To, The Shareholders (Members),

The Board of Directors of the Company hereby present the Thirty-second (32^nd) Annual Report together with the Audited Financial Statements for the year 2017-2018 ended 31^st March 2018.

The financial year 2017-2018 ended 31^st March 2018 under review, witnesses reasonable increase in demand for the Company’s products, which is mainly due to growth in Automobile and Auto Component sector coupled with better sales realization, improved plant utilization and process improvements, all that have been resulted in achieving 8.58% PBT margin as against 4.93% in the corresponding previous financial year. EBIDTA margins have improved to 11.82% as compared to 8.90% in the corresponding previous financial year. The continuous efforts by the Company’s Management towards strict cost reduction, better financial and working capital management, has also helped to improve the overall financial performance of the Company.

1. FINANCIAL RESULTS

The summarised financial results for the year are as follows (Rs. in Lakh except EPS)

2. FINANCE

Your Company has ended the financial year 2017-2018 ended 31^st March 2018 with a profit after tax of Rs. 12,867 Lakhs. After taking into account the brought forward profit of Rs.48,760 Lakhs, your Company has carried forward an amount of Rs.61,627 Lakhs to the Balance Sheet of the Company as at 31^st March 2018.

3. DIVIDEND

The Company is in need of more funds through internal accruals to cope up with the terms and conditions of the lending banks financing the ongoing capital projects under the expansion programme, which will enable future growth of the Company.

As such, the Board of Directors feels appropriate and are pleased to recommend a Dividend @5% (i.e. Rs. 0.50/-) per Equity Share on the equity shares in the capital of the Company for the financial year 2017-2018 ended 31^st March 2018, subject to approval of the Shareholders (Members) in the ensuing Thirty-second (32^nd)Annual General Meeting of the Company.

4. SHARE CAPITAL

During the financial year 2017-2018 ended 31^st March 2018 under review, there is no change in the capital structure of the Company and accordingly, the issued, subscribed and paid-up share capital of the Company stand at Rs. 1,802,194,480/- divided into 180,219,448 equity shares of face value ofRs. 10/- each, as on 31^st March 2018.

5. MARKET SCENARIO

Due to better GDP growth and good monsoon in current financial year, the Automobile and Auto Component Industry is expected to perform well with a growth rate of 18%. Sunflag Steel also expect an enhancement in its sales by entering into new markets and products, apart from development of high value products and more approvals ofvarious OEM’s, with demand is expected to remain strong in near future. However, we need to prepare ourselves to face long term challenges that might be presented due to the advent of Electric Vehicles in Indian Markets.

6. COMPANY’S OPERATIONS OR OVERALL WORKING PERFORMANCE

During the financial year 2017-2018 ended 31^st March 2018 under review, the operational (production) details of the Company are as under

production in MT and Power in Lakh kWh

7. PROJECTS Steel Plant:-

With a view to utilize the full potential of Rolling Mill at Blooming Mill, the Company has undertaken expansion of this unit to produce Rolled Products demanding a higher degree of reduction ratio from bigger size blooms as far as possible by rolling with a single heating, and thus reducing energy, cost & scale loss and inventory of intermediate products.

Also, the Company is expanding its existing Steel Melt Shop to produce high quality clean steel. This will enable the Company to diversify its products.

Overall capital outlay for these projects are estimated atRs. 450.00 Croresand shall be executed over a period of 24 months.

Subsidiary Companies:-

Sunflag Power Limited [CIN-U 31200 UR2003PLC 027802]:-

There were no specific developments or updates for reporting to the Members and the process of obtaining necessary approvals were continued for implementation and commencement of operations of Hydro Power Project of the Company at Hanol-Tuini in the State of Uttarakhand.

Sunflag Special Steels Limited [CIN - U 27102 OR2003 PLC 007099]:-

The Company, in absence of viability to continue, has voluntarily made an application on 27^th March 2017 and submitted requisite documents for strike-off (closure) of name of the Company and a confirmation from the Office of the Registrar of Companies, Odisha, Cuttack about the Striking-off of its Name pursuant to Section 248 of the Companies Act, 2013. In response to Company’s subject application, the Company has received an Order dated 7^th February 2018, from the Office of the Registrar of Companies, Odisha, Cuttack stating that effective 7^th February 2018, the name of the Company has been struck-off from their records and accordingly, the Company stands dissolved.

Khappa Coal Company Private Limited [CIN- U 10100 MH 2009 PTC 191907]:-

ln view of order of the Hon’ble Supreme Court of India dated 24^th September 2014, Khappa & Ext” Coal Block which was allocated to Khappa Coal Company Private Limited, stands de-allocated with immediate effect. The closure of the said Company solely depends upon the outcome of final decision regarding bank guarantee and compensation from the appropriate authorities.

Sunflag Foundation [CIN - U 74999 MH 2017 NPL 289961]:-

Sunflag Foundation, a Section 8 Company (not for profits) was incorporated on 27^th January 2017 as a Wholly-owned Subsidiary of Sunflag Iron and Steel Company Limited. The said Company was appointed as an Implementing Agency to carry out the Corporate Social Responsibility (CSR) activities as perCSR Policy of the Company within the framework of applicable provisions of law.

Joint Venture (JV) Companies:-

Madanpur (North) Coal Company Private Limited [CIN -U 10101 CT2007 PTC 020161]:-

ln view oforder of the Hon’ble Supreme Court of India dated 24^th September 2014, the Coal Block which was allocated to Madanpur (North) Coal Company Private Limited in the State of Chhattisgarh stands de-allocated with immediate effect. The closure of the said Company solely depends upon the outcome of final decision regarding bank guarantee and compensation from the appropriate authorities.

