Electrosteel Castings Ltd Directors Report

Dear Members,

Your Directors take pleasure in presenting the Sixty Ninth Annual Report together with Audited Annual Financial Statements (including Audited Consolidated Financial Statements) of the Company for the Financial Year ended 31 March, 2024.

FINANCIAL RESULTS (Rs. in Crore)

Particulars	Standalone		Consolidated
	FY 2023-24	FY 2022-23	FY 2023-24	FY 2022-23
Revenue from Operations	6938.01	6916.00	7478.01	7275.51
Earnings Before Interest, Taxes, Depreciation, Amortisation	1245.87	819.04	1280.65	822.49
and Exceptional Item
Less: Finance Costs	201.86	272.24	218.83	285.89
Less: Depreciation and Amortisation Expense	114.32	114.02	124.52	121.20
Profit Before Exceptional Item & Tax	929.69	432.78	937.30	415.40
Less: Exceptional Item	–	–	–	–
Profit / (Loss) Before Tax	929.69	432.78	937.30	415.40
Less: Tax Expense	193.64	98.02	197.15	99.17
Profit / (Loss) After Tax	736.05	334.76	740.15	316.23
Share of Profit / (Loss) in Joint Ventures (Net)	–	–	–	–
Profit / (Loss) After Tax including share of Associate and Joint	736.05	334.76	740.15	316.23
Ventures
Attributable to:
Owners of the Company	–	–	739.89	315.80
Non-Controlling Interest	–	–	0.26	0.43
Other Comprehensive Income (Net of Tax)	(5.20)	(29.16)	(0.25)	(13.67)
Total Comprehensive Income	730.85	305.60	739.90	302.56
Attributable to:
Owners of the Company	–	–	739.64	302.13
Non-Controlling Interest	–	–	0.26	0.43
Opening balance in Retained Earnings	1981.09	1696.19	2038.98	1773.28
Closing Balance in Retained Earnings	2633.47	1981.09	2694.25	2038.98

DIVIDEND

The Directors are pleased to recommend a 3nal dividend of Re. 0.90 per Equity Share of face value of Re. 1 each for the Financial Year ended 31 March, 2024. This dividend is subject to the approval of the Members of the Company, at their ensuing Annual General Meeting (‘AGM). If approved, the total outlay on account of 3nal dividend for the Financial Year 2023-24 would amount to Rs. 55.64 Crore. This is over and above the interim dividend of Re. 0.50 per equity share of face value of Re. 1 each for 3nancial year 2023-24 declared by board of directors in their meeting held on February 08, 2024. On approval of the 3nal dividend, the total outlay on account of 3nal and interim dividend for the Financial Year 2023-24 would amount to Rs. 86.55 crores.

The Company had declared dividend of Re. 0.90 per Equity Share of face value of Re. 1 each for the Financial Year ended 31 March, 2023.

The dividend recommended is in accordance with the Dividend Distribution Policy of the Company. The Dividend Distribution Policy of the Company is uploaded on the Companys website: https://www.electrosteel.com/admin/ pdf/1064444546454-Dividend-Distribution-Policy.pdf .

INVESTOR EDUCATION AND PROTECTION FUND

Transfer of Dividend to Investor Education and Protection Fund

In terms of the provisions of Section 124 of the Companies Act, 2013 (‘Act), read together with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 and amendments thereof (‘IEPF Rules), the Company (ECL) has transferred Rs. 13,65,720 (Rupees Thirteen Lakhs Sixty Five Thousand Seven Hundred and Twenty Only) to the IEPF and the SW unit (erstwhile Srikalahasthi Pipes Limited, which got merged with and into Electrosteel Castings Limited), has transferred Rs. 21,03,115 (Rupees Twenty One Lakhs Three Thousand One Hundred and Fifteen Only) to the IEPF, during the Financial Year 2023-24, being unpaid/unclaimed dividend amounts relating to the Financial Year 2015-16.

Pursuant to the provisions of the IEPF Rules, the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on 31 March, 2023 (as on the date of closure of previous 3nancial year) on the website of the Company (www.electrosteel.com).

