S.A.L Steel Ltd Directors Report.

Dear Members,

Your Directors pleased to present the 14th Annual Report of your company on the operations and performance along with the Audited Financial Statements for the year ended on 31st March 2017.

FINANCIAL HIGHLIGHTS

Particulars March 31, 2017 March 31, 2016
Total Revenues 36298.13 33819.36
Total Expenditure 34771.59 31439.10
Profit before interest depreciation, extraordinary item and tax 1526.54 2380.26
Depreciation and Interest 837.29 2086.86
Profit / (Loss) before extraordinary item and tax 689.25 293.40
Extraordinary item Nil 3170.24
Profit / (Loss) before tax 689.25 (2876.84)
Tax Expense / Deferred tax Nil Nil
Net Profit / (Loss) for the year 689.25 (2876.84)
Profit / (Loss) Brought forward from last year (15689.69) (12812.85)*
Balance Carried forward (15000.44) (15689.69)

* includes 54.13 lacs of transitional adjustment on depreciation.

STATE OF COMPANYS AFFAIRS / PERFORMANCE OVERVIEW

During the year under review Total Revenue from operation has been increased from 33819.36 lacs to 36298.13 lacs as compared to previous years turnover. Company has registered a net profit of 689.25 lacs in comparison of loss of 2876.84 lacs during previous year.

DIVIDEND

Due to high accumulated loss, your Directors have not recommended dividend for the financial year 2016-17.

BUSINESS ACTIVITY

The company is engaged in manufacture of sponge iron, ferro alloys and power. Company is generating power on account of waste heat recovery system resulting economic price. Company is having its power plant of 40 MW. Power generated is used for captive consumption. There has been no change in the nature of business of the Company.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

The company does not have holding or subsidiary companies during the year and no other company has become holding / subsidiary/ joint venture / associate. The Company is an Associate Company of M/s Shah Alloys Limited as it is holding more than 20% of the Equity Share Capital in the Company as a Promoter Company.

DEPOSIT

The Company has not accepted any public deposit during the year under review and no amount against the same was outstanding at the end of the year.

DETAILS OF LOANS, GUARANTEES AND INVESTMENTS U/S 186 OF THE COMPANIES ACT, 2013

During the year under review the Company has not made any inter corporate loans, investments, given any corporate guarantee to any other body corporate, subsidiary, associate or any other company.

REGULATORY STATEMENT

In conformity with provision of regulation 34(2)(c) & 53(b) of SEBI (LODR), Regulations 2015, the Cash Flow Statement for the year ended 31.03.2017is annexed hereto. The equity shares of the Company are listed on the BSE Ltd. and the National Stock Exchange of India Ltd. (NSE).

The Company has paid listing fees for the year 2017-18 to above stock exchanges.

DETAILS OF DIRECTORS OR KMPs APPOINTMENT OR RESIGNATION

During the year under review Shri Sujal Shah, Whole Time Director and Shri Babulal Singhal, Whole Time Director of the Company reappointed by the Board for further period of three years, subject to the approval of members in ensuing Annual General Meeting. Except this, there is no change in the Composition of the Board or KMPs.

MEETINGS OF THE BOARD

The Board met four times during the financial year.Details of meetings are given in the Corporate Governance Report annexed herewith and forms part of this report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received necessary declarations from each Independent Director of the Company confirming that he/she met with the criteria of independence as laid out in sub-section (6) of Section 149 of the Companies Act, 2013 and under Regulation 16(1)(B) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

BOARD DIVERSITY

A diverse Board enables efficient functioning through differences in perspective and skill, and also fosters differentiated thought processes at the back of varied industrial and managementexpertise, gender, knowledge and geographical background.The Company follows diverse Board structure.

BOARD EVALUATION

As per the provisions of the Companies Act, 2013 and SEBI(Listing Obligation and Disclosure Requirements) Regulations2015, the formal annual evaluation was carried out for theBoards own performance, its committee & Individual directors.The manner and detail in which evaluation was carried out isstated in the Corporate Governance Report which is annexedand forms a part of this report.

INTERNAL FINANCIAL CONTROL SYSTEM AND THEIR ADEQUACY

The details in respect of internal financial control and their adequacy are included in Management Discussion and Analysis Report, which forms part of this report.

CORPORATE GOVERNANCE REPORT

The Company is committed to observe good corporate governance practices. The report on Corporate Governance for the financial year ended March 31, 2017, as per regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of this Annual Report. The requisite Certificate from the Practicing Company Secretary of the Company confirming compliance with the conditions of Corporate Governance is annexed to this Report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

As required under Section 134 (3) (m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014, particulars relating to conservation of Energy, R & D, Technology absorption and foreign Exchange earnings / outgo are separately provided in the annexure to this report as Annexure - 1.

