company is
exploring alternate measures to utilize its assets and facilities by
creating additional facilities at Kudremukh to develop eco-tourism.
8.7.2 KIOCL approached Secretary (Revenue), Govt. of Karnataka with a
plan of developing eco-tourism and sought for renewal of revenue land
lease (1220 ha).
Govt. of Karnataka agreed in principle to accord permission for change
of purpose from mining to eco tourism and advised KIOCL to prepare
Detailed Project Report (DPR) and also to work jointly with Jungle
Lodges & Resorts Limited (JLR) (A Govt. of Karnataka Undertaking) for
the project.
8.7.3 Board at its 178th meeting held on 11.02.2008 agreed that, the
Company should submit a DPR on eco tourism and should have MOU with JLR
in nature of services agreed upon. Consultant submitted final DPR for
the project in the month of December 2010.
8.7.4 Meanwhile, KIOCL submitted draft MoU to JLR for their consent and
participation in the project. KIOCL also provided Executive Summary of
master plan and business plan to JLR for reference.
8.8 Takeover of M/s Tungabhadra Steel Products Ltd. (TSPL), Hospet and
establishment of Beneficiation Plant for processing Low Grade Iron Ore
8.8.1 TSPL is a Govt. of India undertaking under control of Ministry of
Heavy Industries & Pubic Enterprises, Deptt. of Heavy Industry with 79%
capital being held by Govt. of India, 12% by Govt. of Andhra Pradesh &
9% by Govt. of Karnataka. Secretary, Ministry of Heavy Industries &
Pubic Enterprises, Deptt. of Heavy Industry, Govt. of India, New Delhi
took up the issue of taking over of M/s TSPL by KIOCL Ltd.
8.8.2 TSPL has a workshop in a free hold area of 62.194 acres on
Ankola-Gutti National Highway 63 between Hospet Town and Tungabhadra
Dam and have a township in a free hold area of 25.26 acres .TSPL is
also having Malaprabha Mini Hydel Plant near Saudathi Town, Belgaum
Dist. Karnataka State. It produces about 5 million units of Power per
year and the power is sold to Karnataka Grid through a Power purchase
agreement.
8.8.3 During the Quarterly Performance Review Meeting for 4th Quarter
of 2009-10 held on 13.07.2010, Secretary (Steel), Govt. of India has
mentioned that low grade Iron Ore is available in India and KIOCL
should explore mechanism for optimal utilization of such Ore and
suggested that the Company could make a plan to set up beneficiation
plant for processing of low grade Iron Ore. The processed Ore can be
utilized for Pellet production.
8.8.4 Company is in the process of appointing expert consultant for
preparation of Techno-Economic Feasibility Report (TEFR) for
establishment of beneficiation plant for processing low grade Iron Ore
in the premises of TSPL.
8.9 Removal of Lakya Dam Tailings
8.9.1 The tailings generated in the processing of Magnetite Iron Ore in
the beneficiation plant at Kudremukh was contained in the Pollution
Control reservoir created by constructing an earthern dam across Lakya
Hole, a tributary of River Bhadra to prevent the pollution of River
Bhadra which flows along the foot hills of the mine lease.
8.9.2 At present, Dam is filled up to approximately 200 million tonnes
of tailings. There is a need to evacuate these tailings from Lakya Dam
to prevent any possible threat to ecology and environment in future.
8.9.3 Upon desilting of 200 million tonnes of tailings from the dam,
the water carrying capacity of the dam is expected to increase by 100
million cu.m. in addition to the prevailing live water storage of 6.5
million cu.m.
8.9.4 As per the study by Indian Institute of Science (IISc),
Bangalore, these tailings contain approximately 20- 22% Fe and the sand
content is around 75% in the size range of 0.075 mm to 0.60 mm.
8.9.5 Karnataka State Council for Science & Technology (KSCST)
Bangalore and IISc have conducted short term test on utilization of
Lakya Dam tailings as substitute for sand by mixing the tailings. It
has been technically observed that the tailings perform optimally at
40% replacement for sand in the cement mortar manufacture. This can
also be utilized for manufacture of tiles & bricks. Utilization of
tailings for construction sector leads to conservation of scarce
resources like river sand. Further, tests are being conducted for
utilizing the same for cement concreting by IISc.
8.9.6 Company is of the view that tailings deposited in the Dam could
be used as a possible raw material for various industries. This
attracts many potential investors to set up industries in nearby areas
which would generate substantial direct or indirect employment to local
people and also revenue to the Govt. of Karnataka.
8.9.7 IISc have collected tailing sample from Lakya Dam for
construction of building with first floor in IISc campus by using Lakya
Dam tailings with partial replacement of sand in the model building.
IISc would like to have interaction with construction Companies,
transporters and KIOCL for possible utilization of tailings in concrete
and mortar as partial replacement of sand.
8.9.8 Company has requested Govt. of Karnataka to accord permission for
removal of tailings deposited in the Lakya Dam.
9. MINING lEASES FOR IRON ORE DEPOSIT
9.1 Chikkanayakanahalli Iron Ore Deposit
9.1.1 Govt. of Karnataka has accorded in principle approval for grant
of mining lease for a period of 30 years over an area of 116.55 ha in
Hombalghatta and Hosahalli villages of Chikkanayakanahalli Taluk,
Tumkur Dist., Karnataka vide letters dated 01.08.2008 & 02.08.2008 with
the prior approval of Govt. of India under section 5(1) of MMDR Act
1957.
9.1.2 Indian Bureau of Mines has approved Mine Plan, MoEF, Govt. of
India has accorded Environment Clearance and KSPCB has given consent
for establishment of the project.
9.1.3 KIOCL submitted "De Reservation Proposal" (DRP) in Form "A" to
Nodal officer, Forest department, Govt. of Karnataka for diversion of
93.03 ha of forest land for mining purpose which falls under
Thirthrampura State Reserve Forest, Tumkur Dist., Karnataka.
9.1.4 During the joint survey of mining lease area, it was noticed by
the officials of Govt. of Karnataka that mining lease area of KIOCL and
other two mining lease allottees are overlapping with each other. On
issuance of revised mining lease area sketch and demarcation at site by
Govt. of Karnataka, the same will be provided to State Forest
department for grant of forest clearance to comply statutory clearances
for execution of mining lease.
9.2 Ramanadurg Iron Ore Deposit
9.2.1 On 9th March 2000, KIOCL submitted application to the Director,
Department of Mines & Geology, Govt. of Karnataka for grant of mining
lease in an area of 1573 hectares (i.e about 6.5 sq. miles containing
212 million tonnes of Iron Ore) which was hitherto was reserved for
State Exploitation, in Ramanadurga area.
9.2.2 Govt. of Karnataka vide Gazette Notification No. CI 33 MMM 1994,
volume no. 271 dated 15th March 2003, called applications from the
public for grant of mining lease for various blocks. Pursuant to this,
KIOCL had applied for Block No.13/1 of Ramanadurga Iron Ore Deposit for
an area of 1573.04 hectares on 16.04.2003.
9.2.3 Secretary (Mines, SSI and Textile), Commerce and Industries
Dept., Govt. of Karnataka conducted hearing on 31.08.2010 &
02.09.2010. KIOCL made a presentation furnishing credentials of the
Company in terms of mining experience, technology, finance, manpower
and value addition for Iron Ore.
9.2.4 Allocation of mining lease in favour of KIOCL is yet to take
place.
9.3 Khandadhar Iron Ore Deposit
In respect of mining lease of Khandadhar Iron Ore deposit, Odisha
during pendency of KIOCL''s applications for prospecting licence and
mining lease, the Govt. of Odisha recommended to the Central Government
the name of M/s POSCO for prospecting licence quoting special reasons.
This was challenged by the Company by WP No. 3234/09 in the Hon''ble
High Court of Odisha. Hon''ble High court passed an order for
maintaining status quo and direction was issued to the Ministry of
Mines, Govt. of India not to pass any order on the application of
POSCO (I) Ltd for grant of PL. Company also fled revision application
before Mines Tribunal, Ministry of Mines challenging the decision of
the Govt. of Odisha for rejecting KIOCL''s PL and ML applications.
Hearing of revision applications before the Mines Tribunal, Govt. of
India for Khandadhar Iron Ore Deposit was completed and the judgment is
reserved. Hon''ble High Court of Odisha has set aside the recommendation
for grant of prospecting license in favour of M/s POSCO. Accordingly,
the Govt. of Odisha will hear again all the applicants including KIOCL
application. The matter pending before the Central Govt. Mines Tribunal
has become infructuous.
Other Mining /Prospecting Leases
9.4 In the State of Karnataka, your Company has submitted 22
applications for grant of Mining lease & is pursuing application for
Mining Lease in Bellary District for Vysankere & Hanumanahalli,
Narayanapura (Appenahalli), Jaisingpur, Bhavilhalli, Donimalai Range,
Block No. 14 Kumaraswamy Range, Block No. 17 Karthikeswara, Kumaraswamy
Range, Block No. 13/2 NEB Range, Block No.13/2 Donimalai Range, Block
No. 13/2 Kumarswamy Range, Block No. 13/2 Devadari Range, Ramandurga &
Susheel Nagar Range etc., Kudre Kanive Kaval in Hosadurgra, Chitradurga
District, Hosanagara Iron Ore Deposit in Shimoga District, Haluvalli
Iron Ore Deposit, Nellibedu Iron Ore Deposit, Gangrikal Iron Ore
Deposit & Bababudan Iron Ore Deposit, in Chikmagalur District,
Hanumanthanahalli, Ajjiguda, Harogondanahalli, Kodihalli, Janehar and
other Villages of Chikkanyakanahalli Taluk of Tumkur District.
9.5 In the State of Jharkhand, the Company is pursuing for mining lease
in Ghatkuri Iron Ore deposit in West Singhbhum district of Jharkhand.
The application of the Company for grant of Mining Lease is pending
with Jharkhand Government.
9.6 In the State of Kerala, Company is pursuing for mining lease for
Alampara Iron Ore Deposit, Kozhikode Dist. KIOCL''s application for
grant of Mining Lease is pending.
9.7 In the State of Rajasthan, the Company is pursuing for mining lease
for 04 blocks namely Samodi Block in Pur-Banera belt, Bhilwara district
for 1561.5226 Ha. Jipiya Block in Pur-Banera belt, Bhilwara district
for 378 Ha. Malikhera Block in Pur-Banera belt, Bhilwara district for
567.14 Ha. and Ranikhera (Ranipura)- Malikhera in Pur-Banera belt
Bhilwara district for 679.75 Ha.
10. ENVIRONMENTAL MANAGEMENT
10.1 Your Company is committed to preserve the Ecology and prevention
of pollution in its mining/manufacturing activities. During the active
mining operational periods, your Company has undertaken massive
afforestation programmes. Mining was undertaken in 3,200 acres of land
covered by grass. After mining was completed, 7.5 million saplings
adaptable to Western Ghats were planted and the same has turned into
big forest now. Further, at Mangalore, the Company is processing the
Iron Ore with wet grinding system without any pollution and generation
of power through Captive Power plant with zero emission. The Company
has won various Environmental Awards at National level.
10.2 The Company''s Environment Management System is Certified to 14001
 2004 Standard by DNV. The Certificate is valid upto 09-11-2012.
11. QUALITY CONTROL - ISO 9001: 2008
The Company''s Quality Management System is certified under ISO 9001:
2008 International Standard. This Certificate is valid upto 09-11-2012
12. OCCUPATIONAL HEALTH & SAFETY MANAGEMENT SYSTEM Â OHSAS 18001:2007
The Company''s Occupational Health and Safety Management System is
certified as per International Standard OHSAS Â 18001:2007. This
Certificate is valid upto 09-11-2012.
13. SAFETY
13.1 Although the mining activities at Kudremukh has been stopped with
effect from 01-01-2006 as per the Hon''ble Supreme Court verdict,
regular Safety inspections are being carried out to ensure Safety and
occupational health of employees engaged in upkeep and maintenance of
Mining Equipments, essential services like water pumping, watch and
ward etc. Safety awareness training is being imparted to the new
contract labourers who are coming for dismantling the structures and
other related works at Kudremukh.
13.2 Workers participation in Safety Management System is one of the
important criteria adopted by the Company. Area wise Safety Committees
are formed. Workers participation in these Safety Committees is
ensured.
13.3 Safety inspections are carried out regularly by the safety Officer
along with Safety Committee members. Safety points are discussed in the
Safety meetings held once in three months. Suitable action is taken for
implementation of the shortfalls if any for improvement.
13.4 Various training programmes are being conducted to inculcate
safety consiousness and to develop human resourses. Refresher training
covering their area of working, First Aid Training, Fire Fighting,
Awareness programme on Quality, Environment, Health & Safety Management
System are conducted on need base regularly.
13.5 As the Mangalore unit is under the aegis of the Factories Act from
January 2006, the National Safety Day & Safety week is celebrated from
4th to 10th March every year.
14. PUBLIC/STAFF GRIEVANCE REDRESSAL
14.1 Your Company has framed a well defned grievance procedure evolved
under the Code of Discipline from the very inception of the Company.
Since its introduction, the Scheme has been working satisfactorily
without any complaint from any corner, either from the recognised Union
or Officers Association of the Company. Grievances received have been
redressed to the satisfaction of the aggrieved employees. As regards
public grievance, as and when any complaints are received from the
public, necessary remedial action, if any, is taken by the Company
immediately.
14.2 Complaints/grievances other than the staff grievance are
categorised into customer/ consumer complaints/grievances from the
Contractors, NGOs/ General Public etc. The respective project heads are
empowered to dispose of the grievances concerning their areas and the
general public.
14.3 As regards women employees, the guidelines laid down by the
Supreme Court in the matter relating to sexual harassment of women in
work places are strictly followed.
14.4 The grievances received and disposed of by the Company are
reported to the Administrative Ministry on a monthly basis. The
guidelines laid down by the Government of India in this regard are
being followed. The Government also reviews the subject matter
periodically.
14.5 The second administration reforms commission in its 12th report
"Citizens Centric Administration" - the Heart of Governance recommended
for making organisation transparent, accountable and citizens friendly
through making citizen charter more effective and mandatory. It also
makes all Responsibility Centre should have Citizen Charter. Based on
above recommendation a Public Service Delivery (Sevottam) created for
assessing and improving the quality of services delivery for the
citizens. The system also involves the identification of the services
delivered to the citizens, quality service, its objective, improvement
of quality, by using innovative methods for developing business process
and more informative with the help of information technology. The same
is also available in Company''s website.
15. CORPORATE SOCIAL RESPONSIBILITY (CSR)
As a socially conscious corporate citizen, your Company has contributed
towards community development in and around the project particularly in
the areas of education and health care. During the year, the Company
has spent Rs. 59.36 lakhs as against budget allocation of Rs. 100 lakhs
on various activities. Some of the schemes undertaken during the year
2010-11 are as under:- i) Health & family welfare & organizing free
health camps in and around project sites,
ii) Environment Protection and Pollution Control by sponsoring of
"World Environment day Program organized by "Karnataka State Pollution
Control Board", Chikmagalur, and sponsorship for adoption of animals at
Pilikula Nisarga Dhama,
iii) Promotion of sports and games,
iv) Infrastructural support & financial assistance to Educational
Institutions,
v) Scholarships to meritorious students belonging to economically poor,
SC, ST, OBC and disabled categories,
vi) Development of rural folklore & promotion of cultural tourism and
folk arts,
vii) Financial Assistance for Cardiac Surgery (MVR Repair),
viii) Sponsoring live surgical workshop otology,
ix) Donation of ambulance to Navodaya School, Balehonnur,
x) Providing hearing aid instrument to patient suffering from acute
hearing problem,
xi) Financial assistance to Akshaya patra Foundation for purchase of
Maxi Truck for supplying mid day meals to School children.
16. PARlIAMENTARY COMMITTEE
During the year, your Company was honoured by the visit of following
Parliament Committees:-
i) Department Related Parliamentary Standing Committee on Industry on
07-06-2010.
ii) Third Sub-Committee of Parliamentary Committee on Official Language
on 25-10- 2010.
17. JOINT OPERATION WING OF KIOCL LIMITED & RASTRIYA ISPAT NIGAM
LIMITED
17.1 Shri Veerabhadra Singh the then Hon''ble Minister of Steel, Govt.
of India along with Shri R Ashok, Hon''ble Minister for Home &
Transport, Govt. of Karnataka visited the Corporate office on
14-11-2010 and inaugurated the Joint Operation Wing of KIOCL Limited
and Rashtriya Ispat Nigam Limited for establishment of Mining and Value
Addition Projects in the State of Karnataka. Hon''ble Steel Minister in
his address asked the Govt. of Karnataka to expedite the process of
granting new mining lease in Ramanadurga of Bellary District for which
KIOCL Limited has already applied for grant of mining lease. He has
observed that KIOCL Limited is functioning without captive Iron Ore
mines for the past five years and it is essential for the Company to
have its own captive Iron Ore mines to achieve its ambitious expansion
plans.
17.2 The Hon''ble Steel Minster felt that the coming together of both
KIOCL and RINL is a move in the right direction since both the
Companies do not have their own captive Iron Ore mines and they should
carryout value added products business using in- house technology and
achieve desired goals. Hon''ble Minister for Home & Transport, Govt. of
Karnataka assured all possible help to KIOCL to continue its operations
at Karnataka.
18. VISIT OF CHIEF MINISTER OF KARNATAKA TO MANGALORE
Hon''ble Chief Minister of Karnataka, Hon''ble Minister for Home & Muzrai
and Hon''ble Minister for Large & Medium Industries, Govt of Karnataka
visited our plants at Mangalore on 13-08-2010 and laid the foundation
stone for Raw Materials Silo Storage & Filteration plant up gradation
projects. Hon''ble CM assured the support of Govt. of Karnataka in all
the ventures of the Company.
19. VISIT OF SECRETAY (STEEL)
Shri Atul Chaturvedi, the then Secretary (Steel) visited our plants at
Mangalore on 22-08-2010. He also inaugurated the operations of Pig
Casting Machine-III at Blast Furnace Unit during the visit. During the
visit he also met Chief Secretary, Govt. of Karnataka and held
discussions on issues relating to KIOCL Limited.
20. IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY
20.1 The Company follows the directives issued from time to time by the
Department of Official Language, Ministry of Home Affairs and Ministry
of Steel, Govt of India for progressive use of Official Language Hindi.
Towards this and to promote usage of Official Language by employees of
the Company several programmes in the form of Hindi Workshops/Hindi
Weeks/Hindi Fortnight were organised at all locations of the Company.
Quarterly meetings of Official Language Implementation Committee''s are
held regularly at all the locations of the Company.
20.2 During the year, Hindi Fortnight was orgainsed at all locations of
the Company. At Corporate Office several Hindi competitions are
organised during September 2010. To mark the occation, a talk on Hindi
was organised on 07-09-2010 and a Kavi goshti on 14-09-2010. Concluding
function was held on 23rd September 2010. During the function, Chief
Guest commended and appreciated the Implementation of Official Language
in the Company.
20.3 Company''s effort in the implementation of the Official Language
Policy found recognisation by the Bharatiya Bhasha Evam Samskriti
Kendra, New Delhi and Chairman-cum-Managing Director was conferred with
''Rajbhasha Manishi'' shield for 2009-10 on 10-06-2010.
20.4 An Incentive Scheme is in operation for Hindi Noting and Drafting
for the employees of the Company. On the eve of Hindi Fortnight
celebration, 16 employees were awarded with cash incentives on
23-09-2010.
20.5 Third Sub-Committee of Parliamentary Committee on Official
Language headed by Prof. Alka Balaram Kshatriya, Hon''ble MP (Rajya
Sabha) inspected the Official Language Implementation in the Company.
The Committee expressed its satisfaction and commended the Company for
Implementation of Official Language Policy.
20.6 The Company is Convenor of Bangalore Town Official Language
Implementation Committee (Undertakings) and conducts regular meetings
and Joint Hindi Fortnight programmes for all Central PSUs in Bangalore.
20.7 The Company organised a Joint Hindi Fortnight for Town Official
Language Implementation Committee (Undertakings) members and 16
Competitions were conducted. All most all PSU Offices in Bangalore have
participated in these competitions. Prizes and Certificates were
awarded to the prize winners during the TOLIC meeting held on
07-12-2010.
20.8 Being the Convenor of Town Official Language Implementation
Committee (Undertakings), the Company has introduced a scheme for the
best performance of the Implementation of the Official Language Policy
of the Union to its Member Offices, on the basis of Annual Performance
Report. The Scheme consists of Shield and Certificates. For the year
2008-09, five Member Offices were awarded during its Half yearly
meeting held on 08-07-2010.
20.9 A half yearly Souvenir titled "Deepika" was published and released
under Town Official Language Implementation Committee (Undertaking)
during the TOLIC meetings held on 08-07-2010 and 07-12-2010.
21. PERSONNEL
21.1 The total number of employees on the rolls of the Company as on
31.3.2011 was 1347 consisting of 867 workmen, 440 Executives and 40
Supervisors as against 1362 on 31.3.2010.
21.2 During the financial year 2010-11 (April 2010 to March 2011), 14
candidates in Group ''A'' (Executives) were recruited/appointed including
1 Presidential appointee, 2 candidates belonging to SC category and 1
candidate belonging to Minority community. In Group ''C'' (Non-Executive
cadre) 1 General candidate was recruited. 4 Internal candidates have
been appointed from Group ''C'' (Non-Executive cadre) to Group ''B'' posts
(Supervisory cadre) against Company''s Internal Circular.
21.3 SCs/STs and women employees
The following table shows the number of SCs, STs, women employees,
Ex-servicemen and Persons with Disabilities as against the total number
of employees in different Groups on rolls of the Company as on
31.3.2011:
Group Total No.of SC ST No. of Ex- Persons with
employees women servicemen Disabilities
on rolls employ
-ees
A 440 53 15 25 01 08
B 40 05 01 07 02 -
C 792 115 34 17 07 08
D 67 15 09 03 - 03
D(Sweepers) 08 07 - 02 - -
Total 1347 195 59 54 10 19
21.4 Voluntary Retirement Scheme:
During the year 2010-11 (April 2010 to March 2011), Company has not
introduced VR Scheme. However, 11 employees whose VR Applications have
been accepted during 2009-10 were released during 2010-11 on their
specific request.
21.5 Compliance under persons with Disabilities Act, 1995
Your Company ensures compliance under the Persons with Disabilities
Act, 1995. Suitable provision/modification is made in the working
place to meet the requirements of such persons with disability.
22. INDUSTRIAL RELATIONS AND EMPLOYEES WELFARE:
22.1 The Industrial Relations situation remained peaceful throughout
the year in all the establishments of the Company. Issues relating to
productivity, safety, welfare, etc., are mutually discussed with
employee representatives.
22.2 The validity period of Tripartite Wage Agreement entered into with
the Recognised Union has expired on 31-12-2006. Based on the broad
Guidelines provided by the Government, a comprehensive settlement with
the Recognised Union (Kudremukh Shram Shakti Sangathan (KSSS) on
revision of scales of pay, allowances and perks etc., effective from
01-01-2007 was signed on 31-08-2010. In addition to introduction of
revised pay scales, the package also includes improvement in other
benefits to the employees. With the introduction of this package, it is
expected that the motivation on the part of the Company''s workforce
will improve, leading to more prosperous results for the Company.
22.3 Right from inception, the Company has provided various amenities
to its employees, such as well planned Township, Hospitals, Schools,
Recreation, Cable TV Net work, Parks, Temples, Church, Mosque, etc.,
besides Grant of Scholarships, Reimbursement of School Fees, Uniforms,
Children''s Out-station Education Allowance, Entertainment, Magazine and
Technical journal allowance etc. 10% of type ''A'' and ''B'' quarters and
5% of ''C'' and ''D'' type quarters are reserved for SC/ST employees.
22.4 As in the previous years, Dr. Ambedkar Jayanthi was celebrated at
all locations on 14th April 2010.
23. HUMAN RESOURCE DEVELOPMENT
23.1 Human Resource Development is a continuous process. Training and
Development of all levels of employees is given priority by the Company
to improve their skills and contribute productively to the Company.
During the year, the achievement in this area was 1509 Executive
trained man days and 2558 Non- Executive trained mandays.
23.2 During the year 2010-11, following in-house training programmes
were organized for Executives and Non-executives to enhance their
skills and knowledge:
Advanced Communication skills, Stress Management, Productivity
Improvement Techniques, Fire Fighting and First Aid, Safety operating
procedures, Handling of proposals and contracts, Basic Computer skills,
IRDA Act 1999 etc.
23.3 In addition to the above, the Company has sponsored the programmes
like International Seminar and Field Workshop on Iron Ore in South
India conducted by Delhi University, National Seminar on Explosives and
Blasting Techniques for mining, quarrying and infrastructure industry
conducted by NITK, Suratkal etc.
23.4 Your Company has also nominated employees for various Seminars and
Conferences conducted at different locations on subjects like Iron Ore
benefications, Management skills, etc. Some of the programmes for which
employees were nominated are - Direct Trainers skills, Integrated
Management System ISO 9001, ISO 14001 and OHSAS 18001, Advanced
Electrical safety, Company''s Bill 2009, Still photography, Adaptation
of IFRS, Professional Development- Direct Taxes and Corporate Laws,
Joint Internal Dispute Resolution Workshop, Project Management, Lean
Management Principles and Practices, Global Trends in Boiler
Engineering, Vigilance and Disciplinary Proceedings, Prevention and
Management of Chemical accidents, Reservation Policy, Board Interview,
WIPs National Seminar, Corporate Management Practices and others.
24. AWARD AND RECOGNITION
Company''s effort in the implementation of the Official Language Policy
found recognisation by the Bharatiya Bhasha Evam Samskriti Kendra, New
Delhi and Chairman-cum-Managing Director was conferred with ''Rajbhasha
Manishi'' shield for 2009-10 on 10-06-2010.
25. VIGILANCE
25.1 ISO 9001-2008: Vigilance Department of KIOCL obtained
ISO-9001:2000 Certificate on 07.11.2006 with a validity of 3 years. As
the validity is expiring in November 09, agencies have been fixed for
consultation (for up-gradation of system from 2000 version to 2008
version) and Certification separately. M/s. ICS Pvt Ltd, has conducted
audit on 6th November, 2009 and issued certificate that is valid up to
8th December, 2012. First surveillance audit was conducted during
Nov-2010 and no non-conformities were issued during this audit. Due to
ISO certification of Vigilance Department following benefits and
improvements have been resulted in vigilance functioning:
- After collection/capturing data the trend analysis to demonstrate
continuous improvement was not in practice.
- Monitoring of complaints has been made systematic and will be
monitored on monthly basis.
- Monitoring and measurement parameters for the focus area
"investigation Process Efectiveness" have been defned, which does not
exists earlier.
- To capture the perception of vigilance from other stock holders
namely suppliers, CMD, employees, Customer satisfaction survey was
conducted, and feedback received. After analyzing the feedback
necessary action has been taken.
- To measure the preventive vigilance effectiveness, goal setting and
bench marking has been made to demonstrate continual improvement.
- Objectives and targets for every year is defned and planned to
achieve the same.
25.2. Integrity Pact Programme: Integrity Pact Programme has been
introduced in KIOCL from 01.01.2008. As the tenure of present IEMs Sri
SS. Meenakshisundaram, IAS (Retd) and Sri KVM Pai, IRS (Rtd), completed
on 31.12.2010, two new IEMs Sri. Abhijitsen Guptha, IAS (Retd.) and
Sri. Lukose Vallatharai, IAS (Retd.) have been appointed in their place
after obtaining the approval of CVC. The initial tenure of new IEMs is
3 years w.e.f. 01.01.2011. After implementation of IP in KIOCL, as on
date IP clause was incorporated in 245 contracts. Till date, no
complaints have been received under IP either by IEMs or by CVO.
25.3 Inspections: 7 CTE type inspections, 26 surprise checks, 31
general inspections and 51 scrutinies of files were carried out during
the period under review. i.e. April-2010 to March-2011.
25.4. Submission of Annual Property Returns: Submission of Annual
Property Returns has been made online. There are 465 officers in the
organization. As per the CVC guidelines 20% of above is to be
scrutinized every year. Accordingly scrutiny of Annual Property Returns
of 93 officers commenced in the month of April and completed by
October, 2010.
25.5. Structured Meetings of Vigilance: As per the instructions of CVC
and Ministry of Steel, Structured Meeting of Vigilance with CMD is
being conducted regularly. Till date seven such meetings have been
conducted. Issues related to e-governance, Leveraging Technology,
Integrity Pact, Tender management, Award of works, Recruitment policy
have been discussed. Minutes are circulated to concerned officials for
taking necessary action as decided in the meeting. Copies of minutes
were sent to CVC and MoS.
25.6. Leveraging Technology: With reference to Commission''s circular,
emphasizing the effective use of website and leveraging technology in
discharge of regulatory, enforcement activities and dealing with
complaints. KIOCL has been using website in a various areas from 2001.
The main areas concerning KIOCL are Contracts & Procurements,
Applications for Registration of Contractors/ suppliers/ consultants /
vendors etc. and status of bill payments to contractors / suppliers.
All Tender documents, Notices and other proformas are posted on the
websites. In order to encourage flow of genuine complaints, the
procedure for making complaints is outlined in the website. Status of
individual applications on website is updated every month. A summary of
works/contracts/ purchases awarded above a predetermined threshold
value are posted on website, every month.
25.7. E-governance: Disposal of scrap/ surplus items is being done by
e-auction, since September 2004. Regularly e-auctions are being held at
Mangalore and Kudremukh. E-sales are in practice since two years.
Commercial Department is conducting sales of Pellets by calling
e-tenders. E-procurement auction by web tendering-cum- reverse auction
has been commenced from September 2010. The threshold value for
e-procurement is fixed at Rs. 5 lakhs and above. All the payments above
the threshold value are being made through electronic mode.
25.8. Vigilance Awareness Week: Vigilance Awareness Period was
observed from October 25th to November 1st, 2010 in KIOCL Limited. On
this occasion a programme was arranged on 26th October 2010. Shri.
Lukose Vallatharai, IAS (Retd), Karnataka Cadre was the Chief Guest.
Messages received from President of India, and CVC were read out. In
the afternoon of 27th October 2010, a presentation/lecture programme
was arranged in the Community Hall. Ms. Manjula, IAS, Commissioner,
Urban Land Transport, Government of Karnataka was the Chief Guest. She
spoke about the "Towards and effective public procurement policy". On
30th October, an interactive session on "the role of public in
combating corruption" was organized. Shri.SM Vernekar, Dy.
Superintendent of Police, Lokayuktha, Mangalore Division and Shri.
Prabhudev Mane, Dy. Superintendent of Police, Lokayuktha, Udupi
Division were the chief guests. On this occasion the Company has
honoured one officer for very high integrity who has scored excellent
grading in respect of four traits such as fairness, transparency,
disciple & ethical behaviour in their annual appraisals for 3
continuous years with an Integrity Recognition Certificate.
25.9. Training Programmes: Vigilance Department has conducted as many
as 14 training programmes at three different locations. More than 650
employees have participated in these programmes. Important topics such
as Integrity Pact, leveraging technology, Handling of tenders &
contracts, preventive vigilance, etc., were covered.
26. DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956 with respect to Directors'' Responsibility Statement, it is
hereby confirmed that -
i. in the preparation of the Annual Accounts for the financial year
2010-11, the applicable Accounting Standards have been followed along
with proper explanation relating to material departures;
ii. The Directors have selected such Accounting Policies and applied
consistently, that made judgements 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 on 31.03.2011 and of the Proft/(Loss) of the Company
for the said period;
iii. The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities; and
iv. The Directors have prepared the Accounts for the financial year
ended 31.03.2011 on a going concern basis.
27. BOARD OF DIRECTORS
Appointment
i) Shri S Machendra Nathan, IAS, Additional Secretary & Financial
Adviser, Ministry of Steel was appointed as Part time official Director
W.e.f. 25-05-2010. Major Gen. (Retd.) Dr. OP Soni, VSM, Commander,
Faculty of Doctrine & Tactics, School of Artillary, Deolali is
appointed as Director (Commercial) vide Order No.5(13)/2009-KDH dated
06-12-2010. He assumed charge on 01-02-2011.
ii) Shri Upendra Prasad Singh, Joint Secretary, Ministry of Steel
appointed as Part time official Director w.e.f. 9.5.2011.
iii) Shri K Subba Rao, is appointed as Director (Production & Projects)
w.e.f. 9.6.2011 in pursuance to Ministry of Steel order dated 9.6.2011.
Cessation
Shri George Elias, IAS, Joint Secretary to Govt. of India, Ministry of
Steel resigned from the Directorship of the Company from 20-01-2011
consequent to his transfer from Ministry of Steel. Your Directors place
on record their deep appreciation of the valuable services
rendered/advice and guidance provided by Shri George Elias, as Director
of the Company during his tenure as Govt. nominee on KIOCL Board and
also his assistance at the Ministry on various matters.
28. LISTING REQUIREMENTS
I. The Company''s shares are listed on the following Stock exchanges:
Bangalore Stock Exchange Limited, Madras Stock Exchange Limited,
"Stock Exchange Towers", Exchange Building,
No.51, 1st Cross, J.C.Road, P.O.Box No.183, 11 Second
Bangalore  560 027. Line Beach,
Chennai  600 001.
II. The Company has paid the Annual listing fee to each of these Stock
Exchanges for the year 2010-11.
III. A report on the Corporate Governance is at Annexure-II.
IV. A declaration by the Chairman-cum-Managing Director regarding the
Code of Conduct for the Board Members and the Senior Management of the
Company is at Appendix-I to Annexure-II.
V. A Certificate from the Chairman-cum-Managing Director and the
Director (Finance) regarding the Financial and Cash Flow statements is
at Appendix-II to Annexure-II.
VI. A Certificate from the Auditors of the Company regarding
compliance of conditions of Corporate Governance is at Annexure-III.
VII. There is no pecuniary relationship or any transactions by any of
the non-executive Directors vis-Ã -vis the Company.
29. STATUTORY AUDITORS
Pursuant to Section 619(2) of the Companies Act, 1956 the Comptroller
and Auditor General of India has appointed M/s ASA & Associates
(earlier Murali Associates), Chartered Accountants as Statutory
Auditors of the Company for the year 2010-11.
30. STATUTORY AUDITORS REPORT, COMMENTS OF C & AG AND MANAGEMENT REPLY
The comments of C & AG under Section 619(4) of the Companies Act, 1956
on the accounts of the Company for the year ended 31st March 2011, the
Statutory Auditors observations and management replies thereto are
annexed to the report.
31. IMPLEMENTATION OF RIGHT TO INFORMATION ACT, 2005
The information required to be provided to citizens under Section 4(1)
(b) of the RTI Act 2005 has been posted and updated on the website of
the Company, www.kioclltd.com. The information posted on the website
contains general information about the Company, powers and duties of
the employees, information about decision making, rules, regulations,
manuals and record held by KIOCL, directory of the Company''s officers,
pay scales, procedure for requesting additional information about the
Company by citizens and associated request formats. During the year
2010-11 the Company received and attended to 64 requests for
information under RTIA.
32. ENERGY CONSERVATION
Energy conservation day was celebrated on 14-12-2010 at plants in
Mangalore. Various competitions were held as a part of Energy
Conservation week and prizes were distributed to the winners of various
competitions conducted during the week. Electricity consumption during
2010-11 as compared to 2009-10 was as under:-
2010-11 2009-10
Consumption per tonne of
Pellets production in kWh 71.02 66.92
(including grinding)
33. ENERGY AUDIT
The Company''s operations are highly energy intensive. Keeping in view
the importance of energy conservation, a specific plan and a programme
has been drawn for compulsory energy audit to quantify the targets for
energy conservation over the entire operational area. The
recommendations of M/s Tata Energy Research Institute (TERI) (now M/s
The Energy Research Institute), in the areas of energy conservation
have been implemented. Energy conservation is an ongoing process.
Efforts are continuing to conserve energy in all possible areas. Energy
Audit is carried out through Petroleum Conservation & Research
Association (PCRA) and some more measures of energy conservation are
being planned as suggested by PCRA in a phased manner.
34. R&D, TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
The information relating to Technology Absorption, Adaptation and
Innovation, R&D and foreign exchange earning & outgo to be disclosed in
Companies (Disclosure of particulars in the Report of Board of
Directors) Rules, 1988 is given and forms part of this report.
35. PARTICULARS OF EMPLOYEE OF SECTION 217 (2A) OF THE COMPANY READ
WITH COMPANIES (PARTICULARS OF EMPLOYEES) RULES 1988
During the year none of the employee was covered under the purview of
Section 217(2A) of the Companies Act, 1956 read with Companies
(Particulars of Employees) Amendment Rules, 2011.
36. ACKNOWLEDGEMENT
36.1 Your Directors gratefully acknowledge the support, cooperation and
guidance received from the Hon''ble Minister for Steel, Hon''ble Minister
of State for Steel, the Secretary, Ministry of Steel and other
officials of the Department of Steel as well as other Ministries of the
Government of India and the Government of Karnataka and all other
departments/agencies concerned in all the endeavours of the company.
36.2 Your Directors also acknowledge the timely advice and assistance
rendered by the Indian Embassies abroad during the year in the
Company''s marketing efforts.
36.3 Your Directors sincerely thank all the customers and suppliers for
their support and co-operation.
36.4 The Directors also appreciate the continued and dedicated efforts
put in by all the employees to overcome many challenges faced during
the year.
36.5 Last but not the least, your Directors express their gratitude to
the Shareholders for the confidence reposed by them in the management
of the Company.
For and on behalf of the Board of Directors
(K.Ranganath)
Chairman-cum-Managing Director
Place: Bangalore
Dated: 10-06-2011
Mar 31, 2010
On behalf of the Directors of your Company, I have great pleasure in
presenting the 34th Annual Report of your Company together with the
audited accounts for the year ended on 31.03.2010. The Auditors
Report and the Comments on the accounts of the Company by the
Comptroller and Auditor General of India thereon are annexed to this
report.
2.0 YEARS HIGHLIGHTS AT A GLANCE
- R&D activities have been carried out successfully and established
that the Pellet plant is able to produce Pellet from Doni ore on a
standalone basis without generating any slime during grinding and
filtering which was almost 17% during January 2006 to March 2007. This
R&D effort will enable the Company to have future economic benefit in
cost saving. This has resulted in production of I ton of Pellet with I
ton of Iron Ore (1:1 basis) as against the consumption of 1.025 ton of
Iron Ore for I ton of Pellet (1:1.025 basis) during previous year.
- During the last quarter of 2009-10, the Company has made highest
production and despatch of 700000 MT and 678682 MT respectively for the
first time after the closure of its captive mine.
3.0 PHYSICAL AND FINANCIAL HIGHLIGHTS
During the year 2009-10, the important physical and financial
highlights are as under
3.1 Physical Highlights (Qty. in million tonnes)
Particulars 2009-10 2008-09 Percentage
MOU Target Actual MOU Target Actual Change
(Good) Achieve (Very Good) Achieve- (Actual)
ment ment
Production
Pellets including 2.650 1.273 2.850 1.316 (-) 3.3
Pellet Fines
Pig Iron and 0.170 0.062 0.196 0.118 (-) 47.5
Auxiliary
Materials
Sales
Pellets including 2.650 1.456 2.850 1.131 +28.7
Pellet Fines
Pig Iron and 0.170 0.094 0.196 0.074 +27.0
Auxiliary Materials
3.2 Financial Highlights (Rs. in Crores)
Particulars 2009-10 2008-09
Turnover 992.72 1228.98
Profit /(Loss) Before Tax (194.95) 24.18
Profit /(Loss) After Tax (177.27) 22.01
4.0 SEGMENT-WISE PERFORMANCE
4.1 Pellets
Target set for production of Pellets during the year under MOU Good
category was 2.65 million tonnes. Against this target, the Company has
produced 1.273 million tonnes of Pellets during 2009-10 which is 48%
achievement of the target. The sudden and unprecedented worldwide
recession in the second half of the year 2008-09 which continued till
the end of 3rd quarter of 2009-10, has forced the Company to operate
the Pellet plant intermittently. However, the price of the Pellets has
shown a sign of improvement from January 2010 onwards and has prompted
the Company to increase the production. The Company has produced 7,
00,000 tonnes of Pellets during January to March 2010 which has
surpassed the previous records particularly after the closure of its
captive mine.
4.2 Pig Iron and Auxiliary
As against the MOU target (Good category) of 1, 70,000 tonnes of Pig
Iron Production (including Auxilliary) the Company produced 62,041
tonnes during 2009-10 which is 36% fulfilment of the target. Due to
uneconomical price for Pig Iron, BFU is shut down from 05-08-2009.
4.3 The following table summarises the production performance during
the last three years:-
PP : Pellet plant, PI : Pig Iron (Qty. In million tonnes)
Year MOU target Actual production Capacity utilisation of
installed capacity in %
PP PI PP PI PP PI
2009-10 2.650 0.170 1.273 0.062 36 29
2008-09 2.850 0.196 1.316 0.118 38 55
2007-08 2.600 0.199 1.927 0.157 55 73
4.3 The production performance in respect of Pellets and Pig Iron (in
thousand dry metric tonnes) for the last three years is reproduced
below in a graphic form:-
5.0 MARKETING AND EXPORTS:
During the year, Pellets was supplied to China, Vietnam and domestic
buyers. Pig Iron & Auxiliary were supplied to the buyers in the
Domestic market. Sales in the DTA represented 67% of the total sale of
Pellets in quantitative terms and 70% in monetary terms.
