ESL Steel Ltd Directors Report

(Except otherwise stated)

ESL Steel Limited (Formerly known as Electrosteel Steels Limited) (hereinafter referred to as ESL or the Company) is a fully integrated iron and steel manufacturing unit, situated at Siyaljori Village in Bokaro, Jharkhand. The Company currently has a capacity of 1.7 MTPA hot metal production and an expansion plan underway to enhance the capacity to 3 MTPA steel production.

ESL is engaged in manufacturing and supply of billets, TMT bars, wire rods, and ductile iron (DI) pipes. It also deals in iron ore, pig iron, and iron and steel scrap products related to its manufacturing. Additionally, ESL produces metallurgical coke, sinter, and power for its own use.

In the Financial Year 2024, the Company has achieved the highest ever hot metal production of 1.473 MT up 8 % Y-O-Y and highest ever saleable production of 1.386 MT up by 8% Y-O-Y. However, the EBITDA margins have contracted by 32% Y-O-Y mainly due to the decline in market prices for long- products and volatility in commodity prices, mainly in coal and iron ore.

The Company is working on optimizing the cost in all aspects and increasing the production and operational efficiency for better product mix and price realization to protect the margins. Mines acquired in earlier year have been ramped up In FY2024. It produced 5.4 MT and dispatches were 5 MT, ensuring iron ore raw material security.

India, the worlds second-largest steel producer, significantly contributes over 2% to its GDP. In FY 2023-24, Indias crude steel production is anticipated to rise by 14% to 143 million tons, driven by the governments infrastructure and housing initiatives. Finished steel consumption is expected to grow by 14%, reaching 135 million tons. Per capita steel consumption increased from 77 kg in FY 2022-23 to 87 kg in FY 2023-24 and is projected to reach 158 kg by FY 2030-31. The Indian steel market is forecasted to expand from 135 million tons in 2024 to 210 million tons by 2029, with an annual growth rate of 9.18%, reflecting robust demand and a positive outlook for the industry.

In view of the losses incurred by the Company during the Financial Year, the Management of the

Company expresses their inability to declare any dividend for the financial year ended 31st March 2024.

No amounts have been transferred to the Reserve during the year under review.

Authorised Share Capital of your Company as on March 31, 2024, is INR 1,00,20,00,00,000 divided into

10,02,00,00,000 Equity Shares of INR 10 each.

Issued, Subscribed and Paid-Up Share Capital of your Company as on March 31, 2024, is INR

18,49,03,02,240 divided into 1,84,90,30,224 Equity Shares of INR 10 each fully paid up.

The Company has not bought back any of its securities during the Financial Year under review.

The Company has not issued any Sweat Equity Shares.

The Company has not issued any Bonus Shares.

The Company has not provided any Stock Option Scheme to the employees.

None of the Directors of the Company hold any equity shares or convertible instruments of the Company.

The Company has not accepted any deposits from the public within the meaning of the provisions of Section 73 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014 any modifications and reenactment thereof and any other applicable law for the time being in force.

There has been no change in the nature of the business of the Company during the year.

The Board meets at regular intervals to discuss and decide on Company/business policy and strategy in addition to the statutory and other matters. During the financial year 2023-24, the Board of Directors met Eight (8) times i.e., on 19^th April 2023, 20^th July 2023, 01^st September 2023, 29^th September 2023, 21^st October 2023, 20^th January 2024, 24^th February 2024 and 30^th March 2024. The intervening gap between the meetings was within the period prescribed under the provision of Section 173 of the Companies Act, 2013. The Board of Directors of your Company as on 31^st March 2024 consists of following Members:

1. Mr. Arun Misra Non-Executive Director

2. Mr. Thomas Mathew T Non-Executive Independent Director

3. Mr. Subodh Kumar Rai - Non-Executive Independent Director

4. Ms. Poovannan Sumathi - Non Executive Woman Director

5. Mr. Ashish Kumar Gupta - Whole Time Director & Chief Executive Officer.

The Audit Committee is constituted pursuant to provisions of Companies Act, 2013 and consists of

following Members, as on 31st March 2024:

1. Mr. Thomas Mathew T, Non-Executive Independent Director Chairman

2. Mr. Subodh Kumar Rai, Non-Executive Independent Director Member

3. Mr. Arun Misra, Non-Executive Director Member

During the financial year 2023-24, the Audit Committee members met Four (4) times i.e., on 19^th April 2023, 20^th July 2023, 21^st October 2023, and 20^th January 2024.

