REPORT OF THE DIRECTORS DEAR MEMBERS, Your Directors are pleased to present the Sixtieth Annual Report together with Audited Annual Financial Statements (including Audited Consolidated Financial Statements) of the Company for the Financial Year ended 31 March 2015 DIVIDEND The Directors are pleased to recommend a dividend of Re.0.65 per Equity Share of face value of Re.1 each, i.e. 65%, for the Financial Year ended 31 March 2015. This dividend is subject to the approval of the Members at the ensuing Annual General Meeting (AGM). If approved, the total outlay on account of dividend for the Financial Year 2014-15 would amount to Rs.27.92 Crores (including Rs.4.72 Crores towards Dividend Distribution Tax) as compared to Rs.26.15 Crores (including Rs.3.80 Crores towards Dividend Distribution Tax) paid for the Financial Year 2013-14. TRANSFER TO RESERVES The Company proposes to transfer an amount of Rs.3.50 Crores to Debenture Redemption Reserve Account and an amount of Rs.25.00 Crores to the General Reserve. An amount of Rs.198.35 Crores is proposed to be retained in the Statement of Profit and Loss. OPERATIONS The Company's Revenue from Operations on standalone basis decreased marginally by around 1.51% from Rs.2,186.88 Crores in 2013-14 to Rs.2,153.78 Crores in 2014-15. Export Sales decreased by around 23.83% from Rs.989.21 Crores in 2013-14 to Rs.753.46 Crores in 2014-15, due to stiff competition faced by the products of the Company in the overseas markets. The Company's profit (PAT) for the Financial Year was Rs.72.67 Crores as against Rs.100.56 Crores for the previous Financial Year due to additional Coal levy of Rs.13 Crores being charged to the Profit and higher depreciation of Rs.16 Crores due to change in rates under Schedule II of the Companies Act, 2013. An additional levy at the rate of Rs.295 per ton of Coal extracted has been paid as per the terms of the Ordinance promulgated by Government of India, Ministry of Law & Justice dated 21 October 2014 in pursuance of the Order dated 24 September 2014 issued by Hon'ble Supreme Court of India cancelling the allocation of Parbatpur Coal Block to the Company with effect from 31 March 2015. The Revenue from Operations on consolidated basis, for the year ended 31 March 2015 was marginally down by 2.33% from Rs.2,459.16 Crores in 2013-14 to Rs.2,401.83 Crores in 2014-15. The consolidated loss after tax increased to Rs.116.09 Crores for the Financial Year as against Rs.15.93 Crores in the previous year mainly on account of losses of associates. During the year under review, the production of Ductile Iron (DI) Pipes was 2,77,317 MT as against 2,81,239 MT in the previous year. Production of DI Fittings during the year was 6,027 MT as compared to 5,992 MT in the previous year. The production of Cast Iron (CI) Pipes at Elavur was 32,041 MT as against 25,848 MT in the previous year. During the last quarter of the financial year 2014-15, the Company partly commissioned its new DI Fittings Plant at Haldia. The operations are expected to stabilise during the current financial year. The Company continues to provide special attention towards improvement in production and productivity with higher energy efficiency. Further, to delight both International and Indian customers, the Company has added a number of product variants to its existing product base during the year 2014-15. There have been no material changes and commitments, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this report and there has been no change in the nature of business MANAGEMENT DISCUSSION AND ANALYSIS The Management Discussion and Analysis Report forms an integral part of this Report and gives details of the overall industry structure, developments, performance and state of affairs of the Company's business, international operations, internal controls and their adequacy, risk management systems including a section on 'Risk Management' and other material developments during the financial year 2014-15 is annexed marked as Annexure 1 forming part of this Report. FUTURE PROSPECTS Demand for Ductile Iron Pipes and Fittings in the domestic market continues to be bullish. The Company continues to maintain its dominant position in the market against competitors. The Company, after entrenching itself in the prestigious Western European markets, is looking to expand in Eastern Europe. The European Commission has started Anti-Dumping and Anti Subsidy investigation on import of Ductile Iron Pipes manufactured in India, which the Company is stoutly defending. New markets are being opened up in South America and Africa. The Company will continue to maintain its emphasis on the Gulf markets where it has a historically strong presence. SHARE CAPITAL In order to meet the working capital requirements