The Board of Directors has the pleasure of presenting the 45th Annual Reportof Steel Authority of India Limited (SAIL the Company) together with Audited Accounts forthe Financial Year ended 31st March 2017.
A. FINANCIAL REVIEW
Your Company achieved a turnover of '49180 crore during the Financial Year 2016-17which was higher by 14% over previous year due to increase in both sales volume (8%) aswell as Net Sales Realisation (NSR) of Saleable Steel of 5 Integrated Steel Plants byabout 6%. The loss after tax of your Company for the Financial Year 2016-17 has reduced to'2833 crore as compared to loss after tax of '4021 crore in the previous Financial Year.
The reduction in loss has been mainly on account of higher sales volume higher NetSales Realisation of 5 Integrated Steel Plants higher production increase in value addedproduction lower usage of imported coal in blend higher usage of CDI in CDI furnacesreduction in coke rate improvement in BF productivity reduction in salaries and wagesdecrease in average purchase power rate foreign exchange gain etc. However the same hasbeen partially offset by increase in imported and indigenous coking coal prices increasein interest cost and depreciation.
SAIL continued its thrust on optimum utilisation of funds by better fund management.This included replacement of high cost loans with low cost debts timely repayment ofloans including interest action for future fund raising etc. to meet our growthobjectives. Further the Company hedged the foreign currency risk on Buyer's Credit andrepayment of External Commercial Borrowings depending on market conditions. The Companyhad borrowings of '41396 crore as on 31st March 2017. The debt equity ratioof the Company increased to 1.15:1 as on 31st March 2017 from 0.90:1 as on 31stMarch 2016 due to increase in borrowings as well as reduction in net-worth during theyear. The net-worth of Company declined substantially from ' 39196 crore as on 31stMarch 2016 to '36009 crore as on 31st March 2017.
M/s CARE Ratings and M/s Brickwork Ratings RBI approved credit rating agenciesassigned 'CARE AA Outlook: Negative' and 'BWR AA+ Outlook: Stable' ratings respectivelyfor SAIL's long term borrowing programme.
B. OPERATIONS REVIEW
Financial Year 2016-17 has been a year full of challenges for your Company. The Companyfaced tough times amidst plunging steel prices a flood of low- priced imports from Chinaand other countries unprecedented increase in input prices and a subdued demand of steel.
The new facilities already operational were ramped up during the year. New BlastFurnace at RSP achieved about 100% of its capacity whereas other facilities like NewCaster and New Plate Mill were also in process of stabilization and achieved 84% and 80%of their respective capacities during the year. The new facilities at IISCO Steel Planthave also been ramped up and the capacity utilization in Hot Metal Crude Steel andSaleable Steel production was in the range of 50-70% of capacity during this year. AtBhilai Steel Plant Universal Rail Mill (URM) (with capacity to produce World's longestsingle-piece 130- meter long rail) along with Rail Welding Line for production of 260meter Long
Rails has been completed and the Mill has started regular production from Jan'17.Other facilities like Ore Handling Plant Part-A 2nd Sinter Machine in Sinter Plant-3 andCoke Oven Battery-11 are in regular operation. Further Bar line of Bar and Rod Mill (BRM)has been completed and hot trial of BRM has started in Mar'17. At IISCO thirdconverter(#1) in SMS was started in August'16.
Financial Year 2016-17 also witnessed several landmark achievements. Your Companyachieved highest ever Hot Metal production of 15.73 Million Tonnes(MT) surpassing itsprevious best of 15.72 MT achieved in 2015-16 highest ever Crude Steel production at14.50 MT surpassing previous best of 14.29 MT achieved in 2015-16 and highest everSaleable Steel production at 13.87 MT surpassing previous best of 13.04 MT achieved in2007-08.
SAIL has achieved an all time best performance in case of Continuously-Cast Steel andSinter production with production of 11.77 MT and 23.1 MT registering a growth of 9% and1% respectively over last year.
SAIL's various initiatives to reduce environmental footprint and enhance operationalefficiency have led to significant improvement in environmental parameters as well astechno-economic efficiency. This has enabled your Company to produce greener and moreenvironmental friendly steel than ever before. The Plants recorded the best ever CokeRate at 473 kg/thm and BF productivity of 1.67 t/m3/day. This was achieved asa result of higher volume of Hot Metal produced through new state of art Blast Furnaces(29% of total Hot Metal) and increased Crude Steel production through energy efficientContinuous Casting route (81% up by 5% over CPLY).
SAIL became true force in transforming the Nation by supplying steel to ISRO for thelaunch of a record 104 satellites in a single rocket by way of providing high qualitystainless steel for the fuel and oxidizer tanks used in the launch vehicle. SSP hadearlier supplied steel for the iconic Chandrayan and Mangalyan missions too.
Captive Power Generation during the Financial Year 2016-17 increased to 820 MW from 785MW in the previous year with growth of 4.5%. About 68.3% of the Company's total powerrequirement of 1200 MW was supplied from Captive power generation 30% by purchasing powerfrom grid utilities and the balance 1.7% from Power Exchange through Open Access.
During the Financial Year 2016-17 with an objective to optimize power cost SAILPlants procured about 572 Million Units(MU) power through open access which was highestever in any year since open access regulations came into effect in the Country. YourCompany was the first non-power entity to have started wheeling of power in the year 2004after enactment of Electricity Act 2003. Out of the 572 MU about 393 MU of captive powerwas wheeled from NTPC SAIL Power Company Limited(NSPCL) Bhilai a joint venture of SAILand NTPC Ltd. to RSP SSP and CFP and the remaining 179 MU were purchased from PowerExchange for RSP VISP and SSP Such power availed through open access helped in replacingcostly grid power in the recipient Plants and resulted in substantial cost savings.
Grid power being the costliest source of power there was continuous emphasis onreduction in purchase of power from grid and Contract Demand with grid was reduced by 48MVA during the year from the earlier level of 975 MW to 927 MW reduction by about 5% onyear-on-year basis though there was substantial increase in the production of saleablesteel and commissioning of new facilities. Continuous efforts were made towardsimprovement in the performance parameters of Captive Power Plants both own as well asunder joint ventures. The performance of some of the Captive Power Plants under JointVenture was better than the performance norms in the Country and improvement inperformance parameters helped in achieving considerable cost savings.
Your Company has always laid stress on reliability of power supply in its Plants andstrengthening of the power distribution system. Connectivity of BSL with DVC grid at 220KV level was commissioned during the year. With this all the Integrated Steel Plants ofSAIL are now connected with utility grids at 220 KV level which enhances the reliabilityof grid power supply and lowers the tariff of grid power as well as open access chargesfor having grid connectivity at such high voltages.
Captive power generation capacity is being augmented by capacity addition of 290 MWthrough NSPCL. Orders for supply and installation of Power Plants of 1 x 250 MW at RSP and2 x 20 MW at DSP were placed during the year. These Plants are expected to commencecommercial operations during the Financial Year 2019-20.
As a part of commitment towards development of renewable energy your Company hasalready installed a capacity of 1070 KWp rooftop solar plants at various locations and 1MWp grid interactive solar plant at RSP Further actions for installation of 200 MWpcapacity solar plants at various SAIL Plant locations have also been initiated.
During Financial Year 2016-17 total requirement of iron ore was met from captivesources. The Company's captive iron ore mines produced about 26.44 Million Tonnes(MT).However in case of coking coal about 19% requirement (2.91MT) was met from indigenoussources (Coal India Limited & captive sources) and for the balance requirement ofcoking coal (12.41 MT) the Company has to depend on imports due to limitation inavailability within the Country. In the Financial Year 2016-17 production in captivecollieries of the Company was about 0.68 MT out of which 0.54 MT was raw coking coal andbalance 0.14 MT of non coking coal. In case of fluxes around 1.36 MT of Limestone and0.72 MT of Dolomite was produced giving a production of 2.08 MT fluxes from captivesources. For thermal coal your Company depends entirely on purchases from Coal IndiaLimited (CIL) except for small quantity produced from captive mines.
In order to expedite capacity expansion projects of mines following
environment and forest clearance have been obtained during the Financial Year 2016-17:
Environment Clearance(EC) for setting up of 3.5 million tonnes per annum (MTPA)capacity washery at Tasra was granted by MoEFCC on 30th March 2017.
Environment Clearance of the Dhobil Iron Ore mine has been amended by MoEFCC on19th April 2017 for the limited purpose of continuation of transportation ofiron ore for further period of 5 years beyond 24th January 2017.
