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Tata Steel Long Products Ltd.

BSE: 513010 Sector: Metals & Mining
NSE: TATASTLLP ISIN Code: INE674A01014
BSE 13:08 | 17 Feb 370.10 -5.70
(-1.52%)
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377.25

HIGH

380.90

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368.55

NSE 12:59 | 17 Feb 368.05 -7.70
(-2.05%)
OPEN

372.00

HIGH

380.65

LOW

368.00

OPEN 377.25
PREVIOUS CLOSE 375.80
VOLUME 912
52-Week high 677.98
52-Week low 347.35
P/E
Mkt Cap.(Rs cr) 1,669
Buy Price 368.00
Buy Qty 100.00
Sell Price 369.55
Sell Qty 4.00
OPEN 377.25
CLOSE 375.80
VOLUME 912
52-Week high 677.98
52-Week low 347.35
P/E
Mkt Cap.(Rs cr) 1,669
Buy Price 368.00
Buy Qty 100.00
Sell Price 369.55
Sell Qty 4.00

Tata Steel Long Products Ltd. (TATASTLLP) - Director Report

Company director report

Dear Members

The Directors take pleasure in presenting the Integrated Report and Annual Accounts ofthe Company for the financial year ended March 31 2019.

FINANCIAL RESULTS

Standalone Consolidated
Particulars FY 2018-19 FY 2017-18 FY 2018-19 FY 2017-18
( Rs.  lakhs) ( Rs.  lakhs) (Rs.  lakhs) Rs.  ( lakhs)
(i) Sales and other income 104972 85966 104978 85971
(ii) Profit before interest depreciation and taxes 20237 22574 20242 22576
Less: Interest 302 325 302 325
Profit /(loss) before depreciation and taxes 19935 22249 19940 22251
(iii) Less: Depreciation and amortisation expenses 1158 1230 1158 1230
(iv) Profit Before Taxes 18777 21018 18782 21021
(v) Tax Expense 6343 6933 6343 6933
(vi) Profit after tax 12433 14086 12439 14088

OPERATIONS Sponge Iron

During the year (FY'19) the kilns made a record production of 436045 MT (at 112 % ofdesigned capacity) which is higher by 5% as compared to 417094 MT of DRI productionduring the previous year (FY'18). During the year all three kilns could surpass theirprevious records and achieve the best ever performance level. The daily average productionrate during the year was 1323 MT/day.

The sale of sponge iron was 437331 MT which is higher by 6% as against the sale of413506 MT during previous year. The product dispatch through containerised rakesimproved further to meet the customer requirement and contain cost.

Power

During the year the total generation of power was 199.78 MKWH as compared to 199.24MKWH during the previous year which is an increase of 0.27 % and export was 143.47 MKWH ascompared to 143.63 MKWH during FY'18 which has decreased by 0.11 %.

MARKET

During FY'19 it was anticipated that steel industry would grow at 9% and similar growthwas also anticipated in domestic steel consumption of bars & rods. Steel and cementindustry had sustained growth trajectory because of growth in infrastructure andconstruction sector with a boosted Gross Value Added ("GVA") growth rate of 9.2%in comparison to last year. Manufacturing industrial production index during April 2018– January 2019 was 4.4%.

Demand of long product remained subdued in later part of the financial year due tocrisis in Non-Banking Financial Company ("NBFC") and real estate sectorinventory of unsold properties has increased resulting in drop of new launches. This hasresulted in poor off take of Thermo Mechanical Treatment ("TMT") bars. It isanticipated that the markets are going to recover in FY'20 as Government spend oninfrastructure and construction sectors will continue to increase.

