Dear Members,
Your Directors take pleasure in presenting the Sixty Ninth Annual
Report together with Audited Annual Financial Statements (including Audited Consolidated
Financial Statements) of the Company for the Financial Year ended 31 March, 2024.
FINANCIAL RESULTS (Rs. in Crore)
Particulars |
Standalone |
Consolidated |
|
FY 2023-24 |
FY 2022-23 |
FY 2023-24 |
FY 2022-23 |
Revenue from Operations |
6938.01 |
6916.00 |
7478.01 |
7275.51 |
Earnings Before Interest, Taxes, Depreciation, Amortisation |
1245.87 |
819.04 |
1280.65 |
822.49 |
and Exceptional Item |
|
|
|
|
Less: Finance Costs |
201.86 |
272.24 |
218.83 |
285.89 |
Less: Depreciation and Amortisation Expense |
114.32 |
114.02 |
124.52 |
121.20 |
Profit Before Exceptional Item & Tax |
929.69 |
432.78 |
937.30 |
415.40 |
Less: Exceptional Item |
|
|
|
|
Profit / (Loss) Before Tax |
929.69 |
432.78 |
937.30 |
415.40 |
Less: Tax Expense |
193.64 |
98.02 |
197.15 |
99.17 |
Profit / (Loss) After Tax |
736.05 |
334.76 |
740.15 |
316.23 |
Share of Profit / (Loss) in Joint Ventures (Net) |
|
|
|
|
Profit / (Loss) After Tax including share of Associate and
Joint |
736.05 |
334.76 |
740.15 |
316.23 |
Ventures |
|
|
|
|
Attributable to: |
|
|
|
|
Owners of the Company |
|
|
739.89 |
315.80 |
Non-Controlling Interest |
|
|
0.26 |
0.43 |
Other Comprehensive Income (Net of Tax) |
(5.20) |
(29.16) |
(0.25) |
(13.67) |
Total Comprehensive Income |
730.85 |
305.60 |
739.90 |
302.56 |
Attributable to: |
|
|
|
|
Owners of the Company |
|
|
739.64 |
302.13 |
Non-Controlling Interest |
|
|
0.26 |
0.43 |
Opening balance in Retained Earnings |
1981.09 |
1696.19 |
2038.98 |
1773.28 |
Closing Balance in Retained Earnings |
2633.47 |
1981.09 |
2694.25 |
2038.98 |
DIVIDEND
The Directors are pleased to recommend a 3nal dividend of Re. 0.90 per
Equity Share of face value of Re. 1 each for the Financial Year ended 31 March, 2024. This
dividend is subject to the approval of the Members of the Company, at their ensuing Annual
General Meeting (AGM'). If approved, the total outlay on account of 3nal
dividend for the Financial Year 2023-24 would amount to Rs. 55.64 Crore. This is over and
above the interim dividend of Re. 0.50 per equity share of face value of Re. 1 each for
3nancial year 2023-24 declared by board of directors in their meeting held on February 08,
2024. On approval of the 3nal dividend, the total outlay on account of 3nal and interim
dividend for the Financial Year 2023-24 would amount to Rs. 86.55 crores.
The Company had declared dividend of Re. 0.90 per Equity Share of face
value of Re. 1 each for the Financial Year ended 31 March, 2023.
The dividend recommended is in accordance with the Dividend
Distribution Policy of the Company. The Dividend Distribution Policy of the Company is
uploaded on the Company's website: https://www.electrosteel.com/admin/
pdf/1064444546454-Dividend-Distribution-Policy.pdf .
INVESTOR EDUCATION AND PROTECTION FUND
Transfer of Dividend to Investor Education and Protection Fund
In terms of the provisions of Section 124 of the Companies Act, 2013
(Act'), read together with the Investor Education and Protection Fund Authority
(Accounting, Audit, Transfer and Refund) Rules, 2016 and amendments thereof (IEPF
Rules'), the Company (ECL) has transferred Rs. 13,65,720 (Rupees Thirteen Lakhs Sixty
Five Thousand Seven Hundred and Twenty Only) to the IEPF and the SW unit (erstwhile
Srikalahasthi Pipes Limited, which got merged with and into Electrosteel Castings
Limited), has transferred Rs. 21,03,115 (Rupees Twenty One Lakhs Three Thousand One
Hundred and Fifteen Only) to the IEPF, during the Financial Year 2023-24, being
unpaid/unclaimed dividend amounts relating to the Financial Year 2015-16.
Pursuant to the provisions of the IEPF Rules, the Company has uploaded
the details of unpaid and unclaimed amounts lying with the Company as on 31 March, 2023
(as on the date of closure of previous 3nancial year) on the website of the Company
(www.electrosteel.com).
