DIRECTORS’ REPORT

To the Members,

Bhushan Steel Limited

The Reconstituted Board of Directors presents to the Members the 35th Annual Report of the Company, which includes the Directors’ Report (“Annual Report”).

In accordance with the applicable provisions of the Insolvency and Bankruptcy Code 2016 (“IBC/Code”), the Corporate Insolvency Resolution Process (“CIRP Process”) of Bhushan Steel Limited (“Company”) was initiated by the Financial Creditors of the Company. The Financial Creditors petition to initiate the CIRP Process was admitted by the National Company Law Tribunal (“NCLT”) on July 26, 2017 (“Insolvency Commencement Date”). Mr. VijayKumar V. Iyer was appointed as the Interim Resolution Professional (“IRP”) to manage the affairs of the Company. Subsequently, Mr. Iyer was confirmed as the Resolution Professional (“RP”) by the committee of creditors (“CoC”). On appointment of the IRP/RP, the powers of the Board of Directors of the Company were suspended.

The RP invited expressions of interest and submission of a resolution plan in accordance with the provisions of the Code. Of the various resolution plans submitted, the CoC approved the resolution plan submitted by Tata Steel Limited (“TSL”). The RP submitted the CoC approved resolution plan to the NCLT on March 23, 2018 for its approval and the NCLT approved the resolution plan submitted by TSL and approved by the CoC (“Approved Resolution Plan”), on May 15, 2018 (“IBC/NCLT Order”). Pursuant to the NCLT order, TSL acquired the shares of the Company through its wholly-owned subsidiary, Bamnipal Steel Limited, on May 18, 2018 (“Acquisition”). Post the Acquisition, a new Board was constituted in the current financial year i.e. on May 18, 2018 (“Reconstituted Board” or “Board”) and a new management was put in place. In accordance with the provisions of the Code and the NCLT order, the approved resolution plan is binding on the Company and its employees, members, creditors, guarantors and other stakeholders involved.

Members may kindly note that, the Directors of the Reconstituted Board (“Directors”) were not in office for the period to which this report primarily pertains. During the CIRP Process (i.e. between July 26, 2017 to May 15, 2018), the RP was entrusted with the management of the affairs of the Company. Prior to the Insolvency Commencement Date, the erstwhile Board of Directors had the oversight on the management of the affairs of the Company. The Reconstituted Board is submitting this report in compliance with the provisions of the Companies Act, 2013, the rules and regulations framed thereunder (“Act”) and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015 (“Listing Regulations”). The Reconstituted Board is not to be considered responsible to discharge fiduciary duties with respect to the oversight on financial and operational health of the Company and performance of the management for the period prior to the Acquisition.

IBC is a new legislation in India and the Approved Resolution Plan of the Company is amongst the first such resolution plan approved under the IBC. Members are requested to read this report in light of the fact that the Reconstituted Board and the new management is currently implementing the resolution plan.

A.FINANCIAL RESULTS

Rs. Crore

Notes: The exceptional items include:

 (i) Provision for impairment on non-current assets includes non- cash write down of fixed assets, Capital Work in Progress (CWIP) Rs. 19,112.80 crore, Provision for MAT credit Rs. 806.06 crore, provision for impairment of investment in associate companies Bhushan Energy Limited and others Rs. 368.81 crore, provision for certain non-current advances Rs. 471.36 crore. The previous year provision of Rs. 6.69 crore relates to provision on account of investment exposure in joint venture with Andal East Coal Company Pvt. Ltd.

  (ii) Provision for impairment of finance assets of Rs. 34 crore represents impairment of coal block advances paid towards acquisition of de-allocated coal mine of Rs. 148.34 crore and provision for security deposits paid to Bhushan Energy limited of Rs. 90 crore.