UPDATE ON RADHIKAPUR COAL BLOCK

In the month of November 2012 Ministry of Coal ("MoC") issued notices to theCompany for invocation of bank guarantee of Rs.  3250 lakhs submitted towardsperformance of conditions for allocation of coal block against which the Company had fileda writ petition in the Hon'ble High Court of Delhi which directed the Company to keep thebank guarantee valid till November 30 2015 by which date the MoC was directed to takedecision. Meanwhile the bank guarantee expired and had not been renewed since nocommunication had been received from MoC. Subsequently MoC issued a notice dated December28 2015 stating that the bank guarantee be invoked and the aforesaid amount bedeposited. Consequent to MoC's notice the Company has moved to the Hon'ble High Court ofDelhi where the matter is pending adjudication. The Company has been advised and hasobtained a legal opinion that as the original allocation has been declared illegal andcancelled by the Hon'ble Supreme Court the bank guarantee pertaining to such allocation(which is non-est and void ab initio) shall consequently be deemed to be invalid and voidab initio. Pending finalisation of the matter the amount continues to be disclosed as acontingent liability.

During pendency of the aforesaid matters in Hon'ble High Court of Delhi the Hon'bleSupreme Court of India vide its order dated September 24 2014 had cancelled allocation of214 coal blocks including the Radhikapur (East) Coal Block which was allotted to theCompany on February 07 2006. The amount incurred on the Radhikapur (East) Coal Block uptoMarch 31 2019 aggregates to Rs.  18040.96 lakhs (March 31 2018: Rs.  18040.96 lakhs).

Pursuant to the judgment of Hon'ble Supreme Court of India the Government of India hadpromulgated Coal Mines (Special Provision) Rules 2014 ("Rules") for allocationof the coal mines through auction and matters related thereto. In terms of the said Rulesthe successful bidder will be called upon to pay to the prior allocattee the expensesincurred by the prior allocattee towards land and mine infrastructure. Pursuant to thejudgement dated March 09 2017 of the Hon'ble High Court of Delhi in W.P (c) 973/2015 thedirectives of MoC vide its letter dated February 01 2018 and as per the detailsprescribed by the Nominated Authority the Company has furnished the required statement ofexpenses and other details in the prescribed format on February 22 2018. Relying on thelegal position and legal opinion obtained by the Company in respect of the recoverabilityof the amount no provision is considered necessary.

DIVIDEND

The Board of Directors' of the Company has recommended a dividend of Rs.  12.50per share (i.e. 125 %) on 15400000 equity shares of Rs.  10 each for the financialyear ended March 31 2019 subject to the approval of the shareholders at the ensuingAnnual General Meeting. The total outgo on account of dividend (ex-taxes) will be Rs.  1925/- lakhs resulting in a payout of 15.48 % of the profit after tax of theCompany.

The Register of Members and Share Transfer Books of the Company will be closed fromMonday July 08 2019 to Monday July 15 2019 (both days inclusive) for the purpose ofAnnual General Meeting and dividend for the financial year 2018-19.

TRANSFER TO RESERVES

The Directors do not propose to transfer any amount to the general reserve.

CHANGES IN SHARE CAPITAL Authorised Share Capital

During the year your Company has increased its authorised share capital from 2500lakhs to 207500 lakhs comprising of Equity Share Capital of Rs.  7500 lakhs andPreference Share Capital of Rs.  200000 lakhs.

Other than stated above there was no change in the share capital of the Company duringthe financial year.

CREDIT RATING

Your Company enjoys a sound reputation for its prudent financial management and itsability to meet financial obligations. The details of Credit Rating forms part of theCorporate Governance Report.

INTEGRATED REPORT

Your Company has transitioned from compliance based reporting to governance basedreporting and adopted the framework developed by the International Integrated ReportingCouncil.

In continuation with our efforts towards enhancing stakeholder value we are happy topresent to you our first Integrated Report which endeavours to articulate the measuresundertaken by the Company.

SUBSIDIARY COMPANY

Your Company has a wholly owned Subsidiary i.e. "TSIL Energy Limited". Thereis no associate or joint venture company as defined under the Companies Act 2013.

Pursuant to the provisions of Section 129(3) of the Companies Act 2013 a statementcontaining salient features of the financial statements of TSIL Energy Limited in FormAOC-1 is annexed as an

Annexure A.

