ANNUAL REPORT 2017-2018 THE STATE TRADING CORPORATION OF INDIA LTD CIN L74899DL1956GOI002674 Registered Office: Jawahar Vyapar Bhawan, Tolstoy Marg, New Delhi - 110001 Tel No. 91 11 23313177, Fax: 91 11 23701123 / 23701191 E-mail: [email protected], Website: www.stclimited.co.in BOARD OF DIRECTORS CMD AND FUNCTIONAL DIRECTORS Shri Rajiv Chopra, Director (Marketing) [Addl. charge of CMD] Shri Sanjeev Kumar Sharma, Director (Personnel) Shri Prasanta Kumar Das, Director (Marketing) Shri Sanjeev Kumar Gupta, Director (Marketing) (upto 13.07.2017) Shri Umesh Sharma, Director (Finance) MMTC with Addl. Charge of STC (from 04.01.2018) PART-TIME OFFICIAL DIRECTORS (GOVERNMENT NOMINEES) Dr. Inder Jit Singh (upto 28.09.2017) Shri Jitendra Kumar Dadoo (upto 16.03.2018) Shri Sunil Kumar (from 21.10.2017) Shri S.C. Pandey (from 27.03.2018) PAT-TIME NON-OFFICIAL DIRECTORS (INDEPENDENT DIRECTORS) Dr. N. Sundaradevan (from 03.08.2016) Dr. K Rangarajan (from 03.08.2016) Shri Sunil H. Trivedi (from 03.08.2016) Shri Arvind Gupta (from 03.08.2016) Dr. Amitabh Rajan (from14.02.2017) Shri Mohan Lal Pareek (from14.02.2017) Ms. Bharathi Magdum (from 24.03.2017) Shri Bharatsinh Parmar (from 31.03.2017) COMPANY SECRETARY STATUTORY AUDITORS Shri Pankaj Kumar M/s P Jain & Company Chartered Accountants REGISTRAR & SHARE TRANSFER AGENT 210, Arunachal Bhawan, MCS Shares Transfer Agent Limited 19, Barakhamba Road, F-65, 1st Floor, Okhla Industrial Area, New Delhi-110013 Phase-I, New Delhi - 110020 Tel.: 011-41406150 SECRETARIAL AUDITORS E-mail: [email protected] M/s. P.C. Jain & Co. BANKERS Compnay Secretories State bank of India Allahabad Bank 2382, Ist Floor, Sector-16 Bank of Baroda Bank of India Faridabad - 121002 Canara Bank Indian Overseas Bank Indian Bank ICICI Bank UCO Bank Syndicate Bank Vijaya Bank Union Bank of India HDFC Bank ICBC Bank Indusind Bank Axis Bank CONTENTS 1. Directors’ Report: 2017-18 along with the following Annexures: 005-010 I Management Discussions & Analysis Report 011-015 II Extract of Annual Return (MGT-9) 016-031 III Annual Report on CSR Activities 032-033 IV Report on Corporate Governance 034-050 V Compliance Certificate on Corporate Governance 051 VI Secretarial Auditors’ Report & Management’s Replies thereto 052-055 2. Highlights: Ten Years at a Glance 056 3. Standalone Financial Results 057 • Independent Auditors’ report 058-069 • Accounts for the year 2017-2018 070-159 • Management’s Replies to Statutory Auditor’s Report 160-167 • CAG Comments 168-169 4. Statement Pursuant to Section 129(3) of the Companies Act., 2013 related to subsidiary Company and Joint Ventures 170 5. Consolidated Financial Results 171 • Independent Auditors’ report 172-179 • Accounts for the year 2017-2018 180-277 • Management’s Replies to Statutory Auditor’s Report 278-288 6. Green Initiative in Corporate Governance: Go Paperless 289 DIRECTORS’ REPORT The Board of Directors presents the 62nd Annual Report on Industrial Relations the business and operations of the Company and its Audited During the year 2017-18, the company continued to Statement of Accounts for the year ended March 31, 2018 maintain cordial harmonious industrial relations. No man- together with the Auditors’ Report and Comments on the Accounts by the Comptroller and Auditor General (CAG) of days were lost due to any labour unrest. Personnel policies India. and welfare schemes were suitably improved / amended so as to bring them in line with the overall business interests of FINANCIAL RESULTS the Company. The performance of the Company during the year 2017-18 vis-à-vis the previous year is summarized in the table below: Recruitment of SC/ST/OBC/PWD The Company has been following the Government of India (`Crore) policy for reservation/recruitment for SCs/STs/OBCs and 2017-18 2016-17 PWD. TURNOVER Employees’ Learning & Development Exports 266 789 With a view to enable employees to fulfil their potential Imports 10216 6382 and help them in their career progression, domain specific Domestic 343 581 training opportunities and behavioural programmes were organized. During the year, around 206 employees were Grand Total 10825 7752 imparted training in different spheres. Besides, a six day FINANCIALS induction training programme for recently recruited executives Profit Before Tax 32 (-)150 was organised at IIFT, New Delhi, wherein 29 executives participated. Profit After Tax 38 (-)166 In all, 235 employees were imparted training during the year Net Worth 931 890 (incl. revaluation reserves) wherein 486 man-days were dedicated. STC’S performance in terms of MOU 2017-18 with OPERATIONS AND BUSINESS PERFORMANCE respect to HRM Parameters: During 2017-18, your company recorded a business turnover • One of the HRM parameters for MoU 2017-18 was for of `10825 crores as against `7752 crores achieved in holding DPC without delay for executives (E0 and above 2016-17. The increase in turnover was