Sathavahana Ispat Ltd Directors Report.

To

The Members,

SATHAVAHANA ISPAT LIMITED,

Your Board of Directors has pleasure in presenting the 29th Annual Report together with the Audited Accounts of the Company for the year ended 31st March, 2018:

FINANCIAL RESULTS:

Your Board of Directors reports the following financial results for the year 2017-18:

(Amount in Rs.)

SL NO. Particulars Year ended 31-03-2018 Year ended 31-03-2017
1. Gross revenue from operations 2487308166 11315975529
2. Other income 81026938 119101662
3. Operating profit /(loss) before finance costs and depreciation (1152735074) 1009041013
4. Finance costs 1405597605 1169215306
5. Depreciation and amortization 505310460 482032028
6. Profit / (loss) before tax (3063643139) (642206321)
7. Tax expense 0 0
8. Net Profit / (loss) after tax (3063643139) (642206321)
9. Earning /(loss)per Equity Share-Basic (60.19) (12.62)
10. Earning/(loss)per Equity Share-Diluted (60.19) (12.62)

The performance during the year was impacted adversely due to factors beyond the control of the Company. The performance suffered due to working capital constraints and the consequent financial stress which resulted in underutilization of capacities and plant shut downs. Accordingly, the gross revenue at Rs.2487308166/- is lower as compared to previous years revenue of

Rs.11315975529/-. The year ended with loss before tax of Rs.3063643139/- as against loss before tax of Rs.642206321/- in the previous year. During the year, in the absence of virtual certainty deferred tax asset on account of unabsorbed depreciation and business loss and others amounting to Rs.1114567283/- as against previous years amount of Rs.1047886528/- has been recognized to the extent it can be realised fully against deferred tax liability. Accordingly, the tax impact is nil in both current and previous years. The year ended with net loss after tax of Rs.3063643139/- as against net loss after tax of Rs.642206321/- in the year before. Accordingly, the loss per share accounted for at Rs.60.19 as compared to loss per share of Rs.12.62 in the previous year.

DIVIDEND AND GENERAL RESERVE:

The Board of Directors has not recommended any dividend for the year 2017-18 due to loss incurred during the year and carry forward loss from earlier years. Company cannot declare dividend until the carry forward loss is fully set off against the profits as provided in the Companies Act 2013. The Board of Directors also has not proposed to transfer any amount to General Reserve in view of the carry forward loss.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 134(3)(c) of the Companies Act 2013 with respect to Directors Responsibility Statement, your Directors hereby state and confirm that: i) In the preparation of Annual Accounts for the Financial Year 2017-18 the applicable Indian Accounting Standards (Ind AS) had been followed with proper explanation relating to material departures; ii) The Accounting Policies selected were applied consistently and the judgements and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March 2018 and of the Loss of the Company for the year ended on that date; iii) Proper and sufficient care has 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; iv) The Annual Accounts have been prepared on a going concern basis; v) Internal financial controls to be followed by the Company have been laid down and that such Internal Financial Controls are adequate and were operating effectively; and vi) Proper systems had been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

AUDIT COMMITTEE:

The Audit Committee comprises Chairman -Shri K.Thanu Pillai, Independent Director and two other Independent Director members -Shri Syed Anis Hussain, and Shri S.N.Rao. Smt Y. Prameela Rani and Shri M.S. Rama Mohan Rao have ceased to be members of the Audit Committee with effect from 20.11.2017 and 01.10.2017 respectively upon cessation of directorship. The Audit Committee at its meeting held on 30th May 2018 has considered and approved the Audited Accounts of the Company for the financial year ended 31st March 2018. The Audited Accounts for the financial year ended 31st March 2018, as approved and recommended by the Audit Committee, do not require any explanations from the Board.

CORPORATE GOVERNANCE:

Pursuant to Listing Regulations 2015 the Company is required to comply with the Code of Corporate Governance for the financial year under review. Accordingly, the Reports on Corporate Governance and Management Discussion and Analysis together with Auditors Report on compliance of Code of Corporate Governance are attached to this Report and forms part of the Annual Report. These Reports are to be read in conjunction with this Directors Report.

DIRECTORS:

Shri A.S. Rao and Dr. Shailendra Dasari are liable for retirement of Directors by rotation at the end of the ensuing 29th Annual General Meeting and being eligible, offer themselves for re-appointment at the said Annual General Meeting.