  (iii) Other exceptional items for the year ended March 31, 2018 include prior period items of Rs. 2,019.91 crore comprising of the following:

  a) Amortisation of leasehold land accounted as operating lease - The Company has taken land properties on operating lease in previous years, which earlier were accounted as finance Upon change in their classification as operating lease, the cumulative effect of amortisation from inception until previous year ended March 31, 2017 has been recognised in current year’s profit or loss in ‘exceptional items’.

  b) Accounting effect of oxygen plant accounted as finance lease - The Company entered into sale and leaseback arrangement for oxygen plant in  earlier  years  (under the erstwhile management) which was accounted as operating However, the terms of the lease require such arrangement to be classified as finance lease. Consequently, the asset has been recognised with corresponding finance lease obligation. Cumulative effect of reversal  of operating  lease rentals and  booking of depreciation and finance cost from inception until previous year ended March 31, 2017 has been recognised in current year’s profit or loss in ‘exceptional items’.

 (iv) Post the Acquisition, pursuant to the Approved Resolution Plan, the new management has with effect from May 18, 2018 taken complete control of the operations of the Further, the effect of the Approved Resolution Plan on the financial statements (standalone and  consolidated)  of  the  Company for the quarter and year ended March 31, 2018 had to be carefully assessed in order to prepare the financial statements in a manner such that as far as reasonably possible, the said financial statements present a true and fair view for the quarter and year ended March 31, 2018. It is for these reasons, that the financial statements were approved by the Audit Committee and adopted by the Board of Directors as of date. Considering the extra-ordinary situation under which the financial statements for the quarter and year ended March 31, 2018 was prepared, the Company made an application to the Securities and Exchange Board of India (“SEBI”) seeking extension of time to file the financial results. However, the request was not acceded to by SEBI.

B. FINANCIAL PERFORMANCE AND STATE OF AFFAIRS

During the year, the total turnover from operations was Rs. 17,404.43 crore. The increase in turnover was mainly due to increase in sales volume and increase in average realizations. During the year, the company recorded a net loss of Rs. 24,813.47 crore (previous year: Net Loss was Rs. 3,501.12 crore). The increase in loss is primarily due to higher exceptional charges over previous year. The basic and diluted earnings per share for financial year 2017 – 18 were at (Rs. 1,095.45).

In accordance with the provisions of the Insolvency and Bankruptcy Code, the Company was admitted to the CIRP Process pursuant to the order of the NCLT on July 26, 2017. Pursuant to the IBC Order dated May 15, 2018, shares of the Company have been acquired by Bamnipal Steel Limited, a wholly-owned subsidiary of TSL. It is to be noted that during the CIRP Process (i.e. between July 26, 2017 to May 15, 2018), RP and prior to the Insolvency Commencement Date, the erstwhile Board of Directors were entrusted with and responsible for the management of the affairs of the Company.

C. DIVIDEND

In view of the net loss incurred during the financial year ended March 31, 2018, the Reconstituted Board does not recommend any dividend to the shareholders of the Company.

D. TRANSFER TO RESERVES

In view of the losses incurred by the Company, no amount has been transferred to reserves.

E. CAPEX AND LIQUIDITY

During the year, the Company has spent Rs. 314 crore on capital projects, largely towards balancing facilities and essential sustenance capital projects.

As on March 31, 2018, the liquidity position of the Company was Rs. 492 crore (excluding FD under Lien of Rs. 426 crore for LC opening) as against Rs. 129 crore as on March 31, 2017 (excluding FD under Lien of Rs. 26 crore).

During the year under review, the banking facilities of the company were frozen and no headroom was available as the Company was admitted to the CIRP Process.

F. MATERIAL CHANGES POST CLOSURE OF FINANCIAL YEAR

Pursuant to the Acquisition, the following key events took place in the Company:

 (i) Increase in Authorized Capital of the Company

Pursuant to the NCLT order, the Board approved the increase in authorized capital of the Company from Rs. 300 crore (Rupees Three Hundred Crore) consisting of 40,00,00,000 (Forty Crore) equity shares of Rs. 2/- each and 2,20,00,000 (Two Crore Twenty Lakh) preference shares of Rs. 100/- each to Rs. 9,520 crore (Rupees Nine Thousand Five Hundred Twenty Crore) consisting of 4650,00,00,000 (Four Thousand Six Hundred Fifty crore) equity shares of Rs. 2/- each and 2,20,00,000 (Two Crore Twenty Lakh) preference shares of Rs. 100/- each.