5.1 Country-wise details of shipments made during the year to various
customers are as under:-
(In Dry Metric Tonnes)
Country Pellets
China 459816
Vietnam 21289
Ispat Industries Ltd 467750
Essar Steel Ltd 256495
JSW Steel 99945
Bhushan Power & Steel Ltd 92043
Mono Steel Ltd 10668
ASR Multimetals Ltd 10668
Nilkant Concast Ltd 10548
Welspun Power & Steel Ltd 27006
Total 1456228
Pig Iron sold during the year is 82074 tonnes and Auxiliary sold is
12407 tonnes in the domestic market.
5.2 Sales performance during the past three years is summarised
below:-
Qty: in Million Tonnes, Value: Rs. In Lakhs
Year Pellets Pig Iron Total
Qty Value Qty Value Qty Value
2009-10 1.456 79226 0.094 20046 1.550 99272
2008-09 1.131 99410 0.074 23488 1.205 122898
2007-08 1.907 117385 0.170 35626 2.077 153011
Pellets includes Pellet Fines, Pig Iron includes Auxiliary
5.4 The MoU target set for production during 2010-11 (under Good
category) Pellet - 2.780 million tonnes and Pig Iron including
auxiliaries is 0.100 million tonnes.
5.5 During the year 32 ships were handled at New Mangalore Port as
compared to 25 ships handled during previous year.
5.6 Market Scenario - 2010-11: Price negotiations to arrive at annual
bench mark price for 2010 has started between big 3 viz, Vale, Rio
Tinto & BHP Billiton and Steel mills across the Globe. This year, the
miners are pushing for more dynamic pricing mechanism. The Japanese
Steel Mills have agreed for a quarterly pricing mechanism for cooking
coal. Miners are pushing for a similar mechanism for Iron ore also. It
is reported that Japanese and Korean Steel mills have reached a
provisional agreement regarding the 2010 Iron Ore prices with Brazilian
Resource Company Vale and BHP Billiton of Australia. VALE and JSM have
agreed for a price which is approximately 90% higher over the levels of
previous year and BHP Billiton and JSM have agreed for a price which is
approximately 99.7% higher over the levels of previous year for
April-June 2010 deliveries. Locally, NMDC has also provisionally
increased the price of its Iron Ore by 56%.
The demand for Iron Ore is also growing steadily. China imported about
628 Million Tonnes of Iron Ore during 2009 up by 41.5% on year to year.
Reduced supplies from big 3 to China and Chinas ban on import of low
grade Iron Ore has also contributed to the increased demand for Iron
Ore in Chinese market. The spot market prices have almost touched 2008
levels. Since the demand for Steel is also increasing, drastic fall in
Iron Ore price from quarter to quarter is not anticipated though some
price corrections can be expected as the supplies from Australia and
Brazil improves.
In the absence of long-term contracts, the difference between spot
market prices and quarterly contracted prices may drastically reduce
once the quarterly pricing mechanism is accepted by Steel mills. Though
the demand for Steel is likely to increase, the volatility in Iron Ore
prices may continue for some more time.
Due to increase in price of Coke in addition to Iron Ore, price of Pig
Iron in domestic market is likely to move up. The demand for Foundry
grade Pig Iron is also likely to look up as performance in automobile
and agriculture sectors is expected to further improve during the
financial year.
6.0 PROFIT AND DIVIDEND
Due to adverse impact on the physical performance of the Company, the
financial performance was also severely affected. During the year under
report, your Company has incurred a loss of Rs. 177.27 crores as
compared to Profit After Tax of Rs.22.01 crores in the year 2008-09.
Your Directors therefore do not recommend any Dividend for the year
2009-10.
7.0 MEMORANDUM OF UNDERSTANDING WITH GOVERNMENT OF INDIA
Your Company has been signing the Memorandum of Understanding every
year with its Administrative Ministry, Ministry of Steel. MoU between
KIOCL and the Ministry of Steel for the year 2010-11 was signed on
05.03.2010, envisaging the production target of 2.780 million tonnes of
Pellets and 0.100 million tonnes of Pig Iron for achieving the "Good"
performance.
The performance evaluation of the Company for the year 2008-09
vis-a-vis MoU targets is rated as Fair. Performance Evaluation of the
Company for the year 2009-10 vis-a-vis MoU targets is to be evaluated.
8.0 PROJECT EXPANSION AND BUSINESS DIVERSIFICATION
8.1 Ductile Iron Spun Pipe Project
In line with decision of the Board of Directors at its 191 st meeting
held on 12.11.2009, the existing global tender under consideration for
the installation and commissioning of DISP plant was cancelled.
Further, based on the Boards direction, for identification of a JV
partner for the DISP project, the process to fix a consultant and to
identify a JV partner has been initiated. An offer from M/s MECON
Limited has already been received for expert consultancy services
towards the formation of JV An EOI has been floated for the setting up
of Ductile Iron Spun Pipe Plant in the JV at Blast Furnace Complex,
Mangalore.
8.2 Pig Iron Casting Machine, Blast Furnace Complex
To improve the productivity, KIOCL decided to procure and install
additional pig casting machine in blast furnace complex based on the
study conducted by M/s MECON Limited and subsequent report submitted.
In this direction an open tender was floated on 22.09.2008 for the
procurement and installation of Pig Casting Machine. For procurement
and installation of Pig Casting Machine an order has been placed on M/s
Renuka Equipments (P) Ltd., Nagpur on 31.08.2009 for supply and
installation of Pig Casting Machine.
8.3 Procurement and installation of Horizontal Pressure Filters
8.3.1 Met-Chem has submitted a report after a detailed study conducted
on the ore received from Donimalai (NMDC) for the suitability of the
ore to produce quality Pellets. The report suggests for the replacement
of existing Vacuum Disc Filters with Pressure Filters.
8.3.2 Based on the approval accorded by the Board to procure 3 nos. of
Horizontal Pressure Filters, KIOCL has floated a Global Tender notice
for the procurement and installation of the filters.
8.4 Bulk Material Handling and Railway Siding Facilities:
8.4.1 KIOCL has to get the required quantity of Iron Ore from the
indigenous sources especially from Bellary Hospet region by rail only.
As such a dedicated Railway terminal is required for receiving the Iron
Ore closest to the plant. Bulk Material Handling project is to handle
the Iron Ore fines received at the Permanent Railway Siding system from
various agencies and convey the same to the storage shed inside the
plant area. The project consists of wagon tippler, storage bunkers,
conveying facilities etc. from the site of unloading to the plant
storage area.
8.4.2 The DPR has been prepared for the project and KIOCL is in the
process of acquiring the land required for the projects.
8.5 Construction of Storage Silos with handling facilities
KIOCL has envisaged to construct a Storage Silo of 8000 to 10000 tons
capacity with handling facilities for Iron Ore fines at Pellet plant
for augmenting additional storage and handling facilities for
continuous feed to the ball mills as the existing system has a limited
capacity for handling the Iron Ore fines. The feasibility report of
the project has been prepared and the project is expected to be taken
up by June 2010.
8.6 Selection of Joint Venture partner for Equity participation for
setting up of an Integrated Steel plant in the State of Karnataka
8.6.1 The Mineral Policy, 2008 of Government of Karnataka clearly
envisages that the state is in favour of Entrepreneurs establishing
real value addition to the Iron ore like setting up of Steel plant in
the State of Karnataka. Such Enterprises will be given preference in
mine allotment. In this process the Company will be able to do forward
integration by making its presence in the steel sector. The process
will also strengthen the claim of mines allotment for the Company. At
this backdrop, the Board of Directors has in-principle agreed for the
equity participation by KIOCL for setting up of an Integrated Steel
Plant (ISP) in the state of Karnataka.
8.6.2 KIOCL had appointed consultant for preparation of tender document
and floated NIT on 27.04.2009 for the aforesaid purpose. The evaluation
of the received bid has been completed and techno-commercial
recommendation is received from the consultant. After necessary
approvals from the Board, Company will take further action to draw a
suitable Joint Venture Agreement to be signed with the selected party.
8.7 Eco-Tourism at Kudremukh
8.7.1 The Companies mining operation at Kudremukh was stopped w.e.f.
01.01.2006 as per the Honble Supreme Courts judgement. Alternatively
KIOCL is exploring the possibilities of utilizing its assets and
facilities which are already available at Kudremukh and also by
creating additional facilities to develop eco-tourism.
8.7.2 In this regard, KIOCL approached Secretary, Revenue, Government
of Karnataka (GOK) with a plan of developing eco-tourism at Kudremukh,
hence sought for renewal of lease for existing revenue land at
Kudremukh. Secretary, Revenue, GOK vide letter dated 08-08-2007 advised
KIOCL to prepare a detailed Project Report (DPR) and submit the same to
the State Government and the said project may be taken up as a Joint
Venture in collaboration with Jungle Lodges & Resorts Ltd (JLR) a State
Govt. Undertaking.
8.7.3 KIOCL has appointed a Consultant for preparation of DPR which is
under final stage. The final DPR will be submitted to State Government
to initiate appropriate action in this matter.
8.7.4 KIOCL is already initiated discussion with JLR to enter into an
MOU for creation of eco-tourism facilities at Kudremukh.
9. MINING LEASES FOR IRON ORE DEPOSIT
9.1 Chikkanayakanahalli Iron Ore Deposit
9.1.1 Government of Kamataka had granted mining lease over an area of
116.55 ha in Hombalghatta and Hosahalli villages in favour of KIOCL.
9.1.2 Indian Bureau of Mines has already approved mine plan on 23rd
September 2008. De-reservation proposal submitted in Form "A" to Nodal
officer, Forest department, Govt, of Karnataka for diversion of entire
forestland for mining purpose is under process with State Forest
Department.
9.1.3 Ministry of Environment and Forest, Govt, of India accorded
Environment Clearance for the project vide letter dated 01.07.2009 for
mining of 1.0 mtpa of Iron Ore and 5000 tpa of Manganese Ore.
Subsequently, Karnataka State Pollution Control Board has accorded
consent for establishment for the project under Air Act, 1981 and Water
Act, 1974 vide letter dated 21.10.2009.
9.2 Ramanadurg Iron Ore Deposit
In respect of mining lease of Ramanadurg Iron Ore Deposit, Bellary
district of Karnataka, the writ petitions filed by NMDC and other
parties were disposed of on 27.11.2006 by the Honble High Court of
Karnataka holding that NMDC and other parties to the writ petitions
will have preferential rights than the applicants who have responded to
notification calling for grant of mining lease in Ramanadurg area. The
writ appeals filed by the State of Karnataka and others against the
aforesaid decision of the learned single judge have been dismissed by
the Honble Court on 12.03.2009. The aggrieved parties have filed
special leave petition in Supreme Court by challenging the dismissal of
their writ appeals. NMDC have also filed counter SLP to Honble Supreme
Court. Now the case is pending in Supreme Court. The Companys mining
lease application is pending with the State Government.
9.3 Khandadhar Iron Ore Deposit
In respect of mining lease of Khandadhar Iron Ore Deposit, Orissa,
during the pendency of KIOCLs application for prospecting Licence (PL)
and Mining Lease (ML), the Government of Orissa recommended to the
Central Government the name of M/s. POSCO for prospecting licence
quoting special reasons. This was challenged by KIOCL in writ petition
No 3234/09. The Honble High Court of Orissa granted an interim stay of
the operation of the recommendation and directed the Secretary, Govt.
of India, Department of Mines, not to take any action pursuant to such
recommendation of the Government of Orissa. In the meantime, the Govt,
of Orissa rejected KIOCLs application for PL & ML. Recently, KIOCL has
filed revision petition before the Central Government Mines tribunal
challenging the decision of the Govt, of Orissa in rejecting our PL and
ML applications. Hearing of revision applications before the Mines
Tribunal, Govt, of India for Khandadhar Iron Ore Deposit has been
completed and judgment is reserved.
Other Mining /Prospecting Leases
9.4 In the State of Kamataka, the Company is pursuing for Mining lease
for Vysankere & Hanumanahalli- Hospet, Narayanapura (Appenahalli)-
Sandur, Jaisingpur-Hospet, Bellary Dist and Kudre Kanive Kaval-
Hosadurgra, Chitradurga Dist, Hosanagara Iron Ore Deposit, Shimoga
district, Donimalai Range, Sandur taluk, Dist. Bellary, Haluvalli Iron
Ore Deposit , Mudigere, Chickamaglur dist.
9.5 In the State of Jharkhand, the Company is pursuing for mining lease
in Ghatkuri Iron Ore deposit in West Singhbhum district of Jharkhand.
The application of the Company for grant of Mining Lease is pending
with Jharkhand Government.
9.6 In the State of Kerala, Company is pursuing for mining lease for
Alampara Iron Ore Deposit, Kozhikode Dist. KIOCLs application for
grant of Mining Lease is pending.
9.7 In the State of Rajasthan, the company is pursuing for mining lease
for 4 blocks namely Samodi Block in Pur-Banera belt, Bhilwara district
for 1561.5226 Ha. Jipiya Block in Pur-Banera belt, Bhilwara district
for 378 Ha. Malikhera Block in Pur-Banera belt, Bhilwara district for
567.14 Ha. and Ranikhera (Ranipura)- Malikhera in Pur-Banera belt
Bhilwara district for 679.75 Ha.
9.8 Joint Venture with SAIL
9.8.1 A Memorandum of Understanding was signed with M/s Steel Authority
of India Limited (SAIL) for the development and exploitation of Taldih,
Barsua & Kalta deposits in Sundargarh district of Orissa, on joint
venture basis (50:50). Validity of MOU was extended twice and finally
expired on 28th September 2007. Subsequent to this, KIOCL once again
requested SAIL for extension of MOU which was denied by SAIL on the
basis of transfer of mining lease to Joint Venture Company.
9.8.2 As per letter dated 02-03-2009 from Ministry of Steel, a Joint
meeting between SAIL and KIOCL chaired by Joint Secretary, MOS was held
on 13.03.2009 to review the matter. In the meeting, both KIOCL & SAIL
were directed to find out the legal issues, if any in connection with
the transfer of mining lease to Joint Venture Company. Based on the
above directions, KIOCL obtained legal opinion and forwarded the same
to the Ministry of Steel on 7th April 2009 for further directions.
9.8.3 On further evaluation of the proposal, it is found that persuing
the matter further will not yield any benefit to the Company.
9.8.4 As such, the proposal was dropped.
10. ENVIRONMENTAL MANAGEMENT
10.1 Your Company is committed to preserve the Ecology and prevention
of pollution in its mining / manufacturing activities. During the
active mining operational periods Company has undertaken massive
afforestation programmes. Mining was undertaken in 3,200 acres of land
covered by grass. After mining was completed 7.5 million saplings
adaptable to Western Ghats were planted and the same has turned into
big forest now. Further at Mangalore the Company is processing the Iron
Ore with wet grinding system without any pollution and generation of
power through captive power plant, with zero emission. The Company has
won various Environmental Awards at National Level.
10.2 The Companys Environment Management System is Certified to 14001
- 2004 Standard by DNV The Certificate is valid upto 09-11-2012.
11. SAFETY
11.1 Although the mining activities at Kudremukh has been stopped with
effect from 01-01 -2006 as per the Honble Supreme Court verdict,
regular Safety inspections are being carried out to ensure Safety and
occupational health of employees engaged in upkeep and maintenance of
Mining Equipments, essential services like water pumping, watch and
ward etc., Safety awareness training is being imparted to the new
contract labourers who are coming for dismantling the structures and
other related works at Kudremukh.
11.2 Workers participation in Safety Management System is one of the
important criteria adopted by the Company. Area wise Safety Committees
are formed. Workers participation in these Safety Committees is
ensured.
11.3 Safety inspections are carried out regularly by the Safety Officer
along with Safety Committee members. Safety points are discussed in the
Safety meetings held once in three months. Suitable action is taken for
implementation of the shortfalls if any for improvement.
11.4 Various training programmes are being conducted to inculcate
safety consiousness and to develop human resources. Refresher training
covering their area of working, First Aid Training, Fire Fighting,
Awareness programme on Quality, Environment, Health & Safety Management
System are conducted on need base regularly.
11.5 As the Mangalore unit is under the aegis of the Factories Act from
January 2006,-the National Safety Day & Safety week is celebrated from
4th to 10th March every year.
12. QUALITY CONTROL - ISO 9001: 2008
The Companys Quality Management System is certified under the new ISO.
9001: 2008 Standard and this Certificate is valid upto 09-12-2012.
13. OHSAS- 18001:2007
Your Company has successfully implemented the Occupational Health and
Safety Management System as per OHSAS - 18001. This Certificate is
valid upto 09-12-2012.
14. PUBLIC/STAFF GRIEVANCE REDRESSAL
14.1 Your Company has framed a well defined grievance procedure evolved
under the Code of Discipline from the very inception of the company.
Since its introduction, the Scheme has been working satisfactorily
without any complaint from any corner, either from the recognised Union
or Officers Association of the Company. Grievances received have been
redressed to the satisfaction of the aggrieved employees. As regards
public grievance, as and when any complaints are received from the
public, necessary remedial action, if any, is taken by the Company
immediately.
14.2 Complaints/grievances other than the staff grievance are
categorised into customer/ consumer complaints/grievances from the
Contractors, NGOs/ General Public etc. The respective project heads are
empowered to dispose off the grievances concerning their areas and the
general public.
14.3 As regards women employees, the guidelines laid down by the
Supreme Court in the matter relating to sexual harassment of women in
work places are strictly followed.
14.4 The grievances received and disposed off by the Company are
reported to the Administrative Ministry on a monthly basis. The
guidelines laid down by the Government of India in this regard are
being followed. The Government also reviews the subject matter
periodically.
15. CONTRIBUTION TO RELIEF FUND
Between 28th September to 3rd October 2009, parts of north Karnataka
and Andhra Pradesh received six times more than its normal rainfall.
This coupled with overflowing rivers and
reservoirs resulted in massive flooding. 14 districts of Karnataka
state affected and nearly 63% of the geographical area with a
population of about 17.8 million were affected by floods and heavy
rainfall. KIOCL as a token of expression of our concern to flood
victims contributed Rs.25 lakhs to the Chief Ministers Calamity Relief
Fund. Besides this, employees of the Company also contributed a days
salary for the cause, which amounted to Rs. 11.90 lakhs. The employees
from Kudremukh Unit under the banner of Sarvajanika Hitharakshana
Okkoota collected food grains such as Rice, Jovar, wheat , Cooking Oil,
Chilli & Sambar powder, Soap, Biscuits, Steel plates & tumblers,
Bedsheets and Mats by volunteers of the Okkoota worth Rs. 1.75 lakhs.
The materials were distributed as relief packages to around 300 flood
affected families of Aski and Bandigani villages of Jhamakandi taluk in
Bagalkot Dist.
16. CORPORATE SOCIAL RESPONSIBILITY (CSR)
As a socially conscious corporate citizen, your Company has contributed
towards community development in and around the project particularly in
the areas of education and health care. Some of the schemes undertaken
during the year 2009-10 are as under:-
i) Running of Schools and other expenses on education.
ii) Distribution of medicine and extension of other medical facilities
to the tribal population and people of nearby area.
iii) Financial assistance to schools at Mangalore and neighbouring
areas for conducting sports and other related activities.
iv) Free medical camp was organised by the Company for heart ailment
awareness at Kudremukh and Mangalore for the public.
v) Contributions were made to the physically challenged people for
operation/artificial limbs.
17. MINISTRY OF STEELS 100 DAYS AGENDA PROGRAMME - PROPOSAL FOR
SUBSIDIARISATION OF NMDC AND CONSTITUTION OF COMMITTEE TO STUDY ABOUT
KIOCL
Ministry of Steel, Govt, of India as a part of their 100 days agenda
programme,-proposed to acquire 51% stake of KIOCL by NMDC thereby
making KIOCL as a subsidiary of NMDC. As a part of action plan, KIOCL
has appointed the Consultants for valuation of its shares and also to
evaluate option relating to its business restructuring plan for
associating with NMDC. A joint working group comprising of three
members each from NMDC and KIOCL was formed to assess the
techno-commercial viability of operating KIOCL. The Consultants and the
Joint Working Group constituted for that purpose have submitted their
report, which was sent to the Ministry of Steel duly recommended by the
Board for further directions.
As the purpose of making subsidiary of NMDC do not give benefit to the
Company, it was thought fit to drop the proposal.
Ministry of Steel, Government of India constituted a Committee with
four members under the Chairmanship of Shri P Ganesan, former CMD,
KIOCL to undertake detailed study and submit their recommendation on
the following:
a) To study the objective, attainment, business models and functioning
and to suggest strategies to achieve sustainable profits and enhanced
business presence and diversification in the sector;
b) To examine the structure and functioning and to make recommendations
regarding their re-organisation/merger with other companies or other
structural rearrangements as warranted with a view to optimising their
efficiency and profitability;
c) To examine the Capital Structure, shareholding pattern as well as
revival models, accumulated liabilities and losses and to make suitable
recommendation for improving the financial position and viability.
The Committee in the concluded remarks made the following observation:
"KIOCL has a history of facing threats right from inception and due to
combine efforts of employees and Government has withstood these in the
past. The Company, with the support of Government of India in getting a
mine allotted in its favour can, on a standalone basis, come back with
best results in the coming years also along with the envisaged plans
for expansion and diversification."
18. IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY
18.1 The Company follows the directives issued from time to time by the
Department of Official Language, Ministry of Home Affairs and Ministry
of Steel, Government of India for the progressive use of Official
Language Hindi. Towards this and to promote usage of the Official
Language by employees of the Company several programmes in the form of
Hindi Workshops/Hindi Weeks/Hindi Fortnight were organised at all
locations of the Company.
18.2 During the year Hindi Fortnight was orgainsed at all locations of
the Company. At Corporate Office several Hindi competitions are
organised during September 2009 and to mark the occation, concluding
function was held on 19th September 2009. During the function, Chief
Guest commended and appreciated the Implementation of Official Language
in the Company.
18.3 Companys effort in the implementation of the Official Language
Policy found recognisation by the Rastriya Hindi Academy, Roopambara,
Kolkata where Company was conferred with "Sahasrabdi (Millennium)
Rajbhasha Shield" and Certification for 2008-09 on 02-10-2009.
18.4 The Company is Convenor of Bangalore Town Official Language
Implementation Committee (Undertakings) and conducts regular meetings
and Joint Hindi Fortnight programmes for all Central PSUs in Bangalore.
18.5 The Company organised a Joint Hindi Fortnight for Town Official
Language Implementation Committee (Undertakings) members and 15
Competitions were conducted. All most all PSU Offices in Bangalore have
participated in these competitions. Prizes and Certificates were
awarded to the prize winners during the TOLIC meeting held on
07-01-2010.
18.6 A half yearly Souvenir titled "Deepika" was published and released
under Town Official Language Implementation Committee (Undertaking)
during the TOLIC meetings held on 20-04-2009 and 07-01-2010.
19. PERSONNEL
19.1 The total number of employees on the rolls of the Company as on
31.3.2010 was 1362 consisting of 899 workmen, 430 Executives and 33
Supervisors as against 1617 on 31.3.2009.
19.2 During the financial year 2009-10 (April 2009 to March 2010), 15
candidates (4-General, 2-SC, 4-ST, 2-OBC, 2-PWD & I Minority) were
recruited/appointed in Group A (Executives).
19.3 SCs/STs and women employees
The following table shows the number of SCs, STs, women employees,
Ex-servicemen and Persons with Disabilities as against the total number
of employees in different Groups on rolls of the Company as on
31.3.2010:
Group Total No.of SC ST No.of Ex- Physically
employees women service Handicapped
on rolls employees men
A 430 52 10 24 01 06
B 33 03 01 05 - -
C 823 120 36 21 11 09
D 67 15 09 03 - 03
D(Sweepers) 09 01 - 03 - -
Total:- 1362 191 56 56 12 18
19.4 Voluntary Retirement Scheme:
During the year 2009-10 (April 2009 to March 2010), VR Scheme has been
introduced effective from 5.3.2009 to 4.4.2009, 2.5.2009 to 16.5.2009,
1.2.2010 to 15.2.2010 and 6.3.2010 to 20.3.2010. Out of 255 employees
to be released on VRS, 244 have been released and I I will be released
in 2010-1 I on their specific request.
19.5 Compliance under Persons with Disabilities Act, 1995
Your Company ensures compliance under the Persons with Disabilities
Act, 1995. Suitable provision/modification is made in the working
place to meet the requirements of such persons with disability.
20. INDUSTRIAL RELATIONS AND EMPLOYEES WELFARE:
20.1 The Industrial Relations situation remained peaceful throughout
the year in all the establishments of the Company. Issues relating to
productivity, safety, welfare, etc., are mutually discussed with
employee representatives.
20.2 In pursuance of Government of India guidelines, wage revision for
Board level, below Board level Executives and non-unionised Supervisors
has been implemented during the year. In respect of non-executive
employees, negotiation with the recognised union is under progress.
20.3 Right from inception, the Company has provided various amenities
to its employees, such as well planned Township, Hospitals, Schools,
Recreation, Cable TV Net work, Parks, Temples, Church, Mosque, etc.,
besides Grant of Scholarships, Reimbursement of School Fees, Uniforms,
Childrens Out-station Education Allowance, Entertainment, Magazine and
Technical journal allowance etc..
20.4 As in the previous years, Dr. Ambedkar Jayanthi was celebrated at
all locations on 14th April 2009
21. HUMAN RESOURCE DEVELOPMENT
21.1 Human Resource Development is a continuous process. Training and
Development of all levels of employees is given priority by the Company
to improve their skills and contribute productively to the Company.
During the year, the achievement in this area was 879 Executive trained
man days and 1497 Non- Executive trained mandays.
21.2 Besides conducting in-house programmes, such as Computer Training,
Integrity Pact, Processing of Proposals -Vigilance aspects etc., the
Company has* deputed employees for outside conferences/training
programmes. The programmes were focused on both technical and
Managerial skills. Some of the programmes for which employees were
nominated are- Internal Financial Reporting Systems, Selection of
Consultants & Consultancy Agreements, Environmental clearence of Mining
projects, Winning strategies to re-vitalize Mining sectors, Process
modeling in Iron & Steel making. ISO 14001 & OHSAS 18001 Lead Auditor
course, Safety in Material handling, Efficient Iron making and support
initiatives, Public procurement, efficient use of Boilers, Project
Management for Engineers, Lean Six Sigma Strategies for business break
through and Managing Change & Institutional Development through Social
Innovation.
22. AWARD AND RECOGNITION
Your Company was conferred with Sahsrabdi (Millennium) Rajbhasha
Shield award on 02-10-2009 by Rastriya Hindi Academy, Roopambara,
Kolkata in recognition of Companys efforts in the implementation of
the Official Language Policy for 2008-09.
23. VIGILANCE
23.1 Vigilance Department of KIOCL obtained ISO-9001:2000 Certificate
on 07.11.2006 with a validity of 3 years. As the validity is expiring
in November 09, agencies have been fixed for consultation (for
up-gradation of system from 2000 version to 2008 version) and
Certification separately. M/s. ICS Pvt Ltd, has conducted audit on 6th
November, 2009 and issued certificate that is valid up to 8th December,
2012.
23.2 Integrity Pact Programme has been introduced in KIOCL from
01.01.2008. Annual Review Meeting with Transparency international India
was held on 30th September, 2009. Admiral (Retd.) Tahiliani, Chairman,
Til, New Delhi, Under Secretary, MoS, New Delhi have attended the
programme. About 15 agencies (Counter parties) have participated. CMD,
Directors, CVO, lEMs, Sr. Officers of the Company were present. CVO
outlined the basics of the Integrity pact to all the participants. The
counter parties and lEMs shared their experience on IR Doubts raised by
counter parties were clarified by Mr. Tahiliani, CMD and CVO. Till
March 2010, about 136 contracts have been issued with IP included. But
so far no complaints have been received by the lEMs.
23.3 Vigilance awareness Week was observed from November 03rd - 07th
2009 in KIOCL Limited. On this occasion a programme was arranged on 4th
November 2009. Justice (Retd) N. Venkatachala, former Lokayuktha,
Karnataka State was the Chief Guest. On this occasion the Company has
honored three officers for very high integrity who have scored
excellent grading in respect of four traits such as fairness,
transparency, discipline & ethical behavior in their annual appraisals
for 3 continuous years with an Integrity Recognition Certificate. On
7th November 2009, the concluding day of observance of vigilance
awareness week, a lecture programme was arranged in the conference
hall. Sri. Narasimha Komar, IPS, SR CBI, Bangalore was the Chief
Guest. He spoke about the "Role of CBI in the fight against
corruption".
23.4 Vigilance Department has conducted about 10 training programmes at
three different locations. More than 300 employees have participated in
these programmes. Important topics such as Integrity Pact, leveraging
technology, improve transparency & effective use of website, preventive
vigilance, etc., were covered.
23.5 Complaints are investigated properly. Inspections, surprise checks
and scrutinies are done regularly to find out irregularities and
loopholes in the procedures. System improvements and corrective
measures are suggested for implementation.
24. DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 2I7(2AA) of the Companies
Act, 1956 with respect to Directors Responsibility Statement, it is
hereby confirmed that -
i. in the preparation of the Annual Accounts for the financial year
2009-10, the applicable Accounting Standards have been followed along
with proper explanation relating to material departures;
ii. The Directors have selected such Accounting Policies and applied
consistently, that made judgements 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 on 31.03.2010 and of the Profit/ (Loss) of the
Company for the said period;
iii. the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities; and
iv. The Directors have prepared the Accounts for the financial year
ended 31.03.2010 on a going concern basis.
25. BOARD OF DIRECTORS
Appointment
Shri George Elias, IAS, Joint Secretary, Ministry of Steel was
appointed as Part time official Director w.e.f. 10.1 1.2009. Shri NR
Mohanty, Dr. Chiranjib Sen, Shri B Ramesh Kumar and Prof. VR Sastry
were appointed as Part time Non-Official Directors of the Company vide
letter No.5(l l)/2007-KDM dated 30.7.2009. The Directors appointed
during the year will hold the office up to the ensuing Annual General
Meeting and being eligible, offer themselves for re-appointment. Brief
resume of the Directors seeking appointment together with the nature of
expertise as stipulated under clause 49 of the listing agreement with
the Stock Exchanges are given in the notice convening the ensuing 34th
AGM of the Company forming part of the Annual Report.
Appropriate resolutions for the appointment of the aforesaid Directors
are being moved at the ensuing AGM which the Board commends for your
approval.
Cessation
Shri BS Meena, IAS, Special Secretary & Financial Adviser, Ministry of
Steel resigned from the Directorship consequent upon his appointment as
Secretary to Department of Heavy Industries in Ministry of Heavy
Industry & Public Enterprise w.e.f. 31.3.2010.
Dr. Dalip Singh, IAS, Joint secretary to Govt, of India ceased to be
part time official Director W.e.f. 10.1 1.2009 consequent to
reallocation of work in the Ministry of Steel.
Shri Sreeman NS has relinquished charge as Director (Commercial) of the
Company w.e.f. 26.1 1.2009 in terms of Ministry of Steel letter No.
5(IO)/2007-KDM dated 24.11.2009.
Shri S Ravi and Dr. Sukumar Devotta, Directors completed their tenure
as Non-official Directors. Your Directors place on record their deep
appreciation of the valuable services rendered/advice and guidance
provided by S/Shri S Ravi, Dr. Sukumar Devotta, Sreeman NS, BS Meena
and Dr. Dalip Singh as Directors of the Company during their tenure.
26. LISTING REQUIREMENTS
I. The Companys shares are listed on the following Stock exchanges:
Bangalore Stock Exchange Limited, Madras Stock Exchange Limited,
"Stock Exchange Towers", Exchange Building,
No.5l, 1st Cross, J.C.Road, P.O.Box No. 183, 11 Second
Line Beach,
Bangalore - 560 027. Chennai - 600 001.
II. The Company has paid the Annual listing fee to each of these Stock
Exchanges for the year 2009-10.
III. A report on the Corporate Governance is at Annexure-ll.
IV A declaration by the Chairman-cum-Managing Director regarding the
Code of Conduct for the Board Members and the Senior Management of the
Company is at Appendix-I to Annexure-ll.
V A Certificate from the Chairman-cum-Managing Director and the
Director (Finance) regarding the Financial and Cash Flow statements is
at Appendix-ll to Annexure-ll.
VI. A certificate from the Auditors of the Company regarding
compliance of conditions of Corporate Governance is at Annexure-lll.
VII. There is no pecuniary relationship or any transactions by any of
the non-executive Directors vis-a-vis the Company.
27. STATUTORY AUDITORS
Pursuant to Section 619(2) of the Companies Act, 1956 the Comptroller
and Auditor General of India has appointed M/s Murali Associates,
Chartered Accountants as Statutory Auditors of the Company for the year
2009-10.
28. STATUTORY AUDITORS REPORT, COMMENTS OF C&AG AND MANAGEMENT REPLY
The comments of C&AG under Section 619(4) of the Companies Act, 1956 on
the accounts of the Company for the year ended 31 st March 2010, the
Statutory Auditors observations and management replies thereto are
annexed to the report.
29. IMPLEMENTATION OF RIGHT TO INFORMATION ACT, 2005
The information required to be provided to citizens under Section 4( I
)(b) of the RTI Act 2005 has been posted and updated on the website of
the Company, www.kioclltd.com. The information posted on the website
contains general information about the Company, powers and duties of
the employees, information about decision making, rules, regulations,
manuals and records held by KIOCL, directory of the Companys officers,
pay scales, procedure for requesting additional information about the
Company by citizens and associated request formats. During the year
2009-10 the company received and attended to 57 requests for
information under RTI.
30. ENERGY CONSERVATION
The electricity consumption per tonne of Pellet production in kwh was
lower during the year as compared to the previous year. The decrease in
consumption of electricity is on account of stabilisation of Pellet
production during the year. Energy conservation day was celebrated on
14-12-2009 at Mangalore. Various competitions were held as a part of
Energy Conservation week and prizes were distributed to the winners of
various competitions conducted during the week. Electricity consumption
during 2009-10 as compared to 2008-09 was as under:-
2009-10 2008-09
Consumption per tonne of Pellets
production in kWh 66.92 86.91
(including grinding)
31. ENERGY AUDIT
The Companys operations are highly energy intensive. Keeping in view
the importance of energy conservation, a specific plan and a programme
has been drawn for compulsory energy audit to quantify the targets for
energy conservation over the entire operational area. The
recommendations of M/s Tata Energy Research Institute (TERI) (now M/s
The Energy Research Institute), in the areas of energy conservation
have been implemented. Energy conservation is an ongoing process.
Efforts are continuing to conserve energy in all possible areas. Energy
Audit is carried out through Petroleum Conservation & Research
Association (PCRA) and some more measures of energy conservation are
being planned as suggested by PCRA in a phased manner.
32. R&D, TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
The information relating to Technology Absorption, Adaptation and
Innovation, R&D and foreign exchange earning & outgo to be disclosed in
Companies (Disclosure of particulars in the Report of Board of
Directors) Rules, 1988 is given and forms part.of this report.
33. PARTICULARS OF EMPLOYEE OF SECTION 217 (2A) OF THE COMPANY READ
WITH COMPANIES (PARTICULARS OF EMPLOYEES) RULES 1988
During the year none of the employee was covered under the purview of
Section 217(2A) of the Companies Act, 1956 read with Companies
(Particulars of Employees) Rules, 1988.
34. ACKNOWLEDGEMENT
34.1 Your Directors gratefully acknowledge the support, cooperation and
guidance received from the Honble Minister for Steel, Honble Minister
of State for Steel, the Secretary, Ministry of Steel and other
officials of the Department of Steel as well as other Ministries of the
Government of India and the Government of Karnataka and all other
departments/agencies concerned in all the endeavours of the Company.
34.2 Your Directors also acknowledge the timely advice and assistance
rendered by the Indian Embassies abroad during the year in the
Companys marketing efforts.
34.3 Your Directors sincerely thank all the customers and suppliers for
their support and co-operation.
34.4 The Directors also appreciate the continued and dedicated efforts
put in by all the employees to overcome many challenges faced during
the year.
34.5 Last but not the least, your Directors express their gratitude to
the Shareholders for the confidence reposed by them in the management
of the Companyv
For and on behalf of the Board of Directors
Place: Kudremukh (K.Ranganath)
Dated: 26-06-2010 Chairman-cum-Managing Director
Mar 31, 2009
On behalf of the Board of Directors of your Company, I have great
pleasure in presenting the 33rd Annual Report together with the audited
statement of accounts of your Company for the year ended on 31.03.2009.
The Auditors Report and the Comments on the Accounts of the Company by
the Comptroller and Auditor General of India thereon are annexed to
this report.
2.0 YEAR HIGHLIGHTS AT A GLANCE
-I n spite of dropping in sales quantity of pellets due to worldwide
recession from 1.927 MT during 2007-08 to 1.316 MT for the financial
year 2008-09, the Company is able to earn net profit of Rs. 22.01 crore
for the year;
-Govt. of Karnataka had granted Mining lease over an area of 116.55
hectares in Hombalghatta and Hosahalli village in favour of KIOCL.
Karnataka State Pollution Control Board has successfully conducted a
public hearing on 20.01.2009 at project site for environment clearances
for the project. The Company is in the process to obtain necessary
statutory clearances;
-To make the name of the Company synonymous with its objective, the
existing name of the Company has been changed to KIOCL Limited;
-The Company has realized highest ever sale price of US $ 245 per tonne
of Pellets and Rs. 33,000/- per tonne of Pig Iron before world wide
recession set in;
-Highest daily production 10,000 ton on 30.6.2008 and highest monthly
production 2,30,000 in July 2008 for the year 2008-09 and overall
second best achievement in any month so far, after switching over to
use of Hematite ore procured from outside source since January 2006;
-KISCO the erstwhile wholly owned subsidiary Company has merged with
KIOCL w.e.f. 1.4.2007 come out the purview of BIFR during the year,
accordingly your Company declared dividend for the year 2007-08 at the
Extra Ordinary General Meeting.
3.0 PHYSICAL AND FINANCIAL HIGHLIGHTS
During the year 2008-09, the important physical and financial
highlights are as under
3.1 Physical Highlights (Qty. in Million tonnes)
2008-09 2007-08 Percentage
Particulars MOU Target Actual MOU Target Actual Change
(Very Good) Achievement (Very
Good) Achieve- (Actual)
ment
Production
Pellets including
Pellet Fines 2.850 1.316 2.600 1.927 (-) 31.7
Pig Iron and
Auxiliary
Materials 0.196 0.118 0.199 0.157 (-) 24.8
Sales
Pellets including
Pellet Fines 2.850 1.131 2.600 1.907 (-) 40.7
Pig Iron and
Auxiliary
Materials 0.196 0.074 0.199 0.170 (-)54.0
3.2 Financial Highlights (Rs. in croores)
Particulars 2008-09 2007-08
Turnover (Net of Excise Duty) 1159.57 1413.11
Other Income 144.81 152.25
Gross Margin 67.67 211.74
Interest 0.02 6.11
Depreciation and DRE 43.47 49.12
Profit Before Tax 24.18 156.51
Provision for Tax 2.17 48.35
Profit After Tax 22.01 108.16
Appropriations
Proposed Dividend 6.34 21.63
Corporate Dividend Tax 1.08 3.68
Transfer to General Reserve 14.59 82.85
Net Worth 2105.65 2086.99
4.0 SEGMENT-WISE PERFORMANCE
4.1 Pellets
As against the MOU target of 2.85 MT of Pellet Production the Company
produced 1.316 MT of pellets during 2008-09 vis-Ã -vis 1.927 MT for
2007-08 which is almost 46% of the production target for the year
2008-09. Low production of Pellets on account of depressed market
condition with low demands for pellet both domestically as well as in
the international market, particularly from the 2nd half of 2008-09.
In the 1st half of 2008-09 the Company has done exceptionally well with
the growing demand of Pellets as well as the prices also shoot up to a
level of US $245 per MT. During this period the Company was able to
produce and sold nearly 70% of the yearly target.
But with sudden onset of global recession subsequent to Olympic at
China, the market went into depressed mood. The demand for the pellets
was drastically reduced and also prices reached to rock bottom to US$
54 per MT. The market slightly improved thereafter, but was not
sufficient enough to recover the cost of production of the product. To
arrest the situation the Company carried out the maintenance activity
way ahead of schedule in anticipation the market will revive in the
last quarter. However, there is no sign of recovery even upto the end
of 4th quarter, which has resulted no sale of pellet for entire 4th
quarter and very limited quantity in the 3rd quarter. The Company is
holding stock of nearly 2.55 lakh tons of Pellets.
