Electrosteel Steels Limited Unlisted Shares

Annual Report Summary

ESL Steel Limited 2023-2024 Annual Report Summary:

The Board of Directors presents the company's 17th Annual Report for the year ended March 31, 2024. ESL Steel Limited, formerly known as Electrosteel Steels Limited, operates as a fully integrated iron and steel manufacturing unit in Bokaro, Jharkhand, with a current capacity of 1.7 MTPA hot metal production and plans for expansion to 3 MTPA. The company manufactures billets, TMT bars, wire rods, and ductile iron (DI) pipes, and also produces metallurgical coke, sinter, and power for its own use.

Financial Performance:

• Revenue from operations increased to INR 8,50,811.78 Lakhs from INR 7,97,757.92 Lakhs.
• Finance costs were INR 43,161.44 Lakhs, up from INR 37,605.47 Lakhs.
• The company incurred a loss after tax of INR (96,756.82) Lakhs compared to a loss of INR (55,790.59) Lakhs in the previous year.
• EPS (Basic & Diluted) was INR -5.23 compared to INR -3.02.
• Achieved highest ever hot metal production of 1.473 MT, up 8% Y-O-Y, and highest ever saleable production of 1.386 MT, up by 8% Y-O-Y. However, EBITDA margins contracted by 32% Y-O-Y, primarily due to declining market prices for long products and commodity price volatility.

Business Updates:

• Cost optimization efforts are ongoing.
• Mines acquired in earlier years have been ramped up In FY2024, producing 5.4 MT and dispatching 5 MT, ensuring raw material security.
• The management expresses their inability to declare any dividend for the financial year ended 31st March 2024 due to losses.

Equity Share Capital:

• Authorized Share Capital: INR 1,00,20,00,00,000 divided into 10,02,00,00,000 Equity Shares of INR 10 each.
• Issued, Subscribed, and Paid-Up Share Capital: INR 18,49,03,02,240 divided into 1,84,90,30,224 Equity Shares of INR 10 each fully paid up.
• Vedanta Limited (VEDL) is the 'Holding Company', holding 95.49% of the share capital.

Corporate Governance and Compliance:

• Board of Directors includes Mr. Arun Misra, Mr. Thomas Mathew T, Mr. Subodh Kumar Rai, Ms. Poovannan Sumathi, and Mr. Ashish Kumar Gupta.
• Board met 8 times during FY 2023-24.
• Audit Committee, Nomination & Remuneration Committee, Stakeholders' Relationship Committee, and Corporate Social Responsibility Committee are constituted as per the Companies Act, 2013.
• Mr. Thomas Mathew T will be reappointed for a second term of 2 years as an Additional Director (Non-Executive Independent) with effect from 15th June 2024. Mr. Subodh Kumar Rai will be reappointed for a second term.
• The company has received declarations of independence from all Independent Directors.
• The company has a Risk Management Policy and a Corporate Social Responsibility Policy.
• The Secretarial Audit Report does not contain any qualification, reservation, or adverse remark.
• All related party transactions entered during the year 2023-24 have been placed on quarterly basis before the Audit Committee/Board.
• The Company has zero tolerance for sexual harassment at workplace.

Legal and Regulatory Matters:

• The Company's Consent to Operate (CTO) and Environment Clearance (EC) are pending before Ministry of Environment, Forest and Climate Change (MoEF). The Supreme Court has directed that the plant's operation should not be interfered with due to the lack of EC, FC, CTE or CTO.
• The State government of Odisha has issued demand notices for alleged shortfall on minimum dispatch and production requirements. The Company has filed Revision Application contesting the demand.
• Resolution plan submitted by Vedanta Limited for acquisition of Electrosteel Limited specified NIL payment to the Operational Creditors. Subsequently NCLT directed CoC for reconsideration.
• CRISIL Ratings has updated its rating on the long-term bank facilities to 'CRISIL AA-' from 'CRISIL AA'. The rating on the short-term bank facilities has been reaffirmed at 'CRISIL A1+'

Other Key Points:

• No amounts have been transferred to the Reserve during the year under review.
• The Company has not provided any Stock Option Scheme to the employees.
• Company has a well-documented Standard Operating Procedures (SOP).
• The Company has zero tolerance for sexual harassment at workplace. Two complaints were received during the financial year 2023-24 and have been duly resolved.
• The company has developed Miyawaki Forestry, covering 2.63 acres with over 53,000 saplings, and planted an additional 82,000 trees. The company is also committed to resource efficiency and has achieved 100% utilization of blast furnace slag, fly ash, and bed ash, and installed a dust analyzer in its Sinter plant to monitor and control emissions.
• The company is focused on the Capital Expenditure requirement for energy saving equipment, during FY 24 the company has incurred 24 lacs as expenditure towards Capital investment for Energy Conservation Equipment.
• The information related to conservation of energy, technology absorption, foreign exchange earnings and outgo is enclosed as “Annexure A"

Annexure A provides details on energy conservation, including thermography audits, compressor optimization, PLC logic control, compressed air consumption reduction, capacitor bank commissioning, and LED light replacement. The company is planning in-house Solar Renewable Energy Generating Project of 1.5 MWp. They submitted their willingness form to Bureau of Energy Efficiency for financing scheme of energy saving project. The annexure also provides details on technology absorption, noting computer vision based APS at Blast Furnace led to fuel rate reductions. Furthermore, it presents the foreign exchange earnings and outgo for FY 2023-2024, with foreign exchange income at INR 16233.41 Lakh and net foreign exchange outgo at INR 46810.86 Lakh. The report concludes with annexures detailing the auditor's responsibilities, lists of documents reviewed, and details of the financial statements.