Electrosteel Castings Ltd Directors Report.

Dear Members,

Your Directors take pleasure in presenting the Sixty Sixth Annual Report together with Audited Annual Financial Statements (including Audited Consolidated Financial Statement) of the Company for the Financial Year ended 31 March, 2021.

FINANCIAL RESULTS

(Rs. in Crore)

Standalone Consolidated
Particulars FY 2020-21 FY 2019-20 FY 2020-21 FY 2019-20
Revenue from Operations 2,236.12 2,479.89 3,470.56 2,711.04
Earnings Before Interest, Taxes, Depreciation, Amortisation and Exceptional Item 285.45 396.18 489.09 399.22
Less: Finance Costs 183.83 219.90 210.63 227.58
Less: Depreciation and Amortisation Expense 52.67 52.74 91.19 57.15
Profit Before Exceptional Item & Tax 48.95 123.54 187.27 114.49
Less: Exceptional Item - - 244.23 -
Profit / (Loss) Before Tax 48.95 123.54 (56.96) 114.49
Less: Tax Expense 5.71 24.95 40.32 28.20
Profit / (Loss) After Tax 43.24 98.59 (97.28) 86.29
Share of Profit / (Loss) in Associates and Joint Ventures - - 5.41 75.19
Profit / (Loss) After Tax including share of Associate and Joint Ventures 43.24 98.59 (91.87) 161.48
Attributable to:
Owners of the Parent - - (145.88) 161.06
Non-Controlling Interest - - 54.01 0.42
Other Comprehensive Income (Net of Tax) 25.85 (0.09) 147.33 12.60
Total Comprehensive Income 69.09 98.50 55.46 174.09
Attributable to:
Owners of the Parent - - 1.48 173.67
Non-Controlling Interest - - 53.98 0.42
Opening balance in Retained Earnings 636.49 517.07 920.51 739.59
Closing Balance in Retained Earnings 668.38 636.49 763.02 920.51

DIVIDEND

The Directors are pleased to recommend a dividend of Rs. 0.25 per Equity Share of face value of Re. 1 each for the Financial Year ended 31 March, 2021. This dividend is subject to the approval of the Members of the Company, at their ensuing Annual General Meeting (AGM). If approved, the total outlay on account of dividend for the Financial Year 2020-21 would amount to Rs. 10.82 Crore.

The Company had declared dividend of Rs. 0.30 per Equity Share of face value of Re. 1 each for the Financial Year ended 31 March, 2020.

INVESTOR EDUCATION AND PROTECTION FUND

Transfer of Dividend to Investor Education and Protection Fund

In terms of the provisions of Section 124 of the Companies Act, 2013 (Act), read together with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 and amendments thereof (IEPF Rules), the Company has transferred Rs. 11,79,866 (Rupees Eleven Lakh Seventy Nine Thousand Eight Flundred and Sixty Six Only) to the IEPF, during the Financial Year 2020-21, being unpaid/unclaimed dividend amounts relating to the Financial Year 2012-13.

Pursuant to the provisions of the IEPF Rules, the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on 31 March, 2020 (as on the date of closure of previous financial year) on the website of the Company (www.electrosteel.com).

Transfer of Shares to the Demat Account of Investor Education and Protection Fund Authority

In terms of the provisions of Section 124(6) of the Act, read with the relevant Rules made thereunder, 1,21,798 Equity Shares of the Company, in respect of which dividend was unpaid or unclaimed for the Financial Year 2012-13 and onwards, has been transferred to the Demat Account of the IEPF Authority maintained with National Securities Depository Limited, during the Financial Year 2020-21.

Further, the voting rights in respect of shares transferred to the Demat Account of the IEPF Authority shall remain frozen, until the rightful owner claims the shares. Members may note that shares as well as unclaimed dividend transferred to the IEPF Authority can be claimed back. Concerned shareholders are advised to visit http://www.iepf.gov.in/IEPF/refund.html for lodging claim for refund of shares or dividend from the IEPF Authority.

Further, the Company has initiated necessary action for transfer of all shares in respect of which dividend declared for the Financial Year 2013-14 and onwards has not been paid or claimed by the Members for 7 (seven) consecutive years or more. Members are advised to visit the web-link https://www.electrosteel.com/investor/iepf-suspense-account.php.

TRANSFER TO RESERVES

The Company proposes to retain the entire amount of profit in the Profit & Loss Account.

OPERATIONS

During the year under review, the production of Ductile Iron (Dl) Pipes was 2,65,892 MT, as against 3,09,404 MT in the previous year. The production of Cast Iron (Cl) Pipes at Elavur was 37,413 MT as against 38,206 MTin the previous year.

The Financial Year 2020-21 was one of the most challenging year in the history of our organisation. Despite numerous issues presented by the ongoing Global Pandemic caused by thecoronavirus (COVID-19), the Companys people delivered strong result, mainly in last three quarters of the Financial Year 2020-21. All the management cadres, frontline employees and factory workers of the Company have put up a strong show to minimize impact of this global crisis.