4.2 Pig Iron and Auxiliary
As against the MOU target of 0.196 MT of Pig Iron Production the
Company produced 0.118 MT during 2008-09 vis-Ã -vis. 0.157 MT for
2007-08 which is 60% of the production target. Like Pellets the demand
for Pig Iron also reduced drastically due to low consumption by the
other sector viz: Automobile Industry etc. During the entire 3rd
quarter the Company did not produce hot metal and produced limited
quantity in the 4th quarter. In order to remain in the market and to
keep its customers in its folds the Company is selling only a portion
in the market.
4.3 The production performance in respect of Pellets and Pig Iron (in
thousand dry metric tonnes) for the last three years is reproduced
below in a graphic form:-
Note: The erstwhile KISCO has merged with the Company w.e.f. 1.4.2007.
The information of Pig Iron was given for 2007-08 onwards.
5.0 Market Scenario - 2009-10:
Due to global economic crisis, the global Steel production may go down
up to 20% in 2009-10. For the CompanyÂs Pellets, China will remain as
potential market in 2009-10. Settlement of long term prices for Iron
Ore is getting delayed due to resistance from Chinese Mills. Long term
prices may fall between 30 to 40% & spot market has already crashed by
more than 50%. Present deals are taking place at cheaper spot rates
mostly for lower Fe grade Iron Ores by negotiations. Global Pellet
market is badly affected due to poor demand and most of the Pellet
plants have already reduced production by 30%. Opening stock of Iron
Ore during beginning of April 2009 is around 70 Million Tonnes in
China. Market may be volatile till the finalisation of annual prices
for Iron Ore. Your Company is exploring the possibilities to sell
Pellets through Long Term, Counter Trade contracts in addition to spot
contracts for 2009-10 to get better realisation.
6.0 Profit and Dividend
Due to adverse impact on the physical performance of the Company, the
financial performance also severely affected. During the year under
report your Company earned a profit of Rs. 22.01 crores on turnover of
Rs. 1159.56 crores as compared to Rs. 108.16 crores and Rs. 1413.11
crores in the previous financial year 2007-08.
Your Directors propose to pay a Dividend @ 1% on the Paid up Share
Capital of the Company for the year 2008-09, if approved by the
shareholders in the general meeting. This works out to Rs. 6.34 Crores
excluding Dividend Distribution Tax, which works out to 28.81% of Net
Profit.
7.0 Fixed Deposit
The Company has not accepted any fixed deposit during the current
financial year.
8.0 Memorandum of Understanding with Government of India
Your Company has been signing the Memorandum of Understanding every
year with its Administrative Ministry, Ministry of Steel. MoU between
KIOCL and the Ministry of Steel for the year 2009-10 was signed on
31.03.2009, envisaging the production target of 2.650 million tonnes of
Pellets and 0.170 million tonnes of Pig Iron for achieving the ÂGoodÂ
performance.
The performance of your Company against the MoU for 2007-08 is ÂVery
GoodÂ. Performance Evaluation of the Company for the year 2008-09
vis-Ã -vis MoU targets on a provisional basis indicates that the Company
qualifies to be rated as ÂFairÂ. The final evaluation by the Government
of India and the result thereof is awaited.
9.0 PROJECT EXPANSION AND BUSINESS DIVERSIFICATION
9.1 DUCTILE IRON SPUN PIPE PROJECT
9.1.1 In order to make Blast Furnace Unit as a viable unit on stand
alone basis the Board of Directors of the Company has approved for
setting up 1,00,000 tonnes per annum of a DISP plant at BFU, Mangalore.
A Global tender was floated for placement of work order on turnkey
basis. Due to global recession and in order to get better price, the
Board has decided to cancel the existing tender and invite for fresh
Global Tender.
9.1.2 The Company has issued a Global Re-Tender on 09-02-2009 and three
offers were received on bid due date i.e. 24-03-2009. The offers
received are under evaluation for putting up to the Board.
9.2 PIG IRON CASTING MACHINE, BLAST FURNACE COMPLEX
To improve the productivity, your Company has decided to procure and
install additional pig casting machine in Blast Furnace complex. An
open tender was floated on 22.09.2008 for the procurement and
installation of Pig Casting Machine. Against this tender two offers
were received. The techno-commercial evaluation has been done and Price
bids will be opened shortly.
9.3 PROCUREMENT AND INSTALLATION OF HORIZONTAL PRESSURE FILTERS
9.3.1 M/s Met-Chem has submitted a report after a detailed study
conducted on the ore received from Donimalai (NMDC) for the suitability
of the ore to produce quality pellets. The report suggests for the
replacement of existing vacuum disc filters with pressure filters.
9.3.2 Based on the approval accorded by the Board to procure 3 nos. of
Horizontal Pressure Filters, the Company has floated a Global Tender
notice for the procurement and installation of the filters.
9.4 SELECTION OF JOINT VENTURE PARTNER FOR EQUITY PARTICIPATION FOR
SETTING UP OF AN INTEGRATED STEEL PLANT IN THE STATE OF KARNATAKA
As per Mining Policy of various states, State Govt. clearly envisages
that State is in favour of entrepreneurs establishing real value
addition to iron ore. Such enterprises will be given preference in mine
allotment. In this process the Company will be able to do forward
integration by making its presence in the steel sector. The process
will also strengthen the CompanyÂs claim for obtaining mining lease. At
this backdrop the Board of Directors has in-principle agreed to set up
a Integrated Steel Plant on joint venture in the State of Karnataka. An
EOI inviting partners for setting up of an ISP in equity participation
has been floated.
9.5 CREATING ECO -TOURISM FACILITIES AT KUDREMUKH
The Company is pursuing for necessary statutory clearances and awarded
the contract for preparing the detailed project report for creation of
eco-tourism facilities at Kudremukh.
10 MINING LEASES FOR IRON ORE DEPOSIT
10.1 Chikkanayakanahalli Iron Ore Deposit
10.1.1 Government of Karnataka had granted mining lease over an area of
116.55 ha in Hombalghatta and Hosahalli villages in favour of KIOCL
10.1.2 Indian Bureau of Mines has already approved mine plan on
23.09.2008. De- reservation proposal submitted in Form ÂAÂ to Nodal
officer, Forest department, Govt. of Karnataka for diversion of entire
forestland for mining purpose is under process with State Forest
Department.
10.1.3 Karnataka State Pollution Control Board has conducted a public
hearing on 20.01.2009 at project site for environment clearances for
the project. The final EIA/EMP report along with proceedings of public
hearing was submitted to MoEF, Govt. of India, on 09.03.2009 for
awarding the environmental clearance.
10.2 Ramanadurg Iron Ore Deposit
In respect of mining lease Ramanadurg Iron Ore Deposit, Bellary
district of Karnataka, the writ petitions filed by NMDC and other
parties were disposed of on 27.11.2006 by the HonÂble High Court of
Karnataka holding that NMDC and other parties to the writ petitions
will have preferential rights than the applicants who have responded to
notification calling for grant of mining lease in Bellary Ramanadurg
area. The writ appeals filed by the State of Karnataka and others
against the aforesaid decision of the learned single judge have been
dismissed by the HonÂble Court on 12.03.2009. M/s. Ramgad Minerals and
other aggrieved parties have filed special leave petition in Supreme
Court by challenging the dismissal of their writ appeals. Now the case
is pending in Supreme Court. The CompanyÂs mining lease application is
pending with the State Government.
10.3 Khandadhar Iron Ore Deposit
In respect of mining lease Khandadhar Iron Ore Deposit, Orissa, during
the pendency of the KIOCLÂs application for prospecting Licence (PL)
and Mining Lease (ML), the Government of Orissa recommended to the
Central Government the name of
M/s. POSCO for prospecting licence quoting special reasons. This was
challenged by KIOCL in writ petition No 3234/09. The HonÂble High Court
of Orissa granted an interim stay of the operation of the
recommendation and directed the Secretary, Govt. of India, Department
of Mines, not to take any action pursuant to such recommendation of the
Government of Orissa. In the meantime, the Govt. of Orissa rejected
KIOCLÂs application for PL & ML. Recently, KIOCL has filed revision
petition before the Central Government Mines tribunal challenging the
decision of the Govt. of Orissa in rejecting our PL and ML
applications.
Other Mining /Prospecting Leases
10.4 In Karnataka, your Company is pursuing for Mining lease for
Vysankere & Hanumanahalli- Hospet, Narayanapura (Appenahalli)- Sandur,
, Jaisingpur-Hospet, Bellary Dist and Kudre Kanive Kaval- Hosadurgra,
Chitradurga Dist,
10.5 In Jharkhand your Company is pursuing for ML in Ghatkuri Iron Ore
deposit in West Singhbhum district of Jharkhand. The application of the
Company for grant of Mining Lease is pending with Jharkhand Government.
10.6 In Kerala, your Company is pursuing for ML in Alampara Iron Ore
Deposit, Kozhikode Dist. Preliminary discussions held with the State
Government on 22.05.2007. Road Map for Exploitation of deposit has been
submitted to the State Government. KIOCL submitted second time, the
road map for exploitation of deposit on 18.11.2008. KIOCLÂs application
for grant of Mining Lease is pending.
10.7 In Maharashtra, your Company is pursuing for PL for Iron Ore
deposit Gunderwaymeta Iron Ore Deposit, Gadchiroli Dist, Maleramata
Iron Ore Deposit, Gadchiroli Dist and Adolgurda Iron Ore Deposit,
Gadchiroli Dist.
10.8 JOINT VENTURE WITH SAIL
10.8.1 A Memorandum of Understanding was signed with M/s Steel
Authority of India Limited (SAIL) for the development and exploitation
of Taldih, Barsua & Kalta deposits in Sundargarh district of Orissa on
29.09.2004 on joint venture basis (50:50).
10.8.2 KIOCL has completed the job of Preparation and approval of Mine
Plan of ML-130 (lease area of Taldih, Barsua & Kalta) from Indian
Bureau of Mines. The job of Environmental Clearance for the project is
under progress.
10.8.3 Since the validity of MOU has expired on 28.09.2007, KIOCL
sought extension of MoU with SAIL till the formation of Joint venture.
However, SAIL, informed KIOCL that, the company would not like to
extend MOU further and asked to settle the issues as per the relevant
clauses of MOU. Ministry of Steel conducted a Joint meeting between
SAIL and KIOCL Chaired by Joint Secretary, MOS on 13.03.2009 to discuss
the possibilities of extension of MoU for development of Taldih Iron
Ore mine. Both KIOCL & SAIL were directed to find out the legal issues,
if any within a month in connection with the transfer of mining lease
of Barsua, Taldih & Kalta (ML130) Iron Ore mine on JV Company, as
raised by SAIL on the subject. KIOCL has obtained legal opinion with
regard to transfer of mining lease on JV Company and forwarded same to
the Ministry of Steel for further direction from the Ministry.
11. ENVIRONMENTAL MANAGEMENT
11.1 Your Company is committed to preservation of ecology and
prevention of pollution in its manufacturing activity.
11.2 No afforestation activities could be undertaken in mine abandoned
area during the year due to restriction on activities in forest area.
11.3 The CompanyÂs Environment Management System is Certified to 14001
 2004 Standard by DNV.
12. SAFETY
12.1 Due to stoppage of mining activities w.e.f. 31.12.2005 at
Kudremukh only essential & need based training & safety programmes are
conducted at Kudremukh. Safety awareness classes for new contract
workers engaged in dismantling/disposal activities were conducted.
General safety inspections were carried out in all locations during the
year. First-aid training, refresher training, safety awareness classes
were conducted during the year at Mangalore.
12.2 An analysis of accidents indicates a decreasing trend in respect
of both employees and contract workers, which is the indicator of
effective implementation of OHS Management System. OHSAS-18001
Management System was audited both internally at every six months and
also by an external agency in order to check the effectiveness of the
system.
12.3 As the Mangalore unit is under the aegis of the Factories Act from
January 2006, the National Safety Day & Safety week was celebrated from
4th to 10th March every year.
13. QUALITY CONTROL - ISO 9001: 2000
The CompanyÂs Quality Management System is certified under the new ISO
9001: 2000 Standard.
14. OHSAS Â 18001:1999
Your Company has successfully implemented the Occupational Health and
Safety Management System as per OHSAS Â 18001.
15. CORPORATE SOCIAL RESPONSIBILITY (CSR)
As a socially conscious corporate citizen, your Company has contributed
towards community development in and around the project particularly in
the areas of education and health care. Some of the schemes undertaken
during the year 2008-09 are as under:- i) Running of Schools and other
expenses on education.
ii) Distribution of medicine and extension of other medical facilities
to the tribal population and people of nearby area.
iii) Financial assistance to schools at Mangalore and neighbouring
areas for conducting sports and other related activities.
iv) Free medical camp was organised by the Company for heart ailment
awareness at Kudremukh and Mangalore for the public.
v) Contributed towards Flood Victims of Bihar State through SAIL, the
co-ordinating agency for Ministry of Steel.
16. IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY
16.1 The Company follows the directives issued from time to time by the
Department of Official
Language, Ministry of Home Affairs and Ministry of Steel, Government of
India for the progressive use of Official Language Hindi. Towards this
and to promote usage of the Official Language by employees of the
Company several programmes in the form of Hindi Workshops/Hindi
Weeks/Hindi Fortnight were organised at all locations of the Company.
16.2 Your CompanyÂs effort in the implementation of the Official
Language Policy found recognisation in the Hindi Salahakar Samithi
Meeting of Ministry of Steel where the Company conferred with Official
Language Prothsahan Shield for the year 2005-06 among the C -Region.
16.3 The Company is Convenor of Bangalore Town Official Language
Implementation Committee (Undertakings) and conducts regular meetings
and Joint Hindi Fortnight programmes for all Central PSUs in Bangalore.
16.4 The Company organised a Joint Hindi Fortnight for Town Official
Language Implementation Committee (Undertakings) members and 13
Competitions were conducted. Most of the PSU Offices in Bangalore have
participated in these competitions.
16.5 During the year, the Company had the privilege of the interacting
with the Drafting and Evidence Sub-Committee of the Committee of
Parliament on Official Language on 8th & 9th September 2008.
17. PERSONNEL
17.1 The employee strength of your Company as on 31.03.2009 was 1617
consisting of 1139 workmen, 449 Executives and 29 Supervisors as
against 1642 on 31.03.2008. The Company employed 82 women employees as
on 31.03.2009.
17.2 During the calendar year 2008 (Jan. 08 to Dec. 08), 5 candidates
(General category) were recruited in Group ÂAÂ (Executives).
17.3 SCs/STs AND WOMEN EMPLOYEES
The particulars of SCs, STs, women employees, Ex-servicemen and
Physically Handicapped as against the total number of employees in
different Groups on rolls of the Company as on 31.03.2009:-
Executives Non-Executives
Category of Group ÂAÂ Group ÂBÂ Group ÂCÂ Group ÂDÂ
Employees (Including
Sweepers)
Scheduled Caste 52 01 155 46
Scheduled Tribe 10 02 44 12
Women Employee 27 10 26 19
Ex-Servicemen 01 - 14 -
Physically
Handicapped 05 - 11 04
Total 95 13 250 81
17.4 VOLUNTARY RETIREMENT SCHEME
No Voluntary Retirement Scheme has been introduced during the year
2008. One Executive who has applied in response to VR Scheme introduced
during the year 2007 has been released in April 2008. During the year
2009 (January 2009 to March 2009), VR Scheme has been introduced
effective from 05.03.2009 to 04.04.2009.
17.5 Compliance under Persons with Disabilities Act, 1995
Your Company ensures compliance under the Persons with Disabilities
Act, 1995. Suitable provision/modification is made in the working place
to meet the requirements of such persons with disability.
18. INDUSTRIAL RELATIONS AND EMPLOYEE WELFARE
18.1 The Industrial Relations situation remained peaceful throughout
the year in all the establishments of the Company. Issues relating to
productivity, safety, welfare, etc., are mutually discussed with
employee representatives.
18.2 Right from inception, the Company has provided various amenities
to its employees, such as well planned Township, Hospitals, Schools,
Recreation, Cable TV Network, Parks, Temples, Church, Mosque, etc.
besides Grant of Scholarships, Reimbursement of School Fees, Uniforms,
ChildrenÂs Out-Station Education Allowance, Entertainment, Magazine and
Technical Journal Allowance etc.
18.3 As in the previous years, Dr. Ambedkar Jayanthi was celebrated at
all the locations of the Company on 14.04.2008.
19. HUMAN RESOURCE DEVELOPMENT
19.1 Human Resource Development is a continuous process. Training and
Development of all levels of employees is given priority by the Company
to increase effectiveness. During the year, the achievement in this
area was 568 Executive trained man-days and 1142 Non-executive trained
man-days.
19.2 Besides conducting in-house programmes, the Company also deputed
employees for outside conferences/training/developmental programmes.
The programmes were focussed on both technical and Managerial skills.
Some of the in house programmes conducted are  Reservation policy, ISO
Internal AuditorÂs training, ISO Core Team Members training and
Computer training.
20. AWARD AND RECOGNITION
Your Company was a recipient of the following Awards during the year:-
ÂMinistry of Steel, Govt. of India conferred ÂIspat Rajbhasha ShieldÂ
to the Company on 5.4.2008 in recognition of remarkable progress in the
field of Progressive Use of Official Language Hindi and its
implementation for the year 2005-06;
ÂOn 05-02-2009, Visweswaraya Industrial Trade Centre, Government of
Karnataka has conferred State Export Excellence Award under Mineral &
Mineral based products ÂNon SSI ÂGold for the year 2005-06.
21. VIGILANCE
21.1 The main thrust in your Company is given on Predictive &
Preventive rather than Punitive Vigilance. During the year apart from
observing the Vigilance Awareness Week, your Company conducted a number
of seminars and awareness programmes for the benefit of employees as
well as the vendors / customers. Surprise and routine checks are
conducted regularly to detect the loopholes in the system for
irregularities. Complaints are investigated promptly. Corrective
measures for administrative reforms and system improvement are
suggested. Sensitive areas have been identified for job rotation which
is being effected gradually keeping in view that the work is not
hampered.
21.2 With a view to achieve ÂEXCELLENCE WITH ETHICSÂ in all business
contacts last year the Company has signed an MOU with M/s Transparency
International India, and implemented in the Company w.e.f. 1.1.2008.
During the year 47 contracts have been issued with IP included. But so
far no complaints have been received by the IEMs.
21.3 Vigilance Department has conducted 3 internal audits so far in the
current calendar year under Quality System Standard (ISO 9001). M/s Det
Norske Veritas (DNV) has conducted second periodic audit on 25.11.2008.
They have appreciated Vigilance for adoption and implementation of IP
and conducting training classes as measure of preventive vigilance.
There was only one minor observation which has been complied with.
22. CHANGE OF NAME OF THE COMPANY
To make the name of the Company synonymous with its objective, as
approved by the shareholders at the Extra Ordinary general Meeting held
on 17.01.2009 the name of the Company has been changed to KIOCL
Limited. The new name came into effect w.e.f. 22.01.2009.
23. DIRECTORSÂ RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956 with respect to Directors Responsibility Statement, it is
hereby confirmed that Â
i. in the preparation of the Annual Accounts for the financial year
2008-09, the applicable Accounting Standards have been followed along
with proper explanation relating to material departures;
ii. The Directors have selected such Accounting Policies and applied
consistently, that made judgements 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 31.03.2009 and of the Profit of the Company for the
said period;
iii. The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities; and
iv. The Directors have prepared the Accounts for the financial year
ended 31.03.2009 on a going concern basis.
24. BOARD OF DIRECTORS
During the year, Shri P Ganesan, Chairman-cum-Managing Director
relinquished office on attaining the age of superannuation. Consequent
upon Superannuation of Shri Ganesan, additional charge of CMD, KIOCL
was assigned to Shri Rana Som, Chairman-cum-Managing Director, NMDC
Limited till joining of regular CMD. Shri K Ranganath was appointed as
Chairman-cum-Managing Director. Dr. Dalip Singh, Joint Secretary to
Govt. of India was appointed as Director vice Shri George Elias who
ceased to be a Director consequent to reallocation of work in the
Ministry of Steel. Shri TMGK Bhat has been appointed as Director
(Finance) during the year. S/Shri BK Bhattacharya and NR Mohanty,
Directors completed their tenure as Non-official Directors. Your
Directors place on record their appreciation of the valuable services
rendered by S/Shri P Ganesan, Rana Som, George Elias, BK Bhattacharya
and NR Mohanty.
25. LISTING REQUIREMENTS
I. The CompanyÂs shares are listed on the following Stock exchanges:
Bangalore Stock Exchange Limited, Madras Stock Exchange Limited,
ÂStock Exchange TowersÂ, Exchange Building,
No.51, 1st Cross, J.C.Road, P.O.Box No.183, 11
Second Line Beach,
Bangalore  560 027. Chennai  600 001.
II. The Company has paid the Annual listing fee to each of these Stock
Exchanges for the year 2008-09.
III. A report on the Corporate Governance is at Annexure-II.
IV. A declaration by the Chairman-cum-Managing Director regarding the
Code of Conduct for the Board Members and the Senior Management of the
Company is at Appendix-I to Annexure-II.
V. A Certificate from the Chairman-cum-Managing Director and the
Director (Finance) regarding the Financial and Cash Flow statements is
at Appendix-II to Annexure-II.
VI. A certificate from the Auditors of the Company regarding
compliance of conditions of Corporate Governance is at Annexure-III.
VII. There is no pecuniary relationship or any transactions by any of
the non-executive Directors vis-Ã -vis the Company.
26. STATUTORY AUDITORS
Pursuant to Section 619(2) of the Companies Act, 1956 the Comptroller
and Auditor General of India have appointed for the year 2008-09 M/s
Ramraj & Co, Chartered Accountants as Statutory Auditors of the
Company.
27. STATUTORY AUDITORS REPORT, COMMENTS OF C&AG AND MANAGEMENT REPLY
The comments of C&AG under Section 619(4) of the Companies Act, 1956 on
the Accounts of the Company for the year ended 31st March 2009, the
Statutory Auditors observations and management replies thereto are
annexed to the report.
28. IMPLEMENTATION OF RIGHT TO INFORMATION ACT, 2005
Your Company is proactively complying with the provisions of Right to
Information Act, 2005. All information sought under the Act has been
furnished within the stipulated time period. During the year under
report your Company has received total of 25 requests for information
under RTI Act, 2005 of these 24 requests were replied and 1 request was
rejected.
29. ENERGY CONSERVATION
The electricity consumption per tonne of Pellet production in kwh was
higher during the year as compared to the previous year. The increase
in consumption of electricity is on account of lower production of
Pellets during the year. Energy conservation day was celebrated on
14-12-2008 at Mangalore. Various competitions were held as a part of
Energy Conservation week and prizes were distributed to the winners of
various competitions conducted during the week. Electricity consumption
during 2008-09 as compared to 2007-08 was as under:- 2008-09 2007-08
Consumption per tonne of Pellets 86.91 84.11
production in kWh (including grinding)
30. ENERGY AUDIT
The CompanyÂs operations are highly energy intensive. Keeping in view
the importance of energy conservation, a specific plan and a programme
has been drawn for compulsory energy audit to quantify the targets for
energy conservation over the entire operational area. The
recommendations of M/s Tata Energy Research Institute (TERI) (now M/s
The Energy Research Institute), in the areas of energy conservation
have been implemented. Energy conservation is an ongoing process.
Efforts are continuing to conserve energy in all possible areas. Energy
Audit is being carried out again in a phased manner and is in advanced
stage of completion.
31. R&D, TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
The information relating to Technology Absorption, Adaptation and
Innovation, R&D and foreign exchange earning & outgo to be disclosed
Companies (Disclosure of particulars in the Report of Board of
Directors) Rules, 1988 regarding is given and forms part of this
report.
32. PARTICULARS OF EMPLOYEE OF SECTION 217 (2A) OF THE COMPANY READ
WITH COMPANIES (PARTICULARS OF EMPLOYEE) RULES 1988
During the year none of the employees was covered under the purview of
Section 217(2A) of the Companies Act, 1956 read with Companies
(Particulars of Employees) Rules, 1988.
33. ACKNOWLEDGEMENT
33.1 Your Directors gratefully acknowledge the support, cooperation and
guidance received from the HonÂble Minister for Steel, Chemicals &
Fertilizers, HonÂble Minister of State for Steel, the Secretary,
Ministry of Steel and other officials of the Department of Steel as
well as other Ministries of the Government of India and the Government
of Karnataka and all other departments/agencies concerned in all the
endeavours of the company.
33.2 Your Directors also acknowledge the timely advice and assistance
rendered by the Indian Embassies abroad during the year in the
CompanyÂs marketing efforts.
33.3 Your Directors sincerely thank all the customers and suppliers for
their support and co-operation.
33.4 The Directors also appreciate the continued and dedicated efforts
put in by all the employees to overcome many challenges faced during
the year.
33.5 Last but not the least, your Directors express their gratitude to
the Shareholders for the confidence reposed by them in the management
of the Company.
For and on behalf of the Board of Directors
Place : New Delhi (K.Ranganath)
Dated : 25.06.2009 Chairman-cum-Managing Director
Mar 31, 2007
The Directors have great pleasure in presenting the 31st Annual Report
of the Company together with the Audited Accounts, Auditors Report and
Comments by the Comptroller and Auditor General of India thereon for
the year ended on 31st March, 2007.
2.0 OVERVIEW
2.1 In retrospect, the year 2006-07 has been a very difficult year for
the Company. Consequent upon switchover from magnetite ore from the
captive mines at Kudremukh to Hematite Ore sourced from NMDC and other
sources, the operations of Pellet Plant at Mangalore has been affected
significantly. This has adversely affected the production and
profitability of the Company for the year under review.
2.2 Due to usage of 100% Hematite Ore, the Pellet Plant Mangalore is
facing innumerable problems and the process is yet to stabilize.
Samples of Iron Ore fines have been sent to various agencies both in
India and abroad for testing and based on the conclusions of such
results, necessary changes in process parameters will be made in the
process flow sheet. However, this is to be further evaluated for
technical, economical and financial viability.
3.0 PRODUCTION
3.1 Concentrate
In pursuance of the directive of the Honble Supreme Court, the mining
activities at Kudremukh have been stopped on 31-12-2005. There was no
production of Iron Ore Concentrate during the year 2006- 07.
3.2 Pellets
As against a target of 3.050 million tonnes of Pellets set in the MoU
for the year, the actual production was 0.630 million tonnes, which is
21% achievement of the target. The shortfall in production of pellets
during the year is on account of problems faced after switching over to
use of 100% Hematite Iron Ore sourced from NMDC and other sources.
3.3 The following table summarises the production performance during
the past five years:-
CP: Concentrate Plant PP: Pellet Plant (Qty. in million tonnes)
Year MoU target Actual Production Capacity
Utilisation in %
CP PP CP PP CP PP
2006-07 - 3.050 - 0.630 - 18
2005-06 3.100 3.050 2.922 2.834 58 81
2004-05 4.000 3.500 4.350 3.795 65 95
2003-04 5.000 3.400 5.090 3.671 76 92
2002-03 5.500 3.500 5.532 3.450 83 86
* Includes Pellet Fines also. The rated capacity of the Pellet plant
was 4 million tonnes for the year 2002-03 to 2004-05 and the same has
been derated to 3.5 million tonnes from the year 2005- 06, consequent
to utilisation of certain assets and provision made in the Books of
Accounts for the balance assets of Shaft Pelletisation Furnace of 0.5
Million tonnes capacity per annum.
** The Capacity utilisation of Concentrate Plant during 2005-06 has
been arrived at taking note of the fact that the mining activities at
Kudremukh have been stopped on 31.12.2005. Accordingly, the rated
capacity has been reduced proportionately.
3.4 MEMORANDUM OF UNDERSTANDING WITH THE GOVERNMENT
The Company started signing MoU with the Govt. of India from the year
1991-92. Except for the year 1998-99, your Company has been rated
Excellent for the past thirteen years. Performance Evaluation of the
Company for the year 2006-07 vis-Ã -vis MoU targets on a provisional
basis indicates that the Company qualifies to be rated as FAIR. The
final evaluation by the Government of India and the result thereof is
awaited.
4.0 FINANCE AND ACCOUNTS
4.1 The Authorised, Subscribed and Paid-up Share Capital of the Company
remained unchanged during the year.
4.2 Internal resources generated during the year amounted to Rs. 45.49
crores.
4.3 Total Sales during the year amounted to Rs. 267.44 crores. This is
equivalent to US $ 60.274 million as compared to US $ 278.341 million
during the previous year.
4.4 Cash balance at the end of the year stood at Rs. 1298.90 crores
(including Term Deposits) and there was no overdraft as on 31st March,
2007. Reserves and Surpluses as on 31st March 2007 were Rs.1443.21
crores as against Rs.1429.43 crores as on 31st March 2006 after
providing for deferred Tax liabilities.
4.5 During the year under report, your Company proposes to carry Rs.
13.77 crores to the General Reserve Account.
4.6 Your Company has not generated adequate profit during the year
2006-07. Accordingly, no Dividend payment has been proposed for the
year 2006-07.
4.7 Financial performance
The Financial performance of the Company for the year 2006-07 along
with the comparative figures for the previous financial year in brief
are furnished below:
(Rs. in crores)
Particulars 2006-07 2005-06
Sales 267.44 1232.28
Profit before tax (PBT) for the year 19.94 548.10
Profit after Tax (PAT) 13.77 356.30
5.0 COMPLIANCE WITH SECTION 217 (2AA) OF THE COMPANIES ACT, 1956
In pursuance of section 217(2AA) of the Companies Act, 1956 which
requires inclusion of a Directors Responsibility Statement, your
Directors hereby certify -
i. that in the preparation of the Annual Accounts, the applicable
Accounting Standards have been followed along with proper explanation
relating to material departures.
ii. that such of those Accounting Policies have been selected and have
been applied consistently, that such of those judgements and estimates
have been made, which are reasonable and prudent so as to give a true
and fair view of the state of affairs of the Company at the end of the
financial year and of the Profit of the Company for the year under
review.
iii. that proper and sufficient care has been taken for the maintenance
of adequate accounting records in accordance with the provisions of the
Companies Act for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities.
iv. that the Annual Accounts have been prepared on a going concern
basis.
6.0 MARKETING AND EXPORTS
During the year, Pellets was supplied to China and domestic buyers.
Sales in the DTA represented 81.04% of the total sale of Pellets in
quantitative terms and 83.33% in monetary terms.
6.3 For the next year 2007-08, your Company has committed production of
3.0 million tonnes of Pellets under the Excellent category of the MoU
signed with the Govt. of India.
6.4 During the year, 17 ships were handled at New Mangalore Port as
compared to 71 ships handled during the previous year.
7.0 EXPANSION AND DIVERSIFICATION
7.1 Mining in Orissa: The Govt. of Orissa had earlier identified an
area of over 54 sq. kms. (5400 hectares) in Sundargarh District,
containing probable low-grade Hematite Ore reserves. Prospecting work
had been completed for the deposit by the Geological Department of
Orissa Government on behalf of the Company. The prospected area (10.56
Sq. KM) is expected to contain Minerable Reserve of about 150 million
tonnes of low-grade Hematite Iron Ore.
7.2 In the meantime, Department of Steel and Mines, Govt. of Orissa has
conveyed that it has decided not to allow KIOCL to go ahead of setting
up beneficiation/pelletisation plant for the Iron Ore reserves of
Khandadhar mining areas. However, KIOCL has requested Govt. of Orissa
to reconsider its decision. Recently, KIOCL has filed a Writ Petition
in the High Court of Orissa at
Cuttack challenging the aforesaid decision of the Govt. of Orissa.
Meanwhile, M/s POSCO, has filed an intervening application stating that
Govt. of Orissa has recommended their case for prospecting licence. The
Company has filed an objection statement before the Ministry of Mines.
Subsequently, KIOCL has filed another writ petition challenging the
forwarding of POSCOs application to Central Government recommending
for grant of prospecting licence. The Honble High Court of Orissa has
directed that the objection filed by KIOCL before the Central
Government be treated as a Revision Petition. KIOCL has also been given
3 weeks time to file the rejoinder and the same has been sent to
Central Government.
7.3 Ramanadurg Iron Ore Deposits:
7.3.1 The application submitted by the Company to the Secretary
(Commerce & Industry), Govt. of Karnataka in April 2003 for grant of
mining lease in Ramandurga in Bellary district of Karnataka is pending
with Government of Karnataka. Government of Karnataka Cabinet has taken
a decision to allot 50% of the deposits in favour of KIOCL.
7.3.2 Seven parties had filed a writ petition challenging the
Notification dated 17.02.2003 issued by the Government of Karnataka
dereserving iron ore bearing lands in Bellary area, Karnataka (Block
No. 13,14,15 & 17) and also Notification dated 15.03.2003 calling
application from the Public for grant of mining lease and for a
direction to grant mining lease in respect of land measuring 4.5 sq.
kms in Ramanadurg, Bellary District. The Honble High Court of
Karnataka pronounced its judgement and highlights of the judgement are
as under:
(i) The application filled by the petitioners in all these writ
petitions shall be considered by the state government under section 11
(2) of the act without reference to the first proviso to section 11(2)
of the act and the impugned notification in the light of the
observations made above.
(ii) Only in the event of not granting the lease in favour of any of
the petitioners as referred to in clause (i) supra; the application
received in pursuance of the impugned notifications in the respect of
land covered in these writ proceedings, may be considered in accordance
with law.
7.3.3 All the application pending prior to the impugned notification
and the applications received in pursuance of the impugned
notifications, in respect of lands covered under these writ petitions,
the state government is at liberty to consider them in accordance with
the proviso to section 11 (2) of the act.
7.3.4 The Company is taking all necessary steps to get the said lease
allotted in its favour.
7.4 Joint Venture with SAIL:
7.4.1 In September 2004, KIOCL had entered into an MOU with SAIL for a
Joint Venture for Mining at Barsua, Kalta and Taldih mines in Orissa.
M/s MECON Ltd, Ranchi has prepared a feasibility report of the project
and the same is accepted by both the JV partners.
7.4.2 The job of preparation of mine Plan & preparation of EIA/EMP for
Environmental Clearance has been assigned to KIOCL, under the proposed
Joint Venture Company. Orders for preparation of EIA/EMP studies has
been placed on MECON.
7.4.3 As a part of the aforesaid Joint Venture, the possibility of
setting up of a new mine of 4.25 MTPA beneficiation plant and 2 MTPA
pellet plant at Taldih in Orissa is also being examined.
7.5 Chikkanayakanahalli Project:
7.5.1 Government of Karnataka has recommended for grant of mining lease
for one block (Block no. 2) over an area of 116.55 Ha. in Hombalghatta
and Hosahalli area in Chikkanayakanahalli Taluk in Tumkur District.
Subsequently a Joint survey was carried out and Survey drawings were
prepared and submitted for concurrence of officials of Mines & Geology
after fixing boundary stones.
7.5.2 The Company has requested Dy. Conservator of Forests, Tumkur for
enumeration of trees and classification of forestland etc. The job of
enumeration of trees has been completed.
7.5.3 The Company has requested PCCF (General), Bangalore for
exploratory drilling permission. Approach road up to the borehole
points and location of drilling points have been marked in the site and
plan submitted to the Forest Department.
7.5.4 Enumerations of trees for the proposed approach road and drilling
points have been completed. Permission for exploratory drilling from
Forest Department is awaited.
8 JOINT VENTURE PIG IRON PROJECT
8.1 In order to set up a Pig Iron & Ductile Iron Spun Pipe Plant at
Mangalore, your Company has entered into Joint Venture with MECON &
MSTC. A separate Company - Kudremukh Iron & Steel Company Limited
(KISCO) has been set up for the purpose. The Joint Venture Company
KISCO has became a wholly owned subsidiary of KIOCL w.e.f. 30th June,
2006. Production and Sale of Hot Metal, Pig Iron and Slag during the
year 2006-07 was as under:- Production
i) Hot Metal 1,80,400 MT
ii) Pig Iron 1,63,219 MT
iii) Slag 41,530 MT
Sales
i) Pig Iron 1,53,544 MT
ii) Auxiliary Product 15,349 MT
iii) Slag 27,135 MT
Stock
i) Pig Iron 20,349 MT
ii) Auxiliary Product 4,654 MT
8.2 Some of the highlights of performance of the subsidiary Company
during the year under report were as under:- *Production of 1,80,400 MT
of Hot Metal during 2006-07 is the highest production of Hot Metal
achieved in any year since commencement of commercial production;
* Production of 163,219 MT of Pig Iron during 2006-07 is the highest
production achieved in any year since commencement of commercial
production;
* Despatch of 1,53,544 MT of Pig Iron during 2006-07 is the highest
quantity of Pig Iron despatched in any year since inception;
Despatch of 15349 MT of Auxilary Product and 27135 MT of Slag during
2006-07 are the highest quantity of Auxilary product and Slag
despatched in any year so far.
9 MERGER OF KISCO WITH KIOCL
A proposal for merger of KISCO with KIOCL has been approved by your
Board of Directors. The Share holders of the Company and also KISCO
have approved a proposal for merger of KISCO with KIOCL in the
extraordinary General meeting held on 10th July, 2006. Orders of Board
for Industrial & Financial Reconstruction (BIFR) is awaited. KISCO has
became a wholly owned subsidiary of KIOCL during the year w.e.f. 30th
June, 2006. As the members are aware, your Company has invested a sum
of Rs.50 crores in KISCO towards Equity. Besides this, your Company
has also extended the following:-
9.1 lent a sum of Rs.227.50 crores to KISCO.
9.2 provided Lien facility on its Fixed Deposits to an extent of
Rs.57.40 crores to enable KISCO to avail Corporate Loan facility from
Banks including non-fund based limits.
9.3 a further Lien facility on its Term Deposits with Banks for an
amount upto a limit of Rs.80 crores to enable KISCO to avail Working
Capital Loan facility from Banks including non-fund based facility.
9.4 In addition to the above, temporary trade advances has also been
extended to KISCO to meet its commitments.
The Annual Report of the Subsidiary Company, KISCO is annexed.
Statement pursuant to section 212 of the Companies Act, 1956 pertaining
to the subsidiary company is enclosed at Annexure-I.
KISCO was converted into a wholly owned subsidiary of KIOCL in order to
facilitate its merger with the holding Company. KISCO is operating
under severe long-term constraints, which significantly impair its
ability to transfer funds to the parent. In view of this and under the
provisions of clause 11 of the Accounting Standard (AS) - 21
"Consolidated Financial Statements and Accounting for Investment in
subsidiaries in separate Financial Statements" the consolidated
financial statements of the Company Accounts and its subsidiary i.e.,
KISCO, have not been drawn up for the year 2006-07. However, on
consolidation, the net profit after tax will stand at Rs.212.97 lakhs.
10. R&D, TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
The particulars required under section 217(1) of the Companies Act,
1956 read with the Companies (Disclosure of particulars in the Report
of Board of Directors) Rules, 1988 regarding the Technology Absorption,
Adaptation and Innovation and R&D are furnished separately in
Annexure-II.
11. ENERGY CONSERVATION
The electricity consumption per tonne of Pellet production in kWh was
higher during the year as compared to the previous year. Increase in
consumption of electricity is on account of switching over to use of
Hematite Ore from Magnetite Ore consequent to stoppage of mining
activities at Kudremukh on 31st December, 2005. The Electricity
consumption during 2006-07 as compared to 2005-06 was as under:
2006-07 2005-06
Consumption per tonne of Pellets 132.31 37.53
production in kWh (including grinding)
12 ENERGY AUDIT
The Companys operations are highly energy intensive. Keeping in view
the importance of energy conservation, a specific plan and a programme
has been drawn for compulsory energy audit to quantify the targets for
energy conservation over the entire operational area. The
recommendations of M/s Tata Energy Research Institute (TERI) (now M/s
The Energy Research Institute), in the areas of energy conservation
have been implemented. Energy conservation is an ongoing process.
Efforts are continued to conserve energy in all possible areas.
13 QUALITY CONTROL - ISO 9001: 2000
The Companys Quality Management System was certified under the ISO
9001: 2000 Standard and this Certificate is valid upto 25th May, 2008.
14 OHSAS - 18001:1999
Your Company has successfully implemented the Occupational Health and
Safety Management System as per OHSAS - 18001. The certificate is valid
upto 4th December, 2009.
15 ENVIRONMENTAL MANAGEMENT
15.1 Your Company is committed to preservation of ecology and
prevention of pollution in its manufacturing activity. All measures
were taken for monsoon protection, prevention of siltation etc under
the supervision and guidance of IIT, Delhi as directed by Honble
Supreme Court.
15.2 Other activities such as afforestation, improvement of Town park,
bio-technological approach to sustain the ecological balance of mined
area, etc., continued during the year.
15.3 The Companys Environment Management System is Certified to 14001
- 2004 Standard by DNV. The Certificate is valid until November 2009.
16 PARLIAMENTARY COMMITTEE
During the year, your Company was honoured by the visit of following
Parliament Committees:-
i) Standing Committee on Coal and Steel on 30th June, 2006;
ii) Standing Committee on the welfare of Scheduled Castes & Scheduled
Tribes on 12th July, 2006; iii) Third sub-committee of Parliamentary
Committee on Official Language on 6th July, 2006; and
iv) Standing Committee on Industry on the status of reservation for
persons with disabilities on 4th January, 2007.