of the Company and for general corporate use for the Company's growth, the Company had issued and allotted 1,31,38,000 Equity Shares of face value of Re.1/- each at a premium of Rs.18.03 per Equity Shares on preferential basis to the Promoter Companies during the year under review. These Equity Shares rank pari passu in all respect with the existing Equity Shares of the Company. The Issued, Subscribed and Paid up Share Capital of the Company consequently, stood at Rs.35,69,55,322/-, comprising of 35,69,55,322 Equity shares of Re.1/- each as on 31 March 2015. FINANCE Global Depository Receipts Global Depository Receipts (GDRs) of the Company were delisted from London Stock Exchange on 26 February 2015, as the trading volume of GDRs was minimal. A total of 21,05,000 GDRs are outstanding as on 31 March 2015. Debentures As on 31 March 2015, the Company has the following Secured Redeemable Non-Convertible Debentures (NCDs) listed on the National Stock Exchange of India Limited: The Debenture Trustee for each of the aforesaid Series of Debentures is as follows: M/s. Axis Trustee Services Limited, 2nd Floor, Axis House, Bombay Dyeing Mills Compound, Pandurang Budhkar Marg, Worli, Mumbai 400 025 Contact Person : Chief Operating Officer Phone : (022) 2425 5202 Fax : (022) 2425 4200 Email Id: debenturetrustee@axistrustee.com The Company has paid interest on the aforesaid debentures on time and nothing is payable as on date. There was a partial redemption of 10.75% Series of NCD's amounting to Rs.39.60 Crores after the close of the financial year ended 31 March 2015 as per the terms of issue of these NCDs. Warrants The Company had issued 3,35,68,312 Warrants in the year 2010 entitling the holders to convert into one Equity Share of Re.1/- each at an exercise price of Rs.59.58 per share till 7 February 2015. However, all these outstanding warrants expired on 7 February 2015 due to non-exercise of options by the warrant holders within the tenure of the warrants. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS The Company was allotted Parbatpur Coal Block on 7 July 2005 by the Ministry of Coal. The Company was also allotted North Dhadhu Coal Block on 13 January 2006 by the Ministry of Coal and according to the terms of allocation, the Company entered into a joint venture agreement with Adhunik Alloys & Power Limited, Jharkhand Ispat Pvt. Limited and Pawanjay Steel & Power Limited for mining of coal. During the year under review, in pursuance of the Order dated 24 September 2014 issued by Hon'ble Supreme Court of India (the Order) followed by the Ordinance promulgated by the Government of India, Ministry of Law & Justice (legislative department) dated 21 October 2014 (the Ordinance) for implementing the Supreme Court Order, allotment of Parbatpur Coal Block (coal block/mines) to the Company which was under advanced stage of implementation, has been cancelled with effect from 1 April 2015. In terms of the Ordinance, the Company was allowed to continue the operations in the said Block till 31 March 2015. Accordingly, the coal block/mine was handed over to Bharat Coking Coal Ltd as per the directions from Coal India Ltd with effect from 1 April 2015. The claim for compensation amounting to Rs.1,220.71 Crores till 31 March 2014 and Rs.68.13 Crores during the year under review till the handing over the mines is yet to be received by the Company. The Company, pending acceptance and recovery of the claim, has filed a petition before the Hon'ble High Court at Delhi, hearing whereof has concluded and judgement is awaited. Further in terms of the aforesaid Hon'ble Supreme Court Order, North Dhadhu Coal Block allotted in joint venture with other companies, has also been cancelled w.e.f. 24 September 2014. The Company barring initial contribution of Rs.8.23 Crores has not made any further investments in the said joint venture company. In view of the management, the compensation to be received in terms of the Ordinance is expected to cover the cost incurred by the joint venture companies. INTERNAL FINANCIAL CONTROLS The Internal Financial Controls with reference to the Financial Statements are considered to be commensurate with the size, scale and complexity of the operations of the Company. All operations are executed through Standard Operating Procedures (SOPs) in all functional activities for which key manuals have been put in place. The manuals are updated and validated periodically. Approval of all transactions is ensured through a preapproved Delegation of Authority (DOA) Schedule which is in-built into the SAP system. DOA is reviewed periodically by the management and compliance of DOA is regularly checked and monitored by the Auditors. The Company's books of accounts are maintained in SAP and transactions