AFFLUENCE

DIRECTORS' REPORT & MANAGEMENT DISCUSSION AND ANALYSIS

Dear Members,

The Directors are pleased to present their 42nd Annual Report on the affairs of the Company together with the Audited Financial Statements for the year ended 31st March, 2015

2. DIVIDEND :

Due to inadequacy of profits your Directors regret their inability to recommend declaration of dividend for the year to  the Members of the Company.

3. MANAGEMENT DISCUSSION AND ANALYSIS:

Management Discussion and Analysis Report for the year under review giving detailed analysis of Company's operations, segment-wise performance etc., as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges, is given herein below and forms part of this report.

A] Share Capital:

The Company during the year has allotted 4,00,00,000 Equity Shares of Rs. 10/- each issued for cash at a premium of Rs. 15/- per share on preferential basis to certain Promoter Group entities and other entities to cater to the equity requirements for the expansion of projects under implementation. All the new shares issued are listed on BSE Limited and National Stock Exchange of India Limited. The paid up Share Capital of the Company as on 31st March, 2015 was Rs. 638.63 crore. During the year under review, the Company has not issued shares with differential rights as to dividend, voting or otherwise nor granted stock option nor sweat equity.

B] Financial Performance :

Your Directors wish to inform that the year under review was a very challenging one with multiple constraints being faced due to unprecedented dumping of Steel from China, Russia, Japan and South Korea at very aggressive prices, cancellation of captive coal blocks with blockage of investments incurred over period of time in the coal mines , no future return expected from the cancelled coal blocks, payment of significant additional levy on coal extracted right from the inception, pricing pressures, low domestic demand, lack of working capital to sustain the operations and burden of debt servicing of the projects.

Due to the reasons as mentioned above the Company's Gross turnover for the year stood at Rs. 3356.28 Crore  and has reduced by 5.04% than the previous year's Rs. 3534.35 Crore. The Company's Earnings Before Interest Depreciation and Tax (EBIDTA) levels were at Rs. 376.64 crore as against Rs. 401.25 crore for the previous year. The Net Profit before tax from its ordinary activities for the year stood at Rs. 108.95 Crore, exceptional item for retrospective one time additional levy on coal as levied by the orders of the Hon'ble Supreme Court for the previous years' period was Rs. 91.61 crore, the consequent Net Profit Before Tax after exceptional items was Rs.  17.34 crore.

The Company's Net Profits After Tax was Rs. 1.97 Crore for the year.  During the year, the Networth of the Company has increased to Rs.2218.12 Crore from Rs. 2123.87 Crore in the previous year, mainly on account of preferential issue ofshares, the consequent accretion to Securities Premium Account.

Segment wise performance for the year under review is as under:

i) Steel Plant Division:

Despite extremely tough situation being faced the Division's Gross Turnover during the year was Rs.  2920.94 Crore as compared to Rs. 3095.86 Crore of the previous year.

During the year under review the steel division remained focused on ramp up of its coal mine production at  Gare Palma IV/4 which was de-allocated w.e.f. 1st April, 2015, cost reduction efforts, increased production and sale of value added Finished Rolled products, Pig Iron and Sponge Iron, improvement in productivity of Blast Furnace, higher capacity utilization of wire rod mill, strategizing procurement cost of coking coal and iron ore and in captive power generation.

The production levels of the Steel Melt Shop and the Sponge Iron Plant during 2014-15 were at around 86% and 93% of the previous year. The production levels of the Rolling Mill was around 88% of the previous year and the Hot Metal production level was around 96% of the previous year.

The share of metallics sales value i.e. pig iron and sponge iron was around 34 % in 2014-15 which is at almost same levels in previous year, due to weak demand for finished steel and huge dumping pressures being faced by the steel sector during the year. The Company going forward is expected to increase the contribution of finished steel in overall sales quite significantly.

ii) Castings Division:

The Automotive Sub Division accounted for around 34% , the Centrifugal Castings Sub Division for around  32%, Engineering Castings Sub Division for around 27% and the Construction Casting Sub Division for  around 7% of the total Foundry Gross Revenues.