C T Mining Private Limited [CIN - U 10100 JH 2008 PTC 013329]:-

ln view of order of the Hon’ble Supreme Court of India dated 24^th September 2014, the Coal Block which was allocated to C T Mining Private Limited in the State of Jharkhand, stands de-allocated with immediate effect. The closure of the said Company solely depends upon the outcome of final decision regarding bank guarantee and compensation from the appropriate authorities.

Daido D.M.S. India Private Limited [CIN -U 28113 HR2015 FTC054839]:-

Its a Joint Venture (JV) Company between Sunflag, Daido Steel Co. Ltd., Japan and Daido Die and Mold Steel Solutions Co. Ltd., Japan. Sunflag has made an investment of INR 36,000,000/- (INR Three crores sixty lakhs) constituting twenty percent (20%) of the issued, subscribed and paid-up share capital of the said JV Company. The said JV Company is engaged in the business of manufacturing, import, export and distribution indie, mould steel (tool steel and other metallic materials), processed products and mould parts.

Ramesh Sunwire Private Limited [CIN - U 28999 MH 2016 PTC 287281]:-

Sunflag jointly with Stumpp Schuele & Somappa Springs Private Limited, Bengaluru has formed and incorporated a Joint Venture (JV) Company namely Ramesh Sunwire Private Limited on 31^st October 2016 in the State of Maharashtra. Sunflag has contributed a sum of Rs. 22,050,000/- towards subscription to share capital of the said JV Company - namely Ramesh Sunwire Private Limited constituting 49% of its equity shareholding. The main object of the said JV Company is manufacturing high quality of alloy steel wire for automobile and auto component industries both in domestic and export markets. Further during the financial year 2017-2018 ended 31^st March 2018 under review, Sunflag has contributed an additional sum ofRs. 1,50,00,000 for issue and allotment of shares of the said JV Company.

The CAPEX orders placed by the said JV Company are in transit and expected to reach during the second quarter (Q-2) of financial year 2018-2019. The plant is under erection stage and expected to be commissioned by the end of December 2018.

Present Status of Coal and Minerals Mines:-

8. NATURE OF BUSINESS ACTIVITIES AND CHANGES THEREOF

During the financial year 2017-2018 ended 31^st March 2018 under review, the Board of Directors, though exploring addition to existing business and commercial activities, had neither been explored any change in nature of business and commercial activities for the Company nor there is a change in nature of business and commercial activities of the Company. As such, no specific details regarding change in nature of business activities are required to be given or provided.

9. PUBLIC DEPOSITS

During the financial year 2017-2018 ended 31^st March 2018 under review, the Company has neither invited nor accepted any public deposits within the meaning of Section 73 and 74 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 (as amended). As such, no specific details prescribed in Rule 8(1) of the Companies (Accounts) Rules, 2014 (as amended) are required to be given or provided.

10. DIRECTORS AND KEY MANAGERIAL PERSONNEL

The changes amongst the Board of Director/s including the Executive Director/s and Key Managerial Personnel during the period are as follows:-

I. CHANGES AMONGST THE PROMOTER DIRECTOR:-

Mr. Suhrit Bhardwaj (DIN -02318190), who was appointed, as an Additional Director [Category - Promoter, Non-executive & NonIndependent] of the Company, effective 27^th March 2017, has been appointed, as a Director [Category - Promoter, Non-executive & Non-Independent] of the Company, by the Shareholders (Members) of the Company at their Thirty-first (31^st) Annual General Meeting of the Company held on 28^th September 2017.

II CHANGES AMONGST THE EXECUTIVE DIRECTOR/S:-

a) The Board of Directors at its 164^th meeting held on 14^th August 2017, based on the recommendations vide resolution passed by the Nomination & Remuneration Committee at its 33^rd meeting held on 14^th August 2017, has approved and re-appointed, Mr. Surendra Kumar Gupta (DIN - 00054836), as the Deputy Managing Director, [Category - Non-Promoter & Executive], designated Key Managerial Personnel (KMP) of the Company, for a further period of three (3) years effective 30^th July 2017.

The Shareholders (Members) of the Company, at their Thirty-first (31^st) Annual General Meeting held on 28^th September 2017, has approved, the re-appointment of Mr. Surendra Kumar Gupta, (DIN - 00054836), as the Deputy Managing Director, [Category - Non-Promoter & Executive], designated Key Managerial Personnel (KMP) of the Company, for a further period of three (3) years effective 30^th July 2017.

b) The Board of Directors at its 164^th meeting held on 14^th August 2017, based on the recommendations vide resolution passed by the Nomination & Remuneration Committee at its 33^rd meeting held on 14^th August 2017, has approved and appointed, CA R. Muralidhar (DIN -00982212), as an Additional Director [Category - Non-Promotor & Executive], effective 14^th August 2017, and also, the Whole-time Director, designated as the Executive Director (Finance) [Category - Non-Promoter & Executive] & CFO, designated Key Managerial Personnel (KMP) of the Company, for a period of three (3) years effective 14^th August 2017.

The Shareholders (Members) of the Company, at their Thirty-first (31^st) Annual General Meeting held on 28^th September 2017, has approved, the appointment of CA R. Muralidhar (DIN - 00982212), as the Whole-time Director, designated as Executive Director (Finance), [Category - Non-Promoter & Executive] & CFO, designated Key Managerial Personnel (KMP) of the Company, fora period of three (3) years effective 14^th August 2017.

c) The Board of Directors at its 164^th meeting held on 14^,hAugust 2017, based on the recommendations vide resolution passed by the Nomination & Remuneration Committee at its 33^rd meeting held on 14^th August 2017, has approved and appointed, Mr. Ramchandra Vasant Dalvi (DIN - 00012065), as an Additional Director [Category - Non-Promoter & Executive], effective 14^th August 2017, and also, the Whole-time Director, designated as an Executive Director (Works), designated Key Managerial Personnel (KMP) of the Company, for a period of three (3) years effective 14^th August 2017.