are executed through SAP (ERP) setups to ensure correctness/ effectiveness of all transactions, integrity and reliability of reporting. The Internal Auditors of the Company, M/s. Chaturvedi & Company, an independent firm of Chartered Accountants, monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating system, accounting procedures and policies at all locations of the Company. Based on the Internal Audit Reports, process owner takes corrective actions in their respective areas and thereby strengthens the controls. The Report is presented before the Audit Committee for review at regular intervals. M/s. Electrosteel Bahrain Holding S.PC. Company, Bahrain was incorporated as a subsidiary of the Company and M/s. Singardo International Pte Ltd., Singapore ceased to be the subsidiary during the year under review. The Company has formulated a policy on determining material subsidiaries of the Company, which has been uploaded on the Company's website at the web link: <http://www.electrosteelcastings.com/investors/pdf/policy-on-material-subsidiary.pdf>. A Report on performance and financial position of each of the Company's subsidiaries, associate companies and joint ventures for the financial year ended 31 March 2015 pursuant to the provisions of Section 129(3) of the Companies Act, 2013 (the Act) read with Rule 8 of Companies (Accounts) Rules, 2014 is given in Annexure - 2. The statement containing salient features of financial statement of subsidiaries, associate companies and joint ventures for the financial year ended 31 March 2015 pursuant to the said Section read with Rule 5 of the said Rules are given in the financial statements. STATUS OF MERGER OF MAHADEV VYAPAAR PVT LTD The Board of Directors of the Company on 11 August 2014 approved the Scheme of Amalgamation ("the Scheme") between the Company and M/s. Mahadev Vyapaar Pvt Ltd., a wholly owned subsidiary of the Company with effect from 1 April 2014 ("Appointed Date") to obtain operational synergies and also to pool resources of both the companies for growth and development of business. The Company has received Observation letters from both BSE Limited and the National Stock Exchange of India Limited dated 26 February 2015. Separate applications made in this regard by the Company and the subsidiary are pending before Hon'ble High Court of Orissa, Cuttack and Hon'ble Calcutta High Court, respectively. REPORT ON CORPORATE GOVERNANCE The Company is committed to maintain the highest standards of Corporate Governance and adheres to the Corporate Governance requirements as stipulated in Clause 49 of the Listing Agreement. A Report on Corporate Governance & Shareholder Information for the year under review together with the Auditors' Certificate thereon is annexed as Annexure 3 forming part of this Report. The Company had also adopted a "Code of Conduct", as required under Clause 49 of the Listing Agreement and all Directors and Senior Management have affirmed compliance with the Code for 2014-15. A certificate, signed by the Managing Director, affirming compliance of Directors & Senior Management, forms part of the Report on Corporate Governance MEETINGS OF THE BOARD The details of Board Meetings held during the financial year 2014-15 have been furnished in the Corporate Governance Report forming part of this Report and annexed at Annexure 3. DIRECTORS AND KEY MANAGERIAL PERSONNEL Mr. Pradip Kumar Khaitan, Mr. Binod Khaitan, Mr. Naresh Chandra, Dr. Jamshed Jiji Irani and Mr. Bhaskara Nageswararao Mandavilli were appointed as Independent Directors of the Company for tenure of five years with effect from 28 August 2014. The status of Mr. Naresh Chandra had changed from an Independent Director to a Non Executive and Non Independent Director with effect from 10 September 2014. Mr. Bhaskara Nageswararao Mandavilli, an Independent Director resigned from the Board with effect from 27 March 2015. The Board places on record its sincere appreciation for the valuable contributions made by Mr. Bhaskara Nageswararao Mandavilli during the tenure of his office as a Director of the Company. Mr. Vyas Mitre Ralli and Mr. Mahendra Kumar Jalan were appointed as Whole-time Directors of the Company for a period of 5 years with effect from 21 December 2014 and 22 January 2015, respectively and they are liable to retire by rotation as per the provisions of Section 152 of the Act. Mr. Mahendra Kumar Jalan, retires by rotation at the forthcoming Annual General Meeting (AGM) and being eligible, offer himself for re-appointment. Mr. Rama Shankar Singh, Director of the Company resigned from the close of business hours on 31 March 2015 and Ms. Nityangi Kejriwal was appointed as a Director from the close of business hours on 31 March 2015 to fill the casual vacancy