Transfer of Shares to the Demat Account of Investor Education and
Protection Fund Authority
In terms of the provisions of Section 124(6) of the Act, read with the
relevant Rules made thereunder, 1,36,540 Equity Shares of ECL and 21,748 Equity Shares of
SW Unit (erstwhile Srikalahasthi Pipes Limited, which got merged with and into
Electrosteel Castings Limited), in respect of which dividend was unpaid or unclaimed for
the Financial Year 2015-16 and onwards, has been transferred to the Demat Account of the
IEPF Authority maintained with National Securities Depository Limited, during the
Financial Year 2023-24. Further, the voting rights in respect of shares transferred to the
Demat Account of the IEPF Authority shall remain frozen, until the rightful owner claims
the shares. Members may note that shares as well as unclaimed dividend transferred to the
IEPF Authority can be claimed back. Concerned shareholders are advised to visit
http://www.iepf.gov.in/IEPF/refund.html for lodging claim for refund of shares or dividend
from the IEPF Authority.
Further, the Company has initiated necessary action for transfer of all
shares in respect of which dividend declared for the Financial Year 2015-16 and onwards
has not been paid or claimed by the Members for 7 (seven) consecutive years or more.
Members are advised to visit the web-link
https://www.electrosteel.com/investor/iepf-suspense-account.php.
TRANSFER TO RESERVES
The Company proposes to retain the entire amount of pro3t in the Pro3t
& Loss Account.
OPERATIONS
During the year under review, the production of Ductile Iron (DI) Pipes
was 744,958 MT, as against 715,129 MT in the previous year. The production of Cast Iron
(CI) Pipes was 33,769 MT in 2023-24 as against 26,588 MT in the previous year. During the
year Export sales took a hit due to War situations and Economic slowdown in European Union
and US. The shortfall in Export was made up by robust demand in domestic market.
The Financial year 2023-24 was another challenging year for our
Organisation in the perspective of in3ationary pressure, 3uctuations in bulk raw material
market, geopolitical tensions and increase in Repo rate. The Company produced DI Fittings
& Accessories of 18,919 MT in 2023-24 as against 20,343 MT in 2022-23. Flanged pipe
production started at Haldia location.
MATERIAL CHANGES AND COMMITMENTS
There has been no material changes and commitments a3ecting the
3nancial position of the Company which have occurred between the end of the 3nancial year
of the Company to which the 3nancial statements relate and the date of this Report other
than as mentioned in the Operations' section of this Directors' Report.
There has been no change in the nature of the Company's business.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report forms an integral part of
this Report and gives details of the industry structure, developments, opportunities,
threats, performance and state of a3airs of the Company's business, internal controls
and their adequacy, risk management systems including a section on Risk
Management' and other material developments during the Financial Year 2023-24, and is
annexed as Annexure 1.
FUTURE PROSPECTS
India is witnessing an unprecedented era of economic progress and India
today is competing with developed economies in the world and its growth is expected to
hover around 7-8 per cent for next few years. Regarded as one of the fastest growing major
economy, India is thriving hard to achieve the ambition of becoming a $5 trillion economy.
A steady growth in Gross Domestic Product has been witnessed for more than two decades,
which is continuing. India, home to 16 percent of the world's population, has only
2.5 percent of the world's land area and 4 percent of the world's water
resources at its disposal. This is also declining in terms of quantity and quality.
Drinking water was once considered safe in India, but today providing nearly 1.40 billion
inhabitants with access to safe drinking water is a big challenge. The alarming rate of
depleting groundwater sources and rapidly polluting surface water requires immediate and
focused attention by all stake holders.
The demand for water has been increasing at a high pace in the past few
decades. The sustained economic growth has triggered more industrialisation and rapid
urbanisation all over India. With only around 31% of India's population currently
urbanised, along with high population density, India's urbanisation trends have scope
to signi3cantly accelerate and likely to be around 40% by 2030. The rural India still
remaining largely uncovered with piped water network alongside only about one-third of the
Indian homes are connected with a sewerage network.
SHARE CAPITAL
The Authorised Share Capital of the Company is Rs. 103,02,00,000/-
comprising of 103,02,00,000 Equity Shares of Re. 1.00 each. During the year under review,
there has been no change in the Authorised Share Capital of the Company. The Issued,
Subscribed and Paid-up Share Capital of the Company is Rs. 61,81,84,591/- comprising of
61,81,84,591 Equity Shares of Re. 1.00 each. During the year under review, the Company has
not issued shares with di3erential voting rights. It has neither issued employee stock
options nor sweat equity shares and does not have any scheme to fund its employees to
purchase the shares of the Company. The Company has, on 14 January 2024, issued
2,35,79,344 equity shares to the promoter / promoter group for cash, pursuant to the
conversion of 2,35,79,344 Warrants issued by the Company on 27 December, 2022.
CREDIT RATING
During the year, India Ratings and Research (Ind-Ra) has upgraded the
Company's Long-Term Issuer Rating to IND AA-' from IND A+' and
rea3rmed its rating on the short term bank facilities as "IND A1+" with a Stable
Outlook. CRISIL Ratings has upgraded the Company's Long-Term Issuer Rating to
CRISIL AA- from CRISIL A+' and rea3rmed its rating on the
short-term bank facilities as CRISIL A1+' with a Stable Outlook.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS / COURTS /
TRIBUNALS (P)
During the year under review, there were no signi3cant or material
order passed by the regulators or courts or tribunals impacting the going concern status
and the Company's operations in future except as mentioned below.
