Electrosteel Castings Ltd.
|BSE: 500128||Sector: Engineering|
|NSE: ELECTCAST||ISIN Code: INE086A01029|
|BSE 00:00 | 19 Apr||28.90||
|NSE 00:00 | 19 Apr||28.85||
|Mkt Cap.(Rs cr)||1,251|
|Mkt Cap.(Rs cr)||1251.37|
Electrosteel Castings Ltd. (ELECTCAST) - Director Report
Company director report
Your Directors take pleasure in presenting the Sixty Fifth Annual Report together withAudited Annual Financial Statements (including Audited Consolidated Financial Statement)of the Company for the Financial Year ended 31 March 2020.
Note: Previous year figures have been restated due to amalgamation of MahadevVyapaar Pvt. Ltd. wholly-owned subsidiary of the Company with the Company w.e.f. 1April 2018.
The Directors are pleased to recommend a dividend of Rs. 0.30 per Equity Share of facevalue of Re. 1 each for the Financial Year ended 31 March 2020. This dividend is subjectto the approval of the Members of the Company at their ensuing Annual General Meeting('AGM'). If approved the total outlay on account of dividend for the Financial Year2019-20 would amount to Rs. 12.99 Crore. The Company had not declared any dividend for theFinancial Year 2018-19.
investor education and protection fund
Transfer of Dividend to Investor Education and Protection Fund
In terms of the provisions of Section 124 of the Companies Act 2013 ('Act') readtogether with the Investor Education and Protection Fund Authority (Accounting AuditTransfer and Refund) Rules 2016 and amendments thereof ('IEPF Rules') the Company hastransferred Rs. 1020993 (Rupees Ten Lakh Twenty Thousand Nine Hundred and Ninety ThreeOnly) to the IEPF during the Financial Year 2019-20.
Pursuant to the provisions of the IEPF Rules the Company has uploaded the details ofunpaid and unclaimed amounts lying with the Company as on 20 September 2019 (date of lastAnnual General Meeting) on the website of the Company (
Transfer of Shares to the Demat Account of Investor Education and Protection FundAuthority
In terms of the provisions of Section 124(6) of the Act read with the relevant Rulesmade thereunder 79053 Equity Shares of the Company in respect of which dividend wasunpaid or unclaimed for the Financial Year 2011-12 and onwards has been transferred tothe Demat Account of the IEPF Authority maintained with National Securities DepositoryLimited during the Financial Year 2019-20.
Further the voting rights in respect of shares transferred to the Demat Account of theIEPF Authority shall remain frozen until the rightful owner claims the shares. Membersmay note that shares as well as unclaimed dividend transferred to the IEPF Authority canbe claimed back. Concerned shareholders are advised to visit
Further the Company has initiated necessary action for transfer of all shares inrespect of which dividend declared for the Financial Year 2012-13 and onwards has not beenpaid or claimed by the Members for 7 (seven) consecutive years or more. Members areadvised to visit the web-link
transfer to reserves
The Company proposes to retain the entire amount of profit in the Profit & LossAccount.
The Company's Revenue from Operations on standalone basis was reported at Rs. 2479.89Crores during the year under review as compared to Rs. 2390.61 Crores reported in theprevious year. There was a minor decrease of around 2.17% in Export Sales from Rs.1046.82 Crores in 2018-19 to Rs. 1024.06 Crores in 2019-20. The Company's Profit /(Loss) after Tax (PAT) for the Financial Year 2019-20 was reported at Rs. 98.59 Crores asagainst Rs. (635.77) Crores for Financial Year 2018-19.
The Revenue from Operations on consolidated basis for the year ended 31 March 2020increased by 0.43% from Rs. 2699.44 Crores in 2018-19 to Rs. 2711.04 Crores in 2019-20.The consolidated PAT for the year ended 31 March 2020 was Rs. 161.48 Crores as againstPAT of Rs. 38.66 Crores for the previous Financial Year.
During the year under review the production of Ductile Iron (DI) Pipes was 309404MT as against 303838 MT in the previous year. The production of Cast Iron (CI) Pipes atElavur was 38206 MT as against 31930 MT in the previous year.
DI Fittings & Accessories produced 12667 MT of DI Fittings in 2019-20 as against12085 MT in 2018-19. Overall performance like production productivity product variety& quality and despatch etc. have been improved at both Haldia and Khardah FittingsPlant. Both Domestic and Export despatch of Fittings from Haldia and Khardah Plant hasenhanced. Further initiatives have been taken for improvement in the current FinancialYear also taking care of products variety and quantity in both the markets. Productionand dispatches were stopped from 24 March 2020 due to imposition
of nationwide lockdown on account of the novel coronavirus pandemic (COVID-19) andresumed production from 6 June 2020.