Shri A.S. Rao has been appointed as Executive Vice Chairman at 26th Annual General Meeting held on 30.09.2015 for a period of three years effective from 27.07.2015 to 26.07.2018 and the office of Executive Vice Chairman is liable for retirement of Directors by rotation. Shri A.S. Rao is eligible for re-appointment and approval of the Members for his re-appointment is being sought in the ensuing Annual General Meeting. The Nomination and Remuneration Committee at its meeting held on 30.05.2018 has recommended the re-appointment and the Board of Directors at its meeting held on 30.05.2018 has commended the resolution for re-appointment to the members for their approval in the ensuing Annual General Meeting. Dr. Shailendra Dasari has been appointed as Executive Director (Operations) at 26th Annual General Meeting held on 30.09.2015 for a period of three years effective from 01.10.2015 to 30.09.2018 and the office of Executive Director (Operations) is liable for retirement of Directors by rotation. Dr. Shailendra Dasari is eligible for re-appointment and approval of the Members for his re-appointment is being sought in the ensuing Annual General Meeting. The Nomination and Remuneration Committee at its meeting held on 14.08.2018 has recommended the re-appointment and the Board of Directors at its meeting held on 14.08.2018 has commended the resolution for re-appointment to the members for their approval in the ensuing Annual General Meeting.

In the opinion of the Board the proposed appointees fulfils the conditions specified in the Companies Act 2013 and Rules made thereunder and keeps the Board strengthened. These appointments are subject to approval of secured lenders who have lent to the Company term / corporate loans and working capital loans and approval of members in the Annual General Meeting.

Smt Y. Prameela Rani, an Independent Director on the Board of the Company has resigned due to personal reasons and her resignation was accepted by the Board with effect from 20.11.2017. Shri M. Sreerama Mohan Rao, small shareholder holder director ceased to be director with effect from 01.10.2017 on expiry of tenor of appointment. Board wishes to place on record of its appreciation for the valuable services rendered by these Directors during their tenure.

Policy on selection and appointment of Directors, Composition and category of Directors, attendance of each Director at meetings, Number of other Directorships held by each Director, Number of Board meetings held and dates on which held, Board meetings process, familiarisatioin programme of each Independent Directors, Boards evaluation process are discussed in the Report on Corporate Governance which forms part of this Report.

The Board of Directors confirms that based on the declarations given by all the Independent Directors in pursuance of provisions of Section 149(7) of the Companies Act 2013 they meet the criteria of independence as provided in Section 149(6) of the Companies Act 2013.

AUDITORS AND AUDIT REPORT:

The tenor of present Auditors M/s Majeti & Co., Chartered Accountants, Hyderabad has been fixed for period of five years at the Annual General Meeting held on 29.09.2017 subject to ratification of appointment at every subsequent Annual General Meeting. However the Ministry of Corporate Affairs, Government of India, has vide Companies (Amendment) Act 2017 notified vide notification dated 07.05.2018 that such ratification of appointment of statutory auditors is not required at the subsequent Annual General Meetings which in other words means that appointment made initially continues to be effective until the expiry of five years from the date of their appointment. Accordingly no ratifications of appointment of statutory auditors is proposed in the ensuing Annual General Meeting.

With respect to the Independent Auditors Report for the year ended 31st March 2018 which forms part of the Annual Report containing emphasis of matter and qualification your Board of Directors state that the management replies to the same are as under:

1. With respect to emphasis matter the explanation contained in Note No.35 to the financial statements is self-explanatory and the opinion of the Auditors is unmodified in respect of this matter.

2. With respect to Qualification on Trade receivables, supplier advances and capital advances as at March 31, 2018 the explanation contained in Note No.38 to the financial statements is self-explanatory and does not require further explanations.

The Independent Auditors Report for the financial year ended 31st March 2018 which forms part of the Annual Report do not require any further explanations from the Board.