caused by the resignation of Mr. Singh. The Board places on record its sincere appreciation for the contributions made by Mr. Rama Shankar Singh during the tenure of his office as a Director of the Company. Ms. Kejriwal holds office only upto this AGM pursuant to the provisions of Section 161(4) of the Act since Mr. Singh would have retired by rotation at this AGM if he had not resigned from his office. The Company has received a notice under Section 160 of the Act from a Member proposing her appointment as a Director of the Company and the same has been included as an item in the notice of AGM for consideration of the Members. The Board had appointed Mr. Jinendra Kumar Jain as Additional Director (Independent) with effect from 18 June 2015. However, Mr. Jain resigned from his office with effect from 30 July 2015. The Board appointed Mr. Ram Krishna Agarwal, as an Additional Director (Independent) with effect from 30 July 2015 for a term of 5 years, subject to the approval of Members. A declaration has been received from Mr. Agarwal that he satisfies the criteria of independence as per Section 149(6) of the Act. The Company has also received a notice from a Member proposing his appointment as an Independent Director of the Company and the same has been included in the notice of ensuing AGM. Brief resume of the Directors who are subject to appointment/re-appointment at the ensuing AGM, nature of their expertise in their specific functional areas, details of directorships in other companies and the membership of Committees of the Board, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges are given in the Notice for the forthcoming AGM. The Board, at its meeting held on 12 May 2015, had appointed Mr. Gautam Jhunjhunwala as the Chief Financial Officer of the Company under the provisions of Section 2(51) and 203 of the Act read with Rules made thereunder. Mr. Prem Kumar Bafana has been appointed as Company Secretary of the Company with effect from 15 December 2014. Ms. Kavita Bhavsar has resigned from the post of Company Secretary with effect from 6 December 2014. The Board also places on record its appreciation for the contributions made by Ms. Kavita Bhavsar during the tenure of her office as the Company Secretary of the Company. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the provisions of Section 134(3)(c) and 134(5) of the Act, the Directors state that: a) in the preparation of annual accounts for the Financial Year ended 31 March 2015, the applicable accounting standards had been followed and there were no material departures requiring any explanation: b) they 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 of the profit of the Company for that period: c) they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities: d) they had prepared annual accounts on a 'going concern' basis: e) they had laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and were operating effectively; and f) they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. INDEPENDENT DIRECTORS Declaration by Independent Directors Mr. Pradip Kumar Khaitan, Mr. Binod Khaitan, Dr. Jamshed Jiji Irani and Mr. Ram Krishna Agarwal, Independent Directors have given declarations that they fulfil the criteria of independence as laid down in Section 149(6) of the Act and the Rules made thereunder and Clause 49 of the Listing Agreement. Familiarisation Programme for the Independent Directors The Company, on 9 February 2015 had conducted a Familiarisation Programme for the Independent Directors of the Company in order to familiarise them with their roles, rights, responsibilities in the Company. The Familiarisation Program is hosted on the website of the Company and the web link for the same is http://www.electrosteelcastings.com/investors/pdf/familiarisation->independent.pdf. DETAILS OF BOARD COMMITTEES & ADOPTION OF POLICIES There are 5 Board Committees as on 31 March 2015 viz., Audit Committee, Nomination and Remuneration Committee, Stakeholders' Relationship Committee, Corporate Social Responsibility Committee and Banking and Authorisation Committee. The details of composition, terms of reference and meetings held and attended by the Committee members of Audit Committee, Nomination and Remuneration Committee and Stakeholders' Relationship Committee are provided in the Corporate Governance Report annexed as Annexure 3. The Banking and Authorisation Committee comprises of Mr. Binod Khaitan as the Chairman, Mr. Shermadevi Yegnaswami Rajagopalan, Mr. Mayank Kejriwal and Mr. Uddhav Kejriwal as members as on 31 March 2015. The terms of reference for the Committee include taking various decisions pertaining to the opening or closing of bank accounts of the Company, changing the signatories of the Bank