The COVID-19 outbreak has been declared as a pandemic and has impacted the economiesall around the Globe. The outbreak has moved quickly across countries thus disruptingglobal production supply chain trade etc. Our Company's business operations too havebeen impacted as the plants were under shutdown during the lockdown period.
As a continual improvement the Company continues to provide special attention towardsimprovement in production of new range of products and productivity with higher efficiencyof Energy and Human Resource. Further to meet and improve upon the expectations of bothInternational and Domestic customers the Company has continued its activities towardsdevelopment and to add a number of product variants to its existing product base.
material changes and commitments
There has been no material changes and commitments affecting the financial position ofthe Company which have occurred between the end of the financial year of the Company towhich the financial statements relate and the date of this Report other than as mentionedin the 'Operations' section of this Directors' Report.
Even while facing adverse situations the Company is taking all adequate steps tohonour all its commitments.
Further there has been no change in the nature of the Company's business.
management discussion and analysis
The Management Discussion and Analysis Report forms an integral part of this Report andgives details of the industry structure developments opportunities threats performanceand state of affairs of the Company's business internal controls and their adequacy riskmanagement systems including a section on 'Risk Management' and other materialdevelopments during the Financial Year 2019-20 and is annexed as Annexure 1 forming partof this Report.
Water and sewerage infrastructure development in Indian urban and rural sector has beenthe key engine of growth acceleration for the DI Pipe Industry. With the growth ofeconomy India's urbanization trends have scope to significantly accelerate in comingyears. Further the country faces immense task of transporting drinking water with alimited treatment facility and inadequate transmission and distribution network. Rapidlygrowing urban centers also have limited infrastructure for waste water disposal. As awhole the Indian water and waste water market is having a CAGR of about 10%.
To improve and sustain the water availability the Jal Jeevan Mission mainly aimed atrural and sub-urban water supply could mean doubling of spending on water relatedinfrastructure creation over the next 5 years as compared to Financial Years 2015-19.
For urban water supply Central Government as well as the respective State Governmentshave initiated a number of major urban development schemes to transform the urban scenarioof the country resulting in large investment in the Water Supply & Sewerage System. Amajor Initiative is AMRUT Yojna (Atal Mission for Rejuvenation and Urban Transformation).Under AMRUT 500 Small Cities are undergoing infrastructure revamping.
A major part of the investment will be spent on Water Supply and Sewerage. Considerablefund is being allocated under the 'Namami Gange' Scheme where cities on the bank of riverGanga and its tributaries will have modern Waste Water conveyance and treatment facilitiesto make the rivers clean.
At the same time the Company continues to maintain its dominant position in the exportmarket against competitors. The world economy is on the revival phase and a large portionof the production is being exported. The Company after entrenching itself in thediscerning European and gulf markets is continuously expanding its business to newcountries like Tanzania Zambia Congo Nigeria Senegal Morocco in Africa VietnamCambodia Myanmar in South East Asia. The subsidiary in USA is also doing well.
During the year under review the National Company Law Tribunal Cuttack Bench videits order dated 2 September 2019 has approved the Scheme of Amalgamation of MahadevVyapaar Pvt Ltd wholly owned subsidiary w.e.f. 1 April 2014 with the Company.Subsequently Mahadev Vyapaar Pvt Ltd has ceased to be a subsidiary of the Company. Inaccordance with the said Scheme the Authorised Share Capital of the Company has beenincreased from Rs. 500000000 divided into 500000000 Equity Shares of Re. 1.00 eachto Rs. 500200000 divided into 500200000 Equity Shares of Re. 1.00 each.
During the year under review the Company had issued and allotted 27472526 EquityShares of face value of Re. 1.00 each fully paid-up at a price of Rs. 18.20 per EquityShare (inclusive of a share premium of Rs. 17.20 per Equity Share) on preferential basisto Promoter/Promoter Group and non-promoter for an aggregate cash consideration of Rs. 50Crores approx. Pursuant to the above allotment the Issued Subscribed and Paid-up ShareCapital of the Company has increased to Rs. 432954709/- comprising of 432954709Equity Shares of Re. 1.00 each.
The Company has utilised the entire issue proceeds as per the objects of the issuestated in the Notice of AGM dated 21 August 2019 for general corporate purpose i.e.utilised for payment to vendors.
The Company has not issued shares with differential voting rights. It has neitherissued employee stock options nor sweat equity shares and does not have any scheme to fundits employees to purchase the shares of the Company. As on 31 March 2020 none of theDirectors of the Company hold instruments convertible into Equity Shares of the Company.
During the year India Ratings & Research Private Limited has re-affirmed a longterm Issuer Rating of "IND A-" and for short term borrowings as "INDA2+" The outlook is Stable.
