KIOCL Ltd Directors Report.

To the Members,

Your Board of Directors are pleased to present the 45th Annual Report on the business and operations of your Company ("the Company" or "KIOCL") along with Audited Financial Statements for the Financial Year ended March 31, 2021, together with the Auditors’ Report on the Annual Financial Statements and Comments on the same by the Comptroller & Auditor General (C&AG) of India.

The Audited Financial Statements of the Company for the year ended March 31, 2021 are prepared in accordance with the relevant applicable Ind AS and Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") and provisions of the Companies Act, 2013 ("Act").

1. FINANCIAL RESULTS AND STATE OF COMPANYS AFFAIRS

(t in crores, Except EPS & Book Value)

Particulars FY 2021 FY 2020
Total Income 2477.83 2056.53
Revenue from Operations 2383.61 1937.65
Other Income 94.22 118.88
Earnings Before Interest and Tax (EBIT) 425.09 73.65
Profit Before Tax (PBT) 410.23 63.68
Tax Expense (including deferred taxes) 109.06 20.20
Profit After Tax (PAT) 301.17 43.48
Add: Other Comprehensive Income (Net of Tax) 1.37 (0.21)
Total Comprehensive Income 302.54 43.27
EPS (Basic & Diluted) 4.87 0.70
Average Net worth 1950.96 1,954.94
Average Capital Employed 2152.16 2,104.38
Book Value per Share 32.68 30.81
Return (EBDITA) on Average Capital Employed (%) 21.03 4.81
Return on Average Net Worth (%) 15.44 2.22
Capital expenditure 41.05 21.93
Contribution to Exchequer: -
Central 147.97 84.62
State 2.00 1.66

Despite uncertainty in international market for iron ore Pellets since outbreak of COVID-19 Pandemic, your Company, produced 2.210 Million Tons and dispatched 2.311 Million Tons of Pellets during the year and achieved a record total income of t 2477.83 crores, which is highest since inception of the Company as against t 2056.53 crores in the Financial Year 2019-20, registering growth of 20.49%. Your Company achieved its best financial performance, since closure of its captive mine and has earned a PBT of t 410.23 crores and PAT of t 301.17 crores during the year as against PBT of t63.68 crores and PAT of t 43.48 crores during previous Financial Year. The net profit includes an operating profit t 316.01 crores as against operating loss of t 55.21 crores during previous Year.

COVID-19 Pandemic, its Impact and KIOCLs Response

Since the outbreak ofCOVID-19 Pandemic, International market for iron ore Pellet was under severe pressure as manufacturing and economic activities across the globe were affected. KIOCL being a shore-based pellet plant, could continue its sales activities without much hindrance and service the contracts. Due to lockdown imposed across the countries, your Company faced initial difficulties in timely collection and negotiation of shipping / sales documents through banks for realisation of sales proceeds. However, your Company could overcome the difficulty by making specific agreements with its customers.

COVID-19 outbreak in India, followed by the lockdown, had impacted the domestic steel industry severely. It had affected demand, output of steel players and the supply chain. Hit by the pandemic, steel production in India was down by 10% at 100 million tons in 2020, against the 111 million tons logged in the same period during the previous year. Effects of COVID-19 being unclear, it would be extremely difficult to predict market behaviour. Europe is yet to start full scale operations, Japan and South Korea are also going through scaled down production activities. Though presently Chinese market is depicting slightly positive trend, its sustainability needs to be observed. Volatile Geopolitical situation is also a matter of concern and its effects are tough to envisage.

If not for the Government’s spending on infrastructure, steel demand would have fallen even sharply as the pandemic has taken a heavy toll on the industry. However, timely measures such as push for housing and infrastructure projects, aid to MSME’s, Mining reforms and "Atmanirbhar Bharat" scheme by Government have helped industry to recover the turbulence. Though domestic demand recovered to pre-COVID levels in the month of August 2020 with economic activities limping back to normalcy, a full-blown recovery was seen only in the month of November 2020 when sales volume surged to 11% year-on-year. However, with second wave of Pandemic gaining momentum, its impact on the industry is yet to be ascertained.

Revenues

During the year, your Company earned Revenue from Operations of K 2,383.61 crores as compared to K1,937.65 crores in the previous year, a growth of 23.02 %. Revenue from export sales increased by 17.27 % to K 1846.06 crores as compared to the previous Financial Year figure of K 1574.13 crores. Your Company achieved export sales of 1.84 million tonnes of Pellets against previous years export of 1.99 million tonnes. Your Company achieved 77.45 % of total revenue from operations through export. Income from Sale of Services (O&M Operations and Mineral Exploration Services) during the year was K 14.01 crores against K 41.30 crores of previous year. Other Income comprising of Income from Treasury Operation and other Miscellaneous Income has decreased to K 94.22 crores from K 118.88 crores, mainly due to corpus reduction on account of buyback, dividend payment totaling approx. K 300 crore during the year and reduction of interest rates of Fixed Deposits.

Profits

Your Company earned a record Profit Before Tax of K 410.23 crores against a Profit Before Tax of K 63.68 crores in the previous year, an increase of 544 %. The increase is primarily due to realisation of contribution to K 2475 per ton, an increase of K 1724 per ton, compared to K 751 per ton during the previous year. Your Company had earned Profit After Tax of K 301.17 crores during the current year as compared to K 43.48 crores during previous year.

2. RETURN OF SURPLUS FUNDS TO SHAREHOLDERS

Dividend

In view of the Company’s encouraging performance, your Directors have recommended to distribute 33.09% of PAT

i.e. a final dividend of K 1.64 per equity share on face value of K 10/- each for the FY 2021 (16.40% on the Paid-up Share Capital) against K 0.70 per equity shares during the previous year, subject to the approval of Members at the ensuing AGM to be held on 15/09/2021. The final dividend, if approved by the Members, would involve a cash outflow of K 99.67 crore, against a cash outflow of K 43.54 crore during the previous Financial Year.