Accounts, subscribing/purchasing/selling/dealing in shares and securities and availing broking services, making loans from time to time to subsidiary companies/Joint Ventures/Associates for its working capital requirement and any other work related to day-to-day operations of the Company. Vigil Mechanism The Company has established a Vigil Mechanism and adopted Whistle Blower Policy in compliance with provisions of Section 177(9) of the Act and Clause 49 of the Listing Agreement for the Directors and employees to report genuine concerns and grievances. This mechanism provides adequate safeguards against victimisation of employees and directors and also provide for direct access to the Chairperson of the Audit Committee. The said Policy is available at the Company's website and can be accessed through a web link i.e. <http://www.electrosteelcastings.com/investors/pdf/vigil.pdf>. Nomination and Remuneration Policy The Board has adopted a Nomination and Remuneration Policy recommended by Nomination and Remuneration Committee in terms of the provisions of Section 178 of the Act and Clause 49 of the Listing Agreement. The Nomination and Remuneration Policy has been annexed to this Report as Annexure 4. Corporate Social Responsibility Policy The Board has constituted a Corporate Social Responsibility (CSR) Committee on 10 May 2014 as per the provisions of Section 135 of the Act, read with Companies (Corporate Social Responsibility Policy) Rules, 2014. The Board has adopted a Corporate Social Responsibility Policy (CSR Policy) formulated by the CSR Committee in accordance with the provisions of the Act. A Report on CSR activities/initiatives which includes the contents of the CSR Policy, composition of the Committee and other particulars specified in Annual Report on CSR as per Section 135 of the Act read with Rule 8 of Companies (Corporate Social Responsibility Policy) Rules, 2014 are disclosed as Annexure 5 to this Report. Policy on Board Diversity and Succession Plan In compliance with the provisions of Clause 49 of the Listing Agreement, a Policy on Board Diversity and Succession Plan was devised by the Nomination and Remuneration Committee to ensure adequate diversity in the Board of Directors of the Company. FORMAL ANNUAL EVALUATION AND ITS CRITERIA The Nomination and Remuneration Committee of the Board has formulated certain criteria for annual evaluation of Directors pursuant to Clause 49 of the Listing Agreement and as per requirements of Section 134 of the Act are disclosed below - A. The Board shall evaluate the roles, functions, duties of the Independent Directors (IDs) of the Company. Each ID shall be evaluated by all other Directors but not by the Director being evaluated. The Board shall also review the manner in which IDs follow guidelines of professional conduct as specified in Schedule IV to the Act. The adherence of Section 149 and aforesaid Schedule IV by the IDs shall also be reviewed by the Board. B. Performance review of all the Non Independent Directors of the Company on the basis of the activities undertaken by them, expectations of Board and level of participation. C. Performance review of Chairman of the Company in terms of the level of competence of Chairman in steering the Company. D. The review and assessment of the flow of information by the Company to the Board and the manner in which deliberations take place, the manner of placing Agenda and contents therein. E. The review of the performance of Directors individually, its own performance as well as evaluation of working of its Committees shall be carried out by the Board. F. On the basis of performance evaluation, it shall be determined by the Nomination & Remuneration Committee & Board whether to extend or continue the term of appointment of ID subject to all other applicable compliances. Meeting of Independent Directors : The Independent Directors of the Company held a separate meeting on 9 February 2015 without the attendance of Non Independent Directors and members of management for evaluation of the performance of Non Independent Directors, the Board as a whole and Chairman of the Company and for consideration of such other matters as required under the provisions of the Act and Clause 49 of the Listing Agreement. Further, pursuant to the provisions of Section 134(3)(p) of the Act, the Board had carried out an annual evaluation of its own performance, the performance of Directors individually as well as evaluation of the performance and working of its Committees at its meeting. DISCLOSURE RELATING TO REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND PARTICULARS OF EMPLOYEES The statement pertaining to particulars of employees including their remuneration as required to be reported under the provisions of Section 197(12) of