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Jindal Stainless (Hisar) Ltd.

BSE: 539597 Sector: Metals & Mining
NSE: JSLHISAR ISIN Code: INE455T01018
BSE 15:47 | 17 Jan 212.25 -3.10
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NSE 15:42 | 17 Jan 211.65 -3.90
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OPEN 215.35
PREVIOUS CLOSE 215.35
VOLUME 70312
52-Week high 252.00
52-Week low 94.15
P/E 18.19
Mkt Cap.(Rs cr) 5,008
Buy Price 212.25
Buy Qty 4144.00
Sell Price 0.00
Sell Qty 0.00
OPEN 215.35
CLOSE 215.35
VOLUME 70312
52-Week high 252.00
52-Week low 94.15
P/E 18.19
Mkt Cap.(Rs cr) 5,008
Buy Price 212.25
Buy Qty 4144.00
Sell Price 0.00
Sell Qty 0.00

Jindal Stainless (Hisar) Ltd. (JSLHISAR) - Director Report

Company director report

TO

THE MEMBERS

Your Directors have pleasure in presenting the 4th Annual Report on the business andoperations of your Company together with the Audited Statement of Accounts for thefinancial year ended 31st March 2017.

FINANCIAL RESULTS

Your Company's performance for the financial year ended 31st March 2017 is summarizedbelow:

Particulars

Standalone

Consolidated

Year ended 31.03.2017 Year ended 31.03.2016 Year ended 31.03.2017 Year ended 31.03.2016
Revenue from operations 7575.55 7043.64 8536.19 7991.45
Other Income 60.70 24.82 65.00 25.74
Total Income 7636.25 7068.46 8601.19 8017.19
Expenses:
Cost of material consumed 4412.34 3944.49 4974.51 4560.43
Purchase of Stock in trade 81.24 - 203.67 74.50
Changes in Inventories of finished goods stock in trade and work in progress (202.98) 150.54 (176.84) 167.42
Employee benefits expense 144.61 140.20 176.10 175.84
Excise Duty Expenses 685.74 673.90 761.71 756.84
Finance costs 411.93 469.40 431.41 493.35
Depreciation and amortisation expense 265.24 285.00 285.23 304.81
Stores and Spares consumed 424.73 415.87 435.19 431.28
Power & Fuel 626.82 617.14 633.78 623.78
Other expenditure 478.75 296.85 547.19 340.07
Total Expenses 7328.42 6993.39 8271.95 7928.32
Profit/(Loss) before exceptional Items and tax 307.83 75.07 329.24 88.87
Share of ProfitZ(Loss) of an Associate - - 50.25 (1.17)
Exceptional items - Gain /(Loss) 18.02 (44.96) 28.27 (44.17)
Profit /(Loss) after exceptional items but before tax 325.85 30.11 407.76 43.53
Tax expense 107.83 5.28 117.07 7.08
Net profit / (Loss) for the year before non controlling interest 218.02 24.83 290.69 36.45
Non Controlling interest - - 3.83 (0.01)
Net Profit / (Loss) for the year 218.02 24.83 286.86 36.46
Other Comprehensive Income:
Items that will not be reclassified to profit / (loss) (3.44) (1.38) (3.97) (1.43)
Income tax relating to items that will not be reclassified to profit / (loss) 1.19 0.48 1.37 0.49
Share in Associate (Other Comprehensive Income) - - (0.16) 0.25
Non Controlling Interest (Other Comprehensive Income) - - 0.08 0.01
Total Other Comprehensive Income (2.25) (0.90) (2.68) (0.68)
Total Comprehensive Income for the year (comprising Profit / (Loss) and other Comprehensive Income for the year) 215.77 23.93 284.18 35.78

FINANCIAL HIGHLIGHTS

The Company has adopted Indian Accounting Standards (Ind AS) prescribed under Section133 of the Companies Act 2013 read with the Companies (Accounting Standard) Rules 2015as amended w.e.f. April 1 2016 and the above results have been prepared in compliancewith Ind AS. Ind AS has replaced the existing Indian GAAP prescribed under Section 133 ofthe Companies Act 2013 read with Rule 7 of Companies (Accounts) Rules 2014.

