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Jindal Stainless

BSE: 532508|NSE: JSL|ISIN: INE220G01021|SECTOR: Steel - Medium & Small
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Directors Report Year End : Mar '17    Mar 16

TO

THE MEMBERS,

The Directors have pleasure in presenting the 37th Annual Report on the business and operations of your Company together with the Audited Statement of Accounts for the financial year ended 31st March, 2017.

FINANCIAL RESULTS

Your Company''s performance for the financial year ended 31st March, 2017 is summarized below:

(Rs, in Crores)

Particulars

Standalone

Consolidated

Year ended 31.03.2017

Year ended 31.03.2016

Year ended 31.03.2017

Year ended 31.03.2016

Revenue from operations

8,957.40

7,028.24

9,924.78

7,643.86

Other Income

25.55

25.89

25.69

26.15

Total Income

8,982.95

7,054.13

9,950.47

7,670.01

Expenses:

Cost of materials consumed

4,953.76

3,888.43

5,792.62

4,324.10

Purchase of trading goods

146.72

357.40

146.72

357.40

Changes in Inventories of finished goods, stock in trade and work in progress and trading goods

(123.93)

(124.36)

(205.50)

(153.92)

Employee benefits expense

102.46

91.02

154.05

134.34

Excise Duty

646.12

500.25

646.12

500.25

Finance costs

761.69

1,006.23

787.88

1,029.97

Depreciation and amortization expenses

307.98

298.46

325.21

316.16

Stores and Spares consumed

429.42

363.73

458.33

404.40

Power & Fuel

529.71

508.56

565.02

541.94

Other expenditure

1,166.44

922.27

1,201.83

962.62

Total Expenses

8,920.37

7,811.99

9,872.28

8,417.26

Profit/(Loss) before exceptional Items and tax

62.58

(757.86)

78.19

(747.25)

Share of Profit/(Loss) of an Associate

-

-

11.48

0.03

Share of Profit/(Loss) of Minority

-

-

(1.47)

(0.71)

Exceptional items - Gain /(Loss)

26.13

(34.35)

25.84

(40.37)

Profit /(Loss) after exceptional items but before tax

88.71

(792.21)

114.04

(788.30)

Tax expense

30.37

(233.09)

32.47

(231.51)

Profit/(Loss) for the year

58.34

(559.12)

81.57

(556.79)

Other Comprehensive Income:

(A) Items that will not be reclassified to profit / (loss)

(i) Re-measurement gains / (losses) on defined benefit plans

(0.40)

(0.89)

(0.70)

(0.89)

(ii) Income tax effect on above

0.14

0.31

0.21

0.31

(B) Items that will be reclassified to profit or loss

(i) Exchange differences in translating the financial statements of foreign operation

-

-

(31.14)

7.47

(ii) Non-controlling interest in Associates (Rs, 26,000)

-

-

0.00

-

Total Comprehensive Income for the year (comprising Profit / (Loss) and other Comprehensive Income for the year)

58.08

(559.70)

49.94

(549.90)

FINANCIAL HIGHLIGHTS

Your Company has adopted Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Companies Act, 2013, read with the Companies (Accounting Standard) Rules, 2015, as amended, w.e.f. April 1, 2016 and the above results have been prepared in compliance with Ind AS. Ind AS has replaced the existing Indian GAAP prescribed under Section 133 of the Companies Act, 2013 read with Rule 7 of Companies (Accounts) Rules, 2014.

The financial results for the year ended March 31, 2016 have been restated to comply with Ind AS to make them comparable.

A Composite Scheme of Arrangement (the ''Scheme'') amongst the Company, Jindal Stainless (Hisar) Limited, Jindal United Steel Limited, Jindal Coke Limited and their respective shareholders and creditors under the provision of Sec 391-394 of the Companies Act, 1956 and other applicable provisions of Companies Act, 1956 and I or Companies Act, 2013 was sanctioned by the Hon''ble High Court of Punjab & Haryana, Chandigarh (High Court) pursuant to its Order dated 21st September 2015 (as modified on 12th October, 2015). The certified copy of the said order was filed with the office of the Registrar of Companies on 1st November, 2015. Consequent thereupon, Sections I and II of the Scheme became operative with effect from the Appointed Date 1 i.e. close of business hours before midnight of 31st March, 2014. Further, the Company received approval from the Orissa Industrial and Infrastructure Development Corporation Limited (OIIDCO) on 24th September, 2016 with respect to transfer I right to use the land on which Hot Strip Mill (HSM) and Coke Oven Plant is located from the Company to Jindal United Steel Limited and Jindal Coke Limited respectively and consequent thereupon, Sections III and IV of the Scheme became operative with effect from the Appointed Date 2 i.e. close of business hours before midnight of 31st March, 2015. The impact of the implementation of the Scheme has been reflected in the financial results for the years ended on 31st March, 2016 and on 31st March, 2017.

