Steelcast Ltd Directors Report.

Dear Members,

The Directors of your Company are pleased to present the 48th Annual Report together with the Audited Financial Statement for the Financial Year ended on March 31, 2019.

1. FINANCIAL RESULTS: (? in Lakhs)

Sr. No. Particulars 2018-19 2017-18
1 Sales 31,792.46 23,339.46
2 Other Income 141.56 172.61
3 Total Income 31,934.03 23,512.07
4 Profit Before Depreciation & Tax (PBDT) 5,070.69 3,380.14
5 Less: Depreciation 1,565.03 1,481.92
6 Profit Before Taxation (PBT) 3,505.66 1,898.22
7 Less: Taxation (all Taxes) 1,008.13 (187.60)
8 Profit After Taxation (PAT) 2,497.53 2,085.82
9 Other comprehensive income (5.22) (10.63)
10 Add: Balance brought forward from last year 273.01 (1,472.76)
11 Amount Available for Appropriation 2,765.32 602.42
Appropriations:
(a) Interim Dividend - -
(b) Proposed Dividend 404.80 (273.24)
(c) Corporate Dividend Tax 83.21 (56.17)
(d) General Reserve - -
(e) Balance to be carried forward 2,277.31 273.01

2. STATE OF COMPANYS AFFAIRS: The Company has earned revenue from operation of 31,792.46 Lakhs during the year ended on March 31, 2019 as against 23,339.46 Lakhs earned during the previous year ended on March 31, 2018, giving a significant growth of 36.22 % as compared to previous year. The Company has also earned other income of 141.56 Lakhs during the year under review as against 172.61 Lakhs earned during the previous year.

The Company earned Profit Before Tax (PBT) of 11.03% of sales during the year ended on March 31, 2019 against 8.13 % of previous year ended on March 31, 2018.

The Company earned Profit After Tax (PAT) of 7.86% of sales during the year ended on March 31, 2019 against 8.93 % of previous year ended on March 31, 2018.

After adding the surplus in the Statement of profit & loss of 273.01 Lakhs brought forward from the previous

year to the profit of 2,492.30 Lakhs earned by the Company during the year under review, the total amount of 2,765.32 Lakhs profit is available for appropriation. There are no material changes and commitment occurred during the period which affects the financial position of the Company.

Further, there are no change in the nature of business of the Company.

3. DIVIDEND: the Board of Directors of your Company are pleased to recommend dividend @ 40.00% (i.e. 2.00 per share) on full paid up equity shares of 5/- each for the financial year ended March 31, 2019, subject to approval of the shareholders at the ensuring Annual General Meeting.

4. CONSERVATION OF ENERGY, RESEARCH AND DEVLOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EARNINGS AND OUTGO: The Information relating to the Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo required under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed to this Report as an Annexure- A and forming part of this Report.

5. SEGMENT REPORTING: The Company is engaged in the Castings business only and therefore there is only one reportable segment in accordance with the Indian Accounting Standard (Ind AS) 108 Operating Segments.

6. SUBSIDIARIES, ASSOCIATE AND JOINT VENTURE: The Company was having a partnership firm namely STEELCAST LLC, in USA and now the Company is not able to exercise any of the agreed rights under the agreement and it is not expecting to receive any significant benefit from the exercise of its rights over the entity. Hence, the Company determined that it does not have control / joint control over the entity. During the year under review, no other Company became or ceased to become Subsidiary, Joint Venture or Associate Company.

7. CORPORATE SOCIAL RESPONSIBILITY (CSR): Company has formulated Policy on CSR in accordance with Schedule VII of the Companies Act, 2013 and the details of the composition of the Committee are covered in the Corporate Governance Report. Your Companys spent amount towards CSR activities during the year though not applicable to spend any amount under the CSR. Report on CSR activities is annexed as Annexure-B and forming part of this Report. The Board has approved Policy on CSR which has been uploaded on the Companys website at www.steelcat.net.

8. QUALITY: Your Company has continued emphasis on Research & Development. A dedicated Quality Assurance ("QA") team is monitoring product quality. Your Company strives to be industry leader by adopting modern technology.