The Company has withdrawn the ratings assigned by CARE Ratings Limited ('CARE') for thelong-term borrowings as "CARE BBB+" and for short-term borrowings as "CAREA2". The outlook is Stable.
significant and material orders passed by the regulators / courts / tribunals
During the year under review there were no significant or material order passed by theregulators or courts or tribunals impacting the going concern status and the Company'soperations in future.
However in pursuance of the Order dated 24 September 2014 issued by the Hon'bleSupreme Court of India ('the Order') followed by the Ordinance promulgated by theGovernment of India Ministry of Law & Justice (legislative department) dated 21October 2014 (Ordinance) for implementing the Order allotment of Parbatpur coal block(coal block/mines) to the Company which was under advanced stage of implementation hadbeen cancelled w.e.f. 1 April 2015. In terms of the Ordinance the Company was allowed tocontinue the operations in the said block till 31 March 2015. Accordingly the said blockhad been handed over to Bharat Coking Coal Limited as per the direction from Coal IndiaLtd. with effect from 1 April 2015 and the same has been subsequently allotted to SteelAuthority of India Limited (SAIL).
Following a petition filed by the Company the Hon'ble High Court at Delhi haspronounced its judgement on 9 March 2017. Based on the said judgement the Company hasclaimed Rs. 153176.00 Lakh towards compensation against the said coal block acceptancewhereof is awaited. Aggrieved due to delay in acceptance of claim on a petition filed bythe Company before the Hon'ble High Court the Hon'ble Court had directed the NominatedAuthority under Ministry of Coal to expedite the matter. The Hon'ble Court had furtherdirected the Nominated Authority to take decisions within a specific time frame. Duringthe year the Nominated Authority in its order has upheld its decision of the compensationpaid earlier and the same has been contested by the Company before the Hon'ble High Courtand the matter is pending.
Members' attention is also invited to Notes on Contingent Liabilities in the Notesforming part of the Financial Statements.
internal financial controls with reference to the financial statements
The Internal Financial Controls with reference to the Financial Statements areconsidered to be commensurate with the size scale and nature of the operations of theCompany. The system encompasses the major processes to ensure reliability of financialreporting compliance with policies procedures laws and regulations safeguarding ofassets and economical and efficient use of resources. There are Standard OperatingProcedures (SOPs) in all functional activities for which key manuals have been put inplace. The manuals are updated and validated periodically. Approval of all transactions isensured through a pre-approved Delegation of Authority (DOA) schedule which is in-builtinto the SAP system wherever required. DOA is reviewed periodically by the management andcompliance of DOA is regularly checked by the Auditors. The Company's books of accountsare maintained in SAP and transactions are executed through SAP (ERP) setups to ensurecorrectness/effectiveness of all transactions integrity and reliability of reporting.There is adequate MIS (Management Information System) which is reviewed periodically byfunctional heads.
The Internal Auditor of the Company monitors and evaluates the efficacy and adequacy ofinternal control system in the Company its compliance with operating system accountingprocedures and policies at all locations of the Company. The main thrust of internal auditis to test and review controls appraisal of risks and business processes besidesbenchmarking controls with best practices in the industry. Based on the Internal AuditReports process owners take corrective actions in their respective areas and therebystrengthen the controls. The Report is presented before the Audit Committee for review atregular intervals.
details of subsidiaries associates and joint ventures
The Audited Annual Consolidated Financial Statements forming part of the Annual Reporthave been prepared in accordance with the Companies Act 2013 ('the Act') IndianAccounting Standards (Ind AS) 110 - 'Consolidated Financial Statements' and IndianAccounting Standards (Ind AS) 28 - 'Investments in Associates and Joint Ventures notifiedunder Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules2015 as amended from time to time.
The Company had the following Subsidiaries Associate Companies and Joint Ventures ason 31 March 2020:
During the year under review the National Company Law Tribunal Cuttack Bench videits order dated 2 September 2019 has approved the Scheme of Amalgamation of MahadevVyapaar Pvt Ltd wholly owned subsidiary w.e.f. 1 April 2014 with the Company.Subsequently Mahadev Vyapaar Pvt Ltd has ceased to be a Subsidiary Company of theCompany.
During the year under review Electrosteel Thermal Power Limited ceased to be anAssociate Company of the Company with effect from 1 August 2019.
A Report on the highlights of the performance of each of the Company's subsidiariesassociates and joint ventures and their contribution to the overall performance of theCompany for the Financial Year ended 31 March 2020 pursuant to the provisions of Section134(3) of the Act read with Rule 8 of the Companies (Accounts) Rules 2014 is given inAnnexure 2 to this Report. The statement containing salient features of financialstatement of subsidiaries associate companies and joint ventures for the Financial Yearended 31 March 2020 pursuant to the said Section read with Rule 5 of the said Rulesare given along with the Standalone Financial Statements.