Buyback of Shares

The Board ofyour Company in its Meeting held on 19/10/2020, approved the buyback of fully paid-up equity shares of K 10/- each not exceeding 1,41,74,469 equity shares (representing 2.28% of the total number of equity shares in the paid- up share capital of the Company) at a price of K 110/- per equity share payable in cash for an aggregate consideration not exceeding K 155.92 crores (excluding tax) being 8.25% of the aggregate of the fully paid-up equity share capital and free reserves as per the audited financial statements of the Company for the financial year ended March 31, 2020. This

was within the statutory limits of 10% of the aggregate of the fully paid-up equity share capital and free reserves under the Board of Directors approval route as per the provisions of the Companies Act from the equity shareholders of the Company, as on the record date, on a proportionate basis, through the Tender Offer route as prescribed under the Buyback Regulations. The total outflow of funds on account of buyback including taxes was ^ 188.94 crores.

Your Company completed buyback in accordance with provisions contained in Companies Act, 2013 and SEBI (Buyback of Securities) Regulations, 2018. The President of India acting through Ministry of Steel, Govt. of India being the Promoter of the Company had tendered Buy Back offer through Stock Exchange Mechanism and 1,41,73,577 Equity Shares were accepted in the Buy-back and 892 Equity Shares were accepted from other non-promoter shareholders.

The Company concluded buy-back on 24/12/2020, consequently 1,41,74,469 Equity Shares were extinguished. The Company utilized its general reserve for the buy-back of its shares. In accordance with Section 69 of the Companies Act, 2013, the Company created a Capital Redemption Reserve of ^ 14.17 crore equal to the nominal value of shares bought back as an appropriation from the general reserve.

The Shareholding Pattern of the Company, pre-Buyback and post-Buyback is as under:

Credit Rating

During the year, your Company’s credit worthiness for availing Bank Facilities was evaluated by ICRA Limited and the following Credit Rating was assigned: -

Name of Agency Facilities Amount (t in crores) Rating Remarks
ICRA Limited Line of Credit (LOC) 1049 Long Term Rating: ICRA AA- [ICRA Double A Minus; Outlook: Stable] Assigned two notches below the highest rating.
Short Term Rating: ICRA A1+ [ICRA A One Plus] Highest rating.

Market Capitalization - Top 500 Companies

Your Company had been included amongst the top 500 listed Companies as per Market Capitalization on NSE and BSE and stands at No. 291 and 295 with Market Capitalisation of ^ 8715.15 crore and ^ 8730.34 crore, respectively.

Pre-Buyback

Post Buyback

Particulars No. of Equity Share % of existing Equity Share Capital No. of Equity Share % of the Post Buyback Equity Share Capital
Govt. of India 61,60,51,204 99.06 60,18,77,627 99.03
Public Shareholding 58,74,361 0.94 58,73,469 0.97
Total 62,19,25,565 100 60,77,51,096 100

Liquidity

Your Company continue to be debt-free and maintain sufficient cash to meet its strategic and operational requirements. As on March 31, 2021, the Company had a net cash and cash equivalent balance of ^ 1454.87 crores as against ^ 1530.09 crores as on 31/03/2020.

Capital Expenditure (CAPEX)

During the year, the total CAPEX was ^ 41.05 crores, which was 14.40% of the Budget Estimate (BE) of ^ 285 crores and 12.07% of the Revised Estimate (RE) of ^ 340 crores. The shortfall was mainly on account of Forward and Backward integration project of Blast Furnace Unit not taking off as the Public Procurement Policy for domestic tendering for less than ^200 crores entailed re-tendering of the same; delayed finalization of Pressure Filters project for Pellet Plant Unit and pending forest clearance for Devadari Iron Ore Mine.

MoU Performance

Performance of your Company in terms of the Memorandum of Understanding (MoU) with the Ministry of Steel, Government of India for the Financial Year 2019-20 was provisinally rated as "Fair". Final rating from DPE is awaited. The MoU evaluation for the Financial Year 2020-21 is under finalisation and is expected to achieve a "Very Good" rating despite uncertainty in business environment due to COVID-19 Pandemic.

Risk Management

Pursuant to the requirement of Regulation 21 of the Listing Regulations, the Company had constituted a Board level Risk Management Committee w.e.f. 26/03/2019. The details of Committee and its terms ofreference are set out in the Corporate Governance Report forming part of the Board’s Report. The Company has a robust Risk Management framework to identify, evaluate business risks and opportunities.

Particulars of Loans, Guarantees or Investments

During the year 2020-21 there was no loan, guarantee or investment made by your Company under Section 186 of the Companies Act, 2013.

Particulars of Contracts or Arrangements made with Related Parties

No transactions were entered into with Related Parties as defined under the Section 188 of Companies Act, 2013 read with Regulation 34(3) and Para A of Schedule V of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015, during the Financial year, as such annexure AOC-2 is not furnished. There was no materially significant transactions with related parties which were in conflict with the interest of the Company. The Board approved Policy on Materiality of Related Party Transactions and dealing with Related Party Transactions is available on the Company’s Website.

Material Changes and Commitments, if any, affecting Financial Position

There was no material change / commitment occurred affecting the financial position of the Company subsequent to the financial year ended March 31, 2021 till the date of this report and there was no change in the nature of business of the Company during the year.

Disinvestment through Follow-on Public Offer

The disinvestment of 15% KIOCL Equity Shares by Follow-on Public Offer (FPO), as approved by the Cabinet Committee on Economic Affairs (CCEA) had not been achieved by Govt. of India during the year.

Management Discussion and Analysis Report

The Management’s discussion and analysis report is set out in this Annual Report in terms of the provisions of Regulation 34(2)(e) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations. 2015.

Business Responsibility Report (BRR)

During the year, your Company continued to be in top 500 listed companies in term of market capitalization. Accordingly, in compliance to Regulation 34(2)(f) of SEBI (LODR) Regulations, 2015, BRR disclosures have been integrated in the Annual Report.

3. BUSINESS AND OPERATIONAL REVIEW Pellet Plant Unit

Your Company produced 2.210 million tons of Pellets during the year 2020-21 as comparison to 2.375 million tons in the previous year and sold 2.311 million tons of Pellets as against 2.356 million tons in the previous year, against a MoU target of 2.500 (Very Good). The Company missed the MoU target due to non-availability of raw material due to frequent cyclones in the eastern region coupled with COVID-19 Pandemic affecting the mining activities at NMDC mines at Chhattisgarh. Out of the total quantity sold, exported quantity was 1.84 million tons which was about 80% of the total sales and balance 0.47 million tons was sold to domestic customers.