COST AUDITORS AND COST AUDIT REPORT:

Company appointed M/s. S. Mahadevan & Co, Coimbatore, Practicing Cost Accountants (Firms Registration Number 00007), as Cost Auditors for the financial year 2016-17 and 2017-18. The Cost Compliance Report as prepared by the Cost Auditors for the financial year 2016-17 has been filed with the Central Government with in the due date. The Cost Compliance Report for the year 2017-18 prepared by the said Cost Auditors has been reviewed and adopted by the Board. The Board of Directors based on the recommendations of the Audit Committee, has appointed M/s S. Mahadevan & Co., Practicing Cost Accountants (Firms Registration Number : 00007) as Cost Auditors for conducting Cost Audit of the Cost Records of the Company for the year 2018-19. In pursuance of the provisions of Section 148 and other applicable provisions, if any, of the Companies Act 2013, read with Companies (Audit and Auditors) Rules 2014 the remuneration payable for conducting the Cost Audit for the year ending 31st March 2019 to M/s S. Mahadevan & Co., Practicing Cost Accountants is being placed before the Members in the ensuing Annual General Meeting for their ratification and approval.

SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT:

M/s D. Hanumanta Raju & Co., Practicing Company Secretaries, Hyderabad who have been appointed as Secretarial Auditor for the financial year 2017-18 have conducted the Audit of the Secretarial Records and submitted their Report in MR-3 which is annexed to this Report (Annexure-V). With respect to observation of Secretarial Auditor on Non-appointment of woman director on the Board, the response of your Board is that the Company is in search of suitable person who has sectoral and financial background with integrity and is in the process of identifying the person for complying with Regulation 17 of Listing Regulations 2015. The Board of Directors at its meeting held on 30th May 2018 has re-appointed D. Hanumanta Raju & Co., Practicing Company Secretaries, Hyderabad as Secretarial Auditor for the financial year 2018-19.

TRANSFER OF UNCLAIMED DIVIDEND AMOUNTS TO IEPF:

Pursuant to the provisions of Section 205A(5) of the Companies Act, 1956 and / or Section 124(5) of the Companies Act 2013, previously declared dividends, which remained unclaimed for a period of seven years, have been transferred by the Company to the Investor Education and Protection Fund (IEPF) established by the Central Government pursuant to Section 205C of the Companies Act, 1956 and / or Section 125 of the Companies Act 2013.

DIRECTORS, EMPLOYEES AND THEIR REMUNERATION:

The particulars of employees required to be furnished pursuant to Section 197(12) of the Companies Act 2013 read with sub rule (2) to Rule 5 to the Companies (Appointment & Remuneration) Rules, 2014, as amended, are not required to be provided as there were no employees drawing remuneration more than the stipulated limits. Details of Remuneration Policy and payment of remuneration to all Directors / Key Managerial Personnel / other managerial employees is given in the Report on Corporate Governance under the head Nomination and Remuneration Committee which forms part of this Report. Managing Director and other Whole Time Directors have not received any remuneration or commission from holding or subsidiary companies as the Company do not have such companies. In the opinion of the Board the level and composition of remuneration to Directors, Key Managerial Personnel and other managerial employees is reasonable and sufficient to attract, retain and motivate the people who could run the Company efficiently. The Board affirms that the remuneration paid is in accordance with Remuneration Policy of the Company. The relationship between performance and remuneration is clear and meets appropriate benchmarks and that the remuneration criteria succinctly balances between fixed and variable pay wherever set reflecting short and long term performance objectives appropriate to the working of the Company and its goals. Disclosures required to be made pursuant to Rule 5 to the Companies (Appointment & Remuneration) Rules, 2014 are attached to this report (Annexure-II).

DEMATERIALISATION OF EQUITY SHARES:

The Agreements entered into by the Company with the two Depositories viz., National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) for dematerialisation of Shares are in force and the Companys Shares are in dematerialised mode under ISIN No. INE176C01016. As per the Securities and Exchange Board of India(SEBI) directives, the Equity Shares of the Company are to be compulsorily traded in dematerialisation form with effect from 26th Febru-ary 2001. Further the Securities and Exchange of India (SEBI) in its circular dated 20.04.2018 has stated that the equity shares have to compulsorily converted into dematerialization before 5th December 2018 and thereafter dematerialized equity shares are only eligible for transfers with the exception of transmissions. In view of the significant benefits that accrue on dematerialisation of securities, Members may avail the facility.

LISTING OF SHARES ON STOCK EXCHANGES:

The Equity Shares of the Company are listed on BSE Ltd (formerly The Bombay Stock Exchange Limited) Stock Code:526093 and The National Stock Exchange of India Limited (NSE) Stock Code: SATHAISPAT and are regularly traded. The listing fee to these Stock Exchanges has been paid upto date.