MoEFCC vide letter dated 29th November 2016 has revalidated theearlier Environment Clearance of Sitanala Coal block in favour of the Company.
MoEFCC vide letter dated 06th December 2016 transferred theEnvironment Clearance for Parbatpur Coal block to SAIL with a condition that "Nomining shall be carried out till the washery is operational".
However the Stage-II forest clearances for the capacity expansions of Gua and Chiriamines and opening of South-Central Blocks in Kiriburu- Meghahatuburu mines in Sarandaforest in Jharkhand are yet to be granted by MoEFCC. In view of its criticality to thecapacity expansion projects the matter is being actively pursued with the Government.
In view of promulgation of MMDR Amendment Act 2015 and further issuance of Mineral(Mining by Government Companies) Rules 2015 lease period of the following leases havebeen extended:
Lease period of ML-162 mining lease of Barsua Iron Ore Mine for an area of 77.94Ha. has been extended by Government of Odisha vide Order dated 5th July 2016. Under thesaid Rules the first lease is deemed to be granted for 50 years i.e. from 29thApril 1960 to 28th April 2010 and further lease period is extended foranother period of 20 years from 29th April 2010 to 28th April2030. Lease Amendment Agreement in this regard was signed on 29th September2016.
Lease period of the Nandini Limestone Mine of BSP for the area of 526.34 Ha. hasbeen extended by Government of Chhattisgarh till 31st March 2028. LeaseAmendment Agreement in this regard was signed on 22nd March 2017.
Government of Chhattisgarh vide Order dated 25th June 2016 has extended thelease period of Hirri Dolomite Mine of BSP for an area of 128.77 Ha. under ChhattisgarhMinor Minerals Rules 2015 till 31st March 2020. Lease Amendment Agreement inthis regard was signed on 22nd March 2017.
Sales & Marketing
In-spite of the challenging market conditions your Company achieved a total salesvolume of 13.1 million tonnes during the Financial Year 2016-17 registering a growth ofabout 13% over the previous financial year. With regard to Dealer Sales record sales ofaround 0.82 million tonnes were achieved during the Financial Year 2016-17 therebyregistering a growth of 3% over 2015-16. In respect of exports 0.67 million tonnes wereexported which were higher by over 200% as compared to the previous year.
Your Company achieved highest ever despatches of Long Rails(260m panels) to IndianRailways with a growth of 11.1% over the previous year. Further 181 numbers of NarrowGuage Forged wheels were specially manufactured and supplied for maintenance of theKalka-Shimla Railway Line a UNESCO declared World Heritage Site.
Your Company was the main supplier of steel in construction of the Country's longestbridge "Dhola-Sadiya" built on river Lohit in Assam connecting the States ofAssam and Arunachal Pradesh. SAIL has supplied around 30000 tonnes (90%) of steelcomprising TMT Structurals and Plates for this prestigious project built under publicprivate partnership. The bridge being 9.15 km in length is 3.55 km longer than Mumbai'sBandra-Worli Sea Link.
Public Procurement Policy for Micro and Small Enterprises
As required by the Public Procurement Policy of the Government of India theinformation on procurement from Micro & Small Enterprises during Financial Years2016-17 and 2015-16 is given below:
|Particulars ||2016-17 ||2015-16 |
|Total Amount of Procurement ||3246.42 ||3211.93 |
|Total Procurement from MSE ||767.04 ||677.53 |
|%age Procurement from MSE ||23.63 ||21.09 |
Modernisation & Expansion Programme
Your Company is nearing towards the last leg of implementation of on-goingModernisation & Expansion Programme. During the Financial Year 2016-17 your Companyhas achieved many milestones. At Bhilai Steel Plant New Universal Rail Mill for supply of130 m rail World's longest single piece rail has been commissioned and welded 260 m railpanels are being dispatched to Railways. Hot trial in Bar & Rod Mill has been carriedout. Heating of stoves of Blast Furnace-8 has also been started. A capital expenditure of'4939 crore has been incurred during Financial Year 2016-17 and capex planned for 2017-18is '3500 crore.
The details of Addition Modification & Replacement (AMR) Schemes underimplementation are given in the Management Discussion & Analysis (MD&A) Report.
C. HUMAN RESOURCE MANAGEMENT REVIEW
Your Company recognizes contribution of its Human Resources in providing it thecompetitive advantage. The Company has achieved its present level of excellence throughinvestment in its human resource where skill and knowledge constitute the basis of everyinitiative - be it technology or innovation. Developing skills and capabilities ofemployees to improve manpower utilization and labour productivity is the key thrust areaof Human Resource Management (HRM) in the Company.
Your Company provides an environment conducive for learning encourages adoption ofbest practices in every area and nurtures creativity and innovation among employees. HumanResource initiatives in SAIL are focused on developing team spirit employee empowermentand their involvement in various improvement activities. Strategic alignment of HRM tobusiness priorities and objectives has facilitated smooth transition to state-of-the-arttechnology in the Modernization and Expansion Projects.
Enhanced Productivity with Rationalized Manpower
Your Company achieved the Labour Productivity (LP) of 320 TCS/Man/Year in 2016-17. Themanpower strength of the Company was 82964 nos. as on 31.3.2017 with manpowerrationalization of 5691 achieved during the year. The enhanced productivity withrationalized manpower could be achieved as a result of judicious recruitments buildingcompetencies and infusing a sense of commitment and passion among employees to go beyondand excel. To give further thrust for enhancing productivity and manpower rationalizationyour Company has recently introduced Voluntary Retirement Scheme-2017 w.e.f. 15th June2017. Trend of enhanced productivity and manpower rationalization since 2007-08 onwards isdepicted below:
Developing Employee Capabilities & Competencies
Your Company believes that people's development is the key for overall growth andtraining facilitates the development of employee's knowledge and skills so that theresultant advancement of competence contributes towards attainment of organisation's goalsand objective. SAIL has been making sustained efforts through various training anddevelopment activities with focus on preservation transfer and improvement of skillsknowledge and technology in collaboration with reputed organizations and development ofeffective managerial competencies in association with premier institutes.
Preparing employees for tomorrow for effectively taking up challenges and dischargingnew roles and responsibilities was given a major thrust. Overall 36059 employees weretrained against target of 34822 employees during the year on various contemporarytechnical and managerial modules.
Harmonious Employee Relations
SAIL has maintained its glorious tradition of building and maintaining a conducive andfulfilling employee-employer relations environment. The healthy practice of sorting outand settling issues through discussions with trade unions/workers' representatives enabledthe Company in ensuring workers' participation at different levels and establishing apeaceful IR climate. Some of the bi-partite forums are functioning since early seventiesand are sufficiently empowered to address different issues related to wage safety andwelfare of workers arising from time to time thus helping in establishing a conducivework environment.
Bipartite forums like National Joint Committee for Steel Industry (NJCS) JointCommittee on Safety Health & Environment in Steel Industry (JCSSI) etc. withrepresentation from major central Trade Unions as well as representative
Unions of Plants/Units meet on periodic basis and jointly evolve recommendations/action plans for ensuring a safe & harmonious work culture which gets substantiatedfrom the harmonious Industrial Relations enjoyed over the years by SAIL Plant/Unitsmarked with diverse work culture at multilocations.
In addition Quality Circles Suggestion Schemes Shop Welfare Committees SafetyCommittee Canteen Management Committee Productivity Committee etc. also offer multipleavenues for enhanced workers' participation. Workers are also kept abreast of strategicbusiness decisions and their views sought thereon through structured /interactiveworkshops.
Communication with employees at various levels on a wide range of issues impacting theCompany's performance as well as those related to employees' welfare is done in astructured manner across the Company. Mass communication campaigns are undertaken at CEO /Senior Officers' level involving structured discussion with large group of employees.These interactive sessions help employees to align their working with the goals andobjective of the Company leading to not only higher production and productivity but alsoenhance the sense of belongingness of the employees.
Grievance Redressal Mechanism
Effective internal grievances redressal machinery has been evolved and established inSAIL Plants and Units separately for executives and nonexecutives. Joint grievancecommittees have been set up at Plant/Unit level for effective redressal of grievances.
SAIL Plants/Units are maintaining 3 stage grievance handling system and employees aregiven an opportunity at every stage to raise grievances relating to wage irregularitiesworking conditions transfers leave work assignments and welfare amenities etc.Majority of grievances are redressed informally in view of the participative nature ofenvironment existing in the steel plants. The system is comprehensive simple and flexibleand has proved effective in promoting harmonious relationship between employees andmanagement.