During the year, the Revenue from operations of your Company on standalone basis has increased by 27.45% at Rs, 8,957.40 Crore as compared to Rs, 7,028.24 Crore during previous financial year 2015-16. The Profit before other income, Finance Cost, Depreciation, Exceptional Items, Tax & Amortisation (EBIDTA) on standalone basis stood at Rs, 1,106.70 Crore as compared to Rs, 520.94 Crore during previous year. The Net profit on standalone basis stood at Rs, 58.34 Crore as compared to a net loss of Rs, 559.12 Crore during previous year.

Further, during the year, the consolidated Revenue from operations, of your Company has increased by 29.84% at Rs, 9,924.78 Crore as compared to Rs, 7,643.86 Crore during previous financial year 2015-16. Consolidated Profit before other income, Finance Cost, Depreciation, Exceptional Items, Tax & Amortization (EBIDTA) stood at Rs, 1,165.59 Crore as compared to Rs, 572.73 Crore during previous year. The Net profit on consolidated basis stood at Rs, 81.57 Crore as compared to a net loss of Rs, 556.79 Crore during previous year.

During the year under review, the operations of your Company improved significantly and the EBIDTA of the Company on standalone basis increased by 102% over the last financial year. However, the high interest burden continued to put pressure on the profitability of the Company.

OUTLOOK

The world economy is gaining momentum after a dull outturn in 2016. Economic growth is expected to increase to 3.5% in 2017 from 3.1% in 2016, as per International Monetary Fund (IMF). Improved economic activity is likely to push the growth further. Economic performance across most regions is recovering but US policy uncertainty poses a concern.

Growth in emerging markets including India remains subdued. IMF projects slowdown in Indian economy on account of demonetization with GDP growth rate estimates revised to 7.2 % for 2017-18. Further, outlook for the Asian region remains sluggish with an exception of China.

As per International Stainless Steel Forum, global stainless steel production increased to 45.8 MT in 2016, China being the highest contributor. According to estimate by Steel and Metals Market Research (SMR), global stainless steel demand will increase by 4% in 2017. In India, domestic demand will grow by over 9% in next five years as per Indian Stainless Steel Development Association (ISSDA). Major demand is expected from the Architecture, Building and Construction (ABC) segment while Automobile, Railway and Transport (ART) will also provide stimulus. Prospects of normal monsoon project a GDP growth of above 7% in 2017-18.

OPERATIONS

Your Company has been able to improve its performance significantly during the year 2016-17 despite the adverse global position of Stainless Steel industry. Steel Melting Shop produced 7,22,995 MT as compared to 6,03,852 MT in the last year, having rolled both stainless steel material (7,04,680 MT) and mild steel material (3,41,798 MT), Plate Finishing Shop produced 46,966 MT against 33,082 MT in last year, HAPL in CRM produced 5,92,113 MT against 5,34,138 MT in last year and CAPLin CRM produced 3,44,725 MT against 3,11,923 MT produced in last year.

The production at Ferro Alloys during the year was 2,05,510 MT against 1,54,309 MT during last year.

The captive Power Plants (2X125MW) generated 1,784.92 million units (net) of power as compared to 1,620.26 million units (net) in the last year. Your Company is certified for various product and system certifications including integrated management system comprising of ISO 9001:2008 Quality Management System (ISO 9001:2008), Environment Management System (ISO 14001:2004) and Health and Safety Management System as per BS OHSAS 18001:2007. And further up-gradation of ISO 9001 & 14001 for 2015 version is under process.

Your Company is now in receipt of REACH/RoHS certification for 200, 300 & 400 series stainless steel grades. This includes compliance to the 7 new additions of substances of very high concern (SVHC) in the REACH regulation 1907/2006. Scope of Construction Product Directive (CE Marking) certification is expanded to include grades - EN 1.4003, 1.4016,1.4512 and 1.4372. This has enabled your Company to be the preferred and certified manufacturers of stainless for construction field in European market with 10 grades covered under CE marking scope. Validity of AD I PED certification has been extended to Feb 2019 along with the grade additions of EN 1.4003. Your Company''s Jajpur unit has also successfully completed DNV audit against DNV guidelines for Manufacturer Product Quality Assessment (Level 4) and Marine approvals.