In accordance with Section 136 of the Act the Audited Financial Statements includingthe Consolidated Financial Statements and related information of the Company and AuditedAccounts of each of its subsidiaries are available on the website of the Company
status of amalgamation of mahadev vyapaar pvt ltd
The Board of Directors of the Company at its meeting held on 11 August 2014 hadapproved the Scheme of Amalgamation ('the Scheme') of its wholly owned subsidiary MahadevVyapaar Pvt Ltd (MVPL) with the Company with effect from 1 April 2014 ("AppointedDate"). MVPL had filed an application before the Hon'ble High Court at Calcuttawhich had sanctioned the said Scheme on 18 November 2015 and the certified copy of theorder sanctioning the Scheme was duly filed by MVPL with the Registrar of Companies WestBengal.
The Company had filed an Application before the Hon'ble High Court at Orrisa seekingorders for dispensation from compliance of all formalities under the erstwhile Sections391 and 394 of the Companies Act 1956 (i.e. Sections 230 and 232 of the Companies Act2013) inasmuch as the entire paid-up share capital of MVPL was held by the Company and theScheme did not envisage any arrangement between the Company and its members or creditorsand there would be no issuance of shares by the Company under the Scheme. However thesaid Application could not be taken up for hearing.
In the meanwhile the Ministry of Corporate Affairs vide notification dated 7 December2016 enforced the Companies (Transfer of Pending Proceedings) Rules 2016 with effect from15 December 2016 whereby all proceedings under the erstwhile Companies Act 1956including proceedings relating to arbitration compromise arrangements andreconstruction other than proceedings relating to winding up on the date of coming intoforce of these rules stood transferred to the Benches of the National Company LawTribunal ('NCLT') exercising respective territorial jurisdiction. With the formation ofNCLT Cuttack Bench the Hon'ble High Court at Orissa by an order passed on 19 April2019 disposed of the aforesaid Application filed by the Company directing transfer ofthe said petition to NCLT Cuttack Bench.
The NCLT Cuttack Bench vide its Order dated 2 September 2019 has disposed of theaforesaid Application of the Company passing an Order that the Company is not required tofile any application or petition under Sections 230 and 232 of the Companies Act 2013 inrelation to the aforesaid Scheme of Amalgamation of MVPL with the Company. ConsequentlyMVPL got amalgamated with the Company.
report on corporate governance
Your Company believes in transparent and ethical corporate governance practices. TheCompany's approach to Corporate Governance cascades across its business operations and itsstakeholders at large to create long term sustainable value.
The Company is committed in maintaining the highest standards of Corporate Governanceand adheres to the stipulations prescribed under the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 ('Listing Regulations').
A Report on Corporate Governance for the year under review along with the Certificatefrom the Auditors confirming compliance with the conditions of Corporate Governance isannexed as Annexure 3 forming part of this Report.
meetings of the board
During the Financial Year 2019-20 5 (five) Board Meetings were held the details ofwhich are given in the Corporate Governance Report forming part of this Report and annexedas Annexure 3.
board of directors and key managerial personnel
The Members of the Company at the 64th AGM of the Company held on 20 September 2019has approved the appointment of Dr. Mohua Banerjee (DIN: 08350348) as an IndependentDirector of the Company for a period of five consecutive years with effect from 8February 2019.
The Board has based on the recommendation of Nomination and Remuneration Committeeappointed Mr. Sunil Katial (DIN: 07180348) Chief Executive Officer as the AdditionalDirector (Whole-time) on the Board of the Company with effect from 1 April 2020 for aterm of 3 (three) consecutive years subject to the approval of appointment andregularisation by the Members of the Company at the ensuing AGM of the Company. Anaffirmation has been received from Mr. Katial that he is not debarred or disqualified frombeing appointed as Director of companies/holding the office of director pursuant to anyorder of the SEBI Ministry of Corporate Affairs or any such statutory authority. TheCompany has also received a notice under Section 160 of the Act from a Member proposinghis appointment as the Whole-time Director of the Company and the same has been includedin the Notice of the forthcoming AGM. Mr. Sunil Katial shall also continue to be the ChiefExecutive Officer of the Company.
Mr. Ram Krishna Agarwal (DIN: 00416964) Independent Director has resigned from theBoard of the Company with effect from 8 June 2020. The Board places on record itsappreciation and gratitude for the valuable contributions made by him during his tenure asDirector on the Board of the Company.