The financial results for the year ended March 31 2016 have been restated to complywith Ind AS to make them comparable.

Financial year 2016-17 witnessed a very strong financial performance from the Companyresulting in significantly improved EBITDA numbers. Internal productivity and efficiencyimprovement measures have resulted in higher delivery volumes and considerable costbenefits.

During financial year ended 31st March 2017 the Gross Revenue from operations of yourCompany on standalone basis was Rs. 7576 Crore as compared to Rs. 7044 Crore duringprevious financial year 2015-16. Total Income from Operations (net) for the financial yearended 31st March 2017 is Rs. 6890 Crore as compared to Rs. 6370 Crore during previousfinancial year. EBIDTAfor the financial year ended 31st March 2017 stood at Rs. 924 Croreas compared to Rs. 805 Crore during previous financial year.

The Profit after Tax on standalone basis stood at Rs. 218 Crore as compared to Rs. 25Crore during previous financial year.

Further during financial year ended 31st March 2017 the total consolidated revenuefrom operations (net) during the year was Rs. 7774 Crore as against Rs. 7235 Crore. TheEBIDTA on consolidated basis was Rs. 981 Crore as against Rs. 861 Crore during previousfinancial year. The net profit on consolidated basis during the year was Rs. 291 Crore asagainst net profit of Rs. 36 Crore during previous financial year.

The world economy is expected to revive in 2017 after a muted growth in 2016.International Monetary Fund (IMF) estimates increased global economic growth at 3.5% in2017 from 3.1% in 2016. Economic activity is likely to gain momentum with robust demandcoupled with buoyant financial markets. Economic sentiment across world economy is seenrecovering but US policy uncertainty poses a concern.

Growth in emerging markets including India will remain muted. IMF projects slowergrowth in Indian economy against the backdrop of demonetisation with GDP growth rateestimates being revised to 7.2 % from 7.4 % for 2017-18. Further outlook for the Asianregion remains sluggish with an exception of China.

As per International Stainless Steel Forum global stainless steel production increasedby 10.2 % YoY in 2016 to 45.8 MT China being the highest contributor. According toestimate by Steel and Metals Market Research (SMR) global stainless steel demand willincrease by 4% in 2017. In India domestic demand will grow by over 9% in next five years.Major demand is expected to come from Architecture Building and Construction (ABC)segment while Automobile Railway and Transport (ART) will also provide stimulus.Prospects of normal monsoon project a GDP growth of over 7% in 2017-18. Stainless SteelDemand is also expected to see a positive growth corresponding to economic outlook.

OPERATIONS

HISAR DIVISION:

Your Company has been able to grow in financial year 2016-17 despite challenging globalscenario. Your Company sold 656880 MT stainless steel products during the financialyear. Your Company not only managed to increase overall sales but also worked onimproving the sales mix resulting in considerably higher sales of high margin productssuch as cold rolled annealed & pickled products.

Your Company continued to focus on value added products and successfully stabilized itsproductions for wider plates bright bars & rounds etc. The Company enforced itsreputation as leading stainless steel producer in the country by signing agreements withDefence Research & Development Organization ("DRDO") under "Make inIndia" Initiatives. Company is quite hopeful of penetrating further in Defensesegment in near future.

During the year the Company took various benchmark training initiatives to improveManpower productivity and was recognized for its efforts through prestigious 'GoldenPeacock 'Award for best human resource training practices.

Company continued its tradition of Excellent Quality and was duly recognized by theindustrial bodies for the same. The National "PAR EXCELLENCE AWARD" was given toyour Company in Quality circle front by NCQC (National Convention on Quality Circles). TheCompany also received Excellence Award by 'ASSOCHAM' for Best Technology Used inIndustrial waste management.