17 PUBLIC/STAFF GRIEVANCE REDRESSAL
17.1 Your Company has framed a well defined grievance procedure evolved
under the Code of Discipline from the very inception of the company.
Since its introduction, the Scheme has been working satisfactorily
without any complaint from any corner, either from the recognised Union
or Officers Association of the Company. Grievances received have been
redressed to the satisfaction of the aggrieved employees. As regards
public grievance, as and when any complaints are received from the
public, necessary remedial action, if any, is taken by the Company
immediately.
17.2 Complaints/grievances other than the staff grievance are
categorised into customer/consumer complaints/grievances from the
Contractors, NGOs/ General Public etc. The respective project heads are
empowered to dispose off the grievances concerning their areas and the
general public.
17.3 As regards women employees, the guidelines laid down by the
Supreme Court in the matter relating to sexual harassment of women in
work places are strictly followed.
17.4 The grievances received and disposed off by the Company are
reported to the Administrative Ministry on a monthly basis. The
guidelines laid down by the Government of India in this regard are
being followed. The Government also reviews the subject matter
periodically.
18 LISTING REQUIREMENTS
I. The Companys shares are listed on the following Stock exchanges:
a) Bangalore Stock Exchange Limited, "Stock Exchange Towers",
No.51, 1st Cross, J.C.Road,
Bangalore - 560 027.
b) Madras Stock Exchange Limited,
Exchange Building,
P.O.Box No. 183, "
11 Second Line Beach,
Chennai - 600 001.
II. The Company has paid the Annual listing fee to each of the
aforesaid Stock Exchanges for the year 2006-07.
III. A report on the Corporate Governance is at Annexure-III.
IV. A declaration by the Chairman-cum-Managing Director regarding the
Code of Conduct for the Board Members and the Senior Management of the
Company is at Appendix-I to Annexure-III.
V. A Certificate from the Chairman-cum-Managing Director and the
Director (Finance) regarding the Financial and Cash Flow statements is
at Appendix-II to Annexure-III.
VI. A certificate from the Auditors of the Company regarding
compliance of conditions of Corporate Governance is at Annexure-IV.
VII. There is no pecuniary relationship or any transactions by any of
the non-executive Directors vis- a-vis the Company.
19 CORPORATE SOCIAL RESPONSIBILITY (CSR)
As a socially conscious corporate citizen, your Company has contributed
towards community development in and around the project particularly in
the areas of education and health care. Some of the schemes undertaken
during the year 2006-07 are as under:-
* Running of Central School at Kudremukh.
* Buildings, books and other financial assistance to the Educational
Institutions.
* Distribution of Medicine and other medical facilities to the tribal
population and other people of nearby areas.
20 HUMAN RESOURCE DEVELOPMENT
20.1 Human Resource Development is a continuous process. Training and
Development of all levels of employees is given priority by the Company
to increase effectiveness. During the year, the achievement in this
area was 801 Executive trained man-days and 411 Non-executive trained
man-days.
20.2 Besides conducting in-house programmes, the Company also deputed
employees for outside conferences/training/developmental programmes.
The in-house training was focussed on both technical and non-technical.
20.3 The outside programmes included India Mining Summit, Global
Offshore outsourcing summit, National Seminar on Public Procurement,
Project Management, Application of Radio Isotopes, Mineral Processing
Technology, Bulk Material Handling, Vigilance for Organisational
Excellence, Sino India Economic Co-operation, Knowledge Management,
Work Shop on EPF Act, National Convention on Reservation policy,
Knowledge Process Outsourcing etc.
21 PERSONNEL
21.1 The total number of personnel on the rolls of the Company as on
31st March, 2007 was 1582 consisting of 1080 workmen, 380 Executives
and 122 Supervisors as against 1889 on 31st March, 2006.
21.2 Section 217 (2-A) of the Companies Act, 1956
None of the employees were in receipt of remuneration exceeding
Rs.2,00,000/- per month or Rs.24,00,000/- per annum during the year.
22 SCs/STs AND WOMEN EMPLOYEES
The following table shows the number of SCs, STs, women employees,
Ex-servicemen and Physically Handicapped as against the total number of
employees in different Groups on rolls of the Company as on 31st March
2007:-
Group Total No.of SC ST
employees
on rolls
A 380 51 9
B 122 2 1
C 950 149 42
D 101 27 12
D(Sweepers) 29 24 2
Total 1582 253 66
No.of Ex- Physically
women servicemen Handicapped
employees
13 2 3
22 1 2
24 41 11
11 - 3
11 - -
81 44 19
There is no backlog vacancies in any of the categories for the year
2006-07.
23 PHYSICALLY HANDICAPPED
23.1 As on 31.3.2007, there were 19 Physically Handicapped employees on
rolls of the Company. Group-wise distribution is as under:-
Group-A - 3
Group-B - 2
Group-C - 11
Group-D - 3
Group-D(S) - -
Total 19
23.2 The Company had launched a Special Recruitment Drive earlier to
recruit Physically Handicapped candidates in Group C & D posts. The
Company recruited 7 handicapped employees in Group- C and 2 in Group-D.
No discrimination is made in recruitment or promotion on account of
their physical disabilities.
23.3 Physically Handicapped employees are given exemption in Income Tax
as per the Income Tax Rules. Physically Handicapped employees are also
exempted from paying Professional Tax in accordance with the Government
Rules in this regard. Physically Handicapped employees are provided
quarters near to the Administrative Building at the Companys Township
at Kudremukh. Conveyance allowance is granted to the orthopaedically
handicapped employees immediately on their application overriding
seniority of other employees requests.
24 SAFETY
24.1 Your Company gives utmost importance to the occupational Safety
and Health of the persons working in the Company. Workers
participation in Safety Management System is one of the important
criteria adopted by the Company. Area wise Safety Committees are
formed. Workers participation in these Safety Committees is ensured.
Safety inspections are carried out regularly by the Safety Officer
alongwith the Safety Committee Members and the Safety points are
discussed in the Safety Meetings held every month.
24.2 As a measure of Safety of workmen, employees and the Contract
Labourers are subjected to periodical Medical examination to detect
occupational diseases. So far, no notified occupational diseases have
been reported. An analysis of accidents indicates a decreasing trend
in respect of both employees and contract workers, which is the
indicator of effective implementation of OHS Management System.
OHSAS-18001 Management System was audited both internally at every six
months and also by an external agency in order to check the
effectiveness of the system.
24.3 As the Mangalore unit is under the aegies of the Factories Act
from January 2006, the National Safety Day & Safety week was celebrated
from 4th to 10th March. The Flag hoisting ceremony and the concluding
days functions were held. Various competitions as a part of Safety
campaign were held during the week.
24.4 Mock Drill was conducted on 17th November 2006 to test &
demonstrate our preparedness to emergency response as per our On Site
Emergency Plan (OSEP) in the presence of Sr. Asst. Director of
Factories, Mangalore & other Safety Professionals from neighboring
industries. One day workshop on Training in safety was organized on
29-03-2007. Executives, Non-executives and Contractors participated.
The programme was conducted by Deputy Director of Factories & Sr. Asst.
Director of Factories, Mangalore. Safety Committee meetings and safety
inspections are carried out as per the statutory norms.
25 WELFARE
25.1 Right from inception, the Company has provided various amenities
to its employees, such as well planned Township, Hospitals, Schools,
Recreation, Cable TV Network, Parks, Temples, Church, Mosque, etc.
besides Grant of Scholarships, Reimbursement of School Fees, Uniforms,
Childrens Out-Station Education Allowance, Entertainment, Magazine and
Technical Journal Allowance etc.
25.2 As in the previous years, Dr.Ambedkar Jayanthi was celebrated at
all the locations of the Company on 14th April, 2006.
26 INDUSTRIAL RELATIONS
The Industrial Relations situation remained peaceful throughout the
year in all the establishments of the Company. Kudremukh Employees
Union (KEU) was the recognised union during the year. The Joint
Council, Shop Councils, Safety Committees and Canteen Management
Committees meet regularly and their discussions contribute towards
improving Industrial Relations, Production activities and resolving
differences, if any.
27 VOLUNTARY RETIREMENT SCHEME
The Company had introduced a Voluntary Retirement Scheme during
February, 2006. The scheme was in operation from 16-02-2006 to
10-04-2006. The scheme was again reintroduced in July, 2006 and was in
operation from 12-07-2006 to 26-07-2006. 308 employees i.e., 65
Executives, 48 Supervisors and 195 Non-executives were released under
the scheme as on 31 -03-2007.
28 RAJBHASHA
28.1 The Company follows the directives issued from time to time by the
Department of Official Language, Ministry of Home Affairs and Ministry
of Steel, Government of India for the progressive use of Official
Language Hindi.
28.2 Hindi training is given to the employees. Cash awards and
increments are given as per the Government directives. Hindi
Workshops, Orientation programmes are conducted regularly to create
awareness, impart knowledge and encourage the employees to do their
Official work in Hindi. Cash award is given to such of those employees
who do the official work in Hindi.
28.3 All the stationery, Nameplates and Name boards of the Company are
in bilingual form. The Annual Report, MoU, House Magazine, Employees
Pension Scheme, etc., are printed in Hindi also. Hindi Software is
provided in Computers in all Departments.
28.4 Official Language implementation Committee meetings take place
regularly and the progress during the previous quarter is reviewed in
such meeting. Hindi fortnight was celebrated at all the locations of
the Company. Programmes and several competitions were held and prizes
distributed to the winners.
28.5 During the year 7 workshops were conducted to impart practical
training to employees for doing their official works in Hindi.
28.6 Hindi Salahakar Samithi Meeting of the Ministry of Steel under the
Chairmanship of Honble Minister of Steel, Chemicals & Fertilizers Shri
Ramvilas Paswan was held at Shilong on 6th June, 2006 and your Company
was conferred with Official Language Prothsahan award for the year
2002-03 & 2003-04 among C Region by Honble Minister for Steel,
Chemicals and Fertilizers Shri Ram Vilas Paswan.
28.7 The Company is the Convenor of Bangalore Town Official Language
Implementation Committee (Undertakings) and conducts regular meetings
and Joint Hindi Fortnight programmes for all Central PSUs in Bangalore.
2 TOLIC meetings were conducted under the Chairmanship of
Chairman-cum-Managing Director. In every meeting a local Hindi Scholar
was felicitated. During the year 13 Hindi competitions for TOLIC
members were conducted and cash awards were given to the winners.
29 CORPORATE EXCELLENCE
Your Company was a recipient of the following Awards during the year
under report: -
* The Company was conferred with Export Excellence Award in Mineral and
Mineral based products Sector under Non SSI category in June, 2006 by
Federation of Karnataka Chamber of Commerce and Industry ;
* Ministry of Steel, Govt. of India conferred Ispat Rajbhasha Shield
to the Company on 6th June, 2006 in recognition of remarkable progress
in the field of Progressive Use of Official Language Hindi and its
implementation during the years 2002-03 & 2003-04;
* In August, 2006 Visweswaraya Industrial Trade Centre Govt. of
Karnataka has conferred Best Export Award - Mineral & Mineral based
products -Non SSI- Gold for the year 2004-05 in recognition of
outstanding export performance;
* In September, 2006 CAPEXILs Special Export Award was conferred on
the Company in recognition of outstanding Export performance in respect
of Iron Ore for the year 2005-06.
* In March, 2007, the Company was presented MOU excellence Certificate
by the DPE, Government of India for excellence in achievement of MOU
targets for the years 2004-05 and 2005-06.
30.1 Vigilance activities for the year 2006-07 continued with special
emphasis on preventive vigilance and analysis of existing systems for
system improvement. A system of inspections, surprise checks and CTE
type inspections at the rate of 6-8 cases per month is carried out.
Emphasis laid on combination of educative and preventive measures.
During the year 41 CTE type inspections, 39 surprise checks and 47
periodic inspections are conducted.
30.2 Vigilance Department acquired Certificate for Quality Management
System Standard ISO 9001 - 2000 in the month of November, 2006 from M/s
DNV. Regular audit to keep the ISO system on course is conducted.
30.3 Vigilance awareness Week was observed in the second week of
November, 2006. On this occasion workshops were conducted at Mangalore
and Kudremukh in order to focus on preventive vigilance. Employees and
CISF personnel attended the workshop.
30.4 Your Company hosted a CVOs Conference on 18th October, 2006 which
was held in Bangalore. CVOs of all PSUs attached to Ministry of Steel
participated in the Conference. The meeting was presided over by the
Secretary (Steel). It was decided to implement Integrity Pact (IP).
30.5 Implementation of Integrity Pact Program is under process. Nodal
Officer has been appointed. Draft program prepared and posted on
Company web site for comments. Shortly IP will be implemented in the
Company.
30.6 Revised format is drafted for Annual Property Returns and
circulated to all employees. 20% of Property Returns were scrutinised
for the year as per the CVC guidelines.
30.7 As per CVC guidelines, all tenders are put on web site of the
Company. Salient features of progress of successful tenders are also
put on web site for easy access by any visitor.
31 REVIEW OF ACCOUNTS BY THE STATUTORY AUDITORS AND THE CAG
The comments/observations of the Statutory Auditors and reply by the
Company and also Comments by the Comptroller and Auditor General of
India for the year 2006-07 are attached.
32 IMPLEMENTATION OF RIGHT TO INFORMATION ACT, 2005
Your Company is proactively complying with the provisions of Right to
Information Act, 2005. All information sought under the Act have been
furnished within the stipulated time period.
33 BOARD OF DIRECTORS
During the year, Shri Ajoy Kumar, Joint Secretary to the Government of
India, Ministry of Steel was appointed as a Director of the Company in
place of Dr. SN Dash, who has resigned as Director consequent to
transfer from Ministry of Steel to National Highways Authority of India
as Member (Finance). Shri S Ravi and Dr. Sukumar Devotta, were
appointed as Part-time Non-official Directors of the Company for a
period of three years. Your Directors place on record their
appreciation of the valuable services rendered by Dr. SN Dash.
34 ACKNOWLEDGEMENT
34.1 Your Directors gratefully acknowledge the wholehearted support,
assistance, cooperation and guidance received from the Honble Minister
for Steel, Chemicals & Fertilizers, the Secretary, Ministry of Steel
and other officials of the Department of Steel as well as other
Ministries of the Government of India and the Government of Karnataka
and all other departments/agencies concerned in all the endeavours of
the company.
34.2 Your Directors also acknowledge the timely advice and assistance
rendered by the Indian Embassies abroad during the year in the
Companys marketing efforts.
34.3 Your Directors sincerely thank all the customers and suppliers for
their support and co-operation.
34.4 The Directors also appreciate the continued and dedicated efforts
put in by all the employees to overcome many challenges faced during
the year.
34.5 Last but not the least, your Directors express their gratitude to
the Shareholders for the confidence reposed by them in the management
of the Company.
For and on behalf of the
Board of Directors
Place : New Delhi (P Ganesan)
Dated : 14th June, 2007 Chairman-cum-Managing Director
Mar 31, 2003
Your Directors have pleasure in presenting the 27th Annual Report of
the Company together with the Audited Accounts, Auditors Report,
Comments and Review of Accounts by the Comptroller and Auditor General
of India thereon for the year ended on 31st March, 2003.
2.0 HIGHLIGHTS
* Highest annual turnover of Rs. 727.14 crores during the year,
surpassing the previous high of Rs. 721.69 crores achieved during the
previous year 2001-2002;
* Recorded an all time high Gross Margin of Rs.173.03 crores;
* Highest monthly turnover of Rs.103.41 crores during March, 2003, for
the first time crossing the 100 crore mark and surpassing the previous
high of Rs. 86.02 crores achieved in April, 2002)
* Production of 3.45 million tonnes of Pellets (including Pellet Fines)
during the year, the highest quantity of Pellets produced in any year
so far, surpassing the previous high of 3.285 million tonnes achieved
during 1999-2000;
* Production of 7,12,000 tonnes of Concentrate in the month of March,
2003, the highest ever monthly production achieved in the history of
the Company surpassing the previous high of 6,65,000 tonnes in March,
1995;
* Production of 3,52,800 tonnes of Pellets (including Pellet Fines) in
the month of March, 2003, the highest ever monthly production achieved
in the history of the Company surpassing the previous high of 3,41,900
tonnes in March, 2002;
* Production of 13,500 tonnes of Pellets on 09-06-2002, the highest
daily production so far;
* 1,15,000 DMT of Concentrate was pumped in a single pumping batch
(Slurry batch No 5648) from 24-03-2003 to 28-03-2003 in 86.90 hours of
pumping duration which is a new record since inception of the Company;
* Total shipment of 8.614 lakh tonnes of Concentrate and Pellets in the
month of March, 2003, the highest quantity of Concentrate and Pellets
despatched in any month so far surpassing the previous high of 7.819
lakh tonnes shipped in June, 1993;
* Shipped 3.539 million tonnes of Pellets (including Pellet Fines)
during the year, the highest quantity despatched in any financial year
so far surpassing the previous high of 3.285 million tonnes shipped in
1999-2000;
* Shipped 4,62,135 DMT of Pellets in the month of March, 2003, the
highest quantity shipped in any month 50 far surpassing the previous
high of 4,46,954 DMT (including Pellet Fines) shipped in February,
2002;
* Despatch of 2.513 million tonnes of Pellets (including Pellet Fines)
and 1.534 million tonnes of Concentrate to China are the highest
quantity supplied to that country surpassing the previous high of 1.906
million tonnes of Pellets and 1.293 million tonnes of Concentrate
despatched in 2001-2002;
3.0 MINING LEASE
As the Members are aware, an NGO had filed an Inter locutory
Application IA No.670/2001 in Writ Petition (Civil) No.202 of 1995 in
the Supreme Court of India in May, 2001 regarding continuation of
mining at Kudremukh by the Company. The Honble Supreme Court of India
pronounced its judgement on 30th October, 2002. The Honble Court has
permitted the Company to mine at Kudremukh till December, 2005 in the
already broken-up area. In consultation with the Attorney General of
India and other Senior Advocates of the Supreme Court, the Company is
examining the future course of action to be adopted.
4.0 PRODUCTION
4.1 CONCENTRATE
As against a target of 5.5 million tonnes for the year set in the Moll,
the actual production was 5.532 million tonnes which is 101% of the
target. This also represents a capacity utilisation of 83%.
4.2 PELLETS
Production of 3.45 million tonnes of Pellets, as against MoU target of
3.5 million tonnes, represents 99% achievement of the target and a
capacity utilisation of 86%. In the process of production of Pellets,
81,000 tonnes of Pellet Fines were generated. A total quantity of
70,263 tonnes of Pellet Fines was sold to Japan and China. 6109 tonnes
of Iron Ore fines from M/s KISCO & 3700 tonnes from M/s MEPL was used
in Pellet production during the year.
4.3 The following table summarises the production performance during
the past five years:-
CP: Concentrate Plant PP: Pellet Plant
(Qty. in million tonnes)
Year Production Capacity
Utilisation in %
CP PP* Total CP PP
2002-2003 5.532 3.450 8.982 83 86
2001-2002 5.410 3.215 8.625 81 92
2000-2001 5.000 2.737 7.737 75 78
1999-2000 5.750 3.285 9.035 86 110
1998-1999 5.042 2.525 7.567 75 84
4.4 The past five years production performance in respect of
Concentrate and Pellets (in thousand dry metric tonnes) is represented
below in a graphic form:
4.5 MEMORANDUM OF UNDERSTANDING WITH THE GOVERNMENT
Performance evaluation of the Company vis-a-vis MoU targets on a
provisional basis indicates that the Company qualifies to be rated as
EXCELLENT. The final evaluation by the Government of India and the
result thereof is awaited.
5.0 FINANCE AND ACCOUNTS
5.1 The Authorised, Subscribed and Paid-up Share Capital of the Company
remained unchanged during the year.
5.2 Internal resources generated during the year amounted to Rs.144.40
crores.
5.3 Total Sales during the year amounted to Rs.727.14 crores as
compared to the budget estimate of Rs.731.12 crores. This is equal to
US $ 150.812 million as compared to US $ 150.884 million for the
previous year.
5.4 Cash balance at the end of the year stood at Rs.278.62 crores
(including Term Deposits) and there is no overdraft as on 31st March,
2003. Reserves and Surpluses as on 31st March 2003 were Rs.465.42
crores as against Rs.402.87 crores as on 31st March 2002 after
providing for deferred Tax liabilities. Although the Company had
sufficient resources to undertake capital expenditure as projected in
the annual plan and 10th five-year plan period, in view of the Honble
Supreme Court judgement which has permitted the Company to mine at
Kudremukh only till end 2005, many such capital intensive projects
could not be taken up.
5.5 During the year under report, your Company proposes to carry
Rs.62.55 crores to the General Reserve Account.
5.6 Your Directors propose to pay a Dividend of 3.5% on the Equity
Share Capital. This works out to Rs.22.21 crores excluding Distribution
Tax. With this, your Company continues to pay Dividend for the
eleventh year in succession.
5.7 WORKING RESULTS
The working results of the Company for the year 2002-2003 with
comparative figures for the previous financial year are furnished
below:
(Rs. in crores)
Particulars 2003-2004 2001-2002
Sales 727.14 721.69
Stock Adjustments (20.74) 1.29
Operating Expenses 555.22 576.60
Gross Margin on plant operation 151.18 146.38
Profit on sale of assets 0.05 0.02
Income from investments 15.58 7.18
166.81 153.58
Prior period adjustments 6.22 (0.33)
Gross Margin 173.03 153.25
Interest Payments 0.18 0.03
Depreciation and Development expenses 56.87 51.04
Profit before tax for the year 115.98 102.18
Income Tax 28.45 13.81
Profit after Tax 87.53 88.37
6.0 COMPLIANCE WITH SECTION 217 (2AA) OF THE COMPANIES ACT
In pursuance of section 217(2AA) of the Companies Act which requires
inclusion of a Directors Responsibility Statement, your Directors
hereby certify -
i. that in the preparation of the Annual Accounts, the applicable
Accounting Standards have been followed along with proper explanation
relating to material departures.
ii. that such of those Accounting Policies have been selected and have
been applied consistently, that such of those judgements and estimates
have been made, which are reasonable and prudent so as to give a true
and fair view of the state of affairs of the Company at the end of the
financial year and of the Profit of the Company for the year under
review.
iii. that proper and sufficient care has been taken for the maintenance
of adequate accounting records in accordance with the provisions of the
Companies Act for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities.
iv. that the Annual Accounts have been prepared on a going concern
basis.
7.0 MARKETING AND EXPORTS
7.1 During the year, Concentrate and Pellets were shipped to four
countries, besides shipments to the buyers in the Domestic Tariff Area.
Iron Ore Concentrate was supplied to Iran, Japan & China. China bought
the highest quantity of Concentrate & Pellets. Pellets were exported
to China and Taiwan. In the Domestic Tariff Area, Pellets were supplied
to M/s Ispat Industries, MSTC, Vikram Ispat, KISCO and Jindal
Vijayanasar Steel Ltd. Pellet Fines were exported to Japan and China,
Sales in the DTA represented 14.49% of the total sales of Pellets in
quantitative terms and 17.66% in monetary terms. Total quantity of
5.842 million tonnes exported during the year comprised 2.302 million
tonnes of Concentrate and 3.540 million tonnes of Pellets.
7.2 The country-wise details of shipments made during the year to
various customers are as under:
(In Dry Metric Tonnes)
Country Concentrate Pellets
Japan 558228 -
Iran 210475 -
China 1533786 2459026
Taiwan - 497199
Ispat Industries - 341151
MSTC - 72129
Vikram Ispat - 86867
KISCO - 4986
Jindal Vijayanagar Steel Ltd. - 7806
Pellet Fines (to China) - 53923
Pellet Fines (to Japan) - 16340
Total 2302489 3539427
7.3 Export performance in terms of quantity (in thousand dry metric
tonnes) during the past five years is represented in a graphic form
below:-
7.4 Export performance during the past five years is summarised below:
Qty: in Million Tonnes
Value: Rs. in lakhs
Year Concentrate Pellets Total % increase over
previous year
Qty. Value Qty. Value Qty. Value Qty. Value
2002-2003 2.302 21135 3.540 51579 5.842 72714 5.89 0.76
2001-2002 2.306 21571 3.211 50598 5.517 72169 14.41 23.78
2000-2001 2.136 17323 2.686 40980 4.822 58303
1999-2000 2.819 20731 3.235 41348 6.054 62079 20.45 13.33
1998-1999 2.376 18407 2.650 36369 5.026 54776
7.5 During the year, 120 ships were handled at New Mangalore Port as
compared to 114 ships handled during the previous year.
7.6 Your Company has committed production of 5.250 million tonnes of
Concentrate and 3.575 million tonnes of Pellets under the `Excellent
category of the MoU for the year 2003-04 signed with the Govt. of
India. The exports committed are 1.675 million tonnes of Concentrate
and 3.575 million tonnes of Pellets. The Total Sales based on these
targets is estimated to be of the order of Rs.685 crores.
7.7 By taking advantage of the market situation, your Company has
finalized the prices for the year 2003-04 for Chinese market with an
increase of over 20% in case of both Concentrate and Pellets. The
increase is more than 22% in respect of sale of Pellets to the DTA
customers. The prices for the long-term contracts are yet to be
finalized.
8.0 NEW PROJECTS
EXPLORATION OF ALTERNATE ORE DEPOSITS
8.1 Consequent upon the expiry of the mining lease in July, 1999 in
respect of the existing mine at Kudremukh, the Company was operating
its facilities on a temporary Work Permit. The Company was
anticipating grant of long term mining lease for the existing deposits.
There was uncertainty over the grant of lease in respect of nearby
deposits. Keeping all this in view and for the sustained growth, it
became necessary for the Company to explore alternate deposits for long
term operations.
8.2 Your Company had also applied to the Govt. of Karnataka for grant
of Mining Lease in the Chikkanayakanahalli area of Tumkur District.
Survey and mapping work of the area was carriedout. However, in view
of the low quality reserves, it was decided not to pursue with this
project.
8.3 The Company is exploring the possibilities of having a Joint
Venture with SAIL for mining of Iron Ore deposits in Chiria area in
Singbhum District of Jharkhand.
8.4 The Govt. of Orissa has identified an area of over 54 sq. kms.
(5400 hectares) containing probable low grade Hematite Ore reserves.
The entire allocated area is expected to contain about 180 million
tonnes of iron ore containing 55 - 64% Fe. The Company has issued a
Work Order for prospecting on the Geological Department of Orissa
Government and the drilling is in progress.
8.5 In March, 2003, the Government of Karnataka had issued a Gazette
Notification inviting fresh applications for grant of mining lease in
the Bellary-Hospet area. Although your Company had submitted an
application in March, 2001 for grant of Mining Lease for exploitation
of Iron Ore deposits in Ramanadurg in Bellary district of Karnataka, a
fresh application has been filed in response to the Gazette
Notification.
COKE OVEN PLANT
8.6 The Company is planning to set up a non-recovery type Coke Oven
plant with a 30 MW Power Plant at Mangalore next to its Blast Furnace
as backward integration and import substitution.
CAPTIVE POWER PLANT
8.7 The Company had proposed to set up a Captive Power Plant at Miyyar
near Karkala to overcome the frequent interruptions/restrictions on
availability of power and to inhibit the power charges. However, it has
not been possible to proceed further on this project in view of Honble
Supreme Court decision.
ONGOLE PROJECT
8.8 At the instance of the Govt. of Andhra Pradesh, the Company had
explored possibility of exploitation of low grade magnetite Iron Ore
deposits in Ongole region. However, after carrying out drilling, it was
concluded that the proven reserves were too small for exploitation
economically. It is therefore decided not to proceed further with this
project.
EXPLOITATION OF PRIMARY ORE
8.9 As the Members are aware, keeping in view the depleting Ore
reserves in the Aroli deposits where the mining is currently being
carried out, your Company had proposed to exploit the Primary Ore
available beneath the weathered Ore. A DPR for the project was prepared
by a foreign agency, who had opined that the project is technically and
economically viable. However, in view of the Honble Supreme Court
Judgement, this project is not being pursued for the present.
9.0 JOINT VENTURE PIG IRON PROJECT
9.1 As the Members are aware, in order to set up a Pig Iron & Ductile
Iron Spun Pipe Plant at Mangalore, your Company has entered into Joint
Venture with MECON & MSTC. A separate Company - Kudremukh Iron & Steel
Company Limited (KISCO) has been set up for the purpose. Production and
Sale of Hot Metal, Pig Iron and Slag from July, 2002 to 31st March,
2003 was as under:- Production
i) Hot Metal 116044 MT
ii) Pig Iron 103285 MT
iii) Slag 27116 MT
Sales
i) Pig Iron 99277 MT
ii) Auxiliary Product 12236 MT
iii) Slag 3427 MT
Stock
i) Pig Iron 6293 MT
ii) Auxiliary Product 500 MT
9.2 Some of the highlights of performance of the Joint Venture Company
during the year under report were as under:-
* First ever Net Profit of Rs10.85 lakhs posted in the month of March,
2003;
* Highest daily production of 691 tonnes achieved on 10.1.2003;
* Highest monthly production of 18676 tonnes in January, 2003;
* Lowest Coke rate consumption - 614 kg/THM, in March, 2003;
* Annual consumption of 629 kg/THM of Coke during 2002-03 as compared
to 649 kg/THM during 2001-02;
* Lowest power consumption per tonne of Hot Metal in any month - 163
kwh in January, 2003;
* Consumption of Power per tonne of Hot Metal of 182 kwh during 2002-03
as compared to 197 kwh per tonne during the previous year 2001-02;
* Maiden export of Pig Iron to M/s Megasteel, Malaysia and achievement
of wider coverage in domestic foundry market.
DUCTILE IRON SPUN PIPE PROJECT
9.3 As regards the Ductile Iron Spun Pipe (DISP) project, a global
tender notice was issued for setting up of a 70,000 tonnes per annum
DISP plant on a turnkey basis. The Technical and Commercial Offers
submitted by the Bidders have been scrutinised. The price bids have
been opened and the evaluation completed. Finances for the project are
being tied up.
MERGER OF KISCO WITH KIOCL
9.4 A proposal seeking approval of the Govt. of India for merger of
KISCO with KIOCL is under its consideration. As the members are aware,
your Company has invested a sum of Rs.50 crores in KISCO towards
Equity. Besides this, a sum of Rs.227.50 crores has also been lent to
KISCO.
10 R&D, TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
The particulars required under section 217(1) of the Companies Act,
1956 read with the Companies (Disclosure of particulars in the Report
of Board of Directors) Rules, 1988 regarding the Technology Absorption,
Adaptation and Innovation and R&D are furnished separately in
Annexure-l.
11 ENERGY CONSERVATION
11.1 There is significant reduction in consumption of Electricity in
KWH per tonne of Concentrate and Pellets production during the year as
compared to the previous year 2001-2002, as under:-
2002-2003 2001-2002
Concentrate 77.18 80.96
Pellets 33.59 34.59
11.2 As is the practice, Energy Conservation week was observed at
Kudremukh in the month of December, 2002.
12 ENERGY AUDIT
12.1 The concept of Energy Audit has assumed importance in view of the
increase in demand for energy and the ever widening gap between supply
and demand. Companys operations are highly energy intensive. Realising
the importance of energy conservation, the Company has drawn a specific
plan and a programme for compulsory energy audit to quantify the
targets for energy conservation over the entire operational area. M/s
Tata Energy Research Institute (TERI) who were commissioned to conduct
the energy audit for both Kudremukh and Mangalore establishments have
submitted their recommendations. A Committee headed by a Director of
the Company oversees implementation of the recommendations of M/s TERI.
Your Board also periodically reviews implementation of these
recommendations. As a result, there has been substantial reduction in
energy, heating and oil consumption at Kudremukh and Mangalore
facilities.
12.2 Two executives of the Company who were nominated for the Certified
Energy Management Course conducted by FICCI, New Delhi, have qualified
and now they have been nominated as Energy Managers at Kudremukh &
Mangalore to develop and implement Energy Management System at
respective locations, to conduct Energy Audit and function as Convenors
of Energy Committee.
13 QUALITY CONTROL - CHANGE OVER TO ISO 9001: 2000 The ISO 9002 : 1994
Standard has been revised and issued as ISO 9001 : 2000. As the
Companys Quality Management System was due for certification from
June, 2002 under the earlier Standard, it was decided to shift over to
the New Standard and accordingly the Quality Management System has been
certified under the New Standard from 18th July 2002. The Certificate
is valid upto 26th May 2005.
14 OHSAS - 18001:1999
Your Company is in the process of implementing occupational Health and
Safety Management System as per Occupational Health and Safety
Assessment Series. As per the requirement of the Standard, the OH&S
Manual was prepared and the Safety Policy of the Company was issued to
the employees. Training programmes were organised for Internal
Trainers, Internal Auditors and Core Team Members.
15 ENVIRONMENTAL MANAGEMENT
15.1 The dedicated efforts of your Company towards preservation and
upgradation of ecology, prevention of pollution and afforestation in
and around Kudremukh continued during the year. Massive afforestation,
improvement of Town park, bio-technological approach to sustain the
balance of fragile ecosystem of mined area, eco-restoration, monitoring
of Air and Water quality, implementation of anti-pollution control
measures, etc., continued during the year. Companys work in the field
of environment management has drawn appreciation from different
corners. A number of awards won in this area bear testimony to the
efforts of the Company towards maintenance of ecology and environment.
To cite a few - Silver Award for 2001-02 conferred by GREENTECH
Foundation, Gems and Granite Environment Award 1999-2000 by FIMI, etc.
15.2 The Companys Environment Management System is Certified to 14001
- 1996 Standard by DNV. The certificate is valid until November 9,
2003. Activities are being coordinated for maintaining the system.
16 PARLIAMENTARY COMMITTEES
16.1 During the year, your Company was honoured by the visit of a
Parliament delegation - Committee on Government Assurances of Rajya
Sabha on 2nd January, 2003. 16.2 The Consultative Committee attached
to the Ministry of Steel held three meetings at New Delhi on 13th
August, 2002, 25th October, 2002 and 10th December, 2002 to review the
performance of the Company and also the judgement of the Honble
Supreme Court, its implications and the future of the Company. Shri BK
Tripathi, the Honble Minister of State for Steel chaired the meetings.
17 PUBLIC/STAFF GRIEVANCE REDRESSAL
17.1 Your Company has framed a well defined grievance procedure evolved
under the Code of Discipline from the very inception of the company.
Since its introduction, the Scheme has been working satisfactorily
without any complaint from any corner, either from the recognised Union
or Officers Association of the Company. Grievances received have been
redressed to the satisfaction of the aggrieved employees. As regards
public grievance, as and when any complaints are received from the
public, necessary remedial action, if any, is taken by the Company
immediately.
17.2 Complaints/grievances other than the staff grievance are
categorised into customer/consumer complaints/grievances from the
Contractors, NGOs/General Public etc. The respective project heads are
empowered to dispose of the grievances concerning their areas and the
general public.
17.3 As regards women employees, the guidelines laid down by the
Supreme Court in the matter relating to sexual harassment of women in
work places are strictly followed.
17.4 The grievances received and disposed off by the Company are
reported to the Administrative Ministry on a monthly basis. The
guidelines laid down by the Govt. of India in this regard are being
followed. The Govt. also reviews the subject matter periodically.
18 LISTING REQUIREMENTS
I. The Companys shares are listed on the following Stock exchanges:
a) Bangalore Stock Exchange Limited, "Stock Exchange Towers", No.51,
1st Cross, J.C.Road, Bangalore - 560 027.
b) Madras Stock Exchange Limited, Exchange Building, P.O.Box No. 183,
11 Second Line Beach, Chennai - 600 001.
II. The Company has paid the Annual listing fee to each of the
aforesaid Stock Exchanges for the year 2002-03.
III. A report on the Corporate Governance is at Annexure-ll.
IV. A certificate from the Auditors of the Company regarding
compliance of conditions of Corporate Governance is at Annexure-lll.
V. There is no pecuniary relationship or any transactions by any of
the non-executive Directors vis-a-vis the Company.
19 CONCERN FOR NEIGHBOURHOOD Your Company has contributed immensely
towards community development in and around the project area. Some
such developmental works are in the following areas:-
* Pure drinking water facilities.
* Play grounds, buildings, books and other financial assistance to the
Educational Institutions.
* Development of social, cultural and recreation facilities.
* Health and Medical facilities,
* Assistance to the poor, disabled and downtrodden.
* Construction of buildings and provision of equipment to the
hospitals.
* Construction of Bridges.
* Development of Coastal region.
* Rehabilitation.
* Supply of water for irrigation purposes.
20 HUMAN RESOURCE DEVELOPMENT
20.1 Training and Development activities remained a priority on the
Agenda of the HRD Department.
Following are the statistics in this regard:-
Trained Mandays
Executives 1292
Non-Executives 9428
20.2 As a continuation of the training started during the year 2000, a
series of programmes on " Positive Work Culture for Productivity " was
organised for non-executives at Kudremukh. So far we have organised 31
programmes at Kudremukh and 8 Programmes at Mangalore covering 948 and
188 non-executives respectively. It is planned to cover remaining
employees also by this programme during 2003-2004.
20.3 Apart from the above, in-house programme on technical subjects
such as Machine Alignment and Industrial Hydraulics were organised at
Kudremukh. Training & Safety Department has conducted various
Statutory Training Programmes and technical training programmes.
20.4 179 executives were nominated for various Executive Development
Programmes within and outside the Country. Some of the Topics covered
under the above programmes are:
* Material Management
* Environmental Management
* Internal Quality Audit
* Safety
* Condition Monitoring
* Quality Management Lead Auditor Course
* Mines Management
20.5 Two women executives were nominated for a One Week programme on
"Role Effectiveness for Professional Women" conducted by Centre for
Organisation Development, Hyderabad.
20.6 Executives were also nominated to attend various Conferences,
Seminars, Workshops and Symposium conducted by various oraganisations
on various themes. The topics covered included - Mining Technology,
Energy Conservation, Project Management, Assessment Centres, Contract
Labour and other Regulations, Integration of Quality Management System
and Environmental Management System.
20.7 One executive was deputed to "Advanced Management Programme"
conducted by International Management Institute, New Delhi and bne
executive was nominated for a Two Week programme on "Productivity
Enhancement by IT" organised by AOTS at Japan.
21 PERSONNEL
21.1 The total number of personnel on the rolls of the Company as on
31st March, 2003 was 2181 consisting of 1463 workmen, 458 Executives
and 260 Supervisors as against 2279 on 31st March, 2002.
21.2 SECTION 217 (2-A) OF THE COMPANIES ACT, 1956 None of the employees
were in receipt of remuneration exceeding Rs.2,00,000/- per month or
Rs.24,00,000/- per annum during the year.
22 REPRESENTATION OF SCs AND STs
22.1 The following, table shows representation of SCs and STs and also
women employees and Ex-servicemen as against the total number of
employees in different Groups on rolls of the Company as on 31st March
2003:-
Group Total No.of SC ST No.of Ex-Physically
employees women servicemen Handicapped
on rolls employees
A 458 56 12 22 2 1
B 260 10 2 46 3 12
C 1276 190 48 37 73 17
D 152 42 24 15 1 5
D (Sweepers) 35 29 2 15 - 1
Total 2181 327 88 135 79 36
22.2 The Company makes efforts to improve the intake of candidates
belonging to SC/ST and recruitment of women.
22.3 RECRUITMENT OF PHYSICALLY HANDICAPPED
The Company had launched a Special Recruitment Drive during 2000 to
recruit Physically Handicapped candidates in Group C & D posts.
22.4 SAFETY
Your Company gives utmost importance to the occupational Safety and
Health of the persons working in the Company. Workers participation in
Safety Management System is one of the important criteria adopted by
the Company. Area wise Safety Committees are formed. Workers
participation in these Safety Committees is ensured. Safety inspections
are carriedout regularly by the Safety Officer alongwith the Safety
Committee Members and the Safety points are discussed in the Safety
Meetings held every month.
22.5 In order to inculcate Safety consciousness and to develop the
human resources, various training programmes such as Refresher
Training, training on First Aid, training on Positive Work Culture,
Awareness Programmes on Environment, Quality and Safety Management
system are conducted. Further, to increase the awareness of safety
among the mining communities, safety campaign/propaganda is done by
observing Mines Safety Week Celebrations every year under the guidance
of Mines Safety Association, Karnataka. During the Mines Safety Week
Celebrations, various competitions are held at both Zonal Level and the
State Level for the workers of different Mines covered under Mines
Safety Association, Karnataka. The Company has won several prizes both
at Zonal and State level competitions.
22.6 The revised Productivity Linked Incentive Scheme and the Hot Shift
Schemes which are in operation in the Company will be valid upto
31-03-2005.
23 WELFARE
23.1 A special incentive was given to all employees of the Company for
achieving highest Monthly Production Target during the month of March
2003 as a token of appreciation.
