MMTC Ltd Directors Report.

The Members MMTC Limited, New Delhi.

Ladies & Gentlemen,

On behalf of Board of Directors, I have the pleasure of presenting the 56th Annual Report on your companys performance for the financial year ended 31st March 2019 along with Audited Statements of Accounts and Statutory Auditors Report.

OPERATIONAL RESULTS

Your company, one of the leading trading companies in India, recorded a turnover of Rs.28292.82 crores during 2018-19 as against the turnover of Rs.15,756.92 crores registered during last fiscal. This business turnover includes Exports of

Rs.1103.92 crores, Imports of Rs.21624.99 crores and domestic trade of Rs.5563.92 crores. The Company has reported a net profit of Rs.81.43 crores in the current fiscal compared to Rs.48.84 crores earned last year.

The highlights of the Companys performance during 2018-19 are as below: -

2018-19 2017-18
Sales of products 28,288.27 15,746.49
Sales of services 4.55 10.43
Other Trade Earnings 686.62 693.89
Total Revenue from Operations 28,979.44 16,450.81
Cost of Sales 28,505.14 16,117.36
Gross Profit from Operations 474.30 333.45
Add: Dividend and other Income 14.21 46.43
Less: Establishment & Administrative Overheads, etc. 275.91 307.12
Less: Debts/Claims Written o /withdrawn 1.06 0.05
Less: Provisions for Doubtful Debts/ Claims/Advances/Investments 15.96 -
Profit Before Interest, Depreciation and Amortization Expenses and Taxes 195.58 72.71
Add: Interest Earned (Net) (Interest earned minus Finance Cost) (61.69) 0.07
Profit Before Depreciation and Amortization Expenses and Taxes 133.89 72.78
Less: Depreciation and Amortization Expenses 5.54 5.24
Less: Exceptional Items 9.76 8.41
Profit Before Taxes 118.59 59.13
Less: Provision for Current Taxes 32.39 13.32
Less: Provision for Deferred Taxes 4.77 (3.03)
Profit After Taxes 81.43 48.84
Add: Balance brought forward from the previous year 721.67 718.94
Balance
Items of other comprehensive income recognized directly in retained earnings
Re-measurements of post-employment benefit obligation net of tax (1.65) -
Dividend & Dividend Tax (36.17) (36.11)
Appropriations:
General Reserve (10.00) (10.00)
Leaving a Balance to be carried forward 755.28 721.67

The performance of different business groups of your Company is highlighted in the Management Discussion and Analysis Report, which is annexed and forms part of this Report.

Awards and rankings

EEPC India National Award for Star Performer Award for the year 2017-18 in the product group - Basic Iron & Steel, Large Enterprise.

"Best Agency Supplying Gold to Highest Number of Clients" for FY 2018-19 by GJEPC.

In the ET500 rankings MMTC has been given 98th ranking in 2018 on the basis of revenue compared to 108th in 2017.

In the rankings 2018 of Business World of its 500 Companies published on 23.1.2019 MMTC has been ranked 99 in terms of Total Assets + Total Income.

In Fortune India rankings of Most Valuable Firms published on 18.3.2019, MMTC has been assigned 134th rank in 2019 on the basis of Market Cap.

Ministry of MSME, Govt. of India has adjudged MMTC as Second Runner-up under Miniratna (Category I) in recognition of its work done towards promotion of SC/ST entrepreneurs based on the performance parameters laid down by the Ministry.

EQUITY SHARE CAPITAL & DIVIDEND

The Board of Directors recommends declaration of dividend @ 30% on the paid up equity capital of Rs.150 croress (post Bonus Issue) of the Company as on 31.3.2019 for the year 2018-19 out of profits of the year.

RESERVES

A sum of Rs.1348.64 crores was available in the reserves and surplus of your Company as on 1st April, 2018. Your Directors have proposed that Dividend at the rate of 30% on the equity capital as on 31st March, 2019 (Rs.150 crores) be paid out of profits of the Company. Accordingly, an amount of Rs.1342.25 crores was available in "Reserves and Surplus" of your Company as on 31st March, 2019.