 (ii) Acquisition of control of the Company by Bamnipal Steel Limited

Pursuant to the NCLT order and approved resolution plan, on May 18, 2018, 79,44,28,986 (Seventy Nine Crore Forty Four Lakhs Twenty Eight Thousand Nine Hundred and Eighty Six) equity shares at Rs. 2/- per share for cash was allotted to Bamnipal Steel Limited (“Bamnipal”), a wholly owned subsidiary of TSL. Pursuant to the allotment, Bamnipal holds 72.65% of the paid-up capital of the Company and has been classified as the promoter of the Company. Further, the erstwhile Promoters have been re-classified as retail shareholders.

 (iii) Allotment of equity shares to eligible financial creditors

Pursuant to the NCLT order and Approved Resolution Plan, on May 18, 2018, 7,24,96,036 (Seven Crore Twenty Four Lakh Ninety Six Thousand and Thirty Six) equity shares at Rs. 2/- per share were allotted to eligible financial creditors on conversion of their existing loan to the extent of the shares allotted to them.

Further debts of  eligible  financial  creditors  were  also  paid (Rs. 35,200 crore) in the manner provided in the Approved Resolution Plan.

 (iv) Reconstitution of the Board of Directors

Consequent to the NCLT Order dated May 15, 2018, all the Directors as of the date of the order were deemed to have vacated/resigned from their office. Post the  Acquisition,  a new Board was constituted on May 18, 2018 consisting of Mr. Krishnava Dutt as Additional Director (Independent), Mr. Anand Sen, Mr. Shuva Mandal, Mr. Dibyendu Dutta as Additional Directors (Non-Executive) and Mr. Rajeev Singhal as Additional Director (Executive). Mr. Krishnava Dutt has been appointed for a period of 5 (five) years effective May 18, 2018.

On June 7, 2018, the Board appointed Ms. Neera Saggi and Mr. Shashi Kant Maudgal as Additional Directors (Independent) for a period of 5 (five) years.

On July 11, 2018, the Board appointed Mr. T.V. Narendran and Mr. Koushik Chatterjee as Additional (Non-Executive) Directors. Mr. Shuva Mandal and Mr. Dibyendu Dutta resigned as Members of the Board effective July 12, 2018.

On August 9, 2018, the Board appointed Mr. Srikumar Menon as Additional Director (Independent) for a period of 5 (five) years.

The approval of the shareholders for appointment of all Directors except Mr. Srikumar Menon was obtained through postal ballot. The results of the postal ballot were declared on August 21, 2018.

 (v) Key Managerial Personnel.

Mr. Nittin Johari resigned as the Chief Financial Officer of the Company effective May 18, 2018.

Mr. Neeraj Singal ceased to be the Managing Director effective May 18, 2018. Pursuant to the Acquisition, the Board appointed Mr. Rajeev Singhal as Managing Director of the Company for a period of 3 (three) years effective May 18, 2018. The Board also appointed Mr. Sanjib Nanda as Chief Financial Officer of the Company for a period of 3 (three) years effective May 18, 2018.

Mr. O. P. Davra is the Company Secretary and Compliance Officer of the Company.

 (vi) Redemption of redeemable preference shares

During the period, the Company redeemed 1,82,59,885 (One Crore Eighty Two Lakhs Fifty Nine Thousand Eight Hundred and Eighty Five) redeemable preference shares for an amount of ? 100 per preference shareholder.