Pursuant to the provisions of Section 136 of the Companies Act 2013 the financialstatements of the Company consolidated financial statements along with the relevantdocuments and separate audited accounts of TSIL Energy Limited are available on thewebsite of the Company at www.tatasponge.com.

INTERNAL PROCESS & FINANCIAL CONTROL

Improvement in the business processes and systems across all functions is a continuousprocess in line with the Tata Business Excellence Model that the Company has adopted. TheCompany continues to maintain Integrated Management System (IMS) comprising of QualityManagement System (ISO: 9001) Environment Management System (ISO: 14001) and OccupationalHealth Safety & Accountability Management System (ISO: 18001).

The Company has an internal control system commensurate with the size scale andcomplexity of its operations. The scope of authority of the Internal Audit function isdefined in the Internal Audit Charter. The Company's internal controls are tested foradequacy and effectiveness by the Internal Auditor and Statutory Auditors of the Companyon a regular basis.

LISTING FEES

The Annual Listing Fee for the year 2019-20 has been paid to the Stock Exchanges wherethe Company's shares are listed.

CORPORATE SUSTAINABILITY

Our commitment to sustainability is anchored firmly in Tata group's ethos and valueswhich have been revitalised with a concerted focus on the customer success trustpassion change and performance. The balance between economic success environmentalprotection and social responsibility has been an integral part of our corporate culturefor years now. At Tata Sponge sustainability also means creating distinct values for allits stakeholders— customers shareholders employees suppliers and community in abalanced manner. This is apparent from the high perceptional scores given by thestakeholders year-on-year in the feedback surveys conducted by the Company. Over theyears the Company has effectively focused on the key sustainability drivers and aspiresto enhance them in future.

The concept of inclusive growth through Afirmative Action (AA) had been adopted by theCompany in the past. Further efforts have been made by the Company during the year tostrengthen the actions.

CORPORATE SOCIAL RESPONSIBILITY 'CSR'

The brief outline of the Corporate Social Responsibility (CSR) policy of the Companyand the initiatives undertaken by the Company on CSR activities during the year underreview are set out in Annexure B of this report in the format prescribed in theCompanies (Corporate Social Responsibility Policy) Rules 2014. For other detailsregarding the CSR Committee please refer to the Corporate Governance Report which is apart of this report. The CSR policy is available on the website of the Company atwww.tatasponge.com. During the year the Company has spent Rs.  236.25 lakhs on CSRactivities.

VIGIL MECHANISM/ WHISTLE BLOWER POLICY

The Company has a vigil mechanism by way of internal reviews and a third partyhelpline escalating system of ethical concerns etc. The Company also has a "WhistleBlower Policy" which is available on the website of the Company namelywww.tatasponge.com.

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACES

The Company has zero tolerance for sexual harassment at workplace and has adopted apolicy on prevention prohibition and redressal of sexual harassment at workplace in linewith the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and the Rules thereunder.

Further the Company has Internal Complaint Committees for various locations of theCompany in compliance with the above mentioned Act and Rules. During the financial year2018-19 no complaint was received by the Company.

CONSERVATION OF ENERGY TECHNOLOGY

ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

As required under Section 134(3)(m) of the Companies Act 2013 read with Rule 8 of theCompanies (Accounts) Rules 2014 particulars regarding conservation of energy technologyabsorption foreign exchange earnings and outgo are annexed to this report as

Annexure C.

SAFETY & ENVIRONMENT

The Company is committed at providing a safe and healthy working environment andachieving an injury and illness free work place. In recognition of Company's bestpractices in Safety Health and Environment the Company emerged as a winner at the"CII-best practices in health safety and Environment" and got the prestigious"Kalinga Safety Award" for its contribution towards achieving and maintainingthe best safety standards and practices. The Company has also received "5-starrating" from State Pollution Control Board for achieving and maintaining the bestpollution control standards. Over the years the Company has been setting benchmarks inits industry vertical in achieving 100% compliance and getting all the clearances e.g.Consent to Establish and Consent to Operate for enhancement in production from 425000TPA to 465000 TPA producing power from waste heat in its twin captive power plantskeeping emissions well under prescribed norms and becoming a zero – e uent dischargeCompany.

PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are annexed to this report as an

Annexure D(i).

In terms of the provisions of Section 197 (12) of the Companies Act 2013 read withRule 5(2) and 5(3) of the Companies (Appointment and Remuneration) Rules 2014 astatement showing the names and other particulars of employees drawing remuneration inexcess of the limits set out in the said Rules forms part of the report as an

Annexure D(ii).

CORPORATE GOVERNANCE

Your Company believes that facilitation of effective entrepreneurial and prudentmanagement helps in delivering long term success of the Company. The fundamental objectiveof corporate governance in Tata Sponge is to boost and maximise shareholder value andprotect the interest of other stakeholders.

In terms of Regulation 34(3) read with Schedule V of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 a separate section on Corporate Governancetogether with certificate from the Company's Secretarial Auditors forms part of thisReport.

BOARD MEETINGS/ BOARD COMMITTEE MEETINGS

A calendar of meetings is prepared and circulated in advance to the Directors. Duringthe year ten (10) meetings of Board and five (5) Audit Committee meetings were helddetails of which are given in the Corporate Governance Report. The intervening gap betweenthe meetings was within the period prescribed under the Companies Act 2013 and SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015. All recommendationsmade by the Audit Committee were accepted by the Board during the financial year 2018-19.The details of other Board Committee meetings held during the year are given in theCorporate Governance Report which forms part of this Annual Report.

BOARD EVALUATION

The Nomination and Remuneration Committee and the Board of Directors of the Company hadlaid down the process and criteria for annual performance evaluation of the Board itsCommittees and individual Directors. The Board of Directors have carried out an evaluationof its own performance its Committees and that of its individual Directors in compliancewith the provisions of the Act and Listing Regulations.

The evaluation process covered aspects such as Board structure and compositionfrequency of Board Meetings participate in the long term strategic planning contributionto and monitoring of corporate governance practices and the fulfilment of Directors'obligation and fiduciary responsibilities including but not limited to activeparticipation at the Board and Committee meetings.

The Board at its meeting reviewed the performance of the Board as a whole itsCommittees and individual Directors taking into account feedback of the Nomination andRemuneration Committee and the Independent Directors which included the evaluation of theChairman and Non-Independent Directors of the Company.

INDEPENDENT DIRECTORS' MEETING:

During the year under review the Independent Directors met on March 30 2019 interalia to: a) Review the performance of Non-Independent Directors and the Board ofDirectors as a whole; b) Review the performance of the Chairman of the Company takinginto account the views of the Executive and Non- Executive Directors. c) Assess thequality content and timeliness of flow of information between the Company management andthe Board that is necessary for the Board to effectively and reasonably perform itsduties.

All the Independent Directors were present at this meeting. The observations made bythe Independent Directors have been adopted and put into force.

INDEPENDENT DIRECTORS' DECLARATION

All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and Regulation16(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

APPOINTMENT AND REMUNERATION POLICY FOR DIRECTORS KEY MANAGERIAL PERSONNEL AND SENIORMANAGEMENT PERSONNEL

Your Company has a well-defined policy for appointment of Directors Key ManagerialPersonnel (KMP) and Senior Management including their remuneration. The Nomination andRemuneration Committee (NRC) functions in consultation with the Board and follows theguidelines of this policy in letter and spirit while selecting candidate(s) forappointment of Director(s) and/ or KMP(s). The NRC recommends to the Board suitablecandidates based on their qualifications positive attributes and experiences for BoardMembership. The Company's policy on Directors Key Managerial Personnel and SeniorManagement Employees and remuneration and other matters provided in Section 178(3) of theAct has been disclosed in the Corporate Governance Report which is a part of this reportand is also available on the website of the Company www.tatasponge.com.

FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

The details of the familiarisation programmes for Independent Directors are provided inthe Corporate Governance Report annexed herewith and the policy as adopted by theCompany can be accessed at www.tatasponge.com.

