National Steel & Agro Industries Ltd Directors Report.

Dear Members,

Your Directors hereby present the Thirty Third Annual Report on the business and operations of the Company along with the Audited Statement of Accounts for the Financial Year ended 31st March, 2019.

FINANCIAL RESULTS (र in Lacs)
PARTICULARS Year ended 31.03.2019 Year ended 31.03.2018
Revenue from Operations 1,08,172 4,24,190
Earning Before Interest, Tax, Depreciation and Amortisation (EBITDA) (13,118) (4,007)
Finance Cost 14,705 13,417
Depreciation 4,890 4,952
Profit/(Loss) Before Tax (PBT) (32,713) (22,376)
Provision for :-
Income Tax/Adjusted for earlier years (Net) 35 92
Deferred Tax (Assets)/Liabilities (8,634) (8,179)
Profit / (Loss) After Tax (PAT) (24,044) (14,289)

FINANCIAL PERFORMANCE

During the year (2018-19) under review, on account of discontinuation of Agro Business Division, Companys revenue has come down to 1,08,172 Lacs from 4,24,190 Lacs for the previous year (2017-18).

The Loss Before Tax has been 32,713 Lacs (22,376 Lacs in the previous year) and Loss After tax is 24,044 Lacs (14,289 Lacs in the previous year).

During the year under review, on account of changes in the government policies of agro business, company has incurred huge losses including non-realization of debts. Accordingly, it has been decided to suspend the Agro Business Division and made Provision for doubtful debtors in the Books of Accounts. On account of non-realization of debts in time, working capital cycle of the company has disturbed and Letter of Credits (LC) established by the banks has remains un-paid. Accordingly, companys account has been classified as "Non Performing Asset" (NPA) by the bankers and Working Capital facilities has been freezed.

On account of freezing of working capital facilities by the banks, procurement of raw material for steel processing facility has taken a hit and capacity remains underutilized, which led to further losses to the company.

To overcome the situation, Board of Directors has initiated various steps, which includes rationalization of man power, close down of various branch offices, utilization of manufacturing facility (partial capacity for Job Work) etc. Also, company is in discussions with lender/banks for settlement/restructuring of its Account.

Company is hopeful that, all the corrective steps taken and proposed settlement/ restructuring of debts, company will come out of the problem very soon.

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

During the year, the Company does not propose to transfer any amount to the any Reserve.

DIVIDEND

In view of losses, the Board has decided not to recommend any dividend on Equity Shares and preference shares for the year under review.

As specified in Ind – AS No 33, Company has made provision of dividend @ 4% p.a. on 55,01,022 Preference Shares for the Financial Year 2018-19 as deemed financial charges.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the year under review Mr. Ashutosh Upadhyay was appointed on 2nd May, 2018 as Independent Director. Further, Mr. Rajesh Nema, Mr. Ashutosh Upadhyay, and Ms. Neha Singhania, Independent Directors of the Company, have resigned w.e.f. close of working hour on 19th January, 2019, 21st January, 2019 and 19th March, 2019 respectively, citing personal reason. The Board has extended its gratitude to Mr. Rajesh Nema, Mr. Ashutosh Upadhyay and Ms. Neha Singhania for their association, dedication and commitment towards Company as Independent Directors.

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

Independent Directors have given declaration that they meet the criteria of independence as provided in the Section 149 of the Companies Act, 2013.

Mr. Nagalingam Goli – Managing Director of the Company has resigned w.e.f. close of working hours on 31st March, 2019 as his tenure was coming to an end on 31st March, 2019. The Board has extended its gratitude to Mr. Goli for his support and guidance given to the company during his tenure.

During the year under review, Mr. Mahesh Jain, Chief Financial Officer of the Company has resigned w.e.f 2nd April, 2018. Mr. Vikas Rungta was appointed as Chief Financial Officer w.e.f 2nd May, 2018 who resigned from his office w.e.f. 14th November, 2018. Mr. Manoj Khetan was appointed as Chief Financial Officer of the Company w.e.f 14th November, 2018.

Further, Mr. Pankaj Gupta, Company Secretary & Compliance Officer of the Company has resigned w.e.f 10th April, 2018 and Mr. Anurag Gangrade was appointed as Company Secretary and compliance officer of the Company w.e.f 2nd May, 2018.

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 and their attendance was as under:

Name Category
Mr. Rajesh Nema, Chairman* Independent Director
Ms. Neha Singhania** Independent Director
Mr. Nagalingam Goli*** Executive Director

* Mr. Rajesh Nema, Independent Director, ceased as Chairman of Audit Committee w.e.f. closing working hours of 19th January, 2019.

** Ms. Neha Singhania, Independent Director, ceased as member of Audit Committee w.e.f. closing working hours of 19th March, 2019.

*** Mr. Nagalingam Goli, Managing Director, ceased as member of Audit Committee w.e.f. closing working hours of 31st March, 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 was in compliance with the requirements of the provisions of Section 178 of the Companies Act, 2013 and of Regulation 19 of the SEBI (LODR) Regulations, 2015 except as mentioned in corporate governance report of the Company.