Blast Furnace Unit

The Blast Furnace Unit (BFU) remained under suspension due to uneconomic price of Pig Iron and high Coke Price.

A snapshot of production target vis-a-vis actual achievement with capacity utilization and sales performance during last five years including current year are depicted at Table 1 & 2.

Table 1: Capacity Utilisation

(Qty. In Million Tons)

Year MOU Target (Very Good) Actual Production Utilisation of installed capacity in %
2020-21 2.500 2.210 63
2019-20 2.300 2.375 68
2018-19 2.170 2.238 64
2017-18 1.925 2.327 66
2016-17 1.300 1.460 42

(Installed capacity of Pellet Plant is 3.500 million tons / annum)

(Qty: in Million Tons, Value: ^ In Crs.)

Table 2: Sales Performance

Year

Pellets

Pig Iron

Total

Qty Value Qty Value Qty Value
2020-21 2.311 2343.80 0.003 3.55 2.314 2347.35
2019-20 2.356 1878.97 0.003 5.20 2.359 1884.17
2018-19 2.206 1,825.97 0.002 2.80 2.208 1,828.77
2017-18 2.301 1,553.09 0.003 0.40 2.304 1,553.49
2016-17 1.387 868.72 0.000 0.07 1.387 868.79

Mineral Exploration Works

Highlights of performance during the Financial Year 2020-21

are: -

Fifteen (15) Mineral Exploration Projects with cumulative project approved value of ^ 129.81 crores (including GST) were handled;

Total revenue of ^ 4.57 crores (including GST) was received from NMET and Govt. of Karnataka. Interest free advance of an amount (mobilization amount) of ^ 7.62 crores (including GST) was received from Govt. of Karnataka.

Four (4) Mineral Exploration projects were completed as per the approved timelines of National Mineral Exploration Trust (NMET), Ministry of Mines, GoI. Geological Reports were submitted to NMET.

Details of Mineral Exploration Projects executed: -

Projects approved and funded by NMET: -

Mineral Exploration works of below indicated four (4) blocks

completed and GR submitted to NMET: -

Udbur Gold Block, Mysore (District), Karnataka: G4 level ME works for Gold & Associated elements (NICKEL PHASE);

Neerbudhihal Limestone & Dolomite Blocks (East & West), Bagalkote, Karnataka (02 Blocks): G4 level ME works for limestone and dolomite;

Reddipalayam Amalgamated Limestone Block, Ariyalur (Tq & Dist), Tamil Nadu: G2 level ME works for limestone.

Total revenue of ^ 4.41 crores (inclusive of GST) was generated from NMET. The Company received the sanction order for carrying out G4 level of ME works for Kyanite in Kallahalli Kyanite Block, Mysore (Dist), Karnataka with project approved cost of ^ 1.92 Crores (Including GST). Project is planned for execution during the Financial Year 2021-22.

Six (6) potential areas in the State of Karnataka for precious and base metals were identified for future Mineral Exploration works through NMET funding. Mineral Exploration Project Proposals (MEPP) were placed before Department of Mining and Geology (DMG), Govt of Karnataka (GoK) for scrutiny and consent.

Projects approved and funded by DMG, GoK: -

Iron Ore and Manganese - 10 Blocks (Lot No 01, Lot 02 and Haddinapade) for G3 and G2 level situated in Bellary and Chitradurga (Dists) of Karnataka:

Detailed Geological Mapping works completed and Technical Committee of GoK approved the borehole plan.

Proposal seeking permission for diversion of forest land is under process and forest clearance is awaited.

Revenue of ^ 15.68 Lakhs (inclusive of GST) is generated from GoK blocks.

Progress of Mineral Exploration Work is depicted as under: -

Operation and Maintenance Portal - M/s. OMC at South Kaliapani, Odisha: -

M/s. OMC had awarded the work to your Company to take up balance works of construction of Chrome Ore Beneficiation Plant and commissioning. The total awarded contract price for the balance work was ^ 28.60 crores plus GST and subsequently to carry out the operation and maintenance for at least five years period after commissioning. KIOCL had procured equipments worth ^ 13 crores to M/s OMC for the project as per the contractual terms. The jobs were expected to be completed by 30/11/2020. However, the same got extended due to non-supply of mechanical equipment and other items at site by various suppliers due to COVID 19

Pandemic. Construction works is expected to be completed by August, 2021.

MARKET SCENARIO

Global crude steel production reached 1,864 million tonnes (Mt) for the year 2020, down by 0.9% compared to 2019. Asia produced 1,374.9 Mt of crude steel in 2020, an increase of 1.5% compared to 2019. Chinas crude steel production in 2020 reached 1,053 Mt, up by 5.2% on 2019. Chinas share of global crude steel production increased from 53.3% in 2019 to 56.5% in 2020. Indias crude steel production for 2020

was 99.6 Mt, down by 10.6% on 2019. India remained as the second largest steel producer in the world. Japan produced 83.2 Mt in 2020, down 16.2% on 2019. South Korea produced 67.1 Mt, down 6.0% on 2019. The United States produced 72.7 Mt in 2020, down 17.2% on 2019. The EU produced 138.8 Mt of crude steel in 2020, a decrease of 11.8% compared to 2019.

Russia was estimated to have produced 73.4 Mt in 2020, up by 2.6% against 2019. The Middle East produced 45.4 Mt of crude steel in 2020, an increase of 2.5% on 2019. Iran was estimated to have produced 29.0 Mt in 2020, up 13.4% on 2019. Africa produced 17.2 Mt of crude steel in 2020, the same as the 2019 production figure.

During the year 2020-21, domestic sale of pellets was up by about 28% y-o-y due to improved demand. Share of domestic sales in the total sales increased to about 20.24% from 15.55% during the previous year.

DIVERSIFICATION OF EXPORT MARKET

Your Companyis making all efforts to diversify its market base and minimize dependence on few markets. During the year about 56% of the total exports were made to markets other than China, in Middle East, Brazil, Bahrain and Malaysia.

