National Steel & Agro Industries Ltd Directors Report.

Dear Members,

Your Directors hereby present the Thirty Fourth Annual Report on the business and operations of the Company along with the Audited Statement of Accounts for the Financial Year ended 31st March, 2020.

FINANCIAL RESULTS (Rs. in Lakhs)
PARTICULARS Year ended Year ended
31.03.2020 31.03.2019
Revenue from Operations 1,30,933 1,08,172
Earning Before Interest, Tax, Depreciation and Amortisation (EBITDA) (621) (13,118)
Finance Cost 18,242 14,705
Depreciation 4,864 4,890
Profit/(Loss) Before Tax (PBT) (23,727) (32,713)
Provision for :-
Income Tax/Adjusted for earlier years (Net) 13 (35)
Deferred Tax (Assets)/Liabilities 5,343 (8,634)
Profit/(Loss) After Tax (PAT) (29,083) (24,044)

PERFORMANCE OF THE COMPANY

During the year under review, the revenue from operations is 1,30,933 Lakhs against 1,08,172 Lakhs for the previous year.

The Earning Before Interest, Tax, Depreciation and Amortisation (EBITDA) is (621) Lakhs against (13,118) Lakhs for previous year. The Loss Before Tax has been 23,727 Lakhs (32,713 Lakhs in the previous year) and Loss After tax is 29,083 Lakhs (24,044 Lakhs in the previous year). Consequent to classification of Companys Account as Non Performing Assets (NPA) by its lenders, the Company has proposed One Time Settlement with the lenders, which has been sanctioned by 51% (in value) of the lenders during the year under review.

On request of the Company, the holders of 4% Cumulative Redeemable Unlisted Non- Convertible Preference Shares ("Preference Shares") have agreed to waive their accrued and unpaid dividends in the Company and further modify the terms of the issue of Preference Shares, which are as follows:

1. 0% (zero percent) dividend; and

2. Redemption of the Preference Shares within 20 years from the date of issue of Preference Shares in one or more tranches, at the discretion of the Board of the Company.

The outbreak of COVID-19 pandemic has led to an unprecedented disruption in the economic activities across the globe. Consequently, the steel demand is expected to be lower in 2020. Due to the stringent nationwide lockdown imposed by the Government of India with effect from March 25, 2020 the manufacturing activities of the Company were severely affected as the Company continues to bear its fixed overhead expenses and other inevitable financial costs without having any relaxation from the Government of India/State Governments/Local Authorities leading to continue the financial stress on the Company.

The Company has resumed its operations in a phased manner. However, the health and safety of our employees continues to be the foremost priority.

MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis, forming part of this report as required under Regulation 34 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 {hereinafter referred as SEBI (LODR) Regulations, 2015}, is attached separately to this Report.

TRANSFER TO RESERVE, IF ANY

Due to losses, the Company does not propose to transfer any amount to Reserves.

DIVIDEND

Due to losses, the Board has not recommended any dividend during the year under review.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the year under review, Mr. Rajesh Nema and Mr. Ashutosh Upadhyay were appointed w.e.f 13th May, 2019 as Independent Directors and Mrs. Ankita Sethi was appointed w.e.f 30th May, 2019 as Woman Independent Director of the Company.

The Company has received the necessary declaration from each Independent Director in accordance with Section 149(7) of the Act and Regulations 16(1)(b) and 25(8) of the SEBI Listing Regulations, that he/she meets the criteria of independence as laid out in Section 149(6) of the Act and Regulations 16(1)(b) of the SEBI Listing Regulations.

In the opinion of the Board, there has been no change in the circumstances which may affect their status as independent directors of the Company and the Board is satisfied of the integrity, expertise, and experience (including proficiency in terms of Section 150(1) of the Act and applicable rules thereunder) of all Independent Directors on the Board. In terms of Section 150 read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, Independent Directors of the Company have undertaken requisite steps towards the inclusion of their names in the data bank of Independent Directors maintained with the Indian Institute of Corporate Affairs.