VIZAG DIVISION:

Vizag division produces High Carbon Ferro Chrome with annual capacity of 40000 tons.The operations of Vizag division at Kothavalasa in Vizianagaram district Andhra Pradeshwhich was demerged in the Company as a part of the Composite Scheme of Arrangement wereunder temporarily shutdown effective from 13th September 2015. The operations of thedivision were re-started with effect from 29th November 2016. Vizag division uses ChromeOre purchased from OMC Ltd/ Tata Steel & others and transfers the output to HisarPlant. The Unit could produce 7680 ton of High Carbon Ferro Chrome during the year2016-17 as compared to 9974 tons during the last year 2015-16 due to shut down of theplant operation spanning both Financial Years.

Vizag division could dispatch 7736 ton of HCFC to Hisar plant during the year 2016-17as compared to 11825 ton during 2015-16.

MINES:

In terms of the Composite Scheme of Arrangement among the Company Jindal StainlessLimited Jindal United Steel Limited and Jindal Coke Limited and their respectiveShareholders and Creditors sanctioned by the Hon'ble High Court of Punjab and Haryana atChandigarh vide its Order dated September 21 2015 as modified by its order dated October12 2015 ("Scheme") the Demerged Undertakings inter alia including thebusiness undertaking comprising of the Mining Division consisting of the chromite mineslocated in Village Kaliapani and forest block number 27 Sukinda Tehesil Jajpur DistrictOdisha in respect of which Jindal Stainless Limited ("JSL") was havingleasehold rights ("Chromite Mine") were to be demerged and vested with theCompany.

However while according its approval for transfer/right to use of the land Governmentof Odisha Department of steel & mines vide letter dated 16th August 2016 did notaccord its approval for transfer of mining lease to the Company. Consequently (i) allmining activities in relation to the Mining Rights continue to be carried out by JindalStainless Limited ("JSL"); and (ii) all assets (excluding fixed assets) andliabilities (including contingent liabilities) in relation to the Mining Rights continueto be recorded in the books of JSL; and (iii) all revenue and net profit relating theretopost 1st November 2015 i.e. the date of Scheme becoming effective are recorded in thebooks of JSL.

DIVIDEND AND TRANSFER TO RESERVES

The Board has not recommended any dividend on equity shares of the Company for thefinancial year ended 31st March 2017 in terms of the provisions of the loan agreemententered into by the Company with the lenders for availing financial facilities.Accordingly no amount is proposed to be transferred to the reserves of the Company.

SHARE CAPITAL

As on 31st March 2016 paid up share capital of the Company was Rs. 462370890divided into 231185445 equity shares of Rs.2/- each.

During the year the Company allotted 4749240 equity shares of X 21- each inaggregate at a price of X 52.64 (including premium of X 50.64 per share) per share to JSLLimited and Jindal Infrastructure and Utilities Limited upon conversion of 125000000Compulsory Convertible Warrants of X 21- each.

Consequent upon the above allotment the paid up share capital of the Company stand atX 471869370 divided into 235934685 equity shares of X 21- each as on 31st March2017.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report as required under the Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015("SEBI LODR") forms part of this Annual Report.

BUSINESS RESPONSIBILITY REPORT

Your Company is committed to growing the business responsibly with a long termperspective as well to the nine principles enshrined in the National Voluntary Guidelines(NVGs) on social environmental and economic responsibilities of business as notified bythe Ministry of Corporate Affairs Government of India in July 2011.

The Business Responsibility Report ("BRR") of the Company as per therequirements of Regulation 34(f) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 describing the initiatives taken by the Company from anenvironmental social and governance perspective alongwith all the related policies canbe viewed on the Company's website at www.jshlstainless.com.

EMPLOYEES STOCK OPTION SCHEME

Since the Company has not issued any stock options the requirement of disclosure underRegulation 14 of the Securities and Exchange Board of India (Share Based EmployeeBenefits) Regulations 2014 is not applicable to the Company.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Companies Act 2013 SEBI LODR and Ind-AS on ConsolidatedFinancial Statements Accounting for investments in Associates and Financial Reporting ofinterests in Joint Ventures the Audited Consolidated Financial Statements are provided inthe Annual Report.