The Shareholders (Members) of the Company, at their Thirty-first (31^st) Annual General Meeting held on 28^th September 2017, has approved, the appointment of Mr. Ramchandra Vasant Dalvi (DIN -00012065), as the Whole-time Director, designated as Executive Director (Works), [Category - Non-Promoter & Executive], designated Key Managerial Personnel (KMP) of the Company, fora period of three (3) years effective 14^th August 2017.

III. CHANGES AMONGST KEY MANAGERIAL PERSONNEL(KMP):-

Apartfrom change/s referred to in (II) above, there is no other change/s in the Key Managerial Personnel (KMP) of the Company and accordingly, Mr. Pranav Bhardwaj [Managing Director], Mr. Surendra Kumar Gupta [Deputy Managing Director], CA R. Muralidhar [Executive Director (Finance) & CFO], Mr. Ramchandra Vasant Dalvi [Executive Director (Works)] and CS Pranab Panigrahi [Company Secretary] of the Company, continued to act as the Key Managerial Personnel (KMP) of the Company pursuant to the provisions of Section 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (as amended).

IV. CHANGES AMONGST THE INDEPENDENT DIRECTOR/S:-

The Shareholders (Members) of the Company, at their Thirty-first (31^st) Annual General Meeting held on 28^th September 2017, has approved the followings:-

a) the appointment of Dr. E. R. C. Shekar (DIN -00013670), Director [Category - Non-executive, Independent] of the Company, for a fixed second term of consecutive five (5) years i.e. from the conclusion of Thirty-first (31^st) Annual General Meeting up to the conclusion of Thirty-sixth (36^th) Annual General Meeting of the Company to be held for the financial year 2021-2022.

b) the appointment of Mr. Kumar Jitendra Singh (DIN - 00626836), Director [Category - Non-executive, Independent] of the Company, for a fixed second term of consecutive five (5) years i.e. from the conclusion of Thirty-first (31^st) Annual General Meeting up to the conclusion of Thirty-sixth (36^th) Annual General Meeting of the Company to be held for the financial year 2021-2022.

c) the appointment of Mr. S. Gajendran (DIN -00250136), Director [Category - Non-executive, Independent] of the Company, fora fixed second term of consecutive two (2) years i.e. from the conclusion of Thirty-first (31^st) Annual General Meeting up to the conclusion of Thirty-third (33^rd) Annual General Meeting of the Company to be held for the financial year 2018-2019.

d) the appointment of CAJayesh M. Parmar (DIN-00802843), Director [Category-Non-executive, Independent] of the Company, for a fixed second term of consecutive two (2) years i.e. from the conclusion of Thirty-first (31^st) Annual General Meeting up to the conclusion of Thirty-third (33^rd) Annual General Meeting of the Company to be held for the financial year 2018-2019.

Apart, from the aforesaid change/s in the Independent Director/s of the Company,

a) the Board of Directors at its 165^th meeting held on 28^th September 2017, based on the recommendations vide resolution passed by the Nomination & Remuneration Committee at its 34^th meeting held on 28^th September 2017, has approved and appointed, Mr. Rooshad Russi Patel, (DIN - 00473945), as an Additional Director, [Category - Non-executive, Independent], of the Company, effective 29^th September 2017, to hold the office till the conclusion of Thirty-second (32^nd) Annual General Meeting of the Company.

b) Mrs. Neelam Naresh Kothari, (DIN -06709241), Director [Category - Non-executive, Independent] of the Company continued to be a Director on the Board of the Company.

V. DIRECTOR - RETIREMENT BY ROTATION:-

Pursuantto Section 152 of Companies Act, 2013 read with the Companies [Appointment and Qualification of Directors] Rules, 2014 (as amended), Mr. Surendra Kumar Gupta (DIN -00054836) Deputy Managing Director [Category - Non-Promoter & Executive] of the Company, retires by rotation and being eligible, offers himself for re-appointment. The Board recommends his re-appointment as a Director (with existing designation and category) of the Company in the interest of the Company.

VI. PROPOSED CHANGES AMONGST DIRECTOR/S PLACED BEFORE THE MEMBERS FOR THEIR APPROVAL:-

The term of Mr. Rooshad Russi Patel, (DIN - 00473945), as an Additional Director [Category - Non-executive, Independent], of the Company, expiring at the conclusion of the ensuing Thirty-second (32^nd) Annual General Meeting of the Company.

The Board recommends appointment of Mr. Rooshad Russi Patel, (DIN - 00473945), as a Director, [Category - Non-executive, Independent] of the Company, to hold the office for a fixed first term of consecutive five (5) years, i.e. from the conclusion of Thirty-second (32^nd) Annual General Meeting to be held for the financial year 2017-2018, up to the conclusion of Thirty-seventh (37^th) Annual General Meeting of the Company to be held for the financial year 2022 - 2023, in the interest of the Company.

The Company has received a Notice in writing under Section 160 of the Companies Act, 2013 from a Member proposing the candidature of Mr. Rooshad Russi Patel, (DIN -00473945), for the office of a Director of the Company.