Against 402 staff grievances received during the Financial Year 2016-17 with 1grievance pending from previous year 387 staff grievances have been disposed off duringthe year achieving 96.03% fulfilment.
Further during Financial Year 2016-17 1144 grievances have been received underCentralised Public Grievance Redress and Monitoring System (CPGRAMS) while 17 grievanceshad been carried forward from the previous financial year. Total 1139 grievances have beendisposed off during Financial Year 2016-17 thereby achieving fulfilment rate of 98.10%.All the grievances have been disposed off within 30 days of its receipt against thestipulated time of 60 days.
In SAIL pay and other benefits for executives is based on the Presidential Directivesissued by Ministry of Steel Government of India. The last pay revision effective from01/01/2007 was done in accordance with Presidential Directives dated 05/10/2009. Inaforementioned pay revision variable pay in the form of Performance Related Pay (PRP) hasbeen introduced for executives. The PRP is based on the performance / profitability of theCompany as well as individual performance rating based on Key Performance Areas(KPAs)aligned to the organization objectives. In case of Non-executive employees the salariesand wages are finalized / revised in bipartite forum of National Joint Committee for SteelIndustry (NJCS). The last NJCS agreement was finalized and signed on 01.07.2014 effectivefrom 01.01.2012. In terms of notification issued by the Government of India theprovisions of section 197 of the Companies Act 2013 are not applicable to GovernmentCompanies. As such the disclosures to be made in the Board's Report on the remunerationof Directors and other prescribed details are not included in this Report.
Initiatives for Socio-economic Development of SCs /STs & Other Weaker Sections ofthe Society
SAIL follows Presidential Directives on Reservation for Scheduled Castes (SCs) andScheduled Tribes (STs) in the matter of recruitments and promotions. As on 1.4.2017 outof total manpower of 82964 13604 belong to SCs (16.40%) and 12018 belong to STs (14.49%).
SAIL Plants and Units including Mines are situated in economically backward regions ofthe Country with predominant SC/ST population. Therefore SAIL has contributed to theoverall development of civic medical educational and other facilities in these regions.Some of the contributions are:
Over the years a large group of ancillary industries has also developed in thevicinity of Steel Plants. This has created opportunities for local unemployed persons forjobs and development of entrepreneurship.
For jobs of temporary & intermittent nature generally contractors deployworkmen from the local areas which again provide an opportunity for employment of localcandidates of economically weaker section.
Establishment of SAIL Steel Plants in economically backward areas has given afillip to the economic activities thus benefiting the support population providingdifferent types of services.
Steel Townships developed by SAIL have the best of medical education and civicfacilities and are like an oasis for the local Scheduled Castes Scheduled Tribes andother population who share the fruits of prosperity along with SAIL.
SAIL has undertaken several initiatives for the socio-economic development of SCs/STsand other weaker sections of the society which are mainly as under:
Special Schools have been started exclusively for poor underprivileged childrenat five integrated steel plant locations. The facilities provided include free educationmid-day meals uniforms including shoes text books stationery items school bags waterbottles and transportation in some cases.
No tuition fee is charged from SC/ST students studying in the Company runschools whether they are SAIL employees' wards or non-employees' wards.
Free medical health centres for poor have been set up at Bhilai DurgapurRourkela Bokaro Burnpur providing free medical consultation medicines etc. to theperipheral population mainly comprising of SC/ST and weaker sections of society.
SAIL Plants have adopted tribal children. They are being provided freeeducation uniforms textbooks stationery meals boarding lodging and medicalfacilities for their overall growth at residential hostels Saranda Suvan ChhatravasGyanodaya Hostel and an exclusive Gyan Jyoti Yojana for nearly extinct Birhor Tribe.
For Skill Development and better employability tribal school passouts have beensponsored for coaching in premier institutes for IIT/JEE entrance examinations and fortrainings along with monthly stipend accommodation transportation and fooding facilityat various ITIs Nursing and other vocational training institutes.
Implementation of Presidential Directives on Reservation for SC/ST
Liaison Officers have been appointed as per Presidential Directives for duecompliance of the Orders and instructions pertaining to reservation for SCs/STs/OBCs atPlants/Units of SAIL.
SC/ST Cell is functioning in all of the main Plants/Units. A member belonging toSC/ST community is associated in all DPCs/Selection Committees. A sufficiently seniorlevel officer of SC/ST category is nominated for the purpose as per the level of theRecruitment Board / Selection Committees/DPC.
Internal workshops for Liaison Officers for SC/ST/OBC and other dealing officersof SAIL Plants/Units are conducted at regular intervals through an external expert to keepthem updated on the reservation policy for SC/ ST and other related matters.
Plants/Units of SAIL have SC/ST Employees' Welfare Associations which conductregular meetings with Liaison Officers on implementation of reservation policy & otherissues. In addition an Apex level umbrella body namely SAIL SC/ST Employees Federationalso exists in SAIL to represent the issues of SC/ST Employees in a coordinated manner. Ameeting with the Federation at the level of Director (Personnel) is organised on a regularbasis.
Implementation of Right to Information Act 2005
The provisions under the Right to Information Act 2005 (RTI Act) are being complied byall Plants and Units of SAIL. All statutory reports including Annual Report are being sentto Ministry of Steel and also being uploaded on the website of the Company. Your Companyhas appointed Public Information Officers(PIO)/Asstt. Public Information Officers andAppellate Authorities and Transparency Officer under Section 5 and Section 19(1) of theRTI Act in each Plant and Unit for speedy redressal of the queries received under the Act.Under Sec.5(5) all the officers/ line managers responsible for providing information tothe PIO are called Deemed PIO and are made equally responsible as PIO towards timelyprovision of information to the applicant.
An exclusive RTI Portal has been developed with link available on the website of theCompany. All the Plants/Units have listed 17 manuals and details of Authorities under theAct are uploaded on the website of the Company. Quarterly
Returns and Annual Returns on implementation of RTI Act are being submitted onlinethrough the CIC portal. Implementation of online request has already been introduced from1st May 2015. A compilation of Record Retention Policy of various functions ofCorporate Office has also been uploaded on the website of the Company. In addition tothis compilations of important decisions of CIC DOPT circulars and High Court cases arealso available on the website of the Company.
Awareness Programs/Workshops on 'Obligation of Public Authorities under RTI' are beingorganised across Plants/Units and Information Commissioner has been present in most ofthese programs. Further Awareness Programmes on RTI Act are held at Plant Units andCorporate Office regularly.
SAIL received a total of 3564 applications and 612 appeals under RTI Act 2005 duringthe Financial Year 2016-17 all of which have been disposed off within the stipulated timeframe under the Act. CIC has also taken up 82 cases and most of these cases were disposedoff in favour of the Company.
Your Company is totally committed to excellence in public service delivery through goodgovernance by a laid down process of identifying citizens our commitment to them inmeeting their expectations and our communication to them of our key policies in order tomake the service delivery process more effective.
SAIL's Citizen Charter has outlined commitment of SAIL towards its stakeholdersthereby empowering them to demand better products and services. Objectives of theCitizen's Charter of SAIL may be summarized as below:
Ensuring citizen-centric focus across all its processes by adopting TotalQuality Management principles for improvement of products and services.
Ensuring effective citizen communication channels.
Demonstrating transparency and openness of its business operations by hostingthe Citizen's Charter on the Corporate website.
Working towards delight of citizens by fail-safe processes and in case ofexigencies leveraging its service recovery processes like Grievance Redressal HandlingComplaints etc.
Disclosure under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013:
The Company has in place a system of Complaints Committees (under SAIL ConductDiscipline and Appeal (CDA Rules 1977) in line with the requirements of the SexualHarassment of Women at the Workplace (Prevention Prohibition and Redressal) Act 2013.These Committees have been set up to redress complaints received regarding sexualharassment. All employees of the Company are covered under these Rules. The following is asummary of sexual harassment complaints received and disposed off during the year 2016-17:
Number of complaints received : 5
Number of complaints disposed off : 6
(including 1 pending of previous year)
D. AWARDS & ACCOLADES WON DURING THE YEAR
Your Company has won 7 Prime Minister's Shram Awards (involving 26 employees)for the year 2015.
Your Company has won 10 Vishwakarma Rashtriya Puraskar Awards (involving 42employees) for the performance year 2015.