Transfer of Shares to the Demat Account of Investor Education and Protection Fund Authority

In terms of the provisions of Section 124(6) of the Act, read with the relevant Rules made thereunder, 1,36,540 Equity Shares of ECL and 21,748 Equity Shares of SW Unit (erstwhile Srikalahasthi Pipes Limited, which got merged with and into Electrosteel Castings Limited), in respect of which dividend was unpaid or unclaimed for the Financial Year 2015-16 and onwards, has been transferred to the Demat Account of the IEPF Authority maintained with National Securities Depository Limited, during the Financial Year 2023-24. Further, the voting rights in respect of shares transferred to the Demat Account of the IEPF Authority shall remain frozen, until the rightful owner claims the shares. Members may note that shares as well as unclaimed dividend transferred to the IEPF Authority can be claimed back. Concerned shareholders are advised to visit http://www.iepf.gov.in/IEPF/refund.html for lodging claim for refund of shares or dividend from the IEPF Authority.

Further, the Company has initiated necessary action for transfer of all shares in respect of which dividend declared for the Financial Year 2015-16 and onwards has not been paid or claimed by the Members for 7 (seven) consecutive years or more. Members are advised to visit the web-link https://www.electrosteel.com/investor/iepf-suspense-account.php.

TRANSFER TO RESERVES

The Company proposes to retain the entire amount of pro3t in the Pro3t & Loss Account.

OPERATIONS

During the year under review, the production of Ductile Iron (DI) Pipes was 744,958 MT, as against 715,129 MT in the previous year. The production of Cast Iron (CI) Pipes was 33,769 MT in 2023-24 as against 26,588 MT in the previous year. During the year Export sales took a hit due to War situations and Economic slowdown in European Union and US. The shortfall in Export was made up by robust demand in domestic market.

The Financial year 2023-24 was another challenging year for our Organisation in the perspective of in3ationary pressure, 3uctuations in bulk raw material market, geopolitical tensions and increase in Repo rate. The Company produced DI Fittings & Accessories of 18,919 MT in 2023-24 as against 20,343 MT in 2022-23. Flanged pipe production started at Haldia location.

MATERIAL CHANGES AND COMMITMENTS

There has been no material changes and commitments a3ecting the 3nancial position of the Company which have occurred between the end of the 3nancial year of the Company to which the 3nancial statements relate and the date of this Report other than as mentioned in the ‘Operations section of this Directors Report.

There has been no change in the nature of the Companys business.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report forms an integral part of this Report and gives details of the industry structure, developments, opportunities, threats, performance and state of a3airs of the Companys business, internal controls and their adequacy, risk management systems including a section on ‘Risk Management and other material developments during the Financial Year 2023-24, and is annexed as Annexure 1.

FUTURE PROSPECTS

India is witnessing an unprecedented era of economic progress and India today is competing with developed economies in the world and its growth is expected to hover around 7-8 per cent for next few years. Regarded as one of the fastest growing major economy, India is thriving hard to achieve the ambition of becoming a $5 trillion economy. A steady growth in Gross Domestic Product has been witnessed for more than two decades, which is continuing. India, home to 16 percent of the worlds population, has only 2.5 percent of the worlds land area and 4 percent of the worlds water resources at its disposal. This is also declining in terms of quantity and quality. Drinking water was once considered safe in India, but today providing nearly 1.40 billion inhabitants with access to safe drinking water is a big challenge. The alarming rate of depleting groundwater sources and rapidly polluting surface water requires immediate and focused attention by all stake holders.

The demand for water has been increasing at a high pace in the past few decades. The sustained economic growth has triggered more industrialisation and rapid urbanisation all over India. With only around 31% of Indias population currently urbanised, along with high population density, Indias urbanisation trends have scope to signi3cantly accelerate and likely to be around 40% by 2030. The rural India still remaining largely uncovered with piped water network alongside only about one-third of the Indian homes are connected with a sewerage network.

SHARE CAPITAL

The Authorised Share Capital of the Company is Rs. 103,02,00,000/- comprising of 103,02,00,000 Equity Shares of Re. 1.00 each. During the year under review, there has been no change in the Authorised Share Capital of the Company. The Issued, Subscribed and Paid-up Share Capital of the Company is Rs. 61,81,84,591/- comprising of 61,81,84,591 Equity Shares of Re. 1.00 each. During the year under review, the Company has not issued shares with di3erential voting rights. It has neither issued employee stock options nor sweat equity shares and does not have any scheme to fund its employees to purchase the shares of the Company. The Company has, on 14 January 2024, issued 2,35,79,344 equity shares to the promoter / promoter group for cash, pursuant to the conversion of 2,35,79,344 Warrants issued by the Company on 27 December, 2022.