9. INSURANCE: All assets of the Company, including Building, Plant & Machinery, Stocks etc., wherever necessary and to the extent required, have been adequately insured.

10. DIRECTORS AND KEY MANAGERIAL PERSONNEL:

10.1 CHANGES IN DIRECTORS AND KEY MANAGERIAL PERSONNEL:

During the period of this report, Mr. Rajesh Rameshchandra Gandhi, Independent Director of the Company, has resigned from the position of Board & from the position of Independent Director of the Company with effect from September 4, 2018. The Board appreciated the valuable services rendered by him during his tenure.

Mr. Tipirneni Kumar, Non-Executive NonIndependent Director of the Company, has resigned from the position of Board & from the position of Non-Executive Non-Independent Director of the Company with effect from September 7, 2018. The Board appreciated the valuable services rendered by him during his tenure.

Pursuant to the provisions of Section 152 of the Companies Act, 2013 and Rules made thereunder, Mr. Rushil C Tamboli, Whole Time Director of the Company, shall retire by rotation at this Annual General Meeting and being eligible offers himself for re-appointment. The Members are requested to consider his re-appointment.

Necessary resolutions relating to Directors who are seeking appointment/reappointment are included in the Notice of Annual General Meeting. The relevant details of the said Directors are given in the Notes/Annexures to the Notice of the Annual General Meeting.

10.2 COMPLIANCE ON CRITERIA OF INDEPENDENCE BY THE INDEPENDENT DIRECTORS: All Independent Directors of the Company have given declarations to the Company under Section 149 (7) of the Act that they meet the criteria of independence as provided in Sub-Section 6 of Section 149 of the Act and also under the Listing Regulations.

10.3 FORMAL ANNUAL EVALUATION: The Board of Directors has carried out an annual evaluation of its own performance, its Committees and individual

Directors pursuant to the requirements of the Act and the Listing Regulations.

Further, the Independent Directors, at their exclusive meeting held January 31, 2019 during the year reviewed the performance of the Board, its Chairman and Non-Executive Directors and other items as stipulated under the Listing Regulations.

10.4 NOMINATION AND REMUNERATION POLICY: The Board has, on the recommendation of the Nomination & Remuneration Committee, framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The details of the Nomination and Remuneration Policy are covered in the Corporate Governance Report. The said policy has also been uploaded on the Companys website at www.steelcast.net.

10.5 MEETINGS: During the year Six (6) Board Meetings and Five (5) Audit Committee Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

10.6 FORMAL UPDATION PROGRAMME: The Board of Directors has undergone 1st Formal Updation Programme on changes in applicable laws, regulations and compliance requirements conducted by the Company through Mr. Dinesh G Bhimani, Practicing Company Secretary as faculty.

10.7 COMMITTEES OF THE DIRECTORS: The details of various committees of Directors constituted under various provisions of Companies Act, 2013 and Rules made thereunder, their constitution, terms of reference and other details are provided in the Corporate Governance Report.

Compositions of Board of Directors and various Committees of Directors are available on the Companys website at www.steelcast.net.

11. 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.

12. RELATED PARTY TRANSACTIONS: Information on transactions with related parties pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Annexure- C in the prescribed Form - AOC-2 and the same forms part of this report. All related party transactions are placed before

the Audit Committee and Board of the Company for review and approval or Omnibus approval as permitted under law. Transactions with related parties, as per requirements Indian Accounting Standard (Ind AS) 24 are disclosed in the notes to accounts annexed to the financial statements. Your Companys Policy on Related Party Transactions, as adopted by your Board, can be accessed on the Companys website at www.steelcast. net.

13. PARTICULARS OF EMPLOYEES: The Disci osures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are enclosed with this report as Annexure-D.

The Statement of particulars of employees under Section 197(12) read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel), Rules, 2014 is not provided with as during the financial year under review, no employee of the Company including Managing Director was in receipt of remuneration in excess of the limits set out in the said rules.

