Electrosteel Steels Limited Unlisted Shares

Annual Report Summary

Vedanta, ESL Steel Limited - Annual Report 2021-2022

This report from ESL Steel Limited (formerly known as Electrosteel Steels Limited), a fully integrated iron and steel manufacturing unit in Bokaro, Jharkhand, covers the company’s performance for the year ending March 31, 2022. It details financial highlights, business operations, and compliance-related information.

Financial Highlights & Business Performance:

• Revenue: Revenue from operations increased to ₹6,59,586.91 lakhs, up from ₹4,77,142.77 lakhs the previous year.
• Production: ESL achieved its highest-ever hot metal production of 1.355 MT, a 5% year-on-year increase, and saleable production of 1.260 MT, a 6% year-on-year increase.
• Profitability: EBITDA margins contracted by 20% year-on-year due to increased Iron Ore and coking coal prices. The company is focused on optimizing costs and improving production efficiency.
• Loss After Tax: The company recorded a Loss after tax of ₹(9,459.19) lakhs.
• EPS: Earnings Per Share was ₹-0.51.
• Cost Optimization: ESL acquired two iron ore mines in Barbil, Odisha to ensure a continuous supply of iron ore and cost optimization. Operations started in Q4 of FY22.

Dividend & Reserves:

• Due to capacity expansion plans, the directors do not recommend any dividend for the financial year ended March 31, 2022.
• No amounts were transferred to reserves during the year.

Equity Share Capital:

• The Authorized Share Capital is INR 1,00,20,00,00,000 divided into 10,02,00,00,000 Equity Shares of INR 10 each.
• The Issued, Subscribed and Paid-Up Share Capital is INR 18,49,03,02,240 divided into 1,84,90,30,224 Equity Shares of INR 10 each fully paid up.

Corporate Structure & Governance:

• Vedanta Limited (VEDL) is the Holding Company, owning 95.49% of ESL Steel Limited's share capital (1,76,55,53,040 shares).
• The Board of Directors consists of Non-Executive Independent Directors, and a Chief Executive Officer & Whole Time Director. The board met six times during FY22. Several committees including the Audit Committee, Nomination and Remuneration Committee, and Stakeholders’ Relationship Committee are constituted.
• Key Managerial Personnel include the CEO, CFO, and Company Secretary.
• The Company has a Corporate Social Responsibility Committee and undertakes CSR initiatives.

Compliance & Risk Management:

• The company complies with relevant rules.
• CRISIL Ratings has upgraded the company's long-term bank facilities rating to 'CRISIL AA' from 'CRISIL AA-' with a 'Stable' outlook. The short-term bank facilities rating is reaffirmed at 'CRISIL A1+'.
• The Directors confirm compliance with Section 134 (5) of the Companies Act, 2013.
• The company has no subsidiary/associate/joint venture.
• Internal financial controls are in place.
• A Risk Management Policy is in place, reviewed by the Audit Committee.

Legal & Regulatory Matters:

• There were significant orders impacting the company's operations including issues related to the Consent to Operate (CTO) and Environmental Clearance (EC). The Supreme Court directed MoEF to process the environmental clearance application of ESL.
• Hon'ble Supreme Court has directed that operation of the steel plant shall not be interfered with on the ground of want of EC, FC, CTE or CTO.
• Hon'ble Supreme Court has passed an order stating that all pre-acquisition liability which is not a part of the resolution plan will stand extinguished.

Other Key Points:

• The company has adopted Schedule IV of the Companies Act, 2013, as criteria for evaluating the performance of Independent Directors.
• COVID-19 relief initiatives were undertaken, including setting up temporary hospitals.
• Details on energy conservation, technology absorption, and foreign exchange earnings/outgo are provided in Annexure A.
• The company has a well-defined Vigil Mechanism/Whistle Blower Policy.
• The company has zero tolerance for sexual harassment at the workplace.
• The company received multiple awards and recognitions during the year.

Financial Statements & Auditors' Report:

• The report includes audited financial statements for the year ended March 31, 2022, and the auditors' report thereon. The auditors draw attention to matters relating to denial of approval for Consent to Operate (CTO) and Environmental Clearance (EC) are pending before Ministry of Environment, Forest and Climate Change (MoEF).

The report concludes with an appreciation note from the Directors to employees, shareholders, customers, and other stakeholders.