BOARD DIVERSITY

The Company recognises and embraces the importance of a diverse Board in its success.The Company believes that a truly diverse Board will leverage differences in thoughtperspective knowledge skill regional and industry experience cultural and geographicalbackground age ethnicity race and gender which will help the Company to retain itscompetitive advantage.

DIRECTOR S

During the year under review the following changes took place in the Board ofDirectors of the Company:

Inductions

The Board of Directors of your Company based on the recommendation of Nomination andRemuneration Committee

("NRC") approved the following appointments on the Board of the Company:

1. Appointment of Mr. T.V. Narendran (DIN: 03083605) as an Additional (Non-ExecutiveNon-Independent) Director w.e.f. January 12 2019. The Board also appointed Mr. T. V.Narendran as Chairman of the Company w.e.f. January 12 2019.

2. Appointment of Mr. Koushik Chatterjee (DIN: 00004989) as an Additional(Non-Executive Non-Independent) Director of the Company w.e.f. January 12 2019.

3. Appointment of Dr. Sougata Ray (DIN: 00134136) as an Additional (Non-ExecutiveIndependent) Director of the Company w.e.f. January 12 2019.

4. Appointment of Mr. Bimlendra Jha (DIN: 02170280) as an Additional (Non-ExecutiveNon-Independent) Director of the Company w.e.f. January 12 2019.

5. Appointment of Mr. Ashish Anupam (DIN: 08384201) as an Additional (Non-ExecutiveNon-Independent) Director w.e.f. March 14 2019.

The resolution for confirming the above appointment(s) except Mr. Bimlendra Jha (DIN:02170280) who stepped down from the Board w.e.f. February 07 2019 forms part of theNotice convening the Annual General Meeting (‘AGM') scheduled to be held on July 152019.

The profile and particulars of experience attributes and skills that qualify the aboveDirectors for the Board membership are disclosed in the Notice convening the AGM to beheld on July 15 2019.

Re-Appointment

In accordance with the provisions of Section 152 of the Companies Act 2013 and theCompany's Articles of Association Mrs. Meena Lall (DIN: 05133322) (Non-ExecutiveNon-Independent Director) retires by rotation at the ensuing Annual General Meeting ofthe Company and being eligible offers herself for re-appointment. The profile andparticulars of experience attributes and skills that qualify Mrs. Meena Lall (DIN:05133322) for the Board membership are disclosed in the Notice convening the AGM to beheld on July 15 2019.

Cessations

During the year Mr. Krishnava Dutt (DIN: 02792753) Independent Director stepped downfrom the Board of the Company with effect from October 11 2018 owing to his otherpersonal commitments. There were no other material reasons for Mr. Dutt's resignationother than the reason stated. Mr. A.M. Misra (DIN: 01477289) stepped down as Chairman andDirector of the Company w.e.f. January 12 2019 owing to his other engagements.

Mr. R. Ranganath (DIN: 06725337) stepped down as Director of the Company w.e.f.January 12 2019 owing to his other engagements.

Mr. Bimlendra Jha (DIN: 02170280) Additional (Non-Executive Non-Independent) Directorof the Company stepped down from the Board w.e.f. February 07 2019 owing to his otherengagements. The Board places on record its appreciation for their invaluable contributionand guidance.

KEY MANAGERIAL PERSONNEL:

The following are the Key Managerial Personnel of the Company:

1. Mr. Sanjay Kumar Pattnaik – Managing Director

2. Mr. S. K. Mishra – Chief Financial Officer

3. Mr. Sanjay Kasture – Chief Risk & Compliance Officer and Company SecretaryDuring the year there was no change in the key managerial personnel of the company.

DIRECTORS' RESPONSIBILITY STATEMENT

Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the Internal Statutory Costand Secretarial Auditors and external consultant(s) including audit of internal financialcontrols over financial reporting by the statutory auditors reviews performed by themanagement and the relevant Board Committees including the Audit Committee the Board isof the opinion that the Company's internal financial controls were adequate and effectiveduring the financial year 2018-19.