14. HUMAN RESOURCES: Your Company believes that its employees are one of the most valuable assets of the Company. During the year under review, the Company organised various training programs at all level to enhance skill of the employees. As on March 31, 2019, total employees strength at STEELCAST is over 811. The employees are deeply committed to the growth of the Company.

15. VIGIL MECHANISM / WHISTLEBLOWER POLICY: The

Company has formulated Whistleblower Policy in conformity with the provisions of Section 177(9) of the Companies Act, 2013 and Listing Regulation to provide a mechanism for any concerned person of the Company to approach the Ethics Counselor/Chairman of the Audit Committee of the Company for the purpose of dealing with instance of fraud and mismanagement, if any and also ensure that whistleblowers are protected from retribution, whether within or outside the organisation. The details of the Whistle Blower Policy are explained in the Corporate Governance Report and also posted on the Companys website at www.steelcast.net.

16. EXTRACT OF ANNUAL RETURN: Pursuant to the provisions of section 92(3) of the Companies Act, 2013, an extract of annual return is annexed hereto as Annexure-E and forms part of this report.

17. SECRETARIAL AUDITORS: Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, M/s. D.G. Bhimani & Associates, Company Secretary, (CP: 6628) Anand, Gujarat have been appointed as the Secretarial Auditor to conduct the Secretarial Audit of the Company for the Financial Year 2019-20, the Secretarial Audit Report for the 2018-19 is annexed herewith as Annexure-F and forms part of this report.

The observations made in the Auditors Report are selfexplanatory and, therefore, do not call for any further comments under Section 134(3) (f) of the Companies Act, 2013. However, the Company would like to clarify with regard to point No. (v) of Annexure-B to The Independent Auditors Report that the cheque given by a Director from a family members account in Companys favour was accepted and deposited into Companys account out of ignorance . As soon as this error was realised, the amount was repaid.

18. CORPORATE GOVERNANCE REPORT AND CERTIFICATE:

Your Company is committed to maintain the highest standards of Corporate Governance and adheres to the Corporate Governance requirements set out by SEBI. As required under Regulation 34(3) read with Schedule

V (C) of the Listing Regulations a Corporate Governance report and the certificate as required under Schedule

V (E) of the Listing Regulations from Statutory Auditors of the Company regarding compliance of conditions of Corporate Governance are given in Annexure- G and Annexure- H respectively, forming part of this report.

19. MANAGEMENT DISCUSSION AND ANALYSIS REPORT: Management Discussion and Analysis Report for the year under review, as stipulated under Listing Regulation, is annexed herewith as Annexure-I and forms part of this report.

20. COST AUDITORS: In terms of the provisions of Section 148 of the Act read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the Board of Directors, on the recommendation of the Audit Committee, have appointed M/s. S K Rajani & Co. Cost Accountants, Bhavnagar as Cost Auditor of the Company, for the Financial Year 2019-20 on a remuneration as mentioned in the Notice of Annual General Meeting for conducting the audit of the cost records maintained by the Company. A Certificate from M/s. S K Rajani & Co. Cost Accountants has been received to the effect that their appointment as Cost Auditor of the Company, if made, would be in accordance with the limits specified under Section 141 of the Act and Rules framed thereunder. A resolution seeking Members ratification for the remuneration payable to Cost Auditor forms part of the Notice of the Annual General Meeting of the Company and same is recommended for your consideration and approval.

Cost Audit report for the financial year ended March 31, 2018 were filed on September 1, 2018, which was within the time limit as prescribed in Companies (Cost Records and Audit) Rules, 2014 as amended.

21. STATUTORY AUDITORS: M/s. SSM & Co., Chartered Accountants, Statutory Auditors of the Company, having firm registration number 129198W, were appointed as Statutory Auditors at AGM pertaining to the FY 201617, held on July 4, 2017 for three consecutive years starting 2017-18 to 2019-20. As required under Listing Regulation, the auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. The appointment of Statutory Auditors was made for three consecutive years subject to ratification at each Annual General Meeting of the Company until the conclusion of 4th Annual General Meeting to be held for the financial year 2019-20. As the Companies (Amendment) Bill, 2017, Ministry of Corporate Affairs have notified Section 139 & Section 140 on May 07, 2018, and there is no need to ratify appointment of Statutory Auditor of the Company in each Annual General Meeting. The Company have received consent letter from M/s SSM & Co, Chartered Accountants dated on April 29, 2019 for the eligibility to carry out Statutory Audit of the Company for the financial year 2019-20.