Further the Board based on the recommendation of Nomination and RemunerationCommittee has appointed Mr. Rajkumar Khanna (DIN: 05180042) as an Additional Director(Non-Executive and Independent) of the Company with effect from 15 June 2020 for a termof 5 (five) consecutive years subject to the approval of appointment and regularisationby the Members of the Company at the ensuing AGM of the Company. An affirmation has beenreceived from Mr. Khanna that he is not debarred or disqualified from being appointed asDirector of companies/holding the office of director pursuant to any order of the SEBIMinistry of Corporate Affairs or any such statutory authority. The Company has alsoreceived a notice under Section 160 of the Act from a Member proposing his appointment asthe Independent of the Company and the same has been included in the Notice of theforthcoming AGM.
Mr. Vyas Mitre Ralli (DIN: 02892446) retires by rotation at the forthcoming AGM andbeing eligible has offered himself for re-appointment.
In compliance with Regulation 26(4) and 36(3) of the Listing Regulations andSecretarial Standard-2 on General Meetings brief resume and other information of all theDirectors proposed to be appointed and re-appointed are given in the Notice of theforthcoming AGM.
Mr. Brij Mohan Soni resigned and ceased to be the Chief Financial Officer of theCompany with effect from 24 July 2019. Mr. Ashutosh Agarwal has been appointed as theExecutive Director (Group Finance) and CFO of the Company with effect from 13 August2019.
Ms. Subhra Giri Patnaik resigned and ceased to be the Company Secretary of the Companywith effect from 13 August 2019. Mr. Indranil Mitra has been appointed as the CompanySecretary of the Company with effect from 13 August 2019.
There were no other changes in the Board and the Key Managerial Personnel during theyear.
directors' responsibility statement
Pursuant to the provisions of Section 134 of the Act the Directors state that:
a) in the preparation of annual accounts for the Financial Year ended 31 March 2020the applicable accounting standards have been followed and there were no materialdepartures requiring any explanation;
b) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the Financial Year and of the profitof the Company for that period;
c) they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d) they have prepared annual accounts on a 'going concern' basis;
e) they have laid down internal financial controls to be followed by the Company andsuch internal financial controls are adequate and are operating effectively; and
f) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.
Declaration by Independent Directors
Mr. Pradip Kumar Khaitan Mr. Binod Kumar Khaitan Mr. Amrendra Prasad Verma and Dr.Mohua Banerjee Independent Directors have given declarations that they meet the criteriaof independence as laid down in the Act and the Listing Regulations.
The Independent Directors of the Company have undertaken requisite steps towards theinclusion of their names in the data bank of Independent Directors maintained with theIndian Institute of Corporate Affairs in terms of Section 150 of the Act read with Rule 6of the Companies (Appointment & Qualification of Directors) Rules 2014 as amended.
Further in terms of Rule 8(5)(iiia) of the Companies (Accounts) Rules 2014 asamended the Board of Directors state that in the opinion of the Board Dr. MohuaBanerjee whose appointment as an Independent Director of the Company has been approved bythe Shareholders during the year is a person of integrity and possesses relevantexpertise and experience. Further Dr. Banerjee has successfully qualified the onlineproficiency self-assessment test conducted by the Indian Institute of Corporate Affairs.
details of board committees & adoption of policies
There are 6 Board Committees as on 31 March 2020 viz. Audit Committee Nominationand Remuneration Committee Stakeholders' Relationship Committee Corporate SocialResponsibility Committee Banking and Authorisation Committee and Governance Committee.
The details of composition terms of reference and meetings held and attended by theCommittee members of Audit Committee Nomination and Remuneration Committee Stakeholders'Relationship Committee and Corporate Social Responsibility Committee are provided in theCorporate Governance Report annexed as Annexure 3 to this Report.
The Banking and Authorisation Committee comprised of Mr. Binod Kumar Khaitan as theChairman with Mr. Shermadevi Yegnaswami Rajagopalan Mr. Mayank Kejriwal and Mr. UddhavKejriwal as its members as on 31 March 2020. The terms of reference for the Committeeinclude taking various decisions pertaining to the opening or closing of bank and demataccounts of the Company change in authorised signatories for operation of different bankand demat accounts
subscribing/purchasing/selling/dealing in securities of Companies other than relatedparties and availing broking services making loans from time to time to subsidiarycompanies/Joint Ventures/Associates for its working capital requirement giving guaranteeor providing security to any bank in connection with fund based/non-fund based facilitiesincluding loan(s) made to Subsidiary Company/Joint Venture/Associate Company by such bankand any other work related to day- to-day operations of the Company.