During the year 2014-15 the slowdown in the demand from the end user industries continued to affect the performance of the Iron and Steel Castings Division. Consequently, the production in Casting Division of the Company was lower by 8% as compared to previous year's levels.

The Division continued in its objectives to focus on better productivity, cost rationalization and improvement in the quality of castings.

The Gross revenues from the foundry division reported a marginal drop to Rs. 435.34 crore during the year from Rs. 438.49 crore in the Financial Year 2013-14.

The Centrifugal and Construction Castings Sub Divisions are engaged in the production and sales of  Sanitary Castings- Drainage Pipes and Fittings, Manhole Covers etc.

This division was the market leader in this segment but due to the continued problems being faced by the Housing and Construction sector and with the availability of cheaper low grade alternative product the Cast Iron Pipes production and sales too have shrunk. The Company is striving hard to improve the performance of this division.

C] Projects :

The Company with a view to optimize costs, monetize the benefits of captive mines, increase the extent of value addition in the long product segment had commenced implementation of various facilities in the States of Chhattisgarh and Jharkhand. The Coal mining projects in the state of Chhattisgarh and Jharkhand suffered huge setback and were halted completely due to cancellation of the Company's three coal mines by the Hon'ble Supreme Court's order.

The Company had also undertaken need based additional revamping and modification schemes to achieve  smooth operations of some of the existing facilities at Raipur and enhancement in the capacity of the Automotive Casting Division at Nagpur.

Briefly, the status of currently executed /under implementation projects is as under:

1. INTEGRATED STEEL PLANT EXPANSION:

The Facilities are as follows:-

a) Steel Melt Shop and Rolling Mill :

This is Company's one of the key value added projects. The Company is enhancing its Steel Melt Shop  and Rolling Mill capacities by 4.50 Lac TPA and 3.50 Lac TPA respectively. Post stabilization the Company would be in a position to produce Alloy Steel Bars for Automotive Components, Industrial Uses and Medium Structurals for Transmission Line Towers, Industrial and Housing Applications. The Project has been completed, the balance of packages and stabilization work is in process.

b) Sponge Iron and Power Plant :

The Company is implementing this project comprising of 3.0 Lacs MTPA DRI Plant (Sponge Iron Plant) and Captive Power Plants in Bilaspur district. This is a Green field Project. The required Land has been  acquired and the procurement activities are in advance stage. The civil, structural and the equipment erection work is in process. All the statutory clearances for this project have been received and it is  under implementation. The project is facing time delays due to various constraints it has being at  Green field location.

2. IRON ORE PELLETISATION PLANT:

The Company has successfully set up 12 Lacs TPA Iron Ore Pelletisation Plant in the existing Integrated Steel Plant Complex at Raipur. Currently the stabilization process is going on. Low cost dump fines of Iron Ore are adequately available at Mines and other sites which are being used for pelletisation. This would  help in extensive use of fines into pellets that will replace sized ore and thereby reduce their cost for  production of Sponge Iron and hot-metal and ultimately the cost of finished steel.

3. DE-BOTTLENECKING AND AUGMENTATION OF FACILITIES PROJECT AND OTHER SPECIFIC CAPEXSCHEMES:

The Company has undertaken de-bottlenecking of some of its existing facilities and modifications in its Steel Plant Division at Raipur and Automotive Castings units at Nagpur to improve the overall productivity and operations of the plants including certain need based capital expenditure schemes at its Steel Plant  Division, Raipur. It would facilitate smooth operations of the plants, help to reduce the process time,  dependence on the hired equipments, minimize idle time and break-downs.

The Company is also implementing Bright Bar Making facility at the Integrated Steel Plant Division, Raipur. It is a forward integration capex which will lead to further value addition to the Rolled Products.