FOREIGN EXCHANGE EARNINGS AND OUTGO

The Foreign Exchange earnings and outgo of your Company during 2017-18 has been as under:-

EARNINGS (Rs./Cr) OUTGO (Rs./Cr)
Exports 1103.92 Imports 19840.81
Others - Others 111.52
Total 1103.92 Total 19952.33

SUBSIDIARY COMPANY

The wholly owned subsidiary of your Company - MMTC Transnational Pte. Ltd. Singapore (MTPL) incorporated in October 1994 with the objective to take advantage of liberalization/globalization of trade and commerce to tap South East Asian market for trading in commodities has been engaged in commodity trading and has established itself as a credible and reputable trading out t in Singapore. During the financial year 2018-19 MTPL achieved sales turnover of US$ 154.12 million as against US$ 11.84 million during last fiscal. The Net Profit of MTPL during the financial year 2018-19 amounted to US$ 0.27 million as against Net Loss of US$ 0.38 million earned during 2017-18. The net worth of MTPL stood at US$ 12.29 million as on 31st March 2019.

Pursuant to the provisions of Section 129 of the Companies Act, 2013, the audited financial statements of MTPL together with Directors Report & Auditors Report are attached herewith.

MMTCS PROMOTED PROJECT- Neelachal Ispat Nigam Ltd. (NINL)

Your company has set up Neelachal Ispat Nigam Limited (NINL) - an iron & steel plant of 1.1 million tonnes capacity, 0.8 million tonne coke oven and by product unit with captive power plant, jointly with Govt. of Odisha and others. During the year 2018-19, NINL achieved a turnover of Rs.2025 crores and incurred net loss of Rs.402.19 crores. This was primarily due to recession in the economy and steel sector in particular and fall in net sales realisation. Stage II clearance for operation of Mines was received in July 2019. NINL has also signed MOU with NALCO for setting up of Coal Tar Pitch Plant. With the stabilization of steel making facility and starting of iron ore mining during the current financial year, NINLs performance is expected to improve as also increase in production capacity provided there is recovery in the steel sector. The Company has taken ‘in principle decision to divest its equity in NINL through Department of Investment & Public Asset Management.

Projects / Joint Ventures

To take advantage of new opportunities emerging in the free market environment, your company has promoted a number of joint ventures following the public-private partnership model in earlier years. A brief on the current status of such JVs set up in past years is given hereunder:

(i) Your company presently holds 6% equity capital in Indian Commodity Exchange Limited (ICEX) as on 31.3.2019. During the year under review ICEX has reported a net pro t(loss) of Rs.2,851.97 lakhs as against net loss of Rs.1,334.17 lakhs during 2017-18. As per regulation 17 of SECC Regulation, 2018 and SEBI Circular dated November 26, 2015, MMTC is required to reduce equity holding from 6% to 5% in ICEX and MMTC is in process of reducing its equity in ICEX. MMTC has invited Request for Proposal (RfP) for divestment of 6% MMTCs equity in ICEX.

(ii) Your company had participated in the equity of Currency Futures Exchange under the name and style of "United Stock Exchange of India Ltd which had been merged with "BSE Limited" (BSE) wherein your Company holds 38,961 equity shares of Rs.2/- each in BSE. During the year BSE earned a PAT of Rs.201.05 crores and recommended a final dividend of Rs.25/- on equity share of Rs.2/- each apart from Rs.5/- interim dividend paid in December 2018.

(iii) The joint venture for medallion manufacturing unit in collaboration with PAMP Switzerland in the name of MMTC-PAMP India Pvt. Ltd. in which MMTC has participated as 26% equity partner, achieved a turnover of

Rs.47610.04 crores and profit after tax of Rs.96.00 croress during 2018-19. MMTC has received a dividend of 70% on its investment in MMTC-PAMP India Pvt. Ltd. for FY 2018-19. MMTC-PAMP India Pvt. Ltd became Indias first LBMA accredited re ner for Gold and silver.