Your Company has won Gold Trophy of "SCOPE Meritorious Award for BestPractices in Human Resource Management" for the year 2014-15.
Your Company has won Golden Peacock Award for Corporate Governance by theInstitute of Directors India for the year 2016.
Your Company bagged the Governance Now PSU Award 2016 under the award category'Relative Growth & Adaptation'.
Your Company was awarded the Ispat Rajbhasha Trophy for the year 2014-15 forSAIL's best official language implementation.
Bhilai Steel Plant
CII-Exim Bank Business Excellence Award 2016 organized by the CII Institute ofQuality.
Excellence Award in the category of Integrated Steel Plants under Iron &Steel Sector for the year 2015-16 in the State Level Sustainable Energy Awards-2016 byChhattisgarh State Renewable Energy Development Agency (CREDA).
Vayoshreshtha Samman for the "Best Public Sector Organization in Promotingthe Well Being and Welfare of Senior Citizens" on the occasion of International Dayfor Older Persons at Vigyan Bhawan New Delhi on 1st October 2016.
NARAKAS Bhilai-Durg bagged the "Madhya Kshetriya Pratham Puraskar" forthe year 2015-16.
Best Chapter Award for QCFI Bhilai Chapter in the event "NCQC-2016"held in Raipur for significant contribution towards Quality propagation.
17 Quality Circle Teams won awards (15 Par Excellence and 2 Excellence) fromQCFI during their 30th National Convention on Quality Concepts.
Durgapur Steel Plant
10 Quality Circle Teams won awards (8 Par Excellence and 2 Excellence) from QCFIduring their 30th National Convention on Quality Concepts.
Rourkela Steel Plant
CII EXIM Bank Business Excellence Award for Strong Commitment to Excellence forthe year 2015-16.
Coal & Coke Zone and Steel and CCM Zone bagged 'Zero Fatality' awards forthe years 2015 and 2016 respectively from the Joint Committee on Safety Health &Environment in the Steel Industry (JCSSI).
8 Quality Circle Teams won awards (6 Par Excellence and 2 Excellence) from QCFIduring their 30th National Convention on Quality Concepts.
Bokaro Steel Plant
Golden Peacock HR Excellence Award for the year 2016
Gold Award in Training Excellence Category at the 6th Annual Greentech HR Awardfor the year 2015-16.
Energy Management Department First Prize in CII (ER) Productivity Awards 2016.
6 Quality Circle Teams won awards (1 Par Excellence and 5 Excellence) from QCFIduring their 30th National Convention on Quality Concepts.
Visvesvaraya Iron & Steel Plant
Ispat Suraksha Puraskar for 'No fatal accident occurred during the CalendarYears 2015 & 2016 under Scheme-II Group (B) (Special Steel Plant)' by Joint Committeeon Safety Health & Environment in the Steel Industry.
Ispat Suraksha Puraskar for 'No fatal accident occurred involving ContractLabour during the Calendar Years 2015 & 2016 under Scheme-II Group (B) (Special SteelPlant)'by Joint Committee on Safety Health & Environment in the Steel Industry.
Salem Steel Plant
Ispat Suraksha Puraskar for 'No fatal accident' during the Calendar Year 2016under Scheme-II Group (B) (Special Steel Plant).
Ispat Suraksha Puraskar for 'No fatal accident' involving Contract Labour duringthe Calendar Year 2016 under Scheme-IV Group (B) (Special Steel Plant).
National Award for the Empowerment of Persons with Disabilities-2016. (BestEmployee with Disabilities under Hearing Impairment Category) from Hon'ble President ofIndia on 03.12.2016 at Vigyan Bhawan New Delhi.
Raw Materials Division
8 Quality Circle Teams won awards (5 Par Excellence and 3 Excellence) from QCFIduring their 30th National Convention on Quality Concepts.
Research & Development Centre for Iron & Steel
National G-cube (Good Green Governance) Award 2016 at Delhi on Earth Day 22ndApril 2016.
E. ENVIRONMENT MANAGEMENT
Your Company is commited to conduct operations in an environmentally responsible mannerto comply with applicable legal and other requirements related to the environmentalaspects. The environmental vision of the Company is drawn from the tenets of the Policywhich not only stresses on the need to remain in compliance but also to strive to gobeyond address stakeholder concerns and communicate Company's environmental philosophyto all the stake holders.
Improvement in Emissions and Discharges
Concerted efforts have been put over the last few years with a view to conduct variousoperations in an environment friendly manner. These have resulted in reduction ofemissions and discharge levels increase in utilization of solid wastes and green cover.The Plants are effectively maintaining the air pollution control devices and regularlyup-grading them in order to maintain the norms which are becoming stringent day by day.Through continuous efforts the specific Particulate Matter (PM) emission load from themajor stacks has reduced by more than 12% in the last five years. Moreover as a part ofthe on-going expansion cum modernisation projects state of the art technologies are beinginstalled to further bring down the pollution level and CO2 emission. Duringthe last five years the specific CO2 emission has been reduced by more than5%.
Water pollution level at the Steel Plants are taken care by effective utilisation ofthe installed Effluent Treatment Plants (ETPs) at various shops rejuvenation of theexisting water re-circulation systems and recycling of used water for other operationalpurposes. The treated effluent from the ETPs are then let out through the outfallsoutside the Plant boundary only after meeting the stipulated
norms of effluent discharge. The specific effluent load of the discharges have reducedby more than 21% in the last five years. The quality of discharges through the outfallshas remained well within the stipulated norms at all the Plants.
Major Pollution Control facilities installed during the year
Secondary emission control facility equipped with dog house and ESPs for newconverter (#3) at SMS-2 of RSP
Comprehensive Effluent Treatment Plant at the existing Hot Strip Mill of RSP
Primary emission control facility with Converter#5 of SMS-1 at RSP
a. Use of Weathered LD Slag as Rail Track Ballast
The physical properties of Weathered LD Slag (WLD Slag) meet the specification requiredfor stone ballast for use as rail track ballast. In response to a proposal by the CompanySouth Eastern Railway (SER) has agreed to conduct a field trial at the Bokaro Rail Yardwith the WLD Slag from BSL. Field trial in association with SER has started from June2015 at Ispat Nagar Railway Yard Bokaro. Inspections of the track parameters are beingcarried out jointly by the representatives of the SER and SAIL on monthly basis whichshall continue for a total period of about two years.
b. Bio-sequestration of CO2
Job assigned to M/s. Tropical Forest Research Institute as the sequestration partnerfor the project which is being implemented at RSP The following activities have beencompleted till the Financial Year 2016 -17:
Vegetation survey identification of high carbon sequestering species trainingdevelopment of nursery at site.
Submission of reports for Biodiversity Soil Organic Carbon SoilCharacterisation and on quantification of existing total carbon stock in vegetationdeadwood and litter.
Scheduled completion of the project is by March 2019.
Environmental Management System linked with ISO-14001:2004
Environmental Management System (EMS) linked to ISO-14001 is a set of processes andpractices that enable an organization to reduce its environmental impacts and increase itsoperating efficiency. Implementation of EMS has helped the Plants and Mines to ensure thattheir performance remain within the regulatory requirements.
During the Financial Year 2016-17 implementation of EMS-ISO-14001:2004 was completedat the CMO Warehouses at Bangalore and Bokaro.
Sustainable Development Projects
Eco-restoration of mined out areas: As a part of the on-going SustainableDevelopment Project on long term maintenance of ecologically restored 250 acre Limestonemined out area and 200 acre water body of mine void at PLDQ Purnapani more than 10000saplings of different native plant species and more than 2000 saplings of medicinal plantswere planted during the year.
Training was provided to around 100 villagers (mostly from tribal community)from Purnapani and neighbouring villages on practicing of silviculture apiculturepisciculture etc.
Your Company realizes the role of plantation in overall environmental managementinitiatives. It is a well-known fact that plants play an important role in the eco systemand function as a carbon sink. Extensive afforestation programme has been religiouslyfollowed in all the Plants and Mines over the past few decades. Around 2.10 lakhs saplingswere planted in and around SAIL Plant and Mines during the year 2016-17.
Other Environmental Efforts
Your Company observed January 2017 as Water Conservation Month with theobjective to reduce water consumption by 25% through various awareness programmes andworkshops.
Corporate Sustainability Report 2015-16 in accordance with 'core option' ofGRI's G4 Guidelines has been published through in-house resources and has been up-loadedon the website of the Company.
