Dear Members,
Your Directors take pleasure in presenting the Sixty Eighth Annual Report together with
Audited Annual Financial Statements (including Audited Consolidated Financial Statements)
of the Company for the Financial Year ended 31 March, 2023.
FINANCIAL RESULTS
(Rs. in Crore)
Particulars |
Standalone |
Consolidated |
|
FY 2022-23 |
FY 2021-22 |
FY 2022-23 |
FY 2021-22 |
|
|
|
|
|
Revenue from Operations |
6916.00 |
5014.82 |
7275.51 |
5280.95 |
Earnings Before Interest, Taxes, Depreciation, Amortisation and
Exceptional Item |
819.04 |
716.45 |
822.49 |
753.65 |
Less: Finance Costs |
272.24 |
185.27 |
285.89 |
194.68 |
Less: Depreciation and Amortisation Expense |
114.02 |
112.58 |
121.20 |
114.68 |
Profit Before Exceptional Item & Tax |
432.78 |
418.60 |
415.40 |
444.29 |
Less: Exceptional Item |
|
|
- |
- |
Profit / (Loss) Before Tax |
432.78 |
418.60 |
415.40 |
444.29 |
Less: Tax Expense |
98.02 |
93.00 |
99.17 |
96.72 |
Profit / (Loss) After Tax |
334.76 |
325.60 |
316.23 |
347.57 |
Share of Profit / (Loss) in Associates and Joint Ventures |
|
|
- |
- |
Profit / (Loss) After Tax including share of Associate and Joint Ventures |
334.76 |
325.60 |
316.23 |
347.57 |
Attributable to: |
|
|
|
|
Owners of the Company |
|
|
315.80 |
347.28 |
Non-Controlling Interest |
|
|
0.43 |
0.29 |
Other Comprehensive Income (Net of Tax) |
(29.16) |
52.20 |
(13.67) |
57.04 |
Total Comprehensive Income |
305.60 |
377.80 |
302.56 |
404.61 |
Attributable to: |
|
|
|
|
Owners of the Company |
|
|
302.13 |
404.32 |
Non-Controlling Interest |
|
|
0.43 |
0.29 |
Opening balance in Retained Earnings |
1696.19 |
1396.18 |
1773.28 |
1452.80 |
Closing Balance in Retained Earnings |
1981.09 |
1696.19 |
2038.98 |
1773.28 |
DIVIDEND
The Directors are pleased to recommend a dividend of Re. 0.90 per Equity Share of face
value of Re. 1 each for the Financial Year ended 31 March, 2023. 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 dividend for the Financial Year
2022-23 would amount to Rs. 53.51 Crore.
The Company had declared dividend of Re. 0.80 per Equity Share of face value of Re. 1
each for the Financial Year ended 31 March, 2022.
The dividend recommended is in accordance with the Dividend Distribution Policy of the
Company. The Dividend Distribution Policy of the Company is also 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. 14,79,907 (Rupees Fourteen Lakh Seventy-Nine Thousand Nine
Hundred and Seven Only) to the IEPF and the SW unit (erstwhile Srikalahasthi Pipes
Limited, which got merged with and into Electrosteel Castings Limited) has transferred
Rs.10,89,456 (Rupees Ten Lakh Eighty-Nine Thousand Four Hundred and Fifty-Six Only) to the
IEPF, during the Financial Year 2022-23, being unpaid/unclaimed dividend amounts relating
to the Financial Year 2014-15.
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, 2022 (as on the date
of closure of previous financial 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, 70,287 Equity Shares of ECL and 8,606 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
201415 and onwards, has been transferred to the Demat Account of the IEPF Authority
maintained with National Securities Depository Limited, during the Financial Year 2022-23
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 profit in the Profit & Loss
Account.
OPERATIONS
During the year under review, the production of Ductile Iron (DI) Pipes was 715,129 MT,
as against 603,751 MT in the previous year. The production of Cast Iron (CI) Pipes was
26,588 MT in 2022-23 as against 19,049 MT in the previous year.
The Financial year 2022-23 was another challenging year for our Organisation in the
perspective of significant increase and fluctuations in input material prices like Coal,
Iron Ore and Consumables. On the other hand, old orders of DI Pipes have impacted our
profitability as the cost of production went up but the selling prices remained unchanged.
However, selling prices for Exports have supported improvement in profitability. All the
management cadres, frontline employees and factory workers of the Organisation have put up
a strong show to minimise impact of the global crisis.