Dl Fittings & Accessories produced 13,988 MT of Dl Fittings in 2020-21 as against 12,667 MTin 2019-20. Overall performance like production, productivity, product variety & quality and despatch, etc., have been improved at both Khardah and Haldia locations of Fittings Plant. Both Domestic and Export despatch of Fittings from both Haldia and Khardah Plants have increased in spite of more than two monthslockdown on account of COVID-19.

As a standard practice, various initiatives have been taken further for improvement in the current Financial Year, also taking care of products variety and quantity in both domestic & export markets.

As a continual improvement, the Company is focused on improvement in production of new range of products, productivity, quality, energy conservation and human resource. Further, to meet and improve upon the expectations of both international and domestic customers, the Company has continued its activities towards developmentand to add a number of product variants to its existing product base.

MATERIAL CHANGES AND COMMITMENTS

There has been no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this Report other than as mentioned in the Operations section of this Directors Report.

Even while facing adverse situations, the Company is taking all adequate steps to honour all its commitments.

Further, there has been no change in the nature of the Companys business, but the manner in which operations and functioning had to be done had to be altered to adhere to the COVID-19 restrictions and directions like social distancing, no gathering of personnel, replacing physical interface with customers, implementing work from home, restricted travel, etc.

IMPACT OF COVID-19 OUTBREAK

The Company had lost production of about two months of Dl Pipe in first quarter of Financial Year 2020-21 due to nationwide lockdowns and restrictions imposed by the Government of India.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report forms an integral part of this Report and gives details of the industry structure, developments, opportunities, threats, performance and state of affairs of the Companys business, internal controls and their adequacy, risk management systems including a section on Risk Managementand other material developments during the Financial Year 2020-21, and is annexed as Annexure 1.

FUTURE PROSPECTS

With the growth of economy, Indias urbanization trends have scope to significantly accelerate in coming years. Water and sewerage infrastructure development in Indian urban and rural sector has been the key engine of growth acceleration for the Dl Pipe Industry. Further, the country faces huge task of transporting drinking water with a limited treatment facility and inadequate transmission and distribution network. Rapidly growing urban centers also have limited infrastructure for waste water disposal. As a whole, the Indian water and wastewater market is having a CAGR of about 10%.

To bring in improvement and greater sustainability of the water supply infrastructure, the Jal Jeevan Mission, mainly aimed at rural and sub-urban water supply, could mean doubling of spending on water related infrastructure creation over the coming years. For urban water supply, Central Government as well as the respective State Governments have initiated a number of major urban development schemes to transform the urban scenario of the country, resulting in large investment in the Water Supply & Sewerage System. In this direction, AMRUTYojna (Atal Mission for Rejuvenation and Urban Transformation) is a major initiative. Under AMRUT, 500 Small Cities are undergoing infrastructure revamping.

The sewerage and waste water disposal sector is also witnessing increasing fund flow to make our cities cleaner. Considerable fund is being allocated under the Namami Gange Scheme where cities on the bank of river Ganga and its tributaries will have modern Waste Water conveyance and treatment facilities to make the rivers clean. Similar schemes are coming up in Southern and Western India.

The Company, as one of the big players in the world Dl Pipe market, continues to maintain its dominant position in the export market against competitors. After the gradual abetment of the COVID-19 pandemic, the world economy is on the revival phase and a large portion of our production is being exported to more than 50 countries across 5 continents. The Company, after entrenching itself in the discerning European and gulf markets as pipe maker of international quality, is continuously expanding the business to new countries, like,Tanzania, Zambia, Congo, Nigeria, Senegal, Morocco in Africa, and Vietnam, Cambodia, Myanmar in South East Asia.The subsidiary in USA is also doing well.

SHARE CAPITAL

The Authorised Share Capital of the Company is Rs. 50,02,00,000/- comprising of 50,02,00,000 Equity Shares of Re. 1.00 each. During the year under review, there has been no change in the Authorised Share Capital of the Company.

The Issued, Subscribed and Paid-up Share Capital of the Company is Rs. 43,29,54,709/- comprising of 43,29,54,709 Equity Shares of Re. 1.00 each. During the year under review, the Company has not issued shares with differential voting rights. It has neither issued employee stock options nor sweat equity shares and does not have any scheme to fund its employees to purchase the shares of the Company. During the year under review, there has been no change in the Issued, Subscribed and Paid-up Share Capital of the Company. As on 31 March, 2021, the Company had no outstanding instruments convertible into Equity Shares of the Company.

CREDIT RATING

India Ratings and Research (Ind-Ra) has placed the Companys Long-Term Issuer Rating ofIND A-on Rating Watch Positive (RWP) and for short term borrowings as "IND A2+"on Rating Watch Positive (RWP). The Outlook was 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 the regulators or courts or tribunals impacting the going concern status and the Companys operations in future.

Membersattention is invited to Notes on Contingent Liabilities, in the Notes forming part of the Financial Statements.

INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

The Internal Financial Controls with reference to the Financial Statements are considered to be commensurate with the size, scale and nature of the operations of the Company. The system encompasses the major processes to ensure reliability of financial reporting, compliance with policies, procedures, laws, and regulations, safeguarding of assets and economical and efficient use of resources. There are Standard Operating Procedures (SOPs) in all functional activities for which key manuals have been put in place. The manuals are updated and validated periodically. Approval of all transactions is ensured through a pre-approved Delegation of Authority (DOA) schedule which is in-built into the SAP system, wherever required. DOA is reviewed periodically by the management and compliance of DOA is regularly checked by the Auditors. The Companys books of accounts are maintained in SAP and transactions are executed through SAP (ERP) setups to ensure correctness/effectiveness of all transactions, integrity and reliability of reporting. There is adequate MIS (Management Information System) which is reviewed periodically by functional heads.

The Internal Auditor of the Company monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating system, accounting procedures and policies at all locations of the Company. The main thrust of internal audit is to test and review controls, appraisal of risks and business processes, besides benchmarking controls with best practices in the industry. Based on the Internal Audit Reports, process owners take corrective actions in their respective areas and thereby strengthen the controls. The Report is presented before the Audit Committee for review at regular intervals.

DETAILS OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

The Audited Annual Consolidated Financial Statements forming part of the Annual Report have been prepared in accordance with the Companies Act, 2013 (the Act), Indian Accounting Standards (Ind AS) 110 -Consolidated Financial Statementsand Indian Accounting Standards (Ind AS) 28 -Investments in Associates and Joint Ventures) notified under Section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time.

The Company had the following Subsidiaries and Joint Ventures as on 31 March, 2021:

Name of the Company Status
1. Electrosteel Algerie SPA Subsidiary
2. Electrosteel Castings (UK) Limited Subsidiary
3. Electrosteel Castings Gulf FZE Subsidiary
4. Electrosteel Doha forTrading LLC Subsidiary
5. Electrosteel Europe S.A. Subsidiary
6. Electrosteel Trading, S.A. Subsidiary
7. Electrosteel USA, LLC Subsidiary
8. Electrosteel Brasil Ltda.Tubos e Conexoes Duteis Subsidiary
9. Electrosteel Bahrain Holding WLL Subsidiary
10. WaterFab LLC (subsidiary of Electrosteel USA, LLC) Subsidiary
11. Electrosteel Bahrain Trading W.L.L (subsidiary of Electrosteel Bahrain Holding WLL) Subsidiary
12. Srikalahasthi Pipes Limited Subsidiary
13. North Dhadhu Mining Company Private Limited JointVenture
14. Domco Private Limited JointVenture

During the year under review, Srikalahasthi Pipes Limited ceased to be an Associate Company on 17 September, 2020 and became a Subsidiary from 18 September, 2020.

A Report on the highlights of the performance of each of the Companys subsidiaries, associates and joint ventures and their contribution to the overall performance of the Company for the Financial Year ended 31 March, 2021, pursuant to the provisions of Section 134(3) of the Act, read with Rule 8 of the Companies (Accounts) Rules, 2014, is given in Annexure 2 to this Report. The statement containing salient features of financial statement of subsidiaries, associate companies and joint ventures, for the Financial Year ended 31 March, 2021, pursuant to the said Section, read with Rule 5 of the said Rules, are given along with the Standalone Financial Statements.

In accordance with Section 136 of the Act, the Audited Financial Statements, including the Consolidated Financial Statements and related information of the Company, and Audited Accounts of each of its subsidiaries are available on the website of the Company, www.electrosteel.com. Members who wish to inspect these documents can send an e-mail to companysecretary@electrosteel.com.

STATUS OF AMALGAMATION OF SRIKALAHASHTHI PIPES LIMITED WITH THE COMPANY

The proposed Amalgamation of Srikalahashthi Pipes Limited (SPL) with and into the Company and their respective shareholders and creditors, was approved by the Board of Directors of both the said companies, at their respective meetings held on 5 October, 2020 and was subject to the necessary approvals and observations/representations of regulatory and statutory authorities, such as, the Competition Commission of India (CCI), the concerned Stock Exchanges, the Securities and Exchange Board of India (SEBI), the concerned Registrar of Companies, the concerned Regional Directors of the Ministry of Corporate Affairs, the concerned Official Liquidator, the Income Tax authorities, the concerned National Company LawTribunals (NCLT/s), other sectoral regulators or authorities, as may be required by the NCLTs.

Further, the companies had filed an application with the CCI for its approval to the proposed Amalgamation of SPL with and into the Company.The CCI has accorded its approval to the said proposed Amalgamation on 27 November, 2020.

Both, SPL and the Company, had filed respective applications with the Stock Exchanges, i.e., the National Stock Exchange of India Limited (NSE) and BSE Limited (BSE), for their respective approvals to the aforesaid draft Scheme of Amalgamation, under applicable regulations of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), read with applicable SEBI Circulars. The Stock Exchanges have issued their respective Observation Letters, dated 25 February, 2021, to the respective applications made by SPL and the Company, in accordance with the said Regulations, incorporating thereof comments by SEBI. Both the Stock Exchanges have conveyed no adverse observations and no-objection) respectively, to the respective applications filed by both the said companies.