Asset Monetization and Business Reorganization Plan (AMP) and Composite Scheme of Arrangement

The Company, after having various rounds of discussions with the CDR Lenders, had finalized a comprehensive plan of Asset Monetization cum Business Reorganization Plan (“AMP”), which entailed monetization of identified business undertaking(s) of the Company through demerger/slump sale(s) and utilization of the proceeds of the slump sale(s) in reduction of debt of the Company.

As a part of the above said AMP, a Composite Scheme of Arrangement among the Company and its three wholly owned subsidiary companies viz. Jindal Stainless (Hisar) Limited (“JSHL”), Jindal United Steel Limited (“JUSL”) and Jindal Coke Limited (“JCL”) and their respective creditors and shareholders was undertaken which was approved by the Hon''ble High Court of Punjab and Haryana at Chandigarh, vide its order dated 21st September, 2015 (as modified on 12th October, 2015), Certified true copy of the said Order was filed on 1st November, 2015, with the office of Registrar of Companies, NCT of Delhi and Haryana. Consequently, Section I (pertaining to demerger of Mining Division and Ferro Alloys Division and vesting the same in JSHL) and Section II (pertaining to slump sale of manufacturing facility at Hisar from the Company to JSHL) of the Scheme became operative from the Appointed Date 1 i.e. close of business hours before midnight of 31st March, 2014. The Scheme envisaged demerger of Mining Division including the Chromite Mines located at Sukinda and vesting the same in JSHL, however, the Company did not receive approval from the Ministry of Mines, Government of Odisha for transfer of the said Mines to JSHL, therefore, the Board of Directors of the Company in its meeting held on 23rd November, 2016, in terms of clause 1.10 of Section V of the Scheme, decided not to transfer the Mines to JSHL.

Section III and IV of the Scheme with respect to JUSL and JCL respectively became operative from Appointed Date 2 i.e. close of business hours before midnight of 31st March, 2015, and became effective upon receipt of approval from Orissa Industrial and Infrastructure Development Corporation Limited (OIIDCO), on 24th September, 2016, with respect to the transfer I right to use the land on which Hot Strip Mill and Coke Oven Plant is located, from the Company to JUSL and JCL respectively.

Post implementation of the Scheme, the Company has already received an amount of Rs, 2600 Crore as consideration for slump sale from JSHL, which has been utilized to prepay the debts of the Company and accordingly the debt of the Company as on date has been reduced to that extent. The Company has further received an amount of Rs, 2355 Crore from JUSL and Rs, 490 Crore from JCL towards consideration of slump sale and interest free security deposit for sharing infrastructure facilities in due course and that amount shall also be utilized to prepay the debts of the Company.

On 26th May, 2017, the Company has allotted (I) 605,70,320 equity shares of face value of Rs, 2 each (“Equity Shares”) and (ii) 14,28,30,637 -0.01% Optionally Convertible Redeemable Preference Shares of face value of Rs, 2 each (OCRPS) to the lenders of the Company upon conversion of the Funded Interest Term Loan I and the Funded Interest Term Loan II at a price of Rs, 39.10 (including premium of Rs, 37.10) per Share/OCRPS, aggregating to Rs, 236,82,99,512; and Rs, 558,46,77,906.70 respectively.

In view of above the AMP scheme implementation is substantially complete.

DIVIDEND & TRANSFER TO RESERVES

The Board, considering your Company''s performance and financial position for the year under review, has not recommended any dividend on equity shares of your Company for the financial year ended 31st March, 2017. Accordingly, no amount is proposed to be transferred to the reserves of your Company.

SHARE CAPITAL

As on 31st March, 2016, the paid up share capital of your Company was Rs, 46,23,70,890 (Rupees Forty Six Crore Twenty Three Lacs Seventy Thousand Eight Hundred Ninety) divided into 23,11,85,445 (Twenty Three Crore Eleven Lacs Eighty Five Thousand Four Hundred Forty Five) equity shares ofRs, 2 each.