CAPEX AND GROWTH PLAN

For long term sustainability / viability of your Company in the competitive market environment and forward consistent steady growth, yourBoard madethe following efforts:

Commencement and Development of Devadari Ioon Ore Mine

Govf. of karnataka vide G azette Notification dated 23/01/2017 reserved an area of 470.40 ha in kevadari Rarge, Sandur Taluk, Bellary District formininn least od Iron and Maaganese ore for captive utilization at Pellet Plant and Blast Furnace Unit at Mangaluru. Company had initiated actions for obtaining statutory clearances from authorities for execution of mining lerse deed.

Mining Plan was approved on 08/03/2018 for production of 2 mtpa iron ore and setting up of 2 mtpa crushing, conveying and beneficiation plant from IBM.

Company had submitted Form-I through online portal of MOEF&CC, GoI on 18.01.2018. EIA/EMP report was prepared based on Terms of Reference issued on 16.05.2018 by the Environment Appraisal Committee (EAC), MoEF&CC, GoI. On conducting Public Hearing on 25.06.2019, Company submitted Form-II along with Final EIA/EMP report to MoEF&CC, GoI on 12.09.2019 for grant of EC. Environmental Clearance (EC) presentation was made on 19.12.2019 before EAC. On 07/02/2020 EAC had issued summary records of Meeting of environment appraisal and directed KIOCL to submit additional information / documents including status of forest clearance of the project and approval for the allocation of water from Tungabhadra Dam to the project.

EC proposal was presented once again in the 20th EAC Meeting held on 19.08.2020. The EC proposal was deferred for want of Additional Details sought like Submission of Stage - I forest clearance, approval for drawl of 4 MLD water from TB Dam from GoK.

Water permission proposal was submitted on 12.10.2018 to Principal Secretary, Water Resource Department, Govt. of Karnataka for allocation of water for DIOM. The application was under process with Water Resource Dept., GoK. Meanwhile, Company had engaged M/s MECON Ltd for Water availability study and preparation of Feasibility report for drawl of 4MLD of water from TB Dam or down stream of TB dam or Narihalla reservoir. M/s MECON has submitted report to KIOCL. This Report was submitted to Chief Engineer, KNNL, TB Dam, Munirabad and accordingly chief engineer recommended on 27.01.2021 to State Govt for according permission for water drawl from downstream of TB dam. Water allocation proposal is under active consideration at Water Resource Dept., GoK.

The Company submitted Forest Clearance application in Form "A" on 16/03/2018 through online portal of MoEF & CC, GoI for forest clearance. Govt. of Karnataka on 09.10.2020 recommenced the Forest clearance proposal to MoEF&CC, GoI for In-Principle (Stage I) clearance for an extent of401.5761 ha i.e., 388 ha for mining area + 13.5761 ha for conveyor corridor, power line, approach road etc. DDG, IRO Bengaluru, MoEF&CC, GoI visited the project site on 09.02.2021 for submission of Site Inspection Report (SIR) to MoEF&CC, GoI. SIR was submitted on 15.02.2021 to MOEF&CC, GoI.

The Agenda for in-principal stage-I Forest Clearance for Devadari Iron Ore Mine was put up in Forest Advisory Committee (FAC) Meeting held on 17.02.2021 for deliberations and recommendations. As per the recommendations of FAC, a sub-committee visited Devadari Mine site on 19.03.2021 and had interaction with officials of Forest Dept., GoK, Directorate of Mines & Geology, GoK and KIOCL. Sub-committee had submitted the report to MOEF&CC. FC proposal would be placed before the FAC in its Meeting to be held during May- June 2021 for according in-principle (Stage I) approval.

On obtaining statutory clearance, Mining lease deed would be executed with the Government of Karnataka for commencement of Mining operation.

The Company would undertake development of mine, construction and commissioning of beneficiation plant along with infrastructure development viz railway siding, water pipeline, power transmission line, conveyor corridor with capital investment of around ^ 1500 - 2000 crores. The iron ore produced from the mine would be utilized in the Pellet Plant Unit and Blast Furnace Unit of the Company at Mangaluru. Setting up of Pellet Plant at Devadari site had been envisaged at later stage.

Setting up of Coke Oven and DISP projects of BFU

In order to make the Blast Furnace Unit (BFU) viable on standalone basis, your Company had envisaged setting up of 1.8 Lakh TPA capacity of Non-recovery Coke Oven plant with waste recovery Power Generation Plant as back ward integration project and 2 Lakh TPA capacity Ductile Iron Spun pipe (DISP) project as forward integration project at the existing BFU of KIOCL at Mangaluru. KIOCLs Board and PIB has approved the project with total capital outlay of ^ 836.90 Crores. MoEF & CC has granted Environment clearance (EC) in Feb 2020.

Company had appointed M/s MECON as EPCM Consultant for the project. Main technological packages envisaged are installation of Coke Oven Plant, Waste heat recovery Power Plant, DISP Plant, Pulverised Coal Injection plant, Oxygen and Nitrogen plants.

Site Levelling and some of civil jobs have started at the proposed site. Main technological packages are under tendering stage. Due to COVID -19 pandemic the tender process is also getting delayed.

Due to change in General Finance Rules of GoI under the Atmanirbhar Bharat, finalizing tenders is getting delayed. Further, change in GFR and Procurement Policy of Govt. of India, registration of DPIIT is mandatory for participation of foreign companies in the bid sharing the country border.

Setting up of 5.0 MWac Captive Solar Power Plant

In order to meet the power requirement of Company’s plant at Mangaluru and further to reduce the cost of power of Pellet production, Company envisaged for setting up of Captive Solar Power Plant with an estimated cost of ^ 24.17 crores. Company engaged an EPC contractor for land identification, Engineering and Construction for setting of 5.0 MWac (6.5 MWp) captive solar plant in Karnataka and appointed M/s IDeCK as technical consultant for Project monitoring. The EPC Contractor have identified 20 acres of land for setting up of Solar Power Plant at Kathrikehal Village, Chikkanayakanahalli Tq, Tumku dist. Land had been registered in the name of Company on 29.07.2020. All statutory clearances have been obtained for Solar Power Plant. Installation of all solar panel and necessary equipment have been completed. Performance test is being conducted. Long Term Open Access (LTOA) agreement for Wheeling was entered among BESCOM, MESCOM and KPTCL. Solar Power generated is being pumped to Kathrikehal KPTCL substation w.e.f 11.03.2021.