The Governance Committee comprised of Mr. Binod Kumar Khaitan as the Chairman with Mr.Mahendra Kumar Jalan and Dr. Mohua Banerjee as its members as on 31 March 2020. The termsof reference for the Committee inter-alia include formulating a governance policy andrecommending it to the Board for approval assisting the Board in its ongoing oversight ofthe quality of governance in the Company and its subsidiaries monitoring the developmentsin governance practices of the Company and its subsidiaries and report appropriately tothe Board with recommendations advising the Board or any committees of the Board of anycorporate governance issues in the Company and its subsidiaries which the Committeedetermines has a negative impact on the Company's ability to safeguard or improveshareholder value and carrying out any other function as is decided by the Board ofDirectors of the Company from time to time.
The Company has adopted Whistle Blower Policy and established a Vigil Mechanism incompliance with provisions of the Act and the Listing Regulations for the Directors andemployees to report genuine concerns and grievances and leak/suspected leak of UnpublishedPrice Sensitive Information. This mechanism provides adequate safeguards againstvictimisation of employees and Directors and also provides for direct access to theChairperson of the Audit Committee. The Company oversees the vigil mechanism through theAudit Committee of the Company. The said Policy is available at the Company's website andcan be accessed at
Nomination and Remuneration Policy
The Board has adopted a Nomination and Remuneration Policy recommended by Nominationand Remuneration Committee in terms of the provisions of Section 178 of the Act andRegulation 19 read with Part D of Schedule II to the Listing Regulations. The Policygoverns the criteria for determining qualifications positive attributes and independenceof a Director and lays down the remuneration principles for Directors Key ManagerialPersonnel and other employees.
The Policy aims to enable the Company to attract retain and motivate highly qualifiedmembers for the Board Key Managerial Personnel (KMP) and other employees. It enables theCompany to provide a well-balanced and performance- related compensation package takinginto account shareholder interests industry standards and relevant Indian corporateregulations. The policy ensures that the interests of Board members KMP & employeesare aligned with the business strategy and risk tolerance objectives values andlong-term interests of the Company and will be consistent with the"pay-for-performance" principle and the remuneration to directors KMP andemployees involve a balance between fixed and incentive pay reflecting short and long-termperformance objectives appropriate to the working of the Company and its goals. The policylays down the procedure for the selection and appointment of Board Members and KMP andalso the appointment of executives other than Board Members compensation structure forExecutive Directors Non-Executive Directors KMP and other employees.
The Nomination and Remuneration Policy is available at the Company's website and can beaccessed at https://www .electrosteelcastings.com/investors/pdf/nominationRemunerationPolicy.pdf.
Corporate Social Responsibility Policy
In accordance with the requirements of Section 135 of the Act read with the Companies(Corporate Social Responsibility Policy) Rules 2014 the Company has a Corporate SocialResponsibility ('CSR') Committee in place. The CSR Committee
has developed and implemented the Corporate Social Responsibility Policy of theCompany. The Annual Report on CSR activities/initiatives which includes the contents ofthe CSR Policy composition of the Committee and other particulars as specified in Section135 of the Act read with Rule 8 of the Companies (Corporate Social Responsibility Policy)Rules 2014 are disclosed in Annexure 4 to this Report.
Policy on Board Diversity and Succession Planning for the Board of Directors and SeniorManagement
A Policy on Board Diversity and Succession Planning for the Board of Directors andSenior Management as devised by the Nomination and Remuneration Committee is in place toensure adequate diversity in the Board of Directors of the Company and for orderlysuccession for appointments on the Board of Directors and Senior Management.
formal annual evaluation of performance
The Nomination and Remuneration Committee of the Board has formulated and laid downCriteria and Manner for Evaluation of Performance specifying the criteria for performanceevaluation of the Board its Committees and individual Directors and manner forperformance evaluation pursuant to provisions of Section 178 of the Act and ListingRegulations and as per requirements of Section 134 of the Act. The manner in which formalannual evaluation has been made is disclosed below -
A. The Board evaluated the roles functions and duties performed by the IndependentDirectors (IDs) of the Company. Each ID was evaluated by all other Directors but not bythe Director being evaluated. The Board also reviewed the manner in which IDs followguidelines of professional conduct as specified in Schedule IV to the Act. The adherenceto Section 149 of the Act the aforesaid Schedule IV the Listing Regulations and otherapplicable provisions of law by the IDs were also reviewed by the Board.
B. Performance review of all the Non-Independent Directors of the Company was made onthe basis of the activities undertaken by them expectations of Board level ofparticipation roles played by them leadership qualities and their overall performanceand contribution in the development and growth of the business and operations of theCompany.
C. The Board evaluated the performance of its Committees on the basis of the processesand procedures followed by them for discharging their functions & duties as per theirrespective terms of references and as assigned by the Board and laws applicable theirindependence from the Board and on the effectiveness of the suggestions andrecommendations made by them to the Board. The Board observed the size structure andexpertise of the Committees to be appropriate and in compliance with the Act and theListing Regulations.