Nomination and Remuneration Committee

The Nomination & Remuneration Committee is constituted pursuant to provisions of Companies Act,

2013 and consists of following Members as on 31st March 2024:

1. Mr. Thomas Mathew T, Non-Executive Independent Director Chairman

2. Mr. Subodh Kumar Rai, Non-Executive Independent Director Member

3. Mr. Arun Misra, Non-Executive Director Member

During the financial year 2023-24, the Nomination and Remuneration Committee members met Two

(2) times i.e., on 19^th April 2023, and 20^th January 2024.

1. Mr. Thomas Mathew T, Non-Executive Independent Director Chairman

2. Mr. Ashish Kumar Gupta, Chief Executive Officer & Whole Time Director - Member

3. Ms. Poovannan Sumathi, Non-Executive Director Member

Corporate Social Responsibility Committee constituted pursuant to provisions of Companies Act, 2013,

consists of following Members as on 31^st March 2024:

1. Mr. Thomas Mathew T, Non-Executive Independent Director Chairman

2. Mr. Ashish Kumar Gupta, Chief Executive Officer & Whole Time Director - Member

3. Ms. Poovannan Sumathi, Non-Executive Director Member

Pursuant to Section 203 of Companies Act, 2013, the Key Managerial Personnel of your Company as

on 31^st March 2024 are:

1. Mr. Ashish Kumar Gupta - Chief Executive Officer & Whole Time Director

2. Mr. Anand Prakash Dubey - Chief Financial Officer

3. Mr. Manish Kumar Chaudhary - Company Secretary

During the financial year Mr. Prasun Kumar Mukherjee, Mr. Mahendra Singh Mehta, Mr. Thomas Mathew T and Mr. Subodh Kumar Rai were the Independent Directors of the Company. However, Mr. Mukherjee and Mr. Mehta ceased to be Independent Directors w.e.f. June 03, 2023, and June 21, 2023, respectively. Further, the first term of Mr. Thomas Mathew T expired on 14^th June 2024, and he has been reappointed for the Second term of 2 years as an Additional Director (Non-Executive Independent) with effect from 15^th June 2024 subject to the Consent of the members and the first term of Mr. Subodh Kumar Rai will expire on 31^st August 2024 and the Board has recommended his reappointment as an Independent Director for the second term of further period of 2 years to the members in the upcoming Annual General Meeting.

The Company has received declarations pursuant to Section 149(7) of the Companies Act, 2013 from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013.

The Independent Directors have submitted a declaration that they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence.

Further, declaration on compliance with Rule 6(3) of the Companies (Appointment and Qualification of

October 22, 2019, regarding the requirement relating to enrolment in the Data Bank created by MCA

for Independent Directors, has been received from all the Independent Directors.

Further, in terms of Rule 8(5) (IIIA) of the Companies (Accounts) Rules, 2014 (as amended), the Board of Director of the Company is of the opinion that Mr. Subodh Kumar Rai, whose appointment as Independent Director of the Company has been approved by the Shareholders at the 16^th Annual General Meeting held during the FY-2023-24, is a person of integrity and possesses relevant expertise and experience. Further, both of our Independent Directors Mr. Thomas Mathew T and Mr. Subodh Kumar Rai are qualified to act as an Independent Director as per the Rules of Indian Institute of Corporate Affairs.

a. in the preparation of annual accounts, containing financial statements for the year ended March

31, 2024, the applicable accounting standards have been followed along with proper

explanations for any material departures from those standards, wherever required.

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 2023-24 and of the loss 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 any fraud and other irregularities. d. they have prepared Annual Accounts on a going concern basis.

e. Sufficient internal financial controls have been laid down and such internal financial controls are adequate and were operating effectively.

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

The Company is not having any subsidiary/associate /joint venture Company during the year ended

March 31, 2024.

Internal financial controls mean the policies and procedures adopted by the Company for ensuring the

accounting records and the timely preparation of reliable financial information.