The Company has also received the self-declaration/s from Mr. Rooshad Russi Patel, (DIN -00473945), to the effect that, (i) he was oris not disqualified from being appointed as a Director of the Company in terms of the provisions of Section 164 of the Companies Act, 2013 and have submitted his consent to act as a Director of the Company; (ii) he was oris not debarred from holding the office of a Director pursuant to any order of the SEBI or such other authority in terms of SEBI’s Circular No. LIST/COMP/14/2018-19 dated 20^th June 2018 on the subject “Enforcement of SEBI Orders regarding appointment of Directors by listed companies”; and, (iii) he meets the criteria of independence as provided in Section 149(6) of the Act and Regulation 16(1)(b) and 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended) [“Listing Regulations”].

[Brief profile of all the Dlrector/s Including those seeking appointment or re-appolntment Is given In the Corporate Governance Report]

11. PROPOSED CHANGE/S PURSUANT TO THE SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) (AMENDMENT) REGULATIONS, 2018, PLACED BEFORE MEMBERS FOR THEIR APPROVAL:-

a) Based on the Report of the Committee on Corporate Governance chaired by Mr. Uday Kotak, the Securities and Exchange Board of India (SEBI) amended the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 [“Listing Regulations”], vide SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018 published in the Official Gazette on 9^th May 2018. Save as otherwise specifically provided for in these regulations, they shall come into force from 1^st April 2019. According to the new provisions, a person who has attained the age of seventy-five (75) years can continue directorship in a listed company as a non-executive director only after the concerned listed company has taken the approval of its shareholders (members) by way of a special resolution. The said provision comes into effect froml^stApril 2019.

Mr. Ravi Bhushan Bhardwaj, [DIN-00054700], Non-executive Chairman of the Company, [DOB -23^rd October 1943], is attaining the age of seventy-five (75) years, on 23^rd October 2018, whereas, Dr. Edayathimangalam Ramnath Chandra Shekar, commonly known as Dr. E. R. C. Shekar, [DIN -00013670], Non-executive & Independent Director of the Company, [DOB-20^th April 1932], has already attained the age of seventy-five (75) years and is now 86 years old.

The Nomination & Remuneration Committee and in turn, the Board of Directors of the Company at their respective meeting/s held on 13^th August 2018 has, unanimously approved and recommended to the Shareholders (Members) of the Company for their approval at the ensuing Thirty-second (32^nd) Annual General Meeting of the Company, by way of Special Resolution, the continuation of Mr. Ravi Bhushan Bhardwaj [DIN - 00054700], as the Non-executive Chairman of the Company, on attaining the age of seventy-five(75) years on 23^rd October 2018, beyond 1^st April 2019, till the cessation as a Director of the Company, and also, the continuation of Dr. E. R. C. Shekar, [DIN-00013670], who has already attained the age of seventy-five (75) years, as a Nonexecutive & Independent Director of the Company, beyond 1^st April 2019, till the expiry of existing tenure, as an Independent Director, of the Company, (till the conclusion of Thirty-sixth (36^th) Annual General Meeting of the Company to be held for the financial year 2021-2022.

b) Based on the Report of the Committee on Corporate Governance chaired by Mr. Uday Kotak, the Securities and Exchange Board of India (SEBI) amended the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 [“Listing Regulations”], vide SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018 published in the Official Gazette on 9^th May 2018. Save as otherwise specifically provided for in these regulations, they shall come into force from 1^st April 2019. According to the new provisions, the approval of shareholders (members) by special resolution shall be obtained every year, in which the annual remuneration payable to a single non-executive director exceeds fifty per cent of the total annual remuneration payable to all non-executive directors, giving details of the remuneration thereof. The said provision comes into effect from 1^st April 2019.

The Nomination & Remuneration Committee and in turn, the Board of Directors of the Company, at their respective meeting/s held on13^th August 2018, noted and considered, to change or modify the methodology for payment of remuneration by way of commission to Non-executive Director/s of the Company in line with the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018.

Accordingly, the Nomination & Remuneration Committee and in turn, the Board of Directors of the Company, at their respective meeting/s held on 13^th August 2018, has, unanimously approved and recommended to the Shareholders (Members) of the Company for their approval at the ensuing Thirty-second (32^nd) Annual General Meeting of the Company, by way of Ordinary Resolution, the payment of remuneration by way of commission, not exceeding a sum equivalent to one percent (1%) of net profits of the Company per annum, calculated in accordance with the provisions of Section198 of the Act, be paid to, and be distributed amongst all the Non-executive Director/s of the Company, as may be determined by the Board of Directors of the Company, from time to time, in compliance of the applicable provisions of the CompaniesAct, 2013 read with the rules made thereunder and the Listing Regulations, (as amended), subject to, no single Non-executive Directorof the Company, be paid, a sum exceeding fifty percent (50%) of total annual remuneration payable to all Non-executive Director/s of the Company, for the time being in force, fora period of five (5) financial years, effective financial year 2018-2019 till the financial year 2022-2023.

12. NUMBER OF MEETINGS OF THE BOARD

Six (6) meetings of the Board of Directors of the Company were held on (i) 4^th May 2017, (ii) 26^th May 2017, (iii) 14^th August 2017, (iv) 28^th September 2017, (v) 11^th November 2017 and (vi) 12^th February 2018 during the financial year2017-2018 ended 31^st March 2018 under review.

13. DIRECTORS’ RESPONSIBILITY STATEMENT

The Board of Directors confirms:-

i. That in the preparation of the Annual Accounts (Financial Statements), the applicable Accounting Standards had been followed along with properexplanation, relating to material departures;

ii. That 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 at the end of the financial year and of the profit of the Company for that financial year;

Hi. That the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. That the Directors had prepared the Annual Accounts (Financial Statements) on a going concern basis;

v. That the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls were adequate and operating effectively; and

vi. That the Directors had devised proper system to ensure compliance with the provisions of all applicable laws and regulations and that such systems were adequate and operating effectively.