Upon receipt of the aforesaid Observation Letters from NSE and BSE, both, SPL and the Company, have filed applications with the concerned NCLTs, seeking directions for calling and conducting meetings of their respective creditors or class of creditors, or of the members or class of members, as the case may be.

The Application filed by SPL was initially heard on 19 March, 2021, by the Elonble NCLT, Amravati Bench, whereby the said Bench had reserved its Orders.Thereafter, the NCLT, Amaravati Bench, vide its Order dated 30 April, 2021, has directed that the meetings of shareholders and creditors of SPL be held on 16 June, 2021 for, inter alia, approving the Scheme.

On Application filed by the Company, the NCLT, Cuttack Bench, at its hearing held on 10 May, 2021, has directed the matter to be listed on 9 June, 2021 for passing of Order.

Upon obtaining requisite approvals, via, requisite majority (as defined in the applicable provisions of the Act, read with applicable SEBI Circulars) of the respective members (i.e., equity shareholders) and creditors (both, secured and unsecured) of the Company and SPL, and upon receipt of representations, if any, from the aforesaid regulatory and statutory authorities, the companies will make final application(s) with the NCLT(s) for sanctioning the Scheme of Amalgamation of SPL with and into the Company, in accordance with the applicable provisions of the Companies Act, 2013 and such other laws, if any, as may be applicable for the time being in force.

The concerned NCLT(s) may, thereafter, pass an Order sanctioning the Scheme of Amalgamation of SPL with and into the Company, with such directions, as it may deem necessary and as may be required under the law.

REPORT ON CORPORATE GOVERNANCE

Your Company believes in transparent and ethical corporate governance practices.The Companys approach to Corporate Governance cascades across its business operations and its stakeholders at large to create long term sustainable value.

The Company is committed in maintaining the highest standards of Corporate Governance and adheres to the stipulations prescribed under the Listing Regulations. A Report on Corporate Governance for the year under review, along with the Certificate from the Auditors confirming compliance with the conditions of Corporate Governance, is annexed as Annexure 3, forming part of this Report.

MEETINGS OF THE BOARD

During the Financial Year 2020-21, 5 (five) Board Meetings were held, the details of which are given in the Corporate Governance Report, forming part of this Report and annexed as Annexure 3.

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

The Board had, based on the recommendation of Nomination and Remuneration Committee (NRC), appointed Mr. Sunil Katial (DIN: 07180348), Chief Executive Officer, as an Additional Director (Whole-time) on the Board of the Company, with effect from 1 April, 2020. Mr. Sunil Katial had been appointed as a Whole-time Director of the Company from the said date, for a term of 3 (three) consecutive years, subject to the approval of appointment and regularisation by the Members of the Company at the 65th Annual General Meeting (AGM) of the Company. An affirmation had been received from Mr. Katial that he is not debarred or disqualified from being appointed as Director of companies/holding the office of director pursuant to any order of the SEBI, Ministry of Corporate Affairs or any such statutory authority. The Company had also received a notice under Section 160 of the Act from a Member proposing his appointment as a Whole-time Director of the Company. In addition, Mr. Sunil Katial continued to be the Chief Executive Officer of the Company.

Mr. Ram Krishna Agarwal (DIN: 00416964), Independent Director, has resigned from the Board of the Company, with effect from 8 June, 2020, due to his pre-occupations with various professional and social commitments. Mr. Ram Krishna Agarwal has also confirmed that there were no other material reasons other than the above, for his aforesaid resignation. The Board places on record its appreciation and gratitude for the valuable contributions made by him during his tenure as Director on the Board of the Company.

Further, the Board, based on the recommendation of NRC, had appointed Mr. Rajkumar Khanna (DIN: 05180042), as an Additional Director (Non-Executiveand Independent) of the Company with effect from 15 June, 2020. Mr. Rajkumar Khanna had been appointed as an Independent Director of the Company from the said date for a term of 5 (five) consecutive years, subject to the approval of appointment and regularisation by the Members of the Company at the 65th AGM of the Company. An affirmation had been received from Mr. Khanna that he is not debarred or disqualified from being appointed as Director of companies/holding the office of director pursuant to any order of the SEBI, Ministry of Corporate Affairs or any such statutory authority. The Company had also received a notice under Section 160 of the Act from a Member proposing his appointment as an Independent Director of the Company.

The Members of the Company, at the 65th AGM of the Company held on 15 September, 2020, have approved the appointments of Mr. Sunil Katial (DIN: 07180348) as the Chief Executive Officer and Whole-time Director of the Company, with effect from 1 April, 2020, for a term of 3 (three) consecutive years and of Mr. Rajkumar Khanna (DIN: 05180042), as an Independent Director of the Company, for a period of 5 (five) consecutive years, with effect from 15 June, 2020.