(iv) The JV Company M/s SICAL Iron Ore Terminals Limited (SIOTL) could not commence commercial operations due to non-availability of iron ore for exports from Bellary-Hospet Sector in Karnataka State and ban on mining / movement of iron ore for exports by state govt. In view of uncertain future of iron ore exports and to utilize the infrastructure created, Kamarajar Port Trust (erstwhile Ennore Port Trust) decided to award the facility through bidding process for modi cation of the facility to also handle common user coal. As coal does not have synergy with MMTCs existing line of business, MMTC Board had decided to exit from the JV. MMTC invited bids through open tender for sale of its entire 26% equity in the SIOTL JV, however no response was received. Meanwhile, as per "Right of First Refusal" in Shareholders Agreement of SIOTL, Sical Logistics Ltd., (lead promoter of SIOTL) o ered to purchase MMTCs equity at reserve price fixed by MMTC which MMTC Board has decided to accept. Currently, process in on for sale of MMTCs 26% equity in SIOTL to Sical Logistics Ltd.

(v) TM Mining Company Ltd. - your companys JV with M/s TATA Steel Ltd. for mining, exploration and allied activities. However, as the JV Company was not able to generate any business since inception, MMTC Board has accorded approval for ling of necessary documents with Registrar of Companies (RoC) by the JV

Company to ‘strike o the name of the JV Company from the records of RoC. Accordingly the last balance sheet of JV has been drawn during the year and all documents have been submitted to RoC and same is ‘Under Process of Striking O by RoC.

(v) To promote the concept of Free Trade Warehousing Zones in India, MMTC and IL&FS established SPV IN

2004-05 at few selected locations in India and formed a JV Company (Free Trade Warehousing Pvt. Ltd) with equity contribution 26% (MMTC) and 74% (IL&FS). Two 100% owned subsidiaries of FTWPL were also formed to develop FTWZ in Kandla (Kandla Free Trade Warehousing Private Limited) and Haldia (Haldia Free Trade Warehousing Private limited). Currently the JV has equity structure of 50:50. In view of financial position of promoters and the need for substantial investment for development of the project, the JV has decided to invite RFP for induction of strategic investor. Two units approved by KASEZ have taken land on sublease from JV. Regarding Haldia, the project SPV received allotment of 197 acres of land on 90 year lease basis under a lease agreement with Haldia Development Authority (HDA) signed in December 2013. However due to writ petition led by farmers in 2015 against HDA challenging the acquisition process, Calcutta High Court has granted stay on development of land. The JV is exploring options for recouping the investments.

(vi) A 15 MW capacity Wind Mill project with 25 Wind Energy Generators commissioned by MMTC way back in March, 2007 at Gajendragad in Karnataka, is running successfully and has contributed to the development of the area by meeting some portion of energy needs of Karnataka state. The power generated from the project is sold to HESCOM. The turnover of the project during 2018-19 was Rs.5.18 crores with a profit of Rs.3.74 crores.

INDUSTRIAL RELATIONS & HUMAN RESOURCE MANAGEMENT

Cordial and harmonious industrial relations were maintained in the Company during the year. No man days were lost due to any industrial unrest during the year. Wage Negotiation meetings were held with representatives of Federation of MMTC Staff Union. The agreed terms were signed in form of wage settlement. The new wage settlement is effective from 1.1.2017 and valid for 10 years with the provision of review in the year 2020 i.e. after three years. Further, regular meetings were held with the Federation / Unions / Associations of Officers, Staff and SC/ST Employees under Joint Consultative Machinery Forum. The aim of these meetings is to mitigate the grievances of the employees, exchange of information/ideas with a view to achieve Companys goals and objectives.

The aggregate manpower of the company as on 31st March, 2019 stood at 950, comprising of 387 Officers (inclusive of 5 Board level functional executives & 1 CVO) and 477 Staff . This manpower includes 1 officer, 85 Staff / workers of erstwhile Mica Trading Company Ltd., which had been merged with your company pursuant to the orders of BIFR. The composite representation of the total manpower is - women employees representing 21.16% (201 employees) of the total manpower; SC, ST, OBC & persons with disabilities (PWD) to the extent of 20.84% (198 employees), 9.89% (94 employees), 10.63% (101 employees) and 2.42% (23 employees) respectively. During the year 03 officers were inducted through open advertisement.