D] Industry Outlook, Developments and Concerns:

The slowdown in the economic growth which set in two years back continued in the year 2014-15. Many factors like continued inflationary pressures, adverse effects due to coal blocks de-allocation, extraordinary dumping of cheap steel, lack of commensurate domestic demand, pricing pressures, fiscal situation, freeze on the flow of  credit by the Banks and Financial Institutions, lack of private and public investments and the influence of  subdued external demand compounded the problems for the domestic Iron and Steel industry. India is the fourth largest crude steel producer in the world and is one of the leading producers of pig iron and the largest producer of sponge iron in the world. Steel manufacturing infrastructure in the country is well developed and consists of integrated steel mills as well as primary steel mills manufacturing a variety of semi-finished and finished steel products.

However, despite this growth in steel sector, the domestic consumption is yet to pick up commensurately. Stringent anti dumping measures to avoid dumping from China, Russia, South Korea and Japan where domestic

demand is very weak, revival of private and public infrastructure investments in our country, easing of availability of coal at affordable prices through coal linkages, increasing iron ore and fines production and removing restrictions on its mining, recommencement of credit flow to the sector is must to revive the sector which is a vital part of the country's core sector.

Solving socio political issues at the mines sites would help to commence captive iron ore mining in those areas.

With the additional capacities being created by the Company in finished steel making in the long products segment, adoption of various austerity measures and other efforts; the Company is trying to improve its performance weathering the adverse conditions.

Sustained domestic economic recovery will have to be led by improved public infrastructure expenditure and private investment and consumption.

Law and order problems in Iron Ore Mining belts in the State of Chhattisgarh is another continuing concern for the company as well as for the economy; creating serious problems for government and social machineries. This has already delayed operationalisation of the captive Iron Ore Mines of the Company in those regions. Nevertheless, the Company is making all efforts to start those Mines.

Finding market for its new Steel Melt Shop and Rolling Mill products and sustained pressure on selling prices amidst weak demand is a major challenge and area of concern for the company.

The analysts predict that despite global overcapacity, potential growth in domestic demand will continue to fuel  ambitions in the Indian steel landscape. Boosting domestic demand will be a critical enabler to realize the  ambition. The steel intensity curve, socio-economic indicators coupled with announced directional plans of the  new Government, all indicate potential to multiply the industry size in India.

The focus on the "Make in India" campaign is expected to give a fresh impetus to the steel consumption.

Steel being a capital-intensive industry, the investments need to be calibrated to realistic levels based on  domestic demand while aspiring for increased participation in the global arena.

With good raw material supply conditions, a growing market and competent producers, analysts believe that India is at the start of a new growth curve. It may not be immediate, however the fundamental conditions for growth are in place.

De-allocation of Coal Blocks

Your Company's Operating coal mine at Gare Palma IV/4 in Raigarh, Chhattisgarh being operational since the year 2006 and advance stages of development coal mines at Gare Palma IV/8 in Raigarh, Chhattisgarh and Moitra block in Jharkhand got de-allocated w.e.f. 1st April, 2015 and 24th September, 2014 respectively by the Hon'ble Supreme Court orders dated 25th August, 2014 and 24th September, 2014. It has been a huge setback for the company and its entire investments made in those blocks won't yield any return to the Company and also has created issue for sustained availability of coal feed at economical prices for its 25% iron making requirement through Sponge Iron route.

The Company did qualify technically and was in top 50% bidders for E-Auction of new coal blocks which took place for the operating and soon to be operational coal mines. However, it was forced to back out due to very high bidding rates in the E-Auction which company thought to be downright unfeasible to bid.

Your Company had created some reserve of its captive coal for around five-six months of its requirement. The Company is also procuring coal now for its Sponge Iron requirement by way of Imports mainly from South Africa.

The Company would also explore coal linkage options by participating through the policy framework of the  Central Government.

The Company was also required to pay additional levy at Rs.295 PMT on coal blocks right from the inception of coal mining till 24* September,2014 by 31st December,2014 and from 25* September,2014 till 31st March,2015 by 30th June,2015. The Company did comply with the requirement in the stipulated time frame.