Mr. Amrendra Prasad Verma (DIN: 00236108) was appointed as an Independent Director of the Company for a period of 5 (five) years with effect from 22 December, 2016. Mr. Vermas existing term will expire on 21 December, 2021. The Board, based on the recommendation of NRC and performance evaluation by it, at its meeting held on 20 May, 2021, has reappointed Mr. Verma as an Independent Director of the Company for a second term of five consecutive years with effect from 22 December, 2021, subject to the approval of re-appointment by the Members of the Company at the ensuing AGM of the Company. An affirmation has been received from Mr. Verma that he is not debarred or disqualified from being appointed as Director of companies/holding the office of director pursuant to any order of the SEBI, Ministry of Corporate Affairs or any such statutory authority. The Company has also received a notice under Section 160 of the Act from a Member proposing his appointment as an Independent Director of the Company and the same has been included in the Notice of the forthcoming AGM.

Mr. Shermadevi Yegnaswami Rajagopalan (DIN: 00067000) and Mr. Uddhav Kejriwal (DIN: 00066077), retire by rotation at the forthcoming AGM and being eligible, have offered themselves for re-appointment.

In compliance with Regulation 36(3) of the Listing Regulations and Secretarial Standard-2 on General Meetings, brief resume and other information of all the Directors proposed to be re-appointed are given in the Notice of the forthcoming AGM.

There were no other changes in the Board and the Key Managerial Personnel during the year.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134 of the Act, the Directors state that:

a) in the preparation of annual accounts for the Financial Year ended 31 March, 2021, the applicable accounting standards have been followed and there were no material departures requiring any explanation;

b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year and of the profit of the Company for that period;

c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) they have prepared annual accounts on agoing concernbasis;

e) they have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and are operating effectively; and

f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

INDEPENDENT DIRECTORS

Declaration by Independent Directors

Mr. Pradip Kumar Khaitan, Mr. Binod Kumar Khaitan, Mr. Amrendra Prasad Verma, Dr. Mohua Banerjee and Mr. Rajkumar Khanna, Independent Directors, have given declarations that they meet the criteria of independence as laid down in the Act and the Listing Regulations.

Further, in terms of Rule 8(5)(iiia) of the Companies (Accounts) Rules, 2014, as amended, the Board of Directors state that in the opinion of the Board, Mr. Rajkumar Khanna, whose appointment as an Independent Director of the Company has been approved by the Shareholders during the year, is a person of integrity and possesses relevant expertise and experience. Further, Mr. Khanna has successfully qualified the online proficiency self-assessment test conducted by the Indian Institute of Corporate Affairs.

DETAILS OF BOARD COMMITTEES & ADOPTION OF POLICIES

There are 7 Board Committees as on 31 March, 2021, viz., Audit Committee, Nomination and Remuneration Committee, StakeholdersRelationship Committee, Corporate Social Responsibility Committee, Banking and Authorisation Committee, Amalgamation Committee and Governance Committee.

The details of composition, terms of reference and meetings held and attended by the Committee members of Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee and Corporate Social Responsibility Committee are provided in the Corporate Governance Report, annexed as Annexure 3 to this Report.

The Banking and Authorisation Committee comprised of Mr. Binod Kumar Khaitan as the Chairman, with Mr. Shermadevi Yegnaswami Rajagopalan, Mr. Mayank Kejriwal and Mr. Uddhav Kejriwal, as its members as on 31 March, 2021. The terms of reference for the Committee include taking various decisions pertaining to the opening or closing of bank and demat accounts of the Company, change in authorised signatories for operation of different bank and demat accounts, subscribing/purchasing/selling/dealing in securities of Companies other than related parties and availing broking services, making loans from time to time to Subsidiary Companies/Joint Ventures/Associates for its working capital requirement, giving guarantee or providing security to any bank in connection with fund based/non-fund based facilities including loan(s) made to Subsidiary Company/Joint Venture/Associate Company by such bank and any other work related to day- to-day operations of the Company.

During the year under review, the Board of Directors, at its meeting held on 5 October, 2020, have constituted a Committee, designated as the Amalgamation Committee, comprising of Mr. Binod Kumar Khaitan as the Chairman, with Mr. Uddhav Kejriwal, Mr. Mahendra Kumar Jalan and Mr. Sunil Katial as its members. There was no change in the composition of the Committee, as on 31 March, 2021. The terms of reference for the Committee, inter-alia, includes to exclusively oversee and control entire work relating to the said proposed Scheme of Amalgamation and to appoint such external agencies as may be necessary for this purpose, with powers to authorise Mr. Mayank Kejriwal, Joint Managing Director, Mr. Mahendra Kumar Jalan, Whole-time Director, Mr. Sunil Katial, Chief Executive Officer and Whole-time Director, Mr. Ashutosh Agarwal, Executive Director (Group Finance) and CFO, Mr. Indranil Mitra, Company Secretary and Mr. Raj Kumar Agarwal, General Manager (Finance and Accounts) of the Company, to sign and execute such papers including but not limited to any application, petition, affidavit and any other document as might be necessary from time to time and file the same before various authorities in the name of and on behalf of the Company, in relation to the said proposed Scheme of Amalgamation and to settle any question or difficulty, which might arise and give any directions necessary for obtaining approval of and giving effect to the Scheme of Amalgamation, as and when required including taking of all necessary steps, and to perform various other related acts.