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

Information on conservation of energy, technology absorption, foreign exchange earnings and out go required to be disclosed under Section 134 of the Companies Act 2013 read with Companies (Accounts) Rules 2014, is given in the Annexure forming part of this Report (Annexure-I).

FIXED DEPOSITS:

During the year the Company has not accepted fixed deposits within the meaning of Section 2(31) read with Sections 73 and 74 of the Companies Act 2013. There are no overdue deposits or outstanding deposits as on the Balance Sheet date.

RISK MANAGEMENT:

The Board engaged itself with the task of Risk Management by preparing, implementing and monitoring the risk management plan of the Company. The Board apart from ensuring the effectiveness of risk management covering internal financial risks and controls also reviews the same on regular basis. Major risks identified are monitored on a regular basis by the Board.

INTERNAL FINANCIAL CONTROL AND SYSTEMS AND THEIR ADEQUACY:

The Company has put in place Internal Financial Controls that will ensure the policies and procedures of the Company are followed regularly so that the business of the Company is conducted in orderly and efficient manner. The Internal Financial Controls are applied inter alia to test various aspects in the conduct of business including adherence to Companys policies, safeguarding Companys assets, prevention and detection of frauds and errors or irregularities, the accuracy and completeness of the accounting records and timely preparation of reliable financial information and the financial statements. In the opinion of the Board such Internal Financial Controls are adequate and were operating effectively. During the year such Internal Financial Controls have been tested and no reportable weaknesses in the design and operations were observed. With respect to the Independent Auditors Report for the year ended 31st March 2018 which forms part of the Annual Report containing qualification on the Internal Financial Controls your Board of Directors state that the management replies to the same are contained in Note No.38 to the financial statements which is self-explanatory.

RELATED PARTY TRANSACTIONS:

There are no material related party transactions entered into by the Company falling within the meaning of Section 188(1) of the Companies Act 2013. Other related party transactions, contracts or arrangements entered into by the Company are in the ordinary course of business and at arms length price. The details of these contracts or arrangements or transactions as required to be disclosed in terms of Section 134(3)(h)are provided in Form AOC-2 which forms part of this Report (Annexure-III) and accompanying Financial Statements.

PARTICULARS OF LOANS,GUARANTEES AND INVESTMENTS:

The Company has not granted loans, guarantees or made investments in or to companies, firms or other parties covered in the Register maintained under Section 189 of the Companies Act 2013. The Company has not extended any loans to the employees for purchase of its shares. Other investments made by the Company are given in the accompanying Financial Statements which are in the ordinary course of business.

EXTRACTS OF ANNUAL RETURN:

Information on Extracts of Annual Return required to be disclosed under Section 92(3) of the Companies Act 2013 read with Rule 12 of Companies (Management and Administration) Rules 2014, is given in the prescribed Form MGT-9 forming part of this report (Annexure-IV).

CORPORATE SOCIAL RESPONSIBILITY:

The details with respect to Corporate Social Responsibility of the Company as required to be disclosed in terms of provisions of Section 135 read with Section 134(3)(o) and Rule 9 of Companies (Accounts) Rules 2014 are given in the Report on Corporate Governance attached to and forming part of this Report. During the year the Company, in terms of provisions of sub section 5 to Section 135 of the Companies Act 2013, is not required to earmark any fund for Corporate Social Responsibility activities in view of the losses.

MATERIAL CHANGES: Adoption of S4A scheme:

The Company during the year considering the delay in repayment of term loans including interest thereon and in meeting the obligations of short term borrowings and letters of credit has requested the secured lenders to consider and adopt the "Scheme for Sustainable Structuring of Stressed Assets (S4A) with respect to the total exposure to the Company on the term loans and working capital loans.

The Lenders, having constituted Joint Lenders Forum (JLF), in their meeting held on i.e.07-Jun-2017 have acceded in-principle to the request of the Company for S4A scheme with Reference date i.e. 07-Jun-2017 which scheme shall be finalised within 180 days from Reference Date in terms of guidelines / directions of Reserve Bank of India (RBI) issued from time to time with respect to S4A scheme. Under the S4A scheme, the debt exposure of the Company based on Techno Economic Viability study will be bifurcated into two parts –Sustainable and Unsustainable debt. The Sustainable debt amount which shall not be less than 50% of existing debt, shall have to be serviced by the Company on the same terms as that of existing terms and conditions including repayment schedules. The Unsustainable debt portion of the exposure shall be converted in to equity or other instruments as mutually agreed between the Company and the JLF by following the RBI guidelines for the S4A scheme with a clearly spelt out terms. JLF gets 180 days from Reference Date to formulate the resolution plan and implement the same after due internal approvals.