The Company has a well-documented Standard Operating Procedures (SOP) for procurement of materials, capital expenditure, human resources, sales and marketing, finance, treasury, compliance, Health, Safety and Environment (HSE) etc.

Company has in place systems, policies, and procedures/frameworks, which are currently operational, for ensuring the orderly and efficient conduct of its business, which includes adherence to policies, safeguarding its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial information. In line with best practices, the Audit Committee and the Board review these internal control systems to ensure they remain effective and are achieving their intended purpose.

All unclaimed / unpaid share application money, remaining unclaimed / unpaid for a period of seven years from the date they became due for payment, are required to be transferred to the Investor Education and Protection Fund (IEPF). During the year, the Company was not required to transfer any amount to the said IEPF.

During the year there were no applications made under the Insolvency and bankruptcy Code, 2016. One application pertaining to the main IBC case (CP IB 361/2017) under which ESL was acquired is pending before NCLT, Kolkata. (Details of the case are given below).

There were no such instances during the financial year under review, hence this clause is not applicable

to us.

Board (JSPCB). Subsequently the Environment Clearance (EC) was revoked by Ministry of Environment, Forest and Climate Change (MoEF & CC).Writ petitions were filed by the Company before the High Court of Jharkhand against the rejection orders for the renewal of its CTO by JSPCB and against revocation of EC by MOEF & CC. The High Court of Jharkhand was pleased to grant a stay and allowed the plant operations to continue till the next date of hearing and liberty was granted to apply for statutory clearance without prejudice to its rights and contentions.

Pursuant to this order ESL applied for Forest Diversion proposal on October 4, 2018 (on without

prejudice basis) and received Stage I Forest Clearance (FC) on December 17, 2019.

ESL also applied for EC and Term of Reference (ToR) was granted to complete the process of EC

for 3 MTPA plant on Aug 20, 2020.

The High Court of Jharkhand discontinued the interim order against which ESL filed a Special Leave Petition before the Supreme Court of India and the Court pronounced the judgment on December 09, 2021 (Special Leave Petition along with the Interlocutory Application) and passed the following:

EAC recommended the grant of EC to ESL subject to certain conditions, including obtaining FC on

- I vide letter dated June 05, 2023, against which ESL and State of Jharkhand has requested reconsideration. Compliance Report to MoEF & CC has been submitted, and further updated report from State is awaited.

B. During the FY 2022 -23, the State government of Odisha has issued Notice of Demand dated

03.12.2022 to deposit Rs. 8,51,05,51,206/- and Rs. 8,56,75,29,626 in relation to the penalty for

Company has filed Revision Application under Rule 35 of MCR, 2016 before the Revisional Authority, Ministry of Mines contesting the above demand. Revisional Authority has directed the state government/DDM not to take any coercive actions till further orders vide order dated 14.03.2023. Since the State Government has not filed its reply till the last date of hearing (25 August 2023), the Revisional Authority ordered that the Revision Petition be listed as and when the State Government files their reply and, in the meanwhile, if the State Government takes any coercive steps, the Revisionist will be at liberty to approach the Revisional Authority.

Under the Terms of Mine Development and Production Agreement and Rule 12A of MCR, 2016, the Company had to maintain a level of production in so as to ensure minimum dispatch of 80% of the average of annual production of the two immediately preceding years. The company believes that it has completed the minimum required level of production and dispatches. Based on a legal evaluation, Company believes that the minimum dispatch requirement would get rectified by the State government.

C. Vedanta Limited submitted its resolution plan in the course of CIRP of Electrosteel Limited for its acquisition. The resolution plan that was submitted and approved by NCLT specified NIL payment

to the Operational Creditors. When the same was challenged in the Supreme Court, the Supreme Court directed while approving the Resolution plan that it is up to the financial creditors to take a haircut from their share. Subsequently IAs were filed in the NCLT by various applicants and vide order dated 28 June 2022, the NCLT directed CoC for reconsideration on NIL payment to Operational Creditor to balance the interest of all stakeholders (no observation on reassessment of resolution plan or enhancement of amount). The 14 IAs filed were disposed with above directions. SBI (being the Lead Bank) agreed for re-convening of the CoC and filed IA for reappointment of a