JOINT VENTURE / MOU

Setting up 2 MTPA Pellet Plant on JV basis between KIOCL & RINL

Your Company had signed a MoU with M/s RINL Visakhapatnam for setting up a 2 MTPA capacity Pellet Plant at RINL premises, Visakhapatnam on Joint Venture Basis. To take the project forward, the Techno-Economic Feasibility Report (TEFR), Detailed Project Report (DPR) and Shareholders Agreement was approved by the Boards of both KIOCL and RINL. M/s MECON was engaged as Technical Consultant for obtaining the Environmental Clearance from MoEF and Consent for Establishment (CoE) from Andhra Pradesh State Pollution Control Board.

Meanwhile, M/s RINL had floated an EoI for setting up of 2 MTPA Pellet Plant at Vizag on "Build, Operate and Maintain Mode" Basis. RINL have informed your Company to hold the Joint Venture (JV) activities at present, however, JV is still open till clarity emerges on outcomes of EoI. In view of the above, KIOCL has informed MECON to hold further study / work on preparation of draft report of EIA / EMP study.

MoU with M/s SAIL

Your Company had entered into a MoU with M/s SAIL for exploring the Techno-economic feasibility for consideration of setting up of pellet plant under a Joint Venture (JV). M/s MECON was entrusted for preparation of bankable TEFR for identifying the best suited ISP of M/s SAIL for setting up of pellet plant. With due consultation, it is decided to set up 4 mtpa pellet plant at Bokaro Steel Limited of M/s SAIL. Discussion was under progress with M/s SAIL to finalize the JV agreement for setting up of pellet plant under JV. Meanwhile, KIOCL has started the work of setting up of Coke Oven Plant & DISP Plant at BFU, Mangalore and Devadari Iron Ore Mining project was also under advance stage, so, KIOCL intimated SAIL to withdraw from the setting up of pellet plant project to augment its resources for its own projects.

MODERNIZATION OF PELLET PLANT UNIT Installation of a Barrel Type Blender Reclaimer

For modernization and to fulfil the current requirement of Pellet Plant, Company has installed 1000 tph capacity barrel type blender reclaimer with associated civil and structural works, electrics, instrumentation & control etc.

Installation of Vertical Pressure Filters

The existing vacuum disc filters are not suitable to filter the iron ore having high alumina content and slimy in nature. Considering the present scenario and market conditions for the raw materials, KIOCL intends to develop the operations to have flexibility in the blending of ore from any part of the country. Your Company appointed M/s MECON as consultant for installation of vertical pressure filters to handle ore sourcing from Bellary-Hospet belt, Bailadala region or Odisha region. The Board of your Company had approved the project in its 257th Meeting with the estimated cost of ^ 158.60 crores.

Purchase Order on M/s METSO for procuring main equipment had been placed. Auxiliary equipments and Material handling systems are being procured. Dismantling part of SPF building,

Civil and Structural jobs are under progress for erection of the main equipment. The total savings in production cost by installation of vertical pressure filters is expected to be ^ 45.3

crores per annum and it would enable the plant to improve capacity utilization with flexibility in blending of ores from various sources.

4. DIGITAL INDIA - SINGLE INTEGRATED INFORMATION SYSTEM / ERP

Your Company is in the process of implementation of SAP S/4 Hana ERP on MeitY empanelled cloud environment (IaaS model) and had accordingly appointed a System Integrator (SI). Functional experts of respective modules from SI have started Business discussion sessions on Functional Requirement Specification (FRS) of each module with Core team and functional team members. The modules to be implemented are Procurement and Inventory and Payroll with ESS, Project Management, Financial Management, Plant Maintenance, Production and Quality control, Reporting management & Analytics along with Document Management System.

5. HUMAN RESOURCE MANAGEMENT & INDUSTRIAL RELATIONS

Human Assets

Your Company has been conferred with "Karnataka Best Employer Brand Award 2020" by World HRD Congress. The award was presented to CMD during Virtual Event held on 26.12.2020.

Your Company takes proactive measure in building positive employee-employer relationship by nurturing initiatives, innovations and aspirations of the employees as an integrated approach of Human Resource Management, focusing on people to manage change and strive for continued excellence.

As on March 31, 2021, the Company had 746 employees on its rolls comprising of 208 Executives (28%), 37 NonUnionized Supervisors (5%) and 501 Non-Executive Employees (67%).

Table: 3 Breakup of employees on rolls as on March 31, 2021.

Group Total SC ST Ex-servicemen PwD Women Employees
A 208 41 13 - 4 11
B 37 4 1 - 2 6
C 471 69 29 - 2 5
D & D (S) 30 4 5 - 3 1
Total 746 118 48 - 11 23

Persons with Disabilities Act, 1995

Your Company ensures compliance under the Persons with Disabilities Act, 1995.

Industrial Relations and Employees Welfare

Your Company continued to maintain harmonious industrial relations, co-operation between the elected representative bodies of employees and management ensuring no loss of mandays during the year. During the Financial Year, Wage Revision for Non-Executives Employees w.e.f. 01.01.2017 was implemented as per the Memorandum of Settlement arrived between three unions and Management of KIOCL before Dy. Chief Labour Commissioner (Central) on 07.10.2020.

Recruitment, VRS & Superannuation

During the year: -

(a) Company recruited thirteen (13) Executives in different levels;

(b) Thirteen (13) employees separated under Voluntary Retirement Scheme; and

(c) Fifty-Six (56) employees superannuated on attaining the age of superannuation.

l Human Resource Development

5 During the Financial Year 2020-21, various activities were f carried out as per the guidelines / instructions of Department of 5 Public Enterprise, in the area of Human Resource Development. s Management Development Program (MDP) was conducted for 1 middle and senior level officers by NITK-Mangaluru. Various . Training programs including in-house training programs, weblearning programs on various topics were carried out to enhance the skill sets of employees and to build their technical and managerial competencies. Appraisal Team Members training was also conducted as part of PCMM level-2 implementation. During the year 2247 number of mandays of training were imparted to the employees of the Company.