the Act, read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (the Rules) are provided in Annexure 6A to this Report. However, as per the provisions of Section 136 of the Act, the Reports and Accounts for the Financial Year 2014-15 are being sent to the Members and other entitled thereto, excluding this statement. This statement is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard. The disclosures pertaining to the remuneration of Directors, KMP and employees as required under Section 197(12) of the Act, read with Rule 5(1) of the Rules are provided in Annexure 6B to this Report. PREVENTION OF INSIDER TRADING & CODE OF CONDUCT FOR FAIR DISCLOSURE The Company has adopted a Code of Conduct for Regulating, Monitoring and Reporting Trading by Insiders in securities of the Company. The Code requires pre-clearance for dealing in the Company's securities and prohibits the purchase or sale of securities of the Company by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Company has also adopted a Code of Practices and Procedures for Fair Disclosure and Conduct of Unpublished Price Sensitive Information to formulate a stated framework and policy for prompt and fair disclosure of events and occurrences that could impact price discovery in the market for securities of the Company. AUDITORS AND AUDITORS' REPORT M/s. Lodha & Co., Chartered Accountants, (Firm Registration No.301051E) were appointed as Auditors of the Company for a tenure of three years i.e. from the conclusion of the 59th Annual General Meeting (AGM) till the conclusion of the 62nd AGM of the Company. This appointment is subject to ratification by the Members at every AGM held after appointment during their tenure of office. As required under Section 139 of the Act, the Company has received a written consent from the Auditors to such continued appointment and also a certificate from them to the effect that their appointment, if ratified, would be in accordance with the conditions prescribed under the Act and the Rules made thereunder, as may be applicable. The necessary resolution is being placed for Members ratification at the ensuing AGM. The para wise responses of the management to the opinion/remarks/observations made in the Independent Auditors' Report are given below : 1. As regards the Qualified Opinion expressed by the Auditors in their Report and its consequential references made in para nos. (d), (e), (g) and (h)(i) oftheir Report, attention is drawn to Note nos. 2.33a and 2.33b of the Standalone Financial Statement, which are self-explanatory: 2. On the Auditors' observation made in para (i)(a) of the Annexure to the Auditors' Report, your Directors wish to inform that all necessary steps are being taken to regularise the maintenance of proper records for furniture and fixtures: 3. On the Auditors' observation made in para (xi) of Annexure to the Auditors' Report, your Directors have to clarify that External Commercial Borrowings (ECB) funds are being used as per the progress of the respective project(s) for which these amounts were borrowed and pending the completion of the project(s), the balance amounts could only be parked in fixed deposits as per the terms of ECB. COST AUDITORS The Companies (Cost Records and Audit) Amendment Rules, 2014 as published in Official Gazette on 31 December 2014 pursuant to sub-sections (1) and (2) of Section 469 and Section 148 of the Act, requires audit of the cost accounting records of the Company relating to Pig Iron, DI Pipe, DI Fittings, CI Pipe, Coke, Dolomite, Sponge Iron & Power Generating units for every Financial Year. The Cost Audit Report and a Compliance Report for the Financial Year 2013-14 were filed on 8 September 2014 which was within stipulated due date. M/s. S. G. & Associates (FRN 000138), Cost Accountants, Kolkata, has been re-appointed as Cost Auditors for Financial Year 2015-16 for all the applicable units and products of the Company with an intimation to the Ministry of Corporate Affairs. The remuneration proposed to be paid to them for the Financial Year 2015-16 requires ratification of the shareholders of the Company. In view of this, your ratification for payment of remuneration to Cost Auditors is being sought at the ensuing AGM. SECRETARIAL AUDITORS In terms of Section 204 of the Act and Rules framed thereunder, M/s. S. M. Gupta & Co., Practicing Company Secretaries were appointed Secretarial Auditors of the Company for the financial year 2014-15. The report of the Secretarial Auditors is enclosed as Annexure 7 to this Report. An observation made by the Secretarial Auditors that the Company is yet to appoint Chief Financial Officer, to which the Directors wish to inform that Mr. Gautam Jhunjhunwala has been appointed as the Chief Financial Officer with