CREDIT RATING

During the year, India Ratings and Research (Ind-Ra) has upgraded the Companys Long-Term Issuer Rating to ‘IND AA- from ‘IND A+ and rea3rmed its rating on the short term bank facilities as "IND A1+" with a Stable Outlook. CRISIL Ratings has upgraded the Companys Long-Term Issuer Rating to ‘CRISIL AA-‘ from ‘CRISIL A+ and rea3rmed its rating on the short-term bank facilities as ‘CRISIL A1+ with a Stable Outlook.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS / COURTS / TRIBUNALS (P)

During the year under review, there were no signi3cant or material order passed by the regulators or courts or tribunals impacting the going concern status and the Companys operations in future except as mentioned below.

UV Asset Reconstruction Company Limited (UVARCL) had 3led an application before National Company Law Tribunal (NCLT), Cuttack for initiation of Corporate Insolvency and Resolution Process (CIRP) against the Company at NCLT, Cuttack, although there was no debt due. NCLT, Cuttack registry vide email dated 12 June, 2021 informed the Company about such 3ling. The Company immediately made relevant disclosure to the Stock Exchanges.

UVARCL is assignee to SREI Infrastructure Finance Ltd (SREI), one of the erstwhile lenders of Electrosteel Steels Limited now known as ESL Steel Limited (ESL) to whom the Company mortgaged its Elavur Land for securing debt of ESL. The Company has never extended any Corporate Guarantee for securing such debt, i.e., the Company was acting as third-party security provider to such lender. ESL has been taken over by Vedanta Limited in the Financial year 2018-19 under IBC. As per approved resolution plan of Vedanta, the entire admitted debt of ESL was paid and discharged in the form of cash and allotment of Equity shares of ESL. NCLT, Cuttack vide order dated 24 June, 2022 pronounced its Order in favour of the Company by dismissing the application of UVARCL.

UVARCL 3led an appeal before National Company Law Appellate Tribunal (NCLAT) against NCLT, Cuttack Order. NCLAT vide order dated 24 January, 2024 has upheld the judgment dated 24 June, 2022 of the NCLT, Cuttack Bench. NCLAT Judgement is challenged at Honble Supreme Court and presently pending before Honble Supreme Court. Members attention is invited to Notes on Contingent Liabilities, in the Notes forming part of the Financial Statements.

INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

The Internal Financial Controls with reference to the Financial Statements are considered to be commensurate with the size, scale and nature of the operations of the Company. The system encompasses the major processes to ensure reliability of 3nancial reporting, compliance with policies, procedures, laws, and regulations, safeguarding of assets and economical and e3cient use of resources. There are 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 pre-approved Delegation of Authority (DOA) schedule which is in-built into the SAP system, wherever required. DOA is reviewed periodically by the management and compliance of DOA is regularly checked by the Auditors. The Companys books of accounts are maintained in SAP and transactions are executed through SAP (ERP) setups to ensure correctness/e3ectiveness of all transactions and for integrity and reliability of reporting. There is adequate MIS (Management Information System) which is reviewed periodically by functional heads.

The Internal Auditor of the Company monitors and evaluates the e3cacy and adequacy of internal control system in the Company, its compliance with operating system, accounting procedures and policies at all locations of the Company. The main thrust of internal audit is to test and review controls, appraisal of risks and business processes, besides benchmarking controls with best practices in the industry. Based on the Internal Audit Reports, process owners take corrective actions in their respective areas and thereby strengthen the controls. The Report is presented before the Audit Committee for review at regular intervals.

DETAILS OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

The Audited Annual Consolidated Financial Statements forming part of the Annual Report have been prepared in accordance with the Companies Act, 2013 (‘the Act), applicable Indian Accounting Standards, noti3ed under Section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time.

The Company had the following Subsidiaries and Joint Ventures as on 31 March, 2024:

Sl. No. Name of the Company	Status
1. Electrosteel Europe, S.A.	Subsidiary
2. Electrosteel Castings (UK) Limited	Subsidiary
3. Electrosteel Algerie SPA	Subsidiary
4. Electrosteel USA, LLC and its wholly owned subsidiary, WaterFab LLC, USA	Subsidiary
5. Electrosteel Trading, S.A.	Subsidiary
6. Electrosteel Doha for Trading LLC	Subsidiary
7. Electrosteel Castings Gulf FZE	Subsidiary
8. Electrosteel Bahrain Holding W.L.L. and its wholly owned subsidiary, Electrosteel Bahrain Trading WLL	Subsidiary
9. Electrosteel Brasil Ltda. Tubos e Conexoes Duteis	Subsidiary
10. North Dhadhu Mining Company Private Limited	Joint Venture

Pursuant to a settlement arrived in respect of Companys Joint Venture, Domco Private Limited (DPL) for carrying out mining of Coal in Jharkhand, investment in Equity shares of DPL amounting to Rs. 30.00 lakhs and advance of Rs. 700.00 lakhs given to them, being no longer recoverable, had been written o3. Consequent to the said settlement, Arbitration and other proceedings by or against the Company had been withdrawn and DPL ceases to be a Joint Venture of the Company as noted by the Board of Directors at their meeting held on 9 August, 2023.