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, 2021. The terms of reference for the Committee, inter-alia, include formulating a governance policy and recommending it to the Board for approval, assisting the Board in its ongoing oversight of the quality of governance in the Company and its subsidiaries, monitoring the developments in governance practices of the Company and its subsidiaries and report appropriately to the Board, with recommendations, advising the Board or any committees of the Board of any corporate governance issues in the Company and its subsidiaries, which the Committee determines has a negative impact on the Companys ability to safeguard or improve shareholder value and carrying out any other function as is decided by the Board of Directors of the Company from time to time.

Vigil Mechanism

The Company has adopted Whistle Blower Policy and established a Vigil Mechanism in compliance with provisions of the Act and the Listing Regulations for the Directors and employees to report genuine concerns and grievances and leak/suspected leak of Unpublished Price Sensitive Information. This mechanism provides adequate safeguards against victimisation of employees and Directors and also provides for direct access to the Chairperson of the Audit Committee. The Company oversees the vigil mechanism through the Audit Committee of the Company. The said Policy is available at the Companys website and can be accessed at https://www.electrosteel.com/admin/pdf/1613636847Vigil-Mechanism- Whistle-Blower-Policy.pdf.

Nomination and Remuneration Policy

The Board has adopted a Nomination and Remuneration Policy recommended by Nomination and Remuneration Committee in terms of the provisions of Section 178 of the Act and Regulation 19 of the Listing Regulations, read with Part D of Schedule II thereto. The Policy governs the criteria for determining qualifications, positive attributes and independence of a Director and lays down the remuneration principles for Directors, Key Managerial Personnel and other employees.

The Policy aims to enable the Company to attract, retain and motivate highly qualified members for the Board, Key Managerial Personnel (KMP) and other employees. It enables the Company to provide a well-balanced and performance- related compensation package, taking into account shareholder interests, industry standards and relevant Indian corporate regulations. The policy ensures that the interests of Board members, KMP & employees are aligned with the business strategy and risk tolerance, objectives, values and long-term interests of the Company and will be consistent with the "pay-for-performance" principle and the remuneration to directors, KMP and employees involve a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the Company and its goals. The policy lays down the procedure for the selection and appointment of Board Members and KMP and also the appointment of executives other than Board Members, compensation structure for Executive Directors, Non-Executive Directors, KMP and other employees.

The Nomination and Remuneration Policy is available at the Companys website and can be accessed at https://www. electrosteel.com/admin/pdf/1608020082nominationRemunerationPolicy.pdf.

Corporate Social Responsibility Policy

In accordance with the requirements of Section 135 of the Act, read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, the Company has a Corporate Social Responsibility (CSR) Committee in place. The CSR Committee has formulated and recommended to the Board, the Corporate Social Responsibility Policy of the Company which has been approved by the Board. The Annual Report on CSR activities/initiatives which includes the contents of the CSR Policy, composition of the Committee and other particulars as specified in Section 135 of the Act, read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, are disclosed in Annexure 4 to this Report.

Policy on Board Diversity and Succession Planning for the Board of Directors and Senior Management

A Policy on Board Diversity and Succession Planning for the Board of Directors and Senior Management as devised by the Nomination and Remuneration Committee is in place, to ensure adequate diversity in the Board of Directors of the Company and for orderly succession for appointments on the Board of Directors and Senior Management.

FORMAL ANNUAL EVALUATION OF PERFORMANCE

The Nomination and Remuneration Committee of the Board has formulated and laid down Criteria and Manner for Evaluation of Performance of the Board, its Committees and individual Directors pursuant to provisions of Section 178 of the Act and Listing Regulations. As per requirements of Section 134 of the Act, the manner in which formal annual evaluation has been made is disclosed below -

A. The Board evaluated the roles, functions and duties performed by the Independent Directors (IDs) of the Company. Each ID was evaluated by all other Directors but not by the Director being evaluated. The Board also reviewed the manner in which IDs follow guidelines of professional conduct as specified in Schedule IV to the Act. The adherence to Section 149 of the Act, the aforesaid Schedule IV, the Listing Regulations and other applicable provisions of law by the IDs were also reviewed by the Board.

B. Performance review of all the Non-Independent Directors of the Company was made on the basis of the activities undertaken by them, expectations of Board, level of participation, roles played by them, leadership qualities and their overall performance and contribution in the development and growth of the business and operations of the Company.

C. The Board evaluated the performance of its Committees on the basis of the processes and procedures followed by them for discharging their functions & duties as per their respective terms of references and as assigned by the Board and laws applicable, their independence from the Board and on the effectiveness of the suggestions and recommendations made by them to the Board. The Board observed the size, structure and expertise of the Committees to be appropriate and in compliance with the Act and the Listing Regulations.