SUBSIDIARY COMPANIES / JOINT VENTURES / ASSOCIATE COMPANIES

As on 31st March 2017 your Company has five direct and step down subsidiaries namely(i) JSL Lifestyle Limited (ii) Jindal Stainless Steelway Limited (iii) Green Delhi BQSLimited (iv) JSL Media Limited and (v) JSL Logistics Limited and two associate companiesnamely (i) Jindal Stainless Limited; and (ii) Jindal Stainless Corporate ManagementServices Pvt. Ltd.

The Financial Statements of Subsidiary Companies are kept open for inspection by theshareholders at the Registered Office of the Company during business hours on all daysexcept Saturdays and Sundays and public holidays up to the date of Annual General Meeting(AGM) as required under Section 136 of the Companies Act 2013. The members if theydesire may write to Company Secretary at O.P. Jindal Marg Hisar - 125005 (Haryana) toobtain the copy of the annual report of the subsidiary companies. The Financial Statementsincluding the Consolidated Financial Statements and all other documents required to beattached with this Report have been uploaded on the website of your Company viz.www.jshlstainless.com.

A statement containing the salient features of the financial statement of thesubsidiaries and associate companies in the prescribed Form AOC-1 is attached alongwithfinancial statement. The statement also provides the details of performance financialposition of each of the subsidiary company. Your Company has framed a policy fordetermining "Material Subsidiary" in terms of Regulation 16(c) of SEBI LODR. ThePolicy for determining material subsidiaries as approved may be accessed on the Company'swebsite at the link:http://www.jshlstainless.com/pdf/Policy%20for%20determining%20material%20subsidiaries.pdf

DIRECTORS & KEY MANAGERIAL PERSONNEL

Mr. Ashok Kumar Gupta Whole Time Director who retires by rotation at the ensuingAnnual General Meeting under the provisions of the Companies Act 2013 and being eligibleoffers himself for reappointment. The Board of Directors subject to approval ofShareholders has approved payment of remuneration to Mr. Abhyuday Jindal Non-ExecutiveVice Chairman as detailed in the Notice of the Annual General Meeting.

Brief resume of the abovementioned Director nature of his expertise in specificfunctional areas details of Directorship in other companies membership / chairmanship ofcommittees of the board and other details as stipulated under Regulation 36(3) of SEBILODR and Secretarial Standard - 2 issued by the Institute of Company Secretaries of Indiaare given in the Notice forming part of the Annual Report.

There was no change in Key Managerial Personnel during the year.

All Independent Directors have given declaration to the Company that they meet thecriteria of independence as provided in Section 149(6) of the Companies Act 2013.

The Company has also devised a Policy on Familiarization Programme for IndependentDirectors which aims to familiarize the Independent Directors with the Company nature ofthe industry in which the Company operates business operations of the Company etc. Thesaid Policy can be accessed on the Company's website at the link:

http://jshlstainless.com/pdf/Policy%20on%20familiarisation%20programme%20for%20independent%20directors-%20JSHL.pdf

BOARD EVALUATION

An annual performance evaluation of all Directors the Committees of Directors and theBoard as a whole for the year under review was carried out. For the purpose of carryingout performance evaluation assessment questionnaires were circulated to all Directors andtheir feedback was obtained and recorded.

POLICY ON DIRECTORS'APPOINTMENT AND REMUNERATION POLICY

Pursuant to the provisions of Section 178 of the Companies Act 2013 and Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 the Board of Directors has approved the (i) Policies for nomination and selection ofIndependent Directors and Non-Executive Non-Independent Directors and (ii) RemunerationPolicy on the Recommendation of the Nomination and Remuneration Committee of the Company.The said Policies may be accessed on the Company's website at the link:www.jshlstainless.com/pdf/Remuneration%20Policy.pdf

FIXED DEPOSITS

The Company has not accepted any deposit from the public. Hence no information isrequired to be appended to this report.

PARTICULARS REGARDING THE CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGNEXCHANGE EARNINGS AND OUTGO

The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3) (m) of the Companies Act 2013 readwith Rule 8 of The Companies (Accounts) Rules 2014 is annexed herewith as Annexure - Iforming part of this Report.

PARTICULARS OF EMPLOYEES

In terms of 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 astatement showing the names and other particulars of the employees drawing remuneration inexcess of the limits set out in the said rules are provided in the Annual Report whichforms part of this Report.