Accordingly pursuant to Section 134(5) of the Companies Act 2013 the Board ofDirectors to the best of its knowledge and ability confirm that:

(i) in the preparation of annual financial statements the applicable accountingstandards have been followed along with proper explanation relating to materialdepartures if any;

(ii) the directors have selected such accounting policies and applied them consistentlyand made judgements 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 2018-19and of the profit 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 Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

(iv) the directors have prepared the annual accounts on a going concern basis; (v) thedirectors had laid down proper internal financial controls and such internal financialcontrols are adequate and were operating effectively; and

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

GOVERNANCE GUIDELINES

The Company's governance guidelines on Board effectiveness cover aspects relating tocomposition and role of the Board Chairman and Directors Board diversity term ofDirectors retirement age and committees of the Board. The guidelines also cover keyaspects relating to nomination appointment induction and development of DirectorsDirectors remuneration oversight on subsidiary performances code of conduct Boardeffectiveness reviews and various mandates of Board Committees.

AUDIT COMMITTEE

The Audit Committee is duly constituted as per the provisions of the Companies Act2013 applicable Rules framed thereunder read with the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015. The primary objective of the Committee ismonitoring and supervising the Management's financial reporting process to ensure accurateand timely disclosures with highest levels of transparency integrity and quality offinancial reporting. During the financial year there has been no instance where the Boardhas not accepted any recommendation of the Committee.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

During the year under review purchase of Iron ore from Tata Steel Limited promoter ofthe Company constitutes majority of the transactions entered with related parties. Thetransactions being material were approved by the shareholders during the year. All thetransactions with related parties were on an arm's length basis and were in the ordinarycourse of business.

All related party transactions are placed before the Audit Committee and the Board forapproval.

The particulars of material contracts or arrangements with related parties referred toin Section 188(1) of the Companies Act 2013 is given in prescribed Form AOC - 2 attachedherewith as Annexure E. The policy on Related Party Transactions as approved by theBoard is displayed on the website of the Company at www.tatasponge.com. Members' attentionis also drawn on Notes to Financial Statements which sets out details of related partytransactions.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

The Management Discussion and Analysis Report for the year under review as stipulatedunder SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 forms partof this Annual Report.

AUDITORS

(a) Statutory Auditors

Pursuant to the provisions of Section 139 of the Companies Act 2013 read withCompanies (Audit and Auditors) Rules 2014 as amended from time to time Messrs. PriceWaterhouse

& Co Chartered Accountants LLP (Firm Registration Number: 304026E/E-300009) wereappointed as statutory auditors from the conclusion of the Thirty-fourth Annual GeneralMeeting (AGM) held on August 04 2017 till the conclusion of the Thirty-ninth AGM of theCompany in 2022 subject to rati cation of their appointment by Members at every AGM ifso required under the Act. The requirement to place the matter relating to appointment ofauditors for rati cation by Members at every AGM has been done away by the Companies(Amendment) Act 2017 with effect from May 07 2018. Accordingly no resolution is beingproposed for rati cation of appointment of statutory auditors at the ensuing AGM and anote in respect of same has been included in the Notice for this AGM. There is no Auditqualification for the year under review.

(b) Cost Auditor

Pursuant to Section 148 of the Companies Act 2013 ('the Act') read with the Companies(Cost Records and Audit) Rules 2014 as amended from time to time the Company isrequired to maintain cost records and have the audit of its cost records conducted by aCost Accountant. Cost records are made and maintained by the Company as required underSection 148 (1) of the Act. The Board of Directors on the recommendation of AuditCommittee has appointed Messrs. Shome & Banerjee Cost Accountants (FirmRegistration Number: 000001) as Cost Auditor to audit the cost records of the Company forthe financial year 2019-20. As required under the Companies Act 2013 a resolutionseeking member's approval for the rati cation of remuneration payable to the Cost Auditorforms part of the Notice convening the ensuing Annual General Meeting of the Company.

(c) Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration) Rules 2014 the Company has appointed Messrs. S. M. Gupta& Co. a firm of Company Secretaries in Practice to undertake the Secretarial Auditof the Company for the financial year 2019-20. During the year the Company has compliedwith the applicable Secretarial Standards issued by the Institute of Company Secretariesof India.