RISK MANAGEMENT POLICY

The Company had put in place an enterprise wide risk management framework. This holistic approach provides the assurance that, to the best of its capabilities, the Company identifies, assesses and mitigates risks that could materially impact its performance in achieving the stated objectives. The Audit committee ensures that the Company is taking appropriate measures to achieve prudent balance between risk and reward in both ongoing and new business activities. The Committee reviews strategic decisions of the Company and on regular basis, reviews the Companys portfolio of risks and considers it against the Companys Risk Appetite. The Committee also recommends changes to the Risk Management Technique and / or associated frameworks, processes and practices of the Company.

VIGIL MECHANISM POLICY

The Company had implemented a vigil mechanism, whereby employees, directors and other stakeholders can report matters such as generic grievances, corruption, misconduct, fraud, misappropriation of assets and non-compliance of code of conduct to the Company. The policy safeguards the whistle blowers to report concerns or grievances and also provides a direct access to the Chairman of the Audit Committee. During the year under review none of the personnel has been denied access to the Chairman of Audit Committee.

CORPORATE SOCIAL RESPONSIBILITY

Company has earned a profit in the year under review. Accordingly, Company has constituted Corporate Social Responsibility Committee as per Section 135 of Companies Act, 2013 and the rules framed thereunder. Since the average net profits of the Company during immediately three preceding financial years is negative, provisions related to expenditure of atleast two percent of the average net profits in CSR activities is presently not applicable to the Company.

DIRECTORS RESPONSIBILITY STATEMENT

In Compliance with Section 134(5) of the Companies Act, 2013, the Board of Directors to the best of their knowledge and hereby confirm the following:

a) In the preparation of the annual accounts for the financial year ended 31st March 2017, as far as possible and to the extent, if any, accounting standards mentioned by the auditors in their report as not complied with, all other applicable accounting standards have been followed along with proper explanation relating to material departure;

b) The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and profit and loss account of the Company for that period;

c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) The Directors had prepared the annual accounts on a going concern basis; and

e) The directors in the case of a listed company had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

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

POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

The policy of the Company on Directors appointment and remuneration, including criteria for determining qualifications, independence and other matters as provided under subsection (3) of Section 178 of the Companies Act, 2013 is available on the Companys website atwww.salsteel.co.in

DISCLOSURE UNDER SECTION 22 OF THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL), ACT, 2013

There were no complaints pending for the redressal at the beginning of the year and no complaints received during the financial year.

PARTICULARS OF THE EMPLOYEES

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act,2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed to this Report as Annexure- 2.Further, particulars of employees remuneration, as required under section 197(12) of the Companies Act, 2013, read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are not attached with this report since there was no employee who was in receipt of remuneration in excess of aggregate of 1.02 Cr. during the year if employed throughout the financial year or 8.5 Lakh per month in the aggregate if employed for part of the year.

DETAILS OF RELATED PARTIES TRANSACTIONS PURUSANT TO SECTION 188(1) OF THE COMPANIES ACT, 2013

During the financial year, all transactions entered into with the Related Parties as defined under Companies Act, 2013, were in the ordinary course of business and on an arms length basis and as such did not attract provisions of Section 188 (1) of Companies Act, 2013. The Company has formulated policy on related party transactions.Particular of related party transactions in prescribed Form AOC-2 is attached atAnnexure-3.Approvals from the Audit Committee are obtained even for transactions which are in ordinary course of business and repetitive in nature. Further, on quarterly basis, disclosures are made to the Audit Committee and to the Board. Details of related party transactions are given in the notes to financial statements.

IND AS

Your company has adopted IND AS w.e.f. 1st April 2017 pursuant to Notification of the Ministry of Corporate Affairs dated 16th February 2015 in place of Accounting Standards.

AUDITORS

STATUTORY AUDITORS

M/s. Talati & Talati, Chartered Accountants have been giving services as Statutory Auditors of the Company and are eligible to be appointed as Statutory Auditors in the forthcoming Annual General Meeting. However, M/s Talati & Talati, Chartered Accountants at their own expressed their inability to continue as Statutory Auditors and as such has not accorded consent for appointment as Statutory Auditors in the forthcoming Annual General Meeting. Accordingly, M/s Talati & Talati, Chartered Accountants will be ceased to Statutory Auditors after the forthcoming 14th Annual General Meeting.