Your Company has, on 3rd July, 2016, allotted 16,82,84,309 (Sixteen Crore Eighty Two Lakhs Eighty Four Thousand Three Hundred Nine) equity shares of Rs, 2 each at a price of Rs, 21.76 (including premium of Rs, 19.76 per share) per share to Jindal Stainless (Hisar) Limited (“JSHL”) on preferential basis against Rs, 366,18,66,570 (Rupees Three Hundred Sixty Six Crore Eighteen Lakhs Sixty Six Thousand Five Hundred Seventy only), being the amount due and payable by your Company to JSHL as of the ''Appointed Date 1'' i.e. close of business hours before midnight of March 31, 2014 as specified in the Scheme. These shares have already been listed and permitted for trading on the BSE Ltd. and National Stock Exchange of India Ltd.

Further, your Company has on 26th May, 2017, allotted: (a) 6,05,70,320 (Six Crore Five Lacs Seventy Thousand Three Hundred Twenty) equity shares to the lenders of your Company upon conversion of the Funded Interest Term Loan I and the Funded Interest Term Loan II at a price of Rs, 39.10 (including premium of Rs, 37.10) per share, aggregating to Rs, 236,82,99,512 (Rupees Two Hundred Thirty Six Crore Eighty Two Lacs Ninety Nine Thousand Five Hundred Twelve); and (b) 14,28,30,637 (Fourteen Crore Twenty Eight Lacs Thirty Thousand Six Hundred Thirty Seven) 0.01% Optionally Convertible Redeemable Preference Shares of your Company having face value of Rs, 2 each (“OCRPS”) to the lenders of your Company upon conversion of the Funded Interest Term Loan I and the Funded Interest Term Loan II at a price ofRs, 39.10 (including premium of Rs, 37.10) per OCRPS, aggregating to Rs, 558,46,77,906.70 (Rupees Five Hundred Fifty Eight Crore Forty Six Lacs Seventy Seven Thousand Nine Hundred Six and Seventy paise).

Consequent upon the said allotments, paid up share capital of your Company has increased from Rs, 46,23,70,890 (Rupees Forty Six Crore Twenty Three Lacs Seventy Thousand Eight Hundred Ninety) to Rs, 120,57,41,422 (Rupees One Hundred Twenty Crore Fifty Seven Lacs Forty One Thousand Four Hundred Twenty Two) divided into 46,00,40,074 (Forty Six Crore Forty Thousand Seventy Four) equity shares of Rs, 2 each and 14,28,30,637 (Fourteen Crore Twenty Eight Lacs Thirty Thousand Six Hundred Thirty Seven) OCRPS of Rs, 2 each.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report as required under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI LODR”) forms part of this Annual Report.

BUSINESS RESPONSIBILITY REPORT

Your Company is committed to grow the business responsibly with a long term perspective as well as to the nine principles enshrined in the National Voluntary Guidelines (NVGs) on social, environmental and economic responsibilities of business, as notified by the Ministry of Corporate Affairs, Government of India, in July, 2011.

The Business Responsibility Report (“BRR”) of the Company as per the requirements of Regulation 34(f) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 describing the initiatives taken by the Company from an environmental, social and governance perspective, alongwith all the related policies can be viewed on the Company''s website at www.jslstainless.com.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

Your Company has transferred unclaimed and unpaid amounts aggregating to Rs, 1,30,304. During the financial year 2016-17, there was no unclaimed dividend which was required to be transferred to Investor Education and Protection Fund of Government of India.

EMPLOYEES STOCK OPTION SCHEME

During the year under review, no stock options were vested in eligible employees. The disclosure, under Regulation 14 of the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 is set out in Annexure -1 to this Report.

INFORMATION TECHNOLOGY

Your Company has already embarked on the journey of digitization. The achievements of IT and SAP in 2016-2017 is earmarked for its effort and contribution in making smooth transition of the transactions and processes according to the business restructuring. Powered with the knowledge of SAP system and experience of Company''s business process, the team has studied, designed and mapped the confluence of changed business processes in SAP for carrying out critical restructuring activities within target timeline.

The team has also contributed in enhancing several business functionalities and incorporating multiple controls and checks to achieve valued Business benefits. The integrated IT and SAP support framework is enabling Management team in making timely informed business decisions based on MIS, which is directly derived from real time transactional data. The IT team is also able to provide timely secured, integrated, reliable services throughout the year.

Apart from the sustained support rendered, major concurrent additional IT facilities extended and applications were developed to meet dynamic needs of various business functions.