For the first time a third party compliance audit for environmental performancewas conducted at BSP The consultant M/s. Bhagvati Ana Labs Pvt. Ltd. Hyderabad (a BureauVeritas Group Company) a NABET accredited agency has submitted the report within theschedule time.
F. STRATEGIC INITIATIVES OF THE COMPANY
Your Company has adopted a multi-pronged approach that includes organic growthbrown-field projects technology leadership through strategic alliances ensuring rawmaterial security by developing new mines diversifying in allied areas etc. In line withthe above approach SAIL has formed Joint Venture Companies in different areas viz. powergeneration rail wagon manufacturing slag cement production securing coking coalsupplies from indigenous as well as imported sources etc. New initiatives are currentlybeing explored in areas such as outsourcing of power distribution and educationalfacilities in SAIL townships forged roll manufacturing etc. The status of StrategicInitiatives taken by your Company in the recent past includes the following:
SAIL has undertaken a company-wide transformational and turnaround programme"SAIL Uday" supported by M/s. Boston Consulting Group (BCG) one of the topglobal consulting firm covering improvements for all functions in the Plants and Unitswhile reviewing and sharpening our business strategy and processes. BCG shall study thepresent health of the Company and suggest suitable measures for its turnaround. The"SAIL Uday" initiative is expected to drive the Company towards profitability aswell as build for sustained market leadership.
Disinvestment of SAIL Plants: The Cabinet Committee on Economic Affairs (CCEA) inits meeting held on 27.10.2016 has 'in-principle' decided for strategic disinvestment ofAlloy Steels Plant (ASP) Durgapur; Visvesvaraya Iron and Steel Plant (VISP) Bhadrawati;and Salem Steel Plant (SSP) Salem. The process is being carried out with the help ofAdvisors (Transaction Advisor Legal Advisor and Asset Valuer).
Development of Rowghat - Jagdalpur Rail Corridor in the State of Chhattisgarh: Withthe aim of bringing about greater socio-economic development of the backward areas ofBastar region in Chhattisgarh and to further the industrial progress and mining activitiesof the region an MOU was signed amongst SAIL NMDC Ltd. IRCON International Ltd. andGovernment of Chhattisgarh in May 2015 for development of a rail corridor from Rowghat toJagdalpur. This rail corridor shall be used for both freight and passenger services in theSouthern part of Chhattisgarh. A new Joint Venture Company under the name "BastarRailway Private Limited" has been incorporated in May 2016. The survey work &feasibility study for Railway line is being undertaken by IRCON.
Rail Transportation: A Joint Venture Company(JVC) between SAIL and RITES viz."M/s. SAIL RITES Bengal Wagon Industry Pvt. Ltd. (SRBWIPL)" has been formed formanufacture and rehabilitation of railway wagons. The JVC has commenced commercialoperations at its factory at Kulti West Bengal and Orders from Railways are beingexecuted.
JV with ArcelorMittal for production of automotive steel: In line with Make inIndia programme of Govt. of India SAIL and ArcelorMittal signed an MOU in May 2015 toexplore the possibility of setting up an automotive steel manufacturing facility under aJoint Venture (JV) in India. The proposed JV will construct a state-of-the-art ColdRolling Mill (CRM) and other downstream finishing facilities in India that will offertechnologically advanced steel products to India's rapidly growing automotive sector.Joint Task Force of SAIL and ArcelorMittal is working on feasibility study location ofunit and business model for the alliance. Based on the outcome of Joint Study definitiveagreements for setting up the JV Company shall be entered into.
Ultra Mega Steel Project: With the aim to develop large capacity mega steelprojects in the Country which would help India in achieving the capacity growth of 300million tonnes of crude steel Ministry of Steel has evolved a concept of developing UltraMega Steel Plants. SAIL is participating for setting up of an Ultra Mega Steel Plant ofcapacity (3+3) or (4+2) MTPA (million tonnes per annum) in Bastar Chhattisgarh. An MoU tothis effect was signed amongst SAIL NMDC Ministry of Steel and Government ofChhattisgarh in May 2015 at Dantewada in the presence of Hon'ble Prime Minister. NewJoint Venture Companies for Steel SPV and Mining SPV have been formed. MECON has submitteda report for probable sites for the steel plant. Activities related to land acquisitionland development etc. would be initiated after the iron ore mine is leased to the MiningSPV by the State Government.
Business Excellence Initiatives
SAIL has adopted European Foundation of Quality Management (EFQM) Model which isimplemented in India through CII-EXIM Bank Award for Business Excellence. BSP has beenawarded the PRIZE (Score of 600+) consecutively for the second year. Amongst PSUs BSP isonly the second PSU ever to be awarded the Prize. It is also the only PSU to receive thePRIZE twice. In steel arena BSP has been the only steel maker ever to have achieved thiscoveted distinction twice in a row.
Total Quality Management (TQM)
Most of SAIL Plants/Units of your Company are certified to ISO 9000 ISO 14000 OHSAS18000 and SA 8000 Management Systems. DSP & BSL have also implemented ISO 50000(Energy Management System). In addition to other Management Systems DSP BSL & RDCIShave also implemented ISO 270000 (Information Security System). Following Certificationswere achieved during 2016-17:
BSL - ISO : 27000 ISMS certification.
RSP - New Plate Mill certified to ISO 9000 QMS.
The Certification Agencies for four Management Systems i.e. ISO 9000 ISO 14000 OHSAS18000 & SA 8000 were empanelled in 2013 for three years for first time. The systemresulted in reduction in cost reduction in audit man- days ease of operation in engagingCertification Agencies improved quality of audits and reduced administrative hassles.Second cycle of empanelment for three years has been completed with an extended scopewhich includes Management System related to training in addition to the Certification forthe Management Systems mentioned above. With a view to enhance awareness of BusinessExcellence Initiatives sharing of Knowledge and Best Practices 3rd Annual e-BE Journalwas prepared and uploaded on Portal. The other ongoing initiatives across organisation areQuality Circles 5-S Six Sigma and TPM implementation.
IT Related Initiative
Your Company has embarked upon various Information Technology (IT) initiatives dulyaligned with its business goals and vision to maintain its competitive position in themarketplace.
Through Enterprise Resource Planning (ERP) the best global practices in all majorfunctions like procurement sales and distribution production finance etc. have beenimplemented at 4 Integrated Steel Plants i.e. BSP DSP BSL & RSP and Central MarketingOrganization. ERP implementation at IISCO Steel Plant and at Corporate Office for SAILwide data consolidation through integration of all Plants/Units is in progress. Bettermarket reach and transparency has been achieved through Supplier Relation Management(SRM)/ e-Procurement. SAIL has also been able to connect with customers through CustomerRelationship Management. Seamless integration of IT driven automation applications has ledto the evolution of an organisation-wide information backbone with better control andfaster execution of various processes.
Production data has its roots in the strong foundation of 'Manufacturing ExecutionSystems' (MES) which has benefitted SAIL in achieving the market expectations by makingthe production and the associated processes cost quality and delivery efficient.
Various steps have been taken up to promote 'Digital India Initiative' and systems arebeing upgraded to maximize paperless/cashless transactions in business/ employee welfareareas. As a step forward various mobile applications are also being developed.
Utmost care is being taken for internal financial control for protection and securityof data & information. To ensure data security steps have been taken at allPlants/Units for Information Security Management System (ISMS):ISO certification.
For better face to face discussions and reduction in tour & travel expensesexisting Video Conference system has been upgraded to High Definition System along-withstrengthening network bandwidth connecting all Plants & Units of the Company.
Your Company recognizing the need for continuous efforts required for brand buildingand maintaining streamlined internal and external communications undertook various newand innovative efforts during 2016-17.
Your Company actively participated in a number of exhibitions & fairs includingIndia Steel Expo BRICS Summit Vibrant Gujarat India Maritime Summit IndiaInternational Trade Fair CSR Fair etc. Also 2017 marks "70 years of Indo RussiaFriendship" and in this regard SAIL took part in the India Sourcing Fair which washeld in St. Petersburg. These events saw massive participation of senior dignitaries ofthe Government of India public & private sector and industrial participants fromaround the globe. Brand building exercises also included a number of initiatives toconnect with stakeholders through news web phone alerts media features daily newssummaries etc.
Advertising in different media formats including print outdoor television mobile andinternet has been a major focus of corporate communication activities at SAIL. In linewith your Company's strategy SAIL's advertising and visibility efforts across differentformats highlight use of SAIL steel in projects of national importance apart fromshowcasing the core features of SAIL's products which stand for quality durabilityendurance dependability and nation building.