D. The Board evaluated its own performance on the basis of its composition having theright mix of knowledge skills and expertise required to drive organizational performanceand conduct of its affairs effectively monitoring of Company's performance along with theability to understand and deal with factors having a significant bearing developingsuitable strategies and business plans at appropriate time and monitoring itseffectiveness implementation of policies and procedures for proper functioning of theCompany frequency of its meetings efforts made by the Board Members to keep themselvesupdated with the latest developments in areas.
The evaluation of performance of Board it's Committees and of individual Directors wasfound to be satisfactory.
Meeting of Independent Directors: The Independent Directors of the Company held aseparate meeting without the attendance of Non-Independent Directors and members of themanagement for evaluation of the performance of NonIndependent Directors the Board as awhole and Chairman of the Company and for consideration of such other matters as requiredunder the provisions of the Act and the Listing Regulations.
disclosure relating to remuneration of directors key managerial personnel ('KMP') andparticulars of employees
The statement pertaining to particulars of employees including their remuneration asrequired to be reported under the provisions of Section 197(12) of the Act read withRules 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 [including any statutory modification(s) or re-enactment(s)thereof for the time being in force] (the Rules) are provided in Annexure 5A to thisReport. However as per the provisions of Section 136 of the Act the Reports and Accountsfor the Financial Year 2019-20 are being sent to the Members and others entitled theretoexcluding this statement. If any Member is interested in obtaining a copy/inspect thisstatement such Member can send an e-mail to
The disclosures pertaining to the remuneration of Directors KMP and employees asrequired under Section 197(12) of the Act read with Rule 5(1) of the Rules are providedin Annexure 5B to this Report.
auditors and auditors' report
M/s. Singhi & Co. Chartered Accountants (Firm Registration Number 302049E) wereappointed as the Statutory Auditors of the Company to hold office from the conclusion ofthe 62nd Annual General Meeting ('AGM') till the conclusion of the 67th AGM of theCompany.
The para wise responses of the management to the opinion/remarks/observations made inthe Independent Auditors' Report on the financial statements of the Company for the yearended 31 March 2020 are given below:
1. As regards the Qualified Opinion expressed by the Auditors in their Report underpara (a) under the head 'basis of qualified opinion' and its consequential references madein para nos. 2 (d) (e) (g) and (j)(i) under the head 'Report on Other Legal andRegulatory Requirements' of their Report and para (I)(b) and (II)(a) of the Annexure A tothe Auditors' Report of even date attention is drawn to Note no. 47 of the StandaloneFinancial Statement which are selfexplanatory;
2. With respect to the Qualified Opinion expressed by the Auditors in their Reportunder para (b) under the head 'basis of qualified opinion attention is drawn to Note no.8A.2 of the Standalone Financial Statement which are selfexplanatory;
3. With respect to the Qualified Opinion expressed by the Auditors in their reportunder para (c) under the head 'basis of qualified opinion attention is drawn to Note no.48(b) of the Standaone Financial Statement which are self explanatory.
4. On the Auditors' observation made in para (I)(a) of the Annexure A to the Auditors'Report of even date your Directors wish to inform that all necessary steps are beingtaken to regularise the maintenance of proper records for furniture and fixtures.
During the year under review the Auditors had not reported any matter under Section143(12) of the Act therefore no detail is required to be disclosed under Section134(3)(ca) of the Act.
maintenance of cost records and audit thereof
The Company is required to maintain cost records for Pig Iron DI Pipe DI Fittings CIPipe Coke Sponge Iron Power Generating units and Ferro Alloy Product - Si. Mn for everyFinancial Year as specified by the Central Government under Section 148(1) of the Actand accordingly such accounts and records are made and maintained in the prescribedmanner. Further pursuant to Section 148 of the Act read together with the Companies (CostRecords and Audit) Rules 2014 as amended from time to time the Company is required tocarry out audit of the cost accounting records of the Company. M/s. S G & Associates(Firm Registration Number 000138) Cost Accountants Kolkata were appointed as the CostAuditors of the Company for Financial Year 2019-20.
The Cost Audit Report and a Compliance Report for the Financial Year 2018-19 were filedon 6 September 2019.
M/s. S G & Associates Cost Accountants Kolkata has been re-appointed as CostAuditors for Financial Year 2020-21 for all the applicable units and products of theCompany. The remuneration proposed to be paid to them for the Financial Year 2020-21requires ratification of the shareholders of the Company. In view of this theratification for payment of remuneration to the Cost Auditors is being sought at theensuing AGM.
In terms of Section 204 of the Act and Rules framed thereunder M/s. K. Arun & Co.Company Secretaries were appointed to conduct the Secretarial Audit of the Company forthe Financial Year 2019-20. The report of the Secretarial Auditor is annexed as Annexure 6to this Report. The Secretarial Audit Report does not contain any qualificationreservation or adverse remark.