14. COSTRECORDS

Pursuant to recent amendments to the Companies (Accounts) Rules, 2014 vide MCA’s Notification dated 31^st July 2018, the Board of Directors do confirm that the maintenance of cost records as specified by the Central Government under Sub-section (1) of Section 148 of the CompaniesAct, 2013, is required by the Company and accordingly, such cost accounts and records are made and maintained by the Company for the financial year 2017-2018 ended 31⁵¹ March 2018.

15. COMMITTEE(S) OF THE BOARD

The Company has constituted all the requisite Committee(s) of the Board, namely Audit Committee, Nomination & Remuneration Committee, Stakeholders’ Relationship Committee, Corporate Social Responsibility (CSR) Committee, Share Transfer Committee, Risk Management Committee and Project Monitoring Committee, pursuant to the provisions of the CompaniesAct, 2013 read with the rules made there under and Listing Regulations. The details of its constitution, objective or terms of reference and other related information has been provided under the Corporate Governance Report, which forms part and parcel of the Board’s Report.

16. AUDITORS

I. STATUTORY AUDITORS AND THEIR REPORT:-

lt may be recalled that the Shareholders (Members) of the Company at its Thirtieth (30^th) Annual General Meeting held on 23^rd September 2016, has approved and appointed, M/s. S. S. Kothari Mehta & Co., Chartered Accountants, New Delhi, (ICAI Firm Registration No. 000756N, Peer Review Certificate No. 008927), as the Statutory Auditors of the Company, for a fixed first term of two (2) financial years from the conclusion of Thirtieth (30^th) Annual General Meeting until the conclusion of Thirty-second (32^nd)

Annual General Meeting of the Company, to be held for the financial year 2017-2018, subject to ratification by the Shareholders (Members) of the Company, at every subsequent Annual General Meeting of the Company.

Accordingly, the fixed first term of M/s. S.S. Kothari Mehta & Co., Chartered Accountants, New Delhi (ICAI Firm Registration No.000756N, Peer Review Certificate No. 008927), as the Statutory Auditors of the Company, is expiring at the ensuing Thirty-second (32^nd) Annual General Meeting of the Company.

The provisions of Section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014 (as amended) regarding rotation of Statutory Auditors are applicable to the Company.

Accordingly, the Company may consider the re-appointment of M/s. S.S. Kothari Mehta & Co., Chartered Accountants, New Delhi (ICAI Firm Registration No.000756N, Peer Review Certificate No.008927), as the Statutory Auditors of the Company, for a fixed second term of not more than five (5) consecutive financial years.

Moreover, the Company is not required to place the matter relating to appointment including re-appointment of the Statutory Auditors of the Company, for ratification, by the Shareholders (Members), at every subsequent Annual General Meeting of the Company, in terms of deletion of First Proviso to Section139(1) of Companies Act, 2013vide the Companies (Amendment) Act, 2017 effective 7^th May 2018.

Messers S.S.Kothari Mehta & Co., Chartered Accountants, New Delhi (ICAI Firm Registration No. 000756N, Peer Review Certificate No. 008927), the Statutory Auditors have furnished a Certificate of their consent, qualification and eligibility for appointment including re-appointment under Section 139 and 141 of the Companies Act, 2013 read with the rules and regulations made thereunder.

Accordingly, the Audit Committee at its 69^th Meeting held on 13^th August 2018, and in turn, on the basis of their recommendations, the Board of Directors of the Company at its 169^th Meeting held on 13^th August 2018, has duly noted, considered, reviewed, approved and recommended, the appointment including payment of remuneration, of M/s. S.S. Kothari Mehta & Co., Chartered Accountants, New Delhi (ICAI Firm Registration No.000756N, Peer Review Certificate No.008927), as the Statutory Auditors of the Company, for a consecutive two (2) financial years, i.e. to hold office from the conclusion of this Thirty-second (32^nd) Annual General Meeting till the conclusion of the Thirty-fourth (34^th) Annual General Meeting of the Company to beheld for the financial year 20192020, to the Shareholders (Members) at their Thirty- second (32^nd) Annual General Meeting of the Company, for their approval thereof.

The Auditors’ Report submitted by Messers S. S. Kothari Mehta & Co., Chartered Accountants, New Delhi (ICAI Firm Registration No. 000756N, Peer Review Certificate No. 008927), the Statutory Auditors, to the Shareholders (Members) of the Company, for the financial year 2017-2018 ended 31^st March 2018 do not contain any qualification. The observations made by the Statutory Auditors in their report are self-explanatory and have also been further amplified in the Notes to the financial statements and as such, do not call for any explanation/s by the Company.

During the financial year 2017-2018 ended 31⁵¹ March 2018 under review:-

a) there is no fraud occurred, noticed and/or reported by the Statutory Auditors under Section 143(12) of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014 (as amended);

b) the observations made by the Statutory Auditors on the financial statements for the financial year 2017-2018 ended 31^st March 2018 under review including the affairs of the Company are self-explanatory and do not contain any qualification, reservation, adverse remarks or disclaimer thereof.

As such, no specific information, details or explanations required to be given or provided by the Board of Directors of the Company.

II. COST AUDITORS AND THEIR REPORT:-

Pursuant to Section 148 of the Companies Act 2013, the Board of Directors, on the recommendations of the Audit Committee, of the Company, has approved and re-appointed, M/s. G. R. Paliwal & Company, Cost Accountants, Nagpur, (Membership No. 7815), as the Cost Auditors of the Company for the financial year 2018-2019 ending 31^st March 2019 and also recommended their remuneration to the Shareholders (Members) for their ratification at the ensuing Thirty-second (32^nd) Annual General Meeting of the Company.