mainly due to higher level), which was successfully completed as all DPCs bullion sales. from E1 to E8 level were held without delay in 2017-18. DIVIDEND • Another HRM parameter was preparation of succession In view of the crisis faced by company on account of current plan and its approval by Board of Directors before 31.12.2017. The Succession Plan of the Corporation liquidity crunch, low net worth, higher borrowing costs and the was successfully prepared and approved by Board of consequential need to conserve cash, the Board of Directors Directors in its 617th meeting held on 13.12.2018. have not recommended any dividend for the year 2017-18. • With a view to develop a robust and transparent OTHER EQUITY (RESERVES) Performance Management System (PMS) as part of An amount of `830.15 crore (excluding revaluation reserves MoU target for the year 2017-18, online PMS has been of `884.60 crore) was available in the Reserves and Surplus introduced, and has been successfully implemented in of the Company as on 1st April 2017. An amount of the Corporation in respect of all executives (E1-E8) within `40.67 crore (PAT: `37.52 crore and other comprehensive prescribed timelines w.e.f. 08.02.2018 in compliance of income: `3.15 crore) is being retained as surplus in the MoU 2017-18 target. Balance Sheet. Accordingly, as on 31st March 2018, the • A week long (six day) Management Development equity capital stood at `870.81 crore. Programme on “International Business” was conducted HUMAN RESOURCE from March 12-17, 2018 for further enhancing/ STC had 591 employees on its rolls as on 31.03.2018, upgrading the skills of 29 newly recruited executives (i.e. which included 402 officers and 189 staff members. During 7.21% of the total executives) through IIFT, New Delhi a the year, the Company recruited 3 Finance Professionals in Centre of Excellence set up in 1963 by Govt. of India as the executive cadre. an Autonomous organization. THE STATE TRADING CORPORATION OF INDIA LIMITED I 005 OFFICIAL LANGUAGE During the year 2017-18, a total of 9 cases have been The Company has been making continuous efforts in disposed off and action on remaining 22 cases is in progress as on 31.03.2018. implementation of official language policy of the Govt. of India. In order to achieve the targets, employees have been PERFORMANCE OF SUBSIDIARY COMPANY STCL given training on working in Hindi on computers. Besides, Ltd. (Formerly, Spices Trading Company Limited) they are provided necessary information on various aspects In view of extraordinary losses suffered by STCL leading of official language through regular workshops conducted in to erosion of its net worth and keeping in view the remote Hindi. Raj Bhasha Fortnight was organised during September, possibility of its turnaround, the Union Cabinet had, in August 2017 in which employees were motivated towards use of 2013, decided to wind up STCL. Accordingly, a winding up official language Hindi through various Hindi competitions petition was filed by STCL before the Hon’ble High Court / programmes. On the occasion of Hindi Divas on 14th of Karnataka and the same continues to be pending due to objections by Banks. September 2017, winners of Hindi Competitions were given awards. In addition, employees contributing significantly to At present, STCL has 11 employees on its rolls. Due to above the execution of official language Hindi were given cash developments, no business operations were undertaken by prizes under Official Language Encouragement Scheme. STCL during the year. Divisions and Branch offices performing outstanding in the The company incurred a loss of 657 crore (unaudited) area of execution of official language were facilitated with during 2017-18 mainly on account of the interest accrued Raj Bhasha Shield. on outstanding loans and had a negative net worth of 4562 crore (unaudited) as on 31.03.2018. VIGILANCE ACTIVITIES MANAGEMENT DISCUSSION AND ANALYSIS REPORT Vigilance plays a vital role in the adoption and implementation As per the requirement of Regulation 34(2) of schedule V of best practices of Corporate Governance and ethics in the of the SEBI (Listing Obligation and Disclosure Requirements) Company. During the year, Vigilance Division of the Company Regulation 2015, a detailed Management Discussion and played an important role in sensitizing the employees about Analysis Report forming part of the Annual Report of the the preventive action to be taken while handling trade Company is placed at Annexure-I. proposals and took measures to improve the existing system EXTRACT OF THE ANNUAL RETURN and processes. As required under Section 134(3) (a) of the Companies Act, Steps were also taken for systemic improvement in the areas 2013, an extract of the Annual Return pursuant to Section of record management, defining of the role and responsibility 92(3) of the Act is annexed to this Report at Annexure-II.