BOARD MEETINGS

During the year under review 7 (seven) Board Meetings were held on 2nd May, 2018, 29th June, 2018, 14th August, 2018, 24th August, 2018, 30th August, 2018 ,14th November, 2018 and 28th February, 2019. 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, 2019, 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, 2019 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, to be followed by the Company, had been laid down and these controls are adequate and were 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. Prior omnibus approval of the Audit Committee has been obtained for the transactions which were repetitive in nature. The transactions entered into pursuant to the omnibus 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.

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. Nagalingam Goli* : Member

*Mr. Nagalingam Goli - Executive Director of the Company have resigned w.e.f. close of working hours on 31st March, 2019.

CORPORATE SOCIAL RESPONSIBILITY

As part of its initiatives under "Corporate Social Responsibility" (CSR), the Company has spent 2.16 Lacs for CSR Activities during the year under review.

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 Twenty Eight Annual General Meeting held on 6th September, 2014 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 Gupta Saharia & Co., Chartered Accountants (FRN No. 103446W), as the Statutory Auditor of the Company for the period of five years commencing from the conclusion of Twenty Eight Annual General Meeting until the conclusion of Thirty Third Annual General Meeting.

Any qualification, reservation or 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.

(b) Cost Auditors :

Pursuant to the provisions of Section 148 and other applicable provisions of the Companies Act 2013, 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 2018-19. 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, 2018 was filed with the Central Government (Ministry of Corporate Affairs) vide SRN H15491871.

(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.

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 appointment of Independent Director and Woman Director; the Company has appointed Mr. Rajesh Nema and Mr. Ashutosh Upadhyay as Independent Director w.e.f. 13th May, 2019 and Ms. Ankita Sethi as Woman Independent Director w.e.f. 30th May, 2019.

ii. Owing to the resignation of all independent directors meeting of independent directors could not be convened during the year.

iii. In respect of composition and meeting of Audit committee, Nomination & Remuneration Committee and Stakeholder Relationship Committee; all the mandatory committees of the company has been duly constituted after the appointment of Independent Directors.

iv. In respect of non submission of Financial Results on time for the Financial Year ended 31st March 2018 and for the quarter ended 30 June, 2018 and for the quarter ended 31st December, 2018; the Company has submitted the results with some delay and also paid fine imposed on the Company by the exchanges.

V. In respect of shifting of company script to Z group from B group by the Stock Exchange on non-payment of penalty. Since the company has paid the penalty the Stock Exchange the script again shifted to B group.

vi. With respect to SEBI ex-parte ad-interim order dated May 24, 2016 SEBI has issued a notice dated 6th February, 2019, called upon to show cause as to why suitable directions as may be appropriate under Sections 11(1), 11(4) & 11B of SEBI Act, 1992 should not be passed against the Company. The Company has submitted detailed reply of abovementioned show cause on 22nd April, 2019.

vii. In respect of notices received u/s 13(2) of Securitisation and Reconstruction of financial Assets and Enforcement of Security Interest Act, 2002 from the Lender Banks; the Company has submitted reply on the same and also adopting legal course.

viii. In respect of GST matter; the Company has taken legal opinion from its GST consultant and is in co-ordination with GST department and further the Company is adopting legal course to close the matter.The Company is confident that the matter will be closed satisfactorily.

ix. Some of the parties have filed Applications/Petitions under Insolvency and Bankruptcy Code, 2016 with National Company Law Tribunal/ National Company Law Appellate Tribunal for recovery of its alleged dues. 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 /Managing 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 designation and address of the Competent Authority, Executive Chairman/Managing 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 thereon 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 as specified 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

Except the followings, there is no material change and commitment has taken place from April, 2018 to March, 2019: i) Suspension of Agro Business Division. ii) Lenders/bank has classified companys Accounts as Non Performing Assets (NPA).

SIGNIFICANT AND MATERIAL ORDERS

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

1. An award had been passed against the company in the matter of Arbitration at Hongkong initiated by Smart Timing Steel Ltd (STSL). STSL got the award confirmed from High Court of Mumbai. The company has preferred a review petition against the said order. Simultaneously STSL filed a petition under Insolvency and Bankruptcy Code, 2016 (IBC) before National Company Law Tribunal (NCLT), Mumbai, which was dismissed by NCLT. STSL has preferred an appeal before National Company Law Appellant Tribunal, Delhi (NCLAT) against the order of NCLT, which is pending for hearing.

2. The company had drawn power from MPPKVVCL through meter installed at its factory premises situated at Village Sejwaya, Ghatabillod, Dist. Dhar, which was meant for export of power. MPPKVVCL had been raising bills for the said meter after recording of consumed units in regular billing cycle, which were duly honored by the company. However MPPKVVCL raised a demand, retrospectively, through assessment order for the period from May 2009 to May 2016, amounting to Rs. 61.73 Crores, comprising of Rs. 23.88 Crores for Maximum Demand (MD) charges and Tariff Minimum (TMM) charges and Rs. 37.85 Crores as Penalty, on the ground, that company was not authorized to draw power through the meter meant for export. The company had, after the deposition of Rs. 30.27 crores to MPPKVVCL, challenged the quantum of assessment order by filing writ petition in the High Court of Madhya Pradesh, wherein court by, its order dated 22.10.2018, has exempted the amount of penalty of Rs. 37.85 Crores. MPPKVVCL has filed a review petition against the said order which is pending for final order.

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 to the operations of the Company.

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 : 30th May 2019 Executive Chairman