During the year under review, the IDBI Bank Ltd. has withdrawn the nomination of Mr. Shrikant Tirpude, from the board of the Company as Nominee Director w.e.f. close of working hours on 16th September, 2019. The Board has extended its gratitude to Mr. Shrikant Tirpude for his association, dedication and commitment towards Company as Nominee Director of IDBI Bank Limited.

Pursuant to the recommendation of Nomination and Remuneration Committee, the Board of Directors at its meeting held on 8th November, 2019 has approved the re-appointment of Mr. Santosh Shahra as a Whole-time Director of the Company, designated as Executive Chairman, for a period of three years, with effect from 17th December, 2019 which is subject to the approval of members by way of Special Resolution at the forthcoming Annual General Meeting of the Company.

The Board, further taking into account the recommendation of Nomination and Remuneration Committee, at its meeting held on 30th December, 2019 has approved the appointment of Mr. Manoj Khetan as a Whole-time Director of the Company for a period of 3 years, w.e.f. 30th December, 2019 which is subject to the approval of the members at the forthcoming Annual General Meeting. Mr. Manoj Khetan has also been designated as Whole Time Director & CFO.

RETIRE BY ROTATION

Pursuant to the provisions of Section 152 of the Companies Act, 2013, Mr. Santosh Shahra, Executive Chairman of the Company, retires by rotation and being eligible, offers himself for reappointment.

BOARD EVALUATION

Pursuant to the applicable provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance, its Committees and the Directors. The manner in which the evaluation has been carried out, explained in the Corporate Governance Report.

AUDIT COMMITTEE

The Audit Committee comprises of below mentioned directors:

Name Category
Mr. Rajesh Nema, Chairman* Independent Director
Ms. Ashutosh Upadhyay** Independent Director
Mr. Santosh Shahra** Executive Director

* Mr. Rajesh Nema, Independent Director, appointed as the Chairman of Audit Committee w.e.f. 13th May, 2019.

** Mr. Ashutosh Upadhyay, Independent Director and Mr. Santosh Shahra, Executive Director appointed as members of Audit Committee w.e.f. 13th May, 2019.

There are no recommendations of the audit committee which have not been accepted by the board during the year under review.

Details of terms of reference of Audit Committee and meetings of Audit Committee held during the year under review have been given in Corporate Governance Report.

NOMINATION AND REMUNERATION POLICY

The Board has, on the recommendation of the Nomination & Remuneration Committee, framed a policy for selection and appointment of Director(s), Senior Management Personnel and their remuneration. The Nomination and Remuneration Policy is available at the Companys website.

The composition of the Nomination & Remuneration Committee has complied with the requirements of the provisions of Section 178 of the Companies Act, 2013 and of Regulation 19 of the SEBI (LODR) Regulations, 2015.

Details of terms of reference of Nomination & Remuneration Committee and meetings of Nomination & Remuneration Committee held during the year under review have been given in Corporate Governance Report.

BOARD MEETINGS

During the year under review 7 (Seven) Board Meetings were held on 13th May, 2019, 30th May, 2019, 10th July, 2019, 14th August, 2019, 8th November, 2019, 30th December, 2019 and 14th February, 2020. The details of the Board Meetings are given in the Corporate Governance Report. The gap between two meetings did not exceed one hundred and twenty days as provided under the Companies Act, 2013 and SEBI (LODR) Regulations, 2015.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134 of the Companies Act, 2013, your Directors confirm that:

a) in the preparation of the annual accounts for the financial year ended 31st March, 2020, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any;

b) the accounting policies had been selected and applied 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 financial year ended 31st March, 2020 and of the loss of the Company for that period;

c) proper and sufficient care had been taken for 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 annual accounts had been prepared on a going concern basis;

e) internal financial controls were laid down to be followed and that these controls were adequate and operating effectively; and

f) proper systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

RELATED PARTY TRANSACTIONS

The transactions entered into with all the related parties during the year under review were on arms length basis and in the ordinary course of business.