23.2 The Companys workforce is the driving force behind the success of
the Company. Their contribution for the success stems out of the
amenities such as well planned Township, Hospitals, Schools,
Recreation, Cable TV Network, Parks, Temples, Church, Mosque, etc.
besides grant of advances for Purchase of Conveyance, House Building,
Grant of Scholarships, Reimbursement of School Fees, Uniforms,
Childrens Out-Station Education Allowance, Entertainment, Magazine and
Technical Journal Allowance etc.
23.3 The Company has also provided an office for contractors at
Kudremukh in order to mitigate the inconvenience of the Contractors,
Contract Labourers and Statutory authorities in obtaining information
pertaining to Payment of Wages, PF Contribution, Muster Roll etc.
23.4 The International Womens day was celebrated in a befitting manner
by the Company at Kudremukh, Mangalore and Bangalore locations. 23.5
As is the practice, Dr.Ambedkar Jayanthi was celebrated at all the
locations of the Company on 14th April, 2002. During the year, the
Company donated Note Books to the poor School Students through the
SC/ST Welfare Association both at Kudremukh and Mangalore.
24 INDUSTRIAL RELATIONS
24.1 The Kudremukh Shrama Shakthi Sangathan (Affiliated to H.M.S) was
recognised to represent workmen of KIOCL under the Code of Discipline
for a period of two years with effect from 09-09-2002 after having
emerged as the majority Union, in the Secret Ballot conducted by the
Central Industrial Relations Machinery on 24th July, 2002.
24.2 The Industrial Relations situation remained peaceful throughout
the year in all the establishments of the Company. Joint Council and
Shop Councils meet regularly and their discussions contribute towards
improving Industrial Relations, Production activities and resolving
differences, if any.
25 VOLUNTARY RETIREMENT SCHEME The Company introduced a Voluntary
Retirement Scheme in June, 2002. 74 employees i.e.,
24 Executives, 7 Supervisors and 43 Non-Executives were released during
July and August, 2002, under the scheme.
26 RAJBHASHA
26.1 The Company follows the directives issued from time to time by the
Department of Official Language, Ministry of Home Affairs and Ministry
of Steel, Govt. of India for the progressive use of Official Language
Hindi.
26.2 Hindi training is given to the employees. Cash awards and
increments are given as per the Government directives. Hindi Workshops,
Orientation programmes are conducted regularly to create awareness,
impart knowledge and encourage the employees to do their Official work
in Hindi. Cash award is given to such of those employees who do the
official work in Hindi.
26.3 All the stationery, Name plates, and Name boards of the Company
are in bilingual form. The Annual Report, MoU, House Magazine,
Employees Pension Scheme, etc., are printed in Hindi also. Hindi
software is provided on Computers.
26.4 Official Language implementation Committee meetings take place
regularly and the progress during the previous quarter is reviewed in
such meeting. Company takes active part in Town Official Language
Implementation Committee. Two Hindi Competitions were conducted during
the year for all Central Government and Public Sector Officers in
Bangalore. More than 40 Institutions took part in these competitions.
26.5 Hindi fortnight was celebrated in all the locations of the
Company. Various Hindi competitions and programmes were organised and
prizes distributed.
26.6 Companys efforts towards Official Language Implementation are
well appreciated by the Government as also the voluntary Hindi
Organisations. The Company is conferred with awards in appreciation of
its efforts.
26.7 A member of Hindi Advisory Committee, Ministry of Steel is
nominated by the Ministry as Observer for Hindi Meetings and other
Official Language Implementation activities of the Company.
27 CORPORATE EXCELLENCE
Your Company was a recipient of the following Awards during the year
under report:-
* one among top 10 Public Sector Companies conferred with an MoU Award
by the DPE, Govt. of India for Excellence in the achievement of MoU
target for the year 1999-2000.
* "Ispat Rajbhasha Protsahan Shield" for the year 2000-2001 in the
Category Region `C in recognition of success in the implementation of
the Official Language by Ministry of Steel, Govt. of India.
* `Export Award 2002 - conferred by Kanara Chamber of Commerce &
Industry, Mangalore. Company stood at first place for its Iron Ore
Export Performance during 2000-2001.
* `GREENTECH Industrial Safety Award 2001-2002 (Gold Award) by
Greentech Foundation, New Delhi in Mines Sector for outstanding
achievement in the field of Industrial Safety.
* Overall performance Award for Excellence for the years 2000-2001 and
2001-2002 and also Export Achievement Award for Excellence for the year
2000-2001 in the Mines Sector in recongnition of outstanding Export
performance by Cochin Special Economic Zone & EoU in Kamataka, Kerala,
Mahe & Lakshadweep by Ministry of Commerce & Industry, Govt. of India.
* `Rajabhasha Shield for the year 2001-2002 by Rajabhasha Vikas
Samstan, New Delhi for Official Language Implementation.
* CAPEXILs Special Export Award in recognition of outstanding Export
performance in respect of Iron Ore for the year 2001-2002.
* Rashtriya Udyog Award by International Integration & Growth Society,
New Delhi.
* Silver Award for 2001 -2002 in Mining Sector for achievements in the
field of Environment protection by GREENTECH Foundation, New Delhi.
* NIRYAT SHREE award for the year 2000-2001, 2001-2002 for outstanding
Export performance conferred by Federation of Indian Export
Organisations.
28 VIGILANCE
28.1 The Vigilance Department of your Company continued its efforts to
maintain a transparent and corruption free environment. A system of
Surprise Checks and Inspections and analysis of existing systems formed
the basis of Vigilance activities for the year under report. Emphasis
was laid on a combination of educative and preventive measures.
28.2 Two areas viz., (a) Utilisation of materials drawn; and (b)
Emergency purchases were identified as sensitive areas requiring
greater scrutiny.
28.3 A total of 51 Surprise Checks and Inspections were carried out
during the course of the Financial Year.
28.4 Property Returns were obtained from the Executives. As laid down
by the CVC, 20% random scrutiny was carried out of these Returns.
28.5 During the year, as per the directive of the Central Vigilance
Commission, a "Vigilance Awareness Week" was observed from October 31
st to November 06, 2002. Programmes were held on the occasion at
Bangalore, Kudremukh and Mangalore.
29 REVIEW OF ACCOUNTS BY THE STATUTORY AUDITORS AND THE CAG The
comments/observations of the Statutory Auditors and reply by the
Company, and also Review of Accounts by the Comptroller and Auditor
General of India for the year 2002-03 are attached.
30 BOARD OF DIRECTORS
During the year, Shri S Murari, Chairman-cum-Managing Director and Shri
RK Ghosh, Director (Finance) relinquished office on attaining the age
of superannuation. S/Shri P Ganesan and RK Gupta were appointed as
Chairman-cum-Managing Director and Director (Finance) respectively
during the year. Shri JP Singh, Joint Secretary to the Government of
India, Ministry of Steel, was appointed as a Director of the Company
vice Shri KS Rajendra Kumar who resigned as Director consequent to
relinquishing charge as Joint Secretary in the Ministry of Steel.
Prof.BB Dhar and Shri BC Patnaik, were appointed as part-time
Non-official Directors. Your Directors place on record their
appreciation of the valuable services rendered by S/Shri S Murari, RK
Ghosh & KS Rajendra Kumar.
31 ACKNOWLEDGEMENT
31.1 Your Directors wish to place on record their gratitude and
acknowledge the support, assistance, cooperation and guidance received
from the Minister of Steel, the Secretary, Ministry of Steel and other
officials of the Department of Steel as well as other Ministries of the
Government of India and the Government of Karnataka and all other
departments/agencies concerned in all the endeavours of the company.
31.2 Your Directors also gratefully acknowledge the timely advice and
assistance rendered by the Indian Embassies abroad during the year in
the Companys marketing efforts.
31.3 Your Directors sincerely thank all the customers and suppliers who
have stood by the Company during the period of its uncertainty and
convey their gratitude for their support and co-operation.
31.4 Your Directors also wish to record their deep sense of
appreciation for the dedicated and loyal service of your Companys
employees during the difficult times and without whose cooperation and
efforts, the achievements made by the Company during the year would not
have been possible. The Directors also place on record the invaluable
contributions made by the employees to overcome the challenges and
remain firm in their commitment towards the Company.
31.5 Last but not the least, your Directors express their gratitude to
the Shareholders for the confidence reposed by them in the management
of the Company.
For and on behalf of the Board of Directors
Place: Bangalore, (P Ganesan)
Dated: 6th June, 2003 Chairman-cum-Managing Director
FORM - B
DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION,
ADAPTATION AND INNOVATION, AND R&D ACTIVITIES
B. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION:
(a) Feasibility of upgrading magnetic concentrate by removal of silica
(in the form of fine particulates) by adapting innovative screening
technology is under examination. Tests are being conducted for
validation. Based on the success of the tests, implementation of the
technology will be considered.
(b) Adaptation of innovative waste management technology concept of
M/s. Roche Mining Company, Australia by constructing cascade bunds
within the tailings reservoir for augmenting the storage capacity and
simultaneously meeting the process water requirement for the
beneficiation plant, recovery of potential iron values from the
tailings augmenting production capacity and mitigation of downstream
pollution is under review.
RESEARCH & DEVELOPMENT ACTIVITIES:
The R&D activities are conceived keeping in view the short term and
long-term objectives of the Company:
Short-term objective: Upgrading of magnetic concentrate to meet
customers requirement keeping in view the following:
(a) Deteriorating run-of-mine quality of the balance reserves.
(b) Discontinuation of mining beyond the year 2005 as directed by the
Honble Supreme Court.
Tests have been conducted in respect of upgrading magnetic concentrate
having high content silica in fine particulate form by physical
classification to remove siliceous gangue using innovative screen
technology. The results are encouraging. Further tests will be carried
out using high siliceous magnetic concentrate, which needs to be
processed in due course. Long-term objectives:
(a) Feasibility study on waste management of tailings in the existing
tailings reservoir generated from the beneficiation plant at Kudremukh
for augmenting the storage capacity, recovery of potential iron values
from the tailings augmenting production and mitigation of pollution.
Presently, engineering modeling studies have been conducted for
generating the input design parameters required for designing. The
project is kept in abeyance in view of Honble Supreme Court judgement.
(b) Use of alternative raw material for continued operations of the
Pellet Plant at Mangalore.
Preliminary test for exploring the amenability towards pelletization
using alternative raw material viz., Hematite iron ore as feed to the
Pellet Plant has been conducted. Test has shown encouraging results.
Simultaneously, conducting feasibility study on the following is under
consideration:
(i) Handling and processing of hematite iron ores in the Pellet Plant
to be received from different sources.
(ii) Modifications to the existing Lurgi travelling grate furnace to
suit processing using hematite iron ores.
(iii) Production of value added product viz., coke as a diversification
activity.
FORM B
(See rule - 2)
Form for disclosure of particulars with respect to absorption
SI.No Research & Development (R&D) Particulars
1. Specific areas in which R&D carried out by the Company
a) Preliminary amenability studies on pelletisation using hematite iron
ore.
b) Hydro-dynamic modeling, classification and engs. Study of Lakhya
dam by M/s.Roche Mining (MT) Australia.
2. Benefits derived as a result of the above R&D
a) Tests conducted have shown encouraging results.
b) Study has revealed that waste management of tailings within the
existing dam can be exercised mitigating pollution by construction of
cascade bunds using classified tailing within the dam.
3. Future plan of action.
Raw material resource Management for continued operations of Pellet
Plant.
a) Feasibility study for utilization of exclusive hematite iron ore
fines from different sources for Pellet making as alternative raw
material.
b) Continue plant scale trials on use of partially mixed hematite iron
ore fines (10%) with KIOCL concentrate for pellet making for
establishing operations and progressive switch over to use of hematite
iron ore in increasing proportions.
c) Feasibility study on production of coke as a diversification
activity.
Concentrate quality improvement at Kudremukh
Upgrading of magnetic iron ore concentrate having increased silica
content in the micro size particulate range by size classification
using innovative screening technology.
3. Expenditure on R&D (2002-2003)
a. Capital -
b. Total Expenditure Rs.1.24crore
c. Total R&D expenditure as a 0.17 %
percentage of total turnover
Technology absorption, adaptation and innovation
1. Efforts, in brief, made towards technology absorption, adaptation
and innovation
Exploring feasibility of screening fine participates using innovative
screening technology.
2. Benefits derived as a result of the above efforts e.g. product
improvement, cost reduction, development, Import substitution etc.
Expected benefits are qualify improvement of magnetic concentrate
C. FOREIGN EXCHANGE EARNINGS & OUT GO
During the year, your Company earned foreign exchange of US$ 124
million (on receipt basis). Total outgo in Foreign Exchange on account
of imports, payment towards technical services, etc., amounted to about
US$ 31 million only. Your Company thus continues to be a net Foreign
Exchange earner for the country.
Mar 31, 2001
Your Directors have pleasure in presenting the 25th Annual Report of
the Company together with the Audited Accounts, Auditors Report,
Comments and Review of Accounts by the Comptroller and Auditor General
of India thereon for the year ended on 31 st March, 2001.
Your Directors are also happy to inform the Members that the Company
has completed twenty-five eventful years of its existence and is proud
to hoist the Silver Jubilee Flag.
2.0 WORLD STEEL INDUSTRY SCENARIO
2.1 The year 1999-2000 had ushered in hope for the steel Industry,
which was under recession. Because of this swing, the Iron Ore Industry
also started looking up. The Iron Ore price recorded an increase over
the previous year. Investment in the mining as well as restart of the
closed Pellet Plants world over, marked the upward trend in the cycle.
2.2 The year 2000-2001 witnessed an alignment/group consolidation in
the Iron Ore Industry, both in Australia and Brazil. This caused
anxiety among steel producers in Japan as well as in Europe. The Steel
Industry also restructured its operation and resorted to cost
reduction, to improve the operational efficiency to remain competitive.
The going was very good upto October 2000. Thereafter, the steel
production in Europe and USA started a declining trend. It was carried
over for the remaining period of the financial year. The Steel Mills in
Japan and Europe restructured to the situation and scaled down their
production.
2.3 The Natural Gas price increase forced the DR producers to shut down
their plants. Due to the decline in Steel production, the demand for
Pellets also came down, thereby increasing the availability of Pellets
in the market. This put pressure on Iron Ore suppliers, particularly
the Pellet manufacturers. Upto November, the Iron Ore producers world
over were hoping for a very good price increase to that level which
ruled in 1998. Suddenly, the situation changed, coupled with declining
trend in the freight rates of cape size vessels.
2.4 With the economy looking up, there was a bright hope that there
would be substantial increase in the prices by about 8 per cent for
Iron Ore Fines for the year 2001-2002. In this optimistic background,
negotiations commenced in November. But to the disappointment of the
suppliers, it fizzled out to 4.3 per cent in respect of Iron Ore Fines
in December. For Pellets, the increase in the international market is
only 1.75%. The demand for Pellets appears to be dropping worldwide.
2.5 The cumulative effect of the above changes on your Companys
marketing activities is that, the freight market for cape size vessels,
which was firm till the month of November, showed a declining trend
over the months of December, January, February and March, rendering the
movement of cargo from Brazil to Far East, where Kudremukh markets are
located, cheaper on landed cost basis. The Panamax freight market is
firm, thereby imposing pressure on the prices for the Companys
products on landed cost basis. The demand for your Companys products
is very good. The entire production is committed for sales by way of
exports and DTA sales. The price increase is not upto the extent to
which it was expected at the beginning of the year. Though slightly
disappointing, it is not totally disheartening.
3.0 HIGHLIGHTS
* The Mines and the Concentrator Plants have created two new records on
February 24/25. The Mines Department dumped 1596 trips to the Crushers,
and the Concentrator Department produced 53,000 tonnes of Concentrate.
* 88,500 DMT of Concentrate was pumped in a single slurry batch (Batch
No.5133) which is the highest so far in any Batch. Duration of pumping
was 64.55 hrs. from 29th to 31st March, 2001.
* Production of 8,95,000 tonnes and export of 8,54,058 tonnes of
Pellets in the third quarter of 2000-2001 are the highest quantities of
production & export of Pellets in any third quarter so far;
* Production of 5,25,000 tonnes of Concentrate in October 2000 is the
highest quantity produced in any October month so far ;
* Production of 3,25,600 tonnes of Pellets (including Pellet Fines) in
April, 2000, 3,05,000 tonnes in October, 2000, 2,85,000 tonnes in
December, 2000 and 3,15,500 tonnes in January, 2001 are the highest
quantity of Pellets in respective months so far;
* Shipment of 3,20,172 tonnes of Pellets (including Pellet Fines) in
April, 2000, 3,74,156 tonnes in May, 2000, 2,73,508 tonnes in July,
2000, 3,06,380 tonnes in October, 2000 and
3,17,233 tonnes in December, 2000 are the highest quantity of Pellets
despatched in the respective months so far ;
* Despatch of 1.610 Million Tonnes of Pellets to China during the year,
the highest quantity of Pellets shipped to any country so far.
4.0 THE YEAR UNDER REVIEW
The year just gone by was a difficult year for your Company on the
production front, which, as a chain reaction, had its adverse impact on
the sales and the financial performance. There is shortfall in
production, exports and financial performance as compared to the
targets. The reason for shortfall is that the plants and other
facilities could not be operated from 18th July to 18th September. A
leakage in the slurry pipeline, which transports Iron Ore slurry from
the Concentrate plant to the Mangalore Port, was noticed on 18th July.
Repairs to the slurry pipeline took two months. Initially, the repair
works had to be undertaken manually. Incessant rains and frequent land
slides caused delay in completing the work. Since the stretch of the
pipeline where leakage had occurred is situated in the intended
Kudremukh National Park, permission of the State Forest Department for
marching earthmoving equipment and cutting of trees had to be obtained.
After a vigorous follow-up and lot of pursuasion, the State Government
gave its clearance only on 21st August after which, the repair work
could be completed on 17th September and the Concentrate plant
commenced production on 18th September. Due to non-availability of
Pellet feed, the Pellet Plant was also closed upto 21st September. As
stock of material also got exhausted, no shipment was made in August
2000 and only one shipment of Pellets was made in September 2000. Your
Company has taken necessary precautionary measures to avoid delays in
such a situation. Replacement of the slurry pipeline has been taken up
and the entire stretch will be replaced in stages.
5.0 PRODUCTION
5.1 Concentrate
As against a target of 5.5 Million Tonnes set in the MoU signed with
the Government for the year, the actual production was 5 Million Tonnes
which is 91% of the target. This also represents a capacity utilisation
of 75%.
5.2 Pellets
Production of 2.737 Million Tonnes of Pellets, as against a MoU target
of 3.6 Million Tonnes, represents 76% achievement of the target and a
capacity utilisation of 78%. In the process of production of Pellets,
52,000 tonnes of Pellet Fines were generated, out of which 31,054
tonnes was sold to Japan. 35,814 tonnes of Iron Ore Fines procured from
M/s MSPL is used in Pellet production during the year.
5.3 The following table summarises the production performance during
the past five years:- CP: Concentrate Plant PP: Pellet Plant (Qty. in
Million Tonnes)
Year Production Capacity Utilisation in %
CP PP* Total CP PP
2000-2001 5.000 2.737 7.737 75 78
1999-2000 5.750 3.285 9.035 86 110
1998-1999 5.042 2.525 7.567 75 84
1997-1998 6.125 2.900 9.025 90 97
1996-1997 5.572 2.246 7.818 82 75
* Includes Pellet Fines also.
5.5 MEMORANDUM OF UNDERSTANDING WITH THE GOVERNMENT
Performance evaluation of the Company vis-a-vis MoU targets on a
provisional basis indicates that the Company qualifies to be rated as
VERY GOOD. However, on account of stoppage of production for two
months, the Company has sought certain concessions. If those
concessions are granted to the Company, its performance can be rated as
EXCELLENT. The final evaluation by the adhoc task force of the DPE
and the result thereof is awaited.
6.0 FINANCE AND ACCOUNTS
6.1 The Authorised, Subscribed and Paid-up Share Capital of the Company
remained unchanged during the year.
6.2 Internal resources generated during the year amounted to Rs. 109.99
crores.
6.3 Total Sales during the year amounted to Rs.583.03 crores compared
to the budget estimate of Rs.663.42 crores. This is equal to US $
127.162 million as compared to US $ 143.096 million for the previous
year. The lower Sales during the year is on account of lower production
and consequent lower shipments.
6.4 Cash balance at the end of the year stood at Rs. 154.85 crores
(including Term Deposits). Reserves and Surpluses as on 31st March
2001 were Rs.413.93 crores as against Rs.379.90 crores as on 31st March
2000. Although the Company had sufficient resources to undertake
capital expenditure as projected in the 9th five-year plan period, due
to the uncertainties prevailing over the grant of renewal of the Mining
Lease to the Company, many such capital intensive projects could not be
taken up.
6.5 During the year under report, your Company proposes to carry
Rs.34.03 crores to the General Reserve Account.
6.6 Your Directors propose to pay a Dividend of 3.5% on the Equity
Share Capital. This works out to Rs.22.21 crores excluding distribution
tax. With this, your Company continues to pay Dividend for the ninth
year in succession.
6.7 Working Results
The working results of the Company for the year 2000-2001 with
comparative figures for the previous financial year are furnished
below:
(Rs. in crores)
Particulars 2000-2001 1999-2000
Sales 583.03 620.79
Stock Adjustments 22.84 (14.44)
Operating Expenses 503.82 495.12
Gross Margin on plant operation 102.05 111.23
Profit on sale of assets 0.05 1.58
income from investments 15.34 8.53
117.44 121.34
Prior period adjustments 1.09 0.04
Gross Margin 118.53 121.38
Interest Payments 0.12 0.05
Depreciation and Development expenses 51.46 54.96
Profit before tax for the year 66.95 66.37
Income Tax 8.45 7.86
Profit after Tax 58.50 58.51
7.0 COMPLIANCE WITH SECTION 217 (2AA) OF THE COMPANIES ACT
In pursuance of section 217(2AA) of the Companies Act which requires
inclusion of a Directors Responsibility Statement, your Directors
hereby certify -
i. that in the preparation of the Annual Accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures;
ii. that such of those Accounting Policies have been selected and have
been applied consistently, that such of those judgements and estimates
have been made, which are reasonable and prudent so as to give a true
and fair view of the state of affairs of the Company at the end of the
financial year and of the Profit of the Company for the year under
review;
iii. that proper and sufficient care has been taken for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act for safeguarding the assets of the
Company and for preventing and detecting fraud and other
irregularities;
iv. that the Annual Accounts have been prepared on a going concern
basis. 8.0 CONTRIBUTION TO RELIEF FUND
8.1 Your Company contributed Rs.25 lakhs to the Prime Ministers
National Relief Fund to help the GuJarat Earth Quake victims. This
includes contribution of a days salary by the employees.
9.0 MARKETING AND EXPORTS
9.1 During the year, Concentrate and Pellets were shipped to five
countries, besides shipments to the buyers in the Domestic Tariff Area.
Concentrate and Pellets were supplied to Japan and China. While Iran
continues to be the main buyer of Concentrate, China bought the highest
quantity of Pellets. Pellets were exported to Japan, China, Taiwan and
Turkey. In the Domestic Tariff Area, Pellets were supplied to M/s Ispat
Industries, Vikram Ispat, Ispat Metafiles India Ltd. and Jindal
Vijayanagar Steel Ltd. Sales in the DTA represented 19.10% of the total
sales of Pellets in quantitative terms and 24.13% in monetary terms.
Total quantity of 4.822 Million Tonnes exported during the year
comprised 2.136 Million Tbnnes of Concentrate and 2.686 Million Tonnes
of Pellets.
9.2 The country-wise details of shipments made during the year to
various customers are as under:
(In Dry Metric Tonnes)
Country Concentrate Pellets
Japan 836089 61588
Iran 995534 Â
China 304001 1610719
Taiwan  426908
Turkey  43022
Ispat Industries  369553
Vikram Ispat  41198
Ispat Metallics India Ltd. Â 22533
Jindal Vijayanagar Steel Ltd. Â 79768
Pellet Fines (to Japan) Â 31054
Total 2135624 2686343
9.4 Export performance during the past five years is summarised below:
Qty: in MillionTonnes
Year Concentrate Pellets
Qty. Value Qty. Value
2000-2001 2.136 17323 2.686 40980
1999-2000 2.819 20731 3.235 41348
1998-1999 2.376 18407 2.650 36369
1997-1998 3.315 23310 2.830 36081
1996-1997 3.348 21900 2.203 27359
Value: Rs. in lakhs
Total % increase over
previous year
Qty. Value Qty. Value
4.822 58303
6.054 62079 20.45 13.33
5.026 54776
6.145 59391 10.70 20.57
5.551 49259 - 2.95
9.5 During the year, 108 ships were handled at New Mangalore Port
compared to 141 ships handled during the previous year.
9.6 COMMITMENTS FOR 2001-2002
Your Company has committed production of 5.7 Million Tonnes of
Concentrate and 3.85 Million Tonnes of Pellets under the Excellent
category of the MoU for the next year signed with the Govt. of India.
The export target committed are 2 Million Tonnes of Concentrate and
3.85 Million Tonnes of Pellets. The total sales based on these targets
is estimated to be of the order of Rs.782 crores.
10.0 NEW PROJECTS
DEVELOPMENT OF LOW GRADE IRON ORE DEPOSITS AT ONGOLE IN ANDHRA PRADESH
10.1 Consequent upon the expiry of the mining lease in July, 1999 in
respect of the existing mine at Kudremukh, the Company is operating its
facilities only on a temporary Work Permit granted, which will expire
on 24th July. 2001. Pending grant of long term mining lease for the
existing deposits and the uncertainty over the grant of lease in
respect of nearby deposits as well as for sustained growth and with
forecast of good market potential and demand for Iron Ore Concentrate
and Pellets, it has become necessary for the Company to explore
alternate deposits for long term operations.
10.2 At the instance of the Govt. of Andhra Pradesh, for development of
the low-grade Iron Ore deposits in Ongole region, which is similar to
Kudremukh deposits in characteristics, your Company had discussions
with the Govt. of Andhra Pradesh in this regard. Earlier preliminary
investigations made by M/s NMDC had indicated that a geological
probable reserve of about 260 Million Tonnes exist, spread over a
distance of 50 - 60 Kms. This prompted your Company to go in for
development of Ongole Iron Ore deposits, with its expertise.
10.3 Based on the preliminary investigation studies by M/s NMDC, a
mineable deposit of 66 Million Tonnes has been estimated in
Maralapadu-Konijedu area in Andhra Pradesh, one of the biggest deposits
available in the region. The Company intends to develop the deposits in
Ongole region as its own unit with an estimated investment of about
Rs.250 - 280 crores which would annually yield I Million Tonnes per
annum of Concentrate over a period of 20 years, which is the estimated
economic life of the mine. The schedule for implementation of the
project is envisaged as 36 months, after preparation of the feasibility
report. The Govt. of Andhra Pradesh has agreed to grant the mining
lease to the Company.
10.4 An MOD has since been signed with the Govt. of Andhra Pradesh in
January, 2001 for development of the Ongole deposits. The time frame
for the above feasibility studies is scheduled for about a year from
the date of transfer of the mining lease.
10.5 CAPTIVE POWER PLANT
The efforts of the Company to set up a Captive Power Plant at Kudremukh
to overcome the frequent interruptions/restrictions on availability of
power and to inhibit the power charges were explained in the previous
report. However, the Company has not been able to proceed further on
this project due to the restrictions imposed in the Work Permit granted
to the Company by the Govt. of Karnataka for continuation of the mining
operations, in accordance with which no fresh ground can be opened up
during the pendency of the work permit, setting up of the Captive Power
Plant at Kudremukh appears to be difficult. Alternative site at Miyyar
(near Karkala) which is away from Kudremukh has been considered.
EIA/EMP studies, Water availability studies are under progress. Soil
investigation and survey reports have been received. Efforts are on to
procure additional land and obtain sanction from the State Government
authorities.
10.6 COKE OVEN PLANT
To cater to the needs of the PIG IRON PLANT at Mangalore and also to
assist in bridging the wide gap in availability of good quality
metallurgical coke in this part of the country, your Company proposes
to establish a Coke Oven Plant with an initial annual capacity of
250,000 gross tonnes. The Govt. of Karnataka has allotted 400 acres of
land identified by the Company at Mudageri village of Karwar Taluk,
North Canara District. State Govt. has also sanctioned electrical
power and has permitted to draw 1.76 MGD water at the Companys cost,
stipulating certain conditions.
10.7 FUEL OIL STORAGE FACILITIES AT MANGALORE
In order to enable direct import in optimum size vessels and storage of
fuel oil required for the Pellet Plant, Captive Power Plant at
Mangalore and the proposed Captive Power Plant at Miyyar, Fuel oil
storage and handling facilities for a capacity of 30000 KL are being
installed at Mangalore. Construction work has been completed and the
facilities are under commissioning.
10.8 ANALYSIS OF PRIMARY ORE DRILL CORE SAMPLES
The Aroli deposits where the mining is currently being carried out are
expected to last for about 5-6 years. It is, therefore, proposed to
exploit the Primary Ore available beneath the weathered ore where the
mining is carried out at present.
10.9 Preliminary tests were conducted, which indicate that the Primary
Ore is harder than the weathered ore and therefore consumes higher
grinding energy. Further, the Primary Ore, in certain samples, had
Sulphur contents. As such, a Techno Economic study is necessary for a
final decision to exploit the Primary Ore.
10.10 A study is being conducted for preparation of a Detailed Project
Report for exploitation of the Primary Ore. As a part of this study,
5,510 mtrs. of Core drilling has been completed. The testing of samples
in our laboratory has been completed. Further testing is in progress in
foreign laboratories. Point Load Test is in progress. The Primary Ore
Metallurgical Test has also been completed and the report is under
examination.
11.0 JOINT VENTURE PIG IRON PROJECT
11.1 In order to set up a Pig Iron & Ductile Iron Spun Pipe Plant at
Mangalore, as you are aware, your Company has entered into Joint
Venture with MECON & MSTC. A separate Company - Kudremukh Iron & Steel
Company Limited (KISCO) has been set up for the purpose. The Pig Iron
component of the project was commissioned during the year and trial
production is in progress. During the trial run operations, about
19,154 Metric Tonnes of Hot Metal was produced upto 31 st March, 2001.
The Pig Iron production was of the order of 17,069 Metric Tonnes till
end March, 2001. The sale of Pig Iron has also commenced. As regards
the Ductile Iron Spun Pipe (DISP) project, a global tender notice was
issued for setting up of a 70,000 tonnes per annum DISP plant on a
turnkey basis. Bids received from the parties are under scrutiny.
I 1.2 A proposal seeking approval of the Govt. of India for merger of
KISCO with KIOCL is under its consideration. As the members are aware,
your Company has invested a sum of Rs. 50 crores in KISCO towards
equity. While KISCO has alloted 102 equity Shares of Rs. I O/- each
(Rs. 1020/-) to the Company, a sum of Rs.49,99,98,980/- is with KISCO
as Share Application money pending allotment of Equity Shares. Besides
this, your Company has also given a loan of Rs. 74 crores and advance
of Rs. 0.75 crores to KISCO.
12.0 R&D, TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
The particulars required under section 217(1) of the Companies Act,
1956 read with the Companies (Disclosure of particulars in the Report
of Board of Directors) Rules, 1988 regarding the Technology Absorption,
Adaptation and Innovation and R&D are furnished separately in
Annexure-1.
13.0 ENERGY CONSERVATION
The consumption of electricity per tonne of Concentrate and Pellet
production during the year was as under- Energy consumption in KWH per
tonne of production of -
Concentrate 81.05
Pellets 32.42
Energy Conservation week was observed at Mangalore in the month of
December, 2000. 14.0 ENERGY AUDIT
Beneficiation of Iron Ore Concentrate is an energy intensive process.
Cost of energy accounts for about 44% of the total production cost.
Your Company attaches lot of importance for conserving Energy. New
ideas are discussed and analysed on a constant basis. Earlier proposals
and methods are reviewed periodically. The Company has conceived and
implemented several projects in the last few years which have led to
substantial savings in energy consumption. A detailed Energy Audit was
carried out in the Plant through M/s Tata Energy Research Institute
(TERI) and many of their recommendations have been implemented
resulting in savings in Energy. An Energy Audit Committee headed by a
Director of the Company has been constituted and is functioning from a
long time to oversee implementation of the recommendations of M/s TERI,
bring attitudinal changes in all energy users so that they strive for
maximum energy efficiency in all products, process, domestic and
commercial use consistent with economic consideration . On a regular
basis, energy consumption in different areas of the Plant as well as
specific energy are monitored and reviewed for deviations from
benchmarks. Your Board also periodically reviews implementation of
these recommendations. As a result, there has been substantial
reduction in heating and oil consumption at Mangalore facilities.
15.0 QUALITY CONTROL - ISO 9002
The re-certification audit for Quality Management System as per ISO
9002 Standard was conducted by DNV during May99 and your Company has
been re-certified. The first Surveillance Audit after re-certification
was conducted during November, 1999. Coordination of activities in
respect of Quality Management System is continuing.
16.0 ENVIRONMENTAL MANAGEMENT
16.1 Your Company has continued to maintain its intense concern for
preservation and upgradation of ecology, prevention of pollution and
afforestation in and around
Kudremukh. As a part of its intensive efforts to obtain eco-restoration
in the project area especially on areas abandoned after completion of
mining, the Company is taking technical support and assistance, by
entering into two separate MoUs one with Mangalore University and
another with NEERI, Nagpur. The purpose is to rejuvenate the mined land
productivity through re-vegetation with plantation. As a part of this,
about 35000 saplings of identified species have already been planted in
the project area.
16.2 Environment Management System is in place since inception of the
Company and commencement of Mining operations. The Companys
Environment Management System was certified to ISO 14001 as per 1996
Standard by DNV during the year. Your Company has come up with 13
Environmental Management Programmes under implementation and
maintaining of ISO 14001 standard, and with periodic environmental
auditing of the same has resulted in qualitative improvement in various
environmental parameters. Obviously this has helped to build a very
cordial relationship with the public as well as other government
agencies due to complete legislative compliance. Another 3 EMPs are
under preparation for waste minimisation in the process.
16.3 In furtherance of its efforts to preserve the national environment
and also provide recreational places for the residents of Kudremukh
township, the Company has developed and maintains a number of public
gardens, avenue trees, flowering shrubs and plants. A recurring Annual
outlay is made on capital and revenue accounts on these activities.
17.0 ISO 14001
KIOCL is the first Central Public Sector Undertaking awarded with
prestigious ISO 14001 Certification for its Environmental Management
System. This award has been conferred by Det Norske Veritas as per the
accreditation by KVA, Netherlands. The Certificate is valid until
November 9, 2003.
18.0 PARLIAMENTARY COMMITTEES VISIT
18.1 During the year, your Company was honoured by the visit of two
Parliament delegations - (i) Committee on Public Undertakings on 12th
October, 2000 and (ii) Committee on Petitions of Rajya Sabha on 14th
October, 2000.
18.2 The Consultative Committee attached to the Ministry of Steel
reviewed the performance of the Company on 13th December, 2000 at New
Delhi. Shri BK Tripathi, Honble Minister of State for Steel chaired
the meeting.
19.0 MINING LEASE
19.1 As Members are aware, the Govt. of India/Govt, of Karnataka had
granted a temporary Work Permit to the Company to continue mining
operations upto July, 2000. The validity period of this Work Permit
since been extended for one more year i.e., upto 24.7.2001. Since the
Companys entire Mine lease area falls within the intended Kudremukh
National Park, while extending the Work Permit, the Govt. of India had
stipulated that the Govt. of Karnataka should finalise the final
notification in respect of the intended Kudremukh National Park.
19.2 M/s NEERI has completed their EIA/EMP studies and submitted their
comprehensive report to Govt. of Karnataka. The Centre for Ecological
Sciences, Indian Institute of Science had taken up the studies on the
impact of mining operations on the flora and fauna in the Kudremukh
region. They have also completed their study and submitted a report to
the Govt. of Karnataka. The matter regarding issue of final
notification on intended Kudremukh National Park is being pursued with
the Govt. of Karnataka.
20.0 PUBLIC/STAFF GRIEVANCE REDRESSAL
20.1 Your Company has framed a well defined grievance procedure evolved
under the Code of Discipline from the very inception of the company.
Since its introduction, the Scheme has been working satisfactorily
without any complaint from any corner, either from the recognised Union
or Officers Association of the Company. Grievances received have been
redressed to the satisfaction of the aggrieved employees. As regards
public grievance, as and when any complaints is received from the
public, necessary remedial action, if any, is taken by the Company
immediately.
20.2 Complaints/grievances other than the staff grievance are
categorised into customer/ consumer complaints/grievances from the
Contractors, NGOs/General Public etc. The respective project heads are
empowered to dispose of the grievances consisting their areas and the
general public.
20.3 As regards women employees, the guidelines laid down by the
Supreme Court in the matter relating to sexual harassment of women in
work places are strictly followed.
20.4 The grievances received and disposed off by the Company are
reported to the Administrative Ministry on a monthly basis. The
guidelines laid down by the Govt. of India in this regard are being
followed. The Govt. also reviews the subject matter periodically.
21.0 VISION PLAN
21.1 Your Company is the first Centra! Mining PSU to be awarded with
ISO 14001 Certification for its environmental management system in
Karnataka. The Company is accredited with ISO 9002 Certification. It
is a Mini Ratna Category-1 Company conferred with Star Trading House
status. The total investment on Kudremukh project so far is to the tune
of Rs. I 163 crores. The Company earns precious foreign exchange of
about Rs.600 crores per annum, on an average and provides direct and
indirect employment to about 10,000 persons. Besides a capita!
expenditure of about Rs. 130 crores incurred so far, money is also
spent on recurring basis on various Pollution Control Measures and on
improvement of environment. There is a net increase of forest cover of
about 2.75 sq. kms as per studies conducted by National Remote Sensing
Agency through Satellite imageries. The region which remained cut off
for about five months during monsoon periods is now bristling with
activities with latest communications and prosperity all round.
21.2 The Company has also made investments in joint venture Pig Iron
and DISP plants of KISCO.
21.3 Environmental considerations have become very much more exacting
and stringent. Though your Company has a unique track record of
preserving and enhancing ecology, preventing pollution, etc.,
undertaken entirely voluntarily, yet environmental groups are making
attempts to build up opposition to the mining activities through legal
and other means. In view of the uncertainties in obtaining other mining
concessions in and around Kudremukh, your Company has taken recourse to
exploitation of Primary Ore. The Company is also constrained to look
in for mining leases in other States.
21.4 On the basis of internal and external environment as it obtains
for the Company in the scenario for the future, a broad Vision Plan has
been prepared after analysing the strengths, weaknesses, opportunities
and the threat perceptions. The Plan focuses on profitability,
retention and improvement of Companys identity in the international
market, diversification to more value added products like Pig Iron and
Ductile iron Spun Pipes, a Coke Oven Plant, promoting R&D efforts,
making investment decisions for technology upgradation, power
generation, etc., besides exploration and development of new mines,
resource utilisation of tailings dam by reclamation and upgradation of
tailings, hydro-dynamic modelling of Dam and tailing disposal system,
etc.
22.0 LISTING REQUIREMENTS
I. The Companys shares are listed on the following Stock exchanges:
a)Bangalore Stock Exchange Limited, b) Madras Stock Exchange Limited,
"Stock Exchange Towers", Exchange Building, RO.Box No. 183,
No.51, 1st Cross, J.C.Road, II Second Line Beach,
Bangalore - 560 027. Chennai - 600 001.
II. The Company has paid the Annual listing fee to each of the
aforesaid Stock Exchanges for the year 2000-2001.
III. A report on the Corporate Governance is at Annexure-11.
IV A certificate from the Auditors of the Company regarding compliance
of conditions of Corporate Governance is at Annexure-111.
V. There is no pecuniary relationship or any transactions by any of
the non-executive Directors vis-a-vis the Company.
23.0 CONCERN FOR NEIGHBOURHOOD
Socially conscious, as it is known, your Company has stretched its
hands in helping its neighbourhood by providing pure drinking water
facilities, play grounds, books and other financial assistance to the
educational institutions, traffic signals & traffic islands,
development of recreation facilities, health and medical facilities,
assistance to the poor, disabled and downtrodden, construction of
buildings and provision of equipment for hospitals, construction of
bridges, development of coastal region, rehabilitation, supply of water
for irrigation purposes and several other welfare measures.
24.0 HUMAN RESOURCE DEVELOPMENT
24.1 Your Company continues to accord priority to human resource
development through an integrated HRD plan. During the year under
report, deputing employees for various training programmes and seminars
continued as a part of HRD activities. Following statistics bear
testimony to the efforts of the HRD in training activities:-
Trained Mandays
Actuals Target
Executives 1756 1000
Non-Executives 9167 3600
24.2 A series of programmes were conducted on Positive Work Culture for
Productivity covering the Non-executives and junior level Executives.
So far, on this programme alone, 495 employees have been covered. This
particular programme will continue during the year 2001 -2002 also.
24.3 Special attention was paid to train SC/ST employees during the
year. An exclusive nomination of Executives belonging to SC/ST was made
for various programmes conducted by NITIE, Mumbai. In addition to this,
Executives and Non-executives were deputed for training programmes in
Computer Network Administration and usage of various Software.