Going forward, the IT and SAP department plans to explore the new and technologically advanced horizon of SAP architecture and functionalities to meet upcoming business requirements.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Companies Act, 2013, SEBI LODR and Ind-AS on Consolidated Financial Statements read with AS- 23 on Accounting for investments in Associates and AS-27 on Financial Reporting of interests in Joint Ventures, the Audited Consolidated Financial Statements are provided in the Annual Report.

SUBSIDIARY COMPANIES / JOINT VENTURES / ASSOCIATE COMPANIES

Your Company follows its global ambition to build a premium brand name for its quality Stainless Steel solutions and expertise with the ambition and with a view of expansion and diversification, it has created multiple subsidiaries, associates and joint ventures. As on the date of this Report, your Company has 5 direct subsidiaries, namely (i) Jindal Stainless UK Limited; (ii) Jindal Stainless FZE, Dubai; (iii) PT Jindal Stainless Indonesia; (iv) JSL Group Holdings Pte. Ltd., Singapore; and (v) Iberjindal S.L., Spain.

Your Company also has two joint venture companies namely, MJSJ Coal Limited and Jindal Synfuels Limited and three associate companies namely, Jindal United Steel Limited, Jindal Coke Limited and Jindal Stainless Corporate Management Services Pvt. Ltd. Further, your Company is an associate company of Jindal Stainless (Hisar) Limited.

During the financial year ended 31st March, 2017, Jindal United Steel Limited and Jindal Coke Limited ceased to be subsidiaries of your Company and the following subsidiaries of your Company were closed down: (i) Jindal Stainless Italy S.r.l., (ii) JSL Group Holdings Pte. Ltd., Singapore, (iii) JSL Ventures Pte. Ltd., Singapore, and (iv) Jindal Aceros InoxidablesS. L., Spain.

The Financial Statements of Subsidiary Companies are kept open for inspection by the shareholders at the Registered Office of your Company during business hours on all days except Saturdays and Sundays and public holidays up to the date of Annual General Meeting (AGM) as required under Section 136 of the Companies Act, 2013. The members, if they desire, may write to the Secretarial Department of the Company at O.P. Jindal Marg, Hisar - 125005 (Haryana) to obtain the copy of the annual report of the subsidiary companies. The Financial Statements including the Consolidated Financial Statements and all other documents required to be attached with this Report have been uploaded on the website of your Company viz. www.jslstainless.com.

A statement containing the salient features of the financial statement of the subsidiaries and associate companies in the prescribed Form AOC -1 is attached along with financial statement. The statement also provides the details of performance and financial position of each of the subsidiary company.

Your Company has framed a policy for determining “Material Subsidiary” in terms of Regulation 16(6) of SEBI LODR. The Policy for determining material subsidiaries as approved may be accessed on your Company''s website at the link: http://jslstainless.com/pdf/Policy%20on%20Material%20Subsidiaries.pdf DIRECTORS AND KEY MANAGERIAL PERSONNEL

Post lastAGM held on 30th December, 2016, Ms. Ishani Chattopadhyay has ceased to be Director w.e.f. 9th May, 2017. The Board places on record its sincere appreciation for the valuable contributions made by her during her tenure. The Board has appointed Mr. Kanwaljit Singh Thind, Ms. Bhaswati Mukherjee and Mr. Abhyuday Jindal as Additional Directors w.e.f. 11th May, 2017,15th July, 2017 and 9th August, 2017 respectively. The requisite resolutions for the appointment of Ms. Bhaswati Mukherjee as an Independent Director and for the appointment of Mr. Abhyuday Jindal as a Director and Non-Executive Vice-Chairman, will be placed before the shareholders for their approval.

Further, Mr. Raajesh Kumar Gupta has ceased to be the Company Secretary and Compliance Officer of your Company w.e.f. 31st March, 2017. The Board places on record its sincere appreciation for the valuable contributions made by him during his tenure.

The Board of Directors has appointed Mr. Anurag Mantri as the Chief Financial Officer w.e.f. 7th February, 2017. The Board has also designated him as the Key Managerial Personnel (KMP) of your Company. Mr. Ashish Gupta has relinquished the position of Chief Financial Officer of the Company w.e.f. 7th February, 2017.

Mr. Ratan Jindal, who retires by rotation at the ensuing Annual General Meeting under the provisions of the Companies Act, 2013 and being eligible, offers himself for re-appointment.

Brief resumes of the abovementioned Directors, nature of their expertise in specific functional areas, details of Directorship in other companies, membership I chairmanship of committees of the board and other details, as stipulated under Regulation 36(3) of SEBI LODR and Secretarial Standard - 2 issued by the Institute of Company Secretaries of India, are given in the Notice forming part of the Annual Report.