The S4A scheme however could not be implemented due to non-fulfillment of mandatory norm of sufficient cash flows six months prior to and after the reference date and the same was called off on 19.11.2017. Consequent to the calling off the implementation of the S4A scheme and the debt of the Company was classified by JLF as Non-Performing Asset (NPA).

Debt Restructuring:

Consequent to the calling off the implementation of the S4A scheme and classifying the debt of the Company by JLF as Non-Performing Asset (NPA) the Company has requested the JLF to consider deep restructuring of the debt which the banks have considered favourably and initiated the process of restructuring which is under different stages of progress and shall be implemented upon full tie up of restructuring package. The restructuring plan envisages extended tenors of repayment of loans and sanction of additional working capital funding. The restructuring plan also envisages no haircuts to banks and the sacrifice amount on interest concessions requested by the Company would be fully re-compensed after the end of restructuring scheme. Promoters have offered to pledge their total shareholding to the secured lenders apart from offering some personal assets as a collateral security upon sanction of the restructuring plan. The existing personal guarantees of Whole-time Promoter Directors continues to be inforce. The management believes that the shortage of working capital funds faced by the Company will be temporary and lenders will consider the request for deep restructuring of the debt and arrive at the resolution plan at the earliest.

The Company has considered adopting the restructuring scheme of loans for the first time in its history of over two and a half decades.

Plant shutdown:

Due to tight cash flows and non-availability of working capital limits the operations at ferrous division have been impacted and the plant was under shut down since 12th June 2017. The operations at Kudithini works too were impacted where Metallurgical Coke facility is running partly on job work basis and partly for own production and power generation has been restarted. This impact is likely to continue until the restructuring of the loans are done by the secured lenders.

Barring the above, there are no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year to which the Financial Statements relates and the date of this Report.

ORDERS PASSED BY THE REGULATORS, COURTS OR TRIBUNALS:

There are no significant and material orders passed by the Regulators, or Courts or Tribunals impacting the going concern status and Companys operations in future. However the Company in the year 2015-16 along with some other buyers of Iron Ore contested before the Honble High Court of Karnataka (HC) the levy of Forest Development Tax (FDT) by the miners on their sale of Iron Ore. The Honble HC vide its judgement dated 15.02.2016 has granted partial relief to the Company and directed the Government of Karnataka (GOK) to refund the FDT collected earlier. Following the judgement the Company has vide its letter dated 09.03.2016 filed an application for refund of 2325.73 lakhs towards FDT collected in the earlier years. However Government of Karnataka and some mining companies have since gone on appeal before the Honble Supreme Court against the above judgement. Company has also filed a petition before the Honble High Court of Karnataka against collection of Forest Development Fee (FDF) on purchase of Iron Ore and the petition has been held in favour of the Company where an amount of Rs.264.11 lakhs was ordered to be refunded to the Company. The Government of Karnataka has appealed before the Honble Supreme Court against the Order of High Court of Karnataka. Pending disposal of these appeals, the Company has not recognised the said refund claims in its books of account in the Financial Year 2017-18 or in the earlier financial years.

SUBSIDIARY OR ASSOCIATE COMPANIES:

There are no subsidiary or associate companies to the Company as at the end of 31st March 2018. Accordingly no Consolidated Financial Statements is required to be prepared and reported.

CREDIT RATING:

During the year Brickwork Ratings India Private Limited., has assigned BWR D rating for the Companys long term bank borrowings and BWR D for working capital limits a notch down considering the stress in the financial resources of the Company. The rating will be revisited by the Rating agency once the restructuring of the debt is implemented.

STANDALONE FINANCIAL STATEMENTS:

The accompanying Financial Statements and this Boards Report are prepared based on standalone operations of the Company.

BOARDS APPROVAL:

This Directors Report has been considered, approved and adopted by the Board of Directors at its meeting held on 14th August 2018. The accompanying Financial Statements were approved and adopted by the Board of Directors at its meeting held on 30th May 2018.