 (vii) Re-classification of erstwhile promoters

Post the Acquisition, the Company submitted an application with the stock exchanges where its securities are listed, for re- classifying (i) Neeraj Singal; (ii) Brij Bhushan Singal; (iii) Ritu Singal; (iv) Aishwarya Singal; (v) Brij Bhushan Singal (HUF); and (vi) Bhushan Infrastructure Private Limited (collectively referred to as the “Erstwhile Promoter Group”) as public shareholders under Regulation 31A of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015. The Company received the approval from BSE Limited and National Stock Exchange of India Limited on June 25, 2018.

G. CORPORATE SOCIAL RESPONSIBILITY (“CSR”)

The Company incurred losses in the preceding three financial years. Thus the Company was not required to spend any money for CSR activities during the financial year 2017-18.

Post the Acquisition, the Board has reconstituted the CSR Committee and renamed it as Corporate Social Responsibility and Sustainability Committee.

On the recommendation of the newly constituted Corporate Social Responsibility and Sustainability Committee, the Board has adopted a new Corporate Social Responsibility and Sustainability Policy effective July 11, 2018.

The Corporate Social Responsibility and Sustainability Policy is available on the website of the Company www.bhushansteel.com. A web link for the same is provided in the Corporate Governance Report.

H. CORPORATE GOVERNANCE

The Corporate Governance Report for financial year 2017-18 as stipulated under the Listing Regulations forms part of the Annual Report. The certificate from a practicing Company Secretary confirming compliance with the conditions of corporate governance forms part of the Corporate Governance Report.

1. Board Meetings

The Board met six times during the year, the details of which are given in the Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the Act and the Listing Regulations.

2. Selection of New Directors and Board Membership Criteria

Post the Acquisition, the Board of Directors of the Company has been reconstituted.The Board on the recommendation of the Nomination and Remuneration Committee (‘‘NRC/Commmittee”) has approved and adopted a revised Policy for Appointment & Removal of Directors. This Policy covers different parameters including board diversity, membership criteria and criteria for determining independence of Directors.

Characteristics expected of all Directors include independence, integrity, high personal and professional ethics, sound business judgement, ability to participate constructively in deliberations and willingness to exercise authority in a collective manner.

The Policy on Appointment and Removal of Directors is annexed to this Report (Annexure – 1) and is also available on our website www.bhushansteel.com. A web link for the same is also provided in the Corporate Governance Report.

3. Board Evaluation

Pursuant to the provisions of the Act and Listing Regulations, the Board is required to carry an annual evaluation of its own performance, the directors individually as well as the evaluation of the working of various committees.

During financial year 2017-18, the Independent Directors met on March 16, 2018 to discuss and review the performance of the erstwhile Board and the management.

Subsequent to the Acquisition,the then existing Directors of the Company were deemed to have vacated their office effective May 18, 2018.

4. Compensation Policy for the Board and Senior Management

Post the Acquisition, based on the recommendations of the NRC, the Board has approved and adopted a revised Remuneration Policy for Directors, Key Managerial Personnel and all other employees of the Company (“Remuneration Policy”) effective July 11, 2018.

As part of this policy, the Company will strive to achieve alignment between pay and long-term sustainable performance.

The Remuneration Policy is annexed to this report (Annexure – 2) and is also available on the website of the Company www.bhushansteel.com. A weblink of the same is provided in the Corporate Governance Report.

5. Particulars of Employees

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013, read with Rules 5(1), 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed to this Report (Annexure -3).

In addition, there are no employees drawing remuneration in excess of the limits sets out in the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

6. Independent Directors Declaration

Post the Acquisition, the Reconstituted  Board  comprises four Independent Directors. The Company has received the necessary  declaration  from  each  of  the  four  Independent

Directors in accordance with Section 149(7) of the Companies Act, 2013, that he/she meets the criteria of independence as laid out in Section 149(6) of the Act and the Listing Regulations.

7. Directors

The year under review saw the following changes to the Board of Directors:

Induction to the Board

Mr. Vineet Prakash Jain, Nominee Director of Punjab National Bank was appointed as Nominee Director effective November 14, 2017 in place of Mr. Rajesh Yaduvanshi who resigned as Member of the Board effective October 25, 2017.