UV Asset Reconstruction Company Limited (UVARCL) had 3led an
application before National Company Law Tribunal (NCLT), Cuttack for initiation of
Corporate Insolvency and Resolution Process (CIRP) against the Company at NCLT, Cuttack,
although there was no debt due. NCLT, Cuttack registry vide email dated 12 June, 2021
informed the Company about such 3ling. The Company immediately made relevant disclosure to
the Stock Exchanges.
UVARCL is assignee to SREI Infrastructure Finance Ltd (SREI), one of
the erstwhile lenders of Electrosteel Steels Limited now known as ESL Steel Limited (ESL)
to whom the Company mortgaged its Elavur Land for securing debt of ESL. The Company has
never extended any Corporate Guarantee for securing such debt, i.e., the Company was
acting as third-party security provider to such lender. ESL has been taken over by Vedanta
Limited in the Financial year 2018-19 under IBC. As per approved resolution plan of
Vedanta, the entire admitted debt of ESL was paid and discharged in the form of cash and
allotment of Equity shares of ESL. NCLT, Cuttack vide order dated 24 June, 2022 pronounced
its Order in favour of the Company by dismissing the application of UVARCL.
UVARCL 3led an appeal before National Company Law Appellate Tribunal
(NCLAT) against NCLT, Cuttack Order. NCLAT vide order dated 24 January, 2024 has upheld
the judgment dated 24 June, 2022 of the NCLT, Cuttack Bench. NCLAT Judgement is challenged
at Hon'ble Supreme Court and presently pending before Hon'ble Supreme Court.
Members' attention is invited to Notes on Contingent Liabilities, in the Notes
forming part of the Financial Statements.
INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
The Internal Financial Controls with reference to the Financial
Statements are considered to be commensurate with the size, scale and nature of the
operations of the Company. The system encompasses the major processes to ensure
reliability of 3nancial reporting, compliance with policies, procedures, laws, and
regulations, safeguarding of assets and economical and e3cient use of resources. There are
Standard Operating Procedures (SOPs) in all functional activities for which key manuals
have been put in place. The manuals are updated and validated periodically. Approval of
all transactions is ensured through a pre-approved Delegation of Authority (DOA) schedule
which is in-built into the SAP system, wherever required. DOA is reviewed periodically by
the management and compliance of DOA is regularly checked by the Auditors. The
Company's books of accounts are maintained in SAP and transactions are executed
through SAP (ERP) setups to ensure correctness/e3ectiveness of all transactions and for
integrity and reliability of reporting. There is adequate MIS (Management Information
System) which is reviewed periodically by functional heads.
The Internal Auditor of the Company monitors and evaluates the e3cacy
and adequacy of internal control system in the Company, its compliance with operating
system, accounting procedures and policies at all locations of the Company. The main
thrust of internal audit is to test and review controls, appraisal of risks and business
processes, besides benchmarking controls with best practices in the industry. Based on the
Internal Audit Reports, process owners take corrective actions in their respective areas
and thereby strengthen the controls. The Report is presented before the Audit Committee
for review at regular intervals.
DETAILS OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES
The Audited Annual Consolidated Financial Statements forming part of
the Annual Report have been prepared in accordance with the Companies Act, 2013 (the
Act'), applicable Indian Accounting Standards, noti3ed under Section 133 of the Act,
read with the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to
time.
The Company had the following Subsidiaries and Joint Ventures as on 31
March, 2024:
Sl. No. Name of the Company |
Status |
1. Electrosteel Europe, S.A. |
Subsidiary |
2. Electrosteel Castings (UK) Limited |
Subsidiary |
3. Electrosteel Algerie SPA |
Subsidiary |
4. Electrosteel USA, LLC and its wholly owned subsidiary,
WaterFab LLC, USA |
Subsidiary |
5. Electrosteel Trading, S.A. |
Subsidiary |
6. Electrosteel Doha for Trading LLC |
Subsidiary |
7. Electrosteel Castings Gulf FZE |
Subsidiary |
8. Electrosteel Bahrain Holding W.L.L. and its wholly owned
subsidiary, Electrosteel Bahrain Trading WLL |
Subsidiary |
9. Electrosteel Brasil Ltda. Tubos e Conexoes Duteis |
Subsidiary |
10. North Dhadhu Mining Company Private Limited |
Joint Venture |
Pursuant to a settlement arrived in respect of Company's Joint
Venture, Domco Private Limited (DPL) for carrying out mining of Coal in Jharkhand,
investment in Equity shares of DPL amounting to Rs. 30.00 lakhs and advance of Rs. 700.00
lakhs given to them, being no longer recoverable, had been written o3. Consequent to the
said settlement, Arbitration and other proceedings by or against the Company had been
withdrawn and DPL ceases to be a Joint Venture of the Company as noted by the Board of
Directors at their meeting held on 9 August, 2023.
