Steel Exchange India Ltd Directors Report.

To the Members,

Your Directors have pleasure in presenting the 21stAnnual Report together with the Standalone Audited Accounts for the year ended 31st March, 2020

FINANCIAL RESULTS:

The performance of the Company for the Financial Year ended March 31,2020 is as under:

( in Lakhs)

PARTICULARS 31-Mar-20 31-Mar-19
Total Revenue 79142.14 102927.64
Profit/ (Loss) before finance cost, depreciation and tax expense 6987.69 2241.35
Finance cost 347.06 996.55
Profit / (Loss) before depreciation and tax expense 6640.63 1244.81
Depreciation 2723.65 2962.16
Profit/(Loss) before tax expense 3916.98 (1717.36)
Tax expense
i. Tax expense of prior years
ii. Deferred Tax (2512.51) (1950.51)
Profit/(Loss) for the year 6429.49 (3667.87)
Add: Other Comprehensive Income (13.05) (11.37)
Total Comprehensive Income/ (Loss) for the yeai 6416.44 (3679.24)

Review of operations:

During the year under review, the total revenue of the company was Rs. 791.42 crores as against the 1029.27 Crores.Net Profit recorded at 64.29 Crores as against Net Loss of (36.67) crores in the Previous Year.

The Manufacturing Sales including power sales were Rs. 693.22Crores in the current year compared to Rs.880crores in the previous year. The trading sales during the year amounted to Rs.87.20Crores compared to Rs.141.57Crores in the previous year.

State of Companys affairs and future outlook

As part of debt resolution, lenders under Consortium agreed for settlement of dues of the company under One Time Settlement Scheme (OTS). Till date, the company received sanctions from majority of lenders including lead bank i.e., SBI constituting 77.89% of the compromise offer. The company is actively pursuing sanctions from remaining lenders.

The Companys financial performance has been affected mainly due to adverse steel markets, weak demand and prices, and non-availability of working capital which have been compounded by the Covid-19 pandemic and other factors beyond the control of the Company. Most of the lenders have agreed for the debt resolution by way of OTS and keeping in view the expected gradual improvement in demand for steel in the nearby future, the Company expects considerable improvement in its financial performance after the debt resolution. The impact of these developments is expected to be favorable on the Companys operations and financials and the company has therefore prepared these financial statements on the basis of going concern concept.

Listing of Equity Shares

The Equity Shares of your Company are listed on Bombay Stock Exchange Limited and National Stock Exchange of India Limited. It may be noted that there are no payments outstanding to the Stock Exchanges by way of Listing Fees. The company has paid the listing fee for the financial year 2020-21.

Delisting from Calcutta Stock Exchange Limited (CSE)

The Company has made an application for voluntary delisting of equity shares from Calcutta Stock Exchange Limited (CSE) during the year 2017-18 and its in work in progress and waiting for final order from CSE.

Unclaimed Suspense Account/Escrow Account:

In accordance with the procedure laid down in Schedule VI to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has transferred unclaimed shares of Equity shareholders (previously GSAL Shareholders)into one folio in the name of "Steel Exchange India Limited -Unclaimed Suspense Account" and maintain details of shareholders whose shares are credited to the said Unclaimed Suspense Account.

Subsidiaries, Joint Ventures or Associate Companies

Your company incorporated a wholly owned subsidiary company SEIL (Hong Kong) Ltd on 02nd June, 2015 which was in dormant stage due to non- commencement of business operations since its incorporation. Your company does not have any Joint Ventures or associate companies except this company.

Number of Meetings of the Board of Directors

During the year ended March 31,2020, Four Board Meetings were held.

The dates on which the Board meetings were held are May 29, 2019, August 14, 2019, November 08, 2019 and February 12, 2020.

Details of number of Meetings attended by each Director have been given in the corporate governance report, which forms part of the Annual Report.

Directors Responsibility Statement as required under Section 134 of the Companies Act, 2013

Pursuant to the requirement under Section 134(5) of the Companies Act, 2013, with respect to the Directors Responsibility Statement, the Board of Directors of the Company hereby confirms:

i. that in the preparation of the Annual Accounts, the applicable accounting standards have been followed (except in payment/provision of interest to lenders);

ii. that the Directors have 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 as at March 31,2020 and of Profit and Loss Account of the Company for that period;

iii. that the Directors have 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;

iv. that the Directors have prepared the Annual Accounts for the Financial Year ended March 31,2020 on a going concern basis;

v. that the Directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

vi. That the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Statement on Declaration given by Independent Directors under Sub-Section (6) of Section 149

The independent directors have submitted the declaration of independence, as required pursuant to section 149(7) of the Companies Act, 2013 stating that they meet the criteria of independence as provided in sub-section(6).