Particulars of Employees

Ministry of Corporate Affairs vide its notification dated June 5, 2015 exempted Government Company with the applicability of Section 197 of the Companies Act, 2013. However, the remuneration received by the employees of the Company, had not exceeded the limit prescribed under Section 197 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 during the Financial Year 2020-21.

Public/Staff Grievance Redressal

Your Company has framed a well-defined grievance procedure, evolved under the Code of Discipline. Staff Grievances received are redressed to the satisfaction of the aggrieved. With respect to public grievance, as and when any complaints are received, necessary remedial action is taken promptly. Complaints/ grievances other than the staff grievance are categorized into customer / consumer complaints / grievances from the Contractors, NGOs / General Public etc. The respective project heads are empowered to dispose of the grievances concerning their areas. Linkage has been provided to Centralized Public Grievances Redressal & Monitoring System (CPGRAMS) with effect from May 1, 2011. A Public Service Delivery (SEVOTTAM) portal has been created by Govt. of India for assessing and improving the quality of services delivered to the citizens. The same is also available on the Companys website.

6. CORPORATE GOVERNANCE

Pursuant to Regulation 34(3) and Para-C of SEBI (LODR) Regulations, 2015, a separate section on Corporate Governance along with certificate from Practising Company Secretary confirming the level of compliance is attached and forms a part of the Board’s Report.

Directors and Other Key Managerial Personnel

During the year, the Board consists of ten members, four of whom are executive or whole-time Directors, two are nonexecutive Directors, representing Ministry of Steel and four are Independent Directors. Sitting Fees/Remuneration paid to Directors and to KMP’s respectively are provided at table 14 in Corporate Governance Report.

Declaration by Independent Directors

The Company received necessary declaration from Independent Directors under Section 149(7) of the Companies Act, 2013, that they meet the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Regulation 25 of the Listing Regulations. The Board of Directors at its 272nd Meeting held on 27/05/2021, noted the declarations. Independent Directors of the Company have registered themselves with Independent Directors databank in compliance with Companies (Creation and Maintenance of database of Independent Directors) Rules, 2019 and Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019.

Independent Woman Director

In terms of the provisions of Section 149 of the Companies Act, 2013 and Regulation 17(1)(a) of SEBI (LODR) Regulations, 2015, your Company does not have Independent Woman Director on its Board. The aforesaid non-compliance is being continuously brought to the notice of Ministry of Steel for its needful action.

Changes in the Composition of the Board Inductions / Cessations

In terms of Article 91 of the Articles of Association of the Company, the President of India is vested with the power to appoint the Directors of the Company from time to time and also shall determine the term of office of such Directors. Accordingly, the following appointment/cessations on the Board of your Company were effected as per the directives of the President of India: -

Sri Shashank Priya, Additional Secretary and Financial Advisor, Ministry of Commerce & Industry having Additional charge of Financial Advisor in Ministry of Steel was appointed as an Additional Director and designated as Govt. Nominee Director on the Board of the Company with effect from 17.12.2020 vice Sri Vijoy Kumar Singh, Ministry of Steel who ceased to be Director on the Board of the Company w.e.f. 05.11.2020.

Smt Sukriti Likhi, Additional Secretary and Financial Advisor, Ministry of Steel was appointed as an Additional Director and designated as Govt. Nominee Director on the Board of the Company with effect from 23.04.2021 vice Sri Shashank Priya, Ex-Additional Secretary and Financial Advisor, Ministry of Steel. Having so appointed, Smt Sukriti Likhi shall hold office till the date of ensuing Annual General Meeting by virtue of Section 160 of the Companies Act, 2013 and Sri Shashank Priya ceased to be Director on the Board of the Company w.e.f. 23.04.2021.

Appointments / Resignations of the KMP

During the year, there was no appointment / resignation of KMP. However, pursuant to Ministry of Steel Order F. No. 5/3/2017-BLA dated 30/01/2018, Sri MV Subba Rao, ceased to be the Chairman-cum-Managing Director of the Company w.e.f. 30.06.2021 on account of his retirement from the Company on attaining the age of superannuation.

Further, Ministry of Steel vide its Order F. No. 5/1/2020-BLA dated 30/06/2021 had assigned the Additional Charge of the post of Chairman-cum-Managing Director, KIOCL to Sri S.K. Gorai, Director (Finance), w.e.f. 01.07.2021 for a period of three months or till the joining of a regular incumbent or until further orders, whichever is the earliest.

Directors Retiring by Rotation

In terms of Section 152 (6) of the Companies Act, 2013, Sri T. Saminathan, Director (Commercial) and Sri K. V Bhaskara Reddy, Director (Production and Projects) being longest in office shall retire by rotation at the ensuing AGM and being eligible for re-appointment, offers themselves for re-appointment. The Board recommends their re-appointment.

Number of Meetings of the Board

The Board met eight (8) times during the year under review, the details of which are given in the Corporate Governance Report. The maximum interval between any two Meetings did not exceed 120 days. The Meetings were conducted in compliance with relevant regulations of Listing Regulations and Secretarial Standard -1 issued by The Institute of Company Secretaries of India (ICSI).

Directors Responsibility Statement

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 134 (5) of the Companies Act, 2013 that:

(a) In the preparation of the Annual Accounts for the Financial Year ended March 31, 2021, the applicable Accounting Standards had been followed along with proper explanation relating to material departure.

(b) The Company has selected such Accounting Policies and applied them consistently and made judgments & 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 & Loss of the Company for that period.

(c) The Company has taken proper and sufficient care towards the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

(d) The Company have prepared the Annual Accounts on a going concern basis.

(e) The Company has laid down Internal Financial Controls, which are adequate and are operating effectively.

(f) The Company has devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Annual Return

In terms of Section 92(3) of the Companies Act, 2013, the Annual Return in form MGT - 7 filed for the year 2019-20 with MCA during the FY 2020-21 is available at weblink https:// www.kioclltd.in/user/cms/371. The Annual Return for the year 2020-21 will be filed within 60 days from the date of 45th AGM of the Company.