G. VIGILANCE ACTIVITIES
The objective of SAIL Vigilance is to facilitate an environment enabling people to workwith integrity efficiency and in a transparent manner upholding highest ethicalstandards for the organization. To achieve this objective the Vigilance Departmentcarries out preventive proactive and punitive actions with greater emphasis in thepreventive and proactive functions. Following activities were undertaken during theFinancial Year 2016-17:
To increase vigilance awareness amongst employees vigilance awareness sessionsand workshops were regularly held at the various Plants and Units. A total of 143workshops involving 2938 participants were organized for enhancing Vigilance Awareness onWhistle Blower Policy Purchase/ Contract procedures RTI Act Conduct & DisciplineRules System and Procedures followed in SAIL etc.
Periodic surprise checks including Joint Checks were conducted regularly invulnerable areas of the Company. A total of 2531 periodic checks including file scrutinyand Joint Checks were conducted at different Plants / Units. A saving of approx. '23.81crores accrued from the preventive vigilance activities mainly on account of thesesurprise checks.
Vigilance provides vital inputs to the operating authorities for improving theprevailing systems for bringing about more transparency. Accordingly eight major SystemImprovement Projects (SIPs) were undertaken at different Plants/Units of SAIL.
19 cases were taken up for Intensive Examination at different Plants / Units.During these Intensive Examinations high value procurement / contracts are scrutinizedcomprehensively and necessary recommendations are forwarded to concerned departments forimplementing suggestions for improvement.
As per the Guidelines of Central Vigilance Commission Vigilance Awareness Weekwas observed in SAIL during 31st October to 5th November 2016. On the opening day i.e.31st October 2016 Pledge was administered to the employees by Chairman SAIL and CVOSAIL at Corporate Office and by respective Chief Executives at Plants / Units. During theweek a booklet on "Preventive Vigilance- Do's & Don'ts" and 16th edition of"Inspiration" the in-house journal of SAIL Vigilance were released. Variousevents including talk by eminent personalities essay/ debate/quiz competitions etc. foremployees/ families interaction with vendors/contractors were also organized across SAIL.In addition as an outreach measure essay/debate/poster competitions were organisedamongst students of various schools / colleges located at various townships and the citieslike Delhi Kolkata Chennai etc. Events like Walkathon / March against Corruption wereorganised at DSP Durgapur & VISL Bhadrawati wherein general public students NGOsalso participated. Detailed report on observance of Vigilance Awareness Week- 2016 hasbeen sent to CVC.
The following three thrust areas were identified by SAIL Vigilance:
i) Implementation of e-procurement in Contract Cell (Works & Nonworks) includingTownship Contracts.
ii) Installation of CCTV cameras at sensitive areas.
iii) Surveillance in the areas of receipt sampling & testing of high value rawmaterials.
With a view to introduce analytics in the areas of procurement &contracting in order to generate exception alerts and red flags for corrective action /system improvements Business Intelligence (BI) Modules have been developed in theexisting SAP/ERP system in Integrated Steel Plants and Central Marketing Organisation.
A Vendors' Meet was organized on "Success through Synergy" at NewDelhi on 16th July 2016. The programme was chaired by Chairman SAIL where IEMs of SAILCVO SAIL and Functional Directors of SAIL were present. Around 33 senior ManagementExecutives from global / indigenous Vendors for Projects and Corporate Material ManagementGroup attended the programme.
Certain vulnerable points were identified in the Plants/Units such as weighbridges dispatch and unloading points entry and exit points for goods places ofsampling and chemical analysis of received materials etc. on the advice of SAILVigilance. CCTV and allied data recording systems have been installed at these places formonitoring and surveillance which would help in preventing fraudulent activities at theabove sensitive areas.
It has been decided to introduce GPRS/GPS system for monitoring the movement oftippers /dumpers which are to be used by contractors for transportation of Iron Ore torailway sidings which are at far-away locations. The fleet monitoring system has beenintroduced in Kalta Iron Ore Mines and is being extended to other mines.
'Inspiration- Prerna' an in-house publication of SAIL Vigilance is beingpublished regularly. The above publication contains case studies articles from eminentpersonalities quiz on policy matters etc. to enhance awareness of the readers.
The Company has adopted Vigil Mechanism for conducting the affairs in a fair andtransparent manner by adopting highest standards of professionalism honesty integrityand ethical behaviour. All employees of the Company and Directors on the Board of theCompany are covered under this Mechanism. This Mechanism has been established foremployees to report concerns about unethical behaviour actual or suspected fraud orviolation of Code of Conduct. It also provides for adequate safeguards against thevictimization of employees who avail the Mechanism and allows direct access to theChairperson of the Audit Committee in exceptional cases.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
As per the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015Management Discussion and Analysis Report covering the performance and outlook of theCompany is attached and forms part of the Annual Report.
The Statutory Auditors' Report on the Accounts of the Company for the Financial Yearended 31st March 2017 along with Management's replies thereon is placed at Annexure-I.The Comments of Comptroller and Auditor General of India (C&AG) on the accounts of theCompany for the Financial Year ended 31st March 2017 under Section 143(6) ofthe Companies Act 2013 and the Managements' replies thereto are placed at Annexure-II.
Pursuant to the direction of the Central Government for Audit of Cost Accounts theCompany has appointed M/s. Sanjay Gupta & Associates New Delhi M/s. Shome &Banerjee Kolkata and M/s. R.J. Goel & Co. New Delhi as Cost Auditor(s) for theFinancial Year 2017-18.
SECRETARIAL AUDITOR'S REPORT
In terms of the provisions of Section 204 of the Companies Act 2013 the Board ofDirectors have appointed M/s. Agarwal S. & Associates Company Secretaries as theSecretarial Auditor to conduct Secretarial Audit of the Company for the Financial Yearended on 31st March 2017. Secretarial Audit Report is placed at Annexure-III.
With regard to the observation of the Secretarial Auditor that composition of theBoard of Directors of the Company was not in compliance with Regulation 17(1) ofSecurities and Exchange Board of India (Listing Obligations & Disclosure Requirements)Regulations 2015 and Clause 3.1.4 of the DPE Guidelines on Corporate Governance forCentral Public Enterprises it is stated that appointment of Independent Directors on theBoard of the Company is made by the Company based on nomination by Government of India.The Company has requested Ministry of Steel Government of India for nomination ofrequisite number of Independent Directors on its Board.
In respect of observation regarding performance evaluation of the Directors being notcarried out as per the Regulation 17(10) & 25(4) of Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 it is mentionedthat Ministry of Corporate Affairs has vide its notification dated 5th June 2015 hasexempted Government Companies from the provisions of the Companies Act 2013 whichinter-alia provides that Sub Sections (2) (3) & (4) of Section 178 regardingappointment performance evaluation and remuneration shall not apply to Directors of theGovernment Companies. Further the Ministry of Corporate Affairs vide notification dated5th July 2017 has notified certain amendments in Schedule IV of the Companies Act 2013relating to Code for Independent Directors. As per the notification the clauses relatingto evaluation of performance of NonIndependent Directors Chairperson and Board inSchedule IV have been exempted for Government Companies.
In terms of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 aReport on Corporate Governance and Auditors' Certificate thereon form part of the AnnualReport. In terms of the SEBI Regulations the Board has laid down a Code of Conduct forall Board Members and Senior Management of the Company. The Code of Conduct has beenposted on the website of the Company. All the Board Members and Senior ManagementPersonnel have affirmed compliance with the Code.
BUSINESS RESPONSIBILITY REPORT
As per Regulation 34(2)(f) of the SEBI(Listing Obligations and Disclosure Requirements)Regulations 2015 the Business Responsibility Report describing the initiatives taken bythe Company from Environmental Social and Governance perspective forms part of the AnnualReport. SUBSIDIARIES JOINT VENTURES AND ASSOCIATES IISCO-Ujjain Pipe and FoundryCompany Limited a wholly owned subsidiary of the erstwhile Indian Iron and Steel CompanyLimited (IISCO) was ordered to be wound up by BIFR. The Official Liquidator is continuingits liquidation process.