E] Internal Control Systems:

The Company has an Internal Control System, commensurate with the size, scale and nature of its business. It's a risk focused system, analyzing and reporting to the management on the day to day operations of the Company.

The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures, policies and rules & regulations at all  locations of the Company. On the basis of the report of the internal auditor, the respective department or functional head undertake corrective action in their respective areas and thereby strengthen the controls.

Internal Audit Department presents the significant audit observations and corrective actions thereon to the Audit  Committee of the Board.

F] Industrial Relations:

Industrial Relations in all the Divisions of the Company remained cordial and harmonious. During the year, average number of persons working in the Company was about 6350 approximately.

G] Corporate Social Responsibility:

Corporate Social Responsibility for the Company entails much more than social outreach programs and is an integral part of the way the Company conducts its business. As a part of its social responsibility and as a good corporate citizen, the Company regularly undertakes various programs and projects with a view to promote and protect a congenial and eco-friendly atmosphere in and around the plants and mines and to serve and contribute to the welfare of the society in general.

As required under Section 135 of the Companies Act, 2013, your Board has constituted Corporate Social Responsibility (CSR) Committee vide its meeting held on 30th April, 2014 which comprises of Shri Arbind Jayaswal, Chairman, Shri Ramesh Jayaswal and Shri B. K. Agrawal (Independent Director) as Members. During  the year under review the Board of your Company approved a CSR policy on recommendation of CSR  Committee and since then pursuing the CSR programs and projects as per its approved policy.

As part of its initiatives under "Corporate Social Responsibility (CSR), the Company has undertaken projects and  programs in the areas like Healthcare, Sanitation, Drinking Water, Education and Training, Women Empowerment, Promotion of Traditional Art and Culture, Environmental Sustainability, Sports and Rural  Development. These projects and programs are largely in accordance with Schedule VII of the Companies Act, 2013. During the year under review some of the CSR activities undertaken by the Company in and around the Plants and Mining Areas are as follows:

i. Health care and awareness programs, organizing health/eye check-up and blood donation camps, provision of ambulance facility, opening of First Aid Centre, distribution of utensils to 275 families for  ensuring hygienic health conditions, orientation programs on health education, yoga, hygiene etc., health check up camp for livestock, provision for Lavatory and installation of Handpumps and Borewells.

ii. Organizing Education Tour Programs and Free Coaching Classes, Distribution of stationeries, providing  bus facility to school children, arranging community teachers and organizing educational competitions,  sponsoring Ekal Vidyalayas in villages.

iii. Providing sport kit facility to school children, organizing sports activities and construction of boundary wall and leveling of play ground.

iv. Forming self help group, providing leadership development training and free tailoring classes to women, Blanket distribution to elderly men and women, providing Bee-keeping equipments to trained villagers and arranging vocational training for students.

v. Providing solar panel to operate pumps and street lights and solar lamps to old age village women and  providing telephone facility to villagers for emergency and 108 calls.

vi. Organizing cultural programs and socio-cultural programs, promotion of traditional art and culture.

vii. Tree plantation and promoting rain water harvesting etc.

Your Directors wish to inform:

i. That as per the provisions of Section 135 (5) of the Companies Act, 2013, Company was required to spent Rs. 161.84 lacs during the financial year 2014-15 on the CSR Activities.

ii. That the CSR Budget for the financial year 2014-15 as approved by the CSR Committee and the Board was of Rs. 172.94 lacs.

iii. That during the financial year 2014-15, the actual expenditure incurred by the Company on the CSR  activities was 101.12 lacs.

The Company was not able to spend the budgeted expenditure in the financial year 2014-15, as this year proved to be the year of turmoil for the Company, mainly due to cancellation of all the coal mines allocated to the  Company by the Hon'ble Supreme Court vide its order dated 24th September, 2014. Further, the Company during this period had to apply lot of time and efforts to get back these mines but all resulted in vain. All this process badly hampered the CSR activities of the Company too, resulting in less expenditure than what was envisaged, as large amount of CSR expenditure was planned nearby the plants and mines of the Company including the above mentioned coal mines.