ACKNOWLEDGMENTS:

Your Directors take this opportunity to express their grateful thanks to Canara Bank, State Bank of India (formerly State Bank of Hyderabad), Andhra Bank, Shareholders, Central and State Governments and valued suppliers and customers for their cooperation and support. The Board also places on record its appreciation of the valuable services rendered by the employees at all levels of the Company.

for and on behalf of the Board
(K. Thanu Pillai)
Place: Hyderabad Chairman
Date: 14.08.2018 (DIN:00025312)

ANNEXURE-I TO DIRECTORS REPORT

Statutory information as required under Section 134(3) (m) read with Rule 8(3) of the Companies (Accounts) Rules 2014 a) Conservation of Energy: The Company has set-up Captive Power Generation Plants, which utilise surplus Blast Furnace gas and waste heat from exhaust gases of Coke Ovens for generating Power apart from thermal coal. The Power Plants have been functioning satisfactorily. The power requirement of operations is met from these Power Plants. b) Technology absorption: The technologies sourced in earlier years from SINO STEEL for the Pig Iron plant and from Chinese Academy of Agriculture Mechanisation Sciences (CAAMS) for Ductile Iron Pipe manufacturing plant at Haresamudram works and Anshan Technology for Metallurgical Coke plant at Kudithini works, all technologies sourced from P.R.China, stand fully absorbed. c) The Company is not engaged into any Research and Development activity and as such there is no expenditure incurred on Research and Development activity. d) Foreign Exchange earnings and outgo:

( Amount in Rs.)
I) Foreign Exchange Earnings:
a) F.O.B value of exports : Nil
II) Foreign Exchange Outgo:
a) C.I.F. value of imports:
I. Raw materials : 24,07,46,551
ii. Capital goods : 1,20,41,679
b) Usance interest : 1,29,21,638

 

for and on behalf of the Board
(K. Thanu Pillai)
Place: Hyderabad Chairman
Date: 14.08.2018 (DIN:00025312)

ANNEXURE-II TO DIRECTORS REPORT DIRECTORS, EMPLOYEES AND THEIR REMUNERATION

DISCLOSURES REQUIRED TO BE MADE PURSUANT TO SECTION 197 (12) READ WITH RULE 5 TO THE COMPANIES(APPOINTMENT & REMUNERATION) RULES, 2014 a) Details of Remuneration Policy and payment of remuneration to all Directors / Key Managerial Personnel / other managerial employees is given in the Report on Corporate Governance under the head Nomination and Remuneration Committee which forms part of this Report. b) The particulars of employees required to be furnished pursuant to Section 197(12) of the Companies Act 2013 read with sub rule (2) to Rule 5 to the Companies (Appointment & Remuneration) Rules, 2014, as amended, are not required to be provided as there were no employees drawing remuneration more than the stipulated limits: c) The ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year:

S.No. Directors Ratio
Independent Directors:
1. Shri K. Thanu Pillai 1.09
2. Shri Syed Anis Hussain* 3.41
3. Shri S.N.Rao 0.72
4. Smt Y.Prameela Rani # 0.59
5. Shri M.S.Rama Mohan Rao 0.59
Whole Time Directors:
6. Shri A.Naresh Kumar 46.38
7. Shri A.S.Rao 39.99
8. Dr. Shailendra Dasari 41.94

* Including arrears of previous year Rs.150000/-

# Ceased to be director with effective from 20.11.2017 by virtue of resignation.

Ceased to be director with effective from 01.10.2017 on expiry of tenure of appointment. d) The percentage increase in remuneration of each Director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year:

S.No. Directors % increase
Independent Directors:
1. Shri K. Thanu Pillai 50.56
2. Shri Syed Anis Hussain 8.91
3. Shri S.N.Rao 71.15
4. Smt Y.Prameela Rani -14.29
5. Shri M.S.Rama Mohan Rao -14.29
Whole Time Directors:
6. Shri A.Naresh Kumar 12.31
7. Shri A.S. Rao 13.89
8. Dr. Shailendra Dasari 8.96
Key Managerial Personnel:
9. Shri K.V.Krishna Rao 12.10

1. Remuneration of Independent Directors for current year includes fees for committee meetings.

2. Remuneration of Shri Syed Anis Hussain is computed considering the arrears of previous year of Rs.150000/-as if paid in the previous year.