Cessation of Directorship

Mr. Rajesh Yaduvanshi, Nominee Director of Punjab National Bank resigned as Member of the Board effective October 25, 2017.

Mr. Kapil Vaish and Mr. M. V. Suryanaryana, Independent Directors, resigned as Members of the Board effective November 14, 2017 and January 05, 2018 respectively.

Mr. Nittin Johari, Whole Time Director and Chief Financial Officer resigned as Member of the Board effective November 27, 2017.

Directorships post May 15, 2018

Post closure of financial year 2017-18 and pursuant to the Acquisition, the Board of Directors of the Company was reconstituted, details of which are covered under the head “Material Changes Post Closure of Financial Year”.

Re-appointment

In accordance with the provisions of the Act, Mr. Anand Sen will retire at the ensuing AGM and being eligible, seeks re- appointment. The Board recommends and seeks your support in confirming the re-appointment of Mr. Anand Sen as a Director on the Reconstituted Board.

8. Audit Committee

The Audit Committee met five times during the year. The details of the meetings held and attendance of Members during the year are given in the Corporate Governance Report.

Pursuant to the Acquisition, the Audit Committee has been re-constituted and on July 11, 2018 the Board has approved the charter for the functioning of the Audit Committee. The Company Secretary acts as the Secretary to the Committee.

9.Internal Financial Control Systems

Pursuant to the Acquisition, the Company is putting in place a framework for Internal Financial Controls, commensurate with the size, scale and complexity of the Company’s operations.

10. Risk Management

Post the Acquisition, the Company is putting in place an enterprise risk management framework for identifying risks and opportunities that may have a bearing on the organization’s objectives, assessing them in terms of likelihood and magnitude of impact and determining a response strategy.The Board to the best of its knowledge states that, there are at present no such risks that threaten the existence of the Company.

11. Vigil Mechanism

Post the Acquisition, the Board, on the recommendations of the Audit Committee, has approved a new vigil mechanism that provides a formal mechanism for all Directors, employees and vendors to approach the Ethics Counselor/Chairman of the Audit Committee and make protective disclosures about the unethical behaviour, actual or suspected fraud or violation of the Tata Code of Conduct (“TCoC”).

The Vigil Mechanism comprises 3 policies viz., the Whistle Blower Policy for Directors & Employees, Whistle Blower Policy for Vendors and Whistle Blower Reward and  Recognition Policy for Employees. The same is available on our website, www.bhushansteel.com. A weblink for the same is provided in the Corporate Governance Report.

The Whistle Blower Policy for Directors & Employees is an extension of the TCoC that requires every Director or Employee to promptly report to the Management any actual or possible violation of the TCoC or any event where he or she becomes aware of, which could affect the business or reputation of the Company.

The Whistle Blower Policy for Vendors provides protection to vendors from any victimization or unfair trade practices by the Company.

The Whistle Blower Reward and Recognition Policy for Employees has been implemented in order to encourage employees to genuinely blow the whistle on any misconduct or unethical activity taking place in the Company.

During the financial year 2017-18, the Company did not receive any whistleblower complaints.

12. Related Party Transactions

The Company is a party to certain contracts with related parties. The terms of these contracts with related parties appear onerous on the Company. The Reconstituted Board and the new management will deal with these contracts in accordance with the applicable law, Approved Resolution Plan and the IBC Order. The new management is also in the process of identifying, and analysing other contracts entered into by the Company. The process is ongoing and the members are requested to read this report in light of the fact that efforts are still ongoing to understand and acclimatize to the issues that potentially exist in the Company, which has only recently come out from the CIRP Process.

The Company reserves its right under the applicable laws and in terms of the Approved Resolution Plan to seek appropriate remedies in respect of such onerous contracts with the related parties.