Disclosures relating to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are provided in the Annual Report which forms part ofthis Report.

Having regard to the provisions of the first proviso to Section 136(1) of the Act theAnnual Report excluding the aforesaid information is being sent to the members of theCompany. The said information is available for inspection at the Registered Office of theCompany during working hours and any member interested in obtaining such information maywrite to the Company Secretary and the same will be furnished on request.

STATUTORY AUDITORS AND AUDITORS' REPORT

M/s. Lodha & Co. and M/s. S.S. Kothari Mehta & Co. Joint Statutory Auditors ofthe Company were appointed by the Shareholders at the 2nd Annual General Meeting of theCompany held on 30th December 2015 for a period of five consecutive years i.e. until theconclusion of the 7th Annual General Meeting of the Company. Pursuant to the provisions ofSection 139 of the Companies Act 2013 the matter relating to the appointment of theaforesaid Joint Statutory Auditors shall be placed for ratification by members at theensuing Annual General Meeting of the Company. The Notes on financial statement referredto in the Auditors' Report are self-explanatory and do not call for any further comments.The Auditors' Report does not contain any qualification reservation or adverse remark.

COST AUDITORS

In accordance with the provisions of Section 148 of the Companies Act 2013 read withCompanies (Cost Records and Audit) Rules 2014 as amended from time to time your Companyis required to get its cost accounting records audited by a Cost Auditor and hasaccordingly appointed M/s Ramanath Iyer & Company Cost Accountants for this purposefor FY 2017-18.

The Cost Auditors' Report for the FY 2016-17 does not contain any qualificationreservation or adverse remark.

The remuneration of the Cost Auditors shall be placed for ratification by members interms of Section 148 of the Companies Act 2013 read with Rule 14 of the Companies (Auditand Auditors) Rules 2014.

SECRETARIAL AUDITORS

The Board has appointed M/s Vinod Kothari & Co. Practicing Company Secretary toconduct Secretarial Audit for the financial year 2017-18. The Secretarial Audit Report forthe financial year ended March 312017 is annexed herewith marked as Annexure - II to thisReport. The Secretarial Audit Report does not contain any qualification reservation oradverse remark.

CORPORATE SOCIAL RESPONSIBILITY

The Board of Directors of the Company in their meeting held on 2nd November 2015constituted the Corporate Social Responsibility Committee of Directors. The CorporateSocial Responsibility Committee has formulated and recommended to the Board a CorporateSocial Responsibility Policy ("CSR Policy") indicating the focus areas ofCompany's CSR activities.

In line with the CSR philosophy and the focus areas the Company has plannedinterventions in the fields of education & vocational training integrated healthcare women empowerment social projects rural infrastructure development environmentsustainability sports preservation of art and culture business of human rights anddisaster management.

The Company strongly believes that sustainable community development is essential forharmony between the community and the industry. The Company endeavours to make a positivecontribution especially to the underprivileged communities by supporting a wide range ofsocio-economic educational and health initiatives.

The Disclosure as per Rule 9 of the Companies (Corporate Social Responsibility Policy)Rules 2014 is annexed to this Report at Annexure-lll. The CSR Policy can be accessed onthe Company's website at the link: http://jshlstainless.com/pdf/JSHL%20CSR%20Policy.pdf

INTERNAL FINANCIAL CONTROLS

The Company has in place adequate internal financial controls with reference tofinancial statements. During the year such controls were tested and no reportablematerial weakness in the design or operation was observed.

SEXUAL HARASSMENT POLICY

The Company has in place a policy on prevention of sexual harassment at workplace inaccordance with the provisions of Prevention Prohibition and Redressal of SexualHarassment of Women at Workplace Act 2013. The policy aims at prevention of harassment ofemployees and lays down the guidelines for identification reporting and prevention ofsexual harassment. There is an Internal Complaints Committee (ICC) which is responsiblefor redressal of complaints related to sexual harassment and follows the guidelinesprovided in the policy.

During the year ended 31 st March 2017 no complaint was received pertaining to sexualharassment.