3. Remuneration of Smt Y. Prameela Rani and Shri M.S. RamaMohan Rao is up to the date of their resignation or expiry of tenure, respectively and hence is lower.

e) The percentage increase in the median remuneration of employees in the financial year:(-)6.39% f) The number of permanent employees on the rolls of Company:1024 g) The explanation on the relationship between average increase in remuneration and Company performance: The weighted average increase in remuneration of employees across including those who left the services of the Company and new joiners is (-)3.32%. The individual increments varied from 6% to 14% based on the performance of each employee. h) Comparison of the remuneration of the Key Managerial Personnel against the performance of the Company:

S.No. Description Amount Rs. Comparative%
1. Aggregate remuneration of Key Managerial Personnel during
financial year 2017-18 3707245
2. Revenue 2487308166
3. Loss before tax 3063643139
4. Remuneration of Key Managerial Personnel as % of Revenue 0.15
5. Remuneration of Key Managerial Personnel as % of profit before tax negative

i) Variations in the market capitalisation of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over decrease in the market quotations of the shares of the Company in comparison to the rate at which the Company came out with the last public offer:

S.No. Particulars 31.03.2018 31.03.2017 % change
1. Market capitalisation 908565000 2756235000 -67.04
2. Price Earnings Ratio -29.66 -4.26 -596.24
S.No. Particulars 31.03.2018 IPO price % change
April 1994
1. Market price -BSE 17.85 10.00 178.50
2. Market price -NSE 17.65 10.00 176.50

j) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration: The weighted average increase in remuneration of employees across including those who left the services of the Company and new joiners is (-)3.32%. The percentile increase in the remuneration of managerial personnel is within the normal range of increase of other employees. k) Comparison of the each remuneration of the Key Managerial Personnel against the performance of the Company: The comparison is as provided in clause-h herein above. l) The key parameters for any variable component of remuneration availed by the Directors: There is no variable component of remuneration to Independent Directors. m) The ratio of the remuneration of the highest paid Director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year: None of the employees receiving remuneration higher than that of remuneration highest paid to the Director. n) Affirmation that the remuneration is as per the remuneration policy of the Company: The Board affirms that the remuneration paid is in accordance with Remuneration Policy of the Company.

for and on behalf of the Board
(K. Thanu Pillai)
Place: Hyderabad Chairman
Date: 14.08.2018 (DIN:00025312)

ANNEXURE-III TO DIRECTORS REPORT

FORM NO. AOC-2

(Pursuant to clause (h) of sub-section (3) of section 134 of the Companies Act 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014) Form for disclosure of particulars of contracts/arrangements entered into by the Company with related parties referred to in sub-section (1) of section 188 of the Companies Act 2013 including certain arms length transactions under third proviso thereto

1 Details of contracts or arrangements or transactions not at arms length basis :
(a) Name(s) of the related party and nature of relationship
(b) Nature of contracts/arrangements/transactions
(c) Duration of the contracts / arrangements / transactions
(d) Salient terms of the contracts or arrangements or transactions including the value, if any During the financial year 2017-18, Sathavahana Ispat Limited has not entered into any contracts or arrange- ments or transactions that are not at arms length basis.
(e) Justification for entering into such contracts or arrangements or transactions date(s) of approval by the Board
(f)
(g) Amount paid as advances, if any:
(h) Date on which the special resolution was passed in general meeting as required under first proviso to section 188
2. Details of material contracts or arrangement or transactions at arms length basis :
(a) Name(s) of the related party and nature of relationship
(b) Nature of contracts/arrangements/ transactions The details are provided in the Report on Corporate Governance and accompanying Financial Statements.
(c) Duration of the contracts / arrangements / transactions Transactions, contracts or arrangements entered into by the Company are in the ordinary course of business, on an annual renewal basis and at arms length price.
(d) Salient terms of the contracts or arrangements or transactions including the value, if any: These transactions were duly approved by the Audit Committee and the Board on 30th May 2017.
(e) Date(s) of approval by the Board, if any:
(f) Amount paid as advances, if any:

 

for and on behalf of the Board
(K. Thanu Pillai)
Place: Hyderabad Chairman
Date: 14.08.2018 (DIN:00025312)