The Company produced DI Fittings & Accessories of 20,343 MT in 2022-23 as against
20,684 MT in 2021-22. Both Khardah and Haldia Fitting Units have demonstrated a strong
performance.
As a standard practice, various initiatives have been taken further for improvement in
the current Financial Year, also taking care of variety and quantity of products in both
domestic & export markets.
As a continual improvement, the Company is focused on improvement in production of new
range of products, productivity, quality, cost reduction, energy conservation and human
resource management. Further, to meet and improve upon the expectations of both
International and Domestic customers, the Company has continued its activities towards
development and to add a number of product variants to its existing product base.
MATERIAL CHANGES AND COMMITMENTS
There has been no material changes and commitments affecting the financial position of
the Company which have occurred between the end of the financial year of the Company to
which the financial 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 affairs 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 2022-23, and is annexed as Annexure 1.
FUTURE PROSPECTS
Since the economic liberalisation in the nineties, the Indian economy is growing at an
enviable rate and at present it is one of the fastest growing economies in the world. A
steady growth in Gross Domestic Product has been witnessed for more than two decades. This
sustained economic growth has led to rapid urbanisation all over India. As a result,
villages are turning into towns, towns into cities and cities into megacities. Water, the
need of life, is likely to pose the greatest challenge on account of an increased demand
with population rise and economic development, and shrinking supplies due to
over-exploitation and pollution. The ever growing demand for water supply and disposal is
fuelling an increasing demand for pipes and fittings, the basic medium to convey water and
waste water.
The growth acceleration for the domestic DI Pipe Industry is largely coming from the
water and sewerage infrastructure development in Indian urban, sub-urban and rural sector.
With only around 31% of India's population currently urbanised, along with high population
density, India's urbanisation trends have scope to significantly accelerate and likely to
be around 40% by 2030. Further, the country faces immense problems of drinking water
supply and has poor transmission and distribution networks for water. Alongside only about
one-third of the Indian homes are connected with a sewerage network. Use of DI pipes and
fittings in Piped irrigation system is another demand driver. To cater this growing need,
the Indian pipe market is growing at the rate of 10%-12% every year for more than a decade
now.
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. 59,46,05,247/- comprising of 59,46,05,247
Equity Shares of Re. 1.00 each. During the year under review, the Company has not issued
shares with differential 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.
Pursuant to the approval of the Board of Directors at its meeting held on 11 November
2022 and 22 November, 2022 and approval of the members of the Company by way of Postal
Ballot on 23 December 2022, upon receipt of 25% of the issue price of Rs 42.41 per
Warrant, the Company has, on 27 December 2022, issued 2,35,79,344 warrants to promoter /
promoter group for cash, aggregating to Rs. 24.99 crores, with a right to the Warrant
Holders to apply for and be allotted 1 (one) Equity Share of face value of Re. 1/- each of
the Company within a period of 18 (Eighteen) months from the date of allotment.
CREDIT RATING
During the year, India Ratings and Research (Ind-Ra) has affirmed the Company's
Long-Term Issuer Rating of IND A+' and Short-Term borrowings of "IND A1+".
The Outlook was Stable.
CRISIL Ratings has upgraded its rating on the short-term bank facilities to
CRISIL A1+' from CRISIL A1' and reaffirmed its CRISIL A+' rating on the
long-term bank facilities. The outlook has been revised to Positive' from
Stable'.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS / COURTS / TRIBUNALS
During the year under review, there were no significant or material orders passed by
the regulators or courts or tribunals impacting the going concern status and the Company's
operations in future except as mentioned below:
1. In pursuance of the Order dated 24 September, 2014 issued by the Hon'ble Supreme
Court of India (the Order) followed by the Ordinance promulgated by the Government of
India, Ministry of Law & Justice (legislative department) dated 21 October, 2014
(Ordinance) for implementing the Order, allotment of Parbatpur coal block (coal
block/mines) to the Company, had been cancelled w.e.f. 01 April, 2015. In terms of the
Ordinance, the Company was allowed to continue the operations in the said block till 31
March, 2015. Accordingly, the said block had been handed over to Bharat Coking Coal
Limited (BCCL) as per the direction from Coal India Ltd. (CIL) with effect from 01 April,
2015 and the same had been subsequently allotted to Steel Authority of India Limited
(SAIL). The Company understands that SAIL has surrendered the said coal block and handed
over the custody back to BCCL. The Ministry of Coal ("MoC") had once again put
up the Parbatpur Coal Block in the list of mines to be auctioned (for commercial mining)
and JSW Steel Limited has been declared as highest successful bidder for Parbatpur coal
block vide notification dated 28 March, 2023. It is significant to note that the Company
will receive the compensation amount from the new successful bidder, when it is declared
by MoC.