The said Cost Auditors have furnished a Certificate of their eligibility for appointment including re-appointment pursuant to Section 141(3)(g), Section 148(5) of the Companies Act, 2013 read with the rules made there under, Certificate for independence and arms’ length relationship with the Company and have confirmed about their not being disqualified for such appointment including re-appointment within the meaning of Section 141(3) of the Companies Act, 2013.

Pursuant to the applicable provisions of the Act read with the rules made there under, the Statements, Annexures, Proforma, annexed to the Cost Audit Report in Form No. CRA-3, to be submitted by the said Cost Auditors with the Central Government in e-Form No. CRA-4, for the financial year 2016-2017 ended 31^st March 2017, was filed vide SRN G52121639 dated 5^th September 2017.

Moreover, the Statements, Annexures, Proforma, annexed to the Cost Audit Report in Form No. CRA-3, to be submitted by the said Cost Auditors with the Central Government in e-Form No. CRA-4, for the financial year 2017-2018 ended 31^st March 2018, do not contain any adverse remarks and qualifications, is self-explanatory and do not call for any further explanation/s by the Company.

III. SECRETARIAL AUDITORS AND THEIR REPORT:-

M/s. Mukesh Parakh & Associates, Company Secretaries, Nagpur, [Membership No. FCS-4343 & Certificate of Practice No. 13693], were appointed as the Secretarial Auditors of the Company, for the financial year 2017-2018 ended 31⁵¹ March 2018.

The Secretarial Audit Report in Form No. MR-3 submitted by the said Secretarial Auditors is attached herewith as an Annex - B and forms part and parcel of the Board’s Report, do not contain any adverse remarks and qualifications, is self-explanatory and do not call for any further explanation/s by the Company.

Further, the Board of Directors of the Company at its 169^th meeting held on 13^th August 2018, on the recommendations of the Audit Committee, of the Company, has approved and re-appointed, M/s. Mukesh Parakh &Associates, Company Secretaries, Nagpur, [Membership No. FCS-4343 & Certificate of Practice No. 13693], as the Secretarial Auditors of the Company for the financial year 2018-2019 ending 31^st March 2019.

IV. INTERNAL AUDITORS AND THEIR REPORT:-

M/s. AKMK & Associates, Chartered Accountants, Surat [ICAI Firm Registration No.136206W] and M/s. Nitin Alshi & Associates, Chartered Accountants, Nagpur, [ICAI Firm Registration No.116875W] were appointed as the Internal Auditors and Joint Internal Auditors, respectively, of the Company, for the financial year 2017-2018 ended 31^st March 2018, pursuant to the provisions of Section 138 of the Companies Act, 2013 read with Rule 13 of the Companies (Accounts) Rules, 2014 and relevant SEBI Regulations including the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended).

The Internal Audit finding/s and report/s submitted by the said Internal Auditor/s, from time to time, during the financial year 2017 2018 ended 31^st March 2018, to the Audit Committee and Board of Directors of the Company, do not contain any adverse remarks and qualifications, is self-explanatory and do not call for any further explanation/s by the Company.

M/s. AKMK & Associates, Chartered Accountants, Surat, [ICAI Firm Registration No. 136206W] will continue to act as the Internal Auditors of the Company, as approved and appointed, on the recommendations of the Audit Committee of the Company, by the Board of Directors of the Company, at its 153^rd meeting held on 12^th August 2015, for a period of five (5) financial year/s, from the financial year 2015-2016 to the financial year 2019-2020 ending 31^st March 2020.

Further, the Board of Directors of the Company, on the recommendations of the Audit Committee of the Company, at its 169^th meeting held on 13^th August 2018, has approved and appointed, M/s. Nitin Alshi & Associates, Chartered Accountants, Nagpur, [ICAI Firm Registration No.116875W], as the Joint Internal Auditors of the Company, for the financial year 2018-2019 ending 31^st March 2019.

17. PERSONNEL/ PARTICULARS OF EMPLOYEES

The information required to be provided pursuant to the provisions of Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (as amended), are given below:-

a) The ratio of the remuneration of each Executive Director to the median remuneration of the Employees of the Company for the financial year 2017-2018 ended 31^st March 2018:-

b) The percentage increase in remuneration of each Director, Chief Executive Officer, Chief Financial Officer, Company Secretary in the financial year 2017-2018 ended 31⁵¹ March 2018:-

c) The percentage increase in the median remuneration of employees in the financial year 2017-2018 ended 31^st March 2018: 8.40%

d) The number of permanent employees on the rolls of Company as on 31^st March 2018:1,235

e) The average percentile increase already made in the salaries of employees other than the managerial personnel in the lastfinancial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:

- The average annual increase was about 8.40%. During the financial year, the total increase is approximately 3.77% after accounting for promotions and other event based compensation revisions.

- The increase in the managerial remuneration for the financial year 2017-2018 ended 31^st March 2018 was around 10.51%, other than commission based on net profit as per the terms of their appointment.

f) Affirmation : The remuneration paid to Director/s, Key Managerial Personnel and Employees of the Company is as per the remuneration policy of the Company.

g) The details or information as per Section 197 of the Companies Act, 2013 (“the Act”) read with Rule 5(2) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 (as amended), forms part of this report. However, in terms of Section 136(1) of the Act, the Report and Financial Statements are being sent to all the Shareholders (Members) and others entitled to receive the same, excluding the statement of particulars of employees. The statement is available for inspection by the Shareholders (Members) at the Registered Office of the Company during business hours on any working day up to the date of the ensuing Thirty-second (32^nd) Annual General Meeting. If any Shareholder (Member) interested in obtaining a copy thereof, such Shareholder (Member) may write to the Company Secretary, whereupon a copy would be sent to the concerned Shareholder (Member) of the Company.

18. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGES EARNINGS AND OUTGO

The particulars relating to energy conservation, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 134(3)(m) of the CompaniesAct, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are given in the Annex - C to this report.

19. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDERSECTION 186 OF THE COMPANIES ACT, 2013

20. PARTICULARS OF CONTRACTS ORARRANGEMENTS WITH RELATED PARTIES UNDERSECTION 188 OF THE COMPANIESACT, 2013

a) Details of contracts or arrangements or transactions not at arm’s length basis:-There are no such transactions and hence not applicable.

b) Details of contracts or arrangements or transactions at arm’s length basis:-

The details of contracts or arrangements or transactions in the ordinary course of business and at arm’s length basis are as given below:-

Form No. AOC - 2

Pursuant to clause (h) of sub-section (3) of Section 134 of the CompaniesAct, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014(asamended):-

21. LISTING OF SHARES

The Equity Shares in the capital of the Company continued to be listed with and actively traded on the BSE Limited (BSE) and National Stock Exchange of India Limited (NSE). The listing fees for the financial year 2018-2019 ending 31^st March 2019 have been paid to both the Stock Exchanges (BSE & NSE) within the normal stipulated time.

22. DEMATERIALISATION OF SHARES

As on 31^st March 2018, there were approximately 1104.97 lakhs Equity Shares dematerialised through depositories viz. National Securities Depository Limited and Central Depository Services (India) Limited, which represents about 61.3127% of the total issued, subscribed and paid-up capital of the Company.

23. EXTRACT OF THE ANNUAL RETURN

The extract of the Annual Return for the financial year 2017-2018 ended and as on 31^st March 2018 pursuant to the provisions of Section 92(3) of the CompaniesAct, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 (as amended) is furnished in the Annex - D attached to this report, which forms an integral part of the Board’s Report of the Company.

24. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

The detailed information related to the dividend declared by the Company in the previous year/s together with the amount remained unpaid or unclaimed, its transfer to the Investor Education and Protection Fund are provided in Notes annexed to the Notice convening the Thirty-second (32^nd) Annual General Meeting of the Company. To avoid repetition, the Shareholders (Members) of the Company are advised to refer the said Notes for detailed information on the subject matter.

25. TRANSFER OF SHARES PERTAINING TO UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF) Ministry of Corporate Affairs(MCA) has notified “Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016” (the Rules) effective 7^th September 2016. The said Rules, amongst other matters, contain provisions for transfer of all shares in respect of which dividend has not been claimed for seven (7) consecutive years or more, in the name of ‘IEPF Demat Account’. Accordingly, the Company has transferred 30,91,699 Equity Shares constituting about 1.716% of the total issued, subscribed and paid-up share capital, including of 28,050 Equity Shares of “Unclaimed Suspense Account”, which was created pursuant to Regulation 39 of the SEBI (LODR) Regulations, 2015 effective 3^rd August 2015. The voting rights on these shares shall remain frozen till the rightful owner of such shares claim the Equity Shares from the IEPF Authority. The IEPF Authority has laid down the detailed procedure for claiming both Dividend as well as Equity Shares, by the Shareholders (Members) or Investors of the Company.

26. CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance practices or requirements as set out in the Listing Regulations by the SEBI enforced through the Stock Exchange/s (BSE & NSE). The Company has also implemented several best Corporate Governance practices as prevalent globally.

Your Board of Directors are pleased to report that your Company has complied with the SEBI Guidelines on Corporate Governance for the financial year 2017-2018 ended & as of 31^st March 2018 relating to the Listing Regulations. ACertificate from M/s. Mukesh Parakh & Associates, Company Secretaries, Nagpur, (Membership No. FCS-4343, Certificate of Practice No. 13693) confirming compliance with conditions as stipulated under Listing Regulations is annexed to the Corporate Governance Report, which forms an integral part of the Board’s Report of the Company.

27. CORPORATE SOCIAL RESPONSIBILITY(CSR)

The Company’s Steel plant is located at Bhandara Road, Village Warthi, Tahsil Mohadi, District Bhandara, in the State of Maharashtra. It is located at a distance of about 12 kilometers from the Bhandara District Headquarters. The unit is surrounded by about three (3) villages in the radius of 5 Kms. The Company is having its captive Coal Mines at Belgaon, Village Belgaon, Tahsil Warora, District Chandrapur, in the State of Maharashtra. The Company’s CSR activities as per its CSR Policy are strictly implemented in all the area/s close to the manufacturing facilities (Steel Plant) and Coal Mines of the Company.

All the activities and programmes covered under SISCO CSR are being monitored by the CSR Committee and are implemented by the CSR Sub-committee of the Company.

Sunflag Foundation [CIN - U74999MH2017NPL289961] - a Section 8 Company (not for profits) was incorporated on 27^th January 2017 as a Wholly-owned Subsidiary of Sunflag Iron and Steel Company Limited. The said Company was appointed as an Implementing Agency to carry out the Corporate Social Responsibility (CSR) activities as per CSR Policy of the Company within the framework of applicable provisions of law.

Accordingly, Sunflag Foundation is implementing, monitoring all the CSR activities, budget and accounts for the same, the manner in which the CSR amount has been spent and/or to be spent, and in turn shall furnish its report to the Company on regular basis. As required, the details pertaining to the Corporate Social Responsibility (CSR) activities together with details of expenditure is enclosed herewith as an Annex-A which forms an integral part of Board’s Report of the Company.