Your Directors wish to share that despite of all the odds nevertheless your Company is committed for  responsibilities towards society and in the next financial year i.e., 2015-16 it will make an utmost endeavour to spend the entire amount earmarked for the CSR activities.

The Annual Report on CSR activities is attached as "Annexure A" and forms part of this report.

4. AUDITORS REPORT:

Auditors Report on the financial statements of the Company for the year ended 31st March, 2015 is self explanatory save a Qualified Opinion which has been specified here in below along with the Board's explanation thereto:

AUDITOR'S COMMENT/QUALIFICATION

In the paragraphs titled "Qualified Opinion" and "Basis for Qualified Opinion" in the Independent Auditor's Report read with Note No. 12.11 to the Standalone Financial Statements 2014-15, the Auditor's have commented that "no adjustment has been made in the value of mining assets" related to the three cancelled coal blocks of the

Company located at Gare Palma IV/4 and Gare Palma IV/8- Raigarh, Chhattisgarh and Moitra- North Karanpura, Jharkhand.

EXPLANATION TO AUDITOR'S COMMENT/ QUALIFICATION

Your Directors submit the following explanation to the above comments/qualified opinion of the Auditors:

i. That the Hon'ble Supreme Court of India by its Order dated 24th September, 2014 had cancelled number of coal blocks allotted to various entities which included three coal blocks of the Company consisting of one operational coal block at Gare Palma IV/4, Raigarh, Chhattisgarh and two under development coal blocks at Gare Palma

IV/8, Raigarh, Chhattisgarh and Moitra at North Karanpura, Jharkhand allotted by the Ministry of Coal, Government of India.

ii. That subsequently, the Government of India, issued Second Ordinance on 26th December, 2014 for implementing the order of the Hon'ble Supreme Court and fixation of Compensation etc.

iii. That the above mines of the Company were allotted to other bidders in the e-auction, of the Schedule II

(Operational) and Schedule III (Under Advanced Development Stage) of the coal blocks, conducted by the Nominated Authority, Ministry of Coal, Government of India.

iv. That the Company had filed a Writ Petition (WP) before the Hon'ble Delhi High Court, challenging the provisions of above Ordinance and Tender process. The Hon'ble Delhi High Court was pleased to issue Notice to the Central Government (Union of India) on its WP. Subject to outcome of the WP, no adjustment was made in the value of the mining assets by the Company as the value of compensation to be received could not be determined at that stage. In the opinion of your Directors the losses/gains, if any on account of transfer of mining assets would be recognized as and when determined.

Your Directors wish to inform that as on 30th June, 2015, the Company's net investment in the value of mining assets in the three coal blocks was Rs. 22013.39 lacs and it had also made provision for Rs. 2694.95 lacs for site restoration expenses.

5. DIRECTORS AND KEY MANAGERIAL PERSONNEL:

During the year under review, Shri D. K. Sahni (DIN 00131269) and Smt. Raji Nathani (DIN 06945777) were appointed as Additional Directors (Independent) w.e.f. 11th August, 2014. Members at the 41st Annual General Meeting of the Company, under Section 149, 152 read with Schedule IV of the Companies Act, 2013 have appointed Shri S.N. Singh

(DIN 00398484), Shri D. K. Sahni (DIN 00131269) and Smt. Raji Nathani (DIN 06945777) as Director (Independent) for the period of 2(Two) years ending 21st September, 2016 and also appointed Shri B. K. Agrawal (DIN 01223894) as Director (Independent) for a period of 5 (Five) years ending 21st September, 2019. Further, IDBI Bank Limited has withdrawn the nomination of Shri Rakesh Awasthi and appointed Shri Pradip Kumar Das (DIN 06593113) as its nominee w.e.f. 16th August, 2014.