Separate Meeting of Independent Directors

During the year under review, the Independent Directors held their separate meeting on February 12, 2020 inter alia, to discuss:

- Review the performance of Independent Directors.

- Review the performance of the Non-Independent Directors.

- Review the performance of the committees and Board as a whole.

- Review the performance of the Chairman of the Company, taking into account the views of Executive Directors and NonExecutive Directors.

- Assess the quality, quantity and timeliness of flow of information between the Company management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

Particulars of Loans, Guarantees and Investments under Section 186 of the Companies Act, 2013

The company has not given any Loans / Guarantees and not made any Investments during the FY 2019-20, as specified under the provisions of section 186 of the Companies Act, 2013 read with Companies (Meetings of Board and its Powers) Rules, 2014.

Related Party Transactions

All transactions entered into with Related Parties as defined under the Companies Act, 2013 and Regulation 23 of SEBI (LODR) Regulations, 2015 during the Financial Year were in the ordinary course of business and on an arms length pricing basis. There were no materially significant transactions with related parties during the Financial Year, which were in conflict with the interest of the Company. Suitable disclosure as required by the Indian Accounting Standards (Ind AS-24) has been made in the notes to the Financial Statements.

A statement, in summary form, of all the transactions entered into with the related parties in the ordinary course of business, details of individual transactions with related parties are placed before the audit committee for the review from time to time. .The particulars of contracts or arrangements with related parties referred to in sub-section (1) of Section 188 are prepared in Form No. AOC-2 pursuant to clause (h) of sub-section (3) of Section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014 and the same is given in notes to accounts of the company wide note no 3.36.3 and also brief details are annexed to Boards Report as Annexure-1

Transfer of Amount to Reserves

The Company doesnt propose to transfer any amount to the general reserve for the Financial Year ended 31st March, 2020. Dividend

The Board of Directors of the Company has not recommend Dividend for the financial year ended March 31,2020.

Share Capital

During the period under review, there was no change in the Authorized Share Capital of the Company

The Authorized Share Capital of the Company is Rs.3,32,00,00,000/- (Rupees Three Hundred and Thirty Two Crores only) divided into 25,80,00,000 (Twenty Five crores Eighty Lakhs only) equity shares of Rs.10/- ( Ten only) each, and 7,40,00,000 (Seven Crore Forty Lakhs only) preference shares of Rs. 10/- (Ten only) each.

There was no change in Paid up Share Capital of the Company during the year under review

The Company has not issued any shares with differential rights and hence no information as per the provisions of Section 43(a)(ii) of the Act read with Rule 4(4) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished and the Company has not issued any stock options to its employees.

Deposits

The Company has not accepted any deposits from the public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet, in terms of Section 73 of the Companies Act, 2013 during the year ended 31st March, 2020.

Extracts of Annual Return

As required by Section 92(3) of the Act read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, extract of the Annual Return in Form MGT-9 is attached to this Report as Annexure-2.

Conservation of energy, technology absorption, foreign exchange earnings and outgo pursuant to provisions of Section 134(3)(m) of the Companies Act, 2013 (Act) read with the Companies (Accounts) Rules, 2014

Information with respect to conservation of energy, technology absorption, foreign exchange earnings and outgo pursuant to Section 134(3)(m) of the Act read with Companies (Accounts) Rules, 2014 is prepared and the same is enclosed as Annexure-3 to this Report.

Risk Management

The Board of Directors has not formed any risk management committee to identify, evaluate, mitigate and monitor the risk associated with the business carried by the company. The Audit committee/Board reviews the risk management plan and ensures its effectiveness.

Corporate Social Responsibility

The Board of Directors has constituted a Corporate Social Responsibility (CSR) Committee to monitor implementation of CSR activities of your Company. The details of the composition of the CSR Committee, CSR policy, CSR initiatives and activities during the year are given in the Annual Report on CSR activities in Annexure -4 to this Report.

Committees of the Board

The Board has Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee and Corporate Social Responsibility Committee. The composition and other details of these committees have been given in the Report on the Corporate Governance forming part of the Annual Report.

Corporate Governance

A separate report on Corporate Governance is annexed as part of the Annual Report along with the Auditors Certificate on its compliance.