Resolution Professional (RP) since the previous RP had been de-registered. Application was decided by the NCLT and a Special Officer was appointed (as there is no provision to appoint Resolution Professional after the implementation of the Resolution Plan) by the court vide its order dated

There have been no material changes and commitments affecting the financial position of the Company

The Board on the recommendation of the Nomination and Remuneration Committee had adopted

The Independent Directors of the Company in their meeting held on March 19, 2024, without the attendance of Non-Independent Directors and members of the Management, on the basis of defined and agreed parameters, inter alia, had:

(i) reviewed the performance of the Non-Independent Directors, the Board and Committees thereof and

(ii) assessed the quality, quantity, and timeliness of flow of information between the Management and the Board, that is necessary for the Board to be effective and reasonably

perform their duties.

The information related to conservation of energy, technology absorption, foreign exchange

The shareholders of the Company at the Fifteenth (15^th) Annual General Meeting, had reappointed M/s. Lodha & Co. LLP (Formerly known as Lodha and Co.) , Chartered Accountants (Firm Registration No.:301051E) as Statutory Auditors of the Company to hold office for the second term for a period of five consecutive years, commencing from the conclusion of Fifteenth (15^th) Annual General Meeting till the conclusion of the Twentieth (20^th) Annual General Meeting.

M/s. Lodha & Co. LLP, Chartered Accountants have audited the books of accounts of the Company

During the year under review, the Auditors did not report any fraud under Section 143(12) of the

Act, therefore, no detail is required to be disclosed under Section 134(3)(ca) of the Act.

The Company is required to maintain cost records for its products as specified by the Central Government under sub-section (1) of Section 148 of the Act read with the Companies (Cost Records and Audit) Rules, 2014, (as amended) as amended from time to time, and accordingly such accounts and records are made and maintained in the prescribed manner.

In terms of requirement of Section 148 of the Companies Act, 2013, read with Companies (Cost Records and Audit) Rules, 2014, (as amended), the Board of Directors of your Company, upon recommendation of Audit Committee, have re-appointed M/s. Sanjiban & Co., Cost Accountants, (Registration No.: 000259) as Cost Auditors, to conduct a cost audit of your Company for the financial year 2024-25, at a remuneration of INR 1,00,000 per annum plus applicable taxes and out of pocket expenses as actuals.

As required under the Act, the remuneration payable to the Cost Auditors is required to be placed

included in the Notice convening the ensuing AGM.

The cost audit report of the Company for the Financial year ended March 31, 2023, does not contain any qualification or adverse remarks, and was filed with the Ministry of Corporate Affairs (MCA) in XBRL mode within the stipulated due date.

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and Rules thereunder, the

Board of Directors had appointed M/s. Vinod Kothari & Company, Company Secretaries of 1006-

1009, Krishna Building, 224 A.J.C. Bose Road Kolkata 700 017, India, as Secretarial Auditor of the Company for the financial year 2023-24, to conduct secretarial audit of the Company. The said

M/s. Vinod Kothari & Company have submitted their Report for the financial year ended March

31, 2024, which is enclosed as Annexure B and forms an integral part of this Report.

The Secretarial Audit Report does not contain any qualification, reservation, or adverse remark. Thus, no further management comments are required for the same. However, the best practices as suggested by secretarial auditors have already been adopted.

In line with the provisions of Section 138 of the Companies Act, 2013, M/s. KPMG, were appointed by the Board of Directors as Internal Auditors of the Company for the financial year 2023-24. The Audit Committee defines the scope of internal audit from time to time and reviews the observations of internal auditors and the action taken report submitted by the management on the observations at its meeting held every quarter and suggests the management the improvements required in the systems followed by the Company.

Further, the Internal audit activity of the Company is managed through Management Assurance

Services (MAS) function of Vedanta Limited.

The related party transactions are entered into based on considerations of various business requirements such as synergy in operations, profitability, legal requirements, liquidity, resources availability, etc. of related parties. All related party transactions are intended to further the

All related party transactions entered during the year 2023-24 have been placed on quarterly basis

before the Audit Committee/Board for approval/noting/ratification/modification as the case may be.

During the period under review related party transactions have been on arms- length basis and in the ordinary course of business. Accordingly, the particulars of the transactions as prescribed in form AOC-2 under Section 134 of the Act read with the rules made therein are not required to be disclosed as they are not applicable. The policy on Related Party Transactions as approved by the Board is available on the website of the Company at https://www.eslsteel.com/.