A Report on the highlights of the performance of each of the Companys subsidiaries, associates and joint ventures, pursuant to the provisions of Section 134(3) of the Act, read with Rule 8 of the Companies (Accounts) Rules, 2014, is given in Annexure 2 to this Report. The statement containing salient features of 3nancial statements of subsidiaries, associate companies and joint ventures in Form AOC-1, for the Financial Year ended 31 March, 2024, pursuant to the said Section, read with Rule 5 of the said Rules, are given along with the Standalone Financial Statements.

In accordance with Section 136 of the Act, the Audited Financial Statements, including the Consolidated Financial Statements and related information of the Company, and Audited Accounts of each of its subsidiaries are available on the website of the Company, www.electrosteel.com. Members who wish to inspect these documents can send an e-mail to companysecretary@electrosteel.com.

REPORT ON CORPORATE GOVERNANCE

Your Company believes in transparent and ethical corporate governance practices. The Companys approach to Corporate Governance cascades across its business operations and its stakeholders at large to create long term sustainable value. The Company is committed in maintaining the highest standards of Corporate Governance and adheres to the stipulations prescribed under the Listing Regulations. A Report on Corporate Governance for the year under review, along with the Certi3cate from the Auditors con3rming compliance with the conditions of Corporate Governance, is annexed as Annexure 3, forming part of this Report.

MEETINGS OF THE BOARD

During the Financial Year 2023-24, 4 (four) Board Meetings were held, the details of which are provided in the Corporate Governance Report, forming part of this Report and annexed as Annexure 3.

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

The Members of the Company, based on the recommendation of the Nomination and Remuneration Committee and the Board of Directors at their Meeting held on 17 May, 2023, have re-appointed Mr. Uddhav Kejriwal (DIN: 00066077) as a Whole-time Director of the Company, for a second term of 3 (three) consecutive years, with e3ect from 16 June, 2023. Based on the recommendation of the Nomination and Remuneration Committee, the Board of Directors at their Meeting held on 8 February, 2024, considering her expertise and experience in the varied 3elds of marketing, 3nance, management, strategy, global business leadership, etc., re-appointed Dr. Mohua Banerjee (DIN: 08350348) as an Independent Director of the Company, for a second term of 5 (3ve) consecutive years, with e3ect from 8 February, 2024. The said re-appointment of Dr. Mohua Banerjee was approved by the Members of the Company through a Resolution passed by Postal Ballot. On the recommendation of the Nomination and Remuneration Committee of Directors vide their meeting held on 13 May, 2024, the Board of Directors, at their meeting held on 13 May 2024, taking into account his integrity, expertise and experience appointed Dr. Ajay Kumar (DIN: 01975789) as an Additional Director (Non-Executive and Independent) and an Independent Director of the Company with e3ect from 13 May, 2024, for a term of 5 (3ve) consecutive years, subject to approval of appointment and regularisation by the Shareholders of the Company. Dr. Ajay Kumar had joined the Indian Administrative Service in 1985. He was a PhD in Business Administration from the Carlson School of Management, University of Minnesota. He also had M.S. in Applied Economics from the University of Minnesota. He did his B. Tech in Electrical Engineering from the Indian Institute of Technology (IIT), Kanpur. Dr. Kumar had served as Defence Secretary during the crucial period between August 2019 and October 2022. He was the longest serving Secretary in Ministry of Defence, where he also served as Secretary in Department of Defence Production. Dr. Kumar is currently a distinguished Visiting Professor at IIT Kanpur and a non-resident Senior Fellow at Carnegie India. He was also Founder Chairman of Mounttech Growth Fund, a AIF Category – II Venture Fund. He had a monthly editorial in Business Standard titled "O3 the Grid" in the areas of defence, strategy, technology and policy. He was also mentoring start-ups and industry in 3elds of technology and defence.