24.4 In the area of Quality Management and Environment Management
System, additional Executives were trained in Lead Auditor Course. HRD
Department continued its activities in the area of QMS and EMS. It also
focussed its attention on the area of Occupational Health and Safety.
24.5 The programmes covered under major topics are:
- Leadership through Self-Transformation - Indian Insights.
- Certificate Course on ISO 9002 Internal Auditor.
- ASCI Advanced Management Programme with study tour Abroad.
25.0 PERSONNEL
25.1 The total number of personnel on the rolls of the Company as on
31st March, 2001 was 2290 consisting of 1833 workmen and 457 executives
as against 2421 on 31st March, 2000.
25.2 PARTICULARS OF EMPLOYEES.
None of the employees who were on rolls of the Company as on 31 st
March, 2001 were in receipt of remuneration exceeding Rs. 1,00,000/-
per month or Rs. 12,00,000/
- per annum during the year. A statement containing particulars of
employees who opted for Voluntary Retirement during the year and who
are covered under the provisions of Section 217(2A) of the Companies
Act, 1956 read with Companies (Particulars of Employees) Amendment
Rules, 1999, is available for inspection at the Corporate and
Registered Office of the Company. Shareholders desirous of obtaining a
copy may write to the Company Secretary.
26.0 REPRESENTATION OF SCs AND STs
26.1 The following table shows representation of SCs and STs and also
women employees and Ex-servicemen as against the total number of
employees in different Groups on roils of the Company as on 31 st March
2001 :-
Group No.of SC ST No.of Ex-servicemen Physically
employees women Handicapped
on rolls employees
A 457 54 12 22 4 1
B 276 11 1 42 3 7
C 1356 196 50 48 80 16
D 163 45 26 15 3 3
D(Sweepers) 38 32 2 15 - 1
Total 12290 338 91 142 90 28
26.2 The Company makes efforts to improve the intake of candidates
belonging to SC/ST and recruitment of women employees. During the year,
out of 3 numbers of vacancies filled under Group A category, 2 were
women employees.
26.3 As is the practice, Dr.Ambedkar Jayanthi was celebrated at all the
locations of the Company on 14th April, 2000.
26.4 Recruitment of Physically Handicapped
A Special Recruitment Drive to recruit Physically Handicapped
candidates in Group C and D was conducted during the year to fill
up the backlog of vacancies of 16 posts by notifying the posts to the
Employment Exchanges. After the selection process, 4 Physically
Handicapped in Group C and 2 in Group D are being appointed in the
Company. Action is on hand to fill up the balance vacant posts.
26.5 To commemorate the International Womens Day on March 8, Women in
Public Sector (WIPS) Forum of the Company at Bangalore gathered
together, discussed their activities, future plans and focussed on
measures to contribute to the progress of the Company. The Mahila
Samithi at Kudremukh observed the Day through a week long Celebration.
27.0 WELFARE
In addition to payment of productivity linked incentive, your Company
paid MoU linked performance incentive to all employees for the year
1999-2000. The Companys workforce is the driving force behind the
success of your company. Their contribution for the success stems out
of the amenities that are provided to the workforce are well planned
Township, Hospitals, Schools, Recreation Centres , Cable TV Network,
Parks, Temples, Church, Mosque, etc., besides grant of perks such as
advances for purchase of conveyance, house building, computers, grant
of scholarships, reimbursement of school fees, uniforms, childrens
out- station education allowances, entertainment, magazine and journal
allowances, etc.
28.0 INDUSTRIAL RELATIONS
28.1 Kudremukh Shram Shakthi Sangathan (KSS) affiliated to HMS,
continues to be recognised Union for two years effective from
01-3-2000.
28.2 Industrial Relations situation remained peaceful throughout the
year in all the establishments of the Company. The Company has set up
Works Committees and Joint Plant and Shop Councils with the
representatives of the recognised Union. These Committees meet
regularly and their discussions contribute towards improving industrial
relations and resolving differences, if at all they arise.
29.0 VOLUNTARY RETIREMENT SCHEME
In line with BPEs guidelines, a Voluntary Retirement Scheme replacing
the existing Scheme was introduced during November, 1999 to achieve
manpower optimisation and for effective utilisation of human resources,
improved productivity, cost reduction and "quality of work life. Under
the Scheme, among other benefits, the employees are eligible for I /^
months for each completed year of service, or monthly salary for the
balance months of service left before the normal date of retirement,
whichever is less. They are also entitled to other normal retirement
benefits i.e., Provident Fund, Gratuity, Settling Allowance etc. The
Scheme was operative till June 2000. 74 employees comprising 18
Executives, 8 Supervisors and 48 non- executives have been released
from 1.4.2000 to 30-06-2000.
30.0 RAJBHASHA
30.1 The Company follows the directives issued from time to time by the
Department of Official Language, Ministry of Home Affairs and Ministry
of Steel, Govt. of India for the
progressive use of Official Language Hindi. Hindi training is being
given to the employees. Cash awards and increments are given as per
Government directives. Regular Hindi Workshops are being conducted for
the employees to encourage them to do their official work in Hindi.
Cash award is given to such employees who are doing the official work
in Hindi.
30.2 All the stationery of the Company is in bilingual form. The Annual
Report, MoU, House Magazine, Quarterly News Letters, Employees Pension
Scheme, etc., are printed in Hindi also. Hindi software is provided in
the computers of all the departments.
30.3 Official Language implementation Committees quarterly meetings
take place regularly and the progress of the previous quarter is
reviewed in such meetings. Company takes active part in Town Official
Language implementation Committee. During the year, your Company
conducted two Competitions under the TOLIC banner for all Central
Government Officers in Bangalore Town. The Golden Jubilee year of the
Official Language was celebrated in a grand manner in the Company.
30.4 Companys efforts in progressive use of Official Language are
often appreciated by the Government as well as the voluntary Hindi
organisations. The Millennium Rashtriya Rajbhasa Shield-Samman awarded
to the Company in appreciation of its efforts in Official Languages
implementation in the past 5 years.
30.5 In connection with the Golden Jubilee year celebration, Official
Language, various Hindi Competitions were conducted and prizes were
awarded on the concluding day function.
30.6 Inspection by the team of Steel Ministry as well as Home Ministry,
Official Language Departments were carried out during the year. They
have expressed satisfaction on the efforts made by the Company in
Official Language implementation.
31.0 CORPORATE EXCELLENCE
Your Company was a recipient of the following Awards during the year
under report:-
* CAPEXILs Special Award under the Bulk Minerals & Ores Category for
the year 1999-2000, for the I Oth time.
* Gems Granite Environment Award 1999-2000 by Federation of Indian
Mineral Industries for outstanding contribution to the national Goal of
sustainable development through Environmental conservation and rational
utilisation of natural resources.
* Millennium Rashtriya Rajbhasha Shield-Samman for outstanding
achievements in progressive use of Official Language Hindi and its
implementation during the last consecutive 5 years.
* 2001, IMM Top Export Company Award for the Companys excellent
performance in Export by the Institute of Marketing & Management, New
Delhi.
* Indo-German GREENTECH Environment Excellence Award 1999-2000 in
recognition of Companys achievements in the field of environment
management and Pollution Control by GREENTECH foundation, New Delhi.
* JPIs Rajiv Gandhi Memorial Shipping performance Award 1998 in
recognition of exemplary outstanding work contribution in the promotion
of Shipping Maritime Trade at Mangalore Major Port.
32.0 VIGILANCE
The Vigilance Department of your Company continued its efforts to
maintain a transparent and corruption free environment. A system of
Surprise Checks and Inspections, and analysis of existing systems
formed the basis of the Vigilance activities for the year 2000-2001.
Emphasis was laid on a combination of educative and preventive
measures. Two areas viz., (a) Disposal of Scrap, and (b) Contract
Labour were identified as sensitive areas requiring greater scrutiny. A
total of 104 Surprise Checks and Inspections were carried out during
the course of the financial year. Property Returns were obtained from
the Executives. As laid down by the CVC, 20% random scrutiny was
carried out of these Returns. During the course of the year, as per the
directive of the CVC, a "Vigilance Awareness Week" was observed from
October 31 to November 04, 2000. A pledge was administered to all the
employees. Programmes were" held on the occasion at Bangalore,
Kudremukh and Mangalore.
33.0 REVIEW OF ACCOUNTS BY THE STATUTORY AUDITORS AND THE CAG
The comments/observations of the Statutory Auditors and reply by the
Company, and also Review of Accounts by the Comptroller and Auditor
General of India for the year 2000-2001 are attached.
34.0 BOARD OF DIRECTORS
During the year the Board of Directors remained the same and there was
no change in the Board of Directors of the Company.
35.0 ACKNOWLEDGEMENT
35.1 Your Directors express their gratitude and acknowledge the
support, assistance, cooperation and guidance received from the
Minister of Steel, the Secretary, Ministry of Steel and other officiais
of the Department of Steel as well as other Ministries of the
Government of India and the Government of Karnataka and all other
departments/ agencies concerned in all the endeavours of the company,
in particular, in obtaining the work permit for continuation of its
operations.
35.2 Your Directors also acknowledge the timely advice and assistance
rendered by the Indian Embassies abroad during the year in the
Companys marketing efforts.
35.3 Your Directors sincerely thank all the customers and suppliers who
stood by the Company during the period of its uncertainity and convey
their gratitude for their support and co-operation rendered for a long
period of time.
35.4 The Directors also wish to place on record the invaluable
contributions made by ail the employees to overcome the challenges and
remain firm in their commitment towards the Company.
DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION.
ADAPTATION AND INNOVATION, AND R&D ACTIVITIES
B. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
You may recall that a Techno-Economic Group was set up to study and
recommend ways and means of extending the existing mine life and
suggest some new avenues, if any, for prolonged operation of the plant
and other infrastructure facilities. Almost all the recommendations of
this Committee have been implemented and are monitored on a continuous
basis.
RESEARCH & DEVELOPMENT ACTIVITIES
1. The objectives of R&D activities in your Company are directed
towards quality improvement through process development/ modifications
to suit multi product needs and to modify the process Flow Chart to
cater to the present run of mine ore characteristic.
2. Some of the major R&D activities undertaken, keeping the above
objectives in view, are :
i) Primary Ore
Currently, mining is going on in the weathered Ore formation only. By
geological occurrence, Primary Ore exists below the weathered Ore. The
quantity of Primary Ore is estimated to be 340 Million Tonnes. With a
view to extend the mine life, the Company is planning to exploit the
Primary Ore.
Preliminary tests were conducted, which indicate that the Primary Ore
is harder than the weathered Ore and therefore consumes higher grinding
energy. Further, the Primary Ore, in certain samples, had Sulphur
contents. As such, a Techno Economic study is necessary for a final
decision to exploit the Primary Ore.
M/s MET-CHEM, Canada have been entrusted with a study for preparation
of a detailed Project Report for exploitation of the Primary Ore. As a
part of this study, 5,510 mtrs. of Core drilling has been completed
through M/s NMDC. The testing of samples in Companys Laboratory has
been completed. All samples and field data have been sent to M/s
MET-CHEM. The testing of these samples is under progress in Coleraine
Mineral Research Laboratory and at Lakefield Research Limited.
Sample for point Load Test has been sent to the National Institute of
Rock Mechanics. The Primary Ore Metallurgical Test programme report on
laboratory scale testing has been received. The report is under
examination.
As per the project schedule, the final DPR from Met-chem is expected
during the second quarter of the year 2002 and thereafter,
implementation of this project is expected by end 2004. Extraction of
Primary Ore is expected to enhance the life of the current mine by an
additional 17 years.
ii) Use of Bellary-Hospet Ore
As per the recommendations of the Techno-Economic Group, the
possibility of utilising Haematite Ore Fines from Bellary-Hospet area
were explored. Plant level tests by mixing 8 to 10% of Haematite Ore
Fines with our Concentrate for pelletising yielded most encouraging
results. To start with, the Company has already started using Ore fines
in small quantities in the production of Pellets. To cater to the long
term objective of using I million tonne of Ore Fines of Bellary-Hospet
region, upgradation of infrastructures needed are under study.
iii) Recovery of Iron - Feasibility study for hydro-dynamic modelling
of dam and tailing disposal system.
The Lakya Dam, which was constructed at the initial stages of the
Kudremukh project, was meant for the purpose of deposition of tailings
generated in the beneficiation process and the Dam is also catering to
the process water requirement of the Plant. The present Dam, which has
been raised to a height of 100 M is expected to cater to the
requirement of the project for another 5-7 years. Therefore, either a
new Tailings Dam will have to be built or the height of the present Dam
has to be further increased to continue the Plant operations. Studies
were conducted to find ways and means to optimise the Dams
utilisation. M/s CWC have indicated that the height of the Dam could be
increased further. For every I Mtr. increase, 6 million cu.m. of space
would be created. Whereas, M/s MTD, Australia have indicated the
possibility of utilising the existing dam by creating a bund inside the
Dam using the classified course tailings. For this purpose,
hydro-dynamic modelling, geo-technical and engineering study will be
conducted.
3. During the next financial year 2001-2002, it is proposed to
undertake laboratory testing and evaluation of Dunite and Dolomite in
place of Limestone in pellet making as an R&D effort to establish
alternate materials to further improve pellet quality.
I Specific areas in which R&D carried out by the Company i.
Utilisation of Hematite ore fines
ii. Testing of Metallurgical and physical properties of Primary Ore
2 Benefits derived as a result of the above R&D i. Extension of mine
life
ii. Encouraging results for a 350 Million Tonnes reserve is expected
3 Future plan of action i. Pilot plant testing for finalisation of
flow sheet for Primary Ore
ii. Lab testing and evaluation of Dunite and Dolomite in place of
limestone in Pellet making
4 Expenditure on R&D
a. Capital
b. Recurring Rs.4.2 crores
c. Total Rs.4.2 crores
d. Total R&D expenditure as a percentage of total turnover 0.73%
1 Efforts, in brief, made towards technology absorption, adaptation and
innovation
i. Lab test results for metallurgical and physical properties of the
Primary Ore was simulated on computer to get a wide range of data to
determine grinding character of the Ore and energy requirement.
ii. Separation of sulphur from Concentrate was tried out in
conventional method.
2 Benefits derived as a result of the above efforts, eg., product
improvement, cost reduction, product development, import substitution,
etc.
i. The indicative size reduction parameters and critical size in
circuit is predicted. As such, a conceptual flow sheet could be
achieved.
ii. The elimination of Sulphur from Concentrate is must and
methodology could be better ascertained.
3 In case of imported technology (imported during the last 5 years
reckoned from the beginning of the financial year), following
information may be furnished:
a. Technology imported Nil
b. Year of Import Nil
c. Has technology been fully absorbed? Nil
d. If not fully absorbed, areas where this has not
taken place, reasons therefor and
future plans of action. Nil
C. FOREIGN EXCHANGE EARNINGS & OUT GO
During the year, your Company earned foreign exchange of US$ 108
million (on receipt basis). Total outgo in Foreign Exchange on account
of imports, payment towards technical services, etc., amounted to about
US $ 21 million only. KIOCL thus continues to be a net Foreign Exchange
earner for the country.
For and on behalf of the
Board of Directors
Place : Bangalore, (S Murari)
Dated : 18th May, 2001 Chairman-cum-Managmg Director
Mar 31, 2000
The Directors have pleasure in presenting the 24th Annual Report of the
Company together with the Audited Accounts, Auditors' Report, Comments
and Review of Accounts by the Comptroller and Auditor General of India
thereon for the year ended on 31st March, 2000.
AN OVERVIEW
The year under review witnessed a recovery process in the steel
industry with an improvement in steel production, leading to increase
in the demand for Iron Ore and Pellets, which consequently led to a
modest up-swing in prices for Iron Ore products. The previous year had
witnessed the steel industry reeling under the Asian economic crisis,
which had a severe impact on world steel production and consumption,
and a cascading effect on the company's performance. However, with
improved steel production during the second quarter of 1999-2000, the
Pellet Plants, which were shut down due to slackness in the market,
started operation to their capacitates, to meet the demand for Iron
Ore/Pellets. Coupled with this, the freight market also started to
show signs of recovery. The initial four months of the year under
report registered an increase of about 11% in the production of crude
steel over last year's production. Forecast states that the steel
production will continue to increase thence.
The above trend strengthened the position of Iron Ore producers all
over the world leading to prolonged negotiations and finalisation of
higher prices for Iron Ore products. The company's products too got
their due share of price increase. Further, the buoyant freight market
is exerting pressure on buyers to source their increased requirement
from the nearest source of supply. Based on these developments, the
company's marketing strategies were restructured.
The cumulative effect of above developments on the company's
performance is the increased production of Pellets. The production for
the year touched a figure of 3.2 Million tonnes, for the first time
crossing the 3-million-tonne-mark. Yet another fete accomplished was
supply of 1.6 Million tonnes of Pellets to China, the highest quantity
supplied to any country so far.
In view of the cloud of uncertainty handing over the company on the
issue of renewal of the Mining Lease and grant of lease/prospecting
licence for explication of nearby deposits, the company had to think on
the lines of scaling down the production to prolong the mine's life as
well as to maintain the guaranteed specification of its products.
Therefore, a conscious decision was taken to limit the supply of
Concentrate to Iron and Japan and to maintain the levels of production
of the value added products to ensure good returns. As an alternative,
effects are on to procure some quantities of Sinter Concentrate for
other sources within the country in order to honour the commitments for
supply of Concentrate and also to increase the production of Pellets.
HIGHLIGHTS
* Turnover of Rs. 620.79 crore, for the first time crossing Rs. 600
crores mark. The previous high was Rs. 593.91 crores during 1997-98 :
* Turnover of Rs. 75.34 crores during September, 1999, the highest
achieved in any month so far;
* Production of 3.285 Million tonnes of Pellets (including Pellet
Fines) during the year, the highest achieved in any year, surpassing
the previous high of 2.9 million tonnes in 1997-98 :
* Production of 3.26 lakh tonnes of Pellets (including Pellet Fines) in
March, 2000, the highest production in any month so far surpassing the
previous high of 3.20 lakh tonnes in August, 1999 :
* Production of 1.620 Million tonnes of Concentrate in the second
quarter of 1999-2000, the highest for any second quarter so far ;
* Production of 5.2 lakh tonnes of Concentrate in August, 1999, the
highest produced in any august month so far ;
* Production of Pellets (including Pellet Fines) at 7.83 lakh tonnes in
the first quarter, 8.5 lakh tonnes in the second quarter, 8.15 lakh
tonnes in the fourth quarter, the highest quantities produced in
respective quarters so far ;
* Generation of 0.080 Million tonnes of Pellet Fines during the year,
the highest so far ;
* Shipment of 3.235 Million tonnes of Pellets (including Pellet Fines)
during the year, the highest so far. The previous high was 2.830
Million tonnes in 1997-98 ;
* Shipment of 4,04,101 tonnes of Pellets (including Pellet Fines) in
February, 2000, the highest despatched in any February month so far ;
* Shipment of 0.772 Million tonnes of Pellets (including Pellet Fines)
in the first quarter, 0.870 Million tonnes in the second quarter and
0.762 Million tonnes in the third quarter, the highest quantities
shipped in respective quarters of any financial year so far ;
* Export of 1.642 Million tonnes of Pellets (including Pellet Fines) in
the first half of the current financial year, the highest quantity
exported in the first half of any financial year so far ; and
* Despatch of 1.573 Million tonnes of Pellets to china during the year,
the highest quantity of Pellets shopped to any country so far.
PRODUCTION
Concentrate
As against a target of 5.6 Million tonnes set in the MoU signed with
the Government for the year, the actual production was 5.750 Million
tonnes which is 103% of the target. This also represents a capacity
utilisation of 86%.
Pellets
The year witnessed the highest production of 3.285 million tonnes of
Pellets as against a target of 3.2 million tonnes, representing 103%
achievement of the target and a capacity utilisation of 110%.
The following table summaries the production performance during the
past five years :-
CP : Concentrate PP : Pellet Plant (Qty. in million tonnes)
Plant
Year Production Capacity Utilisation in %
CP PP Total CP PP
1999-2000 5.750 3.285 9.035 86 110
1998-1999 5.042 2.525 7.567 75 84
1997-1998 6.125 2.900 9.025 90 97
1996-1997 5.572 2.246 7.818 82 75
1995-1996 6.060 2.500 8.560 89 83
The past five years' production performance in respect of Concentrate
and Pellets (in thousand dry metric tonnes) is represented below in a
graphic form :
MEMORANDUM OF UNDERSTANDING WITH THE GOVERNMENT
Performance evaluation of the Company vis-a-vis MoU targets on a
provisional basis indicates that the Company qualified to be rated as
`EXCELLENT'. The final evaluation by the Government of India and the
result thereof is awaited.
FINANCE AND ACCOUNTS
The Authorised, Subscribed and Paid-up Share Capital of the Company
remained unchanged during the year.
Internal resources generated during the year amounted to Rs. 114.77
crores.
Total sales during the year amounted to Rs. 620.79 crores compared to
the budget estimate of Rs. 552.07 cores. This is equal to US $ 143.096
million as compared to US $ 129.698 million for the previous year.
Cash balance at the end of the year stood at Rs. 126.05 crores
(including Term Deposits). Overdraft as on 31st March 2000 stood at
Rs. 3.38 crores. Reserves and Surpluses as on 31st March 2000 were Rs.
379.90 crores compared to Rs. 346.03 crores as on 31st March 1999.
Although the Company has sufficient resources to undertake capital
expenditure as projected in the 9th five-year plan period, due to the
uncertainties prevailing over the grant of renewal of the Mining Lease
and/or extension of the temporary Work Permit to the Company, many such
capital intensive projects could not be taken up.
It is year another credit to the company's financial performance that
the Directors had recommended an Interim Dividend of 3.5% on the Equity
Share Capital. The Directors now recommend that the same be treated as
final Divided. This works out to Rs. 22.21 crores excluding
Distribution Tax. The Company continued to pay Dividend for the eighth
year in succession.
Working Results
The working results of the Company for the year 1999-2000 with
comparative figures for the previous financial year are furnished below
:
(Rs. in Crores)
Particulars 1999-2000 1998-1999
Sales 620.79 547.76
Stock Adjustments (-)14.44 4.44
Operating Expenses 495.12 485.17
Gross Margin on plant operation 111.23 67.03
Capital gain on long-term investment - 9.88
Profit on sale of assets 1.58 0.34
Income from investments and
inter-corporate Loan 8.53 3.08
121.34 80.33
Less : Prior period adjustments (-) 0.04 (-) 0.15
Gross Margin 121.38 80.48
Interest Payments 0.05 0.98
Deprecation and Development expenses 54.96 53.99
Profit before tax for the year 66.37 25.51
Income Tax 7.86 6.98
Profit after Tax 58.51 18.53
CONTRIBUTION TO RELIEF FUND
The Company contributed Rs. 40 lakhs, including salary contribution by
the employees to the National Defense Fund to help the Kargil victims.
The Company also contributed Rs. 35 lakhs to the Prime Minister's
National relief Fund including employees' contribution, to help the
Orissa Cyclone victims. A further contribution of Rs. 5 lakhs was made
to the Karnataka Chief Minister's Relief Fund to help the victims of
Orissa Cyclone. In addition to this, medicine and bundles of used
cloth mobilised by the Kudremukh Citizens' Forum was also handed over
to the Deputy Commissioner, Bangalore Urban District for distribution
to the victims.
MARKETING AND EXPORTS
The Company exported its products to six countries during the year
bedsides shipment to the buyers in the Domestic Tariff Area.
Concentrate and Pellets were supplied to Japan, Iran and China.
Taiwan, Australia and Turkey bought only Pellets. In the Domestic
Tariff Area, Pellets were supplied to M/s Ispat Industries, Vikram
Ispat, Essar Steel and Jindal Vijayanagar Steel Ltd. Sales in the DTA
represented 20.97% of the total sales in quantitative terms and 23.36%
in monetary terms. Total quantity of 6.054 Million tonnes exported
during the year comprised 2.819 Million tonnes of Concentrate and 3.235
Million tonnes of Pellets. In quantitative terms, the exports have
gone up by about 18.64% of Concentrate and 22.08% of Pellets over the
previous financial year.
The country-wise details of shipments made during the year to various
customers are as under :
(In Dry Metric Tonnes)
Country Concentrate Pellets
Japan 962329 81109
Iran 1189151 124559
China 667290 1573332
Australia - 172143
Taiwan - 499701
Turkey - 24235
Ispat Industries - 580794
Vikram Ispat - 41963
Essar Steel - 24373
Jindal Vijayanagar - 31253
Steel Ltd
Pellet Fines (to Japan) - 81334
Total 2818770 3234796
Export performance in terms of quantity (in thousand dry metric tonnes)
during the past five years is represented in a graphic form below :
Export performance during the past five year sis summarised below :
Qty : In Million Tonnes Value : Rs. in Lakhs
Year Concentrate Pellets Total % increases over
previous year
Qty. Value Qty. Value Qty. Value Qty. Value
1999-2000 2.819 20731 3.235 41348 6.054 62079 20.45 13.33
1998-1999 2.376 18407 2.650 36369 5.026 54776 - -
1997-1998 3.315 23310 2.830 36081 6.145 59391 10.70 20.57
1996-1997 3.348 21900 2.203 27359 5.551 49259 - 2.95
1995-1996 3.650 20676 2.580 27172 6.230 47848 9.66 29.55
The Directors are happy to inform that there has been an increase of
about 13% in the Value of Sales and 20% in the quantum of exports over
the previous year. However, there is a slight shortfall in total
exports as compared to the target fixed for the year in terms of both
quantity and value. This is due to the recessionary conditions
prevailing in the international market, as a result of which, there was
a steep reduction in the prices of Concentrate and Pellets supplied
during the year.
During the year, 141 ships were handled at New Mangalore Port compared
to 111 ships handled during the previous year.
Order Book for 2000-2001
Keeping in view the commitments made in the MoU with the Govt. of
India, the company has booked the orders for the year 2000-2001. The
main strategy has been to serve its existing customers. Efforts are,
however, continuing to enter new markets. The committee quantities for
the year 2000-2001 are 2.55 million tonnes of Concentrate and 3.36
million tonnes of Pellets.
PROJECTS
In order to improve the quality of Company's products, projects were
undertaken by way of additions, modifications and replacements and
completed.
6 nos. of Column flotation and 2 nos. of Highrate thickeners are added
to improve the quality of Concentrate for which mechanical equipment
erection and electrical installations have been completed and the
system is put into operation.
To overcome the frequent interruptions/ restrictions on availability of
power and to inhibit the power charges, a 62 MW Captive Power Plant was
planned to be set up at Kudremukh. A global tender notice for
pre-qualification of bidders was issued. Technical bids received in
May, 1999 were scrutinised and technical discussions with bidders were
held and clarifications sought were received. However, due to the
restrictions imposed in the work permit granted to the Company by the
Govt. of Karnataka for continuation of the mining operations, in
accordance with which, no fresh ground can be opened up during the
pendently of the work permit, the Captive Power Plant now cannot be set
up at Kudremukh. Alternative site at Miyyar (near Karkala) which is
away from Kudremukh has been considered. EIA/EMP studies, water
availability studies are under progress. Soil investigation and survey
reports have been received.
At Mangalore also, in order to improve the quality and quantity of
Pellets, a number of measures were initiated. A Shaft Pelletisation
module of 0.5 million tonnes per annum to augment Pellet production was
commissioned. A Roll press has been installed to save energy. Fuel
oil storage and handing facilities for a capacity of 30,000 KL are
being installed to enable direct import in optimum parcel size and
storage of fuel oil required of the Pellet Plant, Captive Power Plant
at Mangalore and also for the proposed Captive Power Plant at Miyyar.
Work order for construction has been placed. Civil and fabrication
works are in progress.
R&D, TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
The particulars required under section 217(1) of the Companies Act,
1956 read with the Companies (Disclosure of particulars in the Report
of Board of Directors) Rules, 1988 regarding the Technology Absorption,
Adaptation and Innovation and R&D are furnished separately in
Annexure-I.
ENERGY CONSERVATION :
The consumption of electricity per tonne of Concentrate and Pellet
production was as under :-
1999-2000 1998-1999
Energy consumption in KWH
per tonne of production of -
Concentrate 77.24 77.79
Pellets 32.72 32.45
ENERGY AUDIT
The Concept of Energy Audit has assumed importance in view of the
increase in demand for energy and the ever widening gap between supply
and demand. Company's operations being highly energy intensive, there
is a need to draw a specific energy conservation plan and a programme
for compulsory energy audit to quantify the targets for energy
conservation over the entire operational area. With this is view, the
company had commissioned M/s Tata Energy Research Institute (TERI) to
conduct the energy audit for both its Kudremukh and Mangalore
establishments during 1992-93. The recommendations of M/s TERI are in
different stages of implementation. A Committee headed by a Director
of the Company overseas implementation o the recommendations of M/s
TERI. The Board also periodically reviews implementation of these
recommendations. As a result, there has been substantial reduction in
energy, heating and oil consumption at Kudremukh and Mangalore
facilities.
QUALITY CONTROL - ISO 9002
The re-certification audit for Quality Management System as per ISO
9002 Standard was conducted by DNV during May'99 and the Company has
been re-certified. The first Surveillance Audit after re-certification
was conducted during November, 1999. Coordination of activities in
respect of Quality Management System is continuing.
JOINT VENTURE
As you are aware, three PSUs under the Ministry of Steel viz., M/s
KIOCL, MECON and MSTC in joint venture, have set up Ms/ Kudremukh Iron
& Steel Company Limited (KISCO) to implement a Pig Iron & Ductile Iron
Spun Pipe project. Construction of the Pig Iron component of the
project has been completed. While heating of the Chimney has been
completed, heating of stoves has started and the heating process is
continuing. The Plant is expected to be commissioned during the second
quarter of the year 2000. Construction of the DISP component of the
project is expected to be taken up in the near future.
As regards finances for the project, a Consortium of Banks have
sanctioned term-loan limits upto Rs. 160 crores. The Banks had earlier
limited disbursement to only Rs. 73 crores. However, they have now
agreed to disburse the balance portion of the term-loan. KISCO has
also successfully placed privately NCDs aggregating to Rs. 57.40 crores
to meet the fund requirements of the project. The entire amount of Rs.
57.40 crores has also been realised. Efforts are on to raise the
public equity component of the project.
ENVIRONMENTAL MANAGEMENT
In 1976, when the Company was formulated, awareness in the country on
the need to preserve forests and their impact on ecology was not high.
In fact, the Forest (Conservation) Act was enacted only in 1980.
However, though there was no legal obligation towards forest
conservation, the Company chartered out a Master Plan for Forestry &
Ecology in consultation with the Karnataka Forest Department and in
association with a retired Principal Chief Conservatory of Forests.
This Master Plan has been fully implemented. The same sporty and
commitment towards conservation and upgradation of ecology, prevention
of pollution and affectation in and around Kudremukh is continuing. In
addition to this, the Company also supports research schemes in these
fields. Some of these schemes taken up by the Company are as under :-
Mangalore University has made an intensive study of plant bio-diversity
in the project region with reference to the species int he Western
Ghats including study of suitable species of plants which can be grown
in iron rich areas after mining activity. As a part of this, about
25,000 saplings of identified species have already been planted in the
project area and planting of further 10,000 saplings will be taken up
during the next year.
NEERI, Nagger is adopting integrated bio-technological approach in
selection of suitable and sustainable local species for afforestation
on the ore body as well as other available land space to generate a
proper co-restoration in the region. Also, to ensure faster growth of
these species, a `green-house' has been established to develop
bio-fertilizer called `VAM FUNGI' which will assist the release of
metals to hasten the growth of plant, Isolation and identification of
Nitrogen fixing bacteria and VAM fungi were carried out in the mine
spoil. Green house and laboratory has been constructed for conducting,
analyzing and multication of VAM fungi. 10,000 plants have already
been planted around mosque hill area using the bio-fertilizer
developed. Planting of another 10,000 saplings is planned for the next
year.
The MoU Mangalore University evidences Company's commitment to fund the
project to the extent of Rs. 50 lakhs. The company has already
released funds to the tune of Rs. 15.38 lakhs to the Mangalore
University. The assignment to M/S.NEERI is expected to cost the
Company over Rs. 40 lakhs.
In Furtherance of its efforts to preserve the national environment and
also provide recreational and beautiful places for the residents of
Kudremukh township, the Company has developed and maintains a number of
public gardens, avenue trees, flowering shrubs and plants. The main
TOWN PARK (Nandana Vana) spread over 24 acres has lush green lawns,
fountains, fish pond, aquarium and a Mini Zoo for the amusement of
children and the residents. Acclaimed as a jewel of Kudremukh, the
Town Park is the centre of attraction for many visitors from different
parts of the country and abroad. The Company also maintains a Fruit
Orchard for growing and selling a few varieties of fresh fruits at
subsidised prices to the residents. The annual horticultural show
celebrated in the Town Park is the most popular, much awaited
entertainment function for the entire public in the region.
To project and nurture rare medicinal plants in and around Kudremukh, a
project has been launched with the help of Ayurvedic College of Udupi
to grow valuable medicinal plants including endangered species for the
benefits of the Society.
The Company has also financed the State Forest Department in promotion
of afforestation in the Kudremukh National Park area. A sum of Rs. 5
crores has been released by the Company to the State Forest Department
on this account.
Thus, the Company's track record in environment protection,
afforestation and prevention of pollution is comparable to global
standards and is definitely second to none in the country.
ISO 14001
During the year, implementation of the Environmental Management System
as per ISO 14001 Standard was continued. Verification through internal
audits and review by Site Quality Review Committee and also by the Apex
Committee was completed.
Y2K COMPLIANCE
The company had taken all necessary steps to ensure that its mining
operations, processes and information systems are Y2K compliant. The
Company also had a Contingency Plan in place to address any
uncertainties that might arise. The Director are happy to report that
the Company successfully completed a smooth rollover into the year
2000. As against a budgetted expenditure of Rs. 32 lakhs, the actual
expenditure in this regard was Rs. 20.30 lakhs.
PARLIAMENTARY COMMITTEES' VISIT
During the year, the Company was honoured by the visit of two
Parliament delegations - (i) on the papers laid on the table of Rajya
Sabha in July, 1999 and (ii) Rajya Sabha Committee on Government
Assurances including recruitment of persons with disabilities, in
November, 1999.
MINING LEASE
Upon expiry of the Mining Lease, as you are aware, the Company was
granted a temporary Work Permit by the Govt. of India/Govt. of
Karnataka to continue the mining operations for a period of one year.
The validity period of the Work Permit is due to expire in July, 2000.
While granting the Work Permit, the Govt. of Karnataka had also
stipulated that before grant of renewal, the Company shall fund an
EIA/EMP study to be carried out by a reputed institute and the impact
of mining operations on the flora and fauna to be made by the Wild Life
Institute, Dehradun. While M/s NEERI has submitted a Rapid report on
the EIA/EMP studies, their comprehensive report is awaited. The Wild
Life Institute had expressed its inability to take up the study.
Therefore, the Company has requested the Govt. of Karnataka to grant
extension of the Work Permit for one more year and also renew the
Mining Lease for a further period of 20 years. The matter is under
active consideration of the Govt. of Karnataka/Govt. of India.
The Company is also pursuing the applications field with the Govt. of
Karnataka for grant of a Mining Lease for exploitation of the adjacent
Nellibeedu Iron are deposits and also a Prospecting Licence for
exploitation of Gangrikal Iron ore deposits which is also adjacent to
the existing mining area.
PUBLIC/STAFF GRIEVANCE REDRESSAL
The Company has framed a well defined grievance procedure evolved under
the Code of Discipline from the very inception of the company. Since
its introduction, the Scheme has been working satisfactorily without
any complaint from any corner, either from the recognised Union or
Officers' Association of the Company. Grievances received have been
redressed to the satisfaction of the aggrieved employees.
A senior official of the Company in the rank of an Executive Director,
who is in-charge of Public Relations, attends to public grievances.
As regards women employees, the guidelines laid down by the Supreme
Court in the matter relating to sexual harassment of women in work
places are strictly followed. The grievances received and disposed off
by the Company are reported to the Administrative Ministry on a monthly
basis.
CORPORATE PLANNING
Right from inception, the Company had to face challenges, both external
and internal. The Company has surmounted these challenges and achieved
an efficient level of performance. Various improvement schemes have
been completed and the Plants are operating in a sustained manner. In
order to sustain and improve its performance in future, the Company has
initiated schemes both for further improvement of the existing
operations and diversification. Some of these schemes are on-going and
will be completed in the near future. Further diversification
activities have been proposed and are being taken up. The Mining Lease
granted to the Company for 30 years expired in July, 1999. It is very
unsetting that the Company has received only Work Permit for one year
from July, 1999. In order to realise the benefits from investments
already made and efforts put in, the Mining Lease needs to be renewed
for atleast the next 20 years. Keeping this in view, a Corporate Plan
was prepared to focus the activities for the next two years in
particular and for the next 20 years in general. The Plan focuses on
profitability, retention and improvement of company's identity in the
international market, diversification to more value added products like
Pig Iron and Ductile Iron Spun Pipes, a Coke Oven Plan, promoting R&D
efforts, making investment decisions for technology upgradation, power
generation, etc., besides exploration and development of new mines,
resource utilisation of tailings dam by reclamation and upgradation of
tailings, etc. Based on subsequent developments and changes, the
updation/revision work of the present Corporate Plan has been taken up.
LISTING REQUIREMENTS
I. The equity shares of the Company are listed on Bangalore and Madras
Stock Exchanges.
II. With the necessary precautionary measures, a Contingent Plan, etc.,
the Company achieved a smooth roll over to the year 2000.
III. An independent Audit Committee headed by a part-time non-official
Director has been constituted.
IV. There is no pecuniary relationship or any transactions by any of
the non-executive Directors vis-a-vis the Company.
CONCERN FOR NEIGHBORHOOD
Socially conscious, as it is known, the Company has stretched its hands
in helping its neighbourhood by providing pure drinking water
facilities, play grounds, books and other financial assistance to the
educational institutions, traffic signals & traffic islands,
development of recreation facilities, health and medical facilities,
assistance to the poor, disabled and downtrodden, construction of
buildings and provisions of equipment for hospitals, construction of
bridges, development of coastal region, rehabilitation, supply of water
for irrigation purposes and several other welfare measures.
HUMAN RESOURCE DEVELOPMENT
The Company considers the trained human resource as the main assets.
Accordingly, the training and development activities remain as a
priority on the agenda of the HRD Department. Besides In-house
training, during the year, employees were also deputed for outstation
training programmes including study tour abroad. Following statistics
bear testimony to the efforts of the HRD in training activities :-
Trained Mandays
Particulars
Actuals Target
Executive 1693 1500
Non-Executives 8051 3600
During the year, programmes on Corporate Government and awareness on
Vigilance for top level management were conducted. Advanced training
for Systems personnel to enable them to introduce new applications,
Supervisory Development Programmes for promotees were organised.
In-house programmes on Human Resource Management for Line Managers,
Interpersonal relationship & Team Building and Leadership for middle
level Managers were among other programmes organised. Realising the
necessity and importance of Yoga in the day-to-day life and its effect
on easing the stress, programmes on Yoga were organised for employees
at different levels. Besides technical training programmes for
non-executives, joint education programmes were also organised in
association with required institutions. Another area where thrust was
given in training the employees during the year was Personal Computers.
The company aimed at educating and familiarising each and every
employee with the operation of Computers and succeeded to a great
extent.
To reinforce and strengthen the process of Quality Management System
Audit, an In-house programme on Internal Quality Audit was organised
during the year.
PERSONNEL
The total number of personnel on the rolls of the Company as on 31st
March, 2000 was 2421 consisting of 1930 workmen and 491 executives as
against 2454 on 31st March 1999.
Particulars of Employees
A statement containing particulars of employees as required under the
provisions of Section 217(2A) of the Companies Act, 1956 read with
Companies (Particulars of Employees) Amendment Rules, 1999, is
available for inspection at the Corporate and Registered Office of the
Company. Shareholders desirous of obtaining a copy may write to the
Company Secretary.
REPRESENTATION OF SCs AND STs
The following table shows representation of SCs and STs and also women
employees and Ex-servicemen as against the total number of employees in
different Groups on rolls o the Company as on 31st March 2000 :-
Group No.of employees SC ST No.of women Ex-
no rolls employees servicemen
A 491 56 12 29 5
B 293 11 1 41 1
C 1411 218 54 49 102
D 181 39 23 15 5
D(Sweepers) 45 36 3 16 -
Total 2421 360 93 150 113
The Company has taken several measures to improve the intake of
candidates belonging to SC/ST and recruitment of women employees. As a
result, the following number of candidates belonging to SC/ST were
recruited during the years 1998 and 1999. The number of women
candidates recruited during the year 1998 is also indicated below :
Group Total Number recruited % as against total Shortfall as on
No. of vacancies filed 01-01-2000
vacancies
filed
Women SC ST Women SC ST SC ST
`A' 14 3 2 - 21.42 14.28 - - 1
`B' - - - - - - - - -
`C' 48 - 7 7 14.58 14.58 - - -
`D' - - - - - - - - -
`D'(S) - - - - - - - - -
TOTAL 62 3 9 7 4.83 14.51 11.29 - 1
As it the practice. Dr. Ambedkar Jayanthi was celebrated at all the
locations of the Company on 14th April 1999.