Your Company has four other subsidiary Companies namely SAIL Refractory CompanyLimited (SRCL) SAIL Jagdishpur Power Plant Limited SAIL Sindri Projects Limited andChhattisgarh Mega Steel Limited. SRCL is operating the Salem Refractory Unit which wasacquired by SAIL from Burn Standard Company Limited on 16th December 2011. SAILJagdishpur Power Plant Limited incorporated for setting up of Gas based power Plant atJagdishpur and SAIL Sindri Projects Limited incorporated for revival of Sindri Unit ofFertilizer Corporation of India Limited have not taken off. Under present situation theobjectives with which these Companies were incorporated are difficult to achieve hencethe Board of Directors of your Company has decided to close SAIL Jagadishpur Power PlantLimited and SAIL Sindri Projects Limited. Further actions for closure of these Companiesare being taken. Chhattisgarh Mega Steel Limited which was incorporated as a SpecialPurpose Vehicle for setting up of an Ultra Mega Steel Plant of 6 Million Tonnes per annumas a green field steel project under Joint Venture is yet to commence operation.
The Annual Accounts of the subsidiary Companies and related detailed information shallbe made available to the Shareholders of the holding and subsidiary companies seekingsuch information at any point of time. Further the Annual Accounts of the subsidiarycompanies are available for inspection by any Shareholder in the Registered Office of theCompany and of the Subsidiary Companies concerned between 11 AM to 1 PM on working days. Ahard copy of the details of accounts of subsidiaries shall be furnished to theshareholders on receipt of written request.
CONSOLIDATED FINANCIAL STATEMENTS
Pursuant to provisions of Section 129 (3) of the Companies Act 2013 the duly AuditedConsolidated Financial Statements are placed at Annexure-IV. The StatutoryAuditors' Report on the Consolidated Financial Statements along with the Management'sreplies thereon is placed at Annexure-V. The Comments of Comptroller and AuditorGeneral of India (C&AG) on the Consolidated Financial Statements of the Company forthe Financial Year ended 31 st March 2017 and the Management's replies theretoare placed at Annexure-VI. Further the statement containing salient features ofthe financial statements of the subsidiary joint venture and associate companies in theprescribed Form AOC- 1 is placed at Annexure -VII.
EXTRACT OF ANNUAL RETURN
The Extract of Annual Return in Form MGT-9 as per the provisions of the Companies Act2013 and Rules prescribed therein is placed at Annexure-VIII.
During the year 12 meetings of the Board of Directors of the Company were held thedetails of which are given in the Corporate Governance Report forming part of the AnnualReport.
The Audit Committee of the Board was initially formed by the Company in 1998. The AuditCommittee has been reconstituted from time to time in terms of the SEBI Regulations andCompanies Act 1956/2013. The minutes of the Audit Committee meetings are circulated tothe Board discussed and taken note of. The composition and other details pertaining tothe Audit Committee are included in the Corporate Governance Report.
INTERNAL FINANCIAL CONTROLS (IFCs) AND ITS ADEQUACY
The Company has well established and documented policies and procedures for ensuringthe orderly and efficient conduct of business including adherence to various policies andprocedures for safeguarding its assets prevention and detection of frauds and errorsaccuracy and completeness of the accounting records and timely preparation of reliablefinancial disclosures. Further the Company has adopted a corporate governance structurevarious management processes controls policies and guidelines that drive theorganization towards its business objective while also satisfying various stakeholders'needs. Some of your Company's robust protocols such as independent internal audit welldrafted and documented policies guidelines procedures regular review by Audit Committee/ Board etc. helps in compliance of Internal Financial Controls under the Companies Act2013 SEBI (LODR) Regulations 2015 etc. Your Company is commited to the higheststandards of Corporate Governance where the Board is accountable to all stakeholders forreporting effectiveness of Internal Financial Controls (IFCs) and its adequacy. CorporateGovernance has been carried out in accordance with the Companies Act 2013 and SEBI (LODR)Regulations 2015 etc.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(3)(c) of the Companies Act 2013 the Directors state that:
(i) in the preparation of the Annual Accounts the applicable Accounting Standards havebeen followed along with proper explanation relating to material departures;
(ii) 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 at the end of the Financial Year and ofthe profit or loss of the Company for that period;
(iii) the Directors have taken proper and sufficient care for the maintenance ofadequate Accounting Records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) the Directors have prepared the Annual Accounts on a Going-Concern basis;
(v) the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and
(vi) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
INDEPENDENT DIRECTORS' DECLARATION
In terms of Section 149(7) of the Companies Act 2013 necessary declaration has beengiven by each Independent Director stating that he/she meets the criteria of independenceas provided in sub-section (6) of Section 149 of the Companies Act 2013.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186
The details of Loans Guarantees Investments given during the Financial Year ended on31st March 2017 are given in Annexure-IX. in compliance with theprovisions of Section 186 of the Companies Act 2013 read with Companies (Meetings ofBoard and its Powers) Rules 2014.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO INSUB-SECTION (1) OF SECTION 188
All the contracts / arrangements / transactions entered by the Company during theFinancial Year 2016-17 with the related parties were in the ordinary course of businessand on an arm's length basis. The transactions with the related parties have beendisclosed in the financial statements. Therefore particulars of contracts or arrangementswith related parties referred to in Section 188(1) along with the justification forentering into such contract or arrangement in Form AOC-2 do not form part of the Report.
DIVIDEND DISTRIBUTION POLICY
In terms of the Regulation 43A of SEBI(Listing Obligations and Disclosure Requirements)Regulations 2015 the Board of Directors of the Company has adopted Dividend DistributionPolicy and the same is given at Annexure-X to this Report. The Policy has also beenuploaded on the website of the Company www.sail.co.in.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
In accordance with the provisions of Section 134(3)(m) of the Companies Act 2013 readwith Rule 8 of the Companies(Accounts) Rules 2014 the particulars relating toConservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo aregiven in Annexure-XI to this Report.
RISK MANAGEMENT POLICY
Enterprise Risk Management (ERM) is a strategic business discipline that supports theorganization's objectives by addressing full spectrum of its risks and managing thecombined impact of those risks as an inter-related risk portfolio. The Risk ManagementPolicy of your Company was approved by the Board much before the same became a statutoryrequirement and since then the risk management in SAIL has grown and developed in linewith internal and external requirements. The Policy provides guidance for the managementof the business risks across the organisation. It focuses on ensuring that the risks areidentified evaluated and mitigated within a given time frame on a regular basis.
Currently the architecture of Enterprise Risk Management in SAIL comprises awell-designed multi-layered organization structure with each Plant/Unit having its ownperceived Risks which are under the constant monitoring by the Risk Owners / RiskChampions who frame and implement the mitigation strategy and take it to its logicalconclusion. Risk Management Committee of
the Plant/Unit Chaired by the Head of the Plant /Unit periodically reviews the risksand its mitigation status and reports the same to Chief Risk Officer (CRO) of SAIL. SAILRisk Management Committee (SRMC) oversees the Risk Management function in the Company byaddressing issues pertaining to the policy formulation as well as evaluation of riskmanagement function to assess its continuing effectiveness. Risks identified by the RiskChampion/Risk Officer are deliberated in the Risk Management Committee escalated and drawthe mitigation strategy. Roles and responsibility of Board Audit Committee SAIL RiskManagement Committee Risk Management Steering Committee CRO Risk Officer/Risk Championrelated to risk management are defined under the Policy and duly approved by the Board.
CORPORATE SOCIAL RESPONSIBILITY
SAIL's Social Objective is synonymous with Corporate Social Responsibility (CSR). Apartfrom the business of manufacturing steel the objective of the Company is to conductbusiness in ways that produce social environmental and economic benefits to thecommunities in which it operates. For any organization CSR begins by being aware of theimpact of its business on society. With the underlying philosophy and a credo to make ameaningful difference in people's lives your Company has been structuring andimplementing CSR initiatives right from the inception. These efforts have seen the obscurevillages where SAIL Plants are located turn into large industrial hubs today.
The CSR initiatives of your Company have always been undertaken in conformity to theCompanies Act 2013 Companies (Corporate Social Responsibility Policy) Rules 2014 andDPE Guidelines on CSR & Sustainability 2014. SAIL carries out CSR projects in andaround periphery of steel townships mines and far flung location across the Country inthe thrust areas falling in line with the Schedule-VII of the Companies Act 2013 namelyEducation providing Medical and Health Care facilities village development access towater facilities infrastructural development in peripheral rural areas environmentconservation women empowerment assistance to people with disabilities sustainableincome generation through self help groups promotion of sports art culture &heritage conservation etc.
The details of various CSR initiatives taken by the Company alongwith the Report on CSRin prescribed format are placed at Annexure-XII. The CSR Policy of the Company isavailable on the website of the Company- www.sail.co.in.