AUDIT COMMITTEE

The Audit Committee comprises of the following four Directors out of which three areIndependent Directors:

SI. No. Name Status Category
1 Mr. Girish Sharma Chairman Independent Director
2 Mr. Kanwaljit Singh Thind Member Independent Director
3 Mr. Ashok Kumar Gupta Member Whole Time Director
4 Mr. Arunendra Kumar * Member Independent Director

* Mr. Arunendra Kumar has been inducted in the Audit Committee w.e.f. 5th August 2016

All the recommendations made by the Audit Committee during the financial year 2016-17were accepted by the Board.

CSR COMMITTEE

The CSR Committee comprises of the following three Directors out of which one isIndependent Director:

SI. No. Name Status Category
1 Mrs. Deepika Jindal Chairperson Non- Executive Director
2 Mr. Ashok Kumar Gupta Member Whole Time Director
3 Mr. Kanwaljit Singh Thind Member Independent Director

STOCK EXCHANGES WHERE THE SHARES ARE LISTED

National Stock Exchange of India Limited ("NSE") BSE Limited ("BSE")
Exchange Plaza 5th Floor Plot No. C/1 Phiroze Jeejeebhoy Towers
G - Block Bandra-Kurla Complex Dalai Street
Bandra (E) Mumbai - 400 051 Mumbai -400 001

The annual listing fee was paid to both the stock exchanges. No shares of the Companywere delisted during the financial year 2016-17.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT9 is annexedherewith as Annexure -IV.

NUMBER OF BOARD MEETINGS

The Board of Directors met four times during the financial year ended on 31 st March2017. The details of Board Meetings and the attendance of the Directors are provided inthe Corporate Governance Report forming part of this Annual Report. The intervening gapbetween the meetings was within the period prescribed under the Companies Act 2013 andRegulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015

WHISTLE BLOWER POLICY / VIGIL MECHANISM

Pursuant to the provisions of Section 177(9) read with Companies (Meetings of Board andits Powers) Rules 2014 of the Companies Act 2013 and Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 the Company hasa Vigil Mechanism namely Whistle Blower Policy for directors employees and businesspartners to report genuine concerns about unethical behavior actual or suspected fraud orviolation of the Company's code of conduct or ethics policy. The Whistle Blower Policy canbe accessed on the Company's website at the link:http://jshlstainless.com/pdf/Whistle%20Blower%20Policy-JSHL.pdf

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS BY THE COMPANY UNDER SECTION 186

The particulars of loans guarantees or investments by the Company under Section 186are stated in Notes to Accounts forming part of this Annual Report.

CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

Particulars of contracts or arrangements entered into by the Company with the relatedparties referred to in Section 188(1) of the Companies Act 2013 in prescribed formAOC-2 is attached as Annexure - V to this Report.

All related party transactions that were entered and executed during the year underreview were at arms' length basis. As per the provisions of Section 188 of the CompaniesAct 2013 and Rules made thereunder read with Regulation 23 of SEBI LODR your Company hadobtained prior approval of the Audit Committee under omnibus approval route and / or underspecific agenda before entering into such transactions.

Your Directors draw attention of the members to Note 51 to the financial statementwhich sets out related party disclosures. The Policy on materiality of related partytransactions and dealing with related party transactions as approved by the Board may beaccessed on the Company's website at the link:

http://www.jshlstainless.com/pdf/Policy%20for%20determining%20material%20subsidiaries.pdf

In terms of Regulation 23 of SEBI LODR all transactions with related parties whichare of material in nature are subject to the approval of the Members of the Company. Therequisite resolution in order to comply with the aforesaid requirements as detailed atItem No. 6 of the Notice and relevant Explanatory Statement is commended for the members'approval.

RISK MANAGEMENT

The Company has laid down procedures to inform Board members about the risk assessmentand minimization procedures. These procedures are periodically reviewed to ensure thatexecutive management controls risk through means of a properly defined framework. TheCompany has also devised a Risk Management Policy for identification of elements of risksand procedures for reporting the same to the Board.

THE CHANGE IN THE NATURE OF BUSINESS IF ANY

There has been no change in the nature of Company's business during the financial yearended on 31st March 2017.

MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY

During the quarter ended 30th June 2017 the Company has achieved total gross incomeof Rs. 2438 Crore with EBIDTA of Rs. 251 Crore. The Company has earned net profit of Rs.74 Crore during this period.

ANY SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALSIMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE

During the financial year there were no such significant material orders passed by theregulators or courts or tribunals impacting the going concern status and company'soperations in future.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(3)(c) of the Companies Act 2013 withrespect to Directors' Responsibility Statement it is hereby confirmed that:

(a) in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;

(b) the directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at 31st March 2017 and of the profitand loss of the Company for the year ended on that date;

(c) the directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

(d) the directors have prepared the annual accounts of the Company on a 'going concern'basis.

(e) the directors have laid down internal financial controls to be followed by theCompany and such internal financial controls are adequate and were operating effectively.

(f) the directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and such systems were adequate and operating effectively.

CORPORATE GOVERNANCE

A separate section on Corporate Governance forms part of this Annual Report and acertificate from the practicing Company Secretary regarding compliance of conditions ofCorporate Governance as required under the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 form part of this AnnualReport.

ACKNOWLEDGEMENT

Your Directors would like to express their gratitude for the valuable assistance andco-operation received from shareholders banks government authorities customers andvendors. Your Directors also wish to place on record their appreciation for the committedservices of all the employees of the Company.

For and on behalf of the Board of Directors
Place: New Delhi Ratan Jindal
Date: August 7 2017 Chairman

ANNEXURE-I TO DIRECTORS REPORT

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGOPURSUANT TO PROVISIONS OF SECTION 134 OF THE COMPANIES ACT 2013 READ WITH THE COMPANIES(ACCOUNTS) RULES 2014.

(A) CONSERVATION OF ENERGY

(a) The steps taken or Impact on conservation of energy

- Reduction in consumption of compressed Air by effective utilization of air.

- Reduction in steam consumption by effective utilization of steam.

- Increasing combustion efficiency of furnace by Optimization Oxygen % ratio.

- Increasing furnace efficiency by reduction in heat loss by optimization of air-gap.

- Optimization of running hour of Pump Blower &Aux. equipment by VWF drivesinstallation.

- Optimization of electrode regulation system & auto melt controller in Steelmelting shop.

(b) The steps taken by the Company for utilising alternate sources of energy

- Total 250KWp Solar Plant Installed in JSHL Power generation started from Sep.2016.

- Procurement of 400KWp solar plant under-progress.

(c) The capital investment on energy conservation equipments

- Replacement of All Convention Light with LED Light.- Rs. 15 Lakhs

- Installation of Solar System — T 1.41 Crore

- Installation of VWF Drive- Rs. 80 Lakhs

- Upgradation of Pre-heating furnace at Hot Strip Mill- Rs. 3.5 Crore

- Electrode regulation system at Steel Melting shop- Rs. 1.2 Crore

(B) TECHNOLOGY ABSORPTION

(i) The efforts made towards technology absorption; and the benefits derived likeproduct improvement cost reduction product development or import substitution.

Development of new products to diversify product mix:

High Strength steel (HNS & JD1) & rings of super-duplex (UNS 32205 &15CDV6)

- High Nitrogen Steel with high strength and toughness has been developed for defenceapplication in various shapes such as plates (different thickness) round bars & inDisc form.

- Ultra high strength material (JD 1) has been developed for defence application.

- Development of 444 grade for automotive exhaust with excellent corrosion resistancein many types of environments that include chlorides organic acids found in foods andbeverages.

- Development of grade 303 for long product application designed for goodmachinability.

- Rings of super duplex (UNS 32750) & 15CDV6 has been developed for the stringentapplication in defence applications.

Development of customized & value added products:

- Significant improvement in surface quality of grade 432 after optimizing annealing& pickling parameter scale free surface obtained.

- Improvement in surface quality after optimising the hot rolling parameter for 204 Cugrade.

- Stabilization of UNS 32101 grade after suitable modification in annealing &pickling parameters.

- Improvement in steel cleanliness of 321 grade by suitable modification in steelmelting practice.