The observations made in the Auditors Report are selfexplanatory and, therefore, do not call for any further comments under Section 134(3) (f) of the Companies Act, 2013. However, the Company would like to clarify with regard to point No. (v) of Annexure-B to The Independent Auditors Report that the cheque given by a Director from a family members account in Companys favour was accepted and deposited into Companys account out of ignorance . As soon as this error was realised, the amount was repaid.

22. INTERNAL FINANCIAL CONTROLS: The Company has in place adequate internal financial controls with reference to financial statements. The Company has adopted an Internal Financial Control Framework policy and Procedure document in to ensure orderly and efficient conduct of the business, accuracy and

completeness of the accounting records and timely preparation of financial reports. The policy & procedure framework is supported by the ERP system. The ERP system used by the Company developed in-house is conforming to Accounting Standards and Financial Control Requirements. The ERP system of the Company is upgraded to handle newly introduced GST Laws and Ind As, however, fine tuning is still under process.

23. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS: The re were no significant material orders passed by the Regulators/Courts which would impact the going concern status of the Company and its future operations, during the year under review.

24. CHANGE IN THE NATURE OF BUSINESS: During the year under review, there was no change in the nature of business of the Company and there is no material change and/or commitments, affecting the financial position of the Company, during the period from March 31, 2019 till the date of this report.

25. DIRECTORS RESPONSIBILITY STATEMENT: To the

best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) and 134 (5) of the Companies Act, 2013, that:

a. in the preparation of the annual financial statements for the year ended March 31, 2019, the applicable Accounting Standards have been followed along with proper explanation relating to material departures, if applicable;

b. for the Financial Year ended March 31, 2019, such accounting policies as mentioned in the Notes to the financial statements have been applied consistently and judgments and estimates that are reasonable and prudent have been made 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 of the Profit and Loss of the Company for that period;

c. 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;

d. the Annual Financial Statements have been prepared on a going concern basis;

e. proper internal financial controls are in place and such internal financial controls are adequate and were operating effectively;

f. proper systems have been devised to ensure compliance with the provisions of all applicable laws and are adequate and operating effectively.

26. RISK MANAGEMENT: The Company has been addressing various risks impacting the Company and details of the same are provided elsewhere in this Annual Report in Management Discussion and Analysis. The Company has voluntarily framed risk management policy and the same has been approved by the Audit Committee.

27. SEXUAL HARASSMENT POLICY: Your Company has zero tolerance towards sexual harassment at the workplace and has adopted a Policy on Sexual Harassment in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder. The said policy can be accessed on the Companys website at www. steelcast.net

28. CHANGE IN TAXATION ACT AND RULES: The

Government of India has enacted GST Act 2017 along with IGST Act 2017, SGST Act 2017 and UTGST Act 2017 effective from July 1, 2017. Your Company has been updating & implementing new changes in GST law issued by Govt from time to time.

29. CHANGE IN FINANCIAL REPORTING STANDARDS: The

Ministry of Corporate Affairs issued "The Companies (Indian Accounting Standards) Rules, 2015 and amendment thereto "The Companies (Indian Accounting Standards) Amendment Rules, 2016 as converged version of International Financial Reporting System (IFRS). Further "General instructions for preparation of Balance Sheet and Statements of Profit and Loss of a Company", for compliance and implementation of said rules are also notified by Govt. As per MCA notification, your Company has been updating & implementing new changes in Ind AS issued by Govt from time to time.

30. MATERIAL CHANGES AND COMMITMENTS IF ANY:

There is no any material change and commitment which have occurred between the end of the financial year and the date of the report which affect the financial position of the Company.

31. DEPOSITS: The Company has not accepted/renewed any deposits during the year.

32. COMPLIANCE OF SECRETARIAL STANDARD: Your Company have complied with all Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI) and approved by Central Government from time to time.