A Report on the highlights of the performance of each of the
Company's subsidiaries, associates and joint ventures, pursuant to the provisions of
Section 134(3) of the Act, read with Rule 8 of the Companies (Accounts) Rules, 2014, is
given in Annexure 2 to this Report. The statement containing salient features of 3nancial
statements of subsidiaries, associate companies and joint ventures in Form AOC-1, for the
Financial Year ended 31 March, 2024, pursuant to the said Section, read with Rule 5 of the
said Rules, are given along with the Standalone Financial Statements.
In accordance with Section 136 of the Act, the Audited Financial
Statements, including the Consolidated Financial Statements and related information of the
Company, and Audited Accounts of each of its subsidiaries are available on the website of
the Company, www.electrosteel.com. Members who wish to inspect these documents can send an
e-mail to companysecretary@electrosteel.com.
REPORT ON CORPORATE GOVERNANCE
Your Company believes in transparent and ethical corporate governance
practices. The Company's approach to Corporate Governance cascades across its
business operations and its stakeholders at large to create long term sustainable value.
The Company is committed in maintaining the highest standards of Corporate Governance and
adheres to the stipulations prescribed under the Listing Regulations. A Report on
Corporate Governance for the year under review, along with the Certi3cate from the
Auditors con3rming compliance with the conditions of Corporate Governance, is annexed as Annexure
3, forming part of this Report.
MEETINGS OF THE BOARD
During the Financial Year 2023-24, 4 (four) Board Meetings were held,
the details of which are provided in the Corporate Governance Report, forming part of this
Report and annexed as Annexure 3.
BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
The Members of the Company, based on the recommendation of the
Nomination and Remuneration Committee and the Board of Directors at their Meeting held on
17 May, 2023, have re-appointed Mr. Uddhav Kejriwal (DIN: 00066077) as a Whole-time
Director of the Company, for a second term of 3 (three) consecutive years, with e3ect from
16 June, 2023. Based on the recommendation of the Nomination and Remuneration Committee,
the Board of Directors at their Meeting held on 8 February, 2024, considering her
expertise and experience in the varied 3elds of marketing, 3nance, management, strategy,
global business leadership, etc., re-appointed Dr. Mohua Banerjee (DIN: 08350348) as an
Independent Director of the Company, for a second term of 5 (3ve) consecutive years, with
e3ect from 8 February, 2024. The said re-appointment of Dr. Mohua Banerjee was approved by
the Members of the Company through a Resolution passed by Postal Ballot. On the
recommendation of the Nomination and Remuneration Committee of Directors vide their
meeting held on 13 May, 2024, the Board of Directors, at their meeting held on 13 May
2024, taking into account his integrity, expertise and experience appointed Dr. Ajay Kumar
(DIN: 01975789) as an Additional Director (Non-Executive and Independent) and an
Independent Director of the Company with e3ect from 13 May, 2024, for a term of 5 (3ve)
consecutive years, subject to approval of appointment and regularisation by the
Shareholders of the Company. Dr. Ajay Kumar had joined the Indian Administrative Service
in 1985. He was a PhD in Business Administration from the Carlson School of Management,
University of Minnesota. He also had M.S. in Applied Economics from the University of
Minnesota. He did his B. Tech in Electrical Engineering from the Indian Institute of
Technology (IIT), Kanpur. Dr. Kumar had served as Defence Secretary during the crucial
period between August 2019 and October 2022. He was the longest serving Secretary in
Ministry of Defence, where he also served as Secretary in Department of Defence
Production. Dr. Kumar is currently a distinguished Visiting Professor at IIT Kanpur and a
non-resident Senior Fellow at Carnegie India. He was also Founder Chairman of Mounttech
Growth Fund, a AIF Category II Venture Fund. He had a monthly editorial in Business
Standard titled "O3 the Grid" in the areas of defence, strategy, technology and
policy. He was also mentoring start-ups and industry in 3elds of technology and defence.
Mrs. Nityangi Kejriwal Jaiswal (DIN: 07129444) and Mr. Madhav Kejriwal
(DIN: 07293471) retire by rotation at the forthcoming AGM and being eligible, have o3ered
themselves for re-appointment.
In compliance with Regulation 36(3) of the Listing Regulations and
Secretarial Standard-2 on General Meetings, brief resume and other information of all the
Directors proposed to be re-appointed are given in the Notice of the forthcoming AGM.