PRESIDENTIAL DIRECTIVES

During the year 2018-19, the company received the orders under the Presidential directives vide Communication No. K-48921/3/2018-FT(M&O) dated 24.4.2018 from the Department of Commerce, Ministry of Commerce & Industry, Govt. of India with regard to pay revision of Board level & below Board level executives and non-unionised supervisors of CPSEs w.e.f. 1.1.2017. These norms have been implemented during the year 2018-19.

TRAINING AND DEVELOPMENT

For further enhancing / upgrading the skills of employees in the constantly changing business scenario, 369 employees were imparted training during the year in different spheres of companys activities. This was done through programmes organized in association with in-house faculty as well as external resource persons from renowned institutions/organizations. The employees deputed for training had adequate representation of SC, ST and women employees (SC- 92, ST- 28 and women-86). In terms of man days, such training works out to 528 training man days during the year 2018-19.

IMPLEMENTATION OF OFFICIAL LANGUAGE

The Company is fully committed to implement O cial Language Policy of the Government of India. All out the orts were made to achieve the targets prescribed in the Annual Programme for the year 2018-19 issued by the Department of O cial Language, Ministry of Home A airs, Govt. of India. To promote the usage of Hindi in Companys day-to-day work, several programs viz. Hindi Workshops/Hindi Typing, training on Computers/Hindi Day/Week/Fortnight were organized at Corporate Office and Regional Offices during the year. This has brought positive results and a considerable increase of use of Hindi was observed in day to day official work.

During the year under review, the Honble Committee of Parliament on O cial Language had inspected our Regional Office Ahmedabad, Sub Regional Offices Kochi and Goa for reviewing the progress of implementation of Hindi. The Committee appreciated the work being done in Hindi in all three o ces and found the performance satisfactory. MMTC has been awarded the First prize in the form of a Shield by Ministry of Commerce for excellent work in Hindi. Hindi Website of MMTC is being updated regularly. In addition, a Hindi quarterly magazine Manikanchan is being published by MMTC.

VIGILANCE

The Vigilance Wing of your Company continued its focus on preventive vigilance to foster the goodwill & con dence stemming from value based business practices and for strengthening the Company as a professionally managed, globally competitive and internationally reputed organization. With the initiatives of Vigilance Division of your Company, various drills/manuals have been prepared and implemented. During the intervening years, many policies changes were made with respect to Government regulations, internal systematic improvements etc. It was advised by Vigilance Wing of your company to update the Procedures/SOPs and Manuals of all Divisions and to upload the same on the intranet. Trade Divisions have updated SOPs/Business Drills, and hoisted the same on MMTC intranet. Vigilance Division is also instrumental in overhauling of Systems and Procedures to detect and deal with the system failures and effective observance of conduct rules. During the period under review, a total of 19 complaints(8 were carried forward from the last year and 11 new complaints) were processed by Vigilance Division. Out of these 19 complaints, 18 complaints have been disposed off and action on remaining one complaint is in progress. During the year, the Division also dealt with 4 cases involving 19 o cials, out of which 3 cases involving 14 o cials have been disposed o , whereas one case involving 5 o cials is in progress.

During the year under review, 108 vigilance and 36 non-vigilance inspection reports were received from VOs and NVOs at various Regional Offices of MMTC. The same were timely processed and appropriate action was taken, wherever required. In addition to this, Division has also conducted CTE type inspection of tenders oated by various divisions of CO and ROs. Under new initiative to maintain complete transparency, on the advice of the Division, MMTC has started inviting online applications for recruitment. Division is also instrumental in organizing "Vigilance Awareness Week" in various o ces of MMTC from 29.10.2018 to 3.11.2018 with the theme of "Eradicate Corruption - Build a new India". Training to Vigilance and Non-Vigilance Officers has been imparted to apprise the mechanism of conduction vigilance inspection at their respective places in the light of business manual, CVC guidelines and instruction orders issued by Corporate Office in this regard from time to time. Format for inspection report has been standardized and circulated to all Vigilance Officers to bring uniformity in inspections being conducted by them so that it covers all areas of operation in respective ROs.