Management Discussion and Analysis

Management Discussion and Analysis Report for the year under review, as stipulated under Listing Regulations, is annexed herewith which forms part of this report.

Whistle Blower Policy and Mechanism

The Board of Directors has adopted Whistle Blower Policy. The Whistle Blower Policy aims for conducting the affairs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behavior. All permanent employees of the Company are covered under the Whistle Blower Policy.

A mechanism has been established for employees to report concerns about unethical behavior, actual or suspected fraud, or violation of Code of Conduct and Ethics. It also provides for adequate safeguards against the victimization of employees who avail of the mechanism and allows direct access to the Chairperson of the audit committee in exceptional cases.

Board Evaluation

The Board of Directors has carried out an annual evaluation of its own performance, board committees and individual directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed by SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015. The performance of the Board was evaluated by the board after seeking inputs from all the directors on the basis of the criteria such as the board composition and structure, effectiveness of the board processes, in formation and functioning etc. In a separate meeting of independent directors, performance of non-independent directors, performance of the Board as a whole and performance of the Chairman was evaluated, taking into account the views of executive directors and non-executive directors. The same was discussed in the board meeting that followed the meeting of the independent directors, at which the performance of the board, its committees and individual directors was also discussed. Performance evaluation of independent directors was done by the entire board, excluding the independent director being evaluated.

Directors and Key Managerial Personnel

In accordance with the provisions of Section 152 of the Companies Act, 2013, Shri Bavineni Suresh and Shri Veeramachaneni Venkata Krishna Rao will be retiring by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Accordingly, the resolutions seeking the approval of the members for the said re-appointments have been incorporated in the Notice of the AGM.

Shri B Suresh Kumar (DIN: 00206473) was re-appointed as Joint Managing Director of the Company for a further period of three years with effect from October 27th, 2019 pursuant to the provisions of Sections 196 and 197 read with Schedule V and all other applicable provisions of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Shri C Siva Prasad (DIN: 01904785) was reappointed as a Independent Director of the company for a period of five years with effect from 31 st December, 2019 till 30th December, 2024.

Shri R Ramachandra Rao (DIN: 00226945) was reappointed as a Independent Director of the company for a period of five years with effect from 31st December, 2019 till 30th December, 2024.

Shri K Krishna Rao (DIN: 00382726) was reappointed as a Independent Director of the company for a period of five years with effect from 31 st December, 2019 till 30th December, 2024.

Shri G Venkata Narayana Reddy (DIN: 05358117) was reappointed as a Independent Director of the company for a period of five years with effect from 31st December, 2019 till 30th December, 2024.

Policy on directors appointment and remuneration

A gist of policy of the Company on directors appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a director and other matters, as required under sub-section (3) of Section 178 of the Companies Act, 2013, is available in the Corporate Governance Report.

The companys policy on directors appointment and remuneration and other matters provided in Section 178 (3) of the Act have been disclosed in the corporate governance report. Under Section 178 (3) of the Companies Act, 2013, the Nomination and Remuneration Committee of the board has adopted a policy for nomination, remuneration and other related matters for directors and senior management personnel. A gist of the policy is available in the Corporate Governance Report.

Statutory Auditors

M/s. Bhavani & Co., Chartered Accountants (FRN 012139S) were appointed as Statutory Auditors of the Company in the Annual General Meeting held on 30th September, 2019, for a term of 5 (five) consecutive years. M/s. Bhavani & Co., Chartered Accountants, have confirmed their eligibility and qualification required under the Act for holding the office, as Statutory Auditors of the Company.

The para-wise management response to the qualifications / observations made in the Independent Auditors Report is stated as under:

Attention is drawn to point No 8 of the Independent Auditors Report regarding Basis for Qualified Opinion. The detailed clarification of the same is provided in Note No. 3.11 of the Accounts of the Standalone Audited Financial Statements of the Company.

The Auditors observation in point No. 8of the Annexure to the Auditors report regarding Interest due to financial institution and banks aggregating Rs 421.28 Crwere due to severe liquidity crisis being faced by the Company on account of continued cash losses incurred.

The majority of the lenders have stopped charging interest on debts since the dues from the Company have been categorized as Non-performing Asset. The Company is in active discussion / negotiation With the Lenders for a suitable debt resolution by way of debt restructuring at a sustainable level. Pending finalization of a suitable debt resolution, the Company has stopped providing for accrued Interest and unpaid effective from 1st January 2018, in its books of accounts, as the same is under discussion with the Lenders. The amount of such accrued and unpaid interest (including penal interest and other charges) not provided for is estimated at Rs.421.28 Crores for the year ended 31st March 2020 and the same has not been considered for preparation of the financial statements for the year ended 31st March 2020.