Mrs. Nityangi Kejriwal Jaiswal (DIN: 07129444) and Mr. Madhav Kejriwal (DIN: 07293471) retire by rotation at the forthcoming AGM and being eligible, have o3ered themselves for re-appointment.

In compliance with Regulation 36(3) of the Listing Regulations and Secretarial Standard-2 on General Meetings, brief resume and other information of all the Directors proposed to be re-appointed are given in the Notice of the forthcoming AGM.

There were no other changes in the Board and the Key Managerial Personnel during the year.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134 of the Act, the Directors state that: a) in the preparation of annual accounts for the Financial Year ended 31 March, 2024, the applicable accounting standards have been followed and there were no material departures requiring any explanation; b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of a3airs of the Company at the end of the Financial Year and of the pro3t of the Company for that period; c) they have taken proper and su3cient 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 have prepared the annual accounts on a ‘going concern basis;

7 e) they have laid down internal 3nancial controls to be followed by the Company and such internal 3nancial controls are adequate and are operating e3ectively; and f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating e3ectively.

INDEPENDENT DIRECTORS

Declaration by Independent Directors

Mr. Pradip Kumar Khaitan, Mr. Binod Kumar Khaitan, Mr. Amrendra Prasad Verma, Dr. Mohua Banerjee, Mr. Rajkumar Khanna, Mr. B K Choudhury, Mr. Vyas Mitre Ralli, Mr. Virendra Sinha and Mr. Jinendra Kumar Jain, Independent Directors, have given declarations that they meet the criteria of independence as laid down in the Act and the Listing Regulations. Further, in terms of Rule 8(5)(iiia) of the Companies (Accounts) Rules, 2014, as amended, the Board of Directors state that in the opinion of the Board, Dr. Mohua Banerjee, whose re-appointment as Independent Director of the Company has been approved by the Shareholders during the year, is a person of integrity and possesses relevant expertise and experience.

DETAILS OF BOARD COMMITTEES AND ADOPTION OF POLICIES

There are 7 Board Committees as on 31 March, 2024, viz., Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee, Corporate Social Responsibility Committee, Risk Management Committee, Banking and Authorisation Committee and Governance Committee.

The details of composition, terms of reference and meetings held and attended by the Committee members of Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee, Corporate Social Responsibility Committee and Risk Management Committee are provided in the Corporate Governance Report, annexed as Annexure 3 to this Report.

The Banking and Authorisation Committee comprised of Mr. Binod Kumar Khaitan as the Chairman, with Mr. Mayank Kejriwal, Mr. Uddhav Kejriwal and Mr. Ashutosh Agarwal as its members as on 31 March 2024. The terms of reference for the Committee include taking various decisions pertaining to the opening or closing of bank and demat accounts of the Company, change in authorised signatories for operation of di3erent bank and demat accounts, subscribing/ purchasing/selling/dealing in securities of Companies other than related parties and availing broking services, making loans from time to time to Subsidiary Companies/Joint Ventures/Associates for its working capital requirement, giving guarantee or providing security to any bank in connection with fund based/non-fund based facilities including loan(s) made to Subsidiary Company/Joint Venture/Associate Company by such bank and any other work related to day-to-day operations of the Company.

The Governance Committee comprised of Mr. Binod Kumar Khaitan as the Chairman, with Mr. Sunil Katial and Dr. Mohua Banerjee, as its members as on 31 March, 2024. The terms of reference for the Committee, inter-alia, include formulating a governance policy and recommending it to the Board for approval, assisting the Board in its ongoing oversight of the quality of governance in the Company and its subsidiaries, monitoring the developments in governance practices of the Company and its subsidiaries and report appropriately to the Board, with recommendations, advising the Board or any Committees of the Board of any corporate governance issues in the Company and its subsidiaries, which the Committee determines has a negative impact on the Companys ability to safeguard or improve shareholder value and carrying out any other function as is decided by the Board of Directors of the Company from time to time.

There have been no instances where the Board has not accepted the recommendations of any of its committees.