The Company has not given any Loans, Guarantees and made Investments as covered under the

provisions of Section 186 of the Companies Act, 2013 during the Financial Year 2023 -24.

The Company has in place a Risk Management Policy, which is reviewed by the Audit Committee from time to time. The Company has constituted a Risk Management Committee at the management level, which identifies potential risks associated with the Company and formulates its mitigation plan.

The Company has in place a Board approved Corporate Social Responsibility Policy and it is

available on the website of the Company at https://www.eslsteel.com/.

The information required pursuant to Section 197 read with Rule 5(2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request.

In terms of Section 136 of the Companies Act, 2013 the Report and Accounts are being sent to the

hours on working days of the Company 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 in this regard.

The Company has zero tolerance for sexual harassment at workplace and has adopted a Policy on prevention, prohibition, and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder for prevention and redressal of complaints of sexual harassment at workplace. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. During the financial year 2023-24, two complaints were received, and the cases have been duly resolved.

As part of Vedanta Group, ESL is an equal opportunity employer and believes in providing opportunity and key positions to women professionals. The Group has endeavored to encourage women professionals by creating proper policies to tackle issues relating to safe and proper working conditions and create and maintain a healthy and conducive work environment that is free from discrimination. This includes discrimination on any basis, including gender, as well as any form of sexual harassment.

The Company has in place a robust vigil mechanism for reporting genuine concerns through the

database, a 24X7 whistle blower hotline and a web-based portal have been created to facilitate receipt of complaints. All employees and stakeholders can register their integrity related concerns either by calling the number or by writing on the web-based portal which is managed by an independent third party. The hotline provides multiple local language options. All cases reported as part of whistle blower mechanism are taken to their logical conclusion within a reasonable timeframe. After the investigation, established cases are brought to the Group Ethics Committee for decision making. All Whistle Blower cases are

The Company has in place proper system to ensure compliance with the provisions of the applicable Secretarial Standards issued by The Institute of Company Secretaries of India and such systems are adequate and operating effectively.

The Company has received the following awards, recognitions, and certifications during the financial

year 2023-24:

Happiness and Well-Being Award for FY 2023-24

Kincentric Best Employer Award for FY 2023-24

NABARD awards Project WADI for highest survival rate of plants & overall excellent performance, July 2023

10^th CSR India Award, Greentech Foundation Gender Equality & Empowering Women, for FY 2023 -24

Sardar Patel National Award 2024

The Company impresses upon its shareholders to contribute to this green initiative in full measure by registering their e-mail addresses, in respect of electronic holdings with the Depository through their concerned Depository Participant. Members who hold shares in physical form are requested to take necessary steps for registering the same so that they can also become a part of the initiative and contribute to the Green Movement.

Environmental, Social, and Governance (ESG) initiatives represent a framework for companies to align their operations with sustainable and ethical practices, considering the long-term impact on the environment, society, and corporate governance.

ESL, with its vision to become a high-grade and low-cost steel producer adhering to the highest Environment, Health, and Safety standards, has embarked on numerous initiatives towards environment during the Financial Year 2023-24 such as:

The company has developed Miyawaki Forestry, covering 2.63 acres with over 53,000 saplings, and planted an additional 82,000 trees across its premises.

ESL introduced electric forklifts to reduce its carbon footprint and

Demonstrating a commitment to resource efficiency, the company achieved 100% utilization of blast furnace slag, fly ash, and bed ash, and installed a dust analyzer in its Sinter plant to

monitor and control emissions.

development, despite the minimum spending requirement is not applicable on the Company under Section 135 of the Companies Act and Rules made thereunder. Through these comprehensive ESG initiatives, ESL Steel Limited is not only advancing towards its vision but also contributing significantly to environmental sustainability and community welfare.

The Directors would like to thank the employees, shareholders, customers, suppliers, bankers, advisors, auditors, regulatory authorities and all the other stakeholders of the Company for their confidence and continued support of the Management. Your directors would also like to place on record their appreciation to the Central and State Governments for their valuable support. Your Company also recognizes and appreciates the cooperation and support from its holding company Vedanta Limited.