Pursuant to provisions of Section 149 and 161 of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board of Directors of the Company appointed Shri Arvind Iyer (DIN 01375173) as Additional Director (Independent) w.e.f. 13th November, 2014. Shri Megh Pal Singh (DIN 02635073) was appointed as Additional Director as well as Executive Director (Steel) subject to approval of Members in General Meeting. Further, Shri Madan Mohan Vyas (DIN 00399012), was subject to approval of Members in General Meeting, appointed as Director (Independent) w.e.f. 12th February, 2015 for 2(Two) years. Except the above, no other changes took place in the Board of Directors of the  Company and the Board was duly constituted.

During the year under review, Shri A.D.Karajgaonkar ceased as the Company Secretary due to superannuation and Shri Ashutosh Mishra was appointed as the Company Secretary w.e.f. 30th April, 2014.

According to Section 161 of the Companies Act, 2013, Shri Arvind Iyer and Shri Megh Pal Singh will hold the office of Additional Director up to date of ensuing Annual General Meeting.

The Company has received requisite notices in writing from Members under Section 160 of the Companies Act, 2013 proposing the candidature of Shri Arvind Iyer as an Independent Director for a term of 2 (Two) years commencing from 13th November, 2014, Shri M. M. Vyas as an Independent Director for a term of 2 (Two) years commencing from 12th February, 2015 and Shri Megh Pal Singh as Executive Director (Steel) for a period of 3 (Three) years w.e.f. 13th November, 2014. The Board recommends the appointments as aforesaid in the interest of the Company.

Shri Arbind Jayaswal(DIN 00249864), Managing Director and Shri Ramesh Jayaswal (DIN 00249947), Joint

Managing Director of the Company retire by rotation at the ensuing Annual General Meeting and being eligible have offered themselves for re-appointment.

Necessary information on the Directors seeking appointment, reappointment is given in the Notice of the ensuing Annual General Meeting.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Companies Act, 2013 and Clause 49 of the Listing Agreement with the Stock Exchanges.

Pursuant to Section 203 of the Companies Act, 2013 and rules made there under, the Board of Directors of the Company in its meeting held on 30th April , 2014 has noted/appointed the following persons as Key Managerial Personnel of the Company:

i) Shri Arbind Jayaswal, Managing Director,

ii) Shri Ramesh Jayaswal, Joint Managing Director,

iii) Shri P K Bhardwaj, Executive Director and CFO, and

iv) Shri Ashutosh Mishra, Company Secretary.

Board Evaluation

The Board of Directors of the Company is committed to get its performance evaluated in order to identify its strengths  and areas in which it may improve its functioning. To that end, the Nomination and Remuneration Committee has established the process for evaluation of performance of Directors including Independent Directors, the Board and its  Committees. The evaluation of performance of Executive Directors will be done by Independent Directors.

The Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and  other individual Directors which includes criteria and process for performance evaluation of the Non-Executive

Directors and Executive Directors through questionnaire to judge the knowledge to perform the role, time and level of  participation, performance of duties, professional conduct, independence etc. The appointment/re-  appointment/continuation of Directors on the Board shall be based on the outcome of evaluation process.

Remuneration Policy

The Board has, on the recommendation of the Nomination & Remuneration Committee adopted a policy for selection and appointment of Directors, Key Managerial Personnel and Senior Management Personnel and their remuneration. The Nomination & Remuneration Policy details are stated in the Corporate Governance Report.

Meetings

During the year 5 (Five) Board Meetings and 4 (Four) Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and Clause 49 of the Listing Agreement with Stock Exchanges.

RELATED PARTY TRANSACTIONS:

During the period under review all related party transactions that were entered were on an arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

The policy on Related Party Transactions duly approved by the Board on the recommendation of the Audit Committee has been posted on the Company's website.

6. ENERGY CONSERVATION, TECHNOLOGYABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO:

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo  stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule, 8 of The Companies (Accounts) Rules, 2014, is attached as "Annexure B" and forms part of this report.