All Independent Directors have given declaration to the Company that they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013.

Your Company has also devised a Policy on Familiarization Programme for Independent Directors which aims to familiarize the Independent Directors with your Company, nature of the industry in which your Company operates, business operations of your Company etc. The said Policy may be accessed on your Company''s website at the link:

http://jslstainless.com/pdf/DETAILS%200F%20FAMILIARIZATI0N%20%20PR0GRAMMES%20IMPARTED%20T0%20INDEPENDENT%20DIREC

TORS%20JSL.pdf

BOARD EVALUATION

An annual performance evaluation of all Directors, the Committees of Directors and the Board as a whole was carried out during the year. For the purpose of carrying out performance evaluation, assessment questionnaires were circulated to all Directors and their feedback was obtained and recorded.

POLICY ON DIRECTORS''APPOINTMENT AND REMUNERATION POLICY

Pursuant to the provisions of Section 178 of the Companies Act, 2013 and the SEBI LODR, the Board of Directors has approved the (i) Policies for nomination and selection of Independent Directors and Non-Executive Non-Independent Directors and (ii) Remuneration Policy on the recommendation of the Nomination and Remuneration Committee of your Company. The said policies may be accessed on your Company''s website at the link:

http://www.jslstainless.com/pdf/JSL%20Remuneration%20Policy.pdf FIXED DEPOSITS

Your Company had stopped accepting I renewing deposits from 1st April, 2014. In response to a petition filed by your Company, the Company Law Board (“CLB”) had, vide its Order dated 6th May, 2015, allowed extension of time up to 30th June, 2016, for repayment of the entire outstanding Deposits along with interest due thereon and also directed your Company to make payments to those depositors who approach your Company before 30th June, 2016.

As on 31st March, 2017, your Company had total outstanding unclaimed Deposits of Rs, 55,76,684 (including unclaimed deposits). In compliance of the CLB Order, your Company has repaid the entire outstanding deposits on 30th June, 2016.

The details relating to deposits, covered under Chapter V of the Companies Act, 2013 are provided hereunder:

(a) accepted during the year: Nil

(b) remained unpaid or unclaimed as at the end of the year due to pending clearance of cheques including interest: Rs, 55,76,684

(c) whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved:-

(i) at the beginning of the year: Not Applicable

(ii) maximum during the year: Not Applicable

(iii) at the end of the year: Not Applicable

The details of deposits, not in compliance with the requirements of Chapter V of the Act: Nil

PARTICULARS REGARDING THE CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed herewith as Annexure - II forming part of this Report.

PARTICULARS OF EMPLOYEES

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said Rules are provided in the Annual Report, which forms part of this Report.

Disclosure pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annual Report, which forms part of this Report.

Having regard to the provisions of the first proviso to Section 136(1) of the Act, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the Registered Office of the Company during working hours and any member interested in obtaining such information may write to the Secretarial Department of the Company and the same will be furnished on request.

STATUTORY AUDITORS AND AUDITORS'' REPORT

As per provisions of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, M/s. Lodha & Co. and M/s. S.S. Kothari Mehta & Co., having held office as Joint Statutory Auditors for a period of more than ten years prior to the commencement of the Companies Act, 2013, were eligible to be appointed as Joint Statutory Auditors for a period of three more years and were accordingly appointed by the members in the 34th Annual General Meeting of your Company held on 22nd September, 2014 for a period of three consecutive years until the conclusion of the 37th Annual General Meeting of your Company. Accordingly, M/s. Lodha & Co. and M/s. S.S. Kothari Mehta & Co., Chartered Accountants will hold office till the conclusion of the ensuing Annual General Meeting of your Company.

After evaluating the Country''s leading Audit Firms, the Board of Directors has identified and recommended the appointment of Walker Chandiok & Co. LLP, Chartered Accountants as Statutory Auditors of your Company for a period of five consecutive years from the conclusion of 37th Annual General Meeting upto the conclusion of the 42nd Annual General Meeting of your Company, subject to ratification by members at every Annual General Meeting. Walker Chandiok & Co. LLP was established in 1935. It is an independent Indian partnership firm that provides audit, tax and advisory services. It has 43 partners and more than 900 staff out of 12 offices across India. It is registered with the Institute of Chartered Accountants of India as well as the PCAOB (US Public Company Accountancy Oversight Board).