D. The Board evaluated its own performance on the basis of its composition having the right mix of knowledge, skills and expertise required to drive organizational performance and conduct of its affairs effectively, monitoring of Companys performance along with the ability to understand and deal with factors having a significant bearing, developing suitable strategies and business plans at appropriate time and monitoring its effectiveness, implementation of policies and procedures for proper functioning of the Company, frequency of its meetings, efforts made by the Board Members to keep themselves updated with the latest developments in areas.

The evaluation of performance of Board, its Committees and of individual Directors was found to be satisfactory.

Meeting of Independent Directors: The Independent Directors of the Company held a separate meeting without the attendance of Non-Independent Directors and members of the management for evaluation of the performance of Non- Independent Directors, the Board as a whole and Chairman of the Company and for consideration of such other matters as required under the provisions of the Act and the Listing Regulations.

DISCLOSURE RELATING TO REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL (KMP) AND PARTICULARS OF EMPLOYEES

The statement pertaining to particulars of employees including their remuneration as required to be reported under the provisions of Section 197(12) of the Act, read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 [including any statutory modification(s) or re-enactment(s) thereof, for the time being in force] (the Rules) are provided in Annexure 5A to this Report. However, as per the provisions of Section 136 of the Act, the Reports and Accounts for the Financial Year 2020-21 are being sent to the Members and others entitled thereto, excluding this statement. The said statement is available for inspection by the members at the Registered Office of the Company during business hours on working days up to the date of the ensuing Annual General Meeting. If any member is interested in obtaining a copy thereof, such member may write to the Company Secretary, whereupon a copy would be sent.

The disclosures pertaining to the remuneration of Directors, KMP and employees as required under Section 197(12) of the Act, read with Rule 5(1) of the Rules are provided in Annexure 5B to this Report.

AUDITORS AND AUDITORS REPORT

M/s. Singhi & Co., Chartered Accountants (Firm Registration Number: 302049E), were appointed as the Statutory Auditors of the Company to hold office from the conclusion of the 62nd Annual General Meeting (AGM) till the conclusion of the 67th AGM of the Company.

The para wise responses of the management to the opinion/remarks/observations made in the Independent Auditors Report on the financial statements of the Company for the year ended 31 March, 2021 are given below:

1. As regards the Qualified Opinion expressed by the Auditors in their Report under para (a) under the head basis for qualified opinionand its consequential references made in para nos. 2 (d), (e), (g) and (j)(i) under the head Report on Other Legal and Regulatory Requirements of their Report and para (l)(b) and (ll)(a) of the Annexure A to the AuditorsReport of even date, attention is drawn to Note no. 47 of the Standalone Financial Statement, which are self- explanatory;

2. With respect to the Qualified Opinion expressed by the Auditors in their Report under para (b) under the head basis for qualified opinion) attention is drawn to Note no. 8A.2 of the Standalone Financial Statement, which are self- explanatory;

3. With respect to the Qualified Opinion expressed by the Auditors in their Report under para (c) under the head basis for qualified opinion) attention is drawn to Note no. 49 of the Standalone Financial Statement, which are self- explanatory;

4. On the Auditorsobservation made in para (l)(a) of the Annexure A to the AuditorsReport of even date, your Directors wish to inform that all necessary steps are being taken to regularise the maintenance of proper records for furniture and fixtures.

During the year under review, the Auditors had not reported any matter under Section 143(12) of the Act, therefore, no detail is required to be disclosed under Section 134(3)(ca) of the Act.

MAINTENANCE OF COST RECORDS AND AUDIT THEREOF

The Company is required to maintain cost records for Pig Iron, Dl Pipe, Dl Fittings, Cl Pipe, Coke, Sponge Iron, Power Generating units and Ferro Alloy Product - Si. Mn for every Financial Year, as specified by the Central Government under Section 148(1) of the Act, and accordingly, such accounts and records are made and maintained in the prescribed manner. Further, pursuant to Section 148 of the Act, read together with the Companies (Cost Records and Audit) Rules, 2014, as amended, the Company is required to carry out audit of the cost accounting records of the Company. M/s. S G & Associates (Firm Registration Number: 000138), Cost Accountants, Kolkata, were appointed as the Cost Auditors of the Company for Financial Year 2020-21.

The Cost Audit Report and a Compliance Report for the Financial Year 2019-20 were filed on 9 September, 2020.

M/s. S G & Associates, Cost Accountants, Kolkata, has been re-appointed as Cost Auditors for Financial Year 2021-22 for all the applicable units and products of the Company. The remuneration proposed to be paid to them for the Financial Year 2021-22 requires ratification of the shareholders of the Company. In view of this, the ratification for payment of remuneration to the Cost Auditors is being sought at the ensuing AGM.