28. CODES OF CONDUCT OF BUSINESS PRINCIPLES & ETHICS AND PREVENTION OF INSIDER TRADING AND OTHER CODES I POLICIES

The Board of Directors are pleased to report that your Company has complied with the:-

i) Code of Conduct of Business Principles and Conduct;

ii) Code of Prevention of Insider Trading in Sunflag Securities by the designated persons [Insider] (as amended from time to time);

iii) Code for Vigil Mechanism-Whistle Blower Policy;

iv) Code for Independent Directors;

v) Corporate Social Responsibility (CSR) Policy;

vi) Risk Management Policy;

vii) Policy on Document Preservations (Regulation 9 of the SEBI (LODR) Regulations, 2015);

viii) Policy for determining of’material’Subsidiary (Regulation 16 of the SEBI (LODR) Regulations, 2015);

ix) Policy on materiality of related party transaction/s and on dealing with related party transaction/s (Regulation 23 of the SEBI (LODR) Regulations, 2015); and

x) Policy for determination of materiality, based on specified criteria and accordingly, grant authorisation for determination of materiality of events (Regulation 30 of the SEBI (LODR) Regulations, 2015).

The aforesaid code(s) and policy(ies) are available on the Company’s Website www.sunflagsteel.com.

29. MATERIAL DEVELOPMENT IN HUMAN RESOURCES HUMAN RESOURCES

An improvement in employee productivity is the key focus area for the Company, whereby achieving benchmark performance in this area, year on year, is a major goal for the Company led by its Human Resource Department.

The emphasis on the people of the organisation stems from the belief that human resource is the key factor to achieve success in any business. Sunflag Steel has always been a front runner in its human resource practices with many pioneering policies in the area of human resources. Our human resource practices are based on the values of Sunflag Steel with emphasis on respect, dignity, unity and fostering a culture of togetherness.

Employees’ competencies and skills were enhanced by exposing them to several internal and external training programmes. Various measures were taken to improve motivation level of each employees. As a result, many improvements were seen, where initiatives were undertaken to bring about a change in culture and mind set of the workforce of the Company.

SEXUAL HARASSMENT OF WOMEN ATTHE WORKPLACE

Sunflag Iron and Steel Company Limited (“the Company”) has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees, etc.) are covered underthis Policy.

Pursuant to recent amendment to the Companies (Accounts) Rules, 2014 vide MCA’s Notification dated 31^st July 2018, the Board of Directors do confirm that the Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 [14 of 2013],

The Certificate by the Deputy Managing Director and Chairman, Audit Committee of the Company, to that effect is enclosed herewith as an Annex - E and forms an integral part of the Board’s Report of the Company.

HEALTHANDSAFETY

Health and safety remains the Company’s highest priority and Sunflag Steel aspires to be the steel industry benchmark in health & safety. The Health & Safety of the workforce is of utmost importance and hence the need was felt for the same to percolate from the top leadership in theform of learning and experience-sharing.

Several initiatives were undertaken during the financial year to improve health & safety standards of the Company. Steps were taken to improve competency and capability for hazard identification and risk management. Further, departmental safety co-ordinator/s are at place for monitoring & training on safety related matters at shop-floor. The Safety Committee and Apex Committee are available for periodical review on health, safety & environment of all department/s of the Company. As a part of regular assignment, training programs on safety are being organised for New Joinee, as well as for regular employees and contract labour/s, and as a part of this, mock-drills are conducted for practical exposure to meet emergency need on quarterly basis. The Hand book on safety awareness are distributed to all employees of the Company as well as it is displayed at Notice Board/s at the Works and Offices of the Company.

30. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has in place adequate internal control systems and procedures commensurate with the size and nature of business. These procedures are designed to ensure:-

(a) that all assets and resources are used efficiently and are adequately protected;

(b) that all the internal policies and statutory guidelines are complied with; and

(c) the accuracy and timing of financial reports and management information is maintained.

31. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY

During the financial year 2017-2018 ended 31^st March 2018 under review, there are no material changes and commitments, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relates and the date of this Board’s Report. As such, no specific details are required to be given or provided.

32. DETAILS OF 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 2017-2018 ended 31^st March 2018 under review, no significant and material order is passed by any of the Regulators or Courts or Tribunals impacting the going concern status and the Company’s operations in future. As such, no specific details are required to be given or provided.

33. OTHER DISCLOSURES

The details regarding Board and its Committee Meeting/s, Evaluation of Board performance, Self-Declaration by the Independent Director/s, Remuneration policy for Director/sand KMP’s, Induction, training and familiarisation programmes for the Director/s including Independent Director/s and such other related information has been provided under the Corporate Governance Report, which forms an integral part of the Board’s Report of the Company.

34. ENCLOSURES

a) Annex-A : Annual Report on Corporate Social Responsibility (CSR) activities together with expenditure details;

b) Annex-B : Secretarial Auditors Report in Form No. MR-3;

c) Annex-C : Report on Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo;

d) Annex-D : Extract of Annual Return for the financial year 2017-2018 ended & as of 31^st March 2018 in the prescribed Form No. MGT-9;and

e) Annex-E : Certificate pursuant to Section 22 & 28 of the Sexual Harassment of Women at Workplace(Prevention, Prohibition and Redressal) Act, 2013.

35. ACKNOWLEDGMENT

The Board of Directors acknowledge with thanks, co-operation and assistance received by the Company from the Shareholders (Members), Consortium and other Banks or Lenders, Central, State Government and Local Authorities, and other external agencies involved in the overall business operations of the Company.

The Board of Directors also record their appreciation of the dedication of all the employees of the Company for their support and commitments to ensure that the Company continues to grow.

For and on behalf of the Board

Dr. E.R.C.Shekar Surendra Kumar Gupta

Nagpur Director Deputy Managing Director

13.08.2018 DIN-00013670 DIN-00054836