Vigil Mechanism Policy

The Company has adopted Whistle Blower Policy and established a Vigil Mechanism in compliance with provisions of the Act and the Listing Regulations for the Directors and employees to report genuine concerns and grievances and leak/suspected leak of Unpublished Price Sensitive Information. This mechanism provides adequate safeguards against victimisation of employees and Directors and also provides for direct access to the Chairperson of the Audit Committee. The Company oversees the vigil mechanism through the Audit Committee of the Company. The said Policy is available at the Companys website and can be accessed at https://www.electrosteel.com/admin/pdf/1613636847Vigil-Mechanism-Whistle-Blower-Policy.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 Regulation 19 of the Listing Regulations, read with Part D of Schedule II thereto. The Policy governs the criteria for determining quali3cations, positive attributes and independence of a Director and lays down the remuneration principles for Directors, Key Managerial Personnel and other employees. The Policy aims to enable the Company to attract, retain and motivate highly quali3ed members for the Board, Key Managerial Personnel (KMP) and other employees. It enables the Company to provide a well-balanced and performance-related compensation package, taking into account shareholder interests, industry standards and relevant Indian corporate regulations. The policy ensures that the interests of Board members, KMP & employees are aligned with the business strategy and risk tolerance, objectives, values and long-term interests of the Company and will be consistent with the "pay-for-performance" principle and the remuneration to directors, KMP and employees and involve a balance between 3xed and incentive pay re3ecting short and long-term performance objectives appropriate to the working of the Company and its goals. The policy lays down the procedure for the selection and appointment of Board Members and KMP and also the appointment of executives other than Board Members, compensation structure for Executive Directors, Non-Executive Directors, KMP and other employees.

The Nomination and Remuneration Policy is available at the Companys website and can be accessed at https://www. electrosteel.com/admin/pdf/1608020082nominationRemunerationPolicy.pdf.

Corporate Social Responsibility Policy

In accordance with the requirements of Section 135 of the Act, read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, the Company has a Corporate Social Responsibility (‘CSR) Committee in place. The CSR Committee has formulated and recommended to the Board, the Corporate Social Responsibility Policy of the Company which has been approved by the Board. The Annual Report on CSR activities/initiatives which includes the contents of the CSR Policy, composition of the Committee and other particulars as speci3ed in Section 135 of the Act, read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, are disclosed in Annexure 4 to this Report.

Policy on Board Diversity and Succession Planning for the Board of Directors and Senior Management

A Policy on Board Diversity and Succession Planning for the Board of Directors and Senior Management as devised by the Nomination and Remuneration Committee is in place, to ensure adequate diversity in the Board of Directors of the Company and for orderly succession for appointments on the Board of Directors and Senior Management.

FORMAL ANNUAL EVALUATION OF PERFORMANCE

The Nomination and Remuneration Committee of the Board has formulated and laid down Criteria and Manner for Evaluation of Performance of the Board, its Committees and individual Directors pursuant to provisions of Section 178 of the Act and Listing Regulations. As per requirements of Section 134 of the Act, the manner in which formal annual evaluation has been made is disclosed below –A. The Board evaluated the roles, functions and duties performed by the Independent Directors (IDs) of the Company. Each ID was evaluated by all other Directors but not by the Director being evaluated. The Board also reviewed the manner in which IDs follow guidelines of professional conduct as speci3ed in Schedule IV to the Act. The adherence to Section 149 of the Act, the aforesaid Schedule IV, the Listing Regulations and other applicable provisions of law by the IDs were also reviewed by the Board.

B. Performance review of all the Non-Independent Directors of the Company was made on the basis of the activities undertaken by them, expectations of Board, level of participation, roles played by them, leadership qualities and their overall performance and contribution in the development and growth of the business and operations of the Company.

C. The Board evaluated the performance of its Committees on the basis of the processes and procedures followed by them for discharging their functions & duties as per their respective terms of references and as assigned by the Board and laws applicable, their independence from the Board and on the e3ectiveness of the suggestions and recommendations made by them to the Board. The Board observed the size, structure and expertise of the Committees to be appropriate and in compliance with the Act and the Listing Regulations.

D. The Board evaluated its own performance on the basis of its composition having the right mix of knowledge, skills and expertise required to drive organisational performance and conduct of its a3airs e3ectively, monitoring of Companys performance along with the ability to understand and deal with factors having a signi3cant bearing, developing suitable strategies and business plans at appropriate time and monitoring its e3ectiveness, implementation of policies and procedures for proper functioning of the Company, frequency of its meetings, e3orts made by the Board Members to keep themselves updated with the latest developments in areas.

The evaluation of performance of Board, its Committees and of individual Directors was found to be highly satisfactory. Meeting of Independent Directors: The Independent Directors of the Company have on 8 February, 2024 held a separate meeting without the attendance of Non-Independent Directors and members of the 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 the Listing Regulations.