13.Disclosure as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has zero tolerance for sexual harassment at workplace and post the Acquisition has adopted a revised policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace, in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder.

The Company has complied with the provisions relating to the constitution of the Internal Complaints Committee as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

During the financial year 2017-18, the Company did not receive any complaint of sexual harassment.

14. Directors’ Responsibility Statement

Members may kindly note that, the Directors of the Reconstituted Board were not in office for the period to which this report primarily pertains. During the CIRP Process (i.e. between July 26, 2017 to May 15, 2018), RP and prior to the Insolvency Commencement Date, the erstwhile Board of Directors was entrusted with and responsible for the management of the affairs of the Company. The Reconstituted Board is submitting this report in compliance with the Act and Listing Regulations and the Directors, as on date, are not to be considered responsible to discharge fiduciary duties with respect to the oversight on financial and operational health of the Company and performance of the management for the period prior to the Acquisition.

IBC is a new legislation in India and the Approved Resolution Plan of the Company is amongst the first such resolution plan approved under the IBC and the members are requested to read this report in light of the fact that the Reconstituted Board and the new management is currently implementing the resolution plan.

As pointed out above, the Reconstituted Board of Directors have been in office only since May 18, 2018. Consequently, the Reconstituted Board has only a limited overview of the effectiveness of the internal financial and other controls of the Company for the fiscal year 2018.

Accordingly, pursuant to Section 134(5) of the Act, the Reconstituted Board of Directors, based on the knowledge/ information gained by them, about the affairs of the Company, in a limited period of time and based on understanding of the then existing processes of the Company and to the best of their knowledge state:

a) that in the preparation of the annual accounts for the financial year ended March 31, 2018, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) that we have selected such accounting policies and made judgments and estimates that are reasonable and prudent so as to give a reasonably true and fair view of the state of affairs of the Company at the end of the financial year ended March 31, 2018 and of the profit or loss of the Company for that period; and

c) that the annual accounts for the financial year ended March 31, 2018 have been prepared on a going concern

15. Subsidiaries, Joint Ventures and Associates

The Company has 3 (three) wholly-owned subsidiary companies in India and 4 (four) subsidiaries in Australia as on March 31, 2018. Further the Company has 3 (three) associate companies and 1 (one) joint venture as on March 31, 2018.

The Consolidated Financial Statements presented by the Company include financial results of all its subsidiaries. The Audited Financial Statements of the subsidiary companies have been reviewed by the Audit Committee and the Board.

Most of the subsidiaries and joint ventures of the Company have not commenced operations and their contribution to the overall performance of the Company is insignificant.

Pursuant to an order of Hon’ble Calcutta High Court dated January 24, 2017, Andal East Coal Company Pvt. Ltd, a joint venture of the Company is under liquidation.

Further, Bhushan Energy Limited  (“BEL”),  an  associate  of the Company, has been admitted to the corporate insolvency resolution process under the Code since January 08, 2018 and is managed by the resolution professional approved by the committee of creditors. The Board of BEL has been suspended.

In terms of the applicable Accounting Standards, the Company has lost significant influence over BEL and this has been accordingly dealt with while preparing the consolidated financial statements of the Company.

A report on the performance and the financial position of the subsidiaries, associates and joint venture as per Form AOC-1 is attached to this report (Annexure – 4).

16.Auditors

Statutory Auditors

Members of the Company at the Annual General Meeting (“AGM”) held on September 16, 2017, ratified the appointment of M/s. Mehrotra & Mehrotra, Chartered Accountants as the statutory auditor from the conclusion of the 34th AGM till the conclusion of the 35th AGM.

Post the Acquisition, M/s. Mehrotra & Mehrotra, Chartered Accountants resigned as the statutory auditor of the Company with effect from May 29, 2018.