There were no other changes in the Board and the Key Managerial
Personnel during the year.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134 of the Act, the Directors
state that: a) in the preparation of annual accounts for the Financial Year ended 31
March, 2024, the applicable accounting standards have been followed and there were no
material departures requiring any explanation; b) 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 a3airs of the
Company at the end of the Financial Year and of the pro3t of the Company for that period;
c) they have taken proper and su3cient care for the maintenance of adequate accounting
records in accordance with the provisions of the Act, for safeguarding the assets of the
Company and for preventing and detecting fraud and other irregularities; d) they have
prepared the annual accounts on a going concern' basis;
7 e) they have laid down internal 3nancial controls to be followed by
the Company and such internal 3nancial controls are adequate and are operating e3ectively;
and f) they have devised proper systems to ensure compliance with the provisions of all
applicable laws and that such systems are adequate and operating e3ectively.
INDEPENDENT DIRECTORS
Declaration by Independent Directors
Mr. Pradip Kumar Khaitan, Mr. Binod Kumar Khaitan, Mr. Amrendra Prasad
Verma, Dr. Mohua Banerjee, Mr. Rajkumar Khanna, Mr. B K Choudhury, Mr. Vyas Mitre Ralli,
Mr. Virendra Sinha and Mr. Jinendra Kumar Jain, Independent Directors, have given
declarations that they meet the criteria of independence as laid down in the Act and the
Listing Regulations. Further, in terms of Rule 8(5)(iiia) of the Companies (Accounts)
Rules, 2014, as amended, the Board of Directors state that in the opinion of the Board,
Dr. Mohua Banerjee, whose re-appointment as Independent Director of the Company has been
approved by the Shareholders during the year, is a person of integrity and possesses
relevant expertise and experience.
DETAILS OF BOARD COMMITTEES AND ADOPTION OF POLICIES
There are 7 Board Committees as on 31 March, 2024, viz., Audit
Committee, Nomination and Remuneration Committee, Stakeholders' Relationship
Committee, Corporate Social Responsibility Committee, Risk Management Committee, Banking
and Authorisation Committee and Governance Committee.
The details of composition, terms of reference and meetings held and
attended by the Committee members of Audit Committee, Nomination and Remuneration
Committee, Stakeholders' Relationship Committee, Corporate Social Responsibility
Committee and Risk Management Committee are provided in the Corporate Governance Report,
annexed as Annexure 3 to this Report.
The Banking and Authorisation Committee comprised of Mr. Binod Kumar
Khaitan as the Chairman, with Mr. Mayank Kejriwal, Mr. Uddhav Kejriwal and Mr. Ashutosh
Agarwal as its members as on 31 March 2024. The terms of reference for the Committee
include taking various decisions pertaining to the opening or closing of bank and demat
accounts of the Company, change in authorised signatories for operation of di3erent bank
and demat accounts, subscribing/ purchasing/selling/dealing in securities of Companies
other than related parties and availing broking services, making loans from time to time
to Subsidiary Companies/Joint Ventures/Associates for its working capital requirement,
giving guarantee or providing security to any bank in connection with fund based/non-fund
based facilities including loan(s) made to Subsidiary Company/Joint Venture/Associate
Company by such bank and any other work related to day-to-day operations of the Company.
The Governance Committee comprised of Mr. Binod Kumar Khaitan as the
Chairman, with Mr. Sunil Katial and Dr. Mohua Banerjee, as its members as on 31 March,
2024. The terms of reference for the Committee, inter-alia, include formulating a
governance policy and recommending it to the Board for approval, assisting the Board in
its ongoing oversight of the quality of governance in the Company and its subsidiaries,
monitoring the developments in governance practices of the Company and its subsidiaries
and report appropriately to the Board, with recommendations, advising the Board or any
Committees of the Board of any corporate governance issues in the Company and its
subsidiaries, which the Committee determines has a negative impact on the Company's
ability to safeguard or improve shareholder value and carrying out any other function as
is decided by the Board of Directors of the Company from time to time.
There have been no instances where the Board has not accepted the
recommendations of any of its committees.
Vigil Mechanism Policy
The Company has adopted Whistle Blower Policy and established a Vigil
Mechanism in compliance with provisions of the Act and the Listing Regulations for the
Directors and employees to report genuine concerns and grievances and leak/suspected leak
of Unpublished Price Sensitive Information. This mechanism provides adequate safeguards
against victimisation of employees and Directors and also provides for direct access to
the Chairperson of the Audit Committee. The Company oversees the vigil mechanism through
the Audit Committee of the Company. The said Policy is available at the Company's
website and can be accessed at
https://www.electrosteel.com/admin/pdf/1613636847Vigil-Mechanism-Whistle-Blower-Policy.pdf.
Nomination and Remuneration Policy
The Board has adopted a Nomination and Remuneration Policy recommended
by Nomination and Remuneration Committee in terms of the provisions of Section 178 of the
Act and Regulation 19 of the Listing Regulations, read with Part D of Schedule II thereto.