DISCLOSURE RELATING TO REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL (‘KMP) 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 [including any statutory modi3cation(s) or re-enactment(s) thereof, for the time being in force] (the Rules) are provided in Annexure 5A to this Report. However, as per the provisions of Section 136 of the Act, the Reports and Accounts for the Financial Year 2023-24 are being sent to the Members and others entitled thereto, excluding this statement. The said statement is available for inspection by the members at the Registered O3ce of the Company during business hours on working days up to the date of the ensuing Annual General Meeting. If any member is interested in obtaining a copy thereof, such member may write to the Company Secretary, whereupon a copy would be sent.

The disclosures as required under Section 197(12) of the Act, read with Rule 5(1) of the Rules are provided in Annexure 5B to this Report.

AUDITORS AND AUDITORS REPORT

M/s. Lodha & Co. LLP, Chartered Accountants (Firm Registration Number: 301051E/E300284), were appointed as the Statutory Auditors of the Company to hold o3ce from the conclusion of the 67th Annual General Meeting (‘AGM) till the conclusion of the 72nd AGM of the Company.

The para wise responses of the management to the opinion/remarks/observations made in the Independent Auditors

Report on the 3nancial statements of the Company for the year ended 31 March, 2024 are given below:

1. As regards the Quali3ed Opinion expressed by the Auditors in their Report under para (a) under the head ‘Basis for Quali3ed Opinion and its consequential references made in para nos. 2 (d), (e), (g) and 3 (i) under the head ‘Report on Other Legal and Regulatory Requirements of their Report and para (I)(b) and (II)(a) of the Annexure A to the Auditors Report of even date, attention is drawn to Note no. 49(a) of the Standalone Financial Statements, which are self-explanatory; and

2. With respect to the Quali3ed Opinion expressed by the Auditors in their Report under para (b) under the head ‘Basis for Quali3ed Opinion, attention is drawn to Note no. 9.1 of the Standalone Financial Statement, which are self-explanatory; and

3. On the Auditors observation made in para (I)(a) of the Annexure A to the Auditors Report of even date, your Directors wish to inform that all necessary steps are being taken to regularise the maintenance of proper records for furniture and 3xtures.

During the year under review, the Auditors had not reported any fraud under Section 143(12) of the Act, therefore, no detail is required to be disclosed under Section 134(3)(ca) of the Act.

MAINTENANCE OF COST RECORDS AND AUDIT THEREOF

The Company is required to maintain cost records for Pig Iron, DI Pipe, DI Fittings, CI Pipe, Coke, Sponge Iron, Power Generating units and Ferro Alloy Products – Prime Si. Mn and Prime Ferro Silicon for every Financial Year, as speci3ed by the Central Government under Section 148(1) of the Act, and accordingly, such accounts and records are made and maintained in the prescribed manner. Further, pursuant to Section 148 of the Act, read together with the Companies (Cost Records and Audit) Rules, 2014, as amended, the Company is required to carry out audit of the cost accounting records of the Company. M/s. S G & Associates (Firm Registration Number: 000138), Cost Accountants, and M/s. Narasimha Murthy & Co., Cost Accountants (Firm Registration Number: 000042) were appointed as the joint Cost Auditors of the Company for Financial Year 2023-24.

The Cost Audit Report for the Financial Year 2022-23 was 3led on 7 September, 2023.

For Financial Year 2024-25, M/s. S G & Associates, Cost Accountants, and M/s. Narasimha Murthy & Co., Cost Accountants have been re-appointed as joint Cost Auditors for all the applicable units and products of the Company. The remuneration proposed to be paid to them for the Financial Year 2024-25 requires rati3cation of the shareholders of the Company. In view of this, the rati3cation for payment of remuneration to the Cost Auditors is being sought at the ensuing AGM

SECRETARIAL AUDITOR

In terms of Section 204 of the Act and Rules framed thereunder, M/s MKB & Associates., Company Secretaries, were appointed to conduct the Secretarial Audit of the Company for the Financial Year 2023-24. The report of the Secretarial Auditor is annexed as Annexure 6 to this Report. The Secretarial Audit Report does not contain any quali3cation, reservation or adverse remark.

INTERNAL AUDITOR

In terms of the provisions of Section 138 of the Act, M/s. Chaturvedi & Co. were appointed as the Internal Auditor of the Company for the Financial Year 2023-24. The Audit Committee, in consultation with the Internal Auditor, formulates the scope, functioning, periodicity and methodology for conducting the Internal Audit. The Audit Committee, inter-alia, reviews the Internal Audit Reports.