In terms of the provisions of Section 138 of the Act M/s. Ernst & Young LLP wereappointed as the Internal Auditor of the Company for the Financial Year 2019-20. The AuditCommittee in consultation with the Internal Auditor formulates the scope functioningperiodicity and methodology for conducting the Internal Audit. The Audit Committeeinter-alia reviews Internal Audit Reports.
The Board has re-appointed M/s. Ernst & Young LLP as the Internal Auditor of theCompany for the Financial Year 2020-21 under the provisions of Section 138 of the Act.
During the Financial Year 2019-20 the Company has not accepted any deposit within themeaning of Sections 73 and 76 of the Act read together with the Companies (Acceptance ofDeposits) Rules 2014.
loans investments guarantees & securities
The particulars of loans guarantees and investments covered under the provisions ofSection 186 of the Act are given in Note no. 54.3 to the Standalone Financial Statementsof the Company.
extract of annual return
Pursuant to Section 92(3) of the Act and Rule 12(1) of the Companies (Management andAdministration) Rules 2014 an extract of Annual Return as on the Financial Year ended 31March 2020 in Form MGT 9 is annexed as Annexure 7 to this Report.
The extract of the Annual Return of the Company can also be accessed on the website ofthe Company at https://www .electrosteelcastings.com/investors/pdf/Extract-Annual-Return-MGT-9-20.pdf.
business responsibility report
The Business Responsibility Report as per Regulation 34 of the Listing Regulationsdetailing the various initiatives taken by the Company on the environmental social andgovernance front is annexed as Annexure 8 to this Report.
Mr. Mahendra Kumar Jalan Whole-time Director of the Company has been authorized bythe Board of Directors of the Company to oversee the implementation of the BusinessResponsibility Policy. Mr. Ashutosh Agarwal Executive Director (Group Finance) and CFOis designated as the Business Responsibility Head.
disclosure under the sexual harassment of women at workplace (prevention prohibition&
REDRESSAL) act 2013
The Company has in place a Policy in line with requirements of the Sexual Harassment ofWomen at Workplace (Prevention Prohibition & Redressal) Act 2013. In compliance withthe provisions of the said Act an Internal Complaints Committee is in place to redresscomplaints received regarding sexual harassment. The Company has not received anycomplaint of sexual harassment during the Financial Year 2019-20.
related party transactions
The Company has entered into contracts/arrangements with the related parties during theFinancial Year 2019-20 which were in the ordinary course of business and on arm's lengthbasis. Thus provisions of Section 188(1) of the Act were not applicable on the Companyand the disclosure in Form AOC-2 is not required. However your attention is drawn to theRelated Party disclosure in Note no. 54 of the Standalone Financial Statements.
The Board has approved a policy for Related Party Transactions which has been hosted onthe website of the Company. The web-link for the same is
There were no materially significant related party transactions entered into by theCompany during the year which may have a potential conflict with the interest of theCompany at large. There were no pecuniary relationship or transactions entered into by anyIndependent Director with the Company during the year under review.
risk management policy
The Company has a well-established Risk Management Policy to identify and evaluatebusiness risks. This framework seeks to create transparency minimise adverse effect onthe business objectives and enhance Company's competitive advantage. The key businessrisks identified by the Company are economic risk competitor risk industry riskenvironment risk operational risk foreign exchange risk etc. and it has propermitigation process for the same. The Audit Committee evaluates the risk management systemsof the Company periodically. A statement indicating development and implementation ofRisk Management Policy for the Company including identification of elements of risk ifany is provided as a part of Management Discussions & Analysis Report at Annexure 1which forms a part of this Report.
conservation of energy technology absorption and foreign exchange earnings & outgo
The prescribed particulars of Conservation of Energy Technology Absorption and ForeignExchange Earnings & Outgo required to be disclosed under Section 134 of the Act readwith Rule 8 of the Companies (Accounts) Rules 2014 is annexed as Annexure 9 and forms apart of this Report.
disclosure on the compliance of secretarial standards
The Company is in compliance with the Secretarial Standards issued by the Institute ofCompany Secretaries of India on Meetings of the Board of Directors (SS-1) and GeneralMeetings (SS-2).
Your Directors record their sincere appreciation for the assistance and co-operationreceived from the banks financial institutions government authorities and otherbusiness associates and stakeholders. Your Directors also wish to place on record theirdeep sense of appreciation for the committed services by the Company's executives staffand workers.
For and on behalf of the Board of Directors
Pradip Kumar Khaitan Chairman DIN: 00004821
Place: Kolkata Date: 15 June 2020