33. AUDIT COMMITTEE: Composition of Audit Committee and details of number of audit committee held during the 2018-19 is shown herewith at Annexure-G under Corporate Governance Report. The Board has accepted all the recommendation and suggestions received from Audit Committee.

34. MEETING OF NON-EXECUTIVE DIRECTORS WITH SENIOR MANAGEMENT: The meeting of Non-Executive Director with Senior Management of the Company was held on January 31, 2019 where the Non-Executive Directors have interacted with Senior Management of the Company.

35. ACKNOWLEDGEMENTS: Yours Directors take this opportunity to express their sincere appreciation for the excellent support and co-operation extended by the shareholders, customers, suppliers, bankers and other business associates. Your Directors gratefully acknowledge the on-going co-operation and support provided by the Central and State governments and all Regulatory Authorities. Your Directors also place on record their deep sense of appreciation to all employees for their dedicated services rendered at various levels.

By Order of the Board of Directors
For STEELCAST LIMITED
Place: Bhavnagar (Chetan M Tamboli)
Date: May 30, 2019 Chairman & Managing Director

ANNEXURE-A to the Boards Report:

Information under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014,

(A) ENERGY CONSERVATION

(i) The steps taken or impact on conservation of energy:

• Installation of five energy efficient

austenitising furnace.

• Modification of control panel and water cooling system of induction furnace K/L to increase melting capacity.

• Installation of new sand charging system closest to core shop in Plant-5 to minimise pneumatic and electric energy during sand transport.

• Installation of energy efficient induction furnace 1500kw/500Hz VIP-DUAL MODE-R-PI.

• Energy Conservation by replacing 25HP motor by 20HP motor without affecting the performance of Hanger blast machine.

(ii) The steps taken by Company for utilising alternate sources of energy:

Step taken for utilisation of alternate source of energy PNG which was introduced in financial year 2017-18 as substitute of LPG continued through in the 2018-19.

(iii) The capital investment on energy conservation equipment:

The Company has made capital investments amounting to 461.37 Lakhs during 2018-19 on the energy conservation equipment.

(B) TECHNOLOGY ABSORPTION

Research and Development (R & D)

1) The efforts made towards technology absorption:

a. Study of Resin and Hardner on Hot Tensile Strength of Resin Coated Sand.

b. Some investigation of role of presence of Serpentine in Chromite sand and its adverse effect on casting.

c. Study and investigation of presence of Cr2O3 in Chromo magnesite furnace lining material.

d. Tellurium Base Coating and its Chilling characteristics on Hot Spot Area .

e. Development of Proprietary Ladle Flux to avoid slag Stick in Ladle.

f. Study & development of High Toughness(Charpy Impact @ -40C) and High Tensile (High Hardness) material through Polymer quenching.

g. Customise & Optimise alloys content in LS Grade maintaining same quality requirement.

h. Control of oxide inclusion to meet cleanliness of metal by improved technique of Ladle de-oxidation practice of induction furnace metal.

2) The benefits derived like product improvement, cost reduction, product development or import substitution: The Company has in place well developed programe of

a) Continuous improvement Plan ( CIP)

b) Product Development

c) Process Development

d) Materials Development

Benefits derived as a result of the above efforts (e.g. Product development, Cost reduction, Process Development, Import substitution etc.) have resulted in a saving of 281.14 Lakhs during the year 2018-19.

3) In case of imported technology (Imported during the last 3 years reckoned from the beginning of the year)

i) The details of technology imported Nil
ii) The Year of import Not Applicable
iii) Whether technology is fully absorbed Not Applicable
iv) If not fully absorbed, areas where absorption has not taken place, reason thereof Not applicable

4) The expenditure incurred on Research and Development

• Capital : 27,21,645.00
• Recurring : 1,48,98,085.00
• Total : 1,76,19,730.00

Total R & D expenditure as a percentage of total turnovers: 0.55 %.

By Order of the Board of Directors
For STEELCAST LIMITED
Place: Bhavnagar (Chetan M Tamboli)
Date: May 30, 2019 Chairman & Managing Director