7. PARTICULARS OF EMPLOYEES :

The information required pursuant to Section 197 of the Companies Act, 2013 read with Rule, 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company forming part of Directors' Report is not annexed to the Annual Report but will be provided to the members upon request. In terms of Section 136 of the Act, the Directors Report and Accounts are being sent to the Members and others entitled thereto, excluding the information on employees' particulars which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. Any Member, if interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard.

8. SUBSIDIARY COMPANY AND ASSOCIATE COMPANY :

Statement in respect of Jayaswal Neco Urja Limited, a Subsidiary Company and Maa Usha Urja Limited, an Associate Company under Section 129 of the Companies Act, 2013, read with Rule 5 of the Companies (Accounts) Rules, 2014 in Form AOC-1, is attached as "Annexure C" and forms a part of this report.

The Company has formulated a policy for determining 'material subsidiaries' and the said policy has been posted on the website of the Company.

Web link : <http://www.necoindia.com/wp-content/uploads/2015/08/Policy-on-Material-Subsidiaries.pdf>

JAYASWAL NECO URJA LIMITED (JNUL)

JNUL has not yet started any commercial activity and as such there was no income from the operations. During the year under review, the Company has earned an interest income of Rs. 18,739 as compared to Rs. 5,84,854 for the previous year. The expenditure for the year under review was of Rs. 1,68,60,498 as compared to Rs. 1,21,98,219 for the previous year.

The project to be set up by the Company is on hold by the management in view of adverse scenario in the Power sector.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Companies Act, 2013 ("the Act") and the relevant Accounting Standards, Consolidated Financial Statements of the Company and its Subsidiary have been prepared and forms part of the Annual Report.

9. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS :

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

10. CORPORATE GOVERNANCE REPORT :

The report on Corporate Governance as stipulated under the Clause 49 of the Listing Agreement with the Stock Exchanges along with the requisite certificate from the Auditors of the Company confirming compliance with the conditions of corporate governance is appended and forms a part of this report.

11. RISK MANAGEMENT :

Pursuant to the requirement of Clause 49 of the Listing Agreement, the Company has constituted a Risk Management Committee. The details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of this Report.

Your Board has approved a Risk Management Policy to ensure efficient and effective assessment and management of risk in the achievement of the objectives of the Company on an ongoing basis.

Your Company recognizes that risk is an integral and unavoidable component of business and is committed to  managing the risk in a proactive and effective manner. Your Board has approved a comprehensive Risk Management Plan in order to manage the identified risks more efficiently. In the management of the risks the probability of risk assumption has been estimated with available data and information and appropriate risk treatments worked out in the  identified risk areas. Risk mitigation measures have been recommended with an aim to reduce the loss or injury  arising out of various risk exposures. The key risks covered in the Risk Management Plan are as under:

i. Competition

ii Fluctuations in Foreign Exchange

iii. Inflation and Cost Structure

iv. Economic Environment and Market Conditions

v. Technological Obsolescence

vi. Quality and Project Management

vii. Political Environment

viii. Environmental Risk Management

ix. Legal Risk

The objective of your Company in framing the Risk Management Policy and adopting a Risk Management Plan is to manage and ultimately to achieve a substantial reduction in the Company's risk exposure and to maintain it at an acceptable level

12. VIGIL MECHANISM/WHISTLE BLOWER MECHANISM :

The Company has established a Vigil Mechanism that enables the Directors and Employees to report genuine  concerns. The Vigil Mechanism provides for (a) adequate safeguards against victimization of persons who use the Vigil Mechanism; and (b) direct access to the Chairperson of the Audit Committee of the Board of Directors of the  Company in appropriate or exceptional cases. Details of the Vigil Mechanism policy are made available on the  Company's website www.necoindia.com and have also been provided in the Corporate Governance Report forming  part of this Report.  