Statutory Auditor

The C&AG of India vide its letter dated 10.08.2020 had appointed M/s YCRJ & Associates, Chartered Accountants as the Statutory Auditor of the Company under Section 139 of the Companies Act, 2013 for the financial year 2020-21.

Cost Records and Cost Audit

The Company is maintaining the cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Companies Act, 2013. The Cost Audit Report for the Financial Year 2019-20 was filed with the Ministry of Corporate Affairs on 16/09/2020. The Cost Audit Report for Financial Year 2020-21 is under finalisation and will be submitted to the Ministry of Corporate Affairs.

Cost Auditor

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the Cost Audit records of the Pellet Plant Unit of the Company is required to be audited. The Board on the recommendations of the Audit Committee, had appointed M/s R. M. Bansal & Co., Cost Accountants to audit the cost records for the Financial Year 2021-22. The remuneration payable to the Auditor being placed before the members in the Annual General Meeting (AGM) for their ratification vide Resolution at Item No.7 of the Notice convening the AGM.

Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed Sri S. Viswanathan, Practicing Company Secretary for conducting the Secretarial Audit of the Company for the Financial Year 2018-19 to 2020-21. The Secretarial Auditor Report for the Financial Year 2020-21 forms part of the Directors Report.

C&AG Audit

The Comptroller & Auditor General of India (C&AG) vide its letter dated 15.07.2021 has conveyed "NIL" comments on the accounts of the Company for the year ended March 31, 2021. Copy of the same is annexed to this Report.

Adoption of new set of Memorandum of Association and Articles of Association

In line with the approval of the Board at its Meeting held on 11.02.2020, the proposal for adoption of new set of Memorandum of Association and Articles of Association had been taken up with the Administrative Ministry for its approval vide Company’s letter dated 11.03.2020. The approval from Ministry is awaited.

7. CORPORATE SOCIAL RESPONSIBILITY

The brief outline of the Corporate Social Responsibility (CSR) initiatives undertaken by the Company during the year under review form a part of this Report as an Annexure in the format

prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014 and amendments. For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which is a part of this report. The CSR policy is available on weblink https://www.kioclltd.in/user/ cms/344.

8. KEY INITIATIVES

Environmental Management and Pollution Control Measures

Your Company has taken initiatives to address the cause of Global environmental issues and as a part of the initiatives, following has been carried out:

Increased the green cover by planting a number of trees in the plant premises and other areas. As a part of green belt development initiative, about 200 saplings of local variety were planted near the pipe line corridor area.

About 110 saplings were donated by Pilikula Nisargadam in this year and they were planted in the Blast Furnace Unit premises. Additionally, 250 saplings have also been planted departmentally / CISF at BFU.

The formation of concrete road taken up for a length of about 872 meters at OBL area, Pellet Plant premises to ensure dust free atmosphere. The entrance to Shed-1 is also being concreted for smooth movement of trucks and to control dust. The work is under completion stage.

Many trees were transplanted at new site project in BFU.

The environmental monitoring is being carried out as stipulated in the Consent to Operate issued by the KSPCB.

Company reduced emission of Green House Gases by adopting various energy conservation measures as under:

(a) The energy generated from roof top and ground based solar plants at Mangalore was as under: -

(i) Roof top solar plant at CPP = 104912 Kwh Units

(ii) Roof tops solar plant at BFU = 391096 Kwh Units

(iii) 1MW ground based solar system =1666958 Kwh Units.

(b) Purchased renewable energy of 17.87 GWh through wheeling which is 10.87% of total energy utilized in the Pellet Plant Unit, thereby saving energy cost as well as fulfilling Renewable Energy Purchase Obligation.

(c) Energy efficient Motors installed in place of conventional motors.

(d) Conventional light fittings replaced by LED Light fittings.

(e) Old ACs replaced with energy efficient inverter type ACs.

Safety

The Onsite emergency plan approved by Director of Factories is in existence for both PPU and BFU. The same was updated as and when there was change in plant condition as well as emergency team members. Workers participation in Safety Management system was one of the important subjects as per the Factories Act. The Company had formed area wise safety committees. Workers participation in these Safety Committees were ensured. The safety Committee Meetings were conducted at regular intervals.

Safety Inspections were carried out regularly by the Safety Officer along with concerned Department Engineers and Safety Committee members. The observations made during the Inspection were noted and reported to the concerned Departmental Heads for compliance. An Internal cross Departmental Safety Audit was conducted on 18.08.2020 along with a Committee formulated by Competent Authority as per Standard checklist IS:14489.

Suitable Personal Protective Equipments were issued to all employees to protect them against work place hazards. Various Training programmes were conducted to inculcate safety consciousness and develop the human resources. Forty- five ATS trainees were given with 1800 RI classes and 13500 Man days on the job skill development training classes and 150 Technical college students were provided with one week each Internship training during the year.

National Safety week celebrations were conducted on 4th to 10th March 2021 and Productivity Week celebrations were conducted from 12 th to 18th February 2021. The Onsite Emergency Mock drills were also conducted in Pellet Plant Unit and Blast Furnace Unit, to check the emergency preparedness for any major accident.

ISO Certification

Your Company is certified with ISO 9001: 2015 for Quality Management System, ISO 14001:2015 for Environmental Management System and ISO 45001:2018 for Occupational Health and Safety Management System. All certifications are valid up to 08/11/2021.

Implementation of Official Language Policy

Rajbhasha Department of the Company is entrusted with the responsibility of ensuring compliance of the Official Language Act, 1963. During the year, Rajbhasha Department scheduled Official Language Implementation Committee Meetings, organised workshops & conducted Official Language inspections as per targets of the Annual Program 2020-21 of Department of Official Language (Ministry of Home Affairs).

Employees of the Company made their significant presence during online workshops and other virtual activities conducted under the aegis of TOLIC (PSU), Bengaluru & Mangaluru.

As a remarkable initiative the Rajbhasha Department prepared its first Rajbhasha E- House Magazine ‘Srigandha’ during lockdown period utilising creative use of work from home duration and inaugural issue was formally released during Hindi Pakhwada, 2020. The magazine was circulated through Email & WhatsApp. The link of the e-magazine was also provided on the website of the company and web-portal of Official Language Department (Ministry of Home Affairs) under E-Pustakalay segment.