Walker Chandiok & Co. LLP, Chartered Accountants have expressed their willingness to be appointed as Statutory Auditors of the Company. They have further confirmed that the said appointment, if made, would be within the prescribed limits as per the provisions of the Companies Act, 2013 and that they are not disqualified for appointment. Accordingly, requisite resolution for appointment of Walker Chandiok & Co. as Statutory Auditors of your Company is placed for your approval.

The Notes on financial statement referred to in the Auditors'' Report are self-explanatory and do not call for any further comments. The Auditors'' Report does not contain any qualification, reservation or adverse remark.

COST AUDITORS

In accordance with the provisions of Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, your Company is required to get its cost accounting records audited by a Cost Auditor and has accordingly appointed M/s. Ramanath Iyer & Co., Cost Accountants, for this purpose for FY 2017-18. The Cost Auditors’ Report for the FY 2016-17 does not contain any qualification, reservation or adverse remark.

The remuneration of the Cost Auditors shall be placed for ratification by members in terms of Section 148 of the Companies Act, 2013 read with Rule 14 of the Companies (Audit and Auditors) Rules, 2014.

SECRETARIAL AUDITORS

The Board has appointed M/s. Vinod Kothari & Company, Practicing Company Secretaries, to conduct Secretarial Audit for the financial year 2017-18. The Secretarial Audit Report for the financial year ended March 31, 2017 is annexed herewith marked as Annexure - III to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

CORPORATE SOCIAL RESPONSIBILITY

The Corporate Social Responsibility Committee has formulated and recommended to the Board, a Corporate Social Responsibility Policy (“CSR Policy”) indicating the focus areas of Company''s CSR activities.

In line with the CSR philosophy and the focus areas, your Company has planned interventions in the fields of education & vocational training, integrated health care, women empowerment, social projects, rural infrastructure development, environment sustainability, sports, preservation of art and culture. The Disclosure as per Rule 9 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed to this Report at Annexure - IV.

The CSR Policy can be accessed on your Company''s website at the link: http://jslstainless.com/pdf/JSL%20CSR%20Policy.pdf INTERNAL FINANCIAL CONTROLS

Your Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation was observed.

SEXUAL HARASSMENT POLICY

Your Company has in place a policy on prevention of sexual harassment at workplace in accordance with the provisions of Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace Act, 2013. The policy aims at prevention of harassment of employees and lays down the guidelines for identification, reporting and prevention of sexual harassment. There is an Internal Complaints Committee (ICC) which is responsible for redressal of complaints related to sexual harassment and follows the guidelines provided in the policy.

During the year ended 31 st March, 2017, no complaints were received pertaining to sexual harassment.

AUDIT COMMITTEE

The Audit Committee comprises of the following four Directors out of which three are Independent Directors:

SI. No.

Name

Status

Category

1

Mr. Suman Jyoti Khaitan

Chairman

Independent Director

2

Mr. T. S. Bhattacharya

Member

Independent Director

3

Mr. Kanwaljit Singh Thind *

Member

Independent Director

4

Mr. Gautam Kanjilal

Member

Nominee Director, Non-Independent

* Mr. Kanwaljit Singh Thind was inducted as a Member of the Audit Committee w.e.f. 11th May, 2017. Ms. Ishani Chattopadhyay ceased to be a Member of the Audit Committee w.e.f. 9th May 2017.

All the recommendations made by the Audit Committee during the financial year 2016-17 were accepted by the Board.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

The Corporate Social Responsibility Committee comprises of the following three Directors out of which one is Independent Director:

SI. No.

Name

Status

Category

1

Mr. Ratan Jindal

Chairman

Executive, Non Independent

2

Mr. S. Bhattacharya

Member

Executive, Non Independent

3

Mr. T.S. Bhattacharya

Member

Non-Executive, Independent

STOCK EXCHANGES WHERE THE SHARES ARE LISTED

National Stock Exchange of India Ltd., (“NSE”) BSE Ltd.

Exchange Plaza, 5th Floor, Plot No. C/1, Phiroze Jeejeebhoy Towers,

G - Block, Bandra-Kurla Complex, Dalai Street,

Bandra (E),Mumbai - 400 051 Mumbai - 400 001

The annual listing fee was paid to both the stock exchanges. No shares of your Company were delisted during the financial year 2016-17.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return inform MGT9 is annexed herewith as Annexure-V.