Following a petition filed by the Company, the Hon'ble High Court at Delhi had
pronounced its judgement on 09 March, 2017. Accordingly based on the said judgement, the
Company had claimed Rs. 1,53,176 lakhs, which was revised to Rs. 1,54,944 lakhs, towards
compensation against the said coal block, acceptance whereof is awaited. Aggrieved due to
delay in acceptance of claim and on a petition filed by the Company, the Hon'ble High
Court had directed the Nominated Authority appointed under Ministry of Coal to determine
the compensation. Earlier the Nominated Authority had upheld its decision of compensation
of Rs. 8,312 Lakhs already paid and the same was set aside by the Hon'ble High Court with
a direction to the Nominated authority to reconsider. The Nominated Authority further
passed an order dated 11 November, 2019 awarding an additional compensation of Rs. 180
lakhs and with a further direction to re-determine the value of certain assets by
appropriate authority. The newly appointed Nominated Authority had appointed a valuer to
determine the value of those specified assets as per the direction of previous Nominated
Authority dated 11 November, 2019 and the process of declaration of final valuation is
under progress as per the available information. The Company has also approached the newly
appointed Nominated Authority, MoC, to similarly reconsider the compensation determined by
the previous Nominated Authority, for land and some other major assets, which is pending
at the Ministry. Meanwhile, the Company is also exploring other possibilities.
2. Electrosteel Castings Limited (ECL) as a then promoter of Electrosteel Steels
Limited (ESL) mortgaged its Factory Land at Elavur for securing debt of ESL availed from
SREI Infrastructure Finance Ltd (SREI).
In the month of June, 2017, State Bank of India (SBI), one of the lenders of ESL, filed
a petition before National Company Law Tribunal (NCLT), Kolkata, for the initiation of
Corporate Insolvency Resolution Process (CIRP) of ESL under the Insolvency and Bankruptcy
Code (IBC). Hon'ble NCLT, Kolkata, vide an order dated 21 July, 2017 admitted the petition
and initiated CIRP of ESL.
As a part of CIRP, Vedanta Limited (Vedanta) was declared as the successful resolution
applicant, as their resolution plan was unanimously voted upon by the Committee of
Creditors of ESL. Subsequently, the resolution plan was approved by Hon'ble NCLT, Kolkata
vide an order dated 17 April, 2018.
From the stock exchange disclosures of ESL dated: 4 June, 2018, 6 June, 2018 and 21
June, 2018 about the details relating to the implementation of Resolution Plan, it is
understood that Vedanta has discharged the entire loan of ESL partly in cash and partly by
allotment of equity shares of ESL at the face value i.e. Rs. 10 per share.
After implementation of Resolution Plan of Vedanta, SREI assigned its so-called rights
in Factory Land at Elavur to UV Asset Reconstruction Company Ltd (UVARCL).
UVARCL took symbolic possession of Factory Land at Elavur on 19 June, 2019. The Company
filed a "Leave to Sue application" at Madras High Court. After hearing
Leave to Sue application' Hon'ble High Court opined that DRT has jurisdiction to
hear ECL's application.
Simultaneously, the Company has also filed an application at DRT, Chennai, challenging
the Possession Notice. DRT, Chennai, rejected ECL's application on the ground that DRT has
no jurisdiction to hear on the validity of Deed of Assignment.
The Company there upon filed an appeal at Hon'ble Madras High Court for deciding the
forum, i.e., Madras High Court or Elavur District Court or DRT who can hear the Company's
application.
The Hon'ble Madras High Court on 13 August, 2021 have opined that since UVARCL has
already initiated SARFAESI action by taking symbolic possession of the property hence, the
Company should file an application at DRT for undoing such SARFESI actions and again come
back to civil court for the release of title deeds.
To avoid multiple proceedings, the Company had filed a Special Leave Petition (SLP) at
the Hon'ble Supreme Court of India, for deciding appropriate jurisdiction.