VIGIL MECHANISM

In accordance with the provisions of Section 177 of Companies Act 2013, the Board of your company introduced a Scheme on ‘Vigil Mechanism in 2014. The vigil mechanism is established for Directors and employees to report their genuine concerns. The concerns, if any, from any employee/Director shall be addressed to the Chairman of the Audit Committee. During the year under review, no such complaint has been received. This mechanism is apart from the Whistle Blower Policy, already in force.

INTEGRITY PACT

Integrity Pact is promoted as part of series of steps taken by Central Vigilance Commission for ensuring transparency, equity and competitiveness in public procurement. Your Company has also implemented the same to promote transparency/equity amongst the bidders and to plug any possibility of corrupt practices in trade conducted by the Company. Shri D.R.S. Chaudhary IAS (Retd.), has been appointed to function as Independent External Monitor(IEM).

CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABLE DEVELOPMENT

MMTCs CSR Policy is in line with Section 135 of the Companies Act and the CSR Rules as noti ed by the Ministry of Corporate A airs. The CSR Projects are being undertaken in terms of Section 135 of the Companies Act. The new CSR Policy is hosted on MMTCs website.

In compliance to CSR Rules, your Company in its endeavor to continue its commitment towards CSR & Sustainability initiatives during the year 2018-19 a sum of Rs.1.254 crore (Rs.125.4 lakhs) was allocated for undertaking the CSR activities which was equivalent to 2% of the average net profit of preceding three years.

The annual budgetary funds allocated during 2018-19 under CSR have been assigned for various projects and programs majorly related to Healthcare, Promotion of Education & Nutrition, Swachh Bharat Abhiyan, Clean Ganga Mission and Skill Development and other activities as per Schedule-VII of the Companies Act. Further, keeping in view the DPE guidelines on promotion of CSR activities in Aspirational Districts, MMTC has allocated 60% of its annual CSR outlay during the year 2018-19 in Aspirational Districts, as noti ed by NITI Aayog. MMTC has also responded to four Parliamentary Committee on Subordinate Legislation of Rajya Sabha reviews of CSR activities of the Company held at Mumbai, Lucknow, pune and Visakhapatnam. The annual report on CSR activity undertaken by your Company during 2018-19 is annexed to this Report.

CORPORATE GOVERNANCE

Your Company reposes its firm faith in continuous development, adoption and dedication towards the best corporate governance practices. Towards this end, the norms prescribed under the Companies Act, 2013, SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and Guidelines applicable for CPSEs issued by the Department of Public Enterprises in this regard are being implemented in letter and spirit. However, appointment of woman director on the Board of the company including vacant positions of Independent Directors as required as on 31.3.2019 is yet to be made by the Government.

A separate Report on Corporate Governance along with certi cate from M/s J K Gupta & Associates (CP No. 2448) regarding compliance of the stipulations relating to corporate governance specified in Listing Regulations is annexed hereto and forms part of this report. It may be mentioned that the company has complied with the CG norms prescribed by the Department of Public Enterprises applicable for CPSEs and the quarterly reports on compliance of Guidelines of Corporate Governance for CPSEs are sent regularly.

CODE OF CONDUCT

Pursuant to Regulation 15(5) of Listing Regulations, the Code of Conduct applicable to the Board members & senior management personnel has been posted on the website of your company. All Board Members and Senior Management Personnel as on 31st March, 2019 to whom the said Code is applicable have a rmed compliance of the same for the period ended 31st March, 2019 except one CGM(under suspension). Based on the a rmation received from Board Members and Senior Management Personnel, declaration regarding compliance of Code of Conduct made by the Chairman & Managing Director is given below:

Declaration as required under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and DPEs Guidelines on Corporate Governance

"All the members of the Board and Senior Management Personnel except one CGM(under suspension), have a rmed compliance of the ‘Code of Business Conduct & Ethics for Board Members and Senior Management Personnel of the company for the financial year ended on March 31, 2019."

sd/-
VED PRAKASH
Chairman & Managing Director
DIN.: 02988628