NUMBER OF BOARD MEETINGS

The Board of Directors met 5 (five) times during the financial year ended on 31st March, 2017. The details of Board Meetings and the attendance of the Directors are provided in the Corporate Governance Report forming part of this Annual Report.

WHISTLE BLOWER POLICY / VIGIL MECHANISM

Pursuant to the provisions of Section 177(9) of the Companies Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014 and Regulation 22 of the SEBI LODR, your Company has a Vigil Mechanism namely, Whistle Blower Policy for directors, employees and business partners to report genuine concerns about unethical behavior, actual or suspected fraud or violation of your Company''s code of conduct or ethics policy. The Whistle Blower Policy is posted on the website of your Company and can be accessed at the link: http://jslstainless.com/pdf/WB%20Policy.pdf

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS BY THE COMPANY UNDER SECTION 186

The particulars of loans, guarantees or investments by your Company under Section 186 are stated in Notes to Accounts, forming part of this Annual Report.

CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

Particulars of contracts or arrangements entered into by your Company with the related parties referred to in Section 188(1) of the Companies Act, 2013, in prescribed form AOC-2, is attached as Annexure - VI to this Report.

All related party transactions that were entered and executed during the year under review were at arms'' length basis. As per the provisions of Section 188 of the Companies Act, 2013 and Rules made there under read with Regulation 23 of SEBI LODR, your Company had obtained prior approval of the Audit Committee under omnibus approval route and I or under specific agenda before entering into such transactions.

Your Directors draw attention of the members to Note 47 to the financial statements which sets out related party disclosures. The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on your Company''s website at the link: http://jslstainless.com/pdf/Policy%20on%20dealing%20with%20Related%20 Party%20Transactions.pdf In terms of Regulation 23 of the SEBI LODR, all transactions with related parties, which are material in nature, are subject to the approval of the Members of your Company. The requisite resolution in order to comply with the aforesaid requirements of Regulation 23 of SEBI LODR, as detailed at Item No. 7 of the Notice and relevant Explanatory Statement is commended for the members'' approval.

RISK MANAGEMENT

Your Company has laid down procedures to inform Board members about the risk assessment and minimization procedures. These procedures are periodically reviewed to ensure that executive management controls risk through means of a properly defined framework. Your Company has also devised a Risk Management Policy for identification of elements of risks and procedures for reporting the same to the Board.

The change in the nature of business, if any

There has been no change in the nature of Company''s business during the financial year ended on 31st March, 2017.

Material Changes and Commitments, if any, affecting the financial position of the Company.

During the quarter ended 30th June, 2017, your Company has achieved total gross income of Rs, 2,203.86 Crore with EBIDTA of Rs, 250.52 Crore. Your Company incurred earned net profit of Rs, 41.50 Crore during this period.

On 26th May, 2017 the Company has allotted (I) 6,05,70,320 equity shares of Rs, 2 each fully paid up (“Equity Shares”) and (ii) 14,28,30,637- 0.01% Optionally Convertible Redeemable Preference Shares of Rs, 2 each fully paid up (“OCRPS”) to the Lenders of the Company upon conversion of Funded Interest Term Loan I & II at a price of Rs, 39.10 (including premium of Rs, 37.10) per share aggregating to Rs, 236.83 Crore and Rs, 558.47 Crore respectively. The conversion rights of balance FITL into Equity Shares I OCRPS stands lapsed.

Any significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company''s operations in future.

During the financial year there is no such significant material orders passed by the regulators or courts or tribunals impacting the going concern status and Company''s operations in future.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(5) of the Companies Act, 2013 with respect to directors'' responsibility statement, it is hereby confirmed that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 st March, 2017 and of the profit and loss of the Company for the year ended on that date;

(c) the Directors had taken proper and sufficient care 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 Directors had prepared the annual accounts on a going concern basis;

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

CORPORATE GOVERNANCE

A separate section on Corporate Governance and a certificate from the practicing Company Secretary regarding compliance of conditions of Corporate Governance as stipulated under the SEBI LODR, form part of this Annual Report.

ACKNOWLEDGEMENT

Your Directors would like to express their gratitude for the valuable assistance and co-operation received from shareholders, banks, government authorities, customers and vendors. Your Directors also wish to place on record their appreciation for the committed services of all the employees of the Company.

For and on behalf of the Board of Directors

Place : New Delhi Ratan Jindal

Date : 9th August, 2017 Chairman and Managing Director

Source :
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