All Related Party Transactions were placed before the Audit Committee and the Board of Directors, pursuant to applicable provisions of SEBI (LODR) Regulations, 2015 & Companies Act, 2013. Omnibus approval/ prior approval of the Audit Committee have been obtained for entering into related party transactions. The transactions entered into pursuant to the omnibus approval/prior approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors. The policy on Related Party Transactions as approved by the Board, is available at the Companys website at www.nsail.com.

Details of Related Party Transactions are given in "Annexure-A."

RISK MANAGEMENT

The Board has constituted a Risk Management Committee to assess risks in the operations of business of the Company, to mitigate and minimise risks assessed, periodic monitoring of risks and other matters to be delegated to the Committee by the Board from time to time.

Following are the members of the Committee :

1. Mr. Santosh Shahra* Chairman
2. Mr. Rajesh Nema** Member
3. Mr. Ashutosh Upadhyay** Member

*Mr. Santosh Shahra, Executive Director, appointed as Chairman of Risk Management Committee w.e.f 13th May, 2019.

** Mr. Rajesh Nema and Mr. Ashutosh Upadhyay, Independent Directors, appointed as members of Risk Management Committee w.e.f 13th May, 2019.

CORPORATE SOCIAL RESPONSIBILITY

During the period under review, the Company is not required to spend towards Corporate Social Responsibility (CSR). However, as part of its initiatives under "Corporate Philanthropy", the Company has spent 1 Lakh towards the health of the people.

The Report on CSR Activities as required under Companies (Corporate Social Responsibility Policy) Rules, 2014 is set out as "Annexure-B" forming part of this report.

AUDITORS

(a) Statutory Auditors :

The Equity Shareholders of the Company in their Thirty Third Annual General Meeting held on 6th August, 2019 had accorded their approval pursuant to the provisions of Sections 139 and other applicable provisions of Companies Act, 2013 and Rules made there under to appoint M/s. Fadnis & Gupte, Chartered Accountants (FRN No. 006600C), as the Statutory Auditor of the Company for the period of five years commencing from the conclusion of Thirty Third Annual General Meeting until the conclusion of Thirty Eighth Annual General Meeting.

Any qualification, reservation, adverse remark or disclaimer in the Auditors Report to the Members read alongwith notes to the accounts are self explanatory, needs no further clarification or explanation.

Further, no fraud has been reported by the Auditors under section 143(12) of the Companies Act, 2013 requiring disclosure in the Boards Report.

(b) Cost Auditors :

Pursuant to Section 148(1) of the Companies Act, 2013 your Company is required to maintain cost records as specified by the Central Government and accordingly such accounts and records are made and maintained.

Pursuant to the provisions of Section 148(2) read with the Companies (Cost Records and Audit) Amendment Rules, 2014, your Company is also required to get its cost accounting records audited by a Cost Auditor. Accordingly, the Board of your Company had appointed M. Goyal & Co., Cost Accountants (FRN No. 000051) as the Cost Auditor of the Company for the financial year 2019-20. The Cost Audit Report with Annexure shall be submitted along with full information and explanation on every reservation or qualification contained therein, if any, to the Central Government within stipulated time period.

The Cost Audit Report for the financial year ended 31st March, 2019 was filed with the Central Government (Ministry of Corporate Affairs) vide SRN H96086632 dated 27th September, 2019.

(c) 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 Mr. Ashish Garg, Company Secretary in Practice (FCS 5181/CP 4423) to undertake the Secretarial Audit of the Company. During the period under review, the Company has complied with the applicable Secretarial Standards notified by the Institute of Company Secretaries of India.