The Board, on the recommendation of the Audit Committee, appointed M/s Walker Chandiok & Co LLP, Chartered Accountants (Registration No: 001076N/N500013) (“WCC”) as the statutory auditor to fill the vacancy caused by the resignation of the existing statutory auditor, subject to the approval of the shareholders. WCC shall hold office upto the conclusion of the ensuing AGM. The Company sought the approval of members of the Company in respect of the aforesaid appointment by postal ballot notice dated July 11, 2018. The results of the postal ballot were announced on August 21, 2018. The resolution appointing WCC as statutory auditors of the Company was duly passed.

The tenure of WCC as the statutory auditor will expire on the conclusion of the ensuing AGM. The Board, on the recommendation of the Audit Committee, has proposed the appointment of WCC as the statutory auditor for a period of 5 (five) years. The resolution for appointment of auditors forms part of the notice convening the next AGM.

WCC has audited the book of accounts of the Company for the financial year ended March 31, 2018 and has issued a qualified auditors’ report thereon. The qualifications in the auditor’s report are as given hereunder:

a) The statutory auditors of the Company have expressed a qualified opinion on the standalone and consolidated financial results  of  the  Company  for  the  year  ended March 31, The cumulative impact of the same on turnover, total  expenditure,  profit or  loss  and earning per share of the Company for the year ended is Rs. Nil, Rs. 2,019.11 crore, Rs. 1,968.76 crore and decrease of Rs. 86.92 per share respectively. As the qualification pertains to the prior period adjustments in the financial results for the year ended March 31, 2018, there is no cumulative impact thereof on the balance sheet of the Company as of that date.

In connection with the same qualification, the auditors expressed that during the period under review  (April 2017 through March 2018) the Internal Financial Controls over financial reporting is materially weak. Given that the qualification pertains to the prior period, we are not in a position to comment on the said qualification. However, the Company is putting in place appropriate systems and processes to strengthen the internal financial controls.

b) The auditors report that the Directors of the Company as on March 31, 2018, were disqualified from being appointed as Directors in terms of Section 164(2) of the Post the NCLT order dated May 15, 2018, the erstwhile Directors of the Company are deemed to have resigned/vacated the office. Hence none of the erstwhile Directors continue as Members of the Board.

c) The statutory auditors of the Company have stated in their report that “Pursuant to the initiation of CIRP and the requirements of Section 25(2)(j) of IBC, the Resolution Professional appointed by the NCLT identified certain transactions covered under Sections 43 to 51 and 66 of the These transactions were submitted with NCLT. Crystallisation of amount / Future course of action will be carried out based on the judgement/order of NCLT. Further, based on the information and explanations provided to us, certain former key management personnel of the Company are subject matter of investigations by the Government Authorities, which is currently underway and the Company is yet to get any communication in this respect from the government agencies till the balance sheet date. Except these transactions, no fraud by the Company or on the Company by its officers or employees has been noticed during the period covered by our audit.”

The qualification/emphasis of matter in the auditors report pertains to the period prior to the Directors of the Reconstituted Board taking office. The Reconstituted Board is continuously working from May 18, 2018, towards analyzing the financial and operational affairs of the Company for any fraudulent transactions, errors or omissions.

The Company states that it will address the issues arising from the discovery of fraudulent transactions or any other issues relating to the financial and operational affairs of the Company, if and when discovered, in accordance with law. The Company reserves its right under the applicable laws to seek appropriate remedies.

Cost Auditors

In terms of Section 148 of the Act, the Company is required to maintain cost records and have the audit of its cost records conducted by a cost accountant. Cost records are made and maintained by the Company as required under Section 148(1) of the Act. The Board of Directors at its meeting held on July 5, 2017 appointed M/s Kabra & Associates, Cost Auditors to conduct the Cost Audit for the Financial Year 2017-2018.

For the financial year ending March 31, 2019, the Board of Directors of the Company has, on the recommendation of the Audit Committee, approved the appointment of M/s Shome & Banerjee as the cost auditors of the Company. M/s Shome & Banerjee have vast experience in the field of cost audit.