Cost Aud it/Cost Auditors:

The Products classified as "Steel and Electricity" manufactured by the Company are subject to Cost Audit in terms of Sec. 148 of the Companies Act, 2013 read with the rules issued there under by the Central Government.

The Cost Audit Report for year ended 31st March 2019 was reviewed by the Audit Committee at its meeting held on August 14, 2019 and has been filed with MCA on 12th September, 2019.

Internal Auditors

The Board of Directors of the Company has appointed M/s. Pavuluri& Co., Chartered Accountantsas Internal Auditors to perform Internal Audit of the operations of the Company for the Financial Year 2019-20 and the Internal Auditors have presented the observations to the Audit Committee at the meetings of the board held on 14.08.2019, 08.11.2019, 12.02.2020 and 29.07.2020 respectively.

Internal Control Systems and their Adequacy

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Auditor is well defined in the company. To maintain its objectivity and independence, the Internal Auditor reports to the Chairman of the Audit Committee of the Board.

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

Secretarial Audit

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Directors had appointed M/s. BSS& Associates, Practicing Company Secretaries, Hyderabad to undertake the Secretarial Audit of your Company for the financial year 2019-20. The Secretarial Audit Report does not contain any qualifications, reservation or adverse remarks. The Report in Form MR-3 is enclosed as Annexure-5.

Maintenance of Cost Records

The Company is required to maintain cost records of the Company as specified under Section 148 (1) of theCompanies Act, 2013. Accordingly, the Company has properly maintained cost records and accounts.

Particulars of employees

The ratio of remuneration of each director to the median of employees remuneration as per Section 197(12) of the Companies Act, 2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of the Boards report.

A statement containing the names of every employee posted throughout the financial year and in receipt of a remuneration of Rs.1.20 Crore or more, or posted for part of the year and in receipt of Rs.8.50 lakh or more a month, under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of the Boards report enclosed as Annexure - 6

Details in respect of frauds reported by Auditors under Section 143(12) other than those which are reportable to the Central Government

There were no frauds reported by the Statutory Auditors under Sub-section 12 of Section 143 of the Companies Act, 2013 along with the Rules made there under.

Secretarial Standards

The Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively.

Insurance

All properties and insurable interests of the Company including building, plant and machinery and stocks have been fully insured.

Change in the nature of business

There is no change in the nature of business of the Company.

The details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and companys operations in future

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

Material changes and commitments

During the year under review the majority of the lenders have stopped charging interest on debts since the dues from the Company have been categorized as Non-performing Asset. The Company is in active discussion / negotiation With the Lenders for a suitable debt resolution by way of debt restructuring at a sustainable level. Pending finalization of a suitable debt resolution, the Company has stopped providing for accrued Interest and unpaid effective from 1st January 2018, in its books of accounts, as the same is under discussion with the Lenders. The amount of such accrued and unpaid interest (including penal interest and other charges) not provided for is estimated at Rs.421.8 Crores for the year ended 31st March 2020 and the same has not been considered for preparation of the financial statements for the year ended 3lst March 2020. Except this there are no Material changes and commitments in the business operations of the Company from the financial year ended 31stMarch, 2020 to the date of signing of the Directors Report.

Prevention of Sexual Harassment at workplace

The Company has in place a Prevention of Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Committee has been set up to redress complaints received regarding sexual harassment. During the financial year 31st March, 2020, the company has not received any complaints pertaining to sexual harassment.

Industrial Relations and Human Resources

Your company believes that its employees are one of the most valuable assets of the Company and the Board appreciates the employees across the cadres for their dedicated service to the company and expects their continuous support and higher level of productivity for achieving the targets set for the company. During the year under review, the company organized various training programmes at all levels to enhance skills of employees. The total employee strength is over 738 and strength of trainees is over 81 as on 31st March, 2020.

Acknowledgement

The Directors take this opportunity to place on record their sincere thanks to the Banks and Financial Institutions, Insurance Companies, Central and State Government Departments and the shareholders for their support and co-operation extended to the Company from time to time. Directors are pleased to record their appreciation of the dedicated services of the employees and workmen at all levels.

On behalf of the Board of Directors For Steel Exchange India Limited

Place: Visakhapatnam B. Suresh Kumar B. Satish Kumar
Date: 02.09.2020 Joint Managing Director Chairman and Managing Director
(DIN:00206473) (DIN:00163676)