13. DIRECTORS RESPONSIBILITY STATEMENT :

As required under section 134 (3) (c) of the Companies Act, 2013, your Directors confirm and state:

a. that in the preparation of the annual financial statements for the year ended 31st March, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b. that such accounting policies as mentioned in Note 1 of the Notes to the Financial Statements have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2015 and of the profit of the Company for the year ended on that date;

c. that proper and sufficient care has been taken for the maintenance of adequate accounting records in  accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. that the annual financial statements have been prepared on a going concern basis;

e. that proper internal financial controls have been in place and that the internal financial controls are adequate and have been operating effectively;

f. that systems to ensure compliance with the provisions of all applicable laws have been in place and are adequate and operating effectively.

14. INTERNAL FINANCIAL CONTROL SYSTEMS :

The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were operating effectively and no reportable material weakness in the design or operation was observed.

15. EXTRACT OF ANNUAL RETURN :

The particulars forming part of the extract of the Annual Return in form MGT 9 is attached as "Annexure D" and forms

a part of this report.

16. AUDITORS :

M/s. Chaturvedi & Shah, Chartered Accountants, Mumbai and M/s. Agrawal Chhallani & Co., Chartered Accountants, Nagpur, the Auditors of the Company, hold office for the period of 2 years and 3 years respectively from the last Annual General Meeting (AGM) held on 22nd September, 2014 subject to ratification of their appointment at every AGM. The Board of Directors recommend the appointment of M/s. Chaturvedi & Shah, Chartered Accountants, Mumbai and M/s. Agrawal Chhallani & Co.,Chartered Accountants , Nagpur as the statutory auditors of the Company for the ratification by the members as required above at the ensuing Annual General Meeting of the Company.

The Company has received consent letters/ certificates from both the statutory auditors to the effect that their  appointments are within the prescribed limits under Section 141 of the Companies Act, 2013 and that they are not  disqualified.

17. COST AUDITOR :

In pursuance of Section 148 of the Companies Act, 2013, your Directors appointed M/s. Manisha & Associates, Nagpur to conduct the Audit of the Cost Accounting records for the financial year 2014-2015.

The Board of Directors of the Company on the recommendation of the Audit Committee, at its meeting held on 29th May, 2015 has reappointed M/s. Manisha & Associates, Nagpur as the Cost Auditor of the Company, to conduct the Audit of the Cost Accounting records for the financial year 2015-2016 on the remuneration of Rs. 1,25,000/- plus service tax and reimbursement of out of pocket expenses at actual. As required under Section 148 (3) of the Companies Act, 2013 read with rule 14 of the Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the Cost Auditors is to be ratified by the shareholders. Therefore a resolution seeking the shareholders approval to the remuneration payable to M/s. Manisha & Associates, Cost Auditors for the financial year 2015-16 is included at item no. 8 of the Notice convening the ensuing Annual General Meeting.

18. SECRETARIAL AUDITOR :

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Board has appointed M/s. R. A. Daga and Co, Company Secretaries, Nagpur to conduct Secretarial Audit for the financial year 2014-15. The Secretarial Audit Report for the financial year ended 31st March , 2015 in Form MR-3 is attached as "Annexure E" and forms a part to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

19. GENERAL :

Your Directors state that during the year under review:

1. The Company had no deposits covered under Chapter V of the Companies Act, 2013.

2. Neither the Managing Director nor the Whole-time Directors of the Company received any remuneration or commission from its subsidiary.

3. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going  concern status and Company's operations in future except the coal blocks cancellation by the order of the Hon'ble Supreme Court details of which is covered in this report under the head "De-allocation of Coal Blocks".

4. No cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and  Redressal) Act, 2013.

20. ACKNOWLEDGMENTS:

Your Directors place on record, their sincere appreciation and gratitude for all the co-operation extended by  Government Agencies, Bankers, Financial Institutions, Business Associates and Shareholders. The Directors also record their appreciation for the dedicated services rendered by all the Executive Staff and Workers of the Company at all levels in all units and for their valuable contribution in the working of the Company.

For and on behalf of Board of Directors

Basant Lall Shaw

Chairman

(DIN:00249729)

 Place : Nagpur

Date: 12th August, 2015