effect from 12 May 2015. INTERNAL AUDITORS In terms of the provisions of Section 138 of the Act, M/s. Chaturvedi & Company, an independent firm of Chartered Accountants were appointed as Internal Auditors for the financial year 2014-15. The Audit Committee in consultation with the Internal Auditors formulates the scope, functioning, periodicity and methodology for conducting the Internal Audit. The Audit Committee inter-alia reviews Internal Audit Reports. The Board has re-appointed M/s. Chaturvedi & Company as Internal Auditors for the financial year 2015-16 under the provisions of Section 138 of the Act. PUBLIC DEPOSITS During the financial year 2014-15, your Company has not accepted any deposit within the meaning of Sections 73 and 76 of the Act, read together with the Companies (Acceptance of Deposits) Rules, 2014. LOANS, INVESTMENTS, GUARANTEES & SECURITIES The particulars of loans given, investments made, guarantees given or securities provided along with the purpose for which the loan or guarantee or security is/was proposed to be utilised by the recipient as per the provisions of Section 186(4) of the Act are given in Note nos. 2.38.1 to the Standalone Financial Statements. EXTRACT OF ANNUAL RETURN Pursuant to Section 92(3) of the Act and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return as on the Financial Year ended 31 March 2015 in Form MGT 9 as prescribed under the said Rules is annexed as Annexure 8 to this Report. AWARDS AND ACCOLADES EEPC INDIA, Eastern Region has given "AWARD FOR EXPORT EXCELLENCE" to Electrosteel Castings Limited for star performers as large enterprise in the product group of "Sanitary and Industrial Castings" for its outstanding contribution to engineering exports during the year 201213. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013 The Company has in place a Policy in line with requirements, inter-alia, of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committees have been set up to redress complaints received regarding sexual harassment. The Company has not received any complaint of sexual harassment during the financial year 2014-15. RELATED PARTY TRANSACTIONS The Company has entered into contracts/arrangements with the related parties during the Financial Year 2014-15 which were in the ordinary course of business and on arm's length basis. Thus provisions of Section 188(1) of the Act are not applicable and the disclosure under AOC 2 is not required. However, your attention is drawn to the Related Party disclosure in Note no 2.38 of the Standalone Financial Statements. The Board has approved a policy for Related Party Transactions which has been hosted on the website of the Company. The web-link for the same is <http://www.electrosteelcastings.com/investors/pdf/> related-party-transaction-policy.pdf. The Related Party Transactions, wherever necessary, are carried out by the Company as per this Policy. There were no materially significant related party transactions entered into by the Company during the year, which may have a potential conflict with the interest of the company at large. There were no pecuniary relationship or transactions entered into by any Independent Director with the Company during the year under review. RISK MANAGEMENT POLICY The Company has a well-established Risk Management Policy to identify and evaluate business risks. This framework seeks to create transparency, minimise adverse effect on the business objectives and enhance Company's competitive advantage. The key business risks identified by the Company are economic risk, competitor risk, industry risk, environment risk, operational risk, foreign exchange risk etc. and it has proper mitigation process for the same. The Audit Committee reviews this policy periodically. A statement indicating development and implementation of Risk Management Policy for the Company including identification of elements of risk, if any, is provided as a part of Management Discussions & Analysis Report at Annexure 1 which forms a part of this Report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO The prescribed particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings & Outgo required to be disclosed under Section 134 the Act, read with Rule 8 of Companies (Accounts) Rules, 2014 is annexed as Annexure 9 and forms a part of this Report. ACKNOWLEDGEMENT Your Directors record their sincere appreciation for the assistance and co-operation received from the banks, financial institutions, government authorities, and other business associates and stakeholders. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the Company's executives, staff and workers. For and on behalf of the Board of Directors Pradip Kumar Khaitan Chairman DIN:00004821 Date :30July2015 Place : Kolkata |