There were 29 physically handicapped employees and 113 Ex-servicemen on
rolls of the Company as on 31st March, 2000.
WELFARE
In addition to payment of productivity linked incentive, the Company
paid the maximum permissible bonus of 20% in terms of Payment of Bonus
Act to the entitled employees. The Company's workfolk is the driving
force behind the success of the company. Their contribution for the
success stems out of the amenities such as well planned Township,
Hospitals, Schools, Recreation, Cable TV Network, Parks, Temples,
Church, Mosque, etc., besides grant of perks such as advances of
purchase of conveyance, house building, computers, grant of
scholarships, reimbursement of school fees, uniforms, children's
out-station education allowances, entertainment, magazine and journal
allowances, etc.
INDUSTRIAL RELATIONS
The recognition granted to the Kudremukh Mazdoor Sangh (MKS) expired on
05-10-1999. In the elections through secret ballot conducted on
20-01-2000. Kudremukh Shram Shakthi Sangathan (KSSS) emerged the
winners. With the support of a majority, KSSS is now the recognised
Union for two years effective from 1st March, 2000.
Industrial Relations situation remained peaceful throughout the year in
all the establishments of the Company. Consequent upon grant of
recognition to a new Union(KSSS), the Works Committees and Joint Plant
and Shop Councils were reconstituted. These Committees meet regularly
and their discussions contribute towards improving industrial relations
and resolving differences, if at all they arise.
WAGE REVISION
The validity period of the Tripartite Wage Agreement entered into with
the recognised Union expired on 31/12/1996. Based on the broad
guidelines provided by the Government, a comprehensive settlement with
the recognised Union on revision of scales of pay effective from
01-01-1997 was signed on 05-10-1999. In line with the Government
directives, scales of pay of Supervisors and Executives was also
revised with effect from 01-10-1997. In addition to introduction of
better pay scales, the package also includes improvement in other
benefits to the employees. With the introduction of this package, it
is expected that the motivation on the part of the Company's workforce
will improve, leading to more prosperous results for the Company.
VOLUNTARY RETIREMENT SCHEME
In line with BPE's guidelines, a Voluntary Retirement Scheme replacing
the existing Scheme was introduced during November, 1999 to achieve
manpower optimisation and for effective utilisation of human resources,
improved productivity, cost reduction and quality of work life. Under
the Scheme, among other benefits, the employees are eligible for 45
days' salary for each completed year of service, or monthly salary for
the balance months of service left before the normal date of
retirement, whichever is less. They are also entitled to other normal
retirement benefits i.e., Provident Fund, Gratuity, Setting Allowance
etc. The new Voluntary Retirement Scheme was introduced mainly to
encourage the medically unfit employees to opt out and trim the
manpower. The Scheme is operative till June 2000. 21 employees
comprising 5 Executives and 16 non-executives have been released upto
31-03-2000.
RAJBHASHA
The Company follows the directives issued from time to time by the
Department of Official Language. Govt. of India for the progressive
use of Rajbhasha. In addition to grant of cash given to the employees
passing Hindi examinations. Hindi Workshops and Training programmes
are conducted at regular intervals.
All the stationery of the Company is in binlingual form. The Annual
Report, Magazines, MoU, etc., are also printed in Hindi. Some of the
correspondence with the Govt. of India is also made in Hindi.
Company's officials attend the TOLIC meetings regularly and coordinate
in conducting various programmes.
September, 1999 to August, 2000 has been declared as `Official Language
Year' by the Government of India, Ministry of Home Affairs, Department
of Official Language. To commemorate this, Official Language
Programmes are organised. Hindi Workships, Noting and Drafting
practice and Hindi Competitions are being conducted every month for
progressive use of Hindi int he three main locations of the Company.
As a part of aforesaid celebrations, an All India Official Language
Technical Seminar will be conducted during the month of August 2000.
In addition to the Steel Ministry Officials, representatives of all the
Subordinate Offices will take part in this Seminar.
In appreciation of Company's efforts in the progressive use of Official
Language, the Rashtriya Hindi Academy, Calcutta has conferred the
Rashtriya Rajbhasha Shield to the Company.
CORPORATE EXCELLENCE
The Company was awarded the CAPEXIL's `Special Export Award' under the
Bulk Minerals & Ores Category for the year 1998-99. KIOCL is a
recipient of CAPEXIL's award for the ninth time. The Company was also
awarded `Niryat Shree' Award of the year 1997-98 under the Star Trading
Houses Category in recognition of excellent performance in exports
during 1997-98. The Company bagged the 3rd prize for the production of
a film titled `Re-Genesis', a film on environment Management for the
year 1997-98. This award was instituted by Public Sector Public
Relations Forum, New Delhi. Rashtriya Rajbhasha Shield was awarded by
Rashtriya Hindi Academy, Calcutta for implementation of Official
Language during 1997-98. The company was adjudged the Best Performing
Public Sector Enterprise by the Indian Institution of Industrial
Engineering, Navi-Mumbai for the year 1998-99.
VIGILANCE
The Vigilance Department of the Company makes all efforts to maintain a
transparent and corruption free environment. Its activities continued
to strive at making administration more efficient, effective and clean
without corruption. A Plan of Action for th Vigilance Wing for the
year was drawn up and circulated. This laid down the broad parameters
on which Vigilance activity for the year would be scheduled to be
carried out. It identified the areas where greater thrust would be
attempted to be accorded in the arena of carrying out Surprise Checks
and Inspections, Scrutiny of Files, etc. Two areas, viz., Disposal of
Scrap and Inventory Management, were identified as the `sensitive
areas' for ensuring greater thrust and scrutiny. Preventive action
continued to be the focus on ensuring effective vigilance activity in
the Company.
Right from inception, the Company has prepared various manuals viz.,
Purchases, Stores, Contract, Inspection, Finance & Accounts, Internal
Audit etc., and these are followed scrupulously in day-to-day
functioning of the respective departments. To create awareness amongst
employees, programmes on Vigilance for the departmental heads at
different locations of the Company were conducted during the year.
REVIEW OF ACCOUNTS BY CAG
Review of Accounts by the Comptroller and Auditor General of India for
the year 1999-2000 is attached.
BOARD OF DIRECTORS
During the year, Shri C.S. Rao, Addl.Secretary & Financial Adviser,
Ministry of Steel was appointed as a Director of the Company vice Shri
A.H. Jung, who ceased to be a Director, consequent upon his appointment
as Special Secretary in the Ministry of Power.
DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION,
ADAPTATION AND INNOVATION, AND R&D ACTIVITIES
B. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
The Board has constituted a Techno-Economic Group to study and
recommend the ways and means of extending the existing mine life and
suggest some new avenues, if any, for prolonged operation of the plant
and other infrastructure facilities. This Committee has completed its
assignment and submitted a report. The recommendations of the
Committee are under implementation.
RESEARCH & DEVELOPMENT ACTIVITIES
1. The objectives of R&D activities in the Company are directed towards
quality improvement through process development/modifications to suit
multi-product needs and to modify the process Flow chart to cater to
the present run of mine ore characteristic.
2. R&D activities undertaken include implementation of new
technologies/processes like Column Flotation and Hi-rate Thickener for
reduction of Silica in the final product to enable value addition and
ensure better quality Pellets. By introduction of these techniques,
the Concentrate quality has shown improvement with higher Fe and
reduction in Silica in the product. Details of other projects
undertaken are as under :-
I. Optimisation of grinding energy in the Ball Mills
M/s JK Tech of Australia was entrusted with studies on optimisation of
grinding energy consumption in the Ball Mill regrinding circuit as
grinding consumes major portion of energy for the process requirement.
M/s JK Tech have submitted their report consisting of short term and
long term recommendations. Based on their suggestions, short-term
recommendations, viz.,
(i) Replacement of cyclone Vortex finder to 8" from 10".
(ii) Replacement of cyclone inlet from 45 sq. inch to 60 sq. inch ;
and
(iii) Replacement of 40 mm balls with 25 mm balls, have been
implemented. As a result of implementation of these recommendations,
17% throughput increase and 10% reduction in electrical energy
consumption have been achieved. Encouraged with these results, the
long-term recommendations are under consideration for implementation.
II Statistical Process Control methods for Pelletisation
A project regarding mathematical modelling and detailing Statistical
process control methods for pelletisation was taken up, completed and
implemented.
III Organic Binder for Pelletisation
A project for procurement, testing and evaluation of Organic Binder for
pelletisation was taken up during the year. During plant test,
difficulties in green Ball formation were encountered. Improvement in
binder quality is being looked into by the supplier.
IV Primary Ore
Currently, mining is going on in the weathered ore formation only. By
geological occurrence, Primary ore exists below the weathered ore. The
quantity of primary ore is estimated to be 340 million tonnes. With a
view to extend the mine life, the Company is planning to exploit the
primary ore. In order to establish the techno-economic feasibility of
mining and beneficiating the primary ore, the Company carried out an
analysis of the primary ore. The ore samples were also sent to
laboratories at USA and Canada for metallurgical and grindability
tests. Based on the preliminary results, core drilling of about 5000
mts. was taken up to collect representative samples for further
characterisation, testing and analysis as a part of preparation of a
Detailed Project Report. Extraction of primary ore is expected to
enhance the life of the current mine by an additional 17 years.
V. Recovery of Iron values from tailings
A feasibility study on the recovery of iron values from tailings was
taken up in consultation with Mineral Technologies, Australia. The
quality of the tailings have been assessed by drilling and analysis.
Further filed investigations have been completed and the analysis of
the samples collected are being carried out.
3. During the next financial year 2000-2001, it is proposed to
undertake two projects relating to utilisation of Bellary-Hospet ore in
Pellet production involving testing and plant scale trials in the
Pellet Plant and the Analysis of Primary Ore Drill core samples.
Research and Development (R&D)
1. Special areas in which R&D i. Energy conservation
carried out by the Company.
2. Benefits derived as a result ii. Improvement of quality of
of the above R&D. Pellets by using new additives.
3. Future plan of action. i. Reduction in specific energy
consumption, resulting in
reduction of operating cost.
ii. Better quality product.
Higher market acceptability.
i. Utilization of Hematite iron
ore fines to supplement
Pellet Feed material for
extending mine life.
ii. Utilization of Primary Ore
available underneath the
present ore body being
mined.
4. Expenditure on R&D :
a) Capital 0.40 crores
b) Recurring 1.90 crores
c) Total 2.30 crores
d) Total R&D expenditure 0.37%
as a percentage of total
turnover
Technology absorption,
adaptation and innovation.
1. Efforts, in brief, made i) Computer simulated Ball Mill
towards technology absorption, performance was analysed to
adaptation and innovation. impart Improvement in grinding
in Mill circuits, thereby
reducing the energy consumption
and improving throughput. The
software package, J.K. Simmet
is used for various grinding
circuits for analysing
performance in other grinding/
circuits. Efforts are also
made to study various equipment
performance in the total grinding
circuit.
ii) Synthetic organic binder was used
to make Pellets, which would in
turn help in producing Pellets of
good chemical quality without
the addition of gangue.
2. Benefits derived as a result of i) Trials have shown 17%
the above efforts, e.g., product improvement in throughput
improvement, cost reduction, and 10% reduction in power
product development, import consumption. As such, the
substitution, etc. specific power consumption
has comedown, commensurate
with the increase in
throughput and consequently,
cost reduction is also
achieved.
ii) The use of synthetic binder
will not add any additional
gangue in the Pellet, but
will increase the iron (Fe)
content in the Pellet, making
it suitable for use in DR
process. This will also give
a better price for the Pellets
and improved marketability.
3. In case of imported technology
(imported during the last 5 years
reckoned from the beginning of the
financial year), following
information may be furnished :
a) Technology imported. a) Software package for simulating
Grinding circuit performance
was imported from M/s
J.K. Tech., Australia.
b) Year of import b) 1998
c) Has technology been fully
absorbed? c) Yes.
d) If not fully absorbed, areas d) Does not arise.
where this has not taken place,
reasons therefor and future
plans of action.
c. FOREIGN EXCHANGE EARNINGS & OUT GO
During the year, the Company earned foreign exchange of US $ 123
million (on receipt basis). Total outgo in FE on account of imports,
payment towards technical services, etc., amounted to about US $ 19
million only. KIOCL thus continues to be a net FE earner for the
national exchequer.
Mar 31, 1999
The Directors have great pleasure in presenting the 23rd Annual Report
on the working of your Company together with the Audited Accounts for
the year ended on 31st March 1999 and the Report of the Comptroller and
Auditor General of India thereon.
Your Company, as you are aware, has had to face many a downturns in the
twenty-three years of its existence. In fact, its existence came to be
in doubt in the very initial stages, when after the completion of the
project, it was left high and dry due to the collapse of its only
market, Iran. However, undeterred, your Company took up this challenge
and transformed itself and converted this threat into an opportunity;
it successfully reoriented itself and developed new markets for its
products by developing a multi- product mix to cater to the discerning
demands of its customers. This transformation and turnaround,
recapitulated in a few words, only seeks to understate the trials and
tribulations undergone by your Company in those crucial years and is a
testimony of your Company's will and determination to emerge successful
amidst all odds. As things stand today, your Company commands an
impressive presence in the international market as a quality conscious
supplier of Concentrate and Pellets, the credit for which in no small
measure, is owed to the ethos, the work culture and positive attitude
prevalent in your Company - where every problem is viewed as less of a
problem but more as an opportunity presented for further growth.
YEAR 1998-99 - AN OVERVIEW
The year 1998-99 started off well for the Company. With the Order Book
full and the production departments fully geared up to match the export
commitments and meet the targets committed in the MoU with the
Government, all was set to accomplish yet another year of success.
However, the Asian economic crisis which hit sometime during the middle
of the year with the economic slowdown becoming endemic in all these
countries and its adverse effects being felt the world over, causing
interest rate volatility, unmanageable exchange rate fluctuations,
stock market crashes and triggering recessionary conditions across
borders. This adversely affected the entire spectrum of economic
activity including cut backs in production in most of the core sectors
of the economy in these countries.
Your Company could have hardly remained insulated from the present
recessionary conditions of the world economy especially given the fact
that its operations are almost exclusively concentrated in the
international market with as much as 60% of its exports to the South
East Asian countries including China and Japan. The performance of
your Company in the year under review has to be viewed against the
backdrop of this crisis. Even as your Company had set for itself
ambitious targets of production and exports and with its order book
full for the year, the Asian economic crisis cast its dark shadow on
the performance of your Company and with the off-take by the South East
Asian countries coming down substantially, the inevitable result was
cut back in production to match the actual off-take by these countries.
Coupled with this unfortunate and yet inevitable development, the
fallout of this economic slowdown was also naturally felt in the Middle
East, which was reflected in substantial drop in crude oil prices,
resulting in recessionary conditions in this region. Your Company's
markets in the Middle East were also affected because of this
development resulting in substantially reduced off-take by these
countries.
The net result of these developments enumerated above was for your
Company to recast its production programme and dovetail the same to the
exportable levels possible.
HIGHLIGHTS OF THE YEAR
The Company was conferred with a 'MINI RATNA Category I' status by the
Government of India.
Despatch of 412,755 tonnes of Pellets including Pellet Fines in January
1999, the highest quantity despatched n any month so far, surpassing
the previous high of 330,860 tonnes despatched in August 1997.
CPP at Mangalore generated 16.743 million units of power in August
1998, surpassing the previous high of 13.855 million units generated in
February 1998.
Despatch of 991,964 DMT of Pellets including Pellet Fines in the fourth
quarter of 1998-99, the highest quantity despatched in any quarter
surpassing the previous high of 818,091 DMT despatched in the fourth
quarter of 1995-96.
Production of 815,000 tonnes of Pellets in fourth quarter of 1998-99,
the highest quantity produced in a quarter surpassing the previous high
of 800,000 tonnes produced in the fourth quarter of 1997-98.
PRODUCTION
Concentrate
As against a target of 6.2 million tonnes set in the MoU signed with
the Government for the year, the actual production was 5.042 million
tonnes only which is 81% of the target. This also represents a
capacity utilisation of 75%. The shortfall in production is mainly on
account of
shed-full condition arising out of lower off-take by the buyers.
During the year, the plant was stopped for as many as 46 days due to
the stock-yard being full. In the month of February 1999, on account
of delay in settlement of their dispute over the energy charges, the
State Electricity Board disconnected power supply to the installations
of the Company at Kudremukh and Mangalore. While this did not affect
the production activities at Mangalore, as the power was available from
the Company's Captive Power Plant, the operations at Kudremukh came to
a stand-still for six days.
Pellets
The year saw a production of 2.525 million tonnes of Pellets as against
a target of 2.9 million tonnes representing 87% of the target and a
capacity utilisation of 84%. In respect of Pellet Plant also, the
shortfall is due to shedfull condition, a result of lower off-take by
the buyers. During the year, the plant had to be stopped for 43 days
as the shed was full.
The following table summarises the production performance during the
past five years.
CP : Concentrate Plant PP : Pellet Plant (Qty. in million tonnes)
Year Production Capacity
Utilisation %
CP PP Total CP PP
1998-99 5.042 2.525 7.567 75 84
1997-98 6.125 2.900 9.025 90 97
1996-97 5.572 2.246 7.818 82 75
1995-96 6.060 2.500 8.560 89 83
1994-95 5.710 2.315 8.025 84 77
The past five years' production performance in respect of Concentrate
and Pellets (in thousand dry metric tonnes) is represented below in a
graphic form :
MEMORANDUM OF UNDERSTANDING WITH THE GOVERNMENT
Performance evaluation of the Company vis-a- vis MoU targets on a
provisional basis indicates that the Company qualifies to be rated as
'Very Good'. However, in view of the fact that the Company could not
achieve the export targets and consequently the production targets for
reasons beyond its control, the Company has sought revision in the
targets. The matter is under consideration by the Government of India.
FINANCE AND ACCOUNTS
The Authorised, Subscribed and Paid-up Share Capital of the Company
remained unchanged during the year.
Internal resources generated during the year amounted to Rs. 72.52
crores.
Total sales during the year amounted to Rs. 547.76 crores compared to
the budget estimate of Rs. 625.26 crores. This is equal to US $
129.698 million as compared to US $ 158.402 million for the previous
year.
Cash balance at the end of the year stood at
Rs. 87.53 crores (including inter-corporate 8 deposits and
inter-corporate loans). Overdraft as on 31st March 1999 amounted to
Rs. 11.95 crores. Reserves and Surpluses as on 31st March 1999 stood
at Rs. 346.03 crores compared to Rs. 345.11 crores as on 31st March
1998. During the year, long-term investments with original cost of Rs.
47.75 crores were encashed.
The Directors propose to pay a dividend of 2.5% on the Paid-up Share
Capital. This would entail a total payment of Rs.17.61 crores
including distribution tax.
Working Results
The Working results of the Company for the year 1998-99 with
comparative figures for the previous financial year are furnished below
:
(Rs in crores)
Particulars 1998-99 1997-98
Sales 547.76 593.91
Stock Adjustment 4.44 7.35
Operating Expenses 485.17 458.76
Gross Margin on plant operation 67.03 142.50
Capital gain on long-term
investment 9.88 --
Profit on sale of assets 0.34 0.42
Interest earned on inter-
corporate loans 3.08 5.85
80.33 148.77
Less : Prior period adjustments -0.15 2.36
Gross Margin 80.48 146.41
Interest Payments 0.98 4.28
Depreciation and
Development Expenses 53.99 52.98
Profit before tax for the year 25.51 89.15
MARKETING AND EXPORTS
The Company's exports reached as many as five countries during the year
besides shipments to the buyers in the Domestic Tariff Area. While
Japan, Iran and China bought both Concentrate and Pellets, Taiwan and
Australia bought only Pellets. The DTA customers Ms. Ispat Industries
and Vikram Ispat were supplied with Pellets. Sales in the DTA
represented 15.82% of the total sales in quantitative terms and 17.97%
in monetary terms. Total quantity of 5.026 MT exported during the year
comprised 2.376 MT of Concentrate and 2.650 MT of Pellets. In
quantitative terms, the exports have gone down by about 28.33% of
Concentrate and 6.38% of Pellets over the previous financial year. The
main reason for short-fall in export of Concentrate is attributable to
Iran lifting only about 43.5% of its contracted quantity in view of the
foreign exchange crisis faced by that country due to the fall in prices
of Oil. As far as Pellets are concerned, Australia and the DTA buyers
lifted only a portion of their contracted quantities.
The country-wise details of shipments made during the year to various
customers are as under :
(In Dry Metric Tonnes)
Country Concentrate Pellets
Japan 1048840 188151
Iran 650657 82854
China 676575 781751
Australia - 271506
Taiwan - 844132
Ispat Industries - 269317
Vikram Ispat - 149881
Pellet Fines (to Japan) - 62277
Total 2376072 2649869
Export performance in terms of quantity (in thousand dry metric tonnes)
during the past five years is represented in a graphic form below :
Export performance during the past five years is summarised below :
Qty : in Million Tonnes value : Rs. in lakhs
Year Concentrate Pellets Total % increase over
previous year
Qty. Value Qty. Value Qty. Value Qty. Value
1998-99 2.376 18407 2.650 36389 5.026 54776 - -
1997-98 3.315 23310 2.830 36081 6.145 59391 10.61 20.57
1996-97 3.348 21900 2.203 27359 5.551 49259 - 2.95
1995-96 3.650 20676 2.580 27172 6.230 47848 9.66 29.55
1994-95 3.435 16729 2.246 20305 5.681 36934 -
FOREIGN EXCHANGE EARNINGS & OUTGO
During the year, your Company earned foreign exchange of Rs. 458.13
crores (on receipt basis). Total outgo in FE on account of imports,
payment towards technical services, etc., amounted to Rs. 101.37
crores. KIOCL thus continues to be a net FE earner for the national
exchequer.
During the year, 111 ships were handled at New Mangalore Port compared
to 145 ships handled during the previous year.
ORDER BOOK FOR 1999-2000
The forecast is that the impact of Asian economic crisis on the steel
consumption and production is likely to continue for some more time to
come and that the market scenario is not likely to improve to a great
extent for the next year. The Canadian and Brazilian producers have
either suspended their operations or have brought down production of
Pellets in the last quarter of calendar year 1998.
In this background, the Company had to bring down the prices of Iron
Ore Concentrate and Pellets to some of the buyers during the year to
sustain the existing markets and also to withstand severe competition
from suppliers within the country and abroad.
Keeping in view the MoU targets, as also to effectively serve the
existing and the new customers, the Company suitably altered its
marketing strategy. This has resulted in securing orders to meet the
export targets set in the MoU for the next financial year 1999-2000.
CAPITAL SCHEMES
The Company has undertaken several programmes to improve the quality of
its products by way of additions, modifications and replacements.
6 nos. of Column flotation and 2 nos. of Highrate thickeners are added
to improve the quality of concentrate for which mechanical equipment
erection and electrical installations have been completed and cold
commissioning is in progress.
In order to overcome the frequent interruptions/restrictions on
availability of power, a 62 MW Captive Power Plant is planned to be set
up at Kudremukh. A global tender notice for pre- qualification of
bidders was issued. This project will be implemented on EPC basis. It
is expected that selection of the EPC contractor will be finalised by
end of the calendar year 1999.
At Mangalore also, in order to improve the quality and quantity of
Pellets, a number of measures have been initiated. A Shaft
Pelletisation module of 0.5 million tonnes per annum to augment
production, installation of Roll Press, Capillary Ceramic filters to
save energy, etc., are planned and these measures will, in the near
future, yield good results.
R&D, TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
A Technical Group has been constituted to study and recommend the ways
and means of extending the existing mine life and suggest some new
avenues, it any, for prolonged operation of the plant and other
infrastructure facilities. This Committee is completing its assignment
shortly.
Statistical process control methods are being introduced in the Pellet
Plant for which the Consultants have submitted a report. This is under
examination.
A project for optimisation of grinding energy in the Ball Mills has
been taken up. The report submitted by the Consultants are under
active consideration for implementation. This project will be
continued during the next year 1999-2000 also.
During the next financial year 1999-2000, it is proposed to undertake a
project regarding use of organic binder in the pelletisation.
PIG IRON AND DISP PROJECT
The work on the Joint Venture Pig Iron & DISP Project is proceeding
apace. There have been time overruns in completing this project which
is mainly due to funds constraint owing to capping by Banks of
disbursement of Term Loans to only Rs.73 crores against the sanctioned
limit of Rs.160 crores and the Company's inability to raise public
equity component of Rs.57.40 crores. However, the time overrun so far,
has not resulted in any substantial cost overrun. As per the revised
commissioning schedule, the Pig Iron component of the project is
expected to go into commercial production during the last quarter of
calendar year 1999. The DISP component is proposed to be taken up for
Implementation in June 1999 and planned to be commissioned by April
2001.
The consortium of Banks have appreciated the reasons for the delay in
implementation of the Project and have recommended release of the
balance term loan limits, delinking the same from infusion of further
equity and have also recommended rephasement of the terms of repayment
of term loan.
ECOLOGY AND AFFORESTATION
Your Company has continued to maintain its intense concern for
preservation and upgradation of ecology, prevention of pollution and
afforestation in and around Kudremukh. In addition to continuing to
implement the master plan for afforestation drawn up at the inception
of the project, the Company also supports research schemes in these
fields. Some of these schemes taken up by the Company are as under :
Mangalore University has made an intensive study of plant bio-diversity
in the project region with reference to the species in the Western
Ghats including study of suitable species of plants which can be grown
in iron rich areas after mining activity. As a part of this, more than
50,000 plants have already been planted in the project area (Lakhya Dam
area) and the same will be continued on the ore body as and when mining
activities are completed.
M/s. NEERI, Nagpur is adopting integrated bio- technological approach
in selection of suitable and sustainable local species for
afforestation on the ore body as well as other available land space to
generate a proper eco-restoration in the region. Also, to ensure
faster growth of these species, a 'green-house' has been established to
develop bio-fertilizer called 'VAM FUNGI' which will assist the release
of metals to hasten the growth of plant. First cycle of production of
bio-fertilizer to the tune of 1000 kg. has already been completed and
the second cycle for similar quantity is in progress. 10,000 plants
have already been planted around mosque hill area using the
bio-fertilizer developed.
The MoU with Mangalore University evidences Company's commitment to
fund the project to the extent of Rs. 50 lakhs. The Company has
already released funds to the tune of Rs. 15.38 lakhs to the Mangalore
University. The assignment to M/s. NEERI is expected to cost the
Company over Rs.40 lakhs.
The Company has also financed the State Forest Department in promotion
of afforestation in the Kudremukh National Park area. A sum of Rs.5
crores has been released by the Company to the State Forest Department
on this account.
ISO 14001
In the area ISO 14001 based on Environment Management System, various
activities have been completed as required by the Standard and they
include initial Environmental Review, Policy Formulation and
Communication, identification of significant aspects, etc. An
Environmental Manual has been prepared and is available with all the
Departments of the Company. The Certification Audit is scheduled
during June-July 1999.
PERSONNEL
The total number of personnel on the rolls of the Company as on 31st
March 1999 was 2454 consisting of 1965 workmen and 489 executives as
against 2473 on 31st March 1998.
None of the employees was in receipt of remuneration exceeding
Rs.50000/- per month or Rs.6,00,000/- per annum during the year.
REPRESENTATION OF SCs AND STs
The following table shows representation of SCs and STs and also women
employees as against the total number of employees in different groups
on rolls of the Company as on 31st March 1999.
Group No. of employees No. of women
on rolls SC ST employees
A 489 57 12 28
B 289 11 1 33
C 1448 218 53 62
D 183 39 23 15
D (Sweepers) 45 36 3 16
Total 2454 361 92 15
The Company has taken several measures to improve the intake of
candidates belonging to SC/ST As a result, the following number of
candidates were recruited during 1998-99
Group Total No. No. % as against Shortfall
of vacan- recruited total vacan- as on
cies filled cies filled 1.1.99
SC ST SC ST SC ST
A 13 2 - 15.38 - - -
B - - - - - - -
C 24 6 5 25.00 20.00 - -
D - - - - - - -
D
(Sweepers) - - - - - - -
Total 37 8 5 21.62 13.51 - -
As is the practice, Dr. Ambedkar Jayanthi was celebrated at all the
locations of the Company on 14th April 1998.
There were 28 physically handicapped employees on rolls of the Company
as on 31st March 1999.
WELFARE
In addition to payment of productivity linked incentive, your Company
paid the maximum permissible bonus of 20% in terms of Payment of Bonus
Act. The Company continues to show its marked concern for the welfare
of its workforce. The welfare facilities such as Hospitals, Schools,
Recreation, etc., were continued to be maintained as in earlier years.
INDUSTRIAL RELATIONS
Industrial relations situation remained peaceful throughout the year in
all the establishments of the Company. Works Committees in the Plant
are functioning effectively. The Joint Plant and Shop Councils meet
regularly and their discussions contribute towards improving industrial
relations and resolving differences, if at all they arise. The
validity period of the Tripartite Wage Agreement entered into with the
recognised Union expired on 31.12.1996. Based on the broad guidelines
provided by the Government, discussions with the recognised Union have
commenced.
HUMAN RESOURCE DEVELOPMENT
The key word of HRD is 'Training and Development'. During the year
1998-99, programmes on Technical Training, Joint Education, Quality
Circle and Environmental Awareness were conducted for the benefit of
non-executive employees. Non-executives of Quality Circles were also
nominated to participate in the Chapter and National Conventions held
at Bangalore, Chennai and Madurai. Not that only non- executives were
trained; even executives at various levels were nominated for
programmes related to General Management, Commercial aspects, Computer
usage, Revision of ISO 9000 and Environment Management Systems during
the year covering a total of 8222 mandays in respect of non-executives
and 2507 mandays in respect of executives.
QUALITY CONTROL-ISO 9002
ISO 9002 certificate granted to the Company is due to expire in May
1999. The Standard is likely to undergo a revision during the year
2000. Preparations to comply with these changes together with
recertification are under way.
THE FUTURE
The validity period of the existing Mining Lease granted to the Company
in 1969 is due to expire in July, 1999. The Company has filed
necessary applications with all the concerned agencies of the
Government of Karnataka well in advance in June, 1998 itself. However,
although the expiry of the validity period is fast approaching, despite
its best efforts, the Company is yet to secure the renewal.
Your Company is also vigorously pursuing the application filed with the
Government of Karnataka in July, 1997 for grant of a Mining Lease for
exploitation of the adjacent Nellibeedu Iron Ore deposits. The
Company's requests for renewal of the existing mining lease and grant
of a fresh lease for the Nellibeedu deposits have to be viewed in the
following background
Kudremukh deposits, which occur as banded magnetite quartzite, were
discovered as early as in 1913 by late P. Sampath Iyengar, a Geologist
of the then Mysore State. Later, in 1965-66, detailed exploration of
one of these deposits (Aroli) was taken up by NMDC with the association
of Marcona Corporation of USA and MON Group of Japanese Companies.
Beneficiation and upgradation of the Iron Ore quality, transportation
of the Concentrate in slurry form was established only in 1971 by
extensive on-site Pilot scale tests by NMDC. It is estimated that
Karnataka State has about 5000 million tonnes of this type of Magnetite
ore near the West coast. After the initial reluctance by the Japanese
to purchase sinter feed, a deal was struck with Iran in 1975 and KIOCL
was established in April, 1976 to exploit these deposits. The total
investment on this project so far is to the tune of about Rs.1100
crores with a replacement value of about Rs.3000 crores. The Company
earns precious foreign exchange of over Rs.600 crores per annum to the
Central exchequer. The Company also provides direct and indirect
employment to about 10,000 persons and has added to the prosperity of
the State of Karnataka.
Right from its inception, the Company has given much importance for
preservation and maintenance of pollution free environment. Kudremukh
has voluntarily carried out massive afforestation in and around
Kudremukh area right from the stages of project inception. Before
commencement of project activities, Kudremukh hill slopes were devoid
of vegetation. However, as a result of the massive afforestation work
carried out by the Company, it has been possible to improve upon the
existing flora and fauna and also the environment. Capital expenditure
to the extent of Rs.130 crores has been incurred by the Company on
various pollution control and environmental measures. From recent
studies conducted by the National Remote Sensing Agency through
satellite, imageries based on satellite data corresponding to years
1973, 1988 and 1996, it is seen that there has been a net increase of
forest cover to the extent of 2.75 sq.kms. over the forest cover in
Kudremukh area alone as existed before starting of the project. Thus,
due to the concerted efforts and care taken by the Company, the
Kudremukh area is free from pollution and the ecological balance in and
around Kudremukh mine has been maintained. The entire area before
Kudremukh Company's entrance remained cut off for six months during and
after monsoon rains. Establishment of Kudremukh project brought
communication network and infrastructure to this area. The project
became the connecting link with the outside world. This area is now
accessible throughout the year and forest and other Govt. Departments
are also able to carry out their programmes.
After developing major facilities at Kudremukh, Mangalore and
Bangalore, setting up of the project and maintenance of environment and
implementing pollution control measures, it is very essential in the
national interest that such a huge investment is put to long term and
effective use. With this in view, your Company has approached all the
agencies of the State and Central Govt. to permit the Company to
continue its mining activities and other operations beyond the existing
lease period.
The importance of granting extension of the existing mining lease, a
fresh lease for exploitation of Nellibeedu and Prospecting Licence for
Gangrikal deposits has been impressed upon the Government of Karnataka.
In the absence of all these, huge investments already made will go
waste and become infructuous hurting every wing of the society and the
country.
The Company has invested and is planning to invest huge sums of money
during the ninth plan period on a number of projects. The Company
expects to reap the benefits of these investments over a few years
hence. In the event of the Mining Lease renewal not available to the
Company, the entire investment will be infructuous.
There has been lot of agitation by the NGOs and Environmentalists
against grant of any fresh Mining Lease to the Company and renewal of
the existing Mining Lease. There were two PILs filed against the
Company in the High Court of Karnataka during the year. However, after
hearing the Company in the matter, the Court dismissed these Petitions.
Primary Ore
Currently, mining is going on in the weathered ore formation only. By
geological occurrence, Primary ore exists below the weathered ore. The
quantity of primary ore is estimated to be 342 million tonnes. In
order to extend the mine life, the Company is planning to exploit the
primary ore. In order to establish the techno-economic feasibility of
mining and beneficiating the primary ore, the Company carried out an
analysis of the primary ore. The ore samples were also sent to
laboratories at USA and Canada for metallurgical and grindability
tests. Further tests are being carried out to establish the
techno-economic viability of extraction of the primary ore. Once this
is established, the life of the current mine will get extended.
The commissioning of the Pig Iron Plant is scheduled for end 1999.
Efforts to diversify into areas unrelated to the main object of the
Company are continuing. The Coke-Oven Plant at Karwar, mineral water
bottling Plant at Kudremukh, Company's own 62 MW Captive Power Plant at
Kudremukh, the mining lease duly renewed, fresh lease for Nellibeedu
deposits and the establishment of the techno-economic viability of
exploitation of the primary ore, will secure the future of your
Company.
PROGRESSIVE USE OF OFFICIAL LANGUAGE
The Company follows the directives issued from time to time, by the
Department of Official Language, Govt. of India for the progressive use
of Rajbasha. In addition to grant of cash awards, increments and other
incentives are also given to the employees passing Hind examinations.
Hindi Workshops and Training programmes are conducted at regular
intervals.
During the year, in addition to conducting regular workshops, a Hindi
Workshop Orientation programme was conducted for executives of the
level of Managers and above in order to familiarise them with the usage
and importance of Official Language. Senior executives including the
Directors attended this Orientation programme. Hindi week was
celebrated and various competitions were conducted. Cash awards were
given to the participants.
All the stationery of the Company is in billingual form, House
Magazines, MoU, etc., are also printed in Hindi. Company's officials
attended the TOLIC meetings regularly and coordinate in conducting
various programmes.
AWARDS
The Company was awarded the CAPEXIL's 'Top Export Award' under the Bulk
Minerals & Ores Category for the year 1997-98. The Company is a
recipient of CAPEXIL's award for the eighth time. The Company was also
awarded 'Best Export Award - Gold' for the years 1994-95 and 1995-96 in
the field of 'Overall' by the Visvesvaraya Industrial Trade Centre, a
Government of Karnataka Centre for Export Promotion. During the year,
your Company bagged The Excellent Performing Public Sector Enterprise
Award for 1997-98 instituted by the Indian Institution of Industrial
Engineering, Navi- Mumbai.
REVIEW OF ACCOUNTS BY CAG
Review of Accounts by the Comptroller and Auditor General of India for
the year 1998-99 is attached.
BOARD OF DIRECTORS
During the year, Shri K. Gurumurthy was appointed as the Director
(Production & Projects). S/Shri GL Tandon, Vikram V Desai and Prof.
(Mrs) Kalyani Gandhi were appointed as part- time Non-official
Directors on the Board.
Mar 31, 1996
Your Directors have pleasure in presenting the 20th Annual Report of
the Company together with the Audited Annual Accounts and the Report
of the Comptroller & Auditor General of India.
2.0 The Year at a glance
2.1 The year 1995-96 started at a truly scorching pace and the
Company excelled almost all the targets set, achieving in the process
several new records. The performance at the end of the first half of
the financial year had exceeded all previous landmarks and the
Company was confidently looking forward to scaling hitherto unreached
peaks in production and exports for the year as a whole. In November
1995, however, The Company suffered a blow in the form of imposition
of powercut by the State Electricity Board. Despite an order of the
Govt. of Karnataka issued in 1993 exempting KIOCL from any future
power cuts in view of its status as a 100% EOU, the power situation
in the State was so acutely grim that energy cut of 30% and demand
cut of 25% were clamped on KIOCL. The effect on operations was
drastic and in fact the Concentrate plant had to be closed for five
days and Pellet Plant for fifteen days during November 1995.
2.2 The Company's efforts to overcome the crisis included attempts to
secure exemption/ relaxation of the power cut, obtaining allocation
of additional energy from the unallocated Central quota of power,
obtaining power from alternative sources, etc. In these attempts, it
succeeded to some extent, mainly in securing allocation of 9 million
units per month of energy from out of the unallocated Central quota.
The Karnataka Electricity Board also came to the Company's rescue by
permitting it to utilise its quota of power either at Kudremukh or at
Mangalore or both in a manner convenient to it. This gave the
flexibility needed to maximise production of the value added pellets.
The result is that, despite the severe constraints in power
availability, your Company managed to reach the highest level ever in
respect of pellet production at 2.5 MT. In the process, the Company
also recorded the highest ever turnover of Rs. 478.48 crores and also
crossed the Rs. 100-crore-mark in Net profits.
3.0 Highlights of the year
3.1 As has happened invariably in the past, adversity once again
brought out the best from your company during the year and once again
several new records were set. Some of them are -
a) Highest ever production of concentrate during the first half of
any financial year at 3.150 MT;
b) Highest ever production of Concentrate during the first and second
quarters of any financial year at 1.56 MT and 1.59 MT respectively;
c) Highest ever annual production of Pellets at 2.50 MT;
d) New record production of Pellets during the first and second half
of any financial year at 1.217 MT and 1.283 MT respectively; and
e) New peak of 2.58 MT of Pellet sales during 1995-96 compared to the
previous high of 2.337 MT.
3.2 Besides the above, the Company also achieved a record production
of 290,000 tonnes of Pellets during January 1996 representing 116%
capacity utilisation. 820,840 tonnes of Pellets produced during the
last quarter of the year is also a new landmark for the corresponding
quarter of any previous year.
4.0 Production
4.1 Concentrate
Production of Concentrate during the year crossed the 6 MT mark
reaching 6.06 MT. This represents 98% of the target of 6.20 MT. As
previously brought out, production of Concentrate would have, in the
normal course, far exceeded the targets but for the power cut
imposed. The urgent and timely steps initiated by the Company in
securing additional power have resulted in almost meeting the target.
4.2 Pellets
Pellet production during the year amounted to 2.50 MT compared to the
target of 2.30 MT. Your Directors are happy to report that by
according higher priority to the Pellet Plant in utilising the
limited power available, it has not only been possible to maximise
production of Pellets but the Company succeeded in offsetting the
effect of lower Concentrate production on the Net Profit.
4.3 The table below summarises the production performance during the
previous five years.
CP: Concentrate Plant PP: Pellet Plant
(Qty. in Million Tonnes)
---------------------------------------------------------------
Production Capacity
Year Utilisation %
CP PP Total CP PP
------------------------------------------------
1995-96 6.060 2.500 8.560 89 83
---------------------------------------------------------------
1994-95 5.710 2.315 8.025 84 77
1993-94 6.200 2.243 8.443 91 75
1992-93 5.010 1.410 6.420 74 47
1991-92 5.875 2.133 8.008 86 71
---------------------------------------------------------------
5.0 Memorandum of Understanding with the Government
Performance of the Company against most of the parameters stipulated
in the MOU with the Govt. of India are equal to or better than the
"Excellent" targets. For the third successive year, the overall
performance of your Company also qualifies to be rated as 'Excellent'
with the best ever composite score of 1.06 as worked out by the
Company. This is subject to final rating by the Department of Public
Enterprises.