SECRETARIAL AUDITOR

In terms of Section 204 of the Act and Rules framed thereunder, M/s. K. Arun & Co., Company Secretaries, were appointed to conduct the Secretarial Audit of the Company for the Financial Year 2020-21. The report of the Secretarial Auditor is annexed as Annexure 6 to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

INTERNAL AUDITOR

In terms of the provisions of Section 138 of the Act, M/s. Ernst & Young LLP were appointed as the Internal Auditor of the Company for the Financial Year 2020-21. The Audit Committee, in consultation with the Internal Auditor, formulates the scope, functioning, periodicity and methodology for conducting the Internal Audit. The Audit Committee, inter-alia, reviews the Internal Audit Reports.

The Board has re-appointed M/s. Ernst & Young LLP, as the Internal Auditor of the Company, for the Financial Year 2021-22, under the provisions of Section 138 of the Act.

PUBLIC DEPOSITS

During the Financial Year 2020-21, the Company has not accepted any deposit within the meaning of Sections 73 and 76 of the Act, read together with the Companies (Acceptance of Deposits) Rules, 2014.

LOANS, INVESTMENTS, GUARANTEES & SECURITIES

The particulars of loans, guarantees and investments covered under the provisions of Section 186 of the Act are given in Note no. 54.3 to the Standalone Financial Statements of the Company.

ANNUAL RETURN

Pursuant to Section 92(3), read with Section 134(3)(a), of the Act, a copy of the Annual Return of the Company as on the Financial Year ended 31 March, 2020, in Form No. MGT-7, can be accessed on the website of the Company, at https://www. electrosteel.com/admin/pdf/Ann ualReturn-MGT-7-31March2020.pdf.

Further, pursuant to Section 92(3) of the Act, the Annual Return of the Company as on the Financial Year ended 31 March, 2021, will be duly uploaded on the website of the Company, at https://www.electrosteel.com/investor/shareholder- information-annual-return.php, upon filing of the same with the Registrar of Companies, under Section 92(4) of the Act.

BUSINESS RESPONSIBILITY REPORT

The Business Responsibility Report as per Regulation 34 of the Listing Regulations, detailing the various initiatives taken by the Company on the environmental, social and governance front, is annexed as Annexure 7 to this Report.

Mr. Mahendra Kumar Jalan, Whole-time Director of the Company, has been authorized by the Board of Directors of the Company to oversee the implementation of the Business Responsibility Policy. Mr. Ashutosh Agarwal, Executive Director (Group Finance) and CFO, is 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 of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. In compliance with the provisions of the said Act, an Internal Complaints Committee is in place to redress complaints received regarding sexual harassment. The Company has not received any complaint of sexual harassment during the Financial Year 2020-21.

RELATED PARTY TRANSACTIONS

The Company has entered into contracts/arrangements with the related parties during the Financial Year 2020-21, which were in the ordinary course of business and on arms length basis. Thus, provisions of Section 188(1) of the Act were not applicable on the Company and the disclosure in Form AOC-2 is not required. However, your attention is drawn to the Related Party disclosure in Note no. 54 of the Standalone Financial Statements.

The Board has approved a policy for Related Party Transactions which has been hosted on the website of the Company. The web-link for the same is electrosteel.com/admin/pdf/1608020034Related-Party-Transaction-Policy.pdf. The Related Party Transactions, wherever necessary, are carried out by the Company as per this Policy.

There were no materially significant related party transactions entered into by the Company during the year, which may have a potential conflict with the interest of the Company at large. There were no pecuniary relationship or transactions entered into by any Independent Director with the Company during the year under review.

RISK MANAGEMENT POLICY

The Company has a well-established Risk Management Policy to identify and evaluate business risks. This framework seeks to create transparency, minimise adverse effect on the business objectives and enhance Companys competitive advantage.The key business risks identified by the Company are economic risk, competitor risk, industry risk, environment risk, operational risk, foreign exchange risk, etc., and it has proper mitigation process for the same. The Audit Committee reviews this policy and evaluates the risk management systems of the Company, periodically. A statement indicating development and implementation of Risk Management Policy for the Company including identification of elements of risk, if any, is provided as a part of Management Discussions & Analysis Report at Annexure 1 which forms a part of this Report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

The prescribed particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings & Outgo required to be disclosed under Section 134 of the Act, read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed as Annexure 8 and forms a part of this Report.

DISCLOSURE ON THE COMPLIANCE OF SECRETARIAL STANDARDS

The Company is in compliance with the Secretarial Standards issued by the Institute of Company Secretaries of India on Meetings of the Board of Directors (SS-1) and General Meetings (SS-2).

OTHER DISCLOSURES

During the year under the review:

i) There was no application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016, involving the Company; and

ii) The Company had not entered into anyone-time settlement with any Bank or any Financial Institution. ACKNOWLEDGEMENT

Your Directors record their sincere appreciation for the assistance and co-operation received from the banks, financial institutions, government authorities, and other business associates and stakeholders. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the Companys executives, staff and workers, especially during the unprecedented COVID-19 pandemic environment.

For and on behalf of the Board of Directors
Pradip Kumar Khaitan
Place: Kolkata Chairman
Date: 20 May, 2021 DIN: 00004821