On the recommendations of the Audit Committee Board of Directors has recommended appointment of M/s. Parikh & Majmudar, Chartered Accountants (Firm Reg. No. 107525W) as the Statutory Auditors of the Companyfor a period of five consecutive years from the conclusion of the 14th Annual General Meeting of the Company, till the conclusion of the 19th Annual General Meeting to be held in the year 2022, subject to the approval of the shareholders of the Company. On approval of the shareholders in the forthcoming Annual General Meeting, new firm will audit financial statements for the year ending 31st March 2018. However, the new firm will be auditing quarterly financial statements from the quarter ended 30th September 2017.

Cost Auditors

Pursuant to the provisions of Section 148 of the Companies Act, 2013 and the Rules made there under M/s. Ashish Bhavsar & Associates, Cost Accountants wereappointed for auditing cost accounting records of the Company for the yearending 31stMarch, 2017. Board has further appointed M/s. Ashish Bhavsar & Associates, Cost Accountants as Cost Auditors for the year ending 31st March 2018 subject to approval of remuneration in the forthcoming Annual General Meeting.

Internal Auditor

The Company has appointed an Independent firm of Chartered Accountants to act as an Internal Auditor as per suggestion of auditors and recommendation of the Audit Committee in order to strengthen the internal control system for the Company.

Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with rules made thereunder,the Board of Directors has appointed M/s Kamlesh Shah & Co., Practicing Company Secretaries, as Secretarial Auditor to conduct Secretarial Audit of the Company for the Financial Year 2017-18. The report submitted by the Secretarial Auditor in Form MR-3 for the financial year ended as on 31st March, 2017 is attached to this report as Annexure - 4. Remarks of secretarial auditor areself-explanatory.

BOARDS RESPONSE ON the REMARKS MADE BY STATUTORY Auditors

The Directors submit their explanations to then variousobservations made by the Auditors in their report for the year 2016-17. Para nos. of Auditors Report and reply are us under:

Basis for Qualified Opinion - Para 1

Company has paid the capital advances in earlier years for total amounting Rs. 9,41,22,080 which are currently shown under long term loans and advances to the suppliers for the supply of customized equipments. The machines are manufactured and ready for dispatch but lenders had stopped funding and Company does not have enough accruals to lift the machines.

Annexure A to the Independent Auditors Report - Para vii a

Payments of Statutory dues were marginally delayed on account of slow recovery/collection. However, the same has been paid.

Annexure A to the Independent Auditors Report - Para viii

In view of the market conditions of steel sector at the relevant time, Company approached to the Consortium of the Banks for restructuring of the debts through CDR mechanism. The lenders appointed SBI Capital Market Limited to prepare a financial package and GITCO to carry out the Techno Economic Viability (TEV) Report. Based on the viability of the plant certified by SBI Caps and GITCO, SBI approached to the CDR (EG) and the case was admitted by the CDR and directed the lenders to submit the final report within 90 days for the sanction of the package. In between, SBI withdrew the support from the CDR by submitting letter of withdrawal without assigning any reason. As a result Company suffered badly and later not able to make the payments as per the terms of sanction. As a result financial health of the Company got further deteriorated and net worth became negative. Thus, Company approached to Honble BIFR for declaring company as sick undertaking pursuant to the provisions of Section 3 (1) (o) of the SICA. The application of the Company has been registered vide letter dated 24.08.2015.

All the banks assigned debts to Assets Reconstruction Company (ARC). Company is negotiating with them for settlement of debts.

MATERIAL CHANGES / INFORMATION:

1. No material changes have taken place after the closure of the financial year up to the date of this report which may have substantial effect on the business and financial position of the Company. However, during the year company does not have status of Sick company due to repeal of SICA.Except this, no material change has taken place after the closure of the financial year up to the date of this report which may have substantial effect on the business and financial of the Company.

2. No significant and material orders have been passed by any of the regulators or courts or tribunals impacting the going concern status and companies operations in future.

EXTRACT OF ANNUAL RETURN

An extract of the Annual Return in Form MGT-9 in compliance with Section 92 of the Companies Act 2013 read with applicable rules made thereunder is annexed to this report atAnnexure - 5.

APPRECIATION

Your Directors place on record their sincere appreciation for the valuable support and co-operation as received from government authorities,Financial Institutions, Banks and ARCs during the year. Directors are also thankful for the support extended by Customers, Suppliers andcontribution made by the employees at all level. Directors would also like to acknowledge continued patronage extended by Companysshareholders in its entire endeavor.

For and on behalf of the Board
Date:5thAugust 2017 Rajendra V. Shah
Place: Santej Chairman
(DIN: 00020904)