Swachh Bharat Abhiyaan-Swachh Vidyalaya Abhiyaan: Your Company has been activelyparticipating in the "Swachh Bharat Abhiyan" initiated by the Hon'ble PrimeMinister of India. Under the campaign construction of 672 toilets in schools fallingwithin the periphery of its Plants & Mines in the States of Chhattisgarh West BengalOdisha Jharkhand Madhya Pradesh and Tamil Nadu; as allocated to SAIL by Ministry of HRDhad been undertaken and completed. Facilities like squatting units urinals washbasin andoverhead water storage have also been provided.
Healthcare: SAIL's extensive and specialised healthcare infrastructure providedspecialized and basic healthcare to 99 lakh people living in the vicinity of its Plantsand Units during the period 2011-16. In order to deliver quality healthcare at thedoorsteps of the needy regular health camps in various villages on fixed days are beingorganized for the people living in the periphery of Plants/Units mines and far-flungareas. During the Financial Year 2016-17 6240 Health Camps have been organizedbenefitting over 125000 villagers. 7 Mobile Medical Units (MMUs) running in the Plant'speripheries have benefitted 28000 villagers at their doorsteps.
24 exclusive Health centres at Plants/Units provided free medical care and medicines to110000 villagers during the Financial Year 2016-17.
Education: To develop the society through education SAIL is supporting over 145schools which are providing modern education to more than 55000 children in the steeltownships. 20 Special Schools (Kalyan & Mukul Vidyalayas) are benefitting over 3100BPL category students at integrated steel plant locations with facilities of freeeducation mid-day meals uniform including shoes text books Stationary items schoolbag water bottles etc. are running under CSR.
Your Company in association with Akshya Patra Foundation is providing midday meals to68000 students of over 500 Government schools in Bhilai and Rourkela.
Women Empowerment & Sustainable Income Generation: Vocational and specialisedskill development training targeted towards sustainable income generation has beenprovided to 2070 youth and 2461 women of peripheral villages in areas such as NursingPhysiotherapy LMV Driving Computers Mobile repairing Welder Fitter & ElectricianTraining Improved agriculture Mushroom cultivation Goatery Poultry Fishery PiggeryAchar/Pappad/ Agarbati/Candle making Screen printing Handicrafts Sericulture YarnWeaving Tailoring Sewing & embroidery Gloves Spices Towels Gunny- bagsLow-cost-Sanitary Napkins Sweet Box Soap Smokeless chullah making etc. 683 youths havebeen sponsored for ITI training at ITCs Bolani Bargaon Baliapur Bokaro Pvt. ITI andRourkela etc. and 31 youths in Plastic Engineering through CIPET at Bokaro.
Connectivity & Water facilities in Rural Areas: Over 77.88 lakh people across435 villages have been connected to mainstream by SAIL since its inception by constructingand repairing of roads. Over 7940 water sources have been installed during last fiveyears thereby enabling easy access to drinking water to 46.46 lakh people living infar-flung areas.
Environment Conservation: Maintenance of parks water bodies & botanicalgardens in its townships and plantation and maintenance of over 4 lakh trees at variouslocations has been undertaken.
Support to Differently Abled & Senior Citizens: Differently abled children/people are being supported through provision of equipments like- tricycle motorizedvehicles calipers hearing aids artificial limbs etc. Your Company supports variousschemes and centres at Plants under CSR like "Sneh Sampada""Prayas"and 'Muskaan" at Bhilai "Schools for blind deaf &mentally challenged children" and Home and Hope" at Rourkela "AshalataViklang Kendra" at Bokaro various programs like "Handicapped Oriented EducationProgram" and "Durgapur Handicapped Happy Home" at Durgapur "CheshireHome" at Burnpur. Support has also been provided to NGOs working in this field likeTAMANNA Deepalaya etc. Old age homes are being supported at different Plant townshipslike "Siyan Sadan" at Bhilai Acharya Dham and Badshah at Durgapur etc.
Sports Art & Culture and Heritage Conservation: SAIL is regularly organizinginter-village sports tournaments extending support to major national sports events &tournaments. Also supporting and coaching aspiring sportsmen and women through itsresidential sports academies at Bokaro (football) Rourkela (Hockey) - with world classastro-turf ground Bhilai (Atheletics for boys) Durgapur (Athletics for girls) andKiriburu Jharkhand (Archery). Cultural events like Chhattisgarh Lok Kala Mahotsav GraminLokotsav are organised every year.
Disaster Relief: Your Company as a responsible corporate citizen supported therehabilitation initiatives for the people affected by Natural Calamities the recent beingflood ravaged Jammu & Kashmir Phylin cyclone in Odisha Flash Floods in Uttarakhandetc.
SARANDA Forest Development: In an effort to bring the marginalized masses of theremote forest areas to the mainstream of development SAIL in association with Govt. ofJharkhand and Ministry of Rural Development Govt. of India actively participated in thedevelopment process of Saranda forest Jharkhand. SAIL provided ambulances 7000 each ofbicycles transistors solar lanterns and established an Integrated Development Centre(IDC) at Digha village in Saranda forest. IDC comprises of facilities like Bank PanchayatOffice Ration shop Telecom office Anganwadi Centre Meeting room etc. for the localpopulace.
In an effort to align the marginalized masses a project to promote comprehensive WaterSupply and Sanitation has been initiated by Rourkela Steel Plant covering 897 householdsin 10 villages of Kuarmunda block. Each household is being provided potable water througha ground water source storage tank and supply network of pipelines with 3 tap points andSanitation unit with RCC roof on partnership model. The villagers have been mobilized andempowered for their active participation in the project. Village level committees havebeen formed for long-term sustenance of the project.
SAIL/Bolani Ore Mines has initiated a project to provide continuous drinking watersupply and sanitation facility in the remote village of Barik Sahi (Kuni Sahi) underBolani Panchayat connecting it with the water source: Jhinkaria Spring on south of Bolanithrough a network of G.I. pipelines. All the 300 natives of Barik Sahi (Kuni Sahi) whohad to travel upto 2 kms daily to fetch water from the springs have been benefitted withthis facility.
SAIL Bio-Diversity Environment Theme Park 'VASUNDHARA' near JC Bose Avenue of DSPTownship Durgapur: The development of a 409 acres BioDiversity Environment Theme Parkwith a large water body and plantation of 400 varieties of trees to attract migratorybirds facilitating avian diversity propagation of rare and medicinal plants rainwaterharvesting and soil conservation for maintaining ecological balance and environmentalsustainability has been carried out. The park site is enriching the environs for 75000natives year on year.
i. During the year the Company has not accepted any deposits under the Companies Act2013.
ii. No significant or material orders were passed by the Regulators or Courts orTribunals impacting the going concern status and Company's operations in future. Howeverattention of Members is drawn to the statement on contingent liabilities in notes formingpart of the Financial Statements.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Shri S.S. Mohanty ceased to be Director on superannuation from services of theCompany on 30th June 2016(A/N).
Shri Raman has been appointed as Director w.e.f. 1st July 2016(F/N).
Dr. Atmanand and Shri J.M. Mauskar Independent Directors have ceased to beDirectors w.e.f. 18th July 2016 on completion of their tenure.
Smt. Bharathi S. Sihag ceased to be Director w.e.f. 30th November2016 (A/N).
Shri Nilanjan Sanyal and Dr. Samar Singh have been appointed as IndependentDirectors w.e.f. 4th February 2017.
Shri Saraswati Prasad Additional Secretary and Financial Adviser Ministry ofSteel has been appointed as Government Nominee Director on the Board of the Company on 8thFebruary 2017.
Shri Binod Kumar has ceased to be Director on superannuation from services ofthe Company on 28th February 2017(A/N).
Ms. Soma Mondal has been appointed as Director w.e.f. 1st March 2017(F/N).
Dr. N. Mohapatra has ceased to be Director on superannuation from services ofthe Company on 30th June 2017(A/N).
The Board of Directors wish to place on record their appreciation for the support andvalue contributed by every member of the SAIL family. The Directors are thankful to theState Governments Electricity Boards Railways Banks Suppliers Customers and Investorsfor their continued co-operation. The Directors also wish to acknowledge the continuedsupport and guidance received from the different wings of the Government of Indiaparticularly from the Ministry of Steel.
| ||For and on behalf of the Board of Directors |
| ||(RK. Singh) |
| ||Chairman |
|Place: New Delhi || |
|Dated: 11th August 2017 || |