In accordance with the provisions of Section 148(3) of the Act read with Rule 14 of the Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the cost auditors as recommended by the Audit Committee and approved by the Board has to be ratified by the members of the Company. Accordingly, an appropriate resolution for the proposed remuneration of Rs. 7 Lakhs (Rupees Seven lakhs) plus applicable taxes and out-of-pocket expenses payable to the cost auditors for the Financial Year ending March 31, 2019, forms part of the notice convening the next AGM.

Secretarial Auditors

Section 204 of the Act inter-alia requires every listed company to annex with its Board’s report, a secretarial audit report given by a Company Secretary in practice, in the prescribed form.

The Board appointed R. K Rai, practicing Company Secretaries, as secretarial auditor to conduct a secretarial audit of the Company for the financial year 2017-18. The secretarial auditor has made certain observations in the report. Pursuant to the Acquisition and the IBC Order dated May 15, 2018 passed by the NCLT, there has been a change in the Board and the management of the Company. Given that the observations pertain to the prior period, we are not in a position to comment on the said observations.

The  Secretarial  Audit  report  for  financial  year  2017-18  is annexed to this report (Annexure – 5).

Post-Acquisition, the Board, at its meeting held on August 9, 2018 has appointed M/s PI & Associates to conduct a secretarial audit of the Company for the financial year 2018-19.

18. Annual Return

In terms of the provisions of Act and the amendments thereto the annual return of the Company is placed on the website of the Company. Weblink of the same is given below:

http://www.bhushan-group.org/Investor%20Relations%20pdf/ Forms/Form%20MGT-7-%202017-18.pdf

19. Significant and Material Orders passed by the Regulators or Courts

On May 15, 2018, the NCLT approved the resolution plan submitted by TSL. Pursuant to the IBC Order, Bamnipal acquired the shares of the Company on May 18, 2018 in accordance and compliance with the provisions of the Code.

The IBC Order was challenged by the members of the Erstwhile Promoter Group of the Company and various other parties before the National Company Law Appellate Tribunal (“NCLAT”). The NCLAT, while dismissing the appeals, has confirmed and upheld the NCLT Order as passed by the NCLT thereby approving the Acquisition, through its order dated August 10, 2018.

It is pertinent to reiterate that the Approved Resolution Plan is binding on the Company and its employees, members, creditors, guarantors and other stakeholders involved. Contravention of any provisions of the Approved Resolution Plan may attract penal consequences in accordance  with  the  provisions  of the Code. Accordingly, the Company will be taking measures towards ensuring a smooth implementation of the Approved Resolution Plan.

Besides the above, to the best of our knowledge, there seems to have been no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Company’s operations.

However, members’ attention is drawn to the statement on contingent liabilities, commitments in the notes forming part of the financial statements.

20. Particulars of Loans, Guarantees or Investments

There were no loans or guarantees given or investments madeduring the financial year 2017-18.21.

21.Energy   Conservation,   Technology   Absorption   and Foreign Exchange Earnings and Outgo

Details of the energy conservation, technology absorption and foreign exchange earnings and outgo are annexed to this Report (Annexure – 6).

22.  Deposits

During the year, the Company has not accepted any public deposits under the Act.

23.  Secretarial Standards

The Company has in place proper systems to ensure compliance with the provisions of the applicable secretarial standards issued by the Institute of Company Secretaries of India and such systems are adequate and operating effectively.

ACKNOWLEDGEMENTS

The Directors thank the Company’s customers, vendors, dealers, suppliers and investors for their continuous support.

The Directors also thank the Government of India, various State Governments particularly the States of Orissa, Maharashtra & Uttar Pradesh, Government of Australia, Banks, Financial Institutions, shareholders and debenture holders and concerned Government departments and agencies for their continued support.

Your Directors wish to place on record their deep sense of appreciation & gratitude to the Company’s employees for their hard work, co-operation and support.

On behalf of the Board of Directors

sd/-

TV NARENDRAN

Chairman DIN: 03083605

Jamshedpur August 22, 2018