The Policy governs the criteria for determining quali3cations, positive attributes and
independence of a Director and lays down the remuneration principles for Directors, Key
Managerial Personnel and other employees. The Policy aims to enable the Company to
attract, retain and motivate highly quali3ed members for the Board, Key Managerial
Personnel (KMP) and other employees. It enables the Company to provide a well-balanced and
performance-related compensation package, taking into account shareholder interests,
industry standards and relevant Indian corporate regulations. The policy ensures that the
interests of Board members, KMP & employees are aligned with the business strategy and
risk tolerance, objectives, values and long-term interests of the Company and will be
consistent with the "pay-for-performance" principle and the remuneration to
directors, KMP and employees and involve a balance between 3xed and incentive pay
re3ecting short and long-term performance objectives appropriate to the working of the
Company and its goals. The policy lays down the procedure for the selection and
appointment of Board Members and KMP and also the appointment of executives other than
Board Members, compensation structure for Executive Directors, Non-Executive Directors,
KMP and other employees.
The Nomination and Remuneration Policy is available at the
Company's website and can be accessed at https://www.
electrosteel.com/admin/pdf/1608020082nominationRemunerationPolicy.pdf.
Corporate Social Responsibility Policy
In accordance with the requirements of Section 135 of the Act, read
with the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, the
Company has a Corporate Social Responsibility (CSR') Committee in place. The
CSR Committee has formulated and recommended to the Board, the Corporate Social
Responsibility Policy of the Company which has been approved by the Board. The Annual
Report on CSR activities/initiatives which includes the contents of the CSR Policy,
composition of the Committee and other particulars as speci3ed in Section 135 of the Act,
read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended,
are disclosed in Annexure 4 to this Report.
Policy on Board Diversity and Succession Planning for the Board of
Directors and Senior Management
A Policy on Board Diversity and Succession Planning for the Board of
Directors and Senior Management as devised by the Nomination and Remuneration Committee is
in place, to ensure adequate diversity in the Board of Directors of the Company and for
orderly succession for appointments on the Board of Directors and Senior Management.
FORMAL ANNUAL EVALUATION OF PERFORMANCE
The Nomination and Remuneration Committee of the Board has formulated
and laid down Criteria and Manner for Evaluation of Performance of the Board, its
Committees and individual Directors pursuant to provisions of Section 178 of the Act and
Listing Regulations. As per requirements of Section 134 of the Act, the manner in which
formal annual evaluation has been made is disclosed below A. The Board evaluated the
roles, functions and duties performed by the Independent Directors (IDs) of the Company.
Each ID was evaluated by all other Directors but not by the Director being evaluated. The
Board also reviewed the manner in which IDs follow guidelines of professional conduct as
speci3ed in Schedule IV to the Act. The adherence to Section 149 of the Act, the aforesaid
Schedule IV, the Listing Regulations and other applicable provisions of law by the IDs
were also reviewed by the Board.
B. Performance review of all the Non-Independent Directors of the
Company was made on the basis of the activities undertaken by them, expectations of Board,
level of participation, roles played by them, leadership qualities and their overall
performance and contribution in the development and growth of the business and operations
of the Company.
C. The Board evaluated the performance of its Committees on the basis
of the processes and procedures followed by them for discharging their functions &
duties as per their respective terms of references and as assigned by the Board and laws
applicable, their independence from the Board and on the e3ectiveness of the suggestions
and recommendations made by them to the Board. The Board observed the size, structure and
expertise of the Committees to be appropriate and in compliance with the Act and the
Listing Regulations.
D. The Board evaluated its own performance on the basis of its
composition having the right mix of knowledge, skills and expertise required to drive
organisational performance and conduct of its a3airs e3ectively, monitoring of
Company's performance along with the ability to understand and deal with factors
having a signi3cant bearing, developing suitable strategies and business plans at
appropriate time and monitoring its e3ectiveness, implementation of policies and
procedures for proper functioning of the Company, frequency of its meetings, e3orts made
by the Board Members to keep themselves updated with the latest developments in areas.
The evaluation of performance of Board, it's Committees and of
individual Directors was found to be highly satisfactory. Meeting of Independent
Directors: The Independent Directors of the Company have on 8 February, 2024 held a
separate meeting without the attendance of Non-Independent Directors and members of the
management for evaluation of the performance of Non-Independent Directors, the Board as a
whole and Chairman of the Company and for consideration of such other matters as required
under the provisions of the Act and the Listing Regulations.
DISCLOSURE RELATING TO REMUNERATION OF DIRECTORS, KEY MANAGERIAL
PERSONNEL (KMP') AND PARTICULARS OF EMPLOYEES
The statement pertaining to particulars of employees including their
remuneration as required to be reported under the provisions of Section 197(12) of the
Act, read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 [including any statutory modi3cation(s) or
re-enactment(s) thereof, for the time being in force] (the Rules) are provided in Annexure
5A to this Report. However, as per the provisions of Section 136 of the Act, the
Reports and Accounts for the Financial Year 2023-24 are being sent to the Members and
others entitled thereto, excluding this statement. The said statement is available for
inspection by the members at the Registered O3ce of the Company during business hours on
working days up to the date of the ensuing Annual General Meeting. If any member is
interested in obtaining a copy thereof, such member may write to the Company Secretary,
whereupon a copy would be sent.