6.0 Finance and Accounts
6.1 The authorised, subscribed and paid-up share capital of the
Company remain unchanged.
6.2 Internal resources generated during the year amounted to Rs. 129
crores. Capital expenditure amounting to as much as Rs. 98.81 crores
was met entirely out of internal resources without any budgetary
support from the Govt. of India.
6.3 The total sales during the year amounted to Rs.478.48 crores
compared to the targetted turnover of Rs.414.78 crores. Not only was
the actual sale value 115% of the target, it was also the highest
ever achieved in the history of the Company. In Dollar terms, the
value of sales amounted to US$ 143.245 million compared to US $
117.638 million earned during the previous year.
6.4 Cash balance at the end of the year stood at Rs.101 .86 crores
(including inter corporate deposits and inter corporate loans but
excluding long term investments). Overdraft as on 31st March 1996
was Rs.36.09 crores. Reserves and Surpluses amounted to Rs.238.02
crores as on 31st March 1996 compared to Rs.163.18 crores as on 31st
March 1995.
6.5 Your Directors propose to pay Dividend at 3.25% on the paid-up
share capital for the year 1995-96. This would entail a total
payment of Rs.20.62 crores.
6.6 Working Results
Working results of the Company for the year 1995-96 together with
comparative figures for the previous year 1994-95 are furnished
below:
(Rupees in crores)
------------------------------------------------------------------
Particulars 1995-96 1994-95
------------------------------------------------------------------
Sales 478.48 369.34
Stock adjustment (6.18) 5.98
Operating expenses 334.71 287.12
Gross Margin 137.59 88.20
Profit on sale of assets 0.28 0.28
Interest earned on inter corporate loans
and Long term investments 4.82 9.93
Interest Payment 3.50 2.28
Depreciation and Development
expenses 33.34 29.57
Profit on operations of the year 105.85 66.56
Less: Prior period adjustments 0.03 0.75
Profit after prior period adjustments 105.82 65.81
------------------------------------------------------------------
6.7 Financial performance of the Company during the year 1995-96
together with the figures for the previous two years is indicated
below:
(Rupees in lakhs)
-----------------------------------------------------------------
Particulars 1995-96 1994-95 1993-94
-----------------------------------------------------------------
Total value of sales 47848 36934 41669
Gross Margin 13759 8820 11161
Total profit on account of
operations of the year 10585 6656 9487
Inventories (excluding
finished stock) 11776 9940 9622
-----------------------------------------------------------------
7.0 Foreign exchange earnings and outgo
During the year your Company earned foreign exchange of Rs.412.09
crores (on receipt basis). Total expenditure incurred in foreign
exchange on imports, payments towards technical services fee, etc.,
amounted to Rs.135.56 crores. Your Company thus continues to be a
net foreign exchange earner for the country.
8.0 Marketing and Exports
8.1 Company's products were exported to eight countries during the
year, namely, Japan, Iran, China, Australia, Bahrain, Turkey, Taiwan
and Indonesia. Besides, your Company also supplied pellets to Ms:
Vikram Ispat, Nippon Denro and Essar Steel in India as Domestic
Trade Area customers. The sale to DTA customers is 17.9% in terms of
quantity and 21% in terms of sales revenue of Pellets.
8.2 Total exports for the year amounted to 6.23 million tonnes
consisting of 3.65 MT of Concentrate and 2.58 MT of Pellets. Despite
a marginal shortfall in the production of Concentrate, actual exports
exceeded a target of 3.6 MT of Concentrate and 2.3 MT of Pellets. In
quantitative terms, there was an increase of 10% in the exports
during the year compared to the previous year.
8.3 The Company's export performance during the past five years is
summarised below:
Qty: in Million Tonnes Value: Rupees in lakhs
----------------------------------------------------------------------
Year Concentrate Pellets Total % increase over
previous year
Q V Q V Q V Q V
----------------------------------------------------------------------
1995-96 3.650 20676 2.580 27172 6.230 47848 9.66 29.55
1994-95 3.435 16729 2.246 20205 5.681 36934 - -
1993-94 4.201 21022 2.337 20647 6.538 41669 38.22 32.75
1992-93 3.355 18551 1.375 12839 4.730 31390 - -
1991-92 3.916 18882 2.152 20399 6.068 39281 5.68 71.55
----------------------------------------------------------------------
8.4 Country-wise details of shipments made during the year are as
follows:
(in '000 DMT)
---------------------------------------------------------------
Country Concentrate Pellets
---------------------------------------------------------------
Japan 1385 -
Iran 1660 -
China 562 801
Australia 6 309
Bahrain 37 -
Turkey - 515
Taiwan - 259
Indonesia - 235
Vikram Ispat - 236
Nippon Denro - 171
Essar Steel - 54
----------------------------------------------------------------
Total 3650 2580
----------------------------------------------------------------
8.5 During the year, 158 ships were handled at the New Mangalore Port
as against 139 ships handled during the previous year 1994-95.
8.6 Order Book for 1996-97
Your Company has a committed order book consisting of 3.5 MT of
Concentrate and 3.1 MT of Pellets for the year 1996-97.
9.0 Capital Schemes
Some of the major capital schemes under implementation are described
below:
9.1 Relocation of Crusher No.1
Consequent upon depletion of ore on the east and west pits to below
benches 16 and 19 respectively, it has become necessary to shift
either Crusher No.1 or 2 to a lower level. Accordingly, it was
decided to dismantle and relocate the existing Crusher No.1. While
major portion of the civil works on this project has been completed,
dismantling of equipment at Crusher No.1 and the refurbishment work
are nearing completion. The project is expected to be completed by
December 1996.
9.2 Captive Power Plant
Two DG sets of 9.36 MW each for which orders were placed during the
previous financial year have been delivered and their erection is
also since completed. These units were inaugurated on 16-2-1996 and
performance tests are currently under way. Commercial operation of
these generators is expected to commence shortly. The 3rd DG set for
which order was placed during December 1995 is expected by end August
1996.
9.3 Shaft Pelletising furnace
To meet the growing demand for Pellets, it was also decided during
the year, to set up a 0.5 MT shaft pelletising module at an estimated
cost of Rs.40 crores. LOI for this work has already been issued to
Ms: Maumee Research & Engineering Inc. USA. Work on the project has
already commenced and commissioning is expected by third quarter of
1997.
9.4 In addition to the above, the Company has also schemes on hand to
effect improvement in the quality of its Concentrate by introduction
of two additional Ball Mills and also floatation and floatex
equipment. Estimated to cost Rs.32 crores, this project is likely to
be completed by middle of 1996-97.
10.0 R&D Projects
10.1 During the year, the Company undertook three R&D projects.
Progress on these projects is as under:
10.2 Recovery of iron values from tailings.
A project to recover iron values from tailings disposed of in the
tailings dam was undertaken during the year in consultation with Ms:
Mineral Technologies Division, Australia The firm submitted a draft
feasibility report in June 1995. Discussions were held with them and
their final report including techno-economic evaluation is awaited.
10.3 Application of synthetic organic binder peridur/perispray for
producing low silica pellets
Test results indicate that Bentonite addition to pellet mix can be
reduced upto 50% by adding peridur without affecting physical
properties of pellets. However, variation on moisture content in
concentrate has a very adverse effect on green pellet formation.
10.4 Studies on beneficiation of iron ore and synthesis of high
quality soft ferrites in consultation with Ms: NML, Jamshedpur, were
completed during the year and the results are encouraging. Final
report from Ms: NML has also been received They have also submitted a
proposal for synthesis of proto-type ferrites. This is under
consideration.
11.0 Joint Ventures by the Company
11.1 Pig Iron and DISP Project
A new Company under the name of Kudremukh Iron & Steel Company Ltd
was incorporated during June 1995 in joint venture with Ms: MSTC and
MECON to implement the Pig Iron and DISP project. The project, which
is scheduled for commissioning in two phases - Pig Iron in the first
phase and DISP in the second will, when commissioned, produce 150,000
tonnes of low phosphorous, low sulphur Iron and 50,000 tonnes of
Ductile Iron Spun Pipes. Basic infra-structure facilities for this
project, such as, land, power and water are already available.
Orders for supply of major equipment and civil works for Pig Iron
Project have already been placed. To finance the project, the
Company would also be entering the capital market shortly after
firming up the term loan component from financial institutions/
commercial banks.
11.2 Among other joint ventures being planned by the Company are one
with Ms: MECON and NMDC for rendering consultancy services in mining
and mineral exploration, another with Ms: BEML for carrying out gold
mining in Ghana and a third with Ms: SAIL and RINL for setting up a
shipping company. All these joint ventures are at different stages
of processing by Govt. of India. On receipt of Govt. approvals, new
joint venture companies would be set up to implement the respective
projects.
12.0 Perspectives
12.1 Nellibeedu
After receipt of prospecting licence for exploration of Nellibeedu
iron ore deposits, Ms: Mineral Exploration Corpn. Ltd., Nagpur, were
entrusted with the work of drilling to estimate the actual extent of
ore reserves available. The work involved is drilling of about 4000
mtrs. and commenced in November 1995. While drilling is scheduled to
be completed in December 1996, their report is expected by March
1997. Estimated cost of this work is Rs. 1.5 crores.
12.2 Gangrikal
Company's application for grant of prospecting licence for Gangrikal
is under the active consideration of Govt. of India and it is hoped
that necessary approvals will be conveyed at an early date.
13.0 Ecology and afforestation
13.1 Your Company has continued to maintain its intense concern for
preservation and upgrading of ecology, prevention of pollution and
afforestation in and around Kudremukh. In addition to continuing to
implement the Master Plan for afforestation drawn up at the inception
of the project, the Company also supports research schemes in these
fields. Some of the schemes taken up by the Company are:
a) Financial support to Mangalore University for conducting research
as to type of plants ideally suited for plantation in areas where the
mining has been completed. As a result of this research programme
for which the Company has committed to extend finance to the extent
of Rs. 55 lakhs, the Mangalore University has already identified
certain species of plants suited for plantation in the Kudremukh
area.
b) Financing the State Forest Department in promotion of
afforestation in the Kudremukh National Park area. Out of the amount
of Rs. 5 crores committed, an amount of Rs.86.67 lakhs has already
been released to the State Forest Department.
13.2 In order to prevent any possible pollution of the natural
resources and the environment both at Kudremukh and Mangalore,
several measures have been undertaken after seeking clearance from
the State Pollution Control Board. Yearly renewal of consents is
obtained from the Pollution Control Board. Water quality in the
Bhadra river is being jointly monitored with the Pollution Control
Board at six sampling stations within the project area and the water
quality is maintained to the standards prescribed. Pollution control
measures undertaken by the Company include the following:
a) Construction of an earthern dam of height 100 mtrs. at a total
cost of over Rs. 100 crores to store tailings discharged from the
plant operations;
b) Effluent treatment-sewage treatment plants for the township the
and plant units;
c) Construction of Pollution control dams and diversion channels to
contain mine run off and soil wash off from the mine benches;
d) Suppression of dust of Mine roads, Mine haul roads, Mine benches,
etc., by water sprinkling;
e) Large scale turfing in all critical earth fills to prevent erosion
and consequent slippage due to heavy rains;
f) Construction of check bunds at different locations in the valleys
to prevent mine wash getting into Bhadra river ; and
g) Continued massive afforestation programme. About 8 million
sapplings have been planted. Sappling plantation is done on Mine
area, Township, Parks, tailings, road sides, river sides, hill tops
and slopes, etc.
14.0 ISO 9002
While KIOCL is already a 100% EOU firmly entrenched in the
international market, independent certification of its standing would
not only facilitate its marketing efforts but would also project a
proper image of the Company. With this end in view, your Company has
already initiated necessary steps for obtaining ISO 9002
certification. Your Directors are glad to report that these steps
are at a very advanced stage and the Company is likely to obtain the
certification before end June 1996.
15.0 Personnel
15.1 The total number of personnel excluding Trainees on the rolls of
the Company as on 31st March 1996 was 2474 consisting of 1977 workmen
and 497 executives as against 2447 on 31st March 1995.
15.2 During the year, a comprehensive wage settlement was entered
into with the recognised Union. Along side this settlement, the pay
scales of executives were also revised. In addition to introduction
of better pay scales, the package also includes improvement in other
benefits to the employees. With the introduction of this package, it
is confidently expected to improve motivation on the part of the
Company's workforce leading to more prosperous results for the
Company.
15.3 None of the employees were in receipt of remuneration exceeding
Rs.25,000/- per month or Rs.300,000/- per annum during the year.
16.0 Representation of SCs and STs
16.1 The following table shows representation of SCs and STs as
against total number of employees in different groups on rolls of the
Company as on 31st March 1996:
----------------------------------------------------------------
Group No. of employees S C S T
on rolls
----------------------------------------------------------------
A 497 48 14
B 200 11 1
C 1527 208 42
D 205 45 29
D(Sweepers) 45 38 4
----------------------------------------------------------------
Total 2474 350 90
----------------------------------------------------------------
16.2 The Company has taken several measures to improve the intake of
candidates belonging to SC/ST. As a result of these efforts which
are part of a special recruitment drive, following number of
candidates belonging to SC/ST were appointed during the past three
years:
----------------------------------------------------------------
Group Total No. No. recruited % as against Shortfall
of vacan- total vacan- as on
cies filled cies filled 31-12-1995
---------------------------------------------
SC ST SC ST SC ST
----------------------------------------------------------------
A 42 9 3 21.42 7.14 2 2
B - - - - - - -
C 60 8 22 13.33 36.66 3 1
D 13 1 4 7.69 30.76 - -
D 3 1 - 33.33 - - -
(Sweepers)
----------------------------------------------------------------
16.3 As is the practice, on 14th April 1995, Dr.Ambedkar Jayanthi was
celebrated at all the establishments of the Company. An order was
placed on a reputed sculptor for a statue of Dr.Ambedkar. The statue
has since been received and is under erection.
17.0 Welfare
The Company continues to show its marked concern for the welfare of
its workforce. While hospital facilities, school, recreation
facilities, etc., continue to be maintained as in the previous year,
enhancement in the quantum of House Building Advance, Conveyance
Advance, introduction of second house rent advance are some of the
additional welfare measures introduced during the year. Maximum
permissible amount of 20% Bonus payable in terms of the Payment of
Bonus Act was paid during the year to the entitled employees.
18.0 Industrial Relations
Industrial relations situation remained peaceful throughout the year
in all the establishments of the Company. The Works Committees in the
Plant has been functioning effectively. The Joint Plant and Shop
Council meet regularly and their discussions contribute towards
improving industrial relations and resolving differences, if any.
19.0 Progressive Use of Official Language
19.1 The Company follows directives issued by the Govt. of India from
time to time regarding progressive use of Hindi for official
purposes. Hindi teaching programmes for the employees are conducted
regularly. Correspondence course and training also form part of
Hindi teaching programme. Cash awards and increments are given to
those who perform well in the Hindi examination and programmes.
Wherever possible, official correspondence is made in Hindi. The
Company's House Magazine is published in English, Hindi and Kannada
languages.
19.2 During Feb 1996, All India Rajabasha Sammelan was conducted by
your Company where eminent personalities attended the Sammelan. A
Certificate of Merit was awarded by Mangalore Town Official Language
Implementation Committee to the Company for the progressive use of
official language.
20.0 Awards
Company's spree of winning awards is continuing. During the year,
two coveted awards were conferred on the Company - CAPEXIL's Special
Export Award for 1994-95 and Leading Exporter's Award - first prize
for 1993-94 awarded by the Visveswaraya Industrial Trade Centre,
Government of Karnataka.
21.0 Review of Accounts by CAG
Review of Accounts by the Comptroller and Auditor General of India
for the year 1995-96 is attached.
22.0 Board of Directors
During the year, while Shri A Prasad has been appointed as Director
vice Shri B.P Mathur who resigned, Shri N K Raghupathy vice Shri
Santosh Nautiyal resigned, has been appointed as Director. Shri
Ashoke Joshi, Director, has since resigned from the Board and Shri P.
G Iyengar, Director (Comml) retired from the services of the Company
on attaining the age of superannuation. Shri S Murari, General
Manager (Prodn & Projects) was appointed as Director (Production &
Projects) during the year. The Directors would like to place on
record their appreciation of the services rendered by S/Shri BP
Mathur, Santosh Nautiyal, Asoke Joshi and PG Iyengar.
23.0 Acknowledgement
23.1 Your Directors wish to place on record the encouragement, advice
and guidance received from the Minister of Steel, the Secretary,
Ministry of Steel and other officials of the Department of Steel as
well as other Ministries of the Government of India and the
Government of Karnataka during the year.
23.2 Your Directors also acknowledge the timely advice and assistance
rendered by the Indian Embassies abroad during the year in the
Company's marketing efforts.
23.3 Your Directors are happy to record their appreciation of the
dedicated work and contribution by all the employees of the Company
during the year for attainment of its objectives.
Mar 31, 1995
Your Directors have pleasure in presenting the 19th Annual Report of
the Company for the year 1994-95 together with the Audited Accounts,
Auditors' Report thereon and a Review of Accounts by the Comptroller
and Auditor General of India.
2.0 The Year at a glance
2.1 The year 1994-95 was a difficult year for the Company. Although
the Order Book position was quite comfortable, the selling prices
continued to decline. There was a further reduction of 11% in the
selling price of Concentrate as a consequence of fall in
international prices for Iron Ore Concentrate. The nature was also
none too favourable to the company. The unprecedented heavy rainfall
during the monsoon of 1994 which amounted to 10mtrs. as compared to
normal levels of 6 to 7 mtrs, upset the entire operations. Frequent
power restrictions/interruptions/stoppages by the Karnataka State
Electricity Board affected production activities to a very great
extent. As a result, the performance of the Company during the year
1994-95 is slightly lower in some of the areas as compared to the
previous year 1993-94.
3.0 Year's Highlights
3.1 Despite the bottlenecks, Company set a few records in some of the
areas. They are as under:
a) 2.315 million tonnes of Pellets produced in 1994-95, is the
highest annual production so far.
b) 665,181 tonnes of Concentrate was produced in March, 1995, the
highest produced in any month so far. This represents a capacity
utilisation of 117%.
c) Production of 600,000 tonnes of Concentrate in February, 1995,
highest produced in February any year so far, also representing a
capacity utilisation of 106%.
d) 1.83 million tonnes of Concentrate was produced during the last
quarter of 1994-95, the highest production in any quarter.
e) 720,128 tonnes of Pellets production in the last quarter of
1994-95, the highest in any quarter.
4.0 Production
4.1 Total production for the year was 8.025 million tonnes comprising
5.71 million tonnes of Concentrate and 2.315 million tonnes of
Pellets. This is as compared to production of 8.443 million tonnes
comprising 6.2 million tonnes of Concentrate and 2.243 million tonnes
of Pellets during the previous year 1993-94.
4.2 Concentrate
A target of 6.2 million tonnes was set for production of Concentrate
during 1994-95. Actual production of Concentrate at 5.71 million
tonnes represents an achievement of 92% of the target and a capacity
utilisation of 84%. As already brought out earlier, performance of
the Company during the current year, especially in respect of
production of Concentrate, was comparatively lower on account of
unprecedented heavy rainfall during the monsoon months. In December,
1994, the Company took stock of the situation and initiated several
measures to improve the production, which are summarised below:
a) Introduction of a special Incentive Scheme for the
Operator-cum-Mechanics of Shovels and Wabco Trucks, which ply on the
difficult terrain of the Mine, as a motivation measure.
b) Optimum utilisation of the Plant and other facilities.
c) Creation of sufficient quantity of blasted inventory, maintenance
of the Crusher Conveyor system in a more planned manner for
uninterrupted production, detailed analysis of various problems
affecting the Mill Feed rate, etc.
All the above measures have resulted in increased production to a
substantial extent.
4.3 Pellets
The target set for production of pellets during the year was 2.3
million tonnes. Actual production was also 2.315 million tonnes,
representing 101% of the target. The pellet plant and other
facilities at Mangalore were also affected to a very great extent by
the power interruptions/restrictions imposed by the State Electricity
Board. Despite these hurdles, your Directors are happy to report that
a record production of 2.315 million tonnes was achieved during the
year, which represents a capacity utilisation of 77%.
4.4 The table below summarises the production performance during the
previous five years.
CP: Concentrate Plant PP: Pellet Plant
(Qty. in million tonnes)
Capacity
Production
Year Utilization
CP PP Total CP PP
1994-95 5.710 2.315 8.025 84 77
1993-94 6.200 2.243 8.443 91 75
1992-93 5.010 1.410 6.420 74 47
1991-92 5.875 2.133 8.008 86 71
1990-91 6.006 1.919 7.925 88 64
5.0 Conservation of Energy
5.1 Several measures initiated by the Company in the area of energy
conservation are continuing.
Independent loading of 120 MVA Transformer is being continued.
Mercury vapour fittings are being replaced with Sodium vapour
fittings in the Concentrate Plant. In addition to the existing three
Energy Savers for motors rating 5.5KW & 22KW, two more Energy Savers
for 5.5KW and 15KW motors are being procured.
5.2 There was marginal improvement in consumption of electricity in
respect of Pellet production. As against consumption of 32.94 KWH per
tonne during the previous year, actual consumption was 32.5 KWH per
tonne during the year under report.
6.0 Memorandum of Understanding with the Government
For the second successive year, your Company has been rated as
'Excellent' for its performance during 1994-95. Final rating by the
Department of Public Enterprises is, however, yet to be taken up.
7.0 Finance and Accounts
7.1 There was no change in the authorised, subscribed and paid-up
share capital of the Company during the year.
7.2 During the year, the Government of India decided to disinvest a
part of its shareholding in the Company. Accordingly, bids were
invited from Financial Institutions, Mutual Funds, etc., including
general public. Further details and decision of the Government in
this regard is awaited.
7.3 Internal resources generated during the year were of the order of
Rs. 96 crores. The capital expenditure during the year was Rs. 119
crores which was spent mainly on Captive Power Plant, Rear Dump
Trucks, Automill head, etc. This was met entirely out of internal
resources generated by the Company during the year and in the earlier
years. The Company did not seek any budgetary support from the
Government of India during the year.
7.4 Total sales for the year amounted to Rs.369.34 crores as against
a target of Rs. 387.66 crores representing 95.27% achievement of the
target. The shortfall in achievement of the targetted sales is
mainly on account of lower production of Concentrate and its
consequent exports.
7.5 Total sales of the year in Dollar terms amounted to US $ 117.64
million as against US $ 132.98 million earned in the previous year.
7.6 Cash balance at the end of the year stood at Rs. 106.92 crores
(including inter-corporate deposits and inter-corporate loans but
excluding long-term investments). Overdraft on 31st March, 1995 was
Rs. 22.41 crores excluding suppliers credit from State Bank of India
of Rs. 13.51 crores. Reserves and surpluses including investment
allowance reserve were Rs. 165.41 crores on 31st March 1995 as
against Rs. 118.65 crores on 31st March 1994.
7.7 As in the previous year, your Directors propose payment of Rs.
19.04 crores as the Dividend.
7.8 Working Results
Working results of the Company for the year 1994-95 together with
comparative figures for the previous year 1993-94 are furnished
below:
(Rupees in Crores)
Particulars 1994-95 1993-94
Sales 369.34 416.69
Stock adjustment 5.98 (12.46)
Operating expenses 287.12 292.62
Gross Margin 88.20 111.61
Profit on sale of assets 0.28 0.04
Interest earned on inter-corporate
loans and Long-term Investment 9.93 14.70
Interest Payment 2.28 4.64
Depreciation and Development expenses 29.57 26.84
Profit on operations of the year 66.56 94.87
Less: Prior period Adjustment 0.75 0.96
Profit after prior period adjustment 65.81 93.91
7.9 Financial performance of the Company during the year 1994-95
together with the figures for the previous two years is indicated
below:
(Rs.in Lakhs)
Particulars 1994-95 1993-94 1992-93
Total value of sales 36934 41669 31390
Gross Margin 8820 11161 10366
Total profit on account
of operations of the year 6656 9487 10015
Inventories (excluding
finished stock) 9940 9622 10586
8.0 Foreign Exchange Earnings and outgo
As against total foreign exchange earnings on receipt basis of Rs.
332.73 crores on exports, the total expenditure in foreign exchange
on import of spares, equipment, technical services free, etc.,
amounted to Rs. 131 crores during the year.
9.0 Marketing and Exports
9.1 During the year, 3.435 million tonnes of Concentrate and 2.246
million tonnes of Pellets were exported to nine countries, viz.,
Japan Iran, China, Bahrain, Turkey, Taiwan, Australia, Indonesia &
North Korea, besides to M/s Vikram Ispat & Essar Steel of India. The
target set for exports for the year was 3.8 million tonnes of
Concentrate and 2.2 million tonnes of Pellets. While the target in
respect of Pellets could be met, only 90% of the target could be
achieved in respect of Concentrate. The main reason for this
shortfall is lower production and, to some extent, delay in arrival
of the ships nominated by the buyers.
9.2 As a result of the declining trend in the international market
for the price of Iron Ore, there was a reduction of 11% in the
selling price of Concentrate. On account of this, as also lower
exports than the targets, the total value of sales for the year was
Rs. 369.34 crores which represents 95% of the target.
9.3 Company's export performance during the previous five years is
summarised below:
Quantity: in Million Tonnes Value: Rupees in lakhs
Year Concentrate Pellets Total % increase over
previous year
Q V Q V Q V Q V
1994-95 3.435 16729 2.246 20205 5.681 36934 - -
1993-94 4.201 21022 2.337 20647 6.538 41669 38.22 32.75
1992-93 3.355 18551 1.375 12839 4.730 31390 - -
1991-92 3.916 18882 2.152 20399 6.068 39281 5.68 71.55
1990-91 3.906 11257 1.836 11641 5.742 22898 7.33 31.30
9.4 During the year, 139 ships were handled at the New Mangalore Port
as against 149 ships handled during the previous year 1993-94.
9.5 Country-wise details of shipments made during the year are as
follows:-
(in '000 DMT)
Country Concentrate Pellets
Japan 1541 -
Iran 1271 90
China 475 711
Bahrain 148 -
Turkey - 372
Taiwan - 231
Australia - 243
Indonesia - 166
North Korea - 58
Vikram Ispat - 288
Essar Steel - 87
Total 3435 2246
9.6 Order Book for 1995-96
The target fixed for export of Concentrate and Pellets during 1995-96
is 3.6 and 2.3 million tonnes respectively. The experience gained
over operating in the international market for the past 15 years
shows that the prices go through cyclical changes with the reducing
and increasing phase lasting about 3-4 years each. The decline in the
selling prices for Company's products over the last four years goes
to prove this. The price increase trend has just set in, the
indicator to this effect being the 7% price increase for the fiscal
year 1995-96, which the Company has been able to secure for supplies
to the Japanese buyers, who are the largest consumers of iron ore in
the world. In respect of Pellets also, it has been possible for the
Company to secure price increase ranging from 12.6% to 14%.
10.0 Technology Absorption, Adaptation and Innovation
10.1 The technologies used in the production process of the Company
are imported technologies and raw material used are indigenous.
Continuous development activity to improve the production process and
the products is, therefore, necessary. The Company, therefore, has
given utmost importance and thrust for in house R&D. A separate R&D
Department has been set up in the Company which is headed by a senior
officer of the level of an Additional General Manager.
10.2 Details of the R&D projects undertaken during the year are as
under:
10.3 Floatex Density Separator- Improved Recovery and Grade of Spiral
Circuits
In order to facilitate classification of feed material at different
size ranges as required to obtain a cleaner product with better grade
and recovery, this project was undertaken. Tests with Floatex Density
Seperator on spiral feed and rougher spiral Concentrate were carried
out. While the results with the use of spiral feed as starting
material did not give encouraging results, those with rougher spiral
concentrate as starting material were encouraging. Evaluation of the
test results indicated that the concentrate obtained from the Floatex
Separator when subjected to flotation will yield a concentrate with
about 66-67% Fe and 2-3% Silica with improved recovery. Based on this
investigation, it has been decided to incorporate the floatex unit in
the revised flow sheet. An alternative Design Density Classifier,
i.e., 'T' Classifier was also tried. However, the test results were
not encouraging and therefore, this project has been abandoned.
10.4 Recovery of iron values from the tailings
An Australian firm was engaged for carrying out a feasibility study
on this project. About 20 bore holes were drilled and 200 samples
were prepared for analysis. Analysis is in progress. Portion of the
samples were also sent to a laboratory in Australia for analysis and
the same is in progress. Deep drilling investigation was also
carried out and the samples are being analysed both at Kudremukh and
Australia.
10.5 Dispersion of tailings in the tailings dam
M/s CWPRS were entrusted with the work on studies for determination
of characteristics of tailings deposition and pattern. Field studies
by their personnel has been completed and their report awaited.
10.6 During the year 1995-96, the Company proposes to undertake the
following R & D projects:
a) Application of synthetic organic binder peridur/perispray for
producing low silica pellets.
b) Beneficiation of Iron Ore and synthesis of high quality Soft
Ferrites.
c) Pursue the project of recovery of Iron Values from the Tailings.
11.0 Ecology & Afforestation
11.1 It is significant to point out the awareness of KIOCL management
towards maintenance of ecology and pollution free environment in the
mining lease area at Kudremukh and its Plant and other facilities at
Mangalore. Implementation of a Master Plan, drawn at the inception of
the project itself, for integrated development of forestry and
ecology to prevent pollution, maintain and improve the environment,
development of horticulture, etc., at Kudremukh is continuing. The
plan also dealt with prevention of soil wash of into Bhadra river on
account of mining operations, prevention of noise and air pollution,
preservation of flora and fauna. The Master Plan also envisaged large
scale afforestation within the mining lease area of Kudremukh.
11.2 In order to prevent any possible pollution of the natural
resources and the environment both at Kudremukh and Mangalore,
several measures have been undertaken after seeking clearance from
the State Pollution Control Board. Yearly renewal of consents is
obtained from the Pollution Control Board. Water quality in the
Bhadra river is being jointly monitored with the Pollution Control
Board at six Sampling Stations within the project area and the water
quality is maintained to the standards prescribed. Pollution control
measures undertaken by the Company include the following:
a) Construction of an earthen dam of height 100mtrs. at a total cost
of over Rs. 100 crores to store tailings discharged from the plant
operations.
b) Effluent treatment- Sewage Treatment Plants for the Township and
the Plant units.
c) Construction of Pollution control dams and diversion channels to
contain mine run off and soil wash off from the mine benches.
d) Suppression of dust on Mine roads, Mine Haul Roads, Mine benches,
etc. by water sprinkling.
e) Large scale turfing in all critical earth fills to prevent erosion
and consequent slippage due to heavy rains.
f) Construction of Check Bunds at different locations in the valleys
to prevent mine wash getting into Bhadra river.
g) Continued massive afforestation programme. About 7.5 million
saplings have been planted. Sapling plantation is done on Mine area,
Township, parks, tailings, road sides, river sides, hill tops and
slopes, etc.
Different species have been tried in the afforestation and
horticulture programmes. Survival rate of all these saplings has
been satisfactory.
11.3 As a result of the continued afforestation programme undertaken
by the Company, out of the total mining lease area of 4605 hectares,
till date, about 1220 hectares of area has been covered by planting
saplings.
11.4 The Company is financing the Mangalore University to the extent
of Rs. 5 crores towards a research programme in connection with
planting of saplings on the abandoned mine area at Kudremukh. The
University is conducting a research study. Experiments with over 100
species are being tried to ascertain their survival rate on the mine
abandoned area.
11.5 Development of Kudremukh National Park
Besides Company's own efforts, afforestation programmes are continued
in association with the State Forest Department and Karnataka Cashew
Development Corporation. The Company has commited to contribute a sum
of Rs. 5 crores to the State Forest Department for development of the
adjacent Kudremukh National Park.
12.0 Capital Schemes
Company's various expansion programmes, additions, modifications and
replacements to the plant and other connected facilities are
continuing. Progress on these programmes is as follows:
a) Installation of Third Crusher
Consequent upon depletion of ore reserves in East pit feeding to the
Crusher No.1, it was decided to install one number Gyratory Crusher
at an estimated cost of Rs. 40 crores. The project was completed and
the Crusher put into operation in December, 1994.
b) Relocation of Crusher No.1
Two Gyratory Crushers of 4000 tonnes / hour capacity each, are
provided on the mine ore body for crushing the mined ore from a
maximum 1500 mm (60") size to less than 175 mm (7") size for further
processing in the Concentrate Plant. The Crusher No.1 was located at
1071 mtrs. RL, bench No.16. It was originally proposed that Crusher
No.1 should be shifted to 880 M RL and Crusher No.2 to 840 M RL,
after 10 years and 12 years of operation respectively. Since shifting
of the first Crusher involved loss of production of about six months,
it was decided to procure and install a new Crusher No.3 along with
associated facilities and works. This Crusher was procured and
installed during the year at 880MRL.
Consequent upon depletion of ore on the East and West pits to below
benches 16 and 19 respectively, and in order to avoid uphauling of
ore from a depth for which the production facilities are not
designed, it was necessary to shift either Crusher No.1 or 2.
Accordingly, it was decided to dismantle and re-erect the existing
Crusher No. 1. Work on this project is under progress and it is
expected that this Crusher will be re-erected by October, 1996.
c) Captive Power Plant
To meet the power requirements of the existing installations and in
order to have uninterrupted power supply, a project to install 3 DG
sets of 9.36 MW capacity each was undertaken. This project is to be
implemented in two stages with 2 DG sets in phase I and one DG set in
phase II. Erection of 2 DG sets is in progress and it is expected
that these will be commissioned by September 1995.
13.0 Quality improvement
Company's Pellets are exported to various customers who demand
superior quality Pellets than the existing one. In order to survive
in the highly competitive international market, it is very essential
for the Company to constantly improve the quality of its products.
During the year, an agreement was entered into with M/s Met-Chem
Canada Inc., for upgradation of the existing facilities of the Pellet
Plant at Mangalore for an increased production of 3.5 million tonnes
per annum. This upgradation will also improve the quality of Pellets.
14.0 Perspectives
Your Directors are happy to report that the Company has been granted
a Prospecting Licence for exploration of nearby Nellibeedu iron ore
deposits. The prospecting work will commence shortly and if the
prospecting proves successful and confirms the availability and
quality of the ore deposits, it will enhance the life of Company's
operations.
15.0 Human Resource Development
15.1 In line with the Government of India objectives, the Company
lays great emphasis on human resource development and special thrust
is given in this area. Promotion of functioning of the Quality
Circles continued during the year. Four Quality Circles of the
Company participated in the Chapter Convention at Bangalore and all
of them bagged prizes in different areas. The winning teams also took
part in the National Convention.
15.2 In house training programmes on technical subjects as applicable
to the type of equipment in use were organised. In addition to this,
Joint Education programmes were conducted by inviting faculty from
Central Board of Workers' Education.
15.3 Executives were nominated to various Executive Development
programmes conducted by reputed institutions and agencies, besides
nominations to attend various conferences and conventions in their
respective professions.
15.4 In house programmes on varied topics of Human Resource
Management, Effective Communication, Productivity Linked Incentive
Scheme, Supervisory Development Programme, Leadership and Culture
Building, etc., were conducted during the year.
15.5 Training programmes for users of Personal Computers were also
organised to improve computer literacy among all office personnel and
executives.
15.6 Stress management has been another theme taken up by the HRD. In
this connection, in house programmes are organised on Yoga regularly
at the project sites. Introduction of Mentoring Scheme for
Graduate-Engineer Trainees and Executive Trainees is a special
feature of the year. Establisliment of HRD Library at all three
locations of the Company, namely Kudrermukh, Bangalore and Mangalore
is another step in the direction of achievement of HRD goals.
16.0 Personnel
16.1 The total number of personnel excluding trainees on the rolls of
the Company as on 31st March, 1995 was 2447 consisting of 1992
workmen and 455 executives as against 2433 on 31st March, 1994.
16.2 None of the employees were in receipt of remuneration exceeding
Rs.25,000/- per month or Rs.3,00,000/- per annum during the year.
17.0 Representation of SCs and STs
17.1 The following table shows representation of SCs and STs as
against total number of employees in different groups on rolls of the
Company as on 31st March, 1995.
No. of employees
Group on rolls SC ST
A 455 40 12
B 209 11 3
C 1545 210 39
D 192 45 29
D (Sweepers) 46 38 4
Total 2447 344 87
17.2 The Company has taken several measures to improve the intake of
candidates belonging to SC/ST. As a result of these efforts which are
part of a special recruitment drive, following number of candidates
belonging to SC/ST were appointed during the past three years:
Group Total % as against Shortfall
No. of total vacancies as on
vacancies No. recruited filled 31-12-1994
filled
SC ST SC ST SC ST
A 66 13 8 19.69 12.12 1 1
B 1 1 - 100.00 - - -
C 91 19 23 20.87 25.27 6 3
D 13 2 3 15.38 23.07 - -
D 3 2 - 66.66 - - -
(Sweepers)
17.3 As is the practice, on 14th April, 1994, Dr. Ambedkar Jayanthi
was celebrated at all the establishments of the Company. An order has
been placed on a reputed sculptor for preparation of a statue of Dr.
Ambedkar. It is expected that the work on erection of the statue will
be completed during the next year.
18.0 Safety Measures
The Safety Department of the Company is functioning effectively. The
various Safety Committees set up with workers' representatives, as
usual, meet regularly to discuss safety measures and bring-in more
awareness about safety among the employees. The annual safety
campaign was observed for a week and as is the practice, the Company
took part in the annual Zonal Safety Week celebrations and bagged
several prizes for excellence in many areas.
19.0 Workers' participation in Management
The Works Committees in the plants of the Company are functioning
effectively. The joint Plant and Shop councils have regular fruitful
discussions and contribute to the improved industrial relations and
resolution of differences, if any.
20.0 Welfare
Several measures initiated by the Company for the welfare of its
workforce are continuing. Hospital facilities, schools, recreation
facilities, educational requirements, house building advance,
conveyance advance facilities, etc., are continued. Maximum
permissible amount of 20% Bonus payable under the Payment of Bonus
Act to the employees governed by the said Act was paid during the
year.
21.0 Industrial relations
The industrial relations situation remained peaceful in all the
establishments of the Company during the year. Recognition granted to
the Kudremukh Employees' Union expired during the year. Election
proceedings have already been initiated and on election of a majority
Union and grant of recognition to it, wage negotiations with
recognised Union will commence.
22.0 Progressive Use of Official Language
22.1 The Company follows directives issued by the Govt. of India from
time to time regarding progressive use of Hindi for official
purposes. Hindi teaching programmes for the employees are conducted
regularly. Correspondence course and training also form part of Hindi
teaching programme. Cash awards and increments are given to those who
perform well in the Hindi examination and programmes. Wherever
possible, official correspondence is made in Hindi. The Company's
House Magazine is published in English, Hindi and Kannada languages.
A Hindi software programme has also been loaded on to personal
computers and the employees are trained in operation of the
computers.
22.2 During the year, a Hindi Workshop was organised on 2nd and 3rd
September, 1994. Employees from all the establishments of the Company
participated in this workshop. 'Hindi Pakhvada' was observed in the
month of September, 1994.
23. Awards
During the year, several awards were conferred on the Company for its
performance in different areas. The details are as under:-
a) Jawaharlal Nehru Memorial National Award for Pollution Control and
Energy Conservation;
b) Abheraj Baldota Environment Award 1993-94 from the Federation of
Indian Mineral Industries for outstanding contribution to the
National Goal of sustainable development through environmental
conservation and rational utilisation of natural resources;
c) Leading Exporter's Award- 1st prize for 1992-93 awarded by
Visvesvaraya Industrial Trade Centre, Centre for Export Promotion for
Excellence in Exports, Govt. of Karnataka.
d) 5th Indira Gandhi Memorial National Award for Excellence in Indian
Industry 1994; and
e) CAPEXIL's Top Export Award for 1993-94.
24.0 Review of Accounts by CAG
Review of Accounts by the Comptroller and Auditor General of India
for the year 1994-95 is attached.
25.0 Board of Directors
During the year, Shri K.V. Rao, Director (Production & Projects)
opted for voluntary retirement. Shri Anantha Ramaiah, Director
(Finance) retired from the services of the Company on attaining the
age of superannuation. Consequent to Anantha Ramaiah's retirement,
Shri K.S Narayanan, General Manager (Finance), was appointed as
Director (Finance) of the Company. The Directors would like to place
on record their appreciation of the services rendered by S/Shri
Anantha Ramaiah and K.V Rao.
26.0 Acknowledgement
26.1 Your Directors wish to place on record the encouragement, advice
and guidance received from the Minister of Steel, the Secretary,
Ministry of Steel and other officers of the Department of Steel as
well as other Ministries of the Government of India and the
Government of Karnataka during the year.
26.2 Your Directors also acknowledge the timely advice and assistance
rendered by the Indian Embassies abroad during the year in the
Company's marketing efforts.
26.3 Your Directors are happy to record their appreciation of the
dedicated work and contribution by all the employees of the Company
during the year for attainment of its objectives.
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