The Secretarial Audit Report for the financial year 2018-19 is annexed herewith as AnnexureF.

COMMENTS ON STATUTORY AUDITORS' REPORT/ SECRETARIAL AUDIT REPORT

There are no qualifications reservations or adverse remarks or disclaimers made eitherby the Statutory Auditors or by the Secretarial Auditors in their report for the yearunder review. The Statutory Auditors have not reported any incident of fraud to the AuditCommittee of the Company during the year under review.

EXTRACT OF ANNUAL RETURN

The extract of annual return in Form MGT 9 as required under Section 92(3) of theCompanies Act 2013 and Rule 12 of the Companies (Management and Administration) Rules2014 is enclosed as Annexure G and can be accessed in ‘Investors' section ofthe

Company's website ‘www.tatasponge.com'.

DISCLOSURES WITH RESPECT TO EMPLOYEES STOCK OPTION SCHEME

The Company does not have any Employees Stock Option Scheme.

RISK MANAGEMENT

The Company has a Risk Management framework in place to identify assess monitor andmitigate various risks to the business. This framework seeks to minimise adverse impact onthe business objectives and enhance the Company's competitive advantage. The frameworkalso defines the risk management approach across the enterprise at various levels. RiskManagement forms an integral part of the Company's planning process.

Risk Management Committee of the Board reviews the process of risk management. Thedetails of the Committee and its terms of reference are set out in the CorporateGovernance Report which forms part of the Board's Report. The development andimplementation of risk management policy has been covered in the Management Discussion andAnalysis which forms part of this report.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS BY THE COMPANY

Details of loans guarantees or investments are given in the notes to financialstatements.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORY BODIES/ COURTS

During the financial year under review no significant or material orders were passedby the Regulatory/ Statutory Authorities or the Courts which would impact the goingconcern status of the Company and its future operations.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

Acquisition of Steel business undertaking of Usha Martin Limited

The Board of Directors of the Company at their meeting held on October 24 2018 hadapproved the acquisition of steel business undertaking of Usha Martin Limited throughslump sale on a going concern basis.

Further the Company on April 09 2019 completed the acquisition of steel businessundertaking including captive power plants pursuant to a cash consideration (afteradjustment for negative working capital and debt like items) payable to Usha MartinLimited of Rs.  409400 lakhs subject to further hold backs of Rs.  64000lakhs pending transfer of some of the assets including mines and certain land parcels.

AWARDS

During the year under the review the following awards were received by the Company:(i) Kalinga Safety Award; (ii) Industry Leader Recognition to Tata Sponge in TBEM; (iii)IIM National Quality Award; (iv) CII SHE Award; (v) CMO Asia's 8th Best CSR PracticesAward; (vi) TBExG Recognition for Afirmative Action; (vii) CII Productivity Award.

DEPOSITS

During the year under review the Company has not accepted any "Deposits" asdefined under the Companies Act 2013.

INDUSTRIAL RELATIONS

During the year under review industrial relations remained harmonious and cordial.

ACKNOWLEDGEMENT

The Board takes this opportunity to sincerely thank all its stakeholders namelyshareholders customers suppliers/ contractors bankers employees Government agencieslocal authorities and the immediate society for their unstinted support and co-operationduring the year.

Cautionary Statement: Statement in the Directors' Report and Management Discussion& Analysis Report describing the Company's expectations may be forward-looking withinthe meaning of applicable securities laws and regulations. Actual results may varymaterially from those expressed in the statement. Important factors that could influencethe Company's operation include global and domestic demand and supply conditions affectingselling prices new capacity additions availability of critical materials and theircosts changes in government policies and tax laws economic development of the countryand such other factors which are material to the business of the Company. The Companyassumes no responsibility to publicly amend modify or revise any forward lookingstatements on the basis of any subsequent developments information or events.

On behalf of the Board of Directors

T.V. Narendran

Chairman (DIN: 03083605)

Mumbai April 18 2019