The disclosures as required under Section 197(12) of the Act, read with
Rule 5(1) of the Rules are provided in Annexure 5B to this Report.
AUDITORS AND AUDITORS' REPORT
M/s. Lodha & Co. LLP, Chartered Accountants (Firm Registration
Number: 301051E/E300284), were appointed as the Statutory Auditors of the Company to hold
o3ce from the conclusion of the 67th Annual General Meeting (AGM') till the
conclusion of the 72nd AGM of the Company.
The para wise responses of the management to the
opinion/remarks/observations made in the Independent Auditors'
Report on the 3nancial statements of the Company for the year ended 31
March, 2024 are given below:
1. As regards the Quali3ed Opinion expressed by the Auditors in their
Report under para (a) under the head Basis for Quali3ed Opinion' and its
consequential references made in para nos. 2 (d), (e), (g) and 3 (i) under the head
Report on Other Legal and Regulatory Requirements' of their Report and para
(I)(b) and (II)(a) of the Annexure A to the Auditors' Report of even date, attention
is drawn to Note no. 49(a) of the Standalone Financial Statements, which are
self-explanatory; and
2. With respect to the Quali3ed Opinion expressed by the Auditors in
their Report under para (b) under the head Basis for Quali3ed Opinion',
attention is drawn to Note no. 9.1 of the Standalone Financial Statement, which are
self-explanatory; and
3. On the Auditors' observation made in para (I)(a) of the
Annexure A to the Auditors' Report of even date, your Directors wish to inform that
all necessary steps are being taken to regularise the maintenance of proper records for
furniture and 3xtures.
During the year under review, the Auditors had not reported any fraud
under Section 143(12) of the Act, therefore, no detail is required to be disclosed under
Section 134(3)(ca) of the Act.
MAINTENANCE OF COST RECORDS AND AUDIT THEREOF
The Company is required to maintain cost records for Pig Iron, DI Pipe,
DI Fittings, CI Pipe, Coke, Sponge Iron, Power Generating units and Ferro Alloy Products
Prime Si. Mn and Prime Ferro Silicon for every Financial Year, as speci3ed by the
Central Government under Section 148(1) of the Act, and accordingly, such accounts and
records are made and maintained in the prescribed manner. Further, pursuant to Section 148
of the Act, read together with the Companies (Cost Records and Audit) Rules, 2014, as
amended, the Company is required to carry out audit of the cost accounting records of the
Company. M/s. S G & Associates (Firm Registration Number: 000138), Cost Accountants,
and M/s. Narasimha Murthy & Co., Cost Accountants (Firm Registration Number: 000042)
were appointed as the joint Cost Auditors of the Company for Financial Year 2023-24.
The Cost Audit Report for the Financial Year 2022-23 was 3led on 7
September, 2023.
For Financial Year 2024-25, M/s. S G & Associates, Cost
Accountants, and M/s. Narasimha Murthy & Co., Cost Accountants have been re-appointed
as joint Cost Auditors for all the applicable units and products of the Company. The
remuneration proposed to be paid to them for the Financial Year 2024-25 requires
rati3cation of the shareholders of the Company. In view of this, the rati3cation for
payment of remuneration to the Cost Auditors is being sought at the ensuing AGM
SECRETARIAL AUDITOR
In terms of Section 204 of the Act and Rules framed thereunder, M/s MKB
& Associates., Company Secretaries, were appointed to conduct the Secretarial Audit of
the Company for the Financial Year 2023-24. The report of the Secretarial Auditor is
annexed as Annexure 6 to this Report. The Secretarial Audit Report does not contain
any quali3cation, reservation or adverse remark.
INTERNAL AUDITOR
In terms of the provisions of Section 138 of the Act, M/s. Chaturvedi
& Co. were appointed as the Internal Auditor of the Company for the Financial Year
2023-24. The Audit Committee, in consultation with the Internal Auditor, formulates the
scope, functioning, periodicity and methodology for conducting the Internal Audit. The
Audit Committee, inter-alia, reviews the Internal Audit Reports.
The Board of Directors of the Company, at their Meeting held on 13 May,
2024 have re-appointed M/s Chaturvedi & Co. as the Internal Auditor of the Company for
the Financial Year 2024-25 on the recommendation of the Audit Committee of
Directors of the Company under the provisions of Section 138 of the
Companies Act, 2013.
PUBLIC DEPOSITS
During the Financial Year 2023-24, the Company has not accepted any
deposit within the meaning of Sections 73 and 76 of the Act, read together with the
Companies (Acceptance of Deposits) Rules, 2014.
LOANS, INVESTMENTS, GUARANTEES & SECURITIES
The particulars of loans, guarantees and investments covered under the
provisions of Section 186 of the Act are given in Note no. 56.1 to the Standalone
Financial Statements of the Company.