The Board of Directors of the Company, at their Meeting held on 13 May, 2024 have re-appointed M/s Chaturvedi & Co. as the Internal Auditor of the Company for the Financial Year 2024-25 on the recommendation of the Audit Committee of

Directors of the Company under the provisions of Section 138 of the Companies Act, 2013.

PUBLIC DEPOSITS

During the Financial Year 2023-24, the 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, guarantees and investments covered under the provisions of Section 186 of the Act are given in Note no. 56.1 to the Standalone Financial Statements of the Company.

ANNUAL RETURN

Pursuant to Section 92(3), read with Section 134(3)(a), of the Act, a copy of the Annual Return of the Company as on the Financial Year ended 31 March, 2023, in Form No. MGT-7, can be accessed on the website of the Company, at https://www. electrosteel.com/investor/shareholder-information-annual-return.php Further, pursuant to Section 92(3) of the Act, the Annual Return of the Company as on the Financial Year ended 31 March, 2024, is uploaded on the website of the Company, at https://www.electrosteel.com/investor/shareholder-information-annual-return.php

BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT

The Business Responsibility & Sustainability Report as per Regulation 34 of the Listing Regulations, detailing the various initiatives taken by the Company on the environmental, social and governance front, is annexed as Annexure 7 to this Report.

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 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. In compliance with the provisions of the said Act, an Internal Complaints Committee is in place to redress complaints received regarding sexual harassment. The Company has not received any complaint of sexual harassment during the Financial Year 2023-24.

RELATED PARTY TRANSACTIONS

The Company has entered into contracts/arrangements with the related parties during the Financial Year 2023-24, which were in the ordinary course of business and on arms length basis. Thus, provisions of Section 188(1) of the Act were not applicable on the Company and the disclosure in Form AOC-2 is not required. However, your attention is drawn to the Related Party disclosure in Note no. 56 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 electrosteel.com/admin/pdf/1608020034Related-Party-Transaction-Policy.pdf. The Related Party Transactions, wherever necessary, are carried out by the Company as per this Policy.

There were no materially signi3cant related party transactions entered into by the Company during the year, which may have a potential con3ict with the interest of the Company at large.

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 e3ect on the business objectives and enhance Companys competitive advantage. The key business risks identi3ed 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 and evaluates the risk management systems of the Company, periodically. A statement indicating development and implementation of Risk Management Policy for the Company including identi3cation 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 of the Act, read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed as Annexure 8 and forms a part of this Report.

DISCLOSURE ON THE COMPLIANCE OF SECRETARIAL STANDARDS

The Company is compliant with the Secretarial Standards issued by the Institute of Company Secretaries of India on Meetings of the Board of Directors (SS-1) and General Meetings (SS-2).

OTHER DISCLOSURES

During the year under review: i) The Company had not entered into any one-time settlement with any Bank or any Financial Institution. ii) Pursuant to a settlement arrived in respect of Companys Joint Venture, Domco Private Limited (DPL) for carrying out mining of Coal in Jharkhand, investment in Equity shares of DPL amounting to Rs. 30.00 lakhs and advance of Rs. 700.00 lakhs given to them, being no longer recoverable, had been written o3. Consequent to the said settlement, Arbitration and other proceedings by or against the Company had been withdrawn and DPL ceases to be a Joint Venture of the Company as noted by the Board of Directors at their meeting held on 9 August, 2023. iii) The Board of Directors at their meeting held on 9 November 2023 had approved the proposal for setting up of a 12 TPD Rubber Gasket Plant at Punganur, Chittor District, Andhra Pradesh. iv) The Company carried out repairs and maintenance of its Blast Furnace at its Khardah Unit from 24.11.2023 to 16.01.2024. v) The Board of Directors, at their meeting held on 13 May 2024, had approved the capacity enhancement of DI Pipe production plant from 5.5 Lakh Tonnes Per Annum (LTPA) to 6.5 LTPA in its Srikalahasthi Works. vi) The Board of Directors, at their meeting held on 13 May 2024, had approved the proposal for setting up a Ductile Iron Pipes & Fittings Plant in Odisha and for the purpose, to acquire approx. 500 acres of land parcel which would result in increase in capacity of the unit in phases.

ACKNOWLEDGEMENT

Your Directors record their sincere appreciation for the assistance and co-operation received from the banks, 3nancial 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 Companys executives, sta3 and workers.