The Hon'ble Supreme Court of India directed the Company to file application under
SARFAESI Act, against UVARCL and SREI at DRT, wherein DRT has to decide on two aspects as
under:
a. that the assignee cannot be said to be secured creditor so far as the appellant
(i.e. Electrosteel Castings Limited) is concerned;
b. that there is no amount due and payable by the plaintiff appellant (i.e.
Electrosteel Castings Limited) herein on the ground that in view of the proceedings under
IBC against the corporate debtor (i.e. Electrosteel Steels Limited) and the corporate
debtor being discharged after the approved resolution plan, there shall not be any
enforceable debt against the appellant.
The Company immediately filed an application before DRT, Chennai.
DRT, Chennai dismissed the Company's application on 8 April, 2022. The dismissal order
was uploaded on website on 27 April, 2022. The Company immediately filed an appeal before
DRAT Chennai. On pre-deposit, DRAT, Chennai was of view that at admission stage DRAT
cannot go into merits, i.e., validity of debt and validity of demand in demand notice and
directed ECL to deposit 50% of SARFAESI Demand Notice amount, i.e., Rs 293.00 Crores
(approximately) as pre-deposit with DRAT for the admission of Appeal.
On Pre-deposit, ECL filed revision and Writ application at Madras High Court.
The matter is pending before Madras High Court.
3. In FY:2021-22, UV Asset Reconstruction Company Limited (UVARCL) had filed an
application before NCLT, Cuttack for initiation of Corporate Insolvency and Resolution
Process (CIRP) against the Company at NCLT, Cuttack. NCLT, Cuttack registry vide email
dated 12 June, 2021 informed the Company about such filing. 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 thirdparty
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 has filed an appeal before NCLAT. The matter is pending before NCLAT.
4. In April, 2006 the Company had applied to South Eastern Railway (SER) for investment
in the wagons as per the Wagon Investment Scheme (WIS) of Railways. In April, 2007, SER
issued NOC for investment in 2 rakes. Agreement for WIS was executed in January, 2008 with
SER. Accordingly, the Company was guaranteed with supply of certain minimum number of
rakes along with rebate in freight.
Subsequently, Railways changed its policy and the Company being deprived of the
availability of the wagons as per WIS had terminated the Agreement with SER. Arbitration
award pursuant to the claim for compensation for losses/ damages has been allowed in
favour of the Company. SER challenged the said award at Hon'ble Calcutta High Court and
the matter is currently pending before Hon'ble High Court.
Pending decision of the Hon'ble High Court, Rs. 252.85 Crores deposited by SER in
respect of said award has been allowed to be withdrawn by the Company on submission of
Bank Guarantee.
Subsequent to the balance sheet date, the said amount has been withdrawn and kept in
fixed deposit.
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 financial
reporting, compliance with policies, procedures, laws, and regulations, safeguarding of
assets and economical and efficient 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/effectiveness 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 efficacy 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, notified 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, 2023:
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 |
11. |
Domco Private Limited |
Joint Venture |
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 financial statements of
subsidiaries, associate companies and joint ventures in Form AOC-1, for the Financial Year
ended 31 March, 2023, 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 Certificate from the
Auditors confirming 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 2022-23, 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
Mr. Shermadevi Yegnaswami Rajagopalan (DIN: 00067000), Independent Director has
resigned from the Board of Directors of the Company, with effect from 31 December, 2022,
due to his advanced age. The Board places on record its appreciation and gratitude for the
valuable contributions made by him during his tenure as Director on the Board of the
Company.
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 14 February,
2023, vide Postal Ballot Notice dated 14 February, 2023, have
1) re-appointed Mr. Sunil Katial (DIN: 07180348) as the Chief Executive Officer and
Whole- time Director of the Company for a term of 3 consecutive years with effect from 1
April, 2023,
2) appointed Mr. Jinendra Kumar Jain (DIN: 00737352) as an Independent Director of the
Company, for a term of 5 (five) consecutive years, with effect from 14 February, 2023.
Mr. Ashutosh Agarwal (DIN: 00115092) and Mrs. Radha Kejriwal Agarwal (DIN: 02758092)
retire by rotation at the forthcoming AGM and being eligible, have offered 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.
The Board of Directors has on the recommendation of Nomination & Remuneration
Committee (NRC), re-appointed Mr. Uddhav Kejriwal (DIN: 00066077), as the Whole-time
Director of the Company for a period of 3 (three) consecutive years with effect from 16
June, 2023, subject to the approval of the Members of the Company.