ANNUAL RETURN
Pursuant to Section 92(3), read with Section 134(3)(a), of the Act, a
copy of the Annual Return of the Company as on the Financial Year ended 31 March, 2023, in
Form No. MGT-7, can be accessed on the website of the Company, at https://www.
electrosteel.com/investor/shareholder-information-annual-return.php Further, pursuant to
Section 92(3) of the Act, the Annual Return of the Company as on the Financial Year ended
31 March, 2024, is uploaded on the website of the Company, at
https://www.electrosteel.com/investor/shareholder-information-annual-return.php
BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT
The Business Responsibility & Sustainability Report as per
Regulation 34 of the Listing Regulations, detailing the various initiatives taken by the
Company on the environmental, social and governance front, is annexed as Annexure 7 to
this Report.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
(PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013
The Company has in place a Policy in line with requirements of the
Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act,
2013. In compliance with the provisions of the said Act, an Internal Complaints Committee
is in place to redress complaints received regarding sexual harassment. The Company has
not received any complaint of sexual harassment during the Financial Year 2023-24.
RELATED PARTY TRANSACTIONS
The Company has entered into contracts/arrangements with the related
parties during the Financial Year 2023-24, which were in the ordinary course of business
and on arm's length basis. Thus, provisions of Section 188(1) of the Act were not
applicable on the Company and the disclosure in Form AOC-2 is not required. However, your
attention is drawn to the Related Party disclosure in Note no. 56 of the Standalone
Financial Statements.
The Board has approved a policy for Related Party Transactions which
has been hosted on the website of the Company. The web-link for the same is
electrosteel.com/admin/pdf/1608020034Related-Party-Transaction-Policy.pdf. The Related
Party Transactions, wherever necessary, are carried out by the Company as per this Policy.
There were no materially signi3cant related party transactions entered
into by the Company during the year, which may have a potential con3ict with the interest
of the Company at large.
RISK MANAGEMENT POLICY
The Company has a well-established Risk Management Policy to identify
and evaluate business risks. This framework seeks to create transparency, minimise adverse
e3ect on the business objectives and enhance Company's competitive advantage. The key
business risks identi3ed by the Company are economic risk, competitor risk, industry risk,
environment risk, operational risk, foreign exchange risk, etc., and it has proper
mitigation process for the same. The Audit Committee reviews this policy and evaluates the
risk management systems of the Company, periodically. A statement indicating development
and implementation of Risk Management Policy for the Company including identi3cation of
elements of risk, if any, is provided as a part of Management Discussions & Analysis
Report at Annexure 1 which forms a part of this Report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS & OUTGO
The prescribed particulars of Conservation of Energy, Technology
Absorption and Foreign Exchange Earnings & Outgo required to be disclosed under
Section 134 of the Act, read with Rule 8 of the Companies (Accounts) Rules, 2014, is
annexed as Annexure 8 and forms a part of this Report.
DISCLOSURE ON THE COMPLIANCE OF SECRETARIAL STANDARDS
The Company is compliant with the Secretarial Standards issued by the
Institute of Company Secretaries of India on Meetings of the Board of Directors (SS-1) and
General Meetings (SS-2).
OTHER DISCLOSURES
During the year under review: i) The Company had not entered into any
one-time settlement with any Bank or any Financial Institution. ii) Pursuant to a
settlement arrived in respect of Company's Joint Venture, Domco Private Limited (DPL)
for carrying out mining of Coal in Jharkhand, investment in Equity shares of DPL amounting
to Rs. 30.00 lakhs and advance of Rs. 700.00 lakhs given to them, being no longer
recoverable, had been written o3. Consequent to the said settlement, Arbitration and other
proceedings by or against the Company had been withdrawn and DPL ceases to be a Joint
Venture of the Company as noted by the Board of Directors at their meeting held on 9
August, 2023. iii) The Board of Directors at their meeting held on 9 November 2023 had
approved the proposal for setting up of a 12 TPD Rubber Gasket Plant at Punganur, Chittor
District, Andhra Pradesh. iv) The Company carried out repairs and maintenance of its Blast
Furnace at its Khardah Unit from 24.11.2023 to 16.01.2024. v) The Board of Directors, at
their meeting held on 13 May 2024, had approved the capacity enhancement of DI Pipe
production plant from 5.5 Lakh Tonnes Per Annum (LTPA) to 6.5 LTPA in its Srikalahasthi
Works. vi) The Board of Directors, at their meeting held on 13 May 2024, had approved the
proposal for setting up a Ductile Iron Pipes & Fittings Plant in Odisha and for the
purpose, to acquire approx. 500 acres of land parcel which would result in increase in
capacity of the unit in phases.
ACKNOWLEDGEMENT
Your Directors record their sincere appreciation for the assistance and
co-operation received from the banks, 3nancial institutions, Government authorities, and
other business associates and stakeholders. Your Directors also wish to place on record
their deep sense of appreciation for the committed services by the Company's
executives, sta3 and workers.