The Company was awarded a citation as an appreciation by TOLIC (PSU), Bengaluru; based on the recommendation

of the evaluation committee, to retain the first prize awarded in the last two years of outstanding performance in the implementation of Official Language.

Vigilance

Preventive vigilance has been the thrust area of Vigilance Department all these years and the same has received focused attention during the year. A climate of preventive vigilance is generated to sensitize officials at all levels about the ill effects of corruption and malpractices. Regular Structured Meeting of Vigilance with the management is being conducted and issues related to e-governance, Leveraging Technology, Tender Management, Award of Works, Recruitment Policy have been discussed. The Vigilance Department is certified for compliance to ISO certification 9001-2015 standards to ensure continuous improvement in Quality Management System. Certificate is valid upto 29th January, 2022. Vigilance Awareness Week was observed from 27th October to 2nd November, 2020 at all the locations/offices of the Company. Workshops, Trainings, Guest Lectures and awareness programmes were conducted during the week through web based/hybrid mode observing COVID-19 prevention guideline. E-Procurement is in vogue and the threshold value for this is fixed at ^ 2 Lakhs and above. During the year, 95.15% contracts by value are covered under this. All payments are being made through electronic mode. During the Year, 143 work/purchase/sale orders have been issued incorporating Integrity Pact Clause, covering 98.71% of contracts by value. No complaints received under Integrity Pact. 49 Scrutiny/examinations, 44 checks/inspections carried out during the period and corrective actions suggested. Necessary action is taken as regards to the complaints received during the year. Vigilance Department conducted 13 training programmes at three different locations, covering 1930 man-hours. Topics such as Preventive Vigilance, Digital Vigilance, Indenting & Tendering procedures, Role of Technology in combating corruption and enhancing competitiveness etc. were covered. During the year, five training programs on Preventive Vigilance for Mid-Career & Induction level employees as per CVC PV training module were conducted through video conference / hybrid mode covering 1480 man-hours.

Compliance of recommendations made by the Committee on Papers Laid on the Table (Rajya Sabha) in its 150th Report

Details of cases initiated / disposed-off during 2020-21: -

The details of vigilance cases initiated / disposed-off during 2020-21 were as under: -

- No. of cases pending as on 31.03.2020 :- NIL
- No. of cases initiated during 2020-21 :- 1
- No. of cases pending as on 31.03.2021 :- 1

Nature of Pending case: -The pending case is regarding procedural lapses in procurement of medicines while on deputation to other PSU.

- Officer involved :- 1
- Charge sheet issue on :- 29.03.2021
- Disciplinary proceedings :- Yet to conclude

Audit Paras:

Audit Para No. 3.7.2.2 of Audit Report No. 2 of 2009-10, 19.1.1 of Audit Report No. 9 of 2009-10, Para No. 15.2 of Audit Report No. 8 of 2012-13 and Para No. 17.1 of Audit Report No. 13 of 2014 were dropped by C&AG during the year under review.

Grant-in-aid for R&D Project

The Company had received a grant-in-aid from Ministry of Steel, Govt. of India for an amount of ^ 11,20,260/- on 05/12/2018 for carrying out R&D for "Synthesis of Kudremukh Iron Ore Mine Tailings based Geopolymer Aggregates using Fly ash as precursor in Construction Industry" by KIOCL Limited in association with

Dayananda Sagar College of Engineering (DSCE), Bengaluru. DSCE carried out the R&D work for a period of 24 months and objectives of the Project was to arrive at design specifications and identify optimum mix of fly ash, bottom ash and iron ore tailings for manufacture of geopolymer aggregates for using in Construction Industry. R&D work had been completed and final report preparation was under progress.

Collection of tailing samples, preparation and lab analysis was completed. Draft R & D report was submitted by DSCE for evaluation. Final report would be submitted to Ministry of Steel, GoI, shortly.

Implementation of Public Procurement Policy for MSEs

In line with the Govt. of India guidelines as per MSMED Act, 2006 and keeping in view of the effective implementation of Public Procurement Policy for Micro and Small Enterprises (MSEs) Order 2012, following steps were taken:

List of item components that could be sourced from MSEs were posted on the Company’s website at www.kioclltd.in for the information of MSE vendors.

Communication sent to all the registered vendors regarding the said policy with the objective of achieving an overall procurement from MSEs. Further, for enhancing the procurement from MSEs owned by SC/ST, all the vendors were approached for capturing necessary details and update the data bank.

During 2020-21, Company placed orders for Goods & Services for a value of ^ 14.23 crores from MSE’s which constituted 33.02 % of the total procurement value of ^ 43.09 crores (excluding raw materials, imported items, proprietary items, capital items, petroleum oil & Lubricants).

Energy Conservation, R&D, Technology Absorption, Foreign Exchange Earnings & Outgo

Details of Energy Conservation, R&D, Technology Absorption and foreign exchange earnings and outgo stipulated under Section 134(3) (m) of the Companies Act, 2013 read with Rule, 8 of The Companies (Accounts) Rules, 2014, is annexed to this report.

Dividend Distribution Policy

In terms of the Regulation 43A of SEBI (LODR) Regulations, 2015, the Board of your Company have adopted a Dividend Distribution Policy, which is available on the website of the Company under weblink https://www.kioclltd.in/user/ cms/344.

Appreciations and Acknowledgement

Your Directors gratefully acknowledge the support, co-operation and guidance received from the Hon’ble Minister of Steel, Hon’ble Minister of State for Steel, Hon’ble Chief Minister of Karnataka, the Secretary, Ministry of Steel and other officials of the Ministry of Steel as well as other Ministries of the Government of India, Government of Karnataka, Odisha, Tamil Nadu and all other departments / agencies of Central and State Government in all the endeavours of the Company.

Your Directors acknowledge the support extended by the valued and esteemed customers, shareholders, bankers, suppliers and other stakeholders for their support and co-operation.

Your Directors appreciate and value the contribution made by every member of the KIOCL family.

For and on behalf of the Board of Directors
Sd/-
Date: 05/08/2021 S.K. Gorai
Place: Bengaluru Chairman-cum-Managing Director (Addl. Charge)