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, 2023,
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 affairs of the Company at the end of the Financial Year and of the profit
of the Company for that period;
c) they have taken proper and sufficient 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;
e) they have laid down internal financial controls to be followed by the Company and
such internal financial controls are adequate and are operating effectively; 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 effectively.
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, Mr. Jinendra Kumar
Jain, whose 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. Further, Mr. Jain has successfully qualified the online proficiency
self-assessment test conducted by the Indian Institute of Corporate Affairs.
DETAILS OF BOARD COMMITTEES & ADOPTION OF POLICIES
There are 7 Board Committees as on 31 March, 2023, 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. Shermadevi Yegnaswami Rajagopalan, Mr. Mayank Kejriwal and Mr. Uddhav
Kejriwal as its members as on 31 December, 2022. Pursuant to the resignation of Mr.
Shermadevi Yegnaswami Rajagopalan with effect from 31 December, 2022, the Banking and
Authorisation Committee was reconstituted with Mr. Binod Kumar Khaitan as the Chairman,
and Mr. Mayank Kejriwal, Mr. Uddhav Kejriwal and Mr. Ashutosh Agarwal as its members with
effect from 14 February, 2023 which remains the same as on 31 March, 2023. 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 different 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, 2023. 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-MechanismWhistle-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 qualifications, 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 qualified
members for the Board, Key Managerial Personnel (KMP) and other employees. It enables the
Company to provide a well-balanced and performancerelated 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 involve a balance between fixed and incentive pay reflecting 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 specified 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 specified 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 effectiveness 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 affairs effectively, monitoring of Company's performance along with the
ability to understand and deal with factors having a significant bearing, developing
suitable strategies and business plans at appropriate time and monitoring its
effectiveness, implementation of policies and procedures for proper functioning of the
Company, frequency of its meetings, efforts 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 satisfactory.
Meeting of Independent Directors: The Independent Directors of the Company have on 14
February, 2023 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 modification(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 2022-23 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 Office 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., Chartered Accountants (Firm Registration Number: 301051EE), were
appointed as the Statutory Auditors of the Company to hold office 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 financial statements of the Company for the year
ended 31 March, 2023 are given below:
1. As regards the Qualified Opinion expressed by the Auditors in their Report under
para (a) under the head Basis for Qualified 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. 48(a)
of the Standalone Financial Statements, which are selfexplanatory;
2. With respect to the Qualified Opinion expressed by the Auditors in their Report
under para (b) under the head Basis for Qualified Opinion', attention is drawn to
Note no. 9.1 of the Standalone Financial Statement, which are selfexplanatory; 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 fixtures.
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 specified 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 2022-23.
The Cost Audit Report for the Financial Year 2021-22 was filed on 7 September, 2022.
For Financial Year 2023-24, 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 2023-24 requires ratification of the shareholders of
the Company. In view of this, the ratification 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 2022-23. The report of the Secretarial Auditor is annexed
as Annexure 6 to this Report. The Secretarial Audit Report does not contain any
qualification, reservation or adverse remark.
INTERNAL AUDITOR
IIn 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 2022-23. 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 17 May, 2023 have
re-appointed M/s Chaturvedi & Co. as the Internal Auditor of the Company for the
Financial Year 2023-24 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 2022-23, 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. 54.1 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, 2022, 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, 2023, is uploaded on the website of the Company, at
https://www.electrosteel.com/investor/shareholder-informationannual-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 2022-23.
RELATED PARTY TRANSACTIONS
The Company has entered into contracts/arrangements with the related parties during the
Financial Year 2022-23, 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. 54 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 significant related party transactions entered into by the
Company during the year, which may have a potential conflict 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 effect on
the business objectives and enhance Company's competitive advantage. The key business
risks identified 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 identification 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) NCLT Cuttack, dismissed the IBC application of UV Asset Reconstruction Company Ltd
(UVARCL) by pronouncing its order in favour of the Company. UVARCL has filed an appeal
before NCLAT. The matter is pending before NCLAT and
ii) The Company had not entered into any one-time settlement with any Bank or any
Financial Institution.
ACKNOWLEDGEMENT
Your Directors record their sincere appreciation for the assistance and co-operation
received from the banks, financial 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, staff
and workers.
For and on behalf of the Board of Directors
Pradip Kumar Khaitan
Chairman
DIN: 00004821
Place: Kolkata
Date: 17 May, 2023