- Improvement in the yield of EQ 309LNb by optimising various parameters from steelmelting shop & hot rolling.

- Development of highly corrosion resistant Super Austenitic Stainless Steel Grade 904Lin 100 micron thickness for Air Purifier Application.

Benefits derived:

- Improvement in the yield of material for grade 432 leading to increase in dispatch& minimize losses at JSHL facilities. Material for 432 grade are being continuouslysupplied to different auto customers for their variant application in autos part.

- Process optimization in UNS 32101 grade leading to cost saving and reducing theoverall processing time for the respective material. JSL is leading supplier of UNS 32101& various other duplex grade for different customers throughout.

- Export segment for grade 321 has been stabilized by suitable processing in steelmelting shop. It is a highly alloyed grade so improvement in cleanliness for this gradewill open opportunities in export market.

- Improvement in the yield of material for EQ309LNB leading to reduction in processingtime and minimize losses at JSHL facilities.

(ii) in case of imported technology (imported during the last three years reckoned fromthe beginning of the financial year)

Horizontal bright annealing line has been installed at Cold rolling division whichwill help to increase supply of material for cutlery based applications. Different gradessuch as JT JSLUDD JSLUSD were successfully processed at Horizontal bright annealing linewith good surface finish. Horizontal bright annealing line offers to process variousgrades of cold rolled thickness from 0.3 mm to 1.5 mm thickness.

(iii) Expenditure incurred on Research and Development (R&D)

2016-17 2015-16
(a) Capital 0.05 0.00
(b) Revenue 4.21 1.54
Total 4.26 1.54
(c) Total R&D expenditure as a percentage of turnover 0.06% 0.02%

FOREIGN EXCHANGE EARNINGS & OUTGO

2016-17
Foreign Exchange Earnings 1242.75
Foreign Exchange Outgo 2018.27

ANNEXURE V TO DIRECTORS REPORT

Form No. AOC-2

[Pursuant to Clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) ofthe Companies (Accounts) Rules 2014] Form for disclosure of particulars ofcontracts/arrangements entered into by the company with related parties referred to insub-section (1) of Section 188 of the Companies Act 2013 including certain arm's lengthtransactions under third proviso thereto

1. DETAILS OF CONTRACTS OR ARRANGEMENTS OR TRANSACTIONS NOT AT ARM'S LENGTH BASIS:

(a) Name(s) of the related party and nature of relationship NIL (All contract or arrangement or transactions with related parties are at arm's length basis)
(b) Nature of contracts/ arrangements/ transactions
(c) Duration of the contracts / arrangements/transactions
(d) Salient terms of the contracts or arrangements or transactions including the value if any
(e) Justification for entering into such contracts or arrangements or transactions
(f) Date(s) of approval by the Board
(g) Amount paid as advances if any
(h) Date on which the special resolution was passed in general meeting as required under first proviso to Section 188

2. DETAILS OF MATERIAL CONTRACTS OR ARRANGEMENT OR TRANSACTIONS AT ARM'S LENGTH BASIS:

(a) Name(s) of the related party and nature of relationship Jindal Stainless Limited

[Jindal Stainless Limited is a public limited company in which a director of the Company is a director and holds more than 2% of its paid up share capital. Further the Company holds more than 20% shareholding of Jindal Stainless Limited and therefore it is an Associate Company of Jindal Stainless (Hisar) Limited]

(b) Nature of contracts/ arrangements/ transactions Sale purchase or supply of goods and materials etc. and giving corporate guarantee for Jindal Stainless Limited
(c) Duration of the contracts/ arrangements/ transactions April 2016 to March 2017
(d) Salient terms of the contracts or arrangements or transactions including the value if any The Company made transactions of sale purchase job charges etc. amounting to Rs. 1259.13 Crore and gave Corporate Guarantees for Jindal Stainless Limited.
(e) Date(s) of approval by the Board if any Particulars Date of Board Approval
Sale purchase or supply of goods and materials etc. and gave corporate guarantee for Jindal Stainless Limited. 12.8.2016; 17.9.2016; and 24.9.2016.
(g) Amount paid as advances if any Nil