The Secretarial Audit Report is annexed herewith as "Annexure-C". The Secretarial Audit Report does not contain any qualification, reservation or adverse remark or disclaimer except as under:

i. In respect of improper composition of Board of the Company; Owing to resignation of Independent Directors and Woman Director the Board was not properly constituted. However, the Company has appointed Mr. Rajesh Nema and Mr. Ashutosh Upadhyay as Independent Directors w.e.f. 13th May, 2019 and Mrs. Ankita Sethi as Woman Independent Director w.e.f. 30th May, 2019.

ii. In respect of adoption of amended code of practices and procedures under Regulation 8 of SEBI (Prohibition of Insider Trading) Regulations, 2015; owing to improper composition of Board, the amended code was adopted in the meeting of Board of Directors held on 30th May 2019.

iii. In respect of composition of Audit committee, Nomination & Remuneration Committee and Stakeholder Relationship Committee and Risk Management Committee; Owing to resignation of Independent Directors, the aforesaid committees was not properly constituted. However, all the committees have been duly constituted after the appointment of Independent Directors.

iv. In respect of SEBI ex-parte ad-interim order; The Company has submitted a detailed written submission on September 06, 2019 against which no further action has been taken by SEBI and the matter is pending for final order.

V. In respect of case filed before Debt Recovery Tribunal (DRT) by the lender banks; The Company has adopted legal course of action to defend the same.

vi. In respect of Applications/Petitions filed under the Insolvency and Bankruptcy Code, 2016; The Company is taking necessary legal recourse to defend the same.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, 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 herewith as "Annexure-D".

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT-9 is annexed as "Annexure-E". The annual return referred under section 92(3) of the Act is available at www.nsail.com.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the Notes to the Financial Statements and are within the limits.

PARTICULARS OF JOINT VENTURE, SUBSIDIARY & ASSOCIATE COMPANY

The Company does not have any joint venture, subsidiary or associate company during the year. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Companys Policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of accounting records, and the timely preparation of financial disclosures.

The Company has an Internal Control System commensurate with the size, scale and complexity of its operations. These are routinely tested and certified by Statutory as well as Internal Auditor. Significant audit observations and corrective action are reported to the Audit Committee.

The concerned executives monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee.

VIGIL MECHANISM/WHISTLE BLOWER POLICY

Your Company has formulated a mechanism called "Vigil Mechanism/ Whistle Blower Policy" for directors and employees to report to the management instances of unethical behavior, actual or suspected fraud or violation of the Companys Code of Conduct and provided a framework to protect employees wishing to raise a concern about serious irregularities within the Company.

The policy permits all the directors and employees to report their concerns to the Competent Authority, Executive Chairman /Executive Director of the Company and if the Whistle Blower believes that there is a conflict of interest between the Competent Authority and the Whistle Blower, he/she may send his/her protected disclosure directly to the Chairman of the Audit Committee.

The policy with the name and address of the Competent Authority, Executive Chairman/ Executive Director of the Company and Chairman of the Audit Committee has been communicated to the employees by uploading the same on the website of the Company.

DEPOSITS

Your Company did not accept any deposit from the Public during the year under review.

INSURANCE

Your Companys Fixed Assets have been adequately insured.

CORPORATE GOVERNANCE

Your Company has been particular in implementing and complying with the norms of Corporate Governance and complying all the mandatory requirements as specified in Regulations 17 to 27, clause (b) to (i) of sub-regulation (2) of Regulation 46 and paragraph C, D and E of Schedule V of the SEBI (LODR) Regulations, 2015. A detailed report on Corporate Governance along with Certificate from Practicing Company Secretary confirming the compliance of the conditions of Corporate Governance is attached separately to this Report.

PARTICULARS OF EMPLOYEES

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are provided in "Annexure-F," forming part of this report.

DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

Your Directors state that during the year under review, there was no complaint filed/pending pursuant to the provisions of "Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013".

The Company has complied with the Constitution of Internal Compliant Committee under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

MATERIAL CHANGES AND COMMITMENTS

There is no material change and commitment has occurred, affecting the financial position of the Company, between the end of the financial year of the Company i.e. 31st March, 2020 and the date of this report except:

1. An application, under Section 9 of Insolvency and Bankruptcy Code, 2016, had been admitted against the Company on June 09, 2020. Thereafter, dues were settled by the company through a settlement deed with the applicant "Argrocorp International Pte. Ltd." (Agrocorp). Upon settlement, an application for withdrawal of the insolvency proceeding was filed. NCLT has dismissed the insolvency proceeding by allowing the said application by its order dated June, 23, 2020.

2. A review petition was filed by Madhya Pradesh Paschim Kshetra Vidyut Vitaran Company Limited (MPPKVVCL) for reviewing the order passed by the Honble High Court, MP in WP No. 22734 of 2017 wherein court had directed MPPKVVCL to issue fresh demand in connection with the demand raised by MPPKVVCL for the period from May 2009 to May 2016, without penalty but with interest calculated as per agreement rate. The review petition is allowed by the Honble High Court of MP by its order dated May 13, 2020 ("May 2020 Court Order"). Pursuant to the said May 2020 Court Order, the Company has now received a demand of 79.18 Crores from MPPKVVCL vide its demand letter dated May 21, 2020. This demand of 79.18 Crores is included the amount of interest calculated at the rate of 16% per annum compounded in every six months, for the period from June 12, 2015 to May 31, 2020 and the pending amount of 31.46 Crs which was due to be paid. Now the Company is approaching MPPKVVCL for the waiver of interest and penalty amount.

SIGNIFICANT AND MATERIAL ORDERS PASSED

Following are the significant and material orders during the year under review:

1. An award has been passed on April 18, 2014 against the company in the matter of Arbitration at Hongkong, initiated by Smart Timing Steel Ltd (STSL). Thereafter, STSL has filed a petition to High Court, Mumbai for seeking an order and direction that the said arbitration award be enforced as a decree, which was allowed by the Honble High Court vide its order dated November 15, 2016. In pursuance of said order, STSL initiated execution proceeding against the company by attaching one of companys properties. Simultaneously, STSL filed a petition under Insolvency and Bankruptcy Code, 2016 (IBC) before National Company Law Tribunal (NCLT), Mumbai, which was dismissed by NCLT. Thereafter, STSL preferred an appeal before National Company Law Appellant Tribunal, Delhi (NCLAT). However, NCLAT has dismissed the appeal and STSL has approached to Supreme Court by filing a civil appeal against the said order of NCLAT. The Civil Appeal is pending for hearing.

2. In August 2010, the Company has started obtaining electricity through open access (from other state). Government of Madhya Pradesh (MP) enacted Vidyut Shulk Adhiniyam, 2012 whereby electricity duty was imposed upon the consumer of open access in the state. The Company had challenged the collection of electricity duty by filing writ petition in High Court of MP which was dismissed therefore, a Special leave Petition (SLP) was filed but same has been dismissed on December 19, 2019 and on December 20, 2019 the Company received a demand letter dated December 18, 2019 from the office of superintendent engineer, HT Billing (MPPKVVCL) for the payment of amount of 9,15,36,009/- (Rupees Nine Crore Fifteen Lakh Thirty Six Thousand and Nine). The Company has submitted its request for waiver of the entire amount of electricity duty along with interest to the State Government (M.P.).

SECRETARIAL STANDARDS

The Company has in place proper systems 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.

ACKNOWLEDGEMENT

The Board of Directors take this opportunity to express their gratitude to the Central Government, State Government and Local Authorities, Financial Institutions, Banks, Customers, Dealers, Vendors and all the stakeholders for their continued cooperation and support to your Company.

The Board of Directors wishes to express its appreciation to all the employees of the Company for their contribution towards successful operations of the Company. The Board also wishes for better health of its Stakeholders and hope for faster recovery from the current pandemic and look for prosperity, growth and constructive developement of our country and world at large.

The Board specially thank to the shareholders for their continued confidence and faith in the Company.

For and on behalf of the Board of Directors
Place : Indore